<PAGE>
EXHIBIT 10.16.3
PARTICIPATION AGREEMENT (TRLIII 2003-1B)
Dated as of November 12, 2003
among
TRINITY RAIL LEASING III L.P.,
as Lessee,
TRINITY RAIL LEASING TRUST II,
TRINITY INDUSTRIES LEASING COMPANY,
as Manager,
TRINITY INDUSTRIES, INC.,
TRLIII 2003-1B RAILCAR STATUTORY TRUST,
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Owner Trustee,
BANKERS COMMERCIAL CORPORATION,
as Owner Participant
AMBAC ASSURANCE CORPORATION,
as Policy Provider
and
WILMINGTON TRUST COMPANY,
as Indenture Trustee and Pass Through Trustee
Tank Cars and Freight Cars
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Table of Contents
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SECTION 1.
DEFINITIONS; INTERPRETATION OF THIS
AGREEMENT..........................................................
3
SECTION 2.
SALE AND PURCHASE; PARTICIPATION IN EQUIPMENT COST; CLOSING;
TRANSACTION COSTS......................... 3
Section
2.1 Sale
and Purchase of
Equipment.........................................................................
3
Section
2.2
Participation in Equipment
Cost........................................................................
4
Section
2.3
Closing Date; Procedure for
Participation..............................................................
4
Section 2.4 Owner Participant's
Instructions to the Owner Trustee; Satisfaction of
Conditions...................... 5
Section
2.5
Expenses...............................................................................................
6
Section 2.6 Calculation of
Adjustments to Basic Rent, Stipulated Loss Value and Termination
Value; Confirmation and
Verification...........................................................................................
9
Section
2.7
Postponement of Closing
Date...........................................................................
11
SECTION 3.
REPRESENTATIONS AND
WARRANTIES.........................................................................
13
Section 3.1 Representations and
Warranties of the Trust
Company....................................................
13
Section
3.2
Representations and Warranties of the
Lessee...........................................................
15
Section
3.3
Representations and Warranties of the Indenture
Trustee................................................
23
Section
3.4
Representations, Warranties and Covenants Regarding Beneficial
Interest, Equipment Note and Pass Through
Certificates...........................................................................................
24
Section
3.5
Representations and Warranties of the Owner
Participant................................................
26
Section 3.6 Representations and
Warranties of
TILC.................................................................
27
Section
3.7
Representations and Warranties of
TRLTII...............................................................
32
Section
3.8
Representations and Warranties of the Pass Through
Trustee............................................. 33
Section
3.9
Representations and Warranties of
Trinity..............................................................
34
Section
3.10
Representations and Warranties of the Policy
Provider..................................................
36
Section
3.11 Opinion
Acknowledgment.................................................................................
36
SECTION 4.
CLOSING
CONDITIONS.....................................................................................
36
Section
4.1
Conditions Precedent to Investment by Each
Participant.................................................
36
Section
4.2
Additional Conditions Precedent to Investment by the Loan
Participant.................................. 43
Section
4.3
Additional Conditions Precedent to Investment by the Owner
Participant................................. 43
Section
4.4
Conditions Precedent to the Obligation of TRLTII and the
Lessee........................................ 44
SECTION 5.
FINANCIAL AND OTHER REPORTS OF THE LESSEE, TILC AND
TRINITY............................................ 46
SECTION 6.
CERTAIN COVENANTS OF THE PARTICIPANTS, THE TRUSTEES AND THE
LESSEE..................................... 47
Section
6.1
Restrictions on Transfer of Beneficial
Interest........................................................
47
Section
6.2
Lessor's Liens Attributable to the Owner
Participant...................................................
50
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Section
6.3
Lessor's Liens Attributable to Trust
Company..........................................................
50
Section
6.4 Liens
Created by the Indenture Trustee and the Loan
Participant....................................... 50
Section
6.5
Covenants of Owner Trustee, Owner Participant and Indenture
Trustee................................... 51
Section
6.6
Information...........................................................................................
52
Section
6.7
Certain Representations, Warranties and
Covenants.....................................................
52
Section
6.8
Covenants of the
Manager..............................................................................
52
Section
6.9
Lessee's Purchase in Certain
Circumstances............................................................
52
Section
6.10 Owner
Participant as Affiliate of
Lessee..............................................................
54
Section
6.11 Records;
U.S. Income Tax
Information..................................................................
54
Section
6.12 Mexico
Filings........................................................................................
54
Section
6.13 Certain
Releases......................................................................................
56
"Release Party" means any of Fleet National Bank, The
Toronto-Dominion
Bank and Pembina Pipeline
Corporation.................................................................
58
SECTION 7.
LESSEE'S
INDEMNITIES..................................................................................
58
Section
7.1
General Tax
Indemnity.................................................................................
58
Section
7.2
General
Indemnification...............................................................................
69
Section
7.3
Indemnification by
TILC...............................................................................
75
SECTION 8.
LESSEE'S RIGHT OF QUIET
ENJOYMENT.....................................................................
77
SECTION 9.
SUCCESSOR INDENTURE
TRUSTEE...........................................................................
78
SECTION 10.
MISCELLANEOUS.........................................................................................
78
Section
10.1
Consents..............................................................................................
78
Section
10.2
Refinancing...........................................................................................
78
Section
10.3 Amendments
and
Waivers................................................................................
80
Section
10.4
Notices...............................................................................................
80
Section
10.5
Survival..............................................................................................
82
Section
10.6 No
Guarantee of Residual Value or
Debt................................................................
83
Section
10.7 Successors
and
Assigns................................................................................
83
Section
10.8 Business
Day..........................................................................................
83
Section
10.9 GOVERNING
LAW.........................................................................................
83
Section
10.10
Severability..........................................................................................
83
Section
10.11
Counterparts..........................................................................................
84
Section 10.12 Headings and Table of
Contents........................................................................
84
Section
10.13 Limitations of
Liability; Extent of
Interest..........................................................
84
Section
10.14 Maintenance of
Non-Recourse
Debt......................................................................
85
Section
10.15 Ownership of and
Rights in Units and Pledged
Units....................................................
85
Section
10.16 No
Petition...........................................................................................
86
Section
10.17 Consent To
Jurisdiction...............................................................................
86
Section
10.18 WAIVER OF JURY
TRIAL..................................................................................
87
Section
10.19 No Partnership
Created................................................................................
87
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Section
10.20 Amendments to
Operative Agreements That Are Not Lessee
Agreements..................................... 87
Section
10.21 Acknowledgment
of Confidentiality Provisions in
Subleases............................................. 87
SECTION 11.
LIMITED
GUARANTY......................................................................................
87
Section
11.1 Limited
Guaranty......................................................................................
87
Section
11.2 Guaranty
Unconditional................................................................................
88
Section
11.3 Discharge
Only Upon Payment and Performance in Full; Reinstatement in Certain
Circumstances........... 90
Section
11.4 Waiver by
Trinity.....................................................................................
90
Section
11.5
Subrogation...........................................................................................
91
Section
11.6
Payments..............................................................................................
91
Section
11.7 Withholding
Taxes.....................................................................................
91
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iii
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EXHIBITS AND SCHEDULES
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Exhibit A-1 --
Form of
Certificate of Insurance Broker Confirming Insurance Coverage
(Primary Liability)
Exhibit A-2 --
Form of
Certificate of Insurance Broker Confirming Insurance Coverage
(Excess Liability)
Exhibit B-1 --
Insurance
Requirements as to Public Liability Insurance
Exhibit B-2 --
Insurance
Requirements as to Physical Damage Insurance
Exhibit C -- Form of Transfer
Agreement
Exhibit D -- Form of Notice of Assignment
of Sublease
Exhibit E-1 --
Form of Winston
& Strawn LLP Opinion
Exhibit E-2 --
Form of Trinity
Rail Leasing III L.P. and Trinity Industries Leasing Company
Opinion
Exhibit E-3 --
Form of Shipman
and Goodwin LLP Opinion
Exhibit E-4 --
Form of Simpson
Thacher & Bartlett LLP Opinion
Exhibit E-5 --
Form of Owner
Participant in-house counsel Opinion
Exhibit E-6 --
Form of Morris,
James, Hitchens & Williams LLP Opinion, as special counsel for
the Indenture Trustee,
Collateral Agent and Pass Through Trustee
Exhibit E-7 --
Form of Alvord
& Alvord Opinion
Exhibit E-8 --
Form of Blake
Cassels Opinion
Exhibit E-9 --
Form of Policy
Provider in-house counsel Opinion
Exhibit E-10 --
Form of Haynes
& Boone, LLP Opinion
Exhibit F -- Form of Officer's Solvency
Certificate
Exhibit G -- Tax Shelter Registration
Form
Schedule 1-A --
Description of
Equipment, Designation of Basic Groups, Designation of Functional
Groups and Equipment
Cost
Schedule 1-B
Description of Pledged Equipment
Schedule 1-C --
List of Existing
Subleases
Schedule 1-D List
of Existing Pledged Equipment Leases
Schedule 2
-- Commitment
Percentage and Payment Information for Participants
Schedule 3-A --
Schedule of
Basic Rent Payments
Schedule 3-B --
Basic Rent
Allocation Schedule
Schedule 4-A --
Schedule of
Stipulated Loss Value and Termination Value
Schedule 4-B --
Termination
Amount Schedule
Schedule 5
-- Terms of
Equipment Note
Schedule 6
-- Purchase
Information
Schedule 7-A --
List of Units
with Bolster Repairs Completed
Schedule 7-B --
List of Units
with Bolster Repairs Not Completed
Schedule 8-A --
List of Units
Subject to a Purchase Option
Schedule 8-B --
List of Units
Subject to a Purchase Option Not for Fair Market Value
Schedule 9
-- Permitted
Liens
Schedule 10 --
List of
Subleases and Pledged Equipment Leases Not in Conformity with
Permitted Sublease Definition
</TABLE>
iv
<PAGE>
PARTICIPATION AGREEMENT (TRLIII 2003-1B)
This
PARTICIPATION AGREEMENT (TRLIII 2003-1B), dated as of November
12,
2003 (this "Agreement"), is by and among (i) Trinity Rail Leasing
III L.P., a
Texas limited partnership (together with its permitted successors
and assigns,
the "Lessee" or the "Partnership"), (ii) Trinity Rail Leasing Trust
II, a
Delaware statutory trust ("TLRTII"), (iii) Trinity Industries
Leasing Company, a
Delaware corporation ("TILC"), (iv) Trinity Industries, Inc., a
Delaware
corporation ("Trinity"), (v) TRLIII 2003-1B Railcar Statutory
Trust, a Delaware
statutory trust (the "Trust"), (vi) U.S. Bank Trust National
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") under the Trust Agreement (such term
and other
defined terms used herein shall have the meanings assigned thereto
in Section 1
below), (vi) Bankers Commercial Corporation, a California
corporation (together
with its permitted successors and assigns, the "Owner
Participant"), (vii) Ambac
Assurance Corporation, a Wisconsin stock insurance corporation, and
(viii)
Wilmington Trust Company, a Delaware banking corporation, not in
its individual
capacity except as expressly provided herein but solely as pass
through trustee
under the Pass Through Trust Agreement (in such capacity, together
with its
permitted successors and assigns, the "Pass Through Trustee" or the
"Loan
Participant"), and as trustee under the Indenture (in such
capacity, together
with its permitted successors and assigns, the "Indenture
Trustee"). The Owner
Participant and the Loan Participant are sometimes hereinafter
referred to
collectively as the "Participants."
WITNESSETH:
WHEREAS,
on or prior to the date hereof, the Owner Participant and the
Trust Company have entered into the Trust Agreement pursuant to
which the Owner
Trustee has agreed, among other things, to hold the Trust Estate
for the benefit
of the Owner Participant thereunder on the terms specified in the
Trust
Agreement, subject, however, to the Lien created under the
Indenture and,
subject to the terms and conditions hereof, (i) to purchase from
the Lessee on
the Closing Date the Equipment described in Schedule 1-A hereto and
(ii) to
acquire Equipment from time to time in connection with the
substitution or
replacement of Units in accordance with the Lease and, in each
case, to lease
such Equipment to the Lessee concurrently with such purchase or
acquisition;
WHEREAS,
on or prior to the date hereof and pursuant to the Pass Through
Trust Agreement a grantor trust was created to facilitate the
financing
contemplated hereby;
WHEREAS,
on the Closing Date, the Trust and the Indenture Trustee will
enter into the Indenture, pursuant to which the Trust will agree,
among other
things, to borrow from the Loan Participant the loan in an amount
not to exceed
the lesser of $78,049,651 and 80% of the Total Equipment Cost in
connection with
the financing of the Total Equipment Cost and to issue to the Loan
Participant
the Equipment Note as evidence of such loan;
WHEREAS,
TRLTII, an indirect wholly-owned subsidiary of TILC, will on
the
Closing Date, pursuant to the Transfer and Assignment Agreement (i)
sell to the
Lessee all of TRLTII's right, title and interest in and to the
Equipment
described on Schedule 1-A hereto and (ii) assign
<PAGE>
and transfer to the Lessee all of TILTII's right, title and
interest in and to
any Existing Equipment Subleases;
WHEREAS
TRLTII will, on the Closing Date, pursuant to the Pledged
Equipment Transfer and Assignment Agreement (i) sell to the
Partnership all of
TRLTII's right, title and interest in and to the Pledged Equipment
and (ii)
assign and transfer to the Partnership all of TRLTII's right, title
and interest
in and to any Existing Pledged Equipment Leases;
WHEREAS,
pursuant to the terms of the Trust Agreement, the Owner
Participant has authorized and directed the Owner Trustee to, on
behalf of the
Trust, and the Trust will, among other things (and subject to the
terms and
conditions of the Operative Agreements), (i) purchase the Equipment
described in
Schedule 1-A hereto from the Lessee and accept delivery from the
Lessee of the
Bill of Sale evidencing the purchase and transfer of title of each
Unit to the
Trust, (ii) acquire Equipment from time to time in connection with
the
substitution or replacement of Units in accordance with the Lease,
(iii) own the
Equipment described in Schedule 1-A hereto as provided in the
Operative
Agreements, (iv) accept pursuant to the Assignment the assignment
and transfer
from the Lessee of all Lessee's right, title and interest in and to
the Existing
Equipment Subleases and (v) execute and deliver the Lease, pursuant
to which,
subject to the terms and conditions set forth therein, the Trust
agrees to lease
to the Lessee, and the Lessee agrees to lease from the Trust, each
Unit to be
delivered on the Closing Date, such lease to be evidenced by the
execution and
delivery of the Lease Supplement covering such Units;
WHEREAS,
concurrently with the execution and delivery of this Agreement,
the Lessee, TILC, the Trust, the Owner Trustee, the Indenture
Trustee and the
Collateral Agent have entered into the Collateral Agency Agreement,
pursuant to
which the Lessee will agree, among other things, to grant to the
Collateral
Agent for the security and the benefit of the Owner Trust and the
other
Beneficiaries (as defined therein) a security interest in the
Collateral
(including the Subleases and Pledged Equipment Leases) to secure
the performance
by the Lessee of its obligations under the Partnership Documents
and Operative
Agreements (including the Lease) to which the Lessee is a
party;
WHEREAS,
pursuant to the terms of the Trust Agreement, the Owner
Participant has authorized and directed the Owner Trustee to, on
behalf of the
Trust, and the Trust will, among other things (and subject to the
terms and
conditions of the Operative Agreements), grant to the Indenture
Trustee under
the Indenture for the security and the benefit of the holder of the
Equipment
Note a security interest in the Indenture Estate;
WHEREAS,
concurrently with the execution and delivery of this Agreement,
Lessee, TILC and the Owner Participant (or an Affiliate of the
Owner
Participant) will enter into the Tax Indemnity Agreement;
WHEREAS, the proceeds from the sale of the Equipment Note to the
Loan
Participant will be applied, together with the equity contribution
made by the
Owner Participant in an amount not less than 20% of the Total
Equipment Cost
pursuant to this Agreement and the Trust Agreement, to effect the
purchase of
the Equipment described on Schedule 1-A hereto by the Trust from
the Lessee as
contemplated hereby;
2
<PAGE>
WHEREAS,
on or prior to the Closing Date, the Partner made capital
contributions to the Lessee in accordance with the Partnership
Agreement and on
the Closing Date all of the proceeds of such capital contributions
will be
applied (i) to effect the purchase of the Pledged Equipment by the
Lessee from
TRLTII as contemplated hereby and (ii) to fund certain reserve
accounts of the
Lessee as contemplated hereby and by the Collateral Agency
Agreement;
WHEREAS,
concurrently with the execution and delivery of this Agreement,
the Lessee and TILC have entered into the Management Agreement,
pursuant to
which TILC will provide management services with respect to the
Equipment, the
Pledged Equipment, the Subleases and the Pledged Equipment
Leases;
WHEREAS,
concurrently with the execution and delivery of this Agreement,
the Lessee and TILC have entered into the Insurance Agreement,
pursuant to which
TILC will provide services to the Lessee in connection with
obtaining, managing
and maintaining insurance with respect to the Equipment and the
Pledged
Equipment required under the Operative Agreements; and
WHEREAS,
concurrently with the execution and delivery of this Agreement,
the Lessee, the General Partner, the Limited Partner and TILC have
entered into
the Administrative Services Agreement, pursuant to which TILC will
provide
certain administrative services with respect to the Partnership,
the General
Partner and the Limited Partner.
NOW,
THEREFORE, in consideration of the mutual agreements herein
contained
and other good and valuable consideration, receipt of which is
acknowledged, the
parties hereto agree as follows:
SECTION 1. DEFINITIONS; INTERPRETATION OF THIS AGREEMENT.
Unless
otherwise defined herein or unless the context shall otherwise
require, capitalized terms used in this Agreement shall have the
meanings
assigned to such terms in Appendix A to the Equipment Lease
Agreement (TRLIII
2003-1B), dated as of November 12, 2003, between the Trust and the
Lessee.
Unless otherwise indicated, all references herein to Sections,
Schedules and
Exhibits refer to Sections, Schedules and Exhibits of this
Agreement.
SECTION 2. SALE AND PURCHASE; PARTICIPATION IN EQUIPMENT COST;
CLOSING;
TRANSACTION COSTS.
Section
2.1 Sale and Purchase of Equipment. Subject to the terms and
conditions hereof and on the basis of the representations and
warranties set
forth herein, the Lessee agrees to sell to the Trust, and the Trust
agrees to
purchase from the Lessee, on the Closing Date and immediately
following
consummation of the transactions described in the third and fourth
recital
clauses above, the Equipment described in Schedule 1-A, and, in
connection
therewith, the Trust agrees to pay to the Lessee the cost for each
Unit as
specified in Schedule 1-A. On the Closing Date, the Lessee shall
deliver each
Unit described on Schedule 1-A to the Trust, and the Trust shall
accept such
delivery.
3
<PAGE>
Section
2.2 Participation in Equipment Cost.
(a) Equity Participation. On the Closing Date, subject to the
terms
and conditions hereof and on the basis of the representations and
warranties set
forth herein, the Owner Participant agrees to participate in the
payment of the
Total Equipment Cost for the Units delivered on the Closing Date by
making an
equity investment in the beneficial ownership of such Units in the
amount equal
to the product of the Total Equipment Cost for such Units delivered
on the
Closing Date and the percentage (not less than 20%) set forth
opposite the Owner
Participant's name in Schedule 2 (the "Owner Participant's
Commitment"). The
aggregate amount of the Owner Participant's Commitment plus the
aggregate amount
of Transaction Costs payable by the Owner Participant shall not
exceed the sum
of (x) the Owner Participant's Commitment and (y) 3.00% of the
Total Equipment
Cost. The Owner Participant's Commitment shall be paid to the
Indenture Trustee
to be held (but not as part of the Indenture Estate) and applied on
behalf of
the Owner Trustee toward payment of the Total Equipment Cost as
provided in
Section 2.3.
(b) Debt Participation. On the Closing Date, subject to the
terms
and conditions hereof and on the basis of the representations and
warranties set
forth herein, the Loan Participant agrees to participate in the
payment of the
Total Equipment Cost for the Units delivered on the Closing Date by
making a
secured loan, not from its own funds but solely from the
Consideration (as
defined in the Pass Through Trust Agreement) received by it from
the sale of the
Pass Through Trust Certificates, to be evidenced by the Equipment
Note, to the
Trust, in the amount equal to the product of the Total Equipment
Cost for the
Units delivered on the Closing Date and the percentage (not in
excess of 80%)
set forth opposite the Loan Participant's name in Schedule 2 (the
"Loan
Participant's Commitment"). The Equipment Note shall bear interest
at the Debt
Rate.
Section
2.3 Closing Date; Procedure for Participation.
(a) Notice of Closing Date. Not later than three Business Days
prior
to the Closing Date (or such lesser notice as may be agreed upon by
the Lessee,
the Owner Participant and the Loan Participant), the Lessee shall
give the Owner
Participant, the Indenture Trustee, the Trust, the Owner Trustee,
the Policy
Provider and the Loan Participant a notice (a "Notice of Delivery")
by facsimile
or other form of telecommunication or telephone (to be promptly
confirmed in
writing) of the Closing Date, which Notice of Delivery shall
specify in
reasonable detail the number and type of Units to be delivered on
such date, the
Total Equipment Cost of such Units, and the respective amounts of
the Owner
Participant's Commitment and the Loan Participant's Commitment
required to be
paid with respect to the Units. Prior to 11:00 a.m., Chicago time,
on the
Closing Date, subject to the satisfaction (or waiver) of the
respective
conditions specified in Section 4, the Owner Participant shall make
the amount
of the Owner Participant's Commitment required to be paid on the
Closing Date
available to the Indenture Trustee, and immediately prior to the
delivery and
acceptance of the Units as specified in Section 2.3(b), the Loan
Participant
shall make the amount of the Loan Participant's Commitment for the
Total
Equipment Cost required to be paid on the Closing Date available to
the
Indenture Trustee, in either case, by transferring or delivering
such amounts,
in funds immediately available on the Closing Date, to the
Indenture Trustee,
either directly to, or for deposit in, the Indenture Trustee's
account at
Wilmington Trust Company, ABA No. 031100092, Att.: Mary St. Amand,
Account
4
<PAGE>
63640-0. The making available by the Owner Participant of the
amount of the
Owner Participant's Commitment for the Total Equipment Cost shall
be deemed a
waiver of the Notice of Delivery by the Owner Participant and the
Trust. The
making available by the Loan Participant of the amount of the Loan
Participant's
Commitment for the Total Equipment Cost shall be deemed a waiver of
the Notice
of Delivery by the Loan Participant and the Indenture Trustee.
(b) Closing. The closing of the transactions contemplated
hereby
(the "Closing") shall take place on or before 2:00 p.m., Chicago
time, on the
Closing Date at the Chicago offices of Winston & Strawn LLP, or
at such other
place or time as the parties hereto shall agree. Upon receipt by
the Indenture
Trustee on the Closing Date of the full amount of the Owner
Participant's
Commitment and the Loan Participant's Commitment in respect of the
Units
delivered on the Closing Date, TILC shall cause TRLTII pursuant to
the Transfer
and Assignment Agreement to deliver the Units described on Schedule
1-A hereto
to the Lessee by delivery of the TRLTII Bill of Sale and shall make
an
assignment of the Existing Equipment Subleases to the Lessee by
delivery of the
TRLTII Assignment, and immediately thereafter, (i) the Indenture
Trustee, on
behalf of the Trust, shall, subject to the conditions set forth in
Sections 4.1,
4.2 and 4.3 having been fulfilled to the satisfaction of the
applicable
Participants or waived by the applicable Participants, pay to the
Lessee from
the funds then held by it, in immediately available funds, an
amount equal to
the Total Equipment Cost for the Units delivered on the Closing
Date, (ii) the
Lessee shall pay to TRLTII pursuant to the Transfer and Assignment
Agreement an
amount equal to the Total Equipment Cost for the Units delivered on
the Closing
Date, (iii) the Lessee shall deliver the Units described on
Schedule 1-A hereto
to the trust by delivery of the Bill of Sale, (iv) the Trust shall,
pursuant to
the Lease, lease and deliver the Units listed on Schedule 1-A
hereto to the
Lessee, and the Lessee, pursuant to the Lease, shall accept
delivery of the
Units described on Schedule 1-A hereto under the Lease, and such
lease, delivery
and acceptance of such Units under the Lease shall be conclusively
evidenced by
the execution and delivery by the Lessee and the Trust of the Lease
Supplement
covering the Equipment so delivered as described in Schedule 1-A
and (v) the
Trust shall execute (and the Indenture Trustee shall authenticate)
and deliver
the Equipment Note relating to such Lease Supplement to the Loan
Participant.
Concurrently with the transactions described immediately above,
TRLTII shall
pursuant to the Pledged Equipment Transfer and Assignment Agreement
sell the
Pledged Units described on Schedule 1-B hereto to the Lessee by
delivery of the
Pledged Equipment Bill of Sale and shall make an assignment of the
Existing
Pledged Equipment Leases to the Lessee by delivery of the TRLTII
Pledged
Equipment Assignment. Each of the Lessee, the Owner Participant,
the Trust, the
Owner Trustee, TILC, the Loan Participant and the Indenture Trustee
hereby
agrees to take all actions required to be taken by it in connection
with the
Closing as contemplated by this Section 2.3(b).
Section
2.4 Owner Participant's Instructions to the Owner Trustee;
Satisfaction of Conditions.
(a) The Owner Participant agrees that the making available to
the
Indenture Trustee of the amount of the Owner Participant's
Commitment for the
Units delivered on the Closing Date in accordance with the terms of
this Section
2 shall constitute, without further act, authorization and
direction by the
Owner Participant to the Owner Trustee, subject, on the Closing
Date, to the
conditions set forth in Sections 4.1 and 4.3 having been fulfilled
to the
5
<PAGE>
satisfaction of the Owner Participant or waived by the Owner
Participant, to
take the actions specified in Section 2.04 of the Trust Agreement
with respect
to the Units on the Closing Date.
(b) The Owner Participant agrees that the authorization by the
Owner
Participant or its counsel to the Indenture Trustee to release to
the Lessee the
Owner Participant's Commitment with respect to the Units delivered
on the
Closing Date shall constitute, without further act, notice and
confirmation that
all conditions to closing set forth in Sections 4.1 and 4.3 were
either met to
the satisfaction of the Owner Participant or, if not so met, were
waived by the
Owner Participant.
(c) The Loan Participant agrees that the authorization by the
Loan
Participant or its counsel to the Indenture Trustee to release to
the Lessee the
Loan Participant's Commitment with respect to the Units delivered
on the Closing
Date shall constitute, without further act, notice and confirmation
that all
conditions to closing set forth in Sections 4.1 and 4.2 were either
met to the
satisfaction of the Loan Participant or, if not so met, were waived
by the Loan
Participant.
Section
2.5 Expenses.
(a) If the Owner Participant shall have made its investment
provided
for in Section 2.2 and the transactions contemplated by this
Agreement are
consummated, either the Owner Participant will promptly pay, or the
Trust will
promptly pay, with funds the Owner Participant hereby agrees to pay
(which,
together with the Owner Participant's Commitment, shall not exceed
the amount
set forth in the second sentence of Section 2.2(a)) to the Trust,
the following
(collectively referred to as the "Transaction Costs") if evidenced
by an invoice
delivered to the Owner Participant within four (4) months after the
Closing Date
and approved by the Lessee and the Owner Participant (such approval
not to be
unreasonably withheld or delayed):
(i) the cost of reproducing, printing and filing the Operative
Agreements, the Equipment Note, the Pass Through Documents and all
amendments
and supplements to the foregoing, including all costs and fees in
connection
with the initial filing and recording of the Lease, the Indenture
and any other
document required to be filed or recorded pursuant to the
provisions hereof or
of any other Operative Agreement and the fees and expenses of the
Rating Agency
in connection with the rating of the Pass Through Certificates;
(ii) the reasonable out-of-pocket expenses of the Owner
Participant and the reasonable fees and expenses of Simpson Thacher
& Bartlett
LLP, special counsel for the Owner Participant, plus disbursements,
for their
services rendered in connection with the negotiation, execution and
delivery of
this Agreement and the other Operative Agreements;
(iii) the initial fees and reasonable out-of-pocket expenses
of the Collateral Agent and the reasonable fees and expenses of
Morris, James,
Hitchens & Williams LLP, special counsel for the Collateral
Agent, for their
services rendered in connection with the negotiation, execution and
delivery of
the Operative Agreements;
(iv) the reasonable out-of-pocket expenses of the Policy
Provider and the reasonable fees and expenses of Jones Day, special
counsel for
the Policy Provider, for their
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services rendered in connection with the negotiation, execution and
delivery of
this Agreement and the other Operative Agreements (which amounts
shall be paid
by or on behalf of the Lessee on the Closing Date);
(v) the reasonable fees and expenses of Winston & Strawn
LLP,
special counsel for TILC, the Lessee and TRLTII, for their services
rendered in
connection with the preparation of documentation, negotiation,
execution and
delivery of this Agreement and the other Operative Agreements;
(vi) the reasonable fees and expenses of Mayer, Brown, Rowe
&
Maw LLP, special counsel for the Initial Purchasers, for their
services rendered
in connection with the preparation of documentation, negotiation,
execution and
delivery of the Pass Through Documents, this Agreement and the
other Operative
Agreements;
(vii) the reasonable fees and expenses of (x) Alvord &
Alvord,
special STB counsel and (y) Blake, Cassels & Graydon LLP,
special Canadian rail
counsel;
(viii) the reasonable fees and expenses of Shipman &
Goodwin,
LLP, special counsel for the Owner Trustee, for their services
rendered in
connection with the negotiation, execution and delivery of this
Agreement and
the other Operative Agreements;
(ix) the reasonable fees and expenses of Morris, James,
Hitchens & Williams LLP, special counsel for the Indenture
Trustee and the Pass
Through Trustee, for their services rendered in connection with the
negotiation,
execution and delivery of the Pass Through Documents, this
Agreement and the
other Operative Agreements;
(x) the reasonable fees and expenses of Deloitte & Touche
LLP
for their services rendered in connection with delivering the
letter referred to
in Section 4.1(aa);
(xi) the reasonable fees and expenses payable to the Arrangers
for their services rendered as advisor to the Lessee;
(xii) the initial fees and reasonable out-of-pocket expenses
of the Owner Trustee and the Trust;
(xiii) the initial fees and reasonable out-of-pocket expenses
of the Indenture Trustee;
(xiv) the initial fees and reasonable out-of-pocket expenses
of the Pass Through Trustee;
(xv) the reasonable fees of RailSolutions, Inc. (which fees
shall in no event exceed $20,000 in the aggregate in respect of the
amounts
payable hereunder), plus disbursements, for their services rendered
in
connection with delivering the Appraisal required by Section 4.3(a)
and for
other consulting services (which amounts, to the extent they are
obligations of
the Policy Provider, shall be paid by or on behalf of the Lessee on
the Closing
Date);
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<PAGE>
(xvi) the reasonable fees of S&P and Moody's for their
services rendered in connection with the negotiation, execution and
delivery of
this Agreement and the other Operative Agreements;
(xvii) the costs incurred in connection with any adjustment
pursuant to Section 2.6(a);
(xviii) all costs and fees in connection with the
qualification of the Pass Through Certificates under federal or
state securities
laws or Blue Sky laws in accordance with the provisions of the
Certificate
Purchase Agreement;
(xix) the reasonable fees and expenses of Dexia Global
Structured Finance, LLC, the advisor to the Owner Participant, as
set forth in
the letter dated September 11, 2003 from Dexia Global Structured
Finance, LLC to
the Owner Participant; and
(xx) the reasonable fees and expenses of Locke Liddell &
Sapp
LLP, special Texas counsel to the Owner Participant.
Except as expressly provided above, Transaction Costs shall not
include internal costs and expenses such as salaries and overhead
of whatsoever
kind or nature of, or costs incurred by, parties to this Agreement
pursuant to
arrangements with third parties for services (other than those
expressly
referred to above).
(b) Upon the consummation of the transactions contemplated by
this
Agreement, the Lessee agrees to be responsible for, and will pay
when due as
Supplemental Rent: (i) the reasonable expenses (including
reasonable legal fees
and expenses) of the Trust, the Owner Trustee, the Indenture
Trustee, the
Participants and the Policy Provider incurred subsequent to the
delivery of the
Equipment on the Closing Date, in connection with any supplements,
amendments,
modifications, alterations, waivers or consents (whether or not
consummated) of
any of the Operative Agreements which are either (1) requested by
the Lessee or
(2) required by any applicable law or regulation (other than laws
or regulations
solely relating to the business of the Lessor, the Indenture
Trustee, the Trust
Company, the Pass Through Trustee, the Initial Purchasers, the
Collateral Agent
or any Participant) or (3) entered into in connection with, or as a
result of, a
Lease Default or (4) required pursuant to the terms of the
Operative Agreements
(including such reasonable expenses incurred in connection with any
adjustment
pursuant to Section 2.6), (ii) the ongoing fees of the Owner
Trustee under the
Trust Agreement, (iii) the ongoing fees of the Indenture Trustee
under the
Operative Agreements, (iv) the ongoing fees of the Collateral Agent
under the
Collateral Agency Agreement, (v) the ongoing fees of the Pass
Through Trustee
under the Pass Through Trust Agreement and (vi) the ongoing fees of
each Rating
Agency; provided that following the occurrence of the "Closing
Date" under the
Other Participation Agreement, the fees referred to in clauses (iv)
and (v)
immediately above shall be allocated between the transactions
contemplated
hereby and the transactions contemplated by the Other Participation
Agreement on
a pro rata basis based on the aggregate commitments of the
Participants
hereunder as compared with the aggregate commitments of the
participants under
the Other Participation Agreement.
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<PAGE>
Notwithstanding the foregoing provisions of this Section 2.5,
the
Lessee shall have no liability for (i) any costs or expenses
relating to any
voluntary transfer of the Owner Participant's interest in the
Equipment pursuant
to Section 6.1 other than during the continuance of a Lease Event
of Default and
no such costs or expenses shall constitute Transaction Costs, (ii)
any costs or
expenses relating to any voluntary transfer of any Loan
Participant's interest
in the Equipment Note (other than any such transfer to the Policy
Provider in
accordance with the Policy Provider Insurance and Indemnity
Agreement) and (iii)
any costs or expenses relating to any voluntary transfer of any
Certificate
holder's interest in the Pass Through Certificates (other than any
such transfer
to the Policy Provider in accordance with the Policy Provider
Insurance and
Indemnity Agreement), and in each case no such costs or expenses
shall
constitute Transaction Costs.
(c) To the extent Transaction Costs exceed 3.00% of the Total
Equipment Cost, Lessee shall pay such excess Transaction Costs. For
purposes of
Section 2.5, the Transaction Costs described in Sections
2.5(a)(ii), (a)(iv),
(a)(vii), (a)(x), (a)(xv), (a)(xix) and (a)(xx) shall be paid first
before other
Transaction Costs, and such other Transaction Costs shall not be
paid or
reimbursed by Lessor to the extent total Transaction Costs exceed
3.00% of the
Total Equipment Cost less $200,000 until four (4) months after the
Closing Date.
Section
2.6 Calculation of Adjustments to Basic Rent, Stipulated Loss
Value and Termination Value; Confirmation and Verification.
(a) Calculation of Adjustments. In the event that (A) the
Closing
Date is other than November 12, 2003, (B) the actual interest rate
on the
Equipment Note is different from the Debt Rate or the amortization
of the
Equipment Note is different from that set forth on Schedule 5, (C)
a refinancing
contemplated by Section 10.2 occurs, (D) the actual aggregate
Equipment Cost or
composition of the Units is different from that set forth on
Schedule 1-A, (E)
the actual aggregate amount of Transaction Costs paid pursuant to
Section 2.5(a)
is other than an amount equal to 3.00% of the Total Equipment Cost,
or (F) there
is any proposed or actual change in the Code or in the regulations
promulgated
thereunder or other administrative pronouncement, which change is
enacted or
effective after the execution of this Agreement and prior to the
Closing Date
(provided that the Owner Participant or the Lessee, as the case may
be, shall
have provided notice to the other prior to the Closing Date), and
which change
alters or eliminates any tax assumption used in calculating Basic
Rent,
Stipulated Loss Values, Stipulated Loss Amounts, Termination
Values, Termination
Amounts or Early Purchase Price, then, in each such case, the Owner
Participant
shall recalculate the payments or amounts, as the case may be, of
Basic Rent,
Stipulated Loss Values, Stipulated Loss Amounts, Termination
Values, Termination
Amounts and Early Purchase Price (i) first, to preserve the Net
Economic Return
that the Owner Participant would have realized had such event not
occurred, and
(ii) second, to minimize to the greatest extent possible,
consistent with the
foregoing clause (i), the present value (discounted monthly at an
interest rate
per annum equal to the Debt Rate) of the sum of the payments of
Basic Rent to
the Early Purchase Date and the Early Purchase Price; provided,
however, that in
no event shall the Early Purchase Price be less than the expected
fair market
value of the Equipment on the Early Purchase Date and the Basic
Term Expiration
Date, respectively, as determined by the Appraisal. Any such
recalculation
performed due to the occurrence of any one or more of the events
described in
clause (A), (B), (D), (E) or (F) above shall be made prior to the
Closing Date.
In performing any such recalculation and in
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<PAGE>
determining the Owner Participant's Net Economic Return, the Owner
Participant
shall utilize the same methods and assumptions originally used in
making the
computations of Basic Rent, Stipulated Loss Values, Stipulated Loss
Amounts,
Termination Values, Termination Amounts and Early Purchase Price
initially set
forth in Schedules 3-A, 3-B, 4-A, 4-B and 6 (other than those
assumptions
changed as a result of any of the events described in clauses (A)
through (F) of
the preceding sentence necessitating such recalculation; it being
agreed that
such recalculation shall reflect solely any changes of assumptions
or facts
resulting directly from the event or events necessitating such
recalculation).
Such adjustments shall comply (to the extent the original structure
complied)
with Section 467 of the Code and the requirements of Revenue
Procedure 2001-28
calculated, except in the case of a refinancing pursuant to Section
10.2,
without taking into account any change after the Closing Date in or
to Section
467 of the Code (and any regulations thereunder).
(b) Confirmation and Verification. Upon completion of any
recalculation described in Section 2.6(a), a duly authorized
officer of the
Owner Participant shall provide a certificate to the Lessee either
(x) stating
that the amounts of Basic Rent, Stipulated Loss Values, Stipulated
Loss Amounts,
Termination Values, Termination Amounts and Early Purchase Price as
are then set
forth in Schedules 3-A, 3-B, 4-A, 4-B and 6 do not require change,
or (y)
setting forth such adjustments to the amounts of Basic Rent,
Stipulated Loss
Values, Stipulated Loss Amounts, Termination Values, Termination
Amounts or
Early Purchase Price as have been calculated by the Owner
Participant in
accordance with Section 2.6(a). Such certificate shall describe in
reasonable
detail the basis for any such adjustments, and any such adjustment
and
corresponding adjustments to the Stipulated Loss Values,
Termination Values and
Early Purchase Price will be computed on a basis consistent with
that used by
the Owner Participant in the original calculation of Basic Rent.
Any such
adjustment shall be deemed approved upon notice of such approval by
the Lessee
to the Owner Participant or on the thirty-first (31st) day
following delivery of
such certificate by the Owner Participant to the Lessee unless the
Lessee, prior
to such day, requests verification pursuant to the following
sentence, and shall
become effective, in the case of adjustments made pursuant to
clause (A), (B),
(D), (E) or (F) of the first sentence of Section 2.6(a), as of the
earlier of
(i) the first Rent Payment Date and (ii) the date the Lessee
approves or has
been deemed to have approved such adjustment, and, in the case of
an adjustment
made pursuant to clause (C) of the first sentence of Section
2.6(a), as of the
date of the refinancing. If the Lessee shall so request, the
recalculation of
any such adjustments described in this Section 2.6 shall be
verified by a
nationally recognized firm of independent accountants selected by
the Owner
Participant and reasonably acceptable to the Lessee, and any such
recalculation
of such adjustment as so verified shall be binding on the Lessee
and the Owner
Participant. Such accounting firm shall be requested to make its
determination
within 30 days. The Owner Participant shall provide to a
representative of such
accounting firm, subject to a confidentiality agreement reasonably
satisfactory
to the Owner Participant, such information as it may reasonably
require, as is
necessary to determine whether the computation is accurate and in
conformity
with the provisions of this Agreement, provided that in no event
shall the Owner
Participant or its affiliates have any obligation to provide the
Lessee with any
such information; and provided, further, that the Owner Participant
or its
affiliates shall have no obligation to disclose to the Lessee, such
accounting
firm or any other Person, or to permit the Lessee, such accounting
firm or any
other Person, to examine any federal, state or local income tax
returns of the
Owner Participant or its affiliates, or books or accounting records
related
thereto, for any taxable year. Subject to the immediately following
sentence,
the costs of such verification shall
10
<PAGE>
be borne by the Lessee. If such accounting firm's verification
shall result in a
decrease in the net present value (expressed as a percentage of
Total Equipment
Cost, discounted monthly at a rate per annum equal to the Debt
Rate) of the sum
of the Basic Rent to the Early Purchase Date and the Early Purchase
Price,
calculated as of the Closing Date, as compared to the net present
value of the
sum of the Basic Rent to the Early Purchase Date and the Early
Purchase Price,
proposed by the Owner Participant, by more than the greater of (i)
ten basis
points and (ii) 5% of the proposed adjustment, then the Owner
Participant agrees
to reimburse the Lessee for any amounts paid for such verification.
Any revised
adjustment resulting from such verification shall become effective
on the next
Rent Payment Date after such verification has been concluded
(except that, in
the case of an adjustment pursuant to clause (C) of the first
sentence of
Section 2.6(c), such adjustment shall be effective as of the date
of the
refinancing).
(c) Compliance. Notwithstanding the foregoing, any adjustment
made
to the payments of Basic Rent, Stipulated Loss Amounts, Termination
Amounts or
Early Purchase Price, pursuant to the foregoing, shall comply with
the following
requirements: (i) each installment of Basic Rent, as so adjusted,
under any
circumstances and in any event, will be in an amount at least
sufficient for the
Trust to pay in full as of the due date of such installment an
amount equal to
the sum of (x) any payment of principal of and interest on the
Equipment Note
required to be paid on the due date of such installment of Basic
Rent in
accordance with the Scheduled Amortization and (y) an amount equal
to the Policy
Provider Base Premium Amount required to be paid on the due date of
such
installment of Basic Rent, and (ii) Stipulated Loss Amount,
Termination Amount
and Early Purchase Price, as so adjusted, under any circumstances
and in any
event, will be an amount which, together with any other amounts
required to be
paid by the Lessee under the Lease in connection with an Event of
Loss or a
termination of the Lease, as the case may be, will be at least
sufficient to pay
in full, as of the date of payment thereof, the aggregate unpaid
principal of
and all unpaid interest on the Equipment Note in accordance with
the Scheduled
Amortization accrued to the date on which Stipulated Loss Amount,
Termination
Amount or Early Purchase Price, as the case may be, is paid in
accordance with
the terms of the Lease.
(d) Invoices. All invoices in respect of Transaction Costs to
the
extent not delivered on the Closing Date shall be directed to the
Owner
Participant at the address set forth in Section 10.4, with a copy
to the Lessee.
Section
2.7 Postponement of Closing Date.
(a) If for any reason whatsoever the Closing is not consummated
on
the Closing Date provided for pursuant to Section 2.3 (the
"Scheduled Closing
Date"), the Closing shall be deemed postponed to the next Business
Day or to
such other Business Day on or prior to November 30, 2003 as the
Lessee shall
specify by facsimile or telephonic (confirmed in writing) notice to
the Owner
Participant, the Indenture Trustee, the Trust, the Owner Trustee,
the Pass
Through Trustee, the Policy Provider and the Initial Purchasers, in
which case
the Participants will keep their funds available, provided that the
notice of
postponement shall be received by each party no later than 4:30
p.m., Chicago
time, on the originally scheduled Closing Date, and the term
"Closing Date" as
used in this Agreement shall mean the postponed "Closing Date."
11
<PAGE>
(b) If the closing fails to occur on the Scheduled Closing Date,
the
Indenture Trustee shall promptly return to each Participant that
makes funds
available to it in accordance with this Section 2 such funds,
together with
interest or income earned thereon.
(c) If the Closing fails to occur on the Scheduled Closing Date
and
funds are not returned to each Participant that made funds
available by the
Indenture Trustee as provided by Section 2.7(b) above, the
Indenture Trustee
shall, if so instructed by the Lessee in the facsimile or
telephonic (confirmed
in writing) notice from the Lessee (which notice shall specify the
Specified
Investments to be purchased), use reasonable best efforts to
invest, at the risk
of the Lessee (except as provided below with respect to the
Indenture Trustee's
gross negligence or willful misconduct), the funds received by the
Indenture
Trustee from the Participants in Specified Investments in
accordance with the
Lessee's instructions. Any such Specified Investments purchased by
the Indenture
Trustee upon instructions from the Lessee shall be held in trust by
the
Indenture Trustee (but not as part of the Indenture Estate under
the Indenture)
for the benefit of the Participants that provided such funds. In
order to obtain
funds for the payment of the Equipment Cost for the Units on the
Closing Date or
to return funds to the Participants pursuant to Section 2.7(b), the
Indenture
Trustee is authorized to sell any Specified Investments purchased
as aforesaid.
The Indenture Trustee shall not be liable for failure to invest
such funds or
for any losses incurred on such investments except for losses
resulting from its
own willful misconduct or gross negligence.
(d) If the Closing fails to occur on the Scheduled Closing
Date,
unless the Indenture Trustee returns all funds to the Participants
by 2:00 p.m.,
Chicago time, on the Scheduled Closing Date, the Lessee shall
reimburse each
Participant that has made funds available pursuant to this Section
2 for the
loss of the use of its funds an amount equal to the excess, if any,
of (x)
interest on such funds at the Debt Rate for the period from and
including the
Scheduled Closing Date to but excluding the actual Closing Date or,
if earlier,
the day on which such Participant's funds are returned if such
return is made by
2:00 p.m., Chicago time (or to but excluding the next following
Business Day if
such return is not made by such time); provided that with respect
to the Owner
Participant such period shall in any case be at least one day,
unless the Owner
Participant shall have received, prior to 12:00 noon (Chicago time)
on the
Business Day preceding the Scheduled Closing Date, a notice of
postponement of
the Scheduled Closing Date pursuant to Section 2.7(a), over (y) any
amount paid
to such Participant in respect of interest or income earned by the
Indenture
Trustee on such funds pursuant to Section 2.7(c) above.
(e) If the Closing fails to occur on the Scheduled Closing Date,
the
Lessee shall, on the Closing Date or on the date funds are required
to be
returned to the Participants pursuant to Section 2.7(b) above,
reimburse the
Indenture Trustee, for the benefit of the Participants that
provided funds which
are invested by the Indenture Trustee pursuant to this Section 2.7
for any
losses incurred on such investments (except with respect to any
Participant, if
the Closing failed to occur as a result of default by such
Participant, or with
respect to the Owner Participant, as a result of default of the
Owner Trustee
(acting pursuant to instructions from the Owner Participant)). All
income and
profits on the investment of such funds shall be for the respective
accounts of
such Participants, and the Indenture Trustee shall not be liable
for failure to
invest such funds or for any losses incurred on such investments,
except for its
willful misconduct or gross negligence.
12
<PAGE>
(f) Notwithstanding the provisions of Section 2.7(a), the
Participants shall not be under any obligation to make their
respective
commitments available beyond 2:00 p.m. (Chicago time) on December
31, 2003.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
Section 3.1 Representations and Warranties of the Trust
Company.
Trust Company, in its individual capacity (except with respect to
clauses (c),
(k) and (m) (to the extent applicable to Trust Company in its
capacity as Owner
Trustee) below) and as Owner Trustee with respect to clauses (c),
(f) and (k)
(to the extent applicable to Trust Company in its capacity as Owner
Trustee)
below, represents and warrants to each of the Owner Participant,
the Indenture
Trustee, the Pass Through Trustee, TILC, TRLTII, Trinity, the
Lessee and the
Policy Provider, notwithstanding the provisions of Section 10.13 or
any similar
provision in any other Operative Agreement, that, as of the date
hereof and as
of the Closing Date:
(a) Trust Company (i) is a national banking association duly
organized, validly existing and in good standing under the laws of
the United
States of America, (ii) has the full corporate power, authority and
legal right
under the laws of the State of Connecticut pertaining to its
banking, trust and
fiduciary powers to carry on its business as now conducted and
execute, deliver
and perform its obligations hereunder and under the Trust
Agreement, (iii)
assuming the due authorization, execution and delivery of the Trust
Agreement by
the Owner Participant, the Trust is a Connecticut statutory trust
duly organized
and validly existing under the laws of the State of Connecticut and
(iv)
assuming due authorization, execution and delivery of the Trust
Agreement by the
Owner Participant, has full power and authority, as Owner Trustee
and/or, to the
extent expressly provided herein or therein, in its individual
capacity, to
execute, deliver and perform its obligations under each of the
Owner Trustee
Agreements;
(b) (i) Trust Company has duly authorized, executed and
delivered
the Trust Agreement, (ii) assuming the due authorization, execution
and delivery
of the Trust Agreement by the Owner Participant, Trust Company in
its trustee
capacity and, to the extent expressly provided therein, in its
individual
capacity, has, or on or prior to the Closing Date will have, duly
authorized,
executed and delivered each of the other Owner Trustee Agreements
and, as of the
Closing Date, the Equipment Note, the Lease Supplement and the
Indenture
Supplement to be delivered on the Closing Date and (iii) the Trust
Agreement
constitutes a legal, valid and binding obligation of Trust Company
enforceable
against it in accordance with the terms thereof except as
enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws
affecting the rights of creditors generally and by general
principles of equity;
(c) assuming the due authorization, execution and delivery of
the
Trust Agreement by the Owner Participant, each of the Owner Trustee
Agreements
(other than the Trust Agreement) to which it is a party
constitutes, or when
entered into will constitute, a legal, valid and binding obligation
of the Owner
Trustee, enforceable against it in accordance with the terms
thereof, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization,
moratorium or other similar laws affecting the rights of creditors
generally and
by general principles of equity;
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<PAGE>
(d) neither the execution and delivery by Trust Company or
Owner
Trustee, as the case may be, of the Owner Trustee Agreements or the
Equipment
Note to be delivered on the Closing Date, nor the consummation by
Trust Company
or Owner Trustee, as the case may be, of any of the transactions
contemplated
hereby or thereby, nor the compliance by Trust Company or Owner
Trustee, as the
case may be, with any of the terms and provisions hereof and
thereof, (i)
requires or will require any approval of its stockholders, or
approval or
consent of any trustees or holders of any indebtedness or
obligations of it in
its individual capacity, or (ii) violates or will violate its
articles of
association or bylaws, or contravenes or will contravene any
provision of, or
constitutes or will constitute a default under, or results or will
result in any
breach of, any indenture, mortgage, chattel mortgage, deed of
trust, conditional
sale contract, bank loan or credit agreement, license or other
agreement or
instrument to which Trust Company is a party or by which it or any
of its
properties may be bound or affected, or contravenes or will
contravene any law,
governmental rule or regulation of the United States of America or
the State of
Connecticut governing the banking, trust or fiduciary powers of
Trust Company,
or any judgment or order applicable to or binding on it, or results
in or will
result in the creation or imposition of any Lien upon the Trust
Estate (other
than a Permitted Lien of the type described in clause (v) of the
definition
thereof);
(e) there are no Taxes payable by Trust Company or the Owner
Trustee, imposed by the State of Connecticut or any political
subdivision
thereof in connection with the execution and delivery by Trust
Company of the
Trust Agreement, and, as Trust Company or Owner Trustee, as the
case may be, of
this Agreement, the other Owner Trustee Agreements (other than the
Trust
Agreement) or the Equipment Note to be delivered on the Closing
Date solely
because Trust Company is a national banking association with an
office for trust
administration in Connecticut and performs certain of its duties as
Owner
Trustee in the State of Connecticut; and there are no Taxes payable
by Trust
Company or the Owner Trustee, as the case may be, imposed by the
State of
Connecticut or any political subdivision thereof in connection with
the
acquisition of its interest in the Equipment (other than franchise
or other
taxes based on or measured by any fees or compensation received by
Trust Company
or the Owner Trustee for services rendered in connection with the
transactions
contemplated hereby) solely because Trust Company is a national
banking
association with an office for trust administration in Connecticut
and performs
certain of its duties as Owner Trustee in the State of
Connecticut;
(f) there are no pending or, to its knowledge, threatened actions
or
proceedings against Trust Company or the Owner Trustee, before any
court or
administrative agency which individually or in the aggregate, if
determined
adversely to it, would be reasonably expected to materially
adversely affect the
ability of Trust Company or the Owner Trustee, as the case may be,
to perform
its obligations under the Trust Agreement, the other Owner Trustee
Agreements or
the Equipment Note to be delivered on the Closing Date;
(g) the "location" of the Trust Company for purposes of Article 9
of
the Uniform Commercial Code is in Delaware, and Trust Company
agrees to give the
Owner Participant, the Indenture Trustee and the Lessee written
notice within 30
days following any relocation of said chief executive office or
said place from
its present location;
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<PAGE>
(h)
no consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in
respect of,
any Connecticut state or local governmental authority or agency or
any United
States federal governmental authority or agency regulating the
banking or trust
powers of Trust Company is required for the execution and delivery
of, or the
carrying out by, Trust Company or the Owner Trustee, as the case
may be, of any
of the transactions contemplated hereby or by the Trust Agreement
or of any of
the transactions contemplated by any of the other Owner Trustee
Agreements,
other than any such consent, approval, order, authorization,
registration,
notice or action as has been duly obtained, given or taken;
(i) on the Closing Date, the Trust's right, title and interest
in
and to the Equipment delivered on the Closing Date shall be free
and clear of
any Lessor's Lien attributable to Trust Company;
(j) proceeds received by the Owner Trustee from the Owner
Participant pursuant to the Trust Agreement will be administered by
it in
accordance with Article III of the Trust Agreement;
(k) the Trust shall receive from the Lessee such title as was
conveyed to it by the Lessee, subject to the rights of the Trust
and the Lessee
under the Lease and the Lien created pursuant to the Indenture and
the Indenture
Supplement in respect of the Equipment delivered on the Closing
Date, and there
will be no Lessor's Liens attributable to the Trust on the
Equipment or any
interest therein or on the Trust Estate;
(l) to its knowledge, no Indenture Default (not attributable to
a
Lease Default) has occurred and is continuing;
(m) the Owner Trustee is not engaged in the business of
extending
credit for the purposes of purchasing or carrying margin stock, and
no proceeds
of the Equipment Note or the Owner Participant's Commitment as
contemplated by
this Agreement and the other Operative Agreements will be used by
the Owner
Trustee for a purpose which violates, or would be inconsistent
with, Section 7
of the Securities Exchange Act of 1934, as amended, or Regulations
T, U and X of
the Federal Reserve System. Terms for which meanings are provided
in Regulations
T, U and X of the Federal Reserve System or any regulations
substituted
therefor, as from time to time in effect, are used in this Section
3.1 (m) with
such meanings; and
(n) the Trust is not an "investment company" or an "affiliated
person" of an "investment company" within the meaning of the
Investment Company
Act of 1940, as amended.
Section
3.2 Representations and Warranties of the Lessee. The Lessee
represents and warrants to the Trust, the Owner Trustee, the
Indenture Trustee,
the Participants, and the Policy Provider as of the date hereof and
as of the
Closing Date:
(a) as to organization, powers and partnership organizational
documents:
(i) the Lessee is a limited partnership duly organized,
validly existing, and in good standing under the laws of the State
of Texas, is
duly licensed or qualified and in good standing in each
jurisdiction in which
the failure to so qualify would reasonably be
15
<PAGE>
expected to have a material adverse effect on its ability to carry
on its
business as now conducted and as contemplated by the Operative
Agreements to be
conducted or to enter into and perform its obligations under the
Lessee
Agreements, each Partnership Document to which the Lessee is or
will be a party
and each Pass Through Document to which the Lessee is or will be a
party, is a
special purpose limited partnership organized to enter into the
transactions
contemplated by this Agreement, the other Operative Agreements to
which it is a
party and the Pass Through Documents to which it is a party, has
the limited
partnership power and authority to acquire from TRLTII and sell to
the Trust the
Equipment described on Schedule 1-A hereto, to acquire from TRLTII
and pledge to
the Collateral Agent the Pledged Equipment, to acquire from TRLTII
and sell to
the Trust the Existing Equipment Subleases and to acquire from
TRLTII and pledge
to the Collateral Agent the Existing Pledged Equipment Leases, in
each case as
contemplated by this Agreement, and to carry on its business as now
conducted
and as contemplated by the Operative Agreements to be conducted,
has the
requisite limited partnership power and authority to execute,
deliver and
perform its obligations under the Lessee Agreements, each
Partnership Document
to which the Lessee is or will be a party and each Pass Through
Document to
which the Lessee is or will be a party, and has conducted no
business or
operations prior to the date hereof (other than those associated
with its
organization and capitalization or as contemplated by the Operative
Agreements),
(ii) the General Partner is a limited liability company duly
formed, validly existing and in good standing under the laws of the
State of
Delaware and has the power and authority to execute, deliver and
perform its
obligations under the Partnership Agreement and each other
organizational
document of the Partnership to which the General Partner is a
party,
(iii) the Limited Partner is a limited liability company duly
formed, validly existing and in good standing under the laws of the
State of
Delaware and has the power and authority to execute, deliver and
perform its
obligations under the Partnership Agreement and each other
organizational
document of the Partnership to which the Limited Partner is a
party,
(iv) the General Partner and the Limited Partner are the only
partners of the Partnership and TILC is the sole member of the
General Partner
and the Limited Partner;
(v) the execution, delivery and performance by each Partner of
the Partnership Agreement and each other organizational document of
the
Partnership to which such Partner is a party (A) have been duly
authorized by
all requisite limited liability company or member action of such
Partner and (B)
did not and do not (x) violate (i) any provision of law, statute,
rule or
regulation, or of the certificate of formation or limited liability
company
agreement or other constitutive documents of such Partner, (ii) any
order of any
governmental authority or (iii) any provision of any indenture,
agreement or
other instrument to which such Partner is a party or by which it or
any of its
property is or may be bound, (y) conflict with, result in a breach
of or
constitute (alone or with notice, or lapse of time or both) a
default under any
such indenture, agreement or other instrument or (z) result in the
creation or
imposition of any Lien upon any property or assets of such
Partner,
16
<PAGE>
(vi) each of the Partnership Agreement and each other
organizational document of the Partnership has been duly executed
and delivered
by each party thereto and constitutes a legal, valid and binding
obligation of
each such party enforceable against such party in accordance with
its terms,
except as enforceability may be limited by bankruptcy,
insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors
generally and by general principles of equity;
(b) each of the Lessee Agreements and each Pass Through Document
to
which the Lessee is a party have been duly authorized by all
necessary limited
partnership action of the Lessee and, if required, limited
liability company
action of each Partner, this Agreement has been duly executed and
delivered (and
in the case of the other Lessee Agreements, such other Lessee
Agreements will on
the Closing Date have been duly executed and delivered) by the
General Partner
in its capacity as the general partner of the Lessee, and
constitutes (and in
the case of the other Lessee Agreements, such other Lessee
Agreements will on
the Closing Date constitute) the legal, valid and binding
obligations of the
Lessee (assuming the due authorization, execution and delivery by
each other
party thereto), enforceable against the Lessee in accordance with
their
respective terms except as enforceability may be limited by
bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
the rights of
creditors generally and by general principles of equity;
(c) the execution, delivery and performance by the Lessee of
each
Lessee Agreement and each Pass Through Document to which Lessee is
a party and
compliance by the Lessee with all of the provisions thereof do not
and will not
contravene any law or regulation, or any order, judgment, decree,
determination
or award of any court or governmental authority or agency
applicable to or
binding on the Lessee or any of its properties, or contravene the
provisions of,
or constitute a default by the Lessee under, or result in the
creation of any
Lien (except for Permitted Liens of the type described in clause
(i), (ii) or
(v) of the definition thereof) upon the property of the Lessee
under its
organizational documents or any indenture, mortgage, contract or
other agreement
or instrument to which the Lessee is a party or by which the Lessee
or any of
its properties may be bound or affected;
(d) there are no proceedings pending or, to the knowledge of
the
Lessee, threatened against the Lessee or any Partner in any court
or before any
governmental authority or arbitration board or tribunal and neither
the Lessee
nor any Partner is subject to any order of any court or
governmental authority
or arbitration board or tribunal;
(e) the unaudited balance sheet of the Lessee as at the Closing
Date
fairly presents, in conformity with generally accepted accounting
principles
applied on a pro forma basis, the pro forma financial position of
the Lessee as
of such date;
(f) no
consent, approval or authorization of, or filing,
registration or qualification with, or the giving of notice to, any
trustee or
any holder of indebtedness of the Lessee or any governmental
authority on the
part of the Lessee is required in the United States, Canada or
Mexico (subject
to the proviso set forth below) in connection with the execution
and delivery by
the Lessee of the Lessee Agreements or the Pass Through Documents
to which the
Lessee is a party or in order for the Lessee to perform its
obligations
thereunder in accordance with the terms thereof, other than: (i)
notices
required to be filed with the STB and the Registrar
17
<PAGE>
General of Canada as described in Section 3.2(g), which notices
shall have been
filed on the Closing Date, (ii) as may be required under existing
laws,
ordinances, governmental rules and regulations to be obtained,
given,
accomplished or renewed at any time after the Closing Date in
connection with
the operation and maintenance of the Equipment, the Pledged
Equipment, the
Subleases and the Pledged Equipment Leases in accordance with the
Operative
Agreements that are routine in nature and are not normally applied
for prior to
the time they are required, and which the Lessee has no reason to
believe will
not be timely obtained, (iii) as may be required under the
Operative Agreements
in connection with any refinancing of the Equipment Notes, (iv) as
may be
required under the Operative Agreements in consequence of any
transfer of the
Beneficial Interest or any transfer of ownership of the Equipment
or the Pledged
Equipment and (v) filing and recording to perfect the Liens under
the Indenture
and the Collateral Agency Agreement as required thereunder;
provided, that the
parties hereto agree that Lessee shall not be required to make any
such filings
or recordings in Mexico;
(g) the Lease, the Lease Supplement, the Indenture and the
Indenture
Supplement (each in respect of the Units delivered on the Closing
Date), the
Collateral Agency Agreement (or a memorandum with respect to any or
all of such
documents), the TRLTII Bill of Sale, the Bill of Sale, the Pledged
Equipment
Bill of Sale, the TRLTII Pledged Equipment Assignment, the TRLTII
Assignment and
the Assignment will on or before the Closing Date be duly filed
with the STB
pursuant to 49 U.S.C. Section 11301 and deposited with the
Registrar General of
Canada pursuant to Section 105 of the Canada Transportation Act,
and appropriate
Personal Property Security Act filings will be filed on or before
the Closing
Date in the provinces of Canada where any Sublessee which is
organized under the
laws of Canada or any province thereof has its chief executive
office, and such
filing with the STB pursuant to 49 U.S.C. Section 11301, such deposit with the
Registrar General of Canada and such other filings will under the
laws of the
United States and Canada perfect the Owner Trust's, the Indenture
Trustee's and
the Collateral Agent's rights in such Operative Agreements, the
Units described
on Schedule 1-A hereto, the Pledged Units, the Subleases and the
Pledged
Equipment Leases and no other filing, recording or deposit with, or
giving of
notice to any other U.S. federal, state or local government or
Canadian national
or provincial government or agency thereof, or any other action, is
necessary in
order to protect the rights of the Owner Trust, the Indenture
Trustee and the
Collateral Agent in such Operative Agreements or in such Units,
Pledged Units,
Subleases and Pledged Equipment Leases in the United States, any
state thereof
or the District of Columbia or Canada or any province thereof;
(h) the Equipment described on Schedule 1-A hereto is covered by
the
insurance required by Section 12 of the Lease and the Pledged
Equipment is
covered by the insurance required by Section 6.4 of the Collateral
Agency
Agreement, and all premiums due prior to the Closing Date in
respect of such
insurance shall have been paid in full and such insurance is in
full force and
effect;
(i) no Lease Default or Manager Default has occurred and is
continuing and, to the knowledge of the Lessee, no Event of Loss,
Pledged Unit
Event of Loss or event that, with the giving of notice, the passage
of time or
both, would constitute an Event of Loss or a Pledged Unit Event of
Loss, has
occurred;
18
<PAGE>
(j) none of the Lessee, any Partner or the Pass Through Trustee
is
an "investment company" or an "affiliated person" of an "investment
company"
within the meaning of the Investment Company Act of 1940, as
amended;
(k) the acquisition and holding by the Owner Participant of the
Beneficial Interest and the consummation of the transactions
contemplated under
this Agreement and each other Operative Agreement and Pass Through
Document will
not constitute or result in a prohibited transaction within the
meaning of
Section 4975(c) of the Code or Section 406 of ERISA and will not
involve any
transaction in connection with which a tax or a penalty could be
imposed
pursuant to Section 502(i) or ERISA or Section 4975 of the Code.
The
representation made by the Lessee in the preceding clause is made
in reliance
upon and subject to the accuracy of the representation of the Owner
Participant
in Section 3.5(h) and the accuracy of the representation of the
Initial
Purchasers set forth in Section 4(e) of the Certificate Purchase
Agreement;
(l) on the Closing Date, (i) the Lessee has, and shall pursuant
to
the Bill of Sale relating to the Equipment described on Schedule
1-A hereto
convey to the Trust, all legal and beneficial title to such
Equipment free and
clear of all Liens except as set forth on Schedule 9 (other than
Permitted Liens
of the type described in clauses (ii) (with respect to the Existing
Equipment
Subleases), (iii), (iv) and (v) of the definition thereof, and such
conveyance
will not be void or voidable under any applicable law; (ii) TRLTII
has, and
shall pursuant to the Pledged Equipment Bill of Sale relating to
the Pledged
Equipment convey to the Partnership, all legal and beneficial title
to such
Pledged Equipment free and clear of all Liens except as set forth
on Schedule 9
(other than Permitted Liens of the type described in clauses (ii)
(with respect
to Existing Pledged Equipment Leases), (iii), (iv) and (v) of the
definition
thereof), and such conveyance will not be void or voidable under
any applicable
law; and (iii) the Lessee has, and the Assignment to be delivered
on the Closing
Date shall assign to the Trust, all legal and beneficial title to
the Existing
Equipment Subleases and the Lessee has all legal and beneficial
title to the
Existing Pledged Equipment Leases, free and clear of all Liens
except as set
forth on Schedule 9 (other than in each case Permitted Liens of the
type
described in clauses (ii), (iii), (iv) and (v) of the definition
thereof), and
the Assignment will not be void or voidable under any applicable
law;
(m) the written information provided by the Lessee or on behalf
of
the Lessee in the offering circular dated October 30, 2003 (the
"Offering
Circular") does not contain any untrue statement of a material fact
and does not
omit a material fact necessary to make the statements contained
therein, in
light of the circumstances under which they were made, not
misleading; the
assumptions and related financial information relating to the
proposed business
and operations of the Lessee and the Equipment and Pledged
Equipment which are
contained in the Offering Circular have been prepared in good faith
based upon
information that the Lessee deems fair and reasonable, and there
are no
statements or conclusions therein which are based on or include
information
known to the Lessee to be misleading in any material respect or
which fail to
take into account material information known to the Lessee
regarding the matters
stated therein; certain information contained in the Offering
Circular (e.g.
statistical information relating to renewal and remarketing of
railcars,
potential increases in absolute or nominal railcar lease rates,
anticipated
utilization, and maintenance costs) is based on the historical
experience of
TILC; and subject to the foregoing, there can be no assurance that
past
experience will be
19
<PAGE>
indicative of future performance with respect to these or other
operating and
marketing factors set forth in the Offering Circular;
(n) the Lessee and the Partners are not engaged in the business
of
extending credit for the purposes of purchasing or carrying margin
stock, and no
proceeds of the Equipment Note or the Owner Participant's
Commitment as
contemplated by this Agreement and the other Operative Agreements
will be used
by the Lessee or any Partner for a purpose which violates, or would
be
inconsistent with, Section 7 of the Securities Exchange Act of
1934, as amended,
or Regulations T, U and X of the Federal Reserve System; terms for
which
meanings are provided in Regulations T, U and X of the Federal
Reserve System or
any regulations substituted therefor, as from time to time in
effect, are used
in this Section 3.2(n) with such meanings;
(o) the Lessee is not in violation of any term of any of its
organizational documents or in violation or breach of or in default
under any
other agreement, contract or instrument to which it is a party or
by which it or
any of its property may be bound;
(p) the Lessee is in compliance with all laws, ordinances,
governmental rules, regulations, orders, judgments, decrees,
determinations and
awards to which it is subject and the Lessee has obtained all
required licenses,
permits, franchises and other governmental authorizations material
to the
conduct of its business;
(q) on the Closing Date, all sales, use or transfer taxes, if
any,
due and payable upon the purchase of the Equipment described on
Schedule 1-A
hereto by the Lessee from TRLTII and by the Trust from the Lessee
and upon the
lease thereof by the Trust to the Lessee and, if applicable, upon
the assignment
of the Existing Equipment Subleases from TRLTII to the Lessee and
by the Lessee
to the Trust and upon the purchase of the Pledged Equipment by the
Lessee from
TRLTII and, if applicable, upon the assignment of the Existing
Pledged Equipment
Leases from TRLTII to the Lessee will have been paid or such
transactions will
then be exempt from any such taxes, and the Lessee will cause any
required forms
or reports in connection with such taxes to be filed in accordance
with
applicable laws and regulations;
(r) no broker's or finder's or placement fee or commission will
be
payable with respect to the transactions contemplated by the
Operative
Agreements as a result of any action by the Lessee, except for the
fees of the
Arrangers, which shall be included in Transaction Costs as provided
in this
Agreement, and the Lessee agrees that it will hold the
Participants, the Policy
Provider, the Indenture Trustee, the Pass Through Trustee, the
Trust and the
Owner Trustee harmless from any claim, demand or liability for
broker's or
finder's or placement fees or commission alleged to have been
incurred as a
result of any action by the Lessee in connection with this
transaction;
(s) (i) each Unit delivered on the Closing Date, taken as a
whole,
and each major component thereof complies in all material respects
with all
applicable laws and regulations, all requirements of the
manufacturer for
maintaining in full force and effect any applicable warranties and
the
requirements, if any, of any applicable insurance policies,
conforms with the
specifications for such Unit contained in the Appraisal referred to
in Section
4.3(a) hereof (to the extent a copy of such Appraisal or a relevant
excerpt
therefrom has been delivered to the Lessee) and is substantially
complete such
that it is ready and available to
20
<PAGE>
operate in commercial service and otherwise perform the function
for which it
was designed; and the railcar identification marks shown on
Schedule 1-A are the
marks presently used on the Units of Equipment set forth on
Schedule 1-A and
(ii) each Pledged Unit, taken as a whole, and each major component
thereof,
complies in all material respects with all applicable laws and
regulations, all
requirements of the manufacturer for maintaining in full force and
effect any
applicable warranties, and the requirements, if any, of any
applicable insurance
policies, conforms with the specifications for such Pledged Unit
contained in
the Appraisal referred to in Section 4.3(a) hereof (to the extent a
copy of such
Appraisal or a relevant excerpt therefrom has been delivered to the
Lessee) and
is substantially complete such that it is ready and available to
operate in
commercial service and otherwise perform the function for which it
was designed;
and the railcar identification marks shown on Schedule 1-B are the
marks
presently used on the Pledged Units;
(t) neither the Lessee nor any Partner is subject to regulation as
a
"holding company," an "affiliate" of a "holding company," or a
"subsidiary
company" of a "holding company," within the meaning of the Public
Utility
Holding Company Act of 1935, as amended;
(u) all of the Units delivered on the Closing Date are subject
to
sublease by Sublessees under the Existing Equipment Subleases and
all of the
Pledged Units delivered on the Closing Date are subject to lease by
Pledged
Equipment Lessees under the Existing Pledged Equipment Leases, and
each such
Sublease and Pledged Equipment Lease contains rental and other
terms which are
no different, taken as a whole, from those for similar railcars in
the TILC
Fleet;
(v) each item or Unit of Equipment described on Schedule 1-A
constitutes Eligible Equipment and each item or Unit of Pledged
Equipment
described on Schedule 1-B constitutes Eligible Pledged
Equipment;
(w) (i) each of the Subleases and each of the Pledged Equipment
Leases is freely assignable from TRLTII to the Lessee, from the
Lessee to the
Owner Trust and from the Owner Trust to any other Person
(including, without
limitation, any transferee in connection with the Indenture
Trustee's or Owner
Trustee's exercise of rights or remedies under the Lease or the
Collateral
Agency Agreement, as applicable) or, if any Sublease or Pledged
Equipment Lease
is not freely assignable, then consents to such assignments that
are
satisfactory to each of the Participants and the Policy Provider
have been
obtained prior to the Closing Date, (ii) no assignment described in
this Section
3.2 (w)(x) is void or voidable or (y) will result in a claim for
damages or
reduction in rental or other payments, in each case pursuant to the
terms and
conditions of any such Sublease or Pledged Equipment Lease and
(iii) no consent,
approval or filing is required under the Subleases in connection
with the
execution and delivery of the Operative Agreements;
(x) [Reserved].
(y) (i) each Unit and each Pledged Unit listed on Schedule 7-A
attached hereto has successfully completed the bolster
repair/replacement
program prior to the Closing Date; (ii) each Unit and each Pledged
Unit listed
on Schedule 7-B attached hereto is required to participate in the
bolster
repair/replacement program after the Closing Date; (iii) the Units
and
21
<PAGE>
Pledged Units listed on Schedules 7-A and 7-B accurately and
completely list all
of the Units and Pledged Units required to participate in the
bolster
repair/replacement program; (iv) the cash reserve of $252,000
established (and
fully funded on the Closing Date) by TILC is adequate to cover all
costs under
the bolster repair/replacement program; (v) after due inspection,
no condition
exists with respect to any Unit or Pledged Unit that is reasonably
likely to
give rise to a defect (other than such defects addressed under the
bolster
repair/replacement program);
(z) (i) none of the Units or the Pledged Units are subject to a
purchase option under the terms of the applicable Sublease or
Pledged Equipment
Lease except for the Units and Pledged Units listed on Schedule 8-A
attached
hereto; (ii) except as set forth on Schedule 8-B attached hereto,
each such
purchase option is for fair market value (at the time of such
purchase);
(aa) after giving effect to the transfers contemplated under
the
Operative Agreements and the Partnership Documents, (i) the
Subleases and
Pledged Equipment Leases in effect on the Closing Date and each of
the riders or
schedules with respect thereto are not subject to and do not cover
railcars
financed in, any financing or securitization transaction other than
the
transactions contemplated by the Operative Agreements and the
Partnership
Documents, (ii) except as set forth on Schedule 10 attached hereto,
the
Subleases and Pledged Equipment Leases in effect on the Closing
Date conform in
all respects with the terms and conditions described in the
definition of
Permitted Sublease, and (iii) except as set forth on Schedule 10
attached
hereto, none of the Subleases or Pledged Equipment Leases are in
default (by
reason of the lessee or lessor thereunder);
(bb) assuming the accuracy of the representations and warranties
of
the Initial Purchaser contained in the Certificate Purchase
Agreement and its
compliance with the agreements set forth therein, it is not
necessary, in
connection with the issuance and sale of the Pass Through
Certificates to the
Initial Purchaser and the offer, resale and delivery of the Pass
Through
Certificates by the Initial Purchaser in the manner contemplated by
the
Certificate Purchase Agreement and the Offering Circular (as
defined in the
Certificate Purchase Agreement), to register the Pass Through
Certificates under
the Securities Act or to qualify the Indentures under the Trust
Indenture Act;
(cc) the Lessee is solvent and will not be rendered insolvent by
the
transactions contemplated by the Operative Agreements and, after
giving effect
to such transactions, the Lessee will not be left with an
unreasonably small
amount of capital with which to engage in its business, and the
Lessee does not
intend to incur, nor believes that it has incurred, debts beyond
its ability to
pay as they mature; and
(dd) all written information provided by the Lessee or any
Affiliate
of the Lessee to the Appraiser with respect to the Units, the
Pledged Units, the
Subleases and the Pledged Equipment Leases (as described or listed
on Schedules
1-A, 1-B, 1-C, and 1-D, respectively) is true to correct in all
material
respects. All written information provided by the Lessee or any
Affiliate of
Lessee to Deloitte & Touche LLP with respect to the Subleases
and the Pledged
Equipment Leases (as described or listed on Schedules 1-C and 1-D,
respectively)
is true and correct in all material respects and accurately
reflects the terms
of the Subleases and the Pledged Equipment Leases. To the extent
the written
information referred to in this clause (dd) was provided to the
Appraiser,
Deloitte & Touche LLP and the Arranger, in each case for
their
22
<PAGE>
use in connection with their services on the date hereof rendered
as
contemplated hereby, such entities had been provided with the same
written
information (or relevant portions thereof).
Section
3.3 Representations and Warranties of the Indenture Trustee.
The
Indenture Trustee represents and warrants to the Owner Participant,
the Trust,
the Owner Trustee, the Pass Through Trustee, the Policy Provider,
TILC, TRLTII,
Trinity and the Lessee that, as of the date hereof and as of the
Closing Date:
(a) the Indenture Trustee is a Delaware banking corporation
duly
incorporated, validly existing and in good standing under the laws
of the State
of Delaware and has the full corporate power, authority and legal
right under
the laws of the State of Delaware pertaining to its banking, trust
and fiduciary
powers to execute, deliver and perform its obligations under each
of the
Indenture Trustee Agreements;
(b) the execution, delivery and performance by the Indenture
Trustee
of each of the Indenture Trustee Agreements have been duly
authorized by the
Indenture Trustee and will not violate any applicable federal or
Delaware law
governing its banking or trust powers or its charter documents or
bylaws or the
provisions of any indenture, mortgage, contract or other agreement
to which it
is a party or by which it or any of its properties may be bound or
affected;
(c) this Agreement has been duly executed and delivered and
constitutes, and each of the other Indenture Trustee Agreements,
when executed
and delivered, will constitute (assuming the due authorization,
execution and
delivery by each other party thereto) the legal, valid and binding
obligation of
the Indenture Trustee, enforceable against the Indenture Trustee in
accordance
with its terms except as enforceability may be limited by
bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
the rights of
creditors generally and by general principles of equity;
(d) there are no proceedings pending or, to the knowledge of
the
Indenture Trustee, threatened, and to the knowledge of the
Indenture Trustee
there is no existing basis for any such proceedings, against or
affecting the
Indenture Trustee in or before any court or before any governmental
authority or
arbitration board or tribunal which, individually or in the
aggregate, if
adversely determined, might impair the ability of the Indenture
Trustee to
perform its obligations under the Indenture Trustee Agreements;
(e) no authorization or approval or other action by, and no
notice
to or filing with, any stockholder, trustee or holder of
indebtedness or any
federal or Delaware state governmental authority or regulatory body
governing
the Indenture Trustee in its trust capacity, is required for the
due execution,
delivery and performance by the Indenture Trustee of the Indenture
Trustee
Agreements, except as have been previously obtained, given or
taken;
(f) the Indenture Trustee is not in default under any of the
Indenture Trustee Agreements; and
(g) neither the Indenture Trustee, nor any Person authorized to
act
on behalf of the Indenture Trustee, has directly or indirectly
offered any
interest in the Trust Estate or the Equipment Note or any security
similar to
either thereof related to this transaction for sale to, or
solicited offers to
buy any of the same from, or otherwise approached or negotiated
with respect
23
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to any of the same with, any Person other than the Pass Through
Trustee and the
Initial Purchasers.
Section
3.4 Representations, Warranties and Covenants Regarding
Beneficial
Interest, Equipment Note and Pass Through Certificates.
(a) Owner Trustee and Trust Company. Each of the Owner Trustee
and
the Trust Company represents and warrants to the Lessee, the
Indenture Trustee,
the Pass Through Trustee, the Policy Provider, TILC, TRLTII,
Trinity and the
Owner Participant that, as of the date hereof and as of the Closing
Date, except
as expressly provided in the Operative Agreements, neither the
Owner Trustee,
nor the Trust Company nor any Person authorized or employed by the
Owner Trustee
or the Trust Company as agent or otherwise has directly or
indirectly offered or
sold any interest in the Beneficial Interest, the Equipment Note,
the Pass
Through Certificates or any part thereof, or in any similar
security or lease,
the offering of which for the purposes of the Securities Act would
be deemed to
be part of the same offering as the offering of the Beneficial
Interest, the
Equipment Note, the Pass Through Certificates or any part thereof
or solicited
any offer to acquire any of the same in violation of the
registration
requirements of Section 5 of the Securities Act.
(b) Lessee. The Lessee represents and warrants to the Trust,
the
Owner Trustee, the Indenture Trustee, the Policy Provider, the
Owner Participant
and the Pass Through Trustee that, as of the date hereof and as of
the Closing
Date, neither the Lessee nor any Person authorized or employed by
the Lessee as
agent or otherwise has directly or indirectly offered or sold any
interest in
the Beneficial Interest, the Equipment Note, the Pass Through
Certificates or
any part thereof, the offering of which for the purposes of the
Securities Act
would be deemed to be part of the same offering as the offering of
the
Beneficial Interest, the Equipment Note, the Pass Through
Certificates or any
part thereof or solicited any offer to acquire any of the same in
violation of
the registration requirements of Section 5 of the Securities
Act.
(c) TRLTII. TRLTII represents and warrants to the Trust, the
Owner
Trustee, the Indenture Trustee, the Policy Provider, the Owner
Participant and
the Pass Through Trustee that, as of the date hereof and as of the
Closing Date,
neither TRLTII nor any Person authorized or employed by TRLTII as
agent or
otherwise has directly or indirectly offered or sold any interest
in the
Beneficial Interest, the Equipment Note, the Pass Through
Certificates or any
part thereof, the offering of which for the purposes of the
Securities Act would
be deemed to be part of the same offering as the offering of the
Beneficial
Interest, the Equipment Note, the Pass Through Certificates or any
part thereof
or solicited any offer to acquire any of the same in violation of
the
registration requirements of Section 5 of the Securities Act.
(d) TILC. TILC represents and warrants to the Trust, the Owner
Trustee, the Indenture Trustee, the Policy Provider, the Owner
Participant and
the Pass Through Trustee that, as of the date hereof and as of the
Closing Date,
neither TILC nor any Person authorized or employed by TILC as agent
or otherwise
has directly or indirectly offered or sold any interest in the
Beneficial
Interest, the Equipment Note, the Pass Through Certificates or any
part thereof,
the offering of which for the purposes of the Securities Act would
be deemed to
be part of the same offering as the offering of the Beneficial
Interest, the
Equipment Note, the Pass Through
24
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Certificates or any part thereof or solicited any offer to acquire
any of the
same in violation of the registration requirements of Section 5 of
the
Securities Act.
(e) Owner Participant. The Owner Participant represents and
warrants
to the Trust, the Owner Trustee, the Indenture Trustee, the Policy
Provider,
TILC, TRLTII, Trinity, the Lessee and the Pass Through Trustee
that, as of the
date hereof and as of the Closing Date, neither the Owner
Participant nor any
Person authorized or employed by the Owner Participant as agent or
otherwise has
directly or indirectly offered or sold any interest in the
Beneficial Interest,
the Equipment Note, the Pass Through Certificates or any part
thereof, or in any
similar security or lease, the offering of which for the purposes
of the
Securities Act would be deemed to be part of the same offering as
the offering
of the Beneficial Interest, the Equipment Note, the Pass Through
Certificates or
any part thereof or solicited any offer to acquire any of the same
in violation
of the registration requirements of Section 5 of the Securities
Act.
(f) Pass Through Trustee. The Pass Through Trustee represents
and
warrants to the Trust, the Owner Trustee, the Indenture Trustee,
the Policy
Provider, TILC, TRLTII, Trinity, the Lessee and the Owner
Participant that, as
of the date hereof and as of the Closing Date, neither the Pass
Through Trustee
nor any Person authorized or employed by the Pass Through Trustee
as agent or
otherwise has directly or indirectly offered or sold any interest
in the
Beneficial Interest, the Equipment Note, the Pass Through
Certificates or any
part thereof, the offering of which for the purposes of the
Securities Act would
be deemed to be part of the same offering as the offering of the
Beneficial
Interest, the Equipment Note, the Pass Through Certificates or any
part thereof
or solicited any offer to acquire any of the same in violation of
the
registration requirements of Section 5 of the Securities Act.
(g) Trinity. Trinity represents and warrants to the Trust, the
Owner
Trustee, the Indenture Trustee, the Policy Provider, TILC, TRLTII,
the Lessee
and the Owner Participant that, as of the date hereof and as of the
Closing
Date, neither Trinity nor any Person authorized or employed by
Trinity as agent
or otherwise has directly or indirectly offered or sold any
interest in the
Beneficial Interest, the Equipment Note, the Pass Through
Certificates or any
part thereof, the offering of which for the purposes of the
Securities Act would
be deemed to be part of the same offering as the offering of the
Beneficial
Interest, the Equipment Note, the Pass Through Certificates or any
part thereof
or solicited any offer to acquire any of the same in violation of
the
registration requirements of Section 5 of the Securities Act.
(h) Future Actions. Each of the Owner Trustee, the Trust
Company,
the Owner Participant, the Lessee, TILC, TRLTII, Trinity, the
Indenture Trustee
and the Pass Through Trustee agrees, as to its own actions only,
severally but
not jointly, that neither the Owner Trustee, the Trust Company, the
Owner
Participant, the Lessee, TILC, TRLTII, the Indenture Trustee nor
the Pass
Through Trustee nor anyone acting on behalf of the Owner Trustee,
the Trust
Company, the Owner Participant, the Lessee, TILC, TRLTII, the
Indenture Trustee
or the Pass Through Trustee will offer the Beneficial Interest, the
Equipment
Note, the Pass Through Certificates or any part thereof or any
similar interest
for issue or sale to any prospective purchaser, or solicit any
offer to acquire
any of the Beneficial Interest, the Equipment Note, the Pass
Through
Certificates or any part thereof so as to cause Section 5 of the
Securities Act
to apply to the issuance and sale of the Beneficial Interest, the
Equipment
Note, the Pass Through Certificates or any part thereof.
25
<PAGE>
Section
3.5 Representations and Warranties of the Owner Participant.
The
Owner Participant represents and warrants to the Trust, the Owner
Trustee, the
Indenture Trustee, the Pass Through Trustee, the Policy Provider,
TILC, TRLTII,
Trinity and the Lessee that, as of the date hereof:
(a) the Owner Participant is a California corporation duly
formed,
validly existing and in good standing under the laws of the State
of California
and has full corporate power and authority to carry on its business
as now
conducted;
(b) the Owner Participant has the requisite corporate power and
authority to execute, deliver and perform its obligations under the
Owner
Participant Agreements, and the execution, delivery and performance
by it
thereof do not and will not contravene any law or regulation, or
any order of
any court or governmental authority or agency applicable to or
binding on the
Owner Participant or any of its properties, or contravene the
provisions of, or
constitute a default under or breach of, or result in the creation
or imposition
of any Lien (other than the Lien granted to the Indenture Trustee
under and
pursuant to the Indenture) upon the Equipment, Subleases or any
other portion of
the Trust Estate under, its certificate of incorporation, bylaws or
any
indenture, mortgage, contract or other agreement or instrument to
which the
Owner Participant is a party or by which it or any of its
properties may be
bound or affected;
(c) the Owner Participant Agreements have been duly authorized
by
all necessary actions on the part of the Owner Participant, do not
require any
approval not already obtained of the partners of the Owner
Participant or any
approval or consent not already obtained of any trustee or holders
of
indebtedness or obligations of the Owner Participant, have been, or
on or before
the Closing Date will be, duly executed and delivered by the Owner
Participant
and (assuming the due authorization, execution and delivery by each
other party
thereto) constitute, or will constitute, the legal, valid and
binding
obligations of the Owner Participant, enforceable against the Owner
Participant
in accordance with their respective terms, except as enforceability
may be
limited by bankruptcy, insolvency, moratorium or other similar laws
affecting
the rights of creditors generally and by general principles of
equity;
(d) no authorization or approval or other action by, and no
notice
to or filing with, any governmental authority or regulatory body is
required for
the due execution, delivery or performance by the Owner Participant
of the Trust
Agreement, the Tax Indemnity Agreement or this Agreement;
(e) the Trust Estate is free and clear of any Lessor's Lien
attributable to the Owner Participant;
(f) there are no pending or, to the Owner Participant's
knowledge,
threatened actions or proceedings against the Owner Participant
before any court
or administrative agency that would reasonably be expected to
materially
adversely affect the Owner Participant's ability to perform its
obligations
under the Trust Agreement, the Tax Indemnity Agreement or any other
Operative
Agreement to which the Owner Participant is a party;
26
<PAGE>
(g) as of the Closing Date, the Owner Participant is purchasing
the
Beneficial Interest to be acquired by it for its own account with
no present
intention of distributing such Beneficial Interest or any part
thereof in any
manner which would violate the Securities Act, but without
prejudice, however,
to the right of the Owner Participant at all times to sell or
otherwise dispose
of all or any part of such Beneficial Interest in compliance with
the Securities
Act and any state securities or "blue sky" laws; provided, however,
that subject
to the provisions of Section 6.1, the disposition of the Beneficial
Interest
shall at all times be within the Owner Participant's control. The
Owner
Participant acknowledges that its Beneficial Interest has not been
registered
under the Securities Act, and that neither the Owner Participant,
the Owner
Trustee, Trust Company, the Lessee, TRLTII nor TILC contemplates
filing, or is
legally required to file, any such registration statement;
notwithstanding the
foregoing, the Owner Participant makes no representation that the
Beneficial
Interest is a "security" within the meaning of such term under the
Securities
Act;
(h) with respect to the source of the amount to be invested by
the
Owner Participant to acquire the Beneficial Interest and to pay any
Transaction
Costs as required under this Agreement, no part of such amount
constitutes
assets of any employee benefit plan subject to Title I of ERISA or
Section 4975
of the Code; and
(i) except for fees payable to Dexia Global Structured Finance,
LLC,
no broker's or finder's or placement fee or commission will be
payable with
respect to the transactions contemplated by the Operative
Agreements as a result
of any action by the Owner Participant, and the Owner Participant
agrees that it
will hold TILC, TRLTII, the Lessee, the Indenture Trustee, the Loan
Participant
and the Owner Trustee harmless from any claim, demand or liability
for broker's
or finder's or placement fees or commission alleged to have been
incurred as a
result of any action by the Owner Participant in connection with
this
transaction.
Section
3.6 Representations and Warranties of TILC. TILC represents and
warrants to each of the Trust, the Owner Trustee, the Indenture
Trustee, the
Policy Provider and the Participants, as of the date hereof and as
of the
Closing Date (which representations, to the extent the same relate
to the
Equipment, the Subleases, the Pledged Equipment Leases or the
assignment and
conveyance of the Equipment or Subleases to the Trust, are made by
TILC in its
capacity as "Manager" for and on behalf of TRLTII, the transferor
thereof):
(a) TILC is a corporation duly organized, validly existing, and
in
good standing under the laws of the State of Delaware, is duly
licensed or
qualified and in good standing in each jurisdiction in which the
failure to so
qualify would reasonably be expected to have a material adverse
effect on its
ability to carry on its business as now conducted or as
contemplated to be
conducted or to execute, deliver and perform its obligations under
the TILC
Agreements and the Partnership Documents to which it is or will be
a party, has
the power and authority to carry on its business as now conducted
and as
contemplated to be conducted, and has the requisite power and
authority to
execute, deliver and perform its obligations under the TILC
Agreements;
(b) the TILC Agreements have been duly authorized by all
necessary
corporate action, executed and delivered by TILC, and (assuming the
due
authorization, execution and delivery by each other party thereto)
constitute
the legal, valid and binding
27
<PAGE>
obligations of TILC, enforceable against TILC in accordance with
their
respective terms except as enforceability may be limited by
bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
the rights of
creditors generally and by general principles of equity;
(c) the execution, delivery and performance by TILC of each
TILC
Agreement and compliance by TILC with all of the provisions thereof
do not and
will not contravene or, in the case of clause (iii), constitute
(alone or with
notice, or lapse of time or both) a default under or result in any
breach of, or
result in the creation or imposition of any Lien upon any property
of TILC
pursuant to, (i) any law or regulation, or any order, judgment,
decree,
determination or award of any court or governmental authority or
agency
applicable to or binding on TILC or any of its properties, or (ii)
the
provisions of its certificate of incorporation or bylaws or (iii)
any indenture,
mortgage, contract or other agreement or instrument to which TILC
is a party or
by which TILC or any of its properties may be bound or affected
except, with
respect to clause (iii), where such contravention, default or
breach would not
reasonably be expected to materially adversely affect TILC's
ability to perform
its obligations under the TILC Agreements or any Sublease or
Pledged Equipment
Leases to which TILC is a party or materially adversely affect its
financial
condition or business;
(d) there are no proceedings pending or, to the knowledge of
TILC,
threatened against TILC in any court or before any governmental
authority or
arbitration board or tribunal that, if adversely determined, would
reasonably be
expected to materially adversely affect TILC's ability to perform
its
obligations under the TILC Agreements or Subleases or Pledged
Equipment Leases
to which TILC is a party or materially adversely affect its
financial condition
or business;
(e) TILC is not in violation of (x) any term of any charter
instrument or bylaw or (y) in violation or breach of or in default
under any
other agreement or instrument to which it is a party or by which it
or any of
its property may be bound except in the case of clause (y) where
such violation,
breach or default would not reasonably be expected to materially
adversely
affect TILC's ability to perform its obligations under the TILC
Agreements or
materially adversely affect its financial condition or business.
TILC is in
compliance with all laws, ordinances, governmental rules,
regulations, orders,
judgments, decrees, determinations and awards to which it is
subject, the
failure to comply with which would reasonably be expected to have a
material and
adverse effect on its operations or condition, financial or
otherwise, or would
impair the ability of TILC to perform its obligations under the
TILC Agreements,
and has obtained all required licenses, permits, franchises and
other
governmental authorizations material to the conduct of its
business;
(f) no consent, approval or authorization of, or filing,
registration or qualification with, or the giving of notice to, any
trustee or
any holder of indebtedness of TILC or any governmental authority on
the part of
TILC is required in the United States in connection with the
execution and
delivery by TILC of the TILC Agreements or any Sublease or Pledged
Equipment
Lease to which TILC is a party, or is required to be obtained in
order for TILC
to perform its obligations thereunder in accordance with the terms
thereof,
other than (i) as may be required under existing laws, ordinances,
governmental
rules and regulations to be obtained, given, accomplished or
renewed at any time
after the Closing Date in connection with the performance of its
obligations
under the TILC Agreements and which are routine in nature and are
not normally
applied for prior to the time they are required, and which TILC has
no reason to
28
<PAGE>
believe will not be timely obtained or (ii) as may be required
under the
Operative Agreements in consequence of any transfer of ownership of
the
Equipment or the Pledged Equipment occurring after the Closing
Date;
(g) to the best knowledge of TILC, no casualty event or other
event
that may constitute an Event of Loss under the Lease or a Pledged
Unit Event of
Loss under the Collateral Agency Agreement has occurred as of the
date of this
Agreement with respect to any Unit or Pledged Unit delivered on the
Closing
Date;
(h) (i) TRLTII has, and the TRLTII Bill of Sale to be delivered
on
the Closing Date shall convey to the Lessee, all legal and
beneficial title to
the Units which are being delivered on the Closing Date, free and
clear of all
Liens (other than Permitted Liens of the type described in clause
(ii) below
with respect to the Existing Equipment Subleases, and in clauses
(iii), (iv),
(v) and (viii) of the definition thereof), and such conveyance will
not be void
or voidable under any applicable law; (ii) TRLTII has, and the
TRLTII Assignment
to be delivered on the Closing Date shall assign to the Lessee, all
legal and
beneficial title to the Existing Equipment Subleases, free and
clear of all
Liens (other than Permitted Liens of the type described in clauses
(ii), (iii),
(iv), (v) and (viii) of the definition thereof), and such
assignment will not be
void or voidable under any applicable law; (iii) all of the Units
being
delivered on the Closing Date other than an immaterial amount shall
be subject
to sublease by the Sublessees under the Existing Equipment
Subleases on rental
and other terms which are no different, taken as a whole, from
those for similar
railcars in the rest of the TILC Fleet (iv) TRLTII shall have, and
the TILC
Pledged Equipment Bill of Sale to be delivered on the Closing Date
shall convey
to the Lessee, all legal and beneficial title to the Pledged Units
which are
being delivered on the Closing Date, free and clear of all Liens
(other than
Permitted Liens of the type described in clauses (ii), (iii), (iv)
and (v) of
the definition thereof), and such conveyance will not be void or
voidable under
any applicable law; (v) TRLTII shall have, and the TRLTII Pledged
Equipment
Assignment to be delivered on the Closing Date shall assign to the
Lessee, all
legal and beneficial title to the Existing Pledged Equipment
Leases, free and
clear of all Liens (other than Permitted Liens of the type
described in clauses
(ii), (iii), (iv) and (v) of the definition thereof), and such
assignment will
not be void or voidable under any applicable law; and (vi) all of
the Pledged
Units shall be subject to lease by the Pledged Equipment Lessees
under the
Existing Pledged Equipment Leases on rental and other terms which
are no
different, taken as a whole, from those for similar railcars in the
rest of the
TILC Fleet;
(i) (a) all sales, use or transfer taxes, if any, due and
payable
upon the sale of the Equipment and assignment of Existing Equipment
Subleases by
TRLTII to the Lessee on the Closing Date will have been paid or
such
transactions will then be exempt from any such taxes and TILC will
cause any
required forms or reports in connection with such taxes to be filed
in
accordance with applicable laws and regulations; and (b) all sales,
use or
transfer taxes, if any, due and payable upon the sale of the
Pledged Equipment
and assignment of Existing Pledged Equipment Leases by TRLTII to
the Lessee will
have been paid or such transactions will then be exempt from any
such taxes and
TRLTII will cause any required forms or reports in connection with
such taxes to
be filed in accordance with applicable laws and regulations;
(j) all Units delivered on the Closing Date and all Pledged
Units
are substantially similar in terms of objectively identifiable
characteristics
that are relevant for
29
<PAGE>
purposes of the services to be performed by TILC under the
Management Agreement
to the equipment in the TILC Fleet;
(k) in selecting the Units to be sold on the Closing Date to
the
Lessee pursuant to the TRLTII Bill of Sale and in selecting the
Pledged Units to
be sold to the Lessee pursuant to the TRLTII Pledged Equipment Bill
of Sale,
TRLTII has not discriminated against the Lessee in a negative
fashion when such
Units and Pledged Units are compared with the other equipment in
the TILC Fleet;
(l) the written information provided by TILC or TRLTII or on
behalf
of TRLTII in the Offering Circular does not contain any untrue
statement of a
material fact and does not omit a material fact necessary to make
the statements
contained therein, in light of the circumstances under which they
were made, not
misleading; the assumptions and related financial information
relating to the
proposed business and operations of TILC and the Equipment which
are contained
in the Offering Circular have been prepared in good faith based
upon information
that TILC deems fair and reasonable, and there are no statements or
conclusions
therein which are based on or include information known to TILC to
be misleading
in any material respect or which fail to take into account material
information
known to TILC regarding the matters stated therein; certain
information
contained in the Offering Circular (e.g. statistical information
relating to
renewal and remarketing of railcars, potential increases in
absolute or nominal
railcar lease rates, anticipated utilization, and maintenance
costs) is based on
the historical experience of TILC; subject to the foregoing, there
can be no
assurance that past experience will be indicative of future
performance with
respect to these or other operating and marketing factors set forth
in the
Offering Circular;
(m) Neither TILC nor TRLTII is in default under any Existing
Equipment Subleases or Existing Pledged Equipment Leases (as
applicable), and,
to the best of TILC's and TRLTII's knowledge (as applicable), there
are (i) no
defaults by any Sublessee or Pledged Equipment Lessee thereunder
existing as of
the date hereof under the Existing Equipment Subleases or Existing
Pledged
Equipment Leases, except such defaults that are not payment
defaults, except to
a de minimus extent (but giving effect to any applicable grace
periods) and are
not material, (ii) no claims or liabilities arising as a result of
the operation
or use of any Unit described on Schedule 1-A hereto prior to the
date hereof as
to which the Lessor, as owner of the Units delivered on the Closing
Date, would
be liable and (iii) no claims or liabilities arising as a result of
the
operation or use of any Pledged Unit prior to the date hereof as to
which the
Lessee, as owner of the Pledged Units, would be liable (in each
case, except for
the ongoing maintenance obligations of the "lessor" provided for
under
full-service Subleases);
(n) (i) the balance sheet of TILC as of March 31, 2003 and June
30,
2003, and the related statements of operations, stockholders'
equity and cash
flows for the periods then ended, and (ii) the balance sheet of
TILC as of
December 31, 2002 and the related statements of income and cash
flows of TILC
for the twelve month period ended on December 31, 2002, have been
prepared in
accordance with generally accepted accounting principles (except as
may be
stated in the notes thereto and except, with respect to interim
financial
statements, for yearend audit adjustments), consistently applied,
and fairly set
forth, in all material respects, the financial condition of TILC as
of such
dates and the results of their operations and cash flows for such
periods;
30
<PAGE>
(o) Neither TILC nor TRLTII is engaged in the business of
extending
credit for the purposes of purchasing or carrying margin stock, and
no proceeds
of the Equipment Note or the Owner Participant's Commitment as
contemplated by
this Agreement and the other Operative Agreements will be used by
TILC or TRLTII
for a purpose which violates, or would be inconsistent with,
Section 7 of the
Securities Exchange Act of 1934, as amended, or Regulations T, U
and X of the
Federal Reserve System; terms for which meanings are provided in
Regulations T,
U and X of the Federal Reserve System or any regulations
substituted therefor,
as from time to time in effect, are used in this Section 3.6(q)
with such
meanings;
(p) no Lease Default, Manager Default or event that, with the
giving
of notice, the passage of time or both, would constitute a Manager
Default has
occurred and is continuing;
(q) since December 31, 2002, there has not occurred a material
adverse change in the business, assets or condition (financial or
otherwise) or
results of operations of TILC and its consolidated subsidiaries,
taken as a
whole;
(r) (i) each Unit and each Pledged Unit listed on Schedule 7-A
attached hereto has successfully completed the bolster
repair/replacement
program prior to the Closing Date; (ii) each Unit and each Pledged
Unit listed
on Schedule 7-B attached hereto is required to participate in the
bolster
repair/replacement program after the Closing Date; (iii) the Units
and Pledged
Units listed on Schedules 7-A and 7-B accurately and completely
list all of the
Units and Pledged Units required to participate in the bolster
repair/replacement program; (iv) the cash reserve of $252,000
established (and
fully funded on the Closing Date) by TILC is adequate to cover all
costs under
the bolster repair/replacement program; (v) after due inspection,
no condition
exists with respect to any Unit or Pledged Unit that is reasonably
likely to
give rise to a defect (other than such defects addressed under the
bolster
repair/replacement program);
(s) (i) none of the Units or the Pledged Units are subject to a
purchase option under the terms of the applicable Sublease or
Pledged Equipment
Lease except for the Units and Pledged Units listed on Schedule 8-A
attached
hereto; (ii) except as set forth in Schedule 8-B attached hereto,
each such
purchase option is for fair market value (at the time of such
purchase);
(t) assuming the accuracy of the representations and warranties
of
the Initial Purchaser contained in the Certificate Purchase
Agreement and its
compliance with the agreements set forth therein, it is not
necessary, in
connection with the issuance and sale of the Pass Through
Certificates to the
Initial Purchaser and the offer, resale and delivery of the Pass
Through
Certificates by the Initial Purchaser in the manner contemplated by
the
Certificate Purchase Agreement and the Offering Circular (as
defined in the
Certificate Purchase Agreement), to register the Pass Through
Certificates under
the Securities Act or to qualify the Indentures under the Trust
Indenture Act;
(u) based on TILC's review of mileage/usage records with respect
to
the Affected Alberta PPSA Units (as defined in Section 6.13), the
Affected
Alberta PPSA Units when used in Canada have been used predominantly
on the rails
of Canadian National Railway Company and/or Canadian Pacific
Railway Company
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(v) all written information provided by TILC or any Affiliate
of
TILC to the Appraiser with respect to the Units, the Pledged Units,
the
Subleases and the Pledged Equipment Leases (as described or listed
on Schedules
1-A, 1-B, 1-C, and 1-D, respectively) is true to correct in all
material
respects. All written information provided by TILC or any Affiliate
of TILC to
Deloitte & Touche LLP with respect to the Subleases and the
Pledged Equipment
Leases (as described or listed on Schedules 1-C and 1-D,
respectively) is true
and correct in all material respects and accurately reflects the
terms of the
Subleases and the Pledged Equipment Leases. To the extent the
written
information referred to in this clause (v) was provided to the
Appraiser,
Deloitte & Touche LLP and the Arranger, in each case for their
use in connection
with their services on the date hereof rendered as contemplated
hereby, such
entities had been provided with the same written information (or
relevant
portions thereof).
Section 3.7 Representations and Warranties of TRLTII. TRLTII
represents
and warrants to the Indenture Trustee, the Trust, the Owner Trustee
and the
Participants, as of the date hereof:
(a) TRLTII is a statutory trust duly organized, validly
existing,
and in good standing under the laws of the State of Delaware, is
duly licensed
or qualified and in good standing in each jurisdiction in which the
failure to
so qualify would have a material adverse effect on its ability to
carry on its
business as now conducted or to execute, deliver and perform its
obligations
under the Partnership Documents to which it is or will be a party,
has the power
and authority to carry on its business as now conducted, and has
the requisite
power and authority to execute, deliver and perform its obligations
under the
TRLTII Agreements;
(b) the TRLTII Agreements have been duly authorized by all
necessary
corporate action, executed and delivered by TRLTII, and (assuming
the due
authorization, execution and delivery by each other party thereto)
constitute
the legal, valid and binding obligations of TRLTII, enforceable
against TRLTII
in accordance with their respective terms except as enforceability
may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws
affecting the rights of creditors generally and by general
principles of equity;
(c) the execution, delivery and performance by TRLTII of each
TRLTII
Agreement and compliance by TRLTII with all of the provisions
thereof do not and
will not contravene (i) any law or regulation, or any order of any
court or
governmental authority or agency applicable to or binding on TRLTII
or any of
its properties, or (ii) the provisions of, or constitute a default
by TRLTII
under, its certificate of trust or trust agreement or (iii) any
indenture,
mortgage, contract or other agreement or instrument to which TRLTII
is a party
or by which TRLTII or any of its properties may be bound or
affected;
(d) there are no proceedings pending or, to the knowledge of
TRLTII,
threatened against TRLTII in any court or before any governmental
authority or
arbitration board or tribunal;
(e) TRLTII is not in violation of any term of any (x) charter
instrument or operating agreement or (y) any other agreement or
instrument to
which it is a party or by which it may be bound except in the case
of clause (y)
where such violation would not materially adversely affect TRLTII's
ability to
perform its obligations under the TRLTII Agreements or
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materially adversely affect its financial condition or business.
TRLTII is in
compliance with all laws, ordinances, governmental rules and
regulations to
which it is subject, the failure to comply with which would have a
material and
adverse effect on its operations or condition, financial or
otherwise, or would
impair the ability of TRLTII to perform its obligations under the
TRLTII
Agreements, and has obtained all licenses, permits, franchises and
other
governmental authorizations material to the conduct of its
business; and
(f) no consent, approval or authorization of, or filing,
registration or qualification with, or the giving of notice to, any
trustee or
any holder of indebtedness of TRLTII or any governmental authority
on the part
of TRLTII is required (x) in connection with the execution and
delivery by
TRLTII of the TRLTII Agreements, or (y) to be obtained in order for
TRLTII to
perform its obligations thereunder in accordance with the terms
thereof, other
than in the case of clause (y) those which are routine in nature
and are not
normally applied for prior to the time they are required, and which
TRLTII has
no reason to believe will not be timely obtained; and
(g) TRLTII is solvent and will not be rendered insolvent by the
transactions contemplated by the Operative Agreements and, after
giving effect
to such transactions, TRLTII will not be left with an unreasonably
small amount
of capital with which to engage in its business, and TRLTII does
not intend to
incur, nor believes that it has incurred, debts beyond its ability
to pay as
they mature.
Section
3.8 Representations and Warranties of the Pass Through Trustee.
The Pass Through Trustee represents and warrants to the Trust, the
Owner
Trustee, the Indenture Trustee, the Policy Provider, the Owner
Participant,
TILC, TRLTII, Trinity and the Lessee that, as of the date
hereof:
(a) the Pass Through Trustee is a Delaware banking corporation
duly
organized and validly existing in good standing under the laws of
the State of
Delaware and has the full corporate power, authority and legal
right under the
laws of the State of Delaware pertaining to its banking, trust and
fiduciary
powers to execute, deliver and perform its obligations under the
Pass Through
Trustee Agreements and the Pass Through Documents to which it is a
party;
(b) this Agreement has been, and on the Closing Date, each of
the
other Pass Through Trustee Agreements will have been, duly
authorized, executed
and delivered by the Pass Through Trustee; this Agreement
constitutes, and on
the Closing Date, each of the other Pass Through Trustee Agreements
will
constitute, the legal, valid and binding obligations of the Pass
Through
Trustee, enforceable against the Pass Through Trustee in accordance
with their
respective terms except as enforceability may be limited by
bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
the rights of
creditors generally and by general principles of equity;
(c) the execution, delivery and performance by the Pass Through
Trustee of each of the Pass Through Trustee Agreements, the
purchase by the Pass
Through Trustee of the Equipment Note pursuant to this Agreement,
and the
issuance of the Pass Through Certificates pursuant to the Pass
Through Trust
Agreement, do not contravene any law, rule or regulation of
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<PAGE>
any federal or Delaware governmental authority or agency regulating
the Pass
Through Trustee's banking, trust or fiduciary powers or any
judgment or order
applicable to or binding on the Pass Through Trustee and do not
contravene or
result in any breach of, or constitute a default under, or in the
case of clause
(ii) below, result in the creation or imposition of any Lien upon
the Pass
Through Trust Estate, (i) the Pass Through Trustee's charter
documents or bylaws
or (ii) any agreement or instrument to which the Pass Through
Trustee is a party
or by which it or any of its properties may be bound or
affected;
(d) neither the execution and delivery by the Pass Through
Trustee
of each of the Pass Through Trustee Agreements nor the consummation
by the Pass
Through Trustee of any of the transactions contemplated thereby,
requires the
consent or approval of, the giving of notice to, or the
registration with, or
the taking of any other action with respect to, any federal or
Illinois
governmental authority or agency regulating the Pass Through
Trustee's banking,
trust or fiduciary powers;
(e) there are no pending or, to its knowledge, threatened actions
or
proceedings against the Pass Through Trustee before any court or
administrative
agency which individually or in the aggregate, if determined
adversely to it,
would materially adversely affect the ability of the Pass Through
Trustee to
perform its obligations under any of the Pass Through Trustee
Agreements;
(f) the Pass Through Trustee is not in default under any Pass
Through Trustee Agreement;
(g) the Pass Through Trustee does not directly or indirectly
control, and is not directly or indirectly controlled by or under
common control
with, the Owner Participant, the Owner Trustee, the Initial
Purchasers, TILC,
TRLTII or the Lessee;
(h) the Pass Through Trustee is purchasing the Equipment Note
for
the purposes contemplated by the Operative Agreements and not with
a view to the
transfer or distribution of any Equipment Note to any other Person,
except as
contemplated by the Operative Agreements and the Pass Through
Documents; and
(i) except for the issue and sale of the Pass Through
Certificates
contemplated hereby and by the other Pass Through Trustee
Agreements, the Pass
Through Trustee has not directly or indirectly offered any
Equipment Note or
Pass Through Certificate or any interest in or to the Trust Estate,
the Trust
Agreement or any similar interest for sale to, or solicited any
offer to acquire
any of the same from, anyone other than the Owner Trustee and the
Owner
Participant, and the Pass Through Trustee has not authorized anyone
to act on
its behalf to offer directly or indirectly any Equipment Note, any
Pass Through
Certificate or any interest in and to the Trust Estate, the Trust
Agreement or
any similar interest related to this transaction for sale to, or to
solicit any
offer to acquire any of the same from, any Person other than the
Owner Trustee
and the Owner Participant.
Section
3.9 Representations and Warranties of Trinity. Trinity
represents
and warrants to the Owner Participant, Trust, the Owner Trustee,
the Indenture
Trustee, the Pass Through Trustee and the Policy Provider that, as
of the date
hereof:
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<PAGE>
(a) Trinity is a corporation duly formed, validly existing and
in
good standing under the laws of the State of Delaware and has full
corporate
power and authority to carry on its business as now conducted;
(b) Trinity has the requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement,
and the
execution, delivery and performance by it thereof do not and will
not contravene
any law or regulation, or any order of any court or governmental
authority or
agency applicable to or binding on Trinity or any of its
properties, or
contravene the provisions of, or constitute a default under or
breach of, or
result in the creation or imposition of any Lien (other than the
Lien granted to
the Indenture Trustee under and pursuant to the Indenture) upon the
Equipment,
Pledged Equipment, Subleases, Pledged Equipment Leases or any other
portion of
the Trust Estate or Collateral under, its Certificate of
Incorporation, bylaws
or any indenture, mortgage, contract or other agreement or
instrument to which
Trinity is a party or by which it or any of its properties may be
bound or
affected;
(c) this Agreement has been duly authorized by all necessary
actions
on the part of Trinity, does not require any approval not already
obtained by
Trinity or any approval or consent not al
