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Participation Agreement (trli 2001-1C)

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Sectors: Automotive and Transport Equipment
Governing Law: New York, View New York State Laws
Effective Date: December 28, 2001
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PARTICIPATION AGREEMENT (TRLI 2001-1C)


Dated as of December 28, 2001


among


TRINITY RAIL LEASING I L.P.,
as Lessee,


TRINITY RAIL MANAGEMENT, INC.,


TRINITY INDUSTRIES LEASING COMPANY,
as Manager,


TRLI 2001-1C RAILCAR STATUTORY TRUST,
BY STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as Owner Trustee,


TRIMARAN LEASING, L.P.,
as Owner Participant


and


LASALLE BANK NATIONAL ASSOCIATION,
as Indenture Trustee and Pass Through Trustee


Tank Cars and Covered Hopper Cars


Participation Agreement (TRLI 2001-1C)


TABLE OF CONTENTS
Page
---- SECTION 1. DEFINITIONS; INTERPRETATION OF THIS
AGREEMENT.........................................................................4


SECTION 2. SALE AND PURCHASE; PARTICIPATION IN EQUIPMENT COST; CLOSING;
TRANSACTION COSTS.................................................................4
Section 2.1 Sale and Purchase of Equipment......................................4
Section 2.2 Participation in Equipment Cost.....................................5
Section 2.3 Closing Date; Procedure for Participation...........................5
Section 2.4 Owner Participant's Instructions to the Owner Trustee;
Satisfaction of Conditions..........................................7
Section 2.5 Expenses............................................................7
Section 2.6 Calculation of Adjustments to Basic Rent,
Stipulated Loss Value and Termination Value;
Confirmation and Verification......................................11
Section 2.7 Postponement of Closing Date.......................................14


SECTION 3. REPRESENTATIONS AND WARRANTIES...................................................16
Section 3.1 Representations and Warranties of the Trust
Company............................................................16
Section 3.2 Representations and Warranties of the Lessee.......................19
Section 3.3 Representations and Warranties of the Indenture Trustee............26
Section 3.4 Representations, Warranties and Covenants
Regarding Beneficial Interest, Equipment Note
and Pass Through Certificates......................................27
Section 3.5 Representations and Warranties of the Owner Participant............29
Section 3.6 Representations and Warranties of TILC.............................31
Section 3.7 Representations and Warranties of TRMI.............................36
Section 3.8 Representations and Warranties of the Pass Through Trustee.........38
Section 3.9 Opinion Acknowledgment.............................................39


SECTION 4. CLOSING CONDITIONS...............................................................40
Section 4.1 Conditions Precedent to Investment by Each Participant.............40


Participation Agreement (TRLI 2001-1C)


i
Page
----
Section 4.2 Additional Conditions Precedent to Investment
by the Loan Participant............................................48
Section 4.3 Additional Conditions Precedent to Investment
by the Owner Participant...........................................48
Section 4.4 Conditions Precedent to the Obligation of
TILC and the Lessee................................................50


SECTION 5. FINANCIAL AND OTHER REPORTS OF THE LESSEE........................................51


SECTION 6. CERTAIN COVENANTS OF THE PARTICIPANTS, THE TRUSTEES AND THE LESSEE..............53
Section 6.1 Restrictions on Transfer of Beneficial Interest....................53
Section 6.2 Lessor's Liens Attributable to the Owner Participant...............56
Section 6.3 Lessor's Liens Attributable to Trust Company.......................57
Section 6.4 Liens Created by the Indenture Trustee and
the Loan Participant...............................................57
Section 6.5 Covenants of Owner Trustee, Owner
Participant and Indenture Trustee..................................58
Section 6.6 Amendments to Operative Agreements
That Are Not Lessee Agreements.....................................59
Section 6.7 Certain Representations, Warranties and Covenants..................59
Section 6.8 Covenants of the Manager...........................................59
Section 6.9 Lessee's Purchase in Certain Circumstances.........................59
Section 6.10 Owner Participant as Affiliate of Lessee...........................61
Section 6.11 Records; U.S. Income Tax Information...............................62
Section 6.12 Replacement of Manager.............................................62
Section 6.13 Acknowledgment of Equity Collateral Security Documents.............65


SECTION 7. LESSEE'S INDEMNITIES.............................................................65
Section 7.1 General Tax Indemnity..............................................65
Section 7.2 General Indemnification............................................75
Section 7.3 Indemnification by TILC............................................81
Section 7.4 Indemnification by TRMI............................................86


SECTION 8. LESSEE'S RIGHT OF QUIET ENJOYMENT................................................91


SECTION 9. SUCCESSOR INDENTURE TRUSTEE......................................................91


SECTION 10. MISCELLANEOUS....................................................................91


Participation Agreement (TRLI 2001-1C)


ii


Page
----
Section 10.1 Consents...........................................................91
Section 10.2 Refinancing........................................................92
Section 10.3 Amendments and Waivers.............................................94
Section 10.4 Notices............................................................94
Section 10.5 Survival...........................................................97
Section 10.6 No Guarantee of Residual Value or Debt.............................97
Section 10.7 Successors and Assigns.............................................97
Section 10.8 Business Day.......................................................97
Section 10.9 GOVERNING LAW......................................................98
Section 10.10 Severability.......................................................98
Section 10.11 Counterparts.......................................................98
Section 10.12 Headings and Table of Contents.....................................98
Section 10.13 Limitations of Liability...........................................98
Section 10.14 Maintenance of Non-Recourse Debt...................................99
Section 10.15 Ownership of and Rights in Units..................................100
Section 10.16 No Petition.......................................................100
Section 10.17 Consent To Jurisdiction...........................................101
Section 10.18 WAIVER OF JURY TRIAL..............................................102


EXHIBITS AND SCHEDULES


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 Skadden, Arps, Slate, Meagher & Flom (Illinois) Opinion


Exhibit E-2 - Form of Trinity Rail Leasing I L.P., Trinity Industries Leasing Company and
Trinity Rail Management, Inc. Opinion


Exhibit E-3 - Form of Bingham Dana LLP Opinion


Exhibit E-4 - Form of Winston & Strawn Opinion


Participation Agreement (TRLI 2001-1C)


iii


EXHIBITS AND SCHEDULES


Exhibit E-5 - Form of Philip Morris Capital Corporation Legal Department Opinion


Exhibit E-6 - Form of Opinion of in-house counsel for the Indenture Trustee


Exhibit E-7 - Form of Alvord & Alvord Opinion


Exhibit E-8 - Form of McCarthy Tetrault Opinion


Exhibit E-9 - Form of Andrews & Kurth L.L.P. Opinion


Exhibit E-10 - Form of Opinion of in-house counsel for the Pass Through Trustee


Exhibit E-11 - Form of Morris, James, Hitchens & Williams Opinion


Exhibit F - Form of Officer's Solvency Certificate


Exhibit G - Form of Officer's Accounts Balance Certificate


Schedule 1 - Description of Equipment, Designation of Basic Groups, Designation of Functional Groups
and Equipment Cost


Schedule 1-B - List of Existing Subleases


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 3.2(m) - Written Information Provided by Trinity Rail Leasing I L.P., Trinity Industries Leasing Company
and Trinity Rail Management, Inc.


Participation Agreement (TRLI 2001-1C)


iv


PARTICIPATION AGREEMENT (TRLI 2001-1C)


This PARTICIPATION AGREEMENT (TRLI 2001-1C), dated as of December 28, 2001 (this "Agreement"), is by and among (i) Trinity Rail Leasing I L.P., a Texas limited partnership (together with its permitted successors and assigns, the "Lessee"), (ii) Trinity Rail Management, Inc., a Delaware corporation ("TRMI"), (iii) Trinity Industries Leasing Company, a Delaware corporation ("TILC"), (iv) TRLI 2001-1C Railcar Statutory Trust, a Connecticut statutory trust, by State Street Bank and Trust Company of Connecticut, National Association, a national banking association, ("Trust Company"), not in its individual capacity except as expressly provided herein but solely as trustee (together with its permitted successors and assigns, the "Owner Trustee") under the Trust Agreement (such term and other defined terms used herein shall have the meanings assigned thereto in Section 1 below), (v) Trimaran Leasing, L.P., a Delaware limited partnership (together with its permitted successors and assigns, the "Owner Participant") and (vi) LaSalle Bank National Association, a national banking association, not in its individual capacity except as expressly provided herein but solely as pass through trustee 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, to purchase on the Closing Date the Equipment described in Schedule 1 hereto from the Lessee and concurrently therewith to lease such Equipment to the Lessee;


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 Owner Trustee and the Indenture Trustee will enter into the Indenture, pursuant to which the Owner Trustee will agree, among other things, to borrow from the Loan Participant the loan in connection with
Participation Agreement (TRLI 2001-1C)


the financing of the Total Equipment Cost and to issue to the Loan Participant the Equipment Note as evidence of such loan;


WHEREAS, TILC will, on the Closing Date, pursuant to the Transfer and Assignment Agreement (i) sell to the Partnership all of TILC's right, title and interest in and to the Equipment described on Schedule 1 hereto and (ii) assign and transfer to the Partnership all of TILC's right, title and interest in and to any Existing Equipment Subleases;


WHEREAS, pursuant to the Pledged Equipment Transfer and Assignment Agreements, TILC (i) sold to the Partnership all of TILC's right, title and interest in and to the Pledged Equipment and (ii) assigned and transferred to the Partnership all of TILC'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, and the Owner Trustee will, among other things and subject to the terms and conditions of the Operative Agreements, (i) purchase the Equipment described in Schedule 1 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 Owner Trustee, (ii) own the Equipment described in Schedule 1 hereto as provided in the Operative Agreements, (iii) 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 (iv) execute and deliver the Lease, pursuant to which, subject to the terms and conditions set forth therein, the Owner Trustee agrees to lease to the Lessee, and the Lessee agrees to lease from the Owner Trustee, each Unit to be delivered on the Closing Date, such lease to be evidenced by the execution and delivery of the Lease Supplement covering such Units, and to assign the Existing Equipment Subleases to the Lessee, such assignment to be evidenced by the execution and delivery of the Assignment covering such Existing Equipment Subleases;


WHEREAS, concurrently with the execution and delivery of this Agreement, the Lessee, TILC, TRMI, the Owner Trustee, the Other Owner Trustees, the Indenture Trustee, the Other Indenture Trustees and the Collateral Agent have entered into the Second Amended and Restated Collateral Agency Agreement to amend and restate the Original Collateral Agency Agreement, pursuant to which the Lessee will agree, among other things, (i) to grant to the Collateral Agent for the security and the benefit of the parties specified therein a security interest in the Collateral to secure the performance by the Lessee of its obligations under the Lease and the Other Leases, and (ii) to exclude certain Pledged Equipment previously designated as Special Collateral from the definition of Special Collateral under the Original Collateral Agency Agreement so that such Pledged Equipment will not be subject to release provisions of Section 2.8 of the Collateral Agency Agreement;


Participation Agreement (TRLI 2001-1C)


2
WHEREAS, pursuant to the terms of the Trust Agreement, the Owner Participant has authorized and directed the Owner Trustee to, and the Owner Trustee will, among other things and subject to the terms and conditions of the Operative Agreements, grant to the Indenture Trustee 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, Trinity 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 pursuant to this Agreement, to effect the purchase of the Equipment described on Schedule 1 hereto by the Owner Trustee from the Lessee as contemplated hereby;


WHEREAS, concurrently with the execution and delivery of this Agreement, the Lessee, the Owner Trustee, the Other Owner Trustees and the Equity Collateral Agent have entered into the Equity Collateral Security Agreement, pursuant to which the Lessee will agree, among other things, to grant to the Equity Collateral Agent for the security and the benefit of the parties specified therein a security interest in the Equity Collateral to secure the performance by the Lessee of its obligations under the Lease and the Other Leases;


WHEREAS, prior to the Closing Date, the Partners made capital contributions to the Lessee in accordance with the Partnership Agreement (as amended prior to the Closing Date) and on the Closing Date the proceeds of such capital contributions will be applied to fund certain reserve accounts of the Lessee as contemplated hereby and by the Collateral Agency Agreement, and to fund the Equity Collateral Account as contemplated hereby and by the Equity Collateral Security Documents;


WHEREAS, concurrently with the execution and delivery of this Agreement, the Lessee and TILC have entered into an amendment to the Management Agreement, pursuant to which TILC will provide management services with respect to the Equipment and the Pledged Equipment;


WHEREAS, concurrently with the execution and delivery of this Agreement, the Lessee and TILC have entered into an amendment to 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;


Participation Agreement (TRLI 2001-1C)


3


WHEREAS, on or prior to the date hereof, the General Partner and the Limited Partner have entered into the First Amendment to Limited Partnership Agreement of the Lessee in connection with the transactions contemplated hereby, and each of the General Partner and the Limited Partner has similarly amended its respective limited liability company agreement;


WHEREAS, concurrently with the execution and delivery of this Agreement, the Lessee, the General Partner, the Limited Partner and TRMI have entered into an amendment to the Administrative Services Agreement, pursuant to which TRMI agrees to provide certain administrative services with respect to the Partnership, the General Partner and the Limited Partner;


WHEREAS, concurrently with the execution and delivery of this Agreement, Trinity Industries, Inc. has issued the Trinity Guaranty in favor of the beneficiaries named therein, pursuant to which Trinity Industries, Inc. will guarantee performance of the obligations of TILC and TRMI under the Operative Agreements to which TILC or TRMI is a party, respectively; and


WHEREAS, concurrently with the execution and delivery of this Agreement, TILC and the Marks Company have entered into the Second Supplement to the Marks Company Trust Supplement to allocate all Marks relating to the Units to the 2001-1A SUBI Portfolio, and the relevant parties thereto have entered into the Amended Marks Trust Documents in relation to such allocation.


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 (TRLI 2001-1C), dated as of December 28, 2001, between the Owner Trustee and the Lessee. Unless other wise 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


Participation Agreement (TRLI 2001-1C)


4 herein, the Lessee agrees to sell to the Owner Trustee, and the Owner Trustee 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, and, in connection therewith, the Owner Trustee agrees to pay to the Lessee the cost for each Unit as specified in Schedule 1. On the Closing Date, the Lessee shall deliver each Unit described on Schedule 1 to the Owner Trustee, and the Owner Trustee shall accept such delivery.


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 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) 1.94% 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 funds available to it for such purposes under the Pass Through Trust Agreement, to be evidenced by the Equipment Note, to the Owner Trustee in the amount equal to the product of the Total Equipment Cost for the Units delivered on the Closing Date and the percentage 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 Owner Trustee and the Loan Participant a notice (a "Notice of Delivery") by facsimile or other form of telecommunication or


Participation Agreement (TRLI 2001-1C)


5 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 LaSalle Bank National Association, ABA No. 071000505, Att.: Kristine Schossow, Corporate Trust Services Division, Trust TRLI 2001-1C, Account No. 2090067, Ref: 608775318 TRLI. 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 Owner Trustee. The making available by the Loan Participant of the amount of the Loan Participant's Commitment for the Total Equipment Cost
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