-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KESvknKqT9ZfxfqjNitI5O/2HqvJuyMqVlt+9dPH1z823u6HWRqFrBRxfsiiYOJ4 nycpGMqkWZhWWHEvRRvwYg== 0000950134-01-503278.txt : 20010619 0000950134-01-503278.hdr.sgml : 20010619 ACCESSION NUMBER: 0000950134-01-503278 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010618 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRINITY INDUSTRIES INC CENTRAL INDEX KEY: 0000099780 STANDARD INDUSTRIAL CLASSIFICATION: RAILROAD EQUIPMENT [3743] IRS NUMBER: 750225040 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 001-06903 FILM NUMBER: 1662489 BUSINESS ADDRESS: STREET 1: 2525 STEMMONS FREEWAY CITY: DALLAS STATE: TX ZIP: 75207-2401 BUSINESS PHONE: 2146314420 FORMER COMPANY: FORMER CONFORMED NAME: TRINITY STEEL CO INC DATE OF NAME CHANGE: 19720407 10-K405 1 d88339e10-k405.txt FORM 10-K FOR FISCAL YEAR END MARCH 31, 2001 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- FORM 10-K --------------- (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to COMMISSION FILE NUMBER 1-6903 TRINITY INDUSTRIES, INC. (Exact name of registrant as specified in its charter) DELAWARE 75-0225040 (State of Incorporation) (I.R.S. Employer Identification No.) 2525 STEMMONS FREEWAY DALLAS, TEXAS 75207-2401 (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 631-4420 Securities Registered Pursuant to Section 12(b) of the Act Name of each exchange Title of each class on which registered ------------------- ------------------- COMMON STOCK, $1.00 PAR VALUE NEW YORK STOCK EXCHANGE, INC. Securities Registered Pursuant to Section 12(g) of the Act: NONE INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. Yes X No ------ ----- INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K . [X] The aggregate market value of voting stock held by nonaffiliates of the Registrant is $ 798,771,120 as of May 31, 2001. At May 31, 2001 the Number of Shares of common stock outstanding was 36,968,456 Portions of the Registrant's definitive Proxy Statement (to be filed no later than 120 days after the end of the Registrant's fiscal year) for the 2001 Annual Meeting of Stockholders to be held July 31, 2001 are incorporated by reference into Part III hereof. ================================================================================ 2 PART I ITEM 1. BUSINESS GENERAL DEVELOPMENT OF BUSINESS. Trinity Industries, Inc. (the "Company" or "Trinity") was originally incorporated under the laws of the State of Texas in 1933. On March 27, 1987, Trinity became a Delaware corporation by merger into a wholly-owned subsidiary of the same name. FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS. Various financial information concerning the Company's segments for each of the last three fiscal years is presented in Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 8 through 13. NARRATIVE DESCRIPTION OF BUSINESS. The Company is engaged in the manufacture, marketing, and leasing of a wide variety of products consisting of the following five business segments: RAILCAR SEGMENT. The Company manufactures railroad freight cars, principally pressure and non-pressure tank cars, hopper cars, box cars, intermodal cars and gondola cars used for transporting a wide variety of liquids, gases and dry cargo. Tank cars transport products such as liquefied petroleum gas, liquid fertilizer, sulfur, sulfuric acids and corn syrup. Covered hopper cars carry cargo such as grain, dry fertilizer, plastic pellets and cement. Open-top hoppers haul coal, and top-loading gondola cars transport a variety of heavy bulk commodities such as scrap metals, finished flat steel products, machinery and lumber. Intermodal cars transport various products which have been loaded in containers to minimize shipping costs. The Company holds patents of varying duration for use in its manufacture of railcar and component products. The Company cannot quantify the importance of such patents, but patents are believed to offer a marketing advantage in certain circumstances. No material revenues are received from licensing of these patents. Seven major manufacturers of one or more of the production lines manufactured by the Company are presently engaged in the manufacture of railcars on a large scale. The Company strives to be competitive through improvements in the efficiency of the manufacturing process and its creative designs to benefit customers. INLAND BARGE SEGMENT. The Company produces hopper barges, tank barges, deck barges, fiberglass barge covers and associated marine parts. Hopper barges are used to carry coal, grain and other bulk commodities by various barge transport companies. Tank barges are used to transport liquid products. Deck barges are used to transport product in the construction related industry. The Company is North America's leading producer of inland barges and one of the largest producers of fiberglass barge covers. Many companies have the capability to enter into, and from time to time do enter into, the inland barge business. The Company strives to compete through efficiency in operations and quality of product. PARTS AND SERVICES SEGMENT. The Company manufactures railcar parts, such as yokes, couplers, axles, hitches and chutes that are ultimately used in the manufacturing and repair of railcars. The Company is also engaged in railcar maintenance, management, and/or leasing to various industries. A wholly-owned leasing subsidiary, Trinity Industries Leasing Company ("TILC"), incorporated in 1979, is engaged in leasing specialized types of railcars and locomotives to industrial companies in the petroleum, chemical, grain, food processing, fertilizer and other industries which supply cars to the railroads. At March 31, 2001, TILC owned 10,317 railcars. The volume of equipment purchased and leased by TILC depends upon a number of factors, including the demand for equipment manufactured by the Company, the cost and availability of funds to finance the purchase of equipment, the Company's decision to solicit orders for the purchase or lease of equipment and factors which may affect the decision of the Company's customers whether to purchase or lease equipment. A number of well established companies actively compete with TILC in the business of owning and leasing railcars, as well as banks, investment partnerships and other financial and commercial institutions. 1 3 In fiscal 2000, the Company began a business, operating under the name TEMCO, that produced concrete mixers, concrete batch plants and component parts for concrete related industries. During fiscal 2001, the Company exited this business. See notes to consolidated financial statements for further discussion. CONSTRUCTION PRODUCTS SEGMENT. The construction products manufactured by the Company include highway guardrail, highway safety devices, and related barrier products (Highway Products), beams, girders, and concrete and aggregates. Highway Products, beams, and girders are used in the highway construction industries. Concrete and aggregates are used in the construction and foundation industries. Generally, customers for highway guardrail and highway safety devices are highway departments or subcontractors on highway projects. Concrete and aggregate customers include primarily owners, contractors, and sub-contractors. Sales of beams and girders are to general contractors and subcontractors on highway construction projects. The Company holds patents and is a licensee for certain of its guardrail and end-treatment products that enhance its worldwide competitive position for these products. The Company is the largest producer of highway guardrail products in North America, with products in use in all 50 states, as well as Canada, Mexico, the Caribbean and Europe. The concrete and aggregate business is extremely competitive depending upon the geographical area. The Company strives to compete through service and efficiency of operations, primarily in Texas. INDUSTRIAL PRODUCTS SEGMENT. The Company is engaged in manufacturing metal containers for the storage and transportation of liquefied petroleum gas ("LPG") and anhydrous ammonia fertilizer. Pressure LPG containers are utilized at industrial plants, utilities, small businesses, and in suburban and rural areas for residential heating and cooking needs. Fertilizer containers are manufactured for highway and rail transport, bulk storage, farm storage, and the application and distribution of anhydrous ammonia. The Company manufactures butt weld type fittings. The weld fittings include caps, elbows, return bends, concentric and eccentric reducers, full and reducing outlet tees, all of which are pressure rated. The Company manufactures and stocks, in standard, extra-heavy, and double-extra-heavy weights and in various diameters and also manufactures to customer specifications. The basic raw materials for weld fittings are carbon steel, stainless steel, aluminum, chrome-moly, and other metal tubing or seamless pipe and forgings. The Company sells its weld fittings to distributors and to other manufacturers of weld fittings. Prior to fiscal 2001 the Company manufactured a full line of pressure rated pipe flanges. During fiscal 2001, the Company exited the flange business. The Company manufactures container heads, which are pressed metal components used in the further manufacture of a finished product of the Company. In addition, the Company sells container heads to other manufacturers. Container heads are manufactured in various shapes and may be pressure rated or non-pressure, depending on the intended use in further manufacture. Competitors for LPG containers range from large to small local companies. Competition for fittings and heads has been intense and has resulted in sharply reduced prices for these products for the previous three fiscal years. ALL OTHER. All Other includes transportation services, the Company's captive insurance company, structural towers, and other peripheral businesses. FOREIGN OPERATIONS. The Company's foreign operations are primarily in Mexico, Romania, Brazil and Slovakia. Sales to foreign customers, primarily in Europe and Mexico, represented 5.3%, 2.6%, and 1.4% of the Company's consolidated revenues for fiscal 2001, 2000, and 1999, respectively. As of March 31, 2001, 2000, and 1999, the Company had approximately 14.8%, 13.5%, and 10.9%, respectively, of its long-lived assets located outside the United States. The Company manufactures railcars and LP gas containers at its Mexico facilities for export to the United States. Any material change in the quotas, regulations, or duties on imports imposed by the United States government and its agencies or on exports by the government of Mexico or its agencies could 2 4 adversely affect its operations. The Company's foreign activities are also subject to various other risks of doing business in foreign countries, including currency fluctuations, political changes, changes in laws and regulations and economic instability. Although the Company's operations have not been materially affected by any of such factors to date, any substantial disruption of business as it is currently conducted could adversely affect its operations at least in the short term. MARKETING, RAW MATERIALS AND EMPLOYEES. As of March 31, 2001, the Company operated in the continental United States, Mexico, Romania, Argentina, Brazil, and Slovakia. The Company sells substantially all of its products through its own salesmen operating from offices in the following states and foreign countries: Alabama, Illinois, Kentucky, Louisiana, Michigan, Ohio, Pennsylvania, Texas, Utah, Brazil, Mexico, Romania, Sweden, and Canada. Independent sales representatives are also used to a limited extent. Except in the case of weld fittings, guardrail, and standard size LPG containers, the Company's products are ordinarily fabricated to the customer's specifications pursuant to a purchase order. The principal materials used by the Company are steel plate, structural steel shapes, steel forgings, aluminum and cement and aggregate material. There are numerous domestic and foreign sources of such steel and most other materials used by the Company. The Company currently has approximately 15,300 employees, of which approximately 12,100 are production employees and 3,200 are administrative, sales, supervisory, and office employees. ACQUISITIONS. The Company made certain acquisitions during fiscal 2001, 2000, and 1999 accounted for by the purchase method. The acquired operations have been included in the consolidated financial statements from the effective dates of the acquisitions. Information concerning these acquisitions are located on page 24. ENVIRONMENTAL MATTERS. The Company is subject to comprehensive and frequently changing federal, state and local environmental laws and regulations, including those governing emissions of air pollutants, discharges of wastewater and storm waters, and the disposal of nonhazardous and hazardous waste. The Company anticipates that it may incur costs in the future to comply with currently existing laws and regulations and any new statutory requirements. The costs of all known environmental matters are not expected to be material to the Company. However, estimates of future response costs are necessarily imprecise. Accordingly, there can be no assurance that the Company will not become involved in future litigation or other proceedings or, if the Company were found to be responsible or liable in any litigation or proceeding, that such costs would not be material to the Company. OTHER MATTERS. To date, the Company has not suffered any material shortages with respect to obtaining sufficient energy supplies to operate its various plant facilities or its transportation vehicles. Future limitations on the availability or consumption of petroleum products (particularly natural gas for plant operations and diesel fuel for vehicles) could have an adverse effect upon the Company's ability to conduct its business. The likelihood of such an occurrence or its duration, and its ultimate effect on the Company's operations, cannot be reasonably predicted at this time. 3 5 EXECUTIVE OFFICERS OF THE COMPANY. The following table sets forth the names and ages of all executive officers of the Company, all positions and offices with the Company presently held by them, the year each person first became an executive officer and the term of each person's office:
Officer Term Name(1) Age Office Since Expires - ------- --- ------ ----- ------- Timothy R. Wallace 47 Chairman, 1985 July 2001 President & Chief Executive Officer John L. Adams 56 Executive Vice President 1999 July 2001 Mark W. Stiles 52 Senior Vice President 1993 July 2001 & Group President Jim S. Ivy 58 Vice President & 1998 July 2001 Chief Financial Officer Douglas H. Schneider 62 Group President 2000 July 2001 Jack L. Cunningham, Jr. 56 Vice President, Labor 1982 July 2001 Relations Michael G. Fortado 57 Vice President, General 1997 July 2001 Counsel, & Secretary John M. Lee 40 Vice President, Business 1994 July 2001 Development Michael J. Lintner 59 Vice President, Human 1999 July 2001 Resources William A. McWhirter, II 37 Vice President, 2000 July 2001 President Concrete & Aggregate Joseph F. Piriano 64 Vice President, Purchasing 1992 July 2001 Linda S. Sickels 50 Vice President, Government 1995 July 2001 Relations Neil O. Shoop 57 Treasurer 1985 July 2001 Christine S. Stucker 39 Controller 1999 July 2001
(1) Mr. Adams joined the Company in 1999. Prior to that, Mr. Adams served as chief executive officer for a national financial institution. Mr. Ivy joined the Company in 1998. Prior to that, Mr. Ivy was a senior audit partner for a national public accounting firm. Mr. Schneider joined the Company in 1995. Mr. Schneider was designated as an executive officer in fiscal 2000 and for at least the last five years has held executive positions in International Development and the Inland Barge segment. Mr. Fortado joined the Company in 1997. Prior to that, Mr. Fortado served one year as senior vice president, general counsel, and corporate secretary for an oil and gas exploration company and prior to that as vice president, corporate secretary, and assistant general counsel for an integrated energy company. Mr. Lintner joined the Company in 1999. Prior to that, Mr. Lintner held executive officer positions with administrative outsourcing and professional staffing businesses. Mr. McWhirter joined the Company in 1985. Prior to 2000, he served as President of the Concrete & Aggregate businesses, a post which he still holds. Ms. Stucker joined the Company in 1985. Prior to 1999, Ms. Stucker served as an officer of various operational divisions. All of the other above-mentioned executive officers have been in the full-time employ of the Company or its subsidiaries for more than five years. Although the titles of certain such officers have changed during the past five years, all have performed essentially the same duties during such period of time except for Timothy R. Wallace and Mark W. Stiles. Mr. Wallace became Chairman and Chief Executive Officer on December 31, 1998. He was previously the President and Chief Operating Officer. In addition to Group President, Mr. Stiles became Senior Vice President on June 10, 1999. 4 6 FORWARD LOOKING STATEMENTS. This annual report on Form 10K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements contained herein that are not historical facts are forward-looking statements and involve risks and uncertainties. These forward-looking statements include expectations, beliefs, plans, objectives, future financial performance, estimates, projections, goals and forecasts. Potential factors which could cause the Company's actual results of operations to differ materially from those in the forward-looking statements include market conditions and demand for the Company's products; the cyclical nature of both the railcar and barge industries; the timing of introduction of new products; the timing of customer orders; price erosion; changes in mix of products sold; the extent of utilization of manufacturing capacity; availability of supplies and raw materials; price competition and other competitive factors; technologies; steel prices; interest rates and capital costs; taxes; the stability of the governments and political and business conditions in certain foreign countries, particulary Mexico and Romania; changes in import and export quotas and regulations; business conditions in emerging economies; and legal, regulatory and environmental issues. Any forward-looking statement speaks only as of the date on which such statement is made. The Company undertakes no obligation to update any foward-looking statement to reflect events or circumstances after the date on which such statement is made. ITEM 2. PROPERTIES. The Company principally operates in various locations throughout the Unites States with other facilities in Mexico, Brazil, Romania, and Slovakia, all of which are considered to be in good condition, well maintained, and adequate for its purposes.
Approximate Square Feet Productive ------------- Capacity Owned Leased Utilized ----------- --------- ----------- Railcar Segment 4,484,500 57,000 30% Inland Barge Segment 692,000 45,000 80% Parts & Services Segment 2,537,000 383,000 30% Construction Products Segment 1,994,000 10,000 85% Industrial Products Segment 906,500 32,000 50% Executive Offices 173,000 -- N/A ----------- --------- 10,787,000 527,000 =========== =========
ITEM 3. LEGAL PROCEEDINGS. In December, 1999, a grand jury sitting in the Western District of Louisiana returned a two-count felony indictment against Trinity Baton Rouge, Inc., a wholly owned subsidiary of the Company. The indictment charges Trinity Baton Rouge, Inc. with transporting hazardous waste without a proper manifest to an unpermitted facility in violation of the Resource Conservation Recovery Act. Trinity Baton Rouge, Inc. continues to deny all charges in the indictment and is defending this matter vigorously. In September of 1999 the United States Environmental Protection Agency filed a complaint against the Company seeking penalties of approximately $225,000. The complaint alleges that the Company failed to file certain submissions timely to the United States Environmental Protection Agency in alleged violation of the Emergency Planning Community Right to Know Act. The Company denies all allegations and is defending this matter vigorously. The Company is involved in other various claims and lawsuits incidental to its business. In the opinion of management, these claims and suits in the aggregate will not have a material adverse effect on the Company's consolidated financial statements. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None 5 7 PART II ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS. The Company's common stock is traded on the New York Stock Exchange with the ticker symbol "TRN". The following table shows the price range of the Company's common stock for fiscal years 2001 and 2000:
Prices -------------------------- Year Quarter High Low ---- ------- ---- --- 2000 First $37.38 $28.75 2000 Second 34.06 30.25 2000 Third 30.75 26.44 2000 Fourth 27.56 19.88 2001 First $23.56 $18.50 2001 Second 23.38 18.37 2001 Third 26.63 22.56 2001 Fourth 25.00 18.97
The Company's transfer agent and registrar is The Bank of New York, New York, N.Y. HOLDERS At March 31, 2001 the Company had approximately 2,059 record holders of common stock. The par value of the stock is $1. 6 8 ITEM 6. SELECTED FINANCIAL DATA.
Year Ended March 31 (in millions except percent and per share data) 2001 2000 1999 1998 1997 ---- ---- ---- ---- ---- Revenues $ 1,904.3 2,740.6 2,926.9 2,473.0 2,234.3 Operating profit (loss) $ (66.1) 279.0 284.9 255.9 214.2 Income (loss) from continuing operations $ (74.4) 165.5 185.3 103.7 113.7 Income from discontinued operations, net of income taxes $ -- -- -- -- 23.8 Net income (loss) $ (74.4) 165.5 185.3 103.7 137.5 Total assets $ 1,825.9 1,738.5 1,684.9 1,573.9 1,356.4 Long-term debt $ 44.0 95.4 120.6 149.6 178.6 Stockholders' equity $ 879.0 1,015.1 959.1 887.5 809.5 Ratio of total debt to total capital % 38.0 20.7 23.9 22.0 23.1 Stock data: Weighted average number of diluted shares outstanding 37.5 39.9 43.6 43.9 42.8 Net income (loss) per diluted common share: continuing operations $ (1.98) 4.15 4.25 2.36 2.66 discontinued operations -- -- -- -- 0.55 --------- --------- --------- --------- --------- net income (loss) per common share $ (1.98) 4.15 4.25 2.36 3.21 Dividends per share $ 0.72 0.72 0.69 0.68 0.68 Book value per share $ 23.89 26.50 23.22 20.40 18.83 Other Data: Net income per diluted common share: Continuing operations before unusual charges in 2001, a nonrecurring credit in 1999, and a nonrecurring charge in 1998 (1) $ 0.97 4.15 3.93 3.36 2.66
(1) Income per diluted common share from continuing operations before unusual charges and credit is not a term which is defined by generally accepted accounting principles but is defined as income (loss) from continuing operations less after tax charges or credit of $110.9 million for unusual charges, $14.0 million for the gain on a sale of an investment in land, and a $43.8 million charge for litigation in 2001, 1999, and 1998, respectively. Income from continuing operations before unusual charges and credit should not be considered as a measure of financial performance under generally accepted accounting principals, nor in isolation or as an alternative to net income, cash flows generated by operating, investing, or financing activities or other financial statement data presented in the consolidated financial statement as an indicator of financial performance or liquidity. 7 9 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. BASIS OF PRESENTATION Trinity Industries, Inc. is one of the nation's leading diversified industrial manufacturers. As of March 31, 2001, the Company modified its segment reporting to align the reportable segments with current internal reporting. The Company combined the Highway Construction Products segment and the Concrete and Aggregate segment into the Construction Products segment, moved its Heads business into the Industrial Products segment from Parts and Services, and moved its Deck Fittings and Marine Parts business into the Inland Barge segment from Parts and Services. Furthermore, the Company changed the definition of operating profit at the segment level to include corporate shared services charges. Information for fiscal years 2000 and 1999 has been changed from prior years' presentation in the fiscal 2000 Annual Report in order to conform to these changes. The determination of operating segments is based on the types of products and services provided by the Company and the internal reporting relationships. The new reporting format includes the following business segments: (1) the Railcar segment, which manufactures and sells railcars; (2) the Inland Barge segment, consisting of barges and related products for inland waterway services; (3) the Parts and Services segment, which manufactures and sells various parts to manufacturers of railcars and other industrial products and provides services such as railcar maintenance, fleet management, and leasing; (4) the Construction Products segment, consisting primarily of highway guardrail and safety products, concrete and aggregate, and girders and beams used in the construction of highway and railway bridges; and (5) the Industrial Products segment, which manufactures and sells containers, container heads, weld fittings used in pressure piping systems, and pressure and non-pressure containers for the storage and transportation of liquefied gases and other liquid and dry products. Finally, All Other includes transportation services, the Company's captive insurance company, structural towers, and other peripheral businesses. See notes to the consolidated financial statements for further discussion of business segments. UNUSUAL CHARGES During fiscal 2001, the Company recorded pre-tax charges of approximately $173.3 million primarily related to the restructuring of the Company's railcar operations, investment and asset write downs, litigation reserves, and other charges. $140.9 million of these charges were charged to operating profit. These charges are reflected in the following income statement categories and segments (in millions):
INLAND PARTS & CONSTRUCTION INDUSTRIAL CORPORATE RAILCAR BARGE SERVICES PRODUCTS PRODUCTS & OTHER TOTAL ------- ----- -------- -------- -------- ------- ----- Cost of revenues $ 66.2 $ 4.4 $ 26.6 $ -- $ 14.4 $ 13.7 $125.3 Selling, engineering & administrative 1.8 -- 6.9 -- 0.1 6.8 15.6 ------ ------ ------ ------ ------ ------ ------ Charged to $ 68.0 $ 4.4 $ 33.5 $ -- $ 14.5 $ 20.5 $140.9 operating profit Operating profit (loss) before charges 36.3 16.1 22.1 38.5 6.3 (44.5) 74.8 ------ ------ ------ ------ ------ ------ ------ Operating profit (loss) reported $(31.7) $ 11.7 $(11.4) $ 38.5 $ (8.2) $(65.0) $(66.1) ====== ====== ====== ====== ====== ====== ======
Unusual charges reported in Other expenses amounted to $32.4 million primarily for the write down of equity investments in fiscal year 2001. See notes to the consolidated financial statements for further discussion and description of the unusual charges. 8 10 The following discussion compares results from continuing operations of Trinity for fiscal 2001, 2000, and 1999. 2001 COMPARED WITH 2000 - RESULTS OF OPERATIONS Revenues were $1.90 billion in fiscal 2001 compared to $2.74 billion in fiscal 2000. Excluding the charges discussed above, operating profit decreased to $74.8 million in fiscal 2001 compared to $279.0 million in fiscal 2000. Decreased revenues were primarily attributable to the Railcar and Parts & Services segments as a result of decreased railcar shipments and prices, as well as a decline in the Industrial Products segment primarily as a result of declines in LPG sales and the Company's decision to exit the flange and valve businesses as more fully described below. All segments experienced decreased operating profit as more fully discussed below. Excluding the unusual charges, selling, engineering and administrative expenses increased to $198.5 million compared to $183.4 million in fiscal 2000. This increase is primarily a result of international expansion and expenses associated with start-up operations and development activities. Interest expense, increased $8.5 million in fiscal 2001 primarily due to a higher level of short-term debt outstanding during the year. Other income, net changed from income of $2.3 million in fiscal 2000 to a loss of $28.2 million in fiscal 2001 primarily due to the unusual charges from the write down of equity investments noted above. The current year benefit for income taxes is primarily related to the deferred tax deductions attributable to the unusual charges. The Company believes that this asset is fully realizable given current tax carryback availability and existing deferred tax liabilities. Net loss in fiscal 2001 was $74.4 million, or $1.98 loss per share as compared to net income of $165.5 million, or $4.15 per diluted share, in fiscal 2000. Excluding the charges in fiscal 2001, net income in fiscal 2001 would have been $0.97 per diluted share. The Company presently expects earnings per share for fiscal 2002 to be in the range of $0.80 to $1.00 per share. RAILCAR SEGMENT (in millions)
2001 2000 ---------- -------- Revenues $738.9 $1,515.3 Operating profit before charges $ 36.3 $ 153.2 Operating profit margin before charges 4.9% 10.1%
Revenues declined 51.2% in fiscal 2001 compared to 2000. This decline is due to the current downturn in the North American railcar industry. Railcar units shipped dropped 37% to approximately 14,000 cars compared to the prior year. Operating profit margins were impacted by the inefficiencies of lower production levels, costs associated with more frequent changeovers to different car types and sizes, and price pressures in the current competitive environment. Including the charges, the railcar segment lost $31.7 million from operations. With the current weakened railcar market, shipments are expected to decline further to 6,000 to 9,000 in fiscal 2002 resulting in a very competitive market. Comparisons to the prior year are also impacted by the level of railcars delivered to customers of Trinity's leasing company. Sales to Trinity's leasing subsidiary are eliminated in consolidation and profits are deferred and generally amortized over the life of the asset or recognized at the time cars are sold to an unrelated third party. Fiscal 2001 railcar sales to TILC were $262.5 million compared to $67.5 million in the prior year with deferred profit of $17.7 million compared to $6.6 million in fiscal 2000. 9 11 INLAND BARGE SEGMENT (in millions)
2001 2000 ---------- ---------- Revenues $202.9 $210.1 Operating profit before charges $ 16.1 $ 25.7 Operating profit margin before charges 7.9% 12.2%
The decrease in Inland Barge operating profit is mainly due to competitive price pressures for both hopper barges and tank barges. These factors are primarily a result of depressed freight rates, which negatively impacted the Inland Barge segment's customers and reduced grain exports. Fiscal 2001 operating profit was $11.7 million, including the unusual charges. PARTS & SERVICES SEGMENT (in millions)
2001 2000 ---------- ---------- Revenues $316.7 $373.8 Operating profit before charges $ 22.1 $ 63.4 Operating profit margin before charges 7.0% 17.0%
Revenues decreased by $57.1 million in the Parts & Services segment, while operating profit before unusual charges declined $41.3 million. Fiscal 2001 and 2000 revenues include intersegment sales of $68.2 million and $110.7 million, respectively. Revenue declines are primarily due to the softness in the railcar market partially offset by the $29.2 million revenues generated by the Company's concrete mixers, concrete batch plants and component parts for concrete related industries business. The operating profit decline is due to the inefficiencies and cost structure of the Company's railcar parts facilities at lower volumes, the revenue loss due to the soft market conditions, and operating losses associated with the Company's concrete mixer, concrete batch plants and component parts for concrete related industries business which was closed and certain assets sold in the fourth quarter. CONSTRUCTION PRODUCTS SEGMENT (in millions)
2001 2000 ---------- ---------- Revenues $441.0 $445.6 Operating profit $ 38.5 $ 56.2 Operating profit margin 8.7% 12.6%
An increase in revenues of beam and girders for highway bridges were offset by a decline in both highway safety products and concrete and aggregate. The decline in concrete and aggregate was due to the significant increase in adverse weather conditions experienced in fiscal 2001 in the Texas market compared to fiscal 2000. Operating profit and operating profit margins declined due to the inefficiencies of lower volumes caused by the poor weather and softer pricing in selected markets. INDUSTRIAL PRODUCTS SEGMENT (in millions)
2001 2000 ---------- ---------- Revenues $220.5 $255.4 Operating profit before charges $ 6.3 $ 12.4 Operating profit margin before charges 2.9% 4.9%
The decline in revenues is primarily attributable to the impact of exiting the flange and valve business, reduced demand in the LPG market and competitive pricing pressures throughout the segment. Operating profits declined primarily due to pricing pressures in the container head products market and the Mexico LPG market. 10 12 Sales of propane cylinders in Mexico have been negatively affected by a temporary halt in purchasing by Mexican propane distributors related to price controls and other matters. When these issues will be resolved, and the impact on Trinity's consolidated profits, cannot be determined. The reduction in first quarter fiscal 2002 net income is currently estimated at approximately $1.0 million. ALL OTHER Revenues in All Other were stable in 2001 compared to 2000, while operating results decreased from a profit of $1.9 million in fiscal 2000 to a $14.5 million loss before charges in fiscal 2001. The decrease in operating profit is primarily a result of the start-up and development costs associated with the Company's internet related initiatives. 2000 COMPARED WITH 1999 Revenues were $2.74 billion in fiscal 2000 compared to $2.93 billion in fiscal 1999, a 6.5% decrease. Operating profit decreased slightly to $279.0 million in fiscal 2000 compared to $284.9 million in fiscal 1999, a 2.1% decrease. Decreased revenues were primarily attributable to the Railcar and Parts & Services segments as a result of decreased railcar shipments. These declines are mostly offset by increased revenues and operating profit in the Inland Barge and Construction Products segments. Selling, engineering and administrative expenses increased as a percentage of revenue to 6.7% from 5.8%. This increase is primarily a result of the Company's global expansion and investments in technology. Other income, net changed from $27.4 million income in fiscal 1999 to $2.3 million in fiscal 2000 due primarily to a net gain on the sale of real estate and other assets in the first quarter of fiscal 1999 in the amount of $22.1 million. Net income in fiscal 2000 decreased 10.7% to $165.5 million, or $ 4.15 per diluted share as compared to $185.3 million, or $4.25 per diluted share, in fiscal 1999. Excluding the net gain in 1999 discussed above, net income per diluted share in fiscal 2000 increased $0.22 per share, or 5.6% from fiscal 1999. RAILCAR SEGMENT (in millions)
2000 1999 ---------- ---------- Revenues $1,515.3 $1,694.0 Operating profit $ 153.2 $ 166.9 Operating profit margin 10.1% 9.9%
While shipments of railcars declined 17.0% in fiscal 2000, revenues fell only 10.5% due to the product mix of units sold. Operating profit margins slightly increased due to operating efficiencies and the product mix of railcar sales. INLAND BARGE SEGMENT (in millions)
2000 1999 ---------- ---------- Revenues $210.1 $201.6 Operating profit $ 25.7 $ 11.5 Operating profit margin 12.2% 5.7%
Inland Barge segment revenues increased 4.2% while operating profit increased 123.5% to $25.7 11 13 million. The increase in operating profit is due mainly to cost reductions and operating efficiencies. PARTS & SERVICES SEGMENT (in millions)
2000 1999 ---------- ---------- Revenues $373.8 $440.1 Operating profit $ 63.4 $ 77.1 Operating profit margin 17.0% 17.5%
Revenues decreased by $66.3 million in the Parts & Services segment, from $440.1 million in fiscal 1999 (including intersegment sales of $155.6 million), to $373.8 million in fiscal 2000 (including intersegment sales of $110.7 million), while operating profit decreased from $77.1 million in fiscal 1999 to $63.4 million in fiscal 2000. Revenue and operating profit declines are primarily due to softness in the railcar market and the sale of three railcar repair plants. CONSTRUCTION PRODUCTS SEGMENT (in millions)
2000 1999 ---------- ---------- Revenues $445.6 $400.9 Operating profit $ 56.2 $ 50.2 Operating profit margin 12.6% 12.5%
Revenues in the Construction Products segment increased 11.1%, while operating profit increased 12% due to increased activity across all product lines, favorable weather conditions, and small acquisitions. INDUSTRIAL PRODUCTS SEGMENT (in millions)
2000 1999 ---------- ---------- Revenues $255.4 $282.2 Operating profit $ 12.4 $ 13.8 Operating profit margin 4.9% 4.9%
The decline in revenues is primarily due to the sale of Beaird Industries, Inc. in the quarter ended June 30, 1998. ALL OTHER Revenues in the All Other segment decreased from $63.7 million in fiscal 1999 to $51.1 million in fiscal 2000 while operating profit decreased from $9.9 million to $1.9 million in fiscal 2000. The decrease in revenues reflects slightly weaker activity in some small, peripheral businesses. LIQUIDITY & CAPITAL RESOURCES Net cash provided by operating activities decreased to $90.9 million during fiscal 2001 from $268.2 million in fiscal 2000 primarily due to reduced operating profits and working capital changes. Capital expenditures during fiscal 2001 were $350.2 million, of which $266.9 million was for additions to the lease portfolio. This compares to $167.2 million of capital expenditures in fiscal 2000, of which $71.0 million was for additions to the lease portfolio. Proceeds from the sale of property, plant and equipment and other assets were $62.8 million in fiscal 2001, composed primarily of the sale of cars from the lease fleet, compared to $77.7 million in fiscal 2000. The Company repurchased 1.6 million shares of its common stock for $34.6 million in fiscal 2001. The Company presently has no intention to repurchase any additional shares. Future operating requirements are expected to be financed principally with net cash flow from operations. Internally generated funds, short-term debt and long-term debt will continue to be used to finance business 12 14 acquisitions. Capital expenditures and additions to Trinity's assets under lease are anticipated to be financed through internally generated funds, short-term debt, the issuance of equipment trust certificates, or similar debt instruments. Subsequent to year-end, the Company received proceeds of approximately $107.8 million pursuant to an off balance sheet, non-recourse financing program to fund railcar leasing activities. The net proceeds were utilized to pay down existing indebtedness. Approximately $43 million of additional railcars are anticipated to be sold under this program in the second fiscal quarter. In addition, on June 8, 2001 the Company completed a committed revolving bank facility for $460 million. Amounts borrowed under the facility bear interest at LIBOR plus 0.625% or other alternative rates at the Company's option and can be converted to a one-year term loan on June 6, 2002. The agreement requires maintenance of ratios related to interest coverage, leverage, and minimum net worth. The Company is currently in compliance and expects to remain in compliance. The initial fundings under this facility were utilized to payoff existing short-term borrowings. INFLATION Changes in price levels of products and services did not significantly affect the Company's operations in fiscal 2001, 2000, or 1999. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The Company's earnings are affected by changes in interest rates due to the impact those changes have on the Company's variable-rate debt obligations, which represented approximately 92% of its total debt as of March 31, 2001. If interest rates average one percentage point more in fiscal 2002 than they did during fiscal 2001, the Company's interest expense would increase by approximately $4.9 million. In comparison, at March 31, 2000, the Company estimated that if interest rates averaged one percentage point more in fiscal 2001 than they did in fiscal 2000, interest expense would have increased by approximately $1.7 million. The impact of an increase in interest rates was determined based on the impact of the hypothetical change in interest rates and scheduled principal payments on the Company's variable-rate debt obligations as of March 31, 2001 and 2000. In addition, the Company is subject to market risk related to its net investments in its foreign subsidiaries. The net investment in foreign subsidiaries as of March 31, 2001 is $232.5 million. However, the impact of such market risk exposures as a result of foreign exchange rate fluctuations has not been material to the Company. 13 15 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. TRINITY INDUSTRIES, INC., INDEX TO FINANCIAL STATEMENTS
PAGE ---- Report of Independent Auditors 15 Consolidated Statement of Operations for the years ended March 31, 2001, 2000, and 1999 16 Consolidated Balance Sheet as of March 31, 2001 and 2000 17 Consolidated Statement of Cash Flows for the years ended March 31, 2001, 2000, and 1999 18 Consolidated Statement of Stockholders' Equity for the years ended March 31, 2001, 2000, and 1999 19 Notes to Consolidated Financial Statements 20 - 30 Selected Quarterly Financial Data (unaudited) for the years ended March 31, 2001 and 2000 31
14 16 REPORT OF INDEPENDENT AUDITORS The Board of Directors and Stockholders Trinity Industries, Inc. We have audited the accompanying consolidated balance sheets of Trinity Industries, Inc. as of March 31, 2001 and 2000, and the related consolidated statement of operations, cash flows and stockholders' equity for each of the three years in the period ended March 31, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Trinity Industries, Inc. at March 31, 2001 and 2000,and the consolidated results of its operations and its cash flows for each of the three years in the period ended March 31, 2001, in conformity with accounting principles generally accepted in the United States. ERNST & YOUNG LLP Dallas, Texas May 21, 2001 15 17 CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended March 31 (in millions except per share data) 2001 2000 1999 --------- --------- --------- Revenues $ 1,904.3 $ 2,740.6 $ 2,926.9 Operating costs: Cost of revenues 1,756.7 2,278.2 2,472.8 Selling, engineering and administrative expenses 213.7 183.4 169.2 --------- --------- --------- 1,970.4 2,461.6 2,642.0 --------- --------- --------- Operating profit (loss) (66.1) 279.0 284.9 Other (income) expense: Interest income (6.9) (2.0) (4.5) Interest expense 28.9 20.4 20.4 Other, net 28.2 (2.3) (27.4) --------- --------- --------- 50.2 16.1 (11.5) --------- --------- --------- Income (loss) before income taxes (116.3) 262.9 296.4 Provision (benefit) for income taxes: Current 3.8 84.4 106.9 Deferred (45.7) 13.0 4.2 --------- --------- --------- (41.9) 97.4 111.1 --------- --------- --------- Net income (loss) $ (74.4) $ 165.5 $ 185.3 ========= ========= ========= Net income (loss) per common share: Basic $ (1.98) $ 4.17 $ 4.31 ========= ========= ========= Diluted $ (1.98) $ 4.15 $ 4.25 ========= ========= ========= Weighted average number of shares outstanding: Basic 37.5 39.7 43.0 Diluted 37.5 39.9 43.6
See accompanying notes to consolidated financial statements. 16 18 CONSOLIDATED BALANCE SHEET
March 31 (in millions except per share data) 2001 2000 -------- -------- Assets Cash and equivalents $ 13.5 $ 16.9 Receivables (net of allowance for doubtful accounts of $4.8 in 2001 and $1.7 in 2000) 245.7 349.8 Inventories: Raw materials and supplies 235.5 257.0 Work in process 43.5 37.5 Finished goods 73.5 66.1 -------- -------- 352.5 360.6 Property, plant and equipment, at cost 1,534.1 1,304.9 Less accumulated depreciation (541.7) (491.7) -------- -------- 992.4 813.2 Other assets 221.8 198.0 -------- -------- $1,825.9 $1,738.5 ======== ======== Liabilities and Stockholders' Equity Short-term debt $ 493.8 $ 170.1 Accounts payable and accrued liabilities 364.2 360.9 Long-term debt 44.0 95.4 Deferred income taxes 7.1 58.5 Other liabilities 37.8 38.5 -------- -------- 946.9 723.4 Stockholders' equity: Common stock - shares issued and outstanding in 2001 - 43.8; in 2000 - 43.8 43.8 43.8 Capital in excess of par value 291.8 295.1 Retained earnings 759.4 860.6 Accumulated other comprehensive loss (21.1) (19.8) Treasury stock (7.0 shares in 2001 and 5.5 shares in 2000) (194.9) (164.6) -------- -------- 879.0 1,015.1 -------- -------- $1,825.9 $1,738.5 ======== ========
See accompanying notes to consolidated financial statements. 17 19 CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended March 31 (in millions) 2001 2000 1999 ------ ------ ------ Operating activities: Net income (loss) $(74.4) $165.5 $185.3 Adjustments to reconcile net income (loss) to net cash provided (required) by operating activities: Depreciation and amortization 89.1 80.3 72.0 Deferred income taxes (45.5) 13.0 4.2 Gain on sale of property, plant and equipment and other assets (11.2) (10.5) (24.6) Unusual charges 173.3 -- -- Other 0.8 2.4 (7.6) Changes in assets and liabilities, net of effects from acquisitions and unusual charges: Decrease in receivables 92.3 17.4 45.3 (Increase) decrease in inventories (24.3) 43.0 (47.9) (Increase) decrease in other assets (33.3) 2.8 (13.9) Decrease in accounts payable and accrued liabilities (75.1) (60.4) (53.0) Increase (decrease) in other liabilities (0.8) 14.7 1.8 ------ ------ ------ Total adjustments 165.3 102.7 (23.7) ------ ------ ------ Net cash provided by operating activities 90.9 268.2 161.6 Investing activities: Proceeds from sale of property, plant and equipment and other assets 62.8 77.7 178.7 Capital expenditures (350.2) (167.2) (193.5) Payment for purchase of acquisitions, net of cash acquired (13.5) (25.6) (82.8) ------ ------ ------ Net cash required by investing activities (300.9) (115.1) (97.6) Financing activities: Issuance of common stock -- 2.3 4.8 Net borrowings (repayments) of short-term debt 323.7 (10.9) 80.0 Payments to retire long-term debt (55.5) (27.5) (29.5) Stock repurchases (34.6) (84.9) (79.5) Dividends paid (27.0) (28.7) (29.4) ------ ------ ------ Net cash provided (required) by financing activities 206.6 (149.7) (53.6) ------ ------ ------ Net increase (decrease) in cash and equivalents (3.4) 3.4 10.4 Cash and equivalents at beginning of period 16.9 13.5 3.1 ------ ------ ------ Cash and equivalents at end of period $ 13.5 $ 16.9 $ 13.5 ====== ====== ======
Interest paid in fiscal 2001, 2000, and 1999 was $29.0, $20.7 and $20.5, respectively. See accompanying notes to consolidated financial statements. 18 20 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Common Common Capital Accumulated Shares Stock in Other (in millions except share (100,000,000 $1.00 Excess of Retained Comprehensive Treasury and per share data) Authorized) Par Value Par Value Earnings Loss Shares ------------ --------- --------- -------- ------------- -------- Balance at March 31, 1998 43,489,276 $ 43.5 $ 287.7 $ 567.5 $ (11.2) Net income -- -- -- 185.3 -- -- Currency translation adjustments -- -- -- -- (9.4) -- Comprehensive income Cash dividends ($0.69 per share) -- -- -- (29.9) -- -- Stock repurchases -- -- -- -- (2,363,932) Other 216,360 0.2 4.9 -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- Balance at March 31, 1999 43,705,636 43.7 292.6 722.9 (20.6) (2,363,932) Net income -- -- -- 165.5 -- -- Currency translation adjustments -- -- -- -- 0.8 -- Comprehensive income Cash dividends ($0.72 per share) -- -- -- (27.8) -- -- Stock repurchases -- -- -- -- -- (2,941,839) Other 90,715 0.1 2.5 -- -- (149,972) ----------- ----------- ----------- ----------- ----------- ----------- BALANCE AT MARCH 31, 2000 43,796,351 43.8 295.1 860.6 (19.8) (5,455,743) NET LOSS -- -- -- (74.4) -- -- CURRENCY TRANSLATION ADJUSTMENTS -- -- -- -- (1.3) -- COMPREHENSIVE LOSS CASH DIVIDENDS ($0.72 PER SHARE) -- -- -- (26.8) -- -- STOCK REPURCHASES -- -- -- -- -- (1,618,900) OTHER -- -- (3.3) -- -- 121,257 ----------- ----------- ----------- ----------- ----------- ----------- BALANCE AT MARCH 31, 2001 43,796,351 $ 43.8 $ 291.8 $ 759.4 $ (21.1) (6,953,386) =========== =========== =========== =========== =========== =========== Treasury Total (in millions except share Stock Stockholders' and per share data) At Cost Equity - ------------------------- ---------- ------------- Balance at March 31, 1998 $ 887.5 Net income -- 185.3 Currency translation adjustments -- (9.4) ----------- Comprehensive income 175.9 Cash dividends ($0.69 per share) -- (29.9) Stock repurchases $ (79.5) (79.5) Other -- 5.1 ----------- ----------- Balance at March 31, 1999 (79.5) 959.1 Net income -- 165.5 Currency translation adjustments -- 0.8 ----------- Comprehensive income 166.3 Cash dividends ($0.72 per share) -- (27.8) Stock repurchases (84.9) (84.9) Other (0.2) 2.4 ----------- ----------- BALANCE AT MARCH 31, 2000 (164.6) 1,015.1 NET LOSS -- (74.4) CURRENCY TRANSLATION ADJUSTMENTS -- (1.3) ----------- COMPREHENSIVE LOSS (75.7) CASH DIVIDENDS ($0.72 PER SHARE) -- (26.8) STOCK REPURCHASES (34.6) (34.6) OTHER 4.3 1.0 ----------- ----------- BALANCE AT MARCH 31, 2001 $ (194.9) $ 879.0 =========== ===========
The Company has authorized and unissued 1,500,000 shares of no par value voting preferred stock. See accompanying notes to consolidated financial statements. 19 21 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of Trinity Industries, Inc. and its consolidated subsidiaries ("Trinity" or the "Company") include the accounts of all significant majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The Company generally recognizes revenue when products are shipped or services are provided. Revenues for contracts providing for a large number of units and few deliveries are recorded as units are produced. For purposes of the Consolidated Statement of Cash Flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Financial instruments which potentially subject the Company to concentrations of credit risk are primarily cash investments and receivables. The Company places its cash investments in investment grade, short-term debt instruments and limits the amount of credit exposure to any one commercial issuer. Concentrations of credit risk with respect to receivables are limited due to control procedures to monitor the credit worthiness of customers, the large number of customers in the Company's customer base, and their dispersion across different industries and geographic areas. The Company maintains an allowance for losses based upon the expected collectibility of all receivables. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Inventories and investments are valued at the lower of cost or market, with cost determined principally on the specific identification method. Market is replacement cost or net realizable value. Depreciation and amortization are generally computed by the straight-line method on the estimated useful lives of the assets, generally 2 to 30 years. The costs of ordinary maintenance and repair are charged to expense while renewals and major replacements are capitalized. For fiscal 2000 and fiscal 1999 diluted net income per common share is based on the weighted average shares outstanding plus the assumed exercise of dilutive stock options less the number of treasury shares assumed to be purchased from the proceeds using the average market price of Trinity's common stock. Basic net income per common share is based on the weighted average number of common shares outstanding for the period. The numerator for both basic net income per common share and diluted net income per common share is net income. The difference between the denominator in the basic calculation and the denominator in the diluted calculation is attributable to the effect of employee stock options. Diluted loss per common share for fiscal 2001 is based only on the weighted average number of common shares outstanding during the period, as the inclusion of stock options would have been antidilutive. Effective April 1, 2001 the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," and its amendments. SFAS No. 133, as amended, requires companies to record derivatives on the balance sheet as assets and liabilities, measured at fair value. Gains and losses resulting from the changes in fair value of those derivatives are accounted for as either components of earnings or other comprehensive income depending on the use of the derivative and whether it qualifies for hedge accounting. The implementation of specific policies and procedures related to derivative instruments and the issues surrounding SFAS No. 133, as amended, ensures the Company is in compliance with this new standard. The adoption of SFAS No.133, as amended, will not have a material impact on the Company's consolidated financial statements. Certain reclassifications have been made to prior year statements to conform to the current year presentation. 20 22 SEGMENT INFORMATION As of March 31, 2001, the Company modified its segment reporting to align the reportable segments with current internal reporting. The new reporting format combines the Highway Construction Products segment and the Concrete and Aggregate segment into one segment called the Construction Products segment. Other minor reclassifications between segments were also made. Operating profit amounts are after allocation of corporate shared services charges. All prior years' amounts have been restated to conform to current presentations. The new reporting format includes the following business segments (1) the Railcar segment, which manufactures and sells railcars; (2) the Inland Barge segment, consisting of barges and related products for inland waterway services; (3) Parts & Services segment, which manufactures and sells various parts to manufacturers of railcars and other industrial products and provides services such as railcar maintenance, fleet management, and leasing; (4) the Construction Products segment, consisting primarily of highway guardrail and safety products, concrete and aggregate, and girders and beams used in the construction of highway and railway bridges; and (5) the Industrial Products segment, which manufactures and sells containers, container heads, weld fittings used in pressure piping systems, and pressure and non-pressure containers for the storage and transportation of liquefied gases and other liquid and dry products. Finally, All Other includes transportation services, the Company's captive insurance company, structural towers, and other peripheral businesses. The financial information for these segments is shown in the tables below. The Company operates principally in the continental United States, Mexico, Romania, Brazil and Slovakia. Intersegmental sales are at market prices.
YEAR ENDED MARCH 31, 2001 (in millions) REVENUES --------------------------------- OPERATING PROFIT DEPRECIATION & CAPITAL OUTSIDE INTERSEGMENT TOTAL (LOSS) ASSETS AMORTIZATION EXPENDITURES -------- ------------ -------- -------- -------- -------------- ------------ RAILCAR SEGMENT $ 738.9 $ 3.3 $ 742.2 $ (31.7) $ 321.9 $ 14.1 $ 38.0 INLAND BARGE SEGMENT 202.9 -- 202.9 11.7 77.2 4.3 1.4 PARTS & SERVICES SEGMENT 248.5 68.2 316.7 (11.4) 716.0 24.3 257.0 CONSTRUCTION PRODUCTS SEGMENT 441.0 1.4 442.4 38.5 240.5 24.0 28.0 INDUSTRIAL PRODUCTS SEGMENT 220.5 9.8 230.3 (8.2) 206.1 9.1 12.4 ALL OTHER 52.5 60.7 113.2 (15.7) 50.9 5.4 11.0 ELIMINATIONS & CORPORATE ITEMS -- -- (143.4) (49.3) 213.3 7.9 2.4 -------- -------- -------- -------- -------- -------- -------- CONSOLIDATED TOTAL $1,904.3 $ (66.1) $1,825.9 $ 89.1 $ 350.2 ======== ======== ======== ======== ========
21 23 See pages 23 and 24 for explanation and segment effect of unusual charges recorded during the year ended March 31, 2001. YEAR ENDED MARCH 31, 2000 (in millions)
Revenues ----------------------------- Operating Profit Depreciation & Capital Outside Intersegment Total (Loss) Assets Amortization Expenditures ------- ------------ ----- --------- ------ ------------ ------------ Railcar Segment $1,515.3 $ 5.9 $1,521.2 $ 153.2 $ 484.1 $ 12.8 $ 19.4 Inland Barge Segment 210.1 -- 210.1 25.7 63.7 5.4 1.5 Parts & Services Segment 263.1 110.7 373.8 63.4 507.4 21.3 82.9 Construction Products Segment 445.6 -- 445.6 56.2 234.1 22.2 27.8 Industrial Products Segment 255.4 1.3 256.7 12.4 148.1 7.1 11.4 All Other 51.1 61.9 113.0 1.9 48.3 6.5 7.8 Eliminations & Corporate Items -- -- (179.8) (33.8) 252.8 5.0 16.4 -------- -------- -------- -------- -------- -------- -------- Consolidated Total $2,740.6 $ 279.0 $1,738.5 $ 80.3 $ 167.2 ======== ======== ======== ======== ========
YEAR ENDED MARCH 31, 1999 (in millions)
Revenues ----------------------------- Operating Profit Depreciation & Capital Outside Intersegment Total (Loss) Assets Amortization Expenditures ------- ------------ ----- --------- ------ ------------ ------------ Railcar Segment $1,694.0 $ 6.9 $1,700.9 $ 166.9 $ 532.2 $ 12.5 $ 30.0 Inland Barge Segment 201.6 -- 201.6 11.5 75.4 6.4 1.0 Parts & Services Segment 284.5 155.6 440.1 77.1 489.7 18.6 118.6 Construction Products Segment 400.9 -- 400.9 50.2 217.8 21.8 17.7 Industrial Products Segment 282.2 1.4 283.6 13.8 115.7 4.2 8.5 All Other 63.7 64.9 128.6 9.9 31.6 5.5 6.6 Eliminations & Corporate Items -- -- (228.8) (44.5) 222.6 3.0 11.1 -------- -------- -------- -------- -------- -------- -------- Consolidated Total $2,926.9 $ 284.9 $1,685.0 $ 72.0 $ 193.5 ======== ======== ======== ======== ========
Total revenues from external customers attributed to foreign operations for fiscal 2001, 2000, and 1999 are $99.5 million, $72.0 million, and $42.6 million, respectively. The Railcar segment includes revenues from one customer that accounted for 12.6 percent and 9.9 percent of consolidated revenues in fiscal 2000 and 1999, respectively. Long-lived assets located outside the United States in fiscal 2001, 2000, and 1999 are $180.1 million, $136.5 million, and $100.2 million, respectively. 22 24 Corporate assets are composed of cash and equivalents, notes receivable, land held for investment, certain property, plant and equipment, and other assets. Capital expenditures do not include business acquisitions. UNUSUAL CHARGES In the second quarter, the Company recorded pretax charges of $51.9 million ($33.2 million after tax), or $0.88 per share, related primarily to restructuring the Company's railcar operations, exiting the flange and valve businesses, writing down certain inventory, curtailing international barge operations, disposing of excess assets, staff reductions of corporate employees and writing down an investment. Costs included in the charges are summarized as follows: (in millions)
Total Reserve Charges March 31, 2001 ------- -------------- Property, plant & equipment - write-downs to net realizable value to be disposed of and related shut-down costs $28.4 $ 6.9 Inventory writedown 10.3 -- Severance costs - approximately 3,900 employees 4.6 1.5 Investment write off 3.0 -- Other 5.6 3.6 ----- ----- $51.9 $12.0 ===== =====
In the third quarter, the Company recorded pretax charges of $65.6 million ($42.0 million after tax), or $1.13 per share, related primarily to environmental liabilities associated with previously closed facilities, write-downs of certain equity investments and acquired assets, including a 20% investment in a Russian transportation company obtained with the acquisition of Transisco Industries in the fall of 1996, and other charges. Costs included in the charges are summarized as follows: (in millions)
Total Reserve Charges March 31, 2001 ------- -------------- Equity investment write-downs: Russian transportation company $17.0 $ -- Other equity investments 17.5 -- ----- Total equity investment write-downs 34.5 -- Asset write-downs related to wholly-owned businesses 18.7 -- Environmental liabilities 6.6 6.6 Railcar Repair contract losses 4.0 3.7 Accounts receivable reserves in Parts & Services segment 2.9 -- Inventory, severance, and other charges 2.8 1.1 Gain on sale of real estate (3.9) -- ----- ----- $65.6 $11.4 ===== =====
23 25 In the fourth quarter, the Company recorded pretax charges of $55.8 million ($35.7 million after tax), or $0.97 per share, related primarily to additional plant closings, severance, asset write downs and a litigation reserve for an adverse jury verdict announced on May 14, 2001. Costs included in the charges are summarized as follows: (in millions)
Total Reserve Charges March 31, 2001 ------- -------------- Severance pay, asset write-downs, and plant shutdown costs related primarily to plant closings and headcount reductions $32.9 $19.2 Adverse jury verdict 14.8 14.8 Loss on closure and loss on sale of certain assets of TEMCO 8.1 -- ----- ----- $55.8 $34.0 ===== =====
Classification of the charges in the income statement are shown below by quarter: (in millions)
2nd Qtr 3rd Qtr 4th Qtr Charges Charges Charges Total ------- ------ ------- ----- Cost of revenues $ 44.1 $ 27.3 $ 53.9 $125.3 Selling, engineering and administrative expenses 4.8 8.9 1.9 15.6 ------ ------ ------ ------ Charged to operating profit 48.9 36.2 55.8 140.9 Other expenses 3.0 29.4 -- 32.4 ------ ------ ------ ------ Total $ 51.9 $ 65.6 $ 55.8 $173.3 ------ ------ ------ ------
Classification of the charges by segment are shown below: (in millions)
INLAND PARTS & CONSTRUCTION INDUSTRIAL CORPORATE & RAILCAR BARGE SERVICES PRODUCTS PRODUCTS OTHER TOTAL ---------- ---------- ---------- ---------- ---------- ---------- ---------- Cost of revenues $ 66.2 $ 4.4 $ 26.6 $ -- $ 14.4 $ 13.7 $ 125.3 Selling, engineering & administrative 1.8 -- 6.9 -- 0.1 6.8 15.6 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Charged to operating profit $ 68.0 $ 4.4 $ 33.5 $ -- $ 14.5 $ 20.5 $ 140.9 ========== ========== ========== ========== ========== ========== ==========
Provisions to write-down property, plant, and equipment to be disposed of to estimated fair market value were primarily related to assets that are no longer in use, have been sold, scrapped, and/or are held for sale at March 31, 2001. The Company estimated the fair market value of properties no longer in use or held for sale based on the location and condition of the properties, the fair market value of similar properties in the area, and the experience of the Company in the selling of similar properties in the past. ACQUISITIONS AND DIVESTITURES The Company made certain acquisitions during fiscal 2001, 2000 and 1999 accounted for by the purchase method. The aggregate purchase price for these acquisitions was $30.6 million, $87.4 million and 24 26 $104.4 million respectively. Goodwill, which is included in other assets and amortized over periods ranging from 10 to 30 years of $14.5 million, $9.3 million and $65 million was recorded on the 2001, 2000 and 1999 acquisitions respectively. The acquired operations have been included in the consolidated financial statements from the effective dates of the acquisitions. Proforma results would not have been materially different from actual results for any year presented. During fiscal 2001, the Company made the decision to discontinue the operations of TEMCO, which produced concrete mixers, concrete batch plants and component parts for concrete related industries. Certain assets associated with this business were sold in March 2001. STOCK PLANS The Company's 1998 Stock Option and Incentive Plan provides for awarding 2,000,000 shares of common stock plus shares covered by forfeited, expired, and canceled options granted under prior plans with a maximum of 600,000 shares being available for issuance as restricted stock or in satisfaction of performance or other awards. At March 31, 2001, a total of 988,233 shares were available for issuance. The plan provides for the granting of: nonqualified and incentive stock options having maximum ten-year terms to purchase common stock at its market value on the award date; stock appreciation rights based on common stock fair market values with settlement in common stock or cash; restricted stock; and performance awards with settlement in common stock or cash on achievement of specific business objectives. Under previous plans, nonqualified and incentive stock options and restricted shares were granted at their fair market values. One grant provided for granting reload options for the remaining term of the original grant at the common stock market value on the date shares already owned by the optionee are surrendered in payment of the option exercise price. Options become exercisable in various percentages over periods ranging up to eight years.
Year Ended March 31 ---------------------------------------------------------------------------------------- 2001 2000 1999 -------------------------- -------------------------- -------------------------- Weighted Weighted Weighted Average Average Average Exercise Exercise Shares Exercise Price Shares Price Shares Price ---------- -------------- ---------- ---------- ---------- ---------- Outstanding beginning of 2,526,836 $ 30.33 2,059,983 $ 29.81 1,982,495 $ 26.01 year Granted 865,200 22.96 636,306 30.06 414,663 39.76 Exercised (186,248) 13.25 (147,309) 21.02 (314,453) 18.73 Cancelled (139,868) 30.87 (22,144) 36.32 (22,722) 33.26 ---------- ---------- ---------- ---------- ---------- ---------- Outstanding end of year 3,065,920 29.26 2,526,836 30.33 2,059,983 29.81 ========== ========== ========== ========== ========== ========== Exercisable 1,589,616 30.79 1,319,168 $ 28.32 961,903 23.92 ========== ========== ========== ========== ========== ==========
March 31, 2001 ---------------------------------------------------------------------------------------------- Outstanding Options --------------------------------------------------------- Weighted Average Exercisable Options ---------------- -------------- --------------------- Remaining Weighted Contractual Life Average Exercise Price Range Shares (Years) Exercise Price Shares Price - -------------------- --------- ---------------- -------------- --------- --------- $15.94 - $23.00 1,085,975 7.02 $22.06 290,299 $19.90 23.91 - 29.29 670,382 4.63 25.14 579,845 25.07 29.44 - 34.81 663,091 7.49 30.23 282,634 31.06 36.06 - 53.81 646,472 6.74 44.63 436,838 45.46 --------- ---------------- -------------- --------- --------- $15.94 - $53.81 3,065,920 6.54 $29.26 1,589,616 $30.79 ========= ================ ============== ========= =========
25 27 The Company has elected to apply the accounting provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and its Interpretations and, accordingly, no compensation cost has been recorded for stock options. The effect of computing compensation cost in accordance with Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," and the weighted average fair value of options granted during 2001, 2000, and 1999 using the Black-Scholes option pricing method is shown in the accompanying table.
2001 2000 1999 -------- -------- -------- Estimated fair value per share of options granted $ 7.56 $ 9.10 $ 15.49 Pro forma: Net income (millions) $ (78.7) $ 162.7 $ 183.1 Per diluted share (2.10) $ 4.06 $ 4.20 Black-Scholes assumptions: Expected option life (years) 6.8 5.7 6.7 Risk-free interest rate 4.5% 6.10% 6.00% Dividend yield Common stock volatility 3.10% 3.10% 1.82% 0.328 0.328 0.393
Restricted Stock
2001 2000 1999 -------- -------- -------- Shares awarded -- 50,000 42,000 Shares cancelled (14,000) -- -- Outstanding at March 31 117,500 131,500 81,500 Grant date fair value per share -- $ 27.94 $ 39.04
Certain internet related subsidiaries of the Company have stock based compensation plans which provide for the granting of stock options and other awards allowing Company employees to purchase stock of the Company's subsidiaries. As of March 31, 2001, options are outstanding with an exercise price of $0.12 per share and a total exercise price of $432,000. The book value of these subsidiaries is approximately a negative $0.50 per share. 26 28 DEBT
Long-term debt March 31 2001 2000 (in millions) ------- ------- 3.0-9.25 percent industrial development revenue bonds payable in varying amounts through 2005 $ 1.3 $ 1.6 6.0-8.0 percent promissory notes, generally payable annually through 2015 4.2 28.2 6.96-9.44 percent equipment trust certificates to institutional investors generally payable in semi-annual installments of varying amounts through 2003 34.3 57.4 11.3 percent notes payable monthly through 2003 4.2 8.2 ------- ------- $ 44.0 $ 95.4 ======= =======
The fair value of non-traded, fixed-rate outstanding debt, estimated using discounted cash flow analysis, approximates its carrying value. Principal payments due during the next five years are 2002 - $26.0; 2003 - $11.7; 2004 - $2.1; 2005 - $0.2; and 2006 - $0.2. The trustees of the equipment trusts have been assigned title to railcars with a net book value of $126.3 at March 31, 2001 for the life of the respective equipment trusts. Leases relating to such railcars financed by equipment trust certificates have been assigned as collateral. Short-term debt Short-term debt primarily consists of money market borrowings, generally due within 30 days, with interest rates ranging from 5.88% to 7.50% in 2001 and 5.21% to 6.74% in 2000. PROPERTY, PLANT AND EQUIPMENT
March 31 2001 2000 (in millions) ---------- ---------- Land $ 51.9 $ 51.0 Buildings and improvements 280.5 261.0 Machinery 538.4 528.6 Equipment on lease 627.9 429.0 Construction in progress 35.4 35.3 ---------- ---------- $ 1,534.1 $ 1,304.9 ========== ==========
Equipment on lease consists primarily of railcars leased by the Company to third parties. The Company enters into lease contracts with third parties with terms generally ranging between one and fifteen years, wherein equipment manufactured by Trinity is leased for a specified type of service over the term of the contract. The Company enters primarily into operating leases. Future minimum rental revenues on leases in each fiscal year are: 2002 - $57.1; 2003 - $49.2; 2004 - $43.6; 2005 - $40.7; 2006 - $35.2; and $225.0 thereafter. 27 29 INCOME TAXES (in millions except percent data) The components of the provision (benefit) for income taxes are:
Year Ended March 31 2001 2000 1999 ---------- ---------- ---------- Current: Federal $ 2.5 $ 78.5 $ 96.2 State 1.1 5.2 10.7 Foreign 0.2 0.7 -- ---------- ---------- ---------- 3.8 84.4 106.9 Deferred (45.7) 13.0 4.2 ---------- ---------- ---------- Total $ (41.9) $ 97.4 $ 111.1 ========== ========== ==========
Deferred income taxes represent the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of deferred tax liabilities and assets are:
March 31 2001 2000 ---------- ---------- Deferred tax liabilities: Depreciation $ 97.4 $ 78.3 Deductions related to inventory and other assets of foreign operations 5.1 7.4 Other -- 8.6 ---------- ---------- 102.5 94.3 Deferred tax assets: Pensions and other benefits 43.1 34.2 Accounts receivable, inventory, and other asset valuation accounts 48.0 1.6 Other 4.3 -- ---------- ---------- Total deferred tax assets 95.4 35.8 ---------- ---------- Net deferred tax liabilities $ 7.1 $ 58.5 ========== ==========
The provision (benefit) for income taxes results in effective tax rates different from the statutory rates. The following is a reconciliation between the statutory U.S. federal income tax rate and the Company's effective income tax rate:
Year Ended March 31 2001 2000 1999 ---------- ---------- ---------- Statutory rate 35.0% 35.0% 35.0% State taxes 1.4 1.3 2.4 Other (net) (0.4) 0.8 0.1 ---------- ---------- ---------- Effective tax rate 36.0% 37.1% 37.5% ========== ========== ==========
In fiscal 2001, 2000, and 1999, income taxes of $11.7, $85.2, and $111.6, respectively, were paid net of refunds received. Income (loss) before income taxes for fiscal 2001, 2000, and 1999 was ($124.8), $252.9, and $287.2, respectively, for U.S. operations, and $8.5, $10.0, and $9.2, respectively, for foreign operations. The Company has not provided U.S. deferred income taxes on the undistributed earnings of its foreign subsidiaries based on the determination that such earnings will be indefinitely reinvested. Undistributed earnings of the Company's foreign subsidiaries were $36.9 as of March 31, 2001. 28 30 EMPLOYEE RETIREMENT PLANS (in millions except percent data) The Company sponsors defined benefit pension and defined contribution profit sharing plans which provide income and death benefits for eligible employees.
Year Ended March 31 2001 2000 1999 ---------- ---------- ---------- Actuarial Assumptions Obligation discount rate 7.75% 8.25% 7.25% Compensation increase rate 4.75% 4.75% 4.75% Long-term rate of return on plan assets 9% 9% 9% Expense Components Service cost $ 10.1 $ 13.5 $ 11.4 Interest 13.3 12.9 11.2 Expected return on assets (15.5) (14.3) (13.1) Amortization and deferral (0.7) (0.1) (0.1) Profit sharing 5.5 4.2 5.3 ---------- ---------- ---------- Net expense $ 12.7 $ 16.2 $ 14.7 ========== ========== ========== Benefit Obligations Beginning of year $ 164.0 $ 163.2 $ 156.1 Service cost 10.1 13.5 11.4 Interest 13.3 12.9 11.2 Benefits paid (5.4) (5.0) (6.1) Actuarial (gain) loss 6.6 (20.6) (3.5) Sale of Beaird Industries, Inc. -- -- (5.9) ---------- ---------- ---------- End of year $ 188.6 $ 164.0 $ 163.2 ========== ========== ========== Under funded plans $ 179.6 $ 6.1 $ 147.9 ========== ========== ========== Over funded plans $ 9.0 $ 157.9 $ 15.3 ========== ========== ========== Plans' Assets Beginning of year $ 169.1 $ 160.0 $ 153.4 Actual return on assets (8.8) 11.4 12.3 Employer contributions 13.9 2.7 5.1 Benefits paid (5.4) (5.0) (6.1) Sale of Beaird Industries, Inc. -- -- (4.7) ---------- ---------- ---------- End of year $ 168.8 $ 169.1 $ 160.0 ========== ========== ========== Under funded plans $ 158.5 $ -- $ 140.4 Over funded plans 10.3 169.1 19.6 ========== ========== ========== Consolidated Balance Sheet Components Funded status $ 19.9 $ (5.1) $ 3.2 Unamortized transition obligation 1.1 1.4 1.6 Unrecognized prior service cost (0.9) (1.1) (1.1) Unrecognized gain (loss) (17.6) 14.4 (3.4) ---------- ---------- ---------- Net obligation $ 2.5 $ 9.6 $ 0.3 ========== ========== ========== Accrued $ 10.0 $ 14.5 $ 5.6 Prepaid 7.5 4.9 5.3 ---------- ---------- ---------- Net accrued $ 2.5 $ 9.6 $ 0.3 ========== ========== ==========
29 31 CONTINGENCIES In May of 2001, a judgement in the amount of $14.8 million was entered against the Company in a lawsuit brought for an alleged breach of contract involving the proposed production of a composite component for a refrigerated railcar for the Company. The amount of the judgement was accrued by the Company in fiscal 2001. The Company intends to appeal this judgement. The Company is subject to federal, state, local and foreign laws and regulations relating to the environment and to work places. The Company believes that it is currently in substantial compliance with such laws and the regulations promulgated thereunder. The Company is involved in various proceedings relating to environmental matters. The Company has provided reserves to cover probable and estimable liabilities of the Company with respect to such investigations and cleanup activities, taking into account currently available information and the Company's contractual rights of indemnification. However, estimates of future response costs are necessarily imprecise. Accordingly, there can be no assurance that the Company will not become involved in future litigation or other proceedings or, if the Company were found to be responsible or liable in any litigation or proceeding, that such costs would not be material to the Company. The Company is involved in various other claims and lawsuits incidental to its business. In the opinion of management, these claims and suits in the aggregate will not have a material adverse effect on the Company's consolidated financial statements. STOCKHOLDER'S RIGHTS PLAN The Company has adopted a Stockholder's Rights Plan to replace its existing plan which expired April 27, 1999. On March 11, 1999, the Board of Directors of the Company declared a dividend distribution of one right for each outstanding share of the Company's common stock, $1.00 par value, to stockholders of record at the close of business on April 27, 1999. Each right entitles the registered holder to purchase from the Company one one-hundredth (1/100) of a share of Series A Preferred Stock at a purchase price of $200.00 per one one-hundredth (1/100) of a share, subject to adjustment. The rights are not exercisable or detachable from the common stock until ten business days after a person acquires beneficial ownership of twelve percent or more of the Company's common stock or if a person or group commences a tender or exchange offer upon consummation of which that person or group would beneficially own twelve percent or more of the common stock. The Company will generally be entitled to redeem the rights at $0.01 per right at any time until the first public announcement that a twelve-percent position has been acquired. If any person becomes a beneficial owner of twelve percent or more of the Company's common stock, each right not owned by that person or related parties enables its holder to purchase, at the right's purchase price, shares of the Company's common stock having a calculated value of twice the purchase price of the right. 30 32 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (in millions except per share data)
First Second Third Fourth Quarter Quarter Quarter Quarter Year -------- -------- -------- -------- -------- YEAR ENDED MARCH 31, 2001: REVENUES $ 533.7 550.7 401.2 418.70 1,904.3 OPERATING PROFIT (LOSS) $ 37.5 (14.9) (30.5) (58.2) (66.1) NET INCOME (LOSS) (1) $ 20.9 (13.2) (42.4) (39.7) (74.4) NET INCOME (LOSS) PER COMMON SHARE: BASIC $ 0.55 (0.35) (1.14) (1.08) (1.98) DILUTED $ 0.55 (0.35) (1.14) (1.08) (1.98) Year ended March 31, 2000: Revenues $ 693.4 700.00 700.8 646.4 2,740.6 Operating profit $ 77.4 76.9 68.8 55.9 279.0 Net income $ 45.0 46.3 40.3 33.9 165.5 Net income per common share: Basic $ 1.11 1.17 1.03 0.87 4.17 Diluted $ 1.10 1.16 1.02 0.87 4.15
(1) See notes to consolidated financial statements for a discussion of certain unusual charges recorded in the Company's second, third, and fourth quarters of fiscal 2001. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY. Information regarding the directors of the Company is incorporated by reference to the information set forth under the caption "Nominees" in the Company's proxy statement for the 2001 Annual Meeting of Stockholders. Information regarding compliance with Section 16(a) of the Securities and Exchange Act of 1934 is incorporated by reference to the information set forth under the caption "Section 16(a) Beneficial Ownership Reporting Compliance" in the Company's proxy statement for the 2001 Annual Meeting of Stockholders. 31 33 ITEM 11. EXECUTIVE COMPENSATION. Information regarding compensation of executive officers and directors is incorporated by reference to the information set forth under the captions "Compensation of Directors" and "Executive Compensation" in the Company's proxy statement for the 2001 Annual Meeting of Stockholders. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Information concerning security ownership of certain beneficial owners and management is incorporated herein by reference from the Company's proxy statement for the 2001 Annual Meeting of Stockholders, under the caption "Security Ownership of Certain Beneficial Owners and Management". ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. None. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. During the fourth quarter, the Company filed two Form 8-K's which reported (i) revised lower North American railcar production volumes for next fiscal year; (ii) intention to discontinue and sell certain assets of it's TEMCO business which produced concrete mixers, concrete batch plant and component parts for concrete related industries and record an $8 million unusual charge associated with the cost of exiting this business; (iii) announced it expects to record charges of approximately $17 million primarily for severance and asset write-downs; (iv) expects fourth quarter earnings, excluding the charges mentioned above, to be a small loss; and (v) announced it expects earnings for the next fiscal year to be in the lower end of the $1.20 to $1.50 per share range. Subsequent to March 31, 2001 the Company filed form 8K, which (i) reported earnings for the fourth quarter and fiscal year ended March 31,2001; (ii) announced additional fourth quarter unusual charges of approximately $16 million related to plant closings and $14.8 million in litigation reserves related to an adverse jury verdict; and (iii) announced that until more improvement is seen in the North American rail market, it is reasonable to expect the Company's net income in fiscal 2002 will be comparable to fiscal 2001 net income before unusual charges. 32 34 EXHIBIT (23) Consent of Independent Auditors We consent to the incorporation by reference in Post-Effective Amendment No. 3 to the Registration Statement (Form S-8, No. 2-64813), Post-Effective Amendment No. 1 to the Registration Statement (Form S-8, No. 33-10937), Registration Statement (Form S-8, No. 33-35514), Registration Statement (Form S-8, No. 33-73026), Registration Statement (Form S-8, No. 333-77735), Registration Statement (Form S-8, No. 333-91067), of Trinity Industries, Inc. and in the related Prospectuses of our report dated May 21, 2001 with respect to the consolidated financial statements and schedule of Trinity Industries, Inc. included in this Annual Report (Form 10-K) for the year ended March 31, 2001. ERNST & YOUNG LLP Dallas, Texas June 14, 2001 33 35 Report of Independent Auditors The Board of Directors and Stockholders Trinity Industries, Inc. We have audited the consolidated financial statements of Trinity Industries, Inc. as of March 31, 2001 and 2000, and for each of the three years in the period ended March 31, 2001, and have issued our report thereon dated May 21, 2001. Our audits also included the financial statement schedule of Trinity Industries, Inc. listed in Item 14(a). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. ERNST & YOUNG LLP Dallas, Texas May 21, 2001 34 36 SCHEDULE II Trinity Industries, Inc. Allowance for Doubtful Accounts Years Ended March 31, 2001, 2000, and 1999 (in millions)
Additions Balance at charged to Accounts Balance beginning costs and charged at end of year expenses off of year ------- ------- ------- ------- YEAR ENDED MARCH 31, 2001 $ 1.7 $ 5.1 $ 2.0 $ 4.8 ======= ======= ======= ======= Year Ended March 31, 2000 $ 1.9 $ 0.7 $ 0.9 $ 1.7 ======= ======= ======= ======= Year Ended March 31, 1999 $ 1.7 $ 0.7 $ 0.5 $ 1.9 ======= ======= ======= =======
35 37 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized. Trinity Industries, Inc. By /s/ Michael G. Fortado - ------------------------ ------------------------ Registrant Michael G. Fortado Vice President, General Counsel, and Secretary June 14, 2001 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons of the Company and in the capacities and on the dates indicated: Directors: Directors (continued) /s/ David W. Biegler /s/ Diana Natalicio - ---------------------- --------------------- David W. Biegler Diana Natalicio Director Director June 14, 2001 June 14, 2001 /s/ Ronald J. Gafford /s/ W. Ray Wallace - ---------------------- ------------------- Ronald J. Gafford W. Ray Wallace Director Director June 14, 2001 June 14, 2001 - ---------------------- Barry J. Galt Director June 14, 2001 Principal Executive Officer: /s/ Clifford J. Grum /s/ Timothy R. Wallace - ---------------------- ------------------------ Clifford J. Grum Timothy R. Wallace Director Chairman, President, June 14, 2001 Chief Executive Officer and Director /s/ Dean P. Guerin June 14, 2001 - -------------------- Dean P. Guerin Director June 14, 2001 Principal Financial Officer: /s/ Jess T. Hay /s/ Jim S. Ivy - ----------------- ---------------- Jess T. Hay Jim S. Ivy Director Vice President June 14, 2001 June 14, 2001 Principal Accounting Officer: /s/ Edmund M. Hoffman /s/ Christine S Stucker - ----------------------- ------------------------- Edmund M. Hoffman Christine S. Stucker Director Controller June 14, 2001 June 14, 2001 38 June 14, 2001 June 14, 2001 Trinity Industries, Inc. Index to Exhibits (Item 14(a))
NO. DESCRIPTION --- ----------- (3.1) Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.A to Registration Statement No. 33-10937 filed April 8, 1987). (3.2) By-Laws of the Company (incorporated by reference to Exhibit 3.2 to the Company's Annual Report on Form 10K for the fiscal year ended March 31, 2000.) (4.1) Specimen Common Stock Certificate of Company (incorporated by reference to Exhibit 4.1 to the Company's Annual Report on Form 10K for the fiscal year ended March 31, 1999). (4.2) Rights Agreement dated March 31, 2000 (incorporated by reference To the Company's Form 8-K filed March 31, 1999). (10.1) Fixed Charges Coverage Agreement dated as of January 15, 1980, between Company and Trinity Industries Leasing Company (incorporated by reference to Exhibit 10.1 to Registration Statement No. 2-70378 filed January 29, 1981). (10.2) Tax Allocation Agreement dated as of January 22, 1980 between Company and its subsidiaries (including Trinity Industries Leasing Company) (incorporated by reference to Exhibit 10.2 to Registration Statement No. 2-70378 filed January 29, 1981). (10.3.1) Form of Amended and Restated Executive Severance Agreement, dated November 7, 2000, entered into between the Company and Chief Executive Officer, each of the four most highly paid executive officers other than the Chief Executive Officer who were serving as executive officers at the end of the last completed fiscal year, three other executive officers, and two executive officers of subsidiaries of the Company. (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10Q for the period ended December 31, 2000.* (10.3.2) Form of Amended and Restated Executive Severance Agreement dated November 7, 2000, entered into between the Company and eight executive officers and fourteen divisional officers of the Company( incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10Q for the period ended December 31, 2000).* (10.4) Trinity Industries, Inc., Stock Option Plan with Stock Appreciation Rights (incorporated by reference to Registration Statement No. 2-64813 filed July 5, 1979, as amended by Post-Effective Amendment No. 1 dated July 1, 1980, Post-Effective Amendment No.2 dated August 31, 1984, and Post-Effective Amendment No. 3 dated July 13, 1990).* (10.5) Directors' Retirement Plan adopted December 11, 1986, as amended by Amendment No. 1 dated September 10, 1998 (incorporated by reference to Exhibit 10.5 to the Company's Annual Report on Form 10K for the fiscal year ended March 31, 1999).*
39 Index to Exhibits -- (Continued) (Item 14(a))
NO. DESCRIPTION --- ----------- (10.6) 1989 Stock Option Plan with Stock Appreciation Rights (incorporated by reference to Registration Statement No. 33-35514 filed June 20, 1990). * (10.7) 1993 Stock Option and Incentive Plan (incorporated by reference to Registration Statement No. 33-73026 filed December 15, 1993). Trinity Industries, Inc.* (10.8.1) Supplemental Profit Sharing Plan for Employees of Trinity Industries, Inc. and Certain Affiliates as restated effective January 1,2000 (incorporated by reference to Exhibit 10.8 to the Company's Annual Report on Form 10K for the fiscal year ended March 31, 2000)* (10.8.2) Amendment dated March 8, 2001 to the Supplemental Profit Sharing Plan for Employees of Trinity Industries, Inc. and Certain Affiliates.* (10.9) Supplemental Profit Sharing and Deferred Director Fee Trust dated March 31, 1999 (incorporated by reference to Exhibit 10.10 to the Company's Annual Report on Form 10K for the fiscal year ended March 31, 1999).* (10.10) Supplemental Retirement Plan dated April 1, 1995, as amended by Amendment No. 1 dated September 14, 1995 and Amendment No. 2 dated May 6, 1997 (incorporated by reference to Exhibit 10.11 to the Company's Annual Report on Form 10K for the fiscal year ended March 31, 1999).* (10.11) Deferred Plan for Director Fees dated July 17, 1996, as amended by Amendment No. 1 dated September 10, 1998 (incorporated by reference to Exhibit 10.12 to the Company's Annual Report on Form 10K for the fiscal year ended March 31, 1999).* (10.12) Trinity Industries, Inc. 1998 Stock Option and Incentive Plan (incorporated by reference to Registration Statement No. 333-77735 filed May 4, 1999).* (10.13) Form of Deferred Compensation Plan and Agreement entered into between Trinity Industries, Inc. and certain officers of the company (incorporated by reference to Exhibit 10.14 to the Company's Annual Report on Form 10K for the fiscal year ended March 31, 1999).* (10.14) Consulting agreement between the Company and W. R. Wallace effective January 1, 1999 (incorporated by reference to Exhibit 10.14 to the Company's Annual Report on Form 10K for the fiscal year ended March 31, 2000)* (10.15) Trinity Industries, Inc. Short-Term Management Incentive Plan (incorporated by reference to Exhibit A to the Company's proxy statement dated June 19,2000).*
40
NO. DESCRIPTION --- ----------- (10.16) Equipment Lease Agreement dated as of May 17, 2001 between TRLI-1A Railcar Statutory Trust, lessor, and Trinity Rail Leasing I L.P., lessee. (10.17) Credit Agreement dated as of June 8, 2001 among Trinity Industries, Inc, as Borrower, and The Chase Manhattan Bank, as Administrative Agent, et.al. (21) Listing of subsidiaries of the Company. (23) Consent of Independent Auditors. (Contained on page 33 of this document)
*Management contracts and compensatory plan arrangements. NOTICE: Exhibits 10.8.2, 10.16, 10.17, and 21 have been omitted from the reproduction of this Form 10-K. A copy of the Exhibits will be furnished upon written request to Neil Shoop, Treasurer, Trinity Industries, Inc., P.O. Box 568887, Dallas, Texas 75356-8887. The Company may impose a reasonable fee for its expenses in connection with providing the above-referenced Exhibits. EX-10.8.2 2 d88339ex10-8_2.txt AMENDMENT NO 1 TO SUPPLEMENTAL PROFIT SHARING PLAN 1 EXHIBIT 10.8.2 AMENDMENT NO. 1 TO SUPPLEMENTAL PROFIT SHARING PLAN FOR EMPLOYEES OF TRINITY INDUSTRIES, INC. AND CERTAIN AFFILIATES AS RESTATED EFFECTIVE JANUARY 1, 2000 WHEREAS, TRINITY INDUSTRIES, INC. (the "Company") has heretofore adopted, for the benefit of certain executive and managerial employees, the SUPPLEMENTAL PROFIT SHARING PLAN FOR EMPLOYEES OF TRINITY INDUSTRIES, INC. AND CERTAIN AFFILIATES, AS RESTATED EFFECTIVE JANUARY 1, 2000, (the "Plan"); and WHEREAS, pursuant to Article X of the Plan, the Company desires to amend the Plan in certain particulars. NOW, THEREFORE, the Plan is hereby admended in the following respects: Effective March 8, 2001, the second sentence of Article 4.01(d) is amended to add the following to the end of the sentence: ; provided further, the Board of Directors or the Human Resources Committee of the Board of Directors, in its discretion, may elect to waive the earnings requirement. IN WITNESS WHEREOF, the Company has executed this Amendment No 1. on the _________________ day of ___________________ , 2001, effective as of March 8, 2001. TRINITY INDUSTRIES, INC. By: -------------------------- Title: ----------------------- ATTEST: - ------------------------------ EX-10.16 3 d88339ex10-16.txt EQUIPMENT LEASE AGREEMENT 1 EXHIBIT 10.16 EQUIPMENT LEASE AGREEMENT (TRLI 2001-1A) --------------------------------- Dated as of May 17, 2001 between TRLI 2001-1A RAILCAR STATUTORY TRUST, By: State Street Bank and Trust Company of Connecticut, National Association, not in its individual capacity except as expressly provided herein but solely as Owner Trustee, Lessor and TRINITY RAIL LEASING I L.P., Lessee Tank Cars, Covered Hopper Cars and Box Cars --------------------------------- CERTAIN OF THE RIGHT, TITLE AND INTEREST OF LESSOR IN AND TO THIS LEASE, THE EQUIPMENT COVERED HEREBY AND THE RENT DUE AND TO BECOME DUE HEREUNDER HAVE BEEN ASSIGNED AS COLLATERAL SECURITY TO, AND ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF, LASALLE BANK NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS INDENTURE TRUSTEE UNDER A TRUST INDENTURE AND SECURITY AGREEMENT (TRLI 2001- 1A), DATED AS OF MAY 17, 2001 BETWEEN SAID INDENTURE TRUSTEE, AS SECURED PARTY, AND LESSOR, AS DEBTOR. INFORMATION CONCERNING SUCH SECURITY INTEREST MAY BE OBTAINED FROM THE INDENTURE TRUSTEE AT ITS ADDRESS SET FORTH IN SECTION 20 OF THIS LEASE. SEE SECTION 25.2 FOR INFORMATION CONCERNING THE RIGHTS OF THE ORIGINAL HOLDER AND HOLDERS OF, THE VARIOUS COUNTERPARTS HEREOF --------------------------------- 2 TABLE OF CONTENTS
Page SECTION 1. Definitions ..........................................................................................1 SECTION 2. Acceptance and Leasing of Equipment ..................................................................1 SECTION 3. Term and Rent ........................................................................................1 Section 3.1 Lease Term .................................................................................1 Section 3.2 Basic Rent .................................................................................2 Section 3.3 Supplemental Rent ..........................................................................2 Section 3.4 Adjustment of Rent .........................................................................3 Section 3.5 Manner of Payments .........................................................................3 SECTION 4. Ownership and Marking of Equipment ...................................................................4 Section 4.1 Retention of Title .........................................................................4 Section 4.2 Duty to Number and Mark Equipment ..........................................................4 Section 4.3 Prohibition Against Certain Designations ...................................................5 SECTION 5. Disclaimer of Warranties .............................................................................5 Section 5.1 Disclaimer of Warranties ...................................................................5 Section 5.2 Rights Under Existing Equipment Subleases ..................................................6 SECTION 6. Return of Equipment; Storage .........................................................................6 Section 6.1 Return; Holdover Rent ......................................................................6 Section 6.2 Condition of Equipment .....................................................................9 SECTION 7. Liens ...............................................................................................10 SECTION 8. Maintenance; Possession; Compliance with Laws .......................................................10 Section 8.1 Maintenance and Operation .................................................................10 Section 8.2 Possession and Use ........................................................................11 Section 8.3 Sublease ................................................................................. 11 SECTION 9. Modifications .......................................................................................14 Section 9.1 Required Modifications ....................................................................14 Section 9.2 Optional Modifications ....................................................................14 Section 9.3 Removal of Property; Replacements .........................................................15 SECTION 10. Voluntary Termination ..............................................................................15
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Page Section 10.1 Right of Termination .....................................................................15 Section 10.2 Sale of Equipment ........................................................................17 Section 10.3 Retention of Equipment by Lessor .........................................................18 Section 10.4 Termination of Lease .....................................................................19 Section 10.5 Funding of Accounts on Termination .......................................................19 SECTION 11. Loss, Destruction Requisition, Etc .................................................................19 Section 11.1 Event of Loss ............................................................................19 Section 11.2 Replacement or Payment upon Event of Loss ................................................20 Section 11.3 Rent Termination .........................................................................22 Section 11.4 Disposition of Equipment; Replacement of Unit ............................................22 Section 11.5 Eminent Domain ...........................................................................24 SECTION 12. Insurance ..........................................................................................24 Section 12.1 Insurance ................................................................................24 Section 12.2 Physical Damage Insurance ................................................................25 Section 12.3 Public Liability Insurance ...............................................................26 Section 12.4 Certificate of Insurance .................................................................27 Section 12.5 Additional Insurance .....................................................................28 Section 12.6 Post-Lease Term Insurance ................................................................28 SECTION 13. Reports; Inspection ................................................................................29 Section 13.1 Duty of Lessee to Furnish ................................................................29 Section 13.2 Lessor's Inspection Rights ...............................................................29 SECTION 14. Lease Events of Default ............................................................................30
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Page SECTION 15. Remedies ...........................................................................................33 Section 15.1 Remedies .................................................................................33 Section 15.2 Cumulative Remedies ......................................................................36 Section 15.3 No Waiver ................................................................................36 Section 15.4 Notice of Lease Default ..................................................................36 Section 15.5 Lessee's Duty to Return Equipment Upon Default ...........................................36 Section 15.6 Specific Performance; Lessor Appointed Lessee's Agent ....................................37 SECTION 16. Filings; Further Assurances ........................................................................38 Section 16.1 Filings ..................................................................................38 Section 16.2 Further Assurances .......................................................................38 Section 16.3 Other Filings ........................................................................... 39 Section 16.4 Expenses ................................................................................ 39 SECTION 17. Lessor's Right to Perform ..........................................................................39 SECTION 18. Assignment .........................................................................................39 Section 18.1 Assignment by Lessor .....................................................................39 Section 18.2 Assignment by Lessee .....................................................................40 Section 18.3 Sublessee's or Others Performance and Rights .............................................40 SECTION 19. Net Lease, Etc .....................................................................................40 SECTION 20. Notices ............................................................................................42 SECTION 21. Concerning the Indenture Trustee ...................................................................43 Section 21.1 Limitation of the Indenture Trustee's Liabilities ........................................43 Section 21.2 Right, Title and Interest of the Indenture Trustee Under Lease..................................................................................................43 SECTION 22. Purchase Options; Renewal Options ..................................................................43 Section 22.1 Early Purchase Option ....................................................................43
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Page Section 22.2 Election to Retain or Return Equipment at End of Basic or Renewal Term .................................................................................45 Section 22.3 Purchase Option ..........................................................................46 Section 22.4 Renewal Option ...........................................................................47 Section 22.5 Rent Appraisal; Outside Renewal Date .....................................................48 Section 22.6 Stipulated Loss Amount and Termination Amount During Renewal Term .................................................................................48 Section 22.7 Deemed Renewals ..........................................................................48 Section 22.8 Funding of Accounts on Purchase ..........................................................49 SECTION 23. Limitation of Lessor's Liability ...................................................................49 SECTION 24. Investment of Security Funds .......................................................................49 SECTION 25. Miscellaneous ......................................................................................49 Section 25.1 Governing Law; Severability ..............................................................49 Section 25.2 Execution in Counterparts ............................................................... 50 Section 25.3 Headings and Table of Contents; Section References .......................................50 Section 25.4 Successors and Assigns ...................................................................50 Section 25.5 True Lease ...............................................................................50 Section 25.6 Amendments and Waivers ...................................................................51 Section 25.7 Survival ................................................................................ 51 Section 25.8 Business Days.............................................................................51 Section 25.9 Directly or Indirectly; Performance by Managers ..........................................51 Section 25.10 Incorporation by Reference ..............................................................51
6 APPENDICES AND EXHIBITS Exhibit A -- Form of Lease Supplement Exhibit B-1 -- Form of Net Sublease Exhibit B-2 -- Form of Full Service Sublease Appendix A -- Definitions 7 EQUIPMENT LEASE AGREEMENT (TRLI 2001-1A) This Equipment Lease Agreement (TRLI 2001-1A), dated as of May 17, 2001 (this "Lease"), is by and between TRLI 2001-1A Railcar Statutory Trust by State Street Bank and Trust Company of Connecticut, National Association, not in its individual capacity except as expressly provided herein, but solely as trustee under the Trust Agreement, as Lessor, and Trinity Rail Leasing I L.P., a Texas limited partnership, as Lessee. In consideration of the mutual agreements herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: SECTION 1. Definitions. Unless otherwise defined herein or required by the context, all capitalized terms used herein shall have the respective meanings assigned to such terms in Appendix A hereto for all purposes of this Lease. SECTION 2. Acceptance and Leasing of Equipment. Subject to Section 4 of the Participation Agreement, Lessor hereby agrees to accept delivery of each Unit from Lessee and to lease such Unit to Lessee hereunder, and Lessee hereby agrees, immediately following such acceptance by Lessor, to lease from Lessor hereunder such Unit, such acceptance by Lessor and lease by Lessee to be evidenced by the execution and delivery by Lessee and Lessor of a Lease Supplement covering such Unit, all in accordance with Section 2.3(b) of the Participation Agreement. Lessee hereby agrees that its execution and delivery of a Lease Supplement covering any Unit shall, without further act, irrevocably constitute acceptance by Lessee of such Unit for all purposes of this Lease. SECTION 3. Term and Rent. Section 3.1 Lease Term. The basic term of this Lease (the "Basic Term") shall commence on the Basic Term Commencement Date and, subject to earlier termination pursuant to Section 10, 11, 15 or 22.1, shall expire at 11:59 p.m. (Chicago, Illinois time) on the Basic Term Expiration Date. Subject and pursuant to Section 22.4, Lessee may elect one or more Renewal Terms and, as provided in Section 22.7 hereof, in certain circumstances a Renewal Term shall be deemed to have occurred with respect to some or all of the Units. 1 8 Section 3.2 Basic Rent. Lessee hereby agrees to pay Lessor Basic Rent for each Unit throughout the Basic Term applicable thereto in consecutive monthly installments payable on each Rent Payment Date. Each such monthly payment of Basic Rent shall be in an amount equal to the product of the Equipment Cost for such Unit multiplied by the Basic Rent percentage set forth opposite such Rent Payment Date on Schedule 3-A to the Participation Agreement (as such Schedule 3-A shall be adjusted pursuant to Section 2.6 of the Participation Agreement). Schedule 3-B to the Participation Agreement sets forth the Basic Rent allocated for Federal income tax purposes to each lease period and calendar year throughout the Basic Term and in addition, sets forth that for certain months, amounts of Basic Rent shall be allocated to the following and/or preceding calendar year. Schedule 3-B to the Participation Agreement also sets forth the application of Basic Rent payments to the calendar year to which such payments relate. It is the intention of Lessor and Lessee that the allocations of Basic Rent set forth on Schedule 3-B to the Participation Agreement constitute specific allocations of fixed rent within the meaning of Treas. Reg. Section 1.467-1(c)(2)(ii). Stipulated Loss Amounts and Termination Amounts have been calculated on the basis that (i) any Basic Rents actually due on the date of such calculation shall not be paid and (ii) any Basic Rents scheduled to have been paid prior to the date of such calculation are assumed to have been paid and have been appropriately reflected in such calculations. Lessor and Lessee agree to include in income and deduct the Basic Rents allocated to each lease period and calendar year according to Schedule 3-B of the Participation Agreement. In addition, Lessor and Lessee intend that under no circumstances are any Basic Rents to be considered related to (i) any period after the calendar year succeeding the calendar year in which such Basic Rents are payable or any period before the calendar year preceding the calendar year in which such Basic Rents are payable or (ii) the period beginning on the Closing Date and ending on (but not including) August 17, 2001 (the "Basic Rent Holiday"). Notwithstanding anything to the contrary contained herein or in the Participation Agreement, each installment of Basic Rent (both before and after any adjustment pursuant to Section 2.6 of the Participation Agreement) shall be, under any circumstances and in any event, in an amount at least sufficient for Lessor to pay in full as of the due date of such installment, any payment of principal of and interest on the Equipment Notes required to be paid by Lessor pursuant to the Indenture on such due date in accordance with the Scheduled Amortization. Section 3.3 Supplemental Rent. Lessee also agrees to pay to Lessor, or to whosoever shall be entitled thereto, any and all Supplemental Rent, promptly as the same shall become due and owing, or where no due date is specified, promptly after demand by the Person entitled thereto, and in the event of any failure on the part of Lessee to pay any Supplemental Rent, Lessor shall have all rights, powers and remedies provided for herein or by law or equity or otherwise as in the case of 2 9 nonpayment of Basic Rent. Lessee will also pay, as Supplemental Rent, (i) on demand, to the extent permitted by applicable law, an amount equal to Late Payment Interest on any part of any installment of Basic Rent not paid when due for any period for which the same shall be overdue and on any payment of Supplemental Rent not paid when due or promptly after demanded for the period from such due date or demand date, as applicable, until the same shall be paid and (ii) as and when due in accordance with the Trust Indenture or the Participation Agreement, any Make-Whole Amount payable with respect to any Equipment Note, including, without limitation, amounts of Make-Whole Amount due in the case of the termination of this Lease with respect to any Unit pursuant to Section 10, in the case of the purchase of any Unit (but not in the case of a purchase of the Beneficial Interest or if the Equipment Notes are assumed in accordance with the Operative Agreements) pursuant to Section 22.1 or Section 6.9 of the Participation Agreement, and in the case of any refinancing of the Equipment Notes pursuant to Section 10.2 of the Participation Agreement. All Supplemental Rent to be paid pursuant to this Section 3.3 shall be payable in the type of funds and in the manner set forth in Section 3.5. Section 3.4 Adjustment of Rent. Lessee and Lessor agree that the Basic Rent, Stipulated Loss Values, Stipulated Loss Amounts, Termination Values and Termination Amount percentages and the Early Purchase Price shall be adjusted to the extent provided in Section 2.6 of the Participation Agreement. Section 3.5 Manner of Payments. All Rent (other than Supplemental Rent payable to Persons other than Lessor, which shall be payable to such other Persons in accordance with written instructions furnished to Lessee by such Persons, as otherwise provided in any of the Operative Agreements or as required by law) shall be paid by Lessee to Lessor at its office at 225 Asylum Street, Goodwin Square, Hartford, CT, 06103, Attention: Corporate Trust Administration, provided, that so long as the Indenture shall not have been discharged pursuant to the terms thereof, Lessor hereby directs, and Lessee hereby agrees, that all Rent (excluding Excepted Property) payable to Lessor shall be paid from the Payment Account directly to the Indenture Trustee at the times and in funds of the type specified in this Section 3.5 at the office of the Indenture Trustee at 135 S. LaSalle Street, Suite 1960, Chicago, IL 60603, ABA No. 071000505, Account 608775318, Attn: Kristine Schossow, Corporate Trust Services Division, Trust TRLI 2001-1A, or at such other location in the United States of America as the Indenture Trustee may otherwise direct. All Rent shall be paid by Lessee to the recipient not later than 11:00 a.m. Chicago, Illinois time on the date of such payment in funds consisting of lawful currency of the United States of America, which shall be immediately available. Notwithstanding anything contained in this Lease to the contrary, any amounts received pursuant to distribution from any of the Accounts (as such term is defined in the Collateral Agency Agreement) shall for all purposes hereof be deemed payment in satisfaction of the related obligation hereunder to which such distribution relates and any failure by Lessor, the Indenture Trustee or any Indemnified Party to receive from the 3 10 Collateral Agent the full amount of any such distribution measured by reference to Basic Rent, Supplemental Rent or any component thereof shall be deemed a failure by Lessee to pay such Basic Rent or Supplemental Rent hereunder, as the case may be. SECTION 4. Ownership and Marking of Equipment. Section 4.1 Retention of Title. Lessor shall and hereby does retain full legal title to and beneficial ownership of each Unit notwithstanding the delivery to and possession and use of such Unit by Lessee hereunder or any Sublessee under any sublease permitted hereby. Section 4.2 Duty to Number and Mark Equipment. With respect to the Units to be delivered on the Closing Date, Lessee represents that Manager has caused, and as soon as practicable after the date on which a Lease Supplement is executed and delivered in respect of a Replacement Unit pursuant to Section 11.4(b), Lessee will cause, each Unit to be numbered with its reporting mark shown on the Lease Supplement dated the date on which such Unit was delivered and covering such Unit, and will from and after such date keep and maintain, plainly, distinctly, permanently and conspicuously marked by a plate or stencil printed in contrasting colors upon each side of each Unit, in letters not less than one inch in height, a legend substantially as follows: "OWNERSHIP SUBJECT TO A SECURITY AGREEMENT FILED WITH THE SURFACE TRANSPORTATION BOARD" with appropriate changes thereof and additions thereto as from time to time may be required by law in order to protect Lessor's right, title and interest in and to such Unit, its rights under this Lease and the rights of the Indenture Trustee. Except as provided hereinabove, Lessee will not place any such Units in operation or exercise any control or dominion over the same until the required legend shall have been so marked on both sides thereof, and will replace promptly any such word or words in such legend which may be removed, defaced, obliterated or destroyed. In the event of a change in the reporting mark of any Unit, within 60 days after a Responsible Officer of the Manager has received notice of any such changed mark, a statement of the new reporting mark to be substituted therefor shall be delivered by Lessee to Lessor and, so long as the Indenture shall not have been discharged pursuant to its terms, to the Indenture Trustee. As soon as practicable after the delivery of such statement a supplement to this Lease and, if not so discharged, the Indenture, with respect to such new reporting marks, shall be filed or recorded in all public offices where this Lease and the Indenture shall have been filed or recorded and in such other places, if any, where Lessor and, so long as the Indenture shall not have been 4 11 discharged pursuant to its terms, the Indenture Trustee may reasonably request in order to protect, preserve and maintain its right, title and interest in the Units. The costs and expenses of all such supplements, filings and recordings shall be borne by Lessee. Section 4.3 Prohibition Against Certain Designations. Except as above provided, Lessee will not allow the name of any Person to be placed on any Unit as a designation that might reasonably be interpreted as a claim of ownership; provided, however, that, subject to the delivery of the statement of new reporting marks specified in Section 4.2, Lessee may cause any Unit to be lettered with the names or initials or other insignia customarily used by Lessee or any Sublessee or any of their respective Affiliates on railroad equipment used by it of the same or a similar type for convenience of identification of the right of Lessee to use such Unit hereunder or any Sublessee to use such Unit pursuant to a Permitted Sublease. SECTION 5. Disclaimer of Warranties. Section 5.1 Disclaimer of Warranties. Without waiving any claim Lessee may have against any seller, supplier or manufacturer, LESSEE ACKNOWLEDGES AND AGREES THAT (i) EACH UNIT IS OF A SIZE, DESIGN, CAPACITY AND MANUFACTURE SELECTED BY AND ACCEPTABLE TO LESSEE, (ii) LESSEE IS SATISFIED THAT EACH UNIT IS SUITABLE FOR ITS PURPOSES AND LESSEE HAS ACCEPTED EACH UNIT, (iii) NEITHER LESSOR NOR OWNER PARTICIPANT IS A MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND OR HAS INSPECTED THE UNITS PRIOR TO DELIVERY TO AND ACCEPTANCE BY LESSEE, (iv) EACH UNIT IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS AND GOVERNMENTAL REGULATIONS NOW IN EFFECT OR HEREAFTER ADOPTED AND (v) LESSOR LEASES AND LESSEE TAKES EACH UNIT "AS-IS", "WHERE-IS" AND "WITH ALL FAULTS", IN WHATEVER CONDITION IT MAY BE, AND LESSEE ACKNOWLEDGES THAT NEITHER LESSOR, AS LESSOR OR IN ITS INDIVIDUAL CAPACITY, NOR OWNER PARTICIPANT MAKES NOR SHALL BE DEEMED TO HAVE MADE, AND EACH EXPRESSLY DISCLAIMS, ANY AND ALL RIGHTS, CLAIMS, WARRANTIES OR REPRESENTATIONS EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, CONDITION, FITNESS FOR ANY PARTICULAR PURPOSE, DESIGN, OPERATION, MERCHANTABILITY THEREOF OR AS TO THE TITLE OF ANY UNIT, THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREOF OR CONFORMITY THEREOF TO SPECIFICATIONS, FREEDOM FROM PATENT, COPYRIGHT OR TRADEMARK INFRINGEMENT, THE ABSENCE OF ANY LATENT OR OTHER DEFECT, WHETHER OR NOT DISCOVERABLE, OR AS TO THE ABSENCE OF ANY OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WHATSOEVER WITH RESPECT THERETO AND EACH OF LESSOR 5 12 AND OWNER PARTICIPANT EXPRESSLY DISCLAIMS SELECTION OF THE UNITS, except that Lessor, in its individual capacity, represents and warrants that on the Closing Date, Lessor shall have received whatever title to each Unit as was conveyed to Lessor by Lessee and each Unit will be free of Lessor's Liens attributable to Lessor and provided that the foregoing disclaimer in clause (v) shall not extend to Owner Participant's representation and warranty contained in Section 3.5(e) of the Participation Agreement. Lessor hereby appoints and constitutes Lessee its agent and attorney-in-fact during the Lease Term to assert and enforce, from time to time, in the name and for the account of Lessor and Lessee, as their interests may appear, but in all cases at the sole cost and expense of Lessee, whatever claims and rights Lessor may have as owner of each Unit against the manufacturers or any prior owner thereof; provided, however, that if at any time a Lease Event of Default shall have occurred and be continuing, at Lessor's option, such power of attorney shall terminate, and Lessor may assert and enforce, at Lessee's sole cost and expense, such claims and rights. Lessee's delivery of a Lease Supplement shall be conclusive evidence as between Lessee and Lessor that all Units described therein are in all the foregoing respects satisfactory to Lessee, and Lessee will not assert any claim of any nature whatsoever against Lessor based on any of the foregoing matters. Section 5.2 Rights Under Existing Equipment Subleases. Unless a Lease Event of Default shall have occurred and be continuing under Section 14 and Lessor shall have given written notice to Lessee, Lessor agrees to make available to Lessee such rights as Lessor may have, and Lessee shall be entitled to exercise all rights of Lessor under, each Sublease. SECTION 6. Return of Equipment; Storage. Section 6.1 Return; Holdover Rent. (a) Not less than 180 days prior to the end of the Basic Term or the end of any Renewal Term, if Lessee has elected to return the Units under Section 22.2, Lessee will provide Lessor with a list of not less than ten (10) alternative storage locations ("Storage Locations") used for the storage of rolling stock within the Contiguous United States sufficient to store the Units and the available storage capacities of such locations. Unless Lessee shall have purchased the Units pursuant to Section 22 of this Lease or pursuant to Section 6.9 of the Participation Agreement, not less than 90 days prior to the end of the Lease Term, Lessor will give Lessee irrevocable notice of its decision either to take possession of or store the Units. If Lessor shall have decided to take possession of the Units, the terms of Section 6.1(b) will apply. If Lessor shall have decided to store the Units, the terms of Section 6.1(c) will apply. (b) Unless Lessee shall have purchased the Units pursuant to Section 22 of this Lease or pursuant to Section 6.9 of the Participation Agreement, if Lessor shall have decided to take possession of the Units, Lessee will, at its sole risk and expense, deliver possession of the Units at any storage location, f.o.b. such 6 13 location, (i) as may be agreed upon by Lessor and Lessee in writing or (ii) in the absence of such agreement as Lessor may reasonably select by written notice to Lessee on or before the 90th day before the end of the Lease Term; provided, that (x) with respect to all Units being so delivered, there shall be no more than ten (10) locations (each of which shall be located within the Contiguous United States and shall have adequate storage capacities) and (y) Lessor's notice shall specify the total number and type of Units to be delivered to each location. (c) (i) Unless Lessee shall have purchased the Units pursuant to Section 22 of this Lease or pursuant to Section 6.9 of the Participation Agreement, if Lessor shall have elected to store the Units upon the expiration of the Lease Term with respect thereto, Lessee shall store the Units free of charge and at the risk and expense of Lessee for a period (the "Storage Period") beginning, for any particular Storage Location, on the expiration of the Lease Term for such Units (the "Storage Period Commencement Date") and ending not more than 60 days thereafter. On or before the 90th day before the end of the Lease Term, Lessor shall provide Lessee with written notice designating its choices from among the Storage Locations provided by Lessee pursuant to Section 6.1(a). Any storage provided by Lessee during the Storage Period shall be at the sole risk and expense of Lessee, and Lessee shall maintain the insurance required by Section 12.1 with respect to all stored Units. During the Storage Period, Lessee will permit Lessor or any Persons designated by it, including the authorized representative or representatives of any prospective purchaser or user of such Units, to restencil the marks on such Units and to inspect the same during Lessee's normal business hours upon at least three Business Days' prior written or telephonic notice; provided, however, that such inspection and restenciling shall not interfere with the normal conduct of Lessee's business; and provided, further, that (x) such inspection and restenciling shall be at such Person's own risk and expense, (y) Lessee shall be indemnified by Lessor against any loss or damage incurred by it in connection with any such inspection or restenciling by such Person and (z) Lessee (except in the case of Lessee's gross negligence or willful misconduct) shall not be liable for any injury to, or the death of, any person exercising, either on behalf of Lessor or any prospective purchaser or user, the rights of inspection and restenciling granted pursuant hereto. Lessee shall not be required to store any Unit after the Storage Period. If Lessee does store any Unit after the expiration of the Storage Period, such storage shall be at the sole risk and expense of Lessor. (ii) Upon the request and direction of Lessor (and at Lessor's sole risk and expense), on not more than one occasion with respect to each stored Unit and upon not less than 15 days' prior written notice from Lessor to Lessee, Lessee will, on or before the expiration of the Storage Period, transport such Unit to any railroad interchange point or points within the Contiguous United States on any railroad lines or to any connecting carrier for shipment (with appropriate instructions to cause such Unit to be transported to such locations in the Contiguous United States as Lessor shall direct), whereupon Lessee shall have no further liability or obligation with respect to such Unit. 7 14 (iii) Upon receipt of Lessor's written notice designating its choices from among the alternative Storage Locations provided by Lessee under Section 6.1(a), Lessee shall have the option to store such Units at such Storage Locations as it shall choose in which case the Storage Period shall be at the sole risk and expense of Lessee for a period of 60 days, during which period Lessee shall be obligated to insure such Units as provided in Section 12. Upon receipt of such notice, Lessee will promptly give notice to Lessor of the locations at which Lessee will store such Units. If Lessee shall exercise such option, Lessee shall on or before the expiration of the Storage Period transport the Units to any railroad interchange point or points within the Contiguous United States on any railroad lines or to any connecting carrier for shipment (with appropriate instructions to cause such Units to be transported to such locations (provided that such Units shall be transported to no more than ten (10) locations, each having adequate storage capacity) designated by Lessor upon not less than 15 days' prior written notice). The movement of any Unit from such Unit's location as designated by Lessee pursuant to this Section 6.1(c)(iii) to an interchange point thereafter designated by Lessor in accordance with the foregoing sentence will be at the risk and expense of Lessor; provided, however, that any incremental costs associated with movement from the storage facility designated by Lessee pursuant to this clause (iii) over the costs that would be incurred in movement from the storage facility designated by Lessor pursuant to Section 6.1 (a) shall be for the account of Lessee. During any Storage Period, Lessee shall store the Units in such manner as the Manager normally stores similar units of railroad equipment owned or managed by it. (d) Upon the latest of (i) expiration of the Lease Term with respect to a Unit, (ii) tender of such Unit at the location determined in accordance with Section 6.1(b) or, as applicable, the tender of such Unit for storage in accor- dance with Section 6.1(c) and (iii) compliance by such Unit with Section 6.2, this Lease and the obligation to pay Basic Rent for such Unit accruing subsequent to the expiration of the Lease Term with respect to such Unit shall terminate. (e) In the event any Unit is not (i) returned to Lessor in accordance with the provisions of Section 6.1(b) on the last day of the Lease Term with respect thereto, or, if requested by Lessor pursuant to Section 6.1(c), delivered and stored on such last day of the Lease Term, and, in either case, in the condition specified in Section 6.2 or (ii) deemed automatically renewed in accordance with the provisions of Section 22.7, the Lease with respect to such Unit shall continue in effect and Lessee shall pay to Lessor for each such day from the scheduled expiration of the Lease Term with respect to such Unit until the date on which such Unit is returned to Lessor in accordance with the provisions of Section 6.1(b) and in the condition specified in Section 6.2, an amount equal to the daily equivalent of the average Basic Rent for the Basic Term or the Renewal Term, as applicable, to such 8 15 Unit. Notwithstanding the foregoing, nothing in this Section 6.1(e) shall be construed as permitting or authorizing Lessee to fail to meet, or be construed as Lessor consenting to or waiving any failure by Lessee to perform, Lessee's obligation to return the Units in accordance with the requirements of this Lease. Nothing herein shall be in abrogation of Lessor's right to terminate this Lease under Section 15 as a result of such failure or to have such Unit returned to it for possession or storage. Section 6.2 Condition of Equipment. Each Unit when returned to Lessor pursuant to Section 6.1 shall be (i) capable of performing the functions for which it was designed, with all loading and unloading components operating in good working order with allowance for normal wear and tear, (ii) suitable for continued commercial use in the commodity last carried immediately prior to such return, (iii) suitable for use in interchange in accordance with then applicable Federal regulations, the Field Manual of the AAR, the Interchange Rules and FRA rules and regulations, (iv) in all material respects in the condition required by Section 8.1, (v) in conformance with any requirement pertaining to warranties of the manufacturer of the Units during the warranty period, (vi) empty, (vii) unless industry custom or practice indicates to the contrary, steam cleaned or otherwise cleaned in a comparable commercially acceptable manner and (viii) free and clear of all Liens except Lessor's Liens. All logs, records, books and other materials, or appropriate copies of any thereof, relating to the maintenance of such Unit shall, upon Lessor's request, be delivered to Lessor or its designee upon the return of such Unit. Lessor shall have the right to inspect any Unit that is returned pursuant to Section 6.1 to ensure that such Unit is in compliance with the conditions set forth in this Section 6.2, at Lessor's sole cost, expense and risk (including, without limitation, the risk of personal injury or death), by its authorized representatives, during Lessee's normal business hours and upon reasonable prior notice to Lessee; provided, however, that Lessee shall not be liable for any injury to, or the death of, any Person exercising, on behalf of Lessor, the rights of inspection granted under this Section 6.2 unless caused by Lessee's gross negligence or willful misconduct; and further provided, that if such Unit is not in compliance with the conditions set forth in this Section 6.2, then Lessee will (i) promptly take such steps as are necessary to bring such Unit in compliance with the conditions set forth in this Section 6.2 and (ii) pay the reason-able cost and expense of the original inspection of such Unit and any reinspection of such Unit conducted by Lessor required because of such non-compliance with Section 6.2. No inspection pursuant to this Section 6.2 shall interfere with the normal conduct of Lessee's business or the normal conduct of any Sublessee's business, and Lessee shall not be required to undertake or incur any additional liabilities in connection therewith. A Unit shall not be deemed to have been returned to Lessor for purposes of this Lease unless and until it is in compliance with the conditions set forth in this Section 6.2. 9 16 SECTION 7. Liens. Lessee will not directly or indirectly create, incur, assume, permit or suffer to exist any Lien on or with respect to any Unit or Lessee's leasehold interest therein under this Lease, except Permitted Liens, Lessor's Liens and Liens described in Section 6.4(a) and 6.4(b) of the Participation Agreement. Lessee shall promptly, at its own expense, take such action or cause such action to be taken as may be necessary to duly discharge (or bond to the reasonable satisfaction of Lessor and Indenture Trustee) any such Lien not excepted above if the same shall arise at any time. SECTION 8. Maintenance; Possession; Compliance with Laws. Section 8.1 Maintenance and Operation. (a) Lessee, at its own cost and expense, shall maintain, repair and keep each Unit, or cause the Manager under the Management Agreement to maintain, repair and keep each Unit, (i) according to prudent industry practice and in all material respects, in good working order, and in good physical condition for railcars of a similar age and usage, normal wear and tear excepted, (ii) in a manner in all material respects consistent with maintenance practices used by the Manager or, with respect to any Equipment subject to an Existing Equipment Sublease that is a Net Sublease, the applicable Sublessee, as applicable, in respect of railcars owned or managed by the Manager or, with respect to any Equipment subject to an Existing Equipment Sublease that is a Net Sublease, the applicable Sublessee, as applicable, similar in type to such Unit, (iii) in accordance in all material respects with all manufacturer's warranties in effect and in accordance with all applicable provisions, if any, of insurance policies required to be maintained pursuant to Section 12 and (iv) in compliance in all material respects with any applicable laws and regulations from time to time in effect, including, without limitation, the Field Manual of the AAR, FRA rules and regulations and Interchange Rules as they apply to the maintenance and operation of the Units in interchange regardless of upon whom such applicable laws and regulations are nominally imposed; provided, however, that, so long as the Manager or, with respect to any Equipment subject to an Existing Equipment Sublease, the applicable Sublessee, as applicable, is similarly contesting such law or regulation with respect to all other similar equipment owned or operated by Manager or, with respect to any Equipment subject to an Existing Equipment Sublease, the applicable Sublessee, as applicable, Lessee may, in good faith and by appropriate proceedings diligently conducted, contest the validity or application of any such standard, rule or regulation in any reasonable manner which does not materially interfere with the use, possession, operation or return of any of the Units or materially adversely affect the rights or interests of Lessor and the Indenture Trustee in the Units or hereunder or other-wise expose Lessor, the Indenture Trustee or any Participant to criminal sanctions or release Lessee from the obligation to return the Units in compliance with the provisions of Section 6.2; provided further, that Lessee shall promptly notify Lessor and Indenture Trustee in reasonable detail of any such contest. In no event shall 10 17 Lessee discriminate in any material respect as to the use or maintenance of any Unit (including the periodicity of maintenance or recordkeeping in respect of such Unit) as compared to equipment of a similar nature which the Manager owns or manages. Lessee will maintain in all material respects all records, logs and other materials required by relevant industry standards or any governmental authority having jurisdiction over the Units required to be maintained in respect of any Unit, all as if Lessee were the owner of such Units, regardless of whether any such requirements, by their terms, are nominally imposed on Lessee, Lessor or Owner Participant. (b) Without the written waiver or consent of Lessor (which waiver or consent will not be unreasonably withheld), Lessee shall not change, or permit any Sublessee to change, a DOT/AAR classification (as provided for in 49 C.F.R. Part 179 or any successor thereto), or permit any Sublessee to operate any Unit under a different DOT/AAR classification, from that classification in effect for such Unit on the Closing Date, except for any change in tank test pressure rating provided such change does not increase the pressure rating of the Unit above the tank test pressure to which the Unit was manufactured; provided however, that in the event Lessor shall not have provided Lessee with a written waiver or consent to such a reclassification or operation of any Unit within 10 Business Days after receipt of Lessee's written request therefor (or Lessor expressly rejects such a request by Lessee), Lessee may elect to replace such Unit in accordance with and subject to the provisions of Sections 11.2(i), 11.3 and 11.4. Section 8.2 Possession and Use. Lessee shall be entitled to the possession of the Units and to the use of the Units by it or any Affiliate in the United States and, subject to the remaining provisions of this Section 8.2 and Section 8.3, Canada and Mexico, only in the manner for which it was designed and intended and so as to subject it only to ordinary wear and tear. In no event shall Lessee use, store or permit the use or storage of any Unit in any jurisdiction not included in the insurance coverage required by Section 12. The Units shall be used primarily on domestic routes in the United States, and in no event shall more than forty percent (40%) of the Units and the Other Units (as determined by mileage records and measured annually on a calendar year basis) be used outside the Contiguous United States at the same time. Nothing in this Section 8.2 shall be deemed to constitute permission by Lessor to any Person that acquires possession of any Unit to take any action inconsistent with the terms and provisions of this Lease or any of the other Operative Agreements. Section 8.3 Sublease. Lessee shall be entitled, without the prior approval of Lessor, to enter into a sublease, car contract or other contract granting permission for the use of a Unit to: 11 18 (i) a railroad company or companies (that is not a Credit Bankrupt, Trinity or any Affiliate of Trinity) organized under the laws of the United States of America or any state thereof or the District of Columbia, Canada or any province thereof, or Mexico or any state thereof, upon lines of railroad owned or operated by such railroad company or companies or over which such railroad company or companies have trackage rights or rights for operation of their trains, and upon connecting and other carriers in the usual interchange of traffic; (ii) responsible companies (i.e., a company with which the Manager would do business in the ordinary course of its business with respect to railcars which it owns or manages) (other than railroad companies, Trinity, Affiliates of Trinity or Credit Bankrupts) for use in their business; or (iii) wholly-owned Subsidiaries of Trinity organized under the laws of (x) Canada or any political subdivision thereof (each a "Canadian Affiliate") or (y) Mexico or any political subdivision thereof (each a "Mexican Affiliate") (subleases to any of such sublessees referred to in clauses (i), (ii) or (iii) of this Section 8.3 being herein referred to as "Permitted Subleases"); provided, however, that Lessee shall not (A) sublease to a sublessee organized under the laws of Mexico or any state thereof (a "Mexican Sublessee") if, after giving effect to such sublease, the percentage of Units, Other Units and Pledged Units in the aggregate (as measured by number of Units, Other Units and Pledged Units and not mileage records) subleased to Mexican Sublessees exceeds the lesser of (I) 7% (or, with Rating Agency Confirmation, 20%) of the Units, Other Units and the Pledged Units in the aggregate, or (II) the percentage of railcars leased or subleased to Mexican Sublessees in the Total Managed Fleet, and (B) sublease more than 50 Units and Other Units to any single Mexican Sublessee (other than (x) with Rating Agency Confirmation, to a Mexican Affiliate or (y) a Mexican Sublessee (I) with a credit rating of at least BBB and Baa2 as determined by S&P and Moody's, respectively (or, in the event that either S&P or Moody's shall not or cease to provide a credit rating for such entity, a credit rating of at least BBB or Baa2 by S&P or Moody's, as the case may be) or (II) with a full, unconditional irrevocable guaranty from such Mexican Sublessee's parent with a credit rating at least BBB and Baa2 as determined by S&P and Moody's, respectively, or (III) with a letter of credit from a provider with a credit rating at least A+ or A1 as determined by S&P and Moody's, respectively), provided, further, that Lessee shall not at any time sublease more than 20% (or, with Rating Agency Confirmation, 30%) of the Units and the Other Units (as measured by number of Units and Other Units and not mileage records) in the aggregate to Canadian Affiliates, provided, further, that any Unit subleased to a Canadian Affiliate or a Mexican Affiliate shall be sub-subleased to Persons of type described in clause (i) or (ii) above pursuant to a sub-sublease containing terms and conditions similar in all material respects to the applicable sublease between Lessee and the applicable Canadian Affiliate or Mexican Affiliate and, provided, further, that no sub-sublease may provide greater rights to the sub-sublessee than those provided to the sublessee in the related sublease. 12 19 Each Sublease (and to the extent permitted, sub-sublease) other than Existing Equipment Subleases shall include appropriate provisions so that such sublease (i) shall require the payment of rent (x) in dollars (y) at Fair Market Rental Value and (z) not disproportionately in the earlier term of the sublease compared to in the later term of the sublease; (ii) shall not permit any sub-subleasing (or in the case of any sub-sublease, any subleasing), other than (A) sub-subleases by Canadian Affiliates or Mexican Affiliates to Persons of the type described in clauses (i) or (ii) of the immediately preceding paragraph containing terms and conditions similar in all material respects to the applicable sublease between Lessee and the applicable Canadian Affiliate or Mexican Affiliate, (B) "single trip" subleases or (C) sub-subleases by Permitted Sublessees so long as such sub-sublease is (X) of a term of not more than one year, (Y) subject and subordinate to the Sublease and (Z) to a sub-sublessee and on terms such that it would be a Permitted Sublease if it were entered into directly by the Partnership and shall not permit any sub-sub-sub leasing, (iii) provide that the rights of the Sublessee to offset or otherwise set-off against amounts due to Lessee from any such Sublessee under the applicable Sublease be limited to matters arising under the Sublease (except that the Sublessee may offset or otherwise set off amounts due to the Marks Company Trustee under the Sublease), (iv) without regard to the payment of Basic Rent or the Lease Term, shall not include any term or provision which is inconsistent with the terms and conditions of this Lease or which could reasonably be expected to result in material adverse consequences to Lessor, any Participant or the Indenture Trustee (it being agreed that a sublease substantially in the form attached as Exhibit B-1 or Exhibit B-2 satisfies the provisions of this sentence) and (v) does not have a term which extends three years beyond the later of (i) the Basic Term Expiration Date or (ii) if applicable, the end of any Renewal Term then in effect. Lessee will use commercially reasonable efforts to have each Sub-lease other than Existing Equipment Subleases (i) provide that such Sublease and all rights of the Sublessee (and of any other person claiming or who may hereafter claim under or through the Sublessee) under such Sublease, including any purchase options of the Sublessee thereunder, be made subject and subordinate to the terms of this Lease and (ii) be substantially in the form attached as Exhibit B-1 or Exhibit B-2. Notwithstanding the foregoing, in no event shall Lessee or any of its Affiliates be required to take any action to perfect any security interest which any Person may have in any Sublease, other than the filing of a UCC-1 Financing Statement against the Partnership in the jurisdiction in which the Partnership's chief executive office is located and in the Partnership's jurisdiction of formation covering all Subleases generally. No sublease entered into by Lessee hereunder shall relieve Lessee of 13 20 any liability or obligation hereunder, which shall be and remain those of a principal and not a surety. Nothing in this Section 8.3 shall be deemed to constitute permission to any Person in possession of any Unit pursuant to any such sublease to take any action inconsistent with the terms and provisions of this Lease or any of the other Operative Agreements. As used in this Section 8.3, "sublease" as a noun means a sublease, car contract or other contract granting permission for the use of a Unit and "sublease" as a verb means to enter into any of the foregoing. SECTION 9. Modifications. Section 9.1 Required Modifications. In the event a Required Modification to a Unit is required, Lessee agrees to make such Required Modification at its own expense; provided, however, that Lessee may, in good faith and by appropriate proceedings diligently conducted, contest the validity or application of any such law, regulation, requirement or rule in any reasonable manner which does not materially interfere with the use, possession, operation or return of any Unit or materially adversely affect the rights or interests of Lessor or the Indenture Trustee in the Units or hereunder or otherwise expose Lessor, the Indenture Trustee or any Participant to criminal sanctions or relieve Lessee of the obligation to return the Units in compliance with the provisions of Section 6.2; provided, further, that, with respect to a Unit subject to a Full Service Sublease, the Manager, and with respect to a Unit subject to a Net Sublease, the Sublessee, as applicable, is similarly contesting such law, regulation, requirement or rule with respect to all other similar equipment owned or operated by the Manager or the Sublessee, as applicable. Title to any Required Modification shall immediately vest in Lessor. Notwithstanding anything herein to the contrary, if Lessee, on a non-discriminatory basis, determines in its reasonable judgment (as evidenced by an Officer's Certificate of Lessee to such effect, confirmed by an Officer's Certificate of the Manager) that any Required Modification to a Unit would be economically impractical and the Manager certifies that it has made a similar determination with respect to similar railcars in similar circumstances which are part of the Manager's Fleet, in lieu of making the Required Modification as provided above, Lessee may provide written notice of such determination to Lessor in such Officer's Certificate and treat such Unit as if an Event of Loss had occurred as of the date of such written notice with respect to such Unit and in such event the provisions of Sections 11.2(ii), 11.3 and 11.4 shall apply with respect to such Unit except that the amount payable under Section 11.2(ii)(a) as a result of such determination shall be an amount equal to the greater of the Fair Market Sales Value or Stipulated Loss Amount of such Unit; provided that there shall also be included in such Officer's Certificate a statement of how Lessee intends to meet the financial obligations imposed under said Sections 11.2, 11.3 and 11.4 with respect to such Units. Section 9.2 Optional Modifications. Lessee at any time may or may permit a Sublessee to, in its discretion and at its own or such Sublessee's cost and 14 21 expense, modify, alter or improve any Unit in a manner which is not required by Section 9.1 (a "Modification"); provided that no Modification shall diminish the fair market value, utility, capacity, residual value or remaining economic useful life of such Unit below the fair market value, utility, capacity, residual value or remaining economic useful life thereof immediately prior to such Modification, in more than a de minimis respect, assuming such Unit was then at least in the condition required to be maintained by the terms of this Lease. Title to any Non-Severable Modification shall be immediately vested in Lessor. Title to any Severable Modification (other than Required Modifications) shall remain with Lessee or the Sublessee as applicable. If Lessee shall at its cost cause such Severable Modifications (other than Required Modifications) to be made to any Unit, Lessor shall have the right, upon 90 days prior written notice in the case of the return of such Unit pursuant to Section 6.1, to purchase any such Severable Modifications (other than Severable Modifications consisting of proprietary or communications equipment) title to which is held by Lessee at their then Fair Market Sales Value (taking into account their actual condition). If Lessor does not so elect to purchase such Severable Modifications, Lessee may remove such Severable Modifications at Lessee's cost and expense, and if requested (which request shall be made by not less than 90 days prior written notice in the case of a return other than pursuant to Section 15.6) by Lessor will so remove such Severable Modifications at Lessee's cost and expense, and Lessee shall, at its expense, repair any damage resulting from the removal of any such Severable Modifications in a manner consistent with Section 8.1. If Lessee has not removed any Severable Modification prior to the return of the related Unit as provided herein, title to such Severable Modification shall pass to Lessor as of the date of such return. Section 9.3 Removal of Property; Replacements. Lessee may, in the ordinary course of maintenance or repair of any Unit, remove any item of property constituting a part of such Unit, and unless the removal of such item is required by Section 9.1 hereof, Lessee shall replace such item as promptly as practicable by an item of property that is free and clear of all Liens (other than Permitted Liens) and in as good operating condition as, and with a fair market value, utility, capacity, residual value and remaining economic useful life at least equal to, the item of property being replaced, assuming that such replaced item was in the condition required to be maintained by the terms of this Lease. Any item of property removed from such Unit in the ordinary course of maintenance and repair as provided in the preceding sentence shall remain the property of Lessor until replaced in accordance with the terms of such sentence, but shall then, without further act, become the property of Lessee. Any replacement property which is incorporated into a Unit in the ordinary course of maintenance and repair shall, without further act, become the property of Lessor and be deemed part of such Unit for all purposes hereof. SECTION 10. Voluntary Termination. Section 10.1 Right of Termination. Lessee shall have the right, at its 15 22 option at any time or from time to time during the Basic Term on or after the seventh anniversary of the Basic Term Commencement Date to terminate the Lease with respect to any or all of the Units(provided that, if such termination is for less than all Units in a Functional Group across the Partnership Fleet, Lessee shall exercise such termination hereunder and under the comparable provisions contained in the Other Lease (i) with respect to at least 50 railcars in the aggregate of the type included in such Functional Group, (ii) no fewer than 25 railcars of the type included in such Functional Group shall in the aggregate remain subject to this Lease and the Other Lease, (iii) such termination shall be made hereunder and under the Other Lease pro rata in accordance with the number of units in such Functional Group subject to each such lease and (iv) the determination as to which Units are subject to termination shall otherwise be made by Lessee on a random basis without discrimination based on maintenance status, operating condition of the Units in question or otherwise) (the "Terminated Units") if (x) Lessee determines in good faith (as evidenced by a certified copy of a resolution adopted by the General Partner's Board of Directors and a certificate executed by the Chief Financial Officer of the General Partner and the Chief Financial Officer of the Manager) that such Units have become obsolete or surplus to Lessee's requirements, (y) Lessor has received an Officer's Certificate from Lessee and the Manager to the effect that there has been no discrimination in the selection of the Terminated Units when measured against the other Units and the Manager's Fleet, and that, following the termination of this Lease with respect to the Terminated Units, the Units remaining subject to this Lease will constitute a pool of Units which is of a sufficient quantity and quality to sustain over the remaining Basic Term the Coverage Ratios applicable at the time of such termination and (z) Lessee delivers at least 120 days' prior notice to Lessor and the Indenture Trustee (i) specifying a proposed date of termination for such Units (the "Termination Date"), which date shall be a Rent Payment Date, any such termination to be effective on the Termination Date upon Lessee's compliance with this Section 10, and (ii) if some but less than all of the Units in a Functional Group are designated as Terminated Units, describing in such Officer's Certificate the nondiscriminatory manner in which Lessee proposes to determine which Units in that Functional Group are to be Terminated Units. Notwithstanding anything herein contained to the contrary, there shall be no determination that a Unit is surplus or obsolete for purposes of this Lease if, on the Termination Date, such Unit is subject to a Sublease. Except as expressly provided otherwise herein, there will be no conditions to Lessee's right to terminate this Lease with respect to the Terminated Units pursuant to this Section 10.1. So long as (a) Lessor shall not have given Lessee a notice of election to retain the Terminated Units in accordance with Section 10.3 or (b) notice of prepayment of the Equipment Notes shall not have been given pursuant to Section 2.10 of the Indenture, Lessee may withdraw the termination notice referred to above at any time prior to the 60th day prior to the scheduled Termination Date, whereupon this Lease shall continue in full force and effect; provided that Lessee may not exercise its right to withdraw a termination notice more than once annually or more than four times during the Basic Term (irrespective of which Units are covered thereby). Lessee 16 23 agrees that whether or not it withdraws a termination notice it will reimburse Lessor, each Participant and the Indenture Trustee on an After Tax Basis for all reasonable out-of-pocket costs and expenses (including reasonable legal fees and expenses) incurred by any thereof in connection with such termination or proposed termination. Section 10.2 Sale of Equipment. During the period from the date of such notice given pursuant to Section 10.1 to the Termination Date, Lessee, as non-exclusive agent for Lessor and, except as provided in Section 10.3, at Lessee's sole cost and expense, shall use reasonable best efforts to obtain bids from Persons other than Lessee or Affiliates thereof for the cash purchase of the Terminated Units, and Lessee shall promptly, and in any event at least five Business Days prior to the proposed date of sale, certify to Lessor in writing the amount and terms of each such bid, the proposed date of such sale and the name and address of the party submitting such bid. Unless Lessor shall have elected to retain the Terminated Units in accordance with Section 10.3, on the Termination Date: (i) Lessee shall deliver the Terminated Units (excluding any optional Severable Modifications removed by Lessee pursuant to Section 9.2) to the bidder (which shall not be Lessee or an Affiliate of Lessee (for the avoidance of doubt the bidder may be a Customer, or a customer of the Manager, and neither the Manager nor any Affiliate shall be prohibited from managing the Units for such bidder after the purchase by such bidder)), which shall have submitted the highest cash bid prior to such date (or to such other bidder as Lessee and Lessor shall agree) and (ii) subject to the prior or concurrent receipt (x) by Lessor of all amounts owing to Lessor pursuant to the next sentence and (y) by the Persons entitled thereto of all unpaid Supplemental Rent due on or before the Termination Date, Lessor shall, without recourse or warranty (except as to the absence of any Lessor's Lien) simultaneously therewith transfer all of its right, title and interest in and to the Terminated Units to such bidder. The net proceeds of sale realized at such sale shall be paid to and retained by Lessor and, in addition, on the Termination Date, Lessee shall pay to Lessor (A) all Basic Rent with respect to such Terminated Units due and payable prior to the Termination Date (exclusive of any Basic Rent due on such date), (B) the excess, if any, of (1) the Termination Amount for the Terminated Units computed as of the Termination Date over (2) the net cash sales proceeds (after the deduction of all reasonable costs and expenses (including any applicable sales, transfer or similar taxes) of Lessor and Owner Participant in connection with such sale) of the Terminated Units, (C) an amount equal to the Make-Whole Amount and any unpaid Late Payment Premium in respect of the principal amount of the Equipment Notes to be prepaid in accordance with Section 2.10(a) of the Indenture and (D) all other Rent (exclusive of any Basic Rent due on such date) then due and payable hereunder (which shall include, without limitation, the Accumulated Equity Deficiency Amount (without duplication of amounts calculated above) and Late Payment Interest related thereto), so that, after receipt and application of all such payments, but without withdrawal from any Reserve Account, Owner Participant shall be entitled under the terms of the Collateral Agency Agreement to receive, and does receive, taking into account all payments of Basic Rent, in respect of all such Units, the sum of the Accumulated Equity 17 24 Deficiency Amount and Late Payment Interest related thereto and any other amounts then due to Owner Participant. If no sale shall have occurred, whether as a result of Lessee's failure to pay all of the amounts hereinabove required or otherwise, this Lease shall continue in full force and effect with respect to such Units and Lessee agrees to reimburse Lessor, each Participant and the Indenture Trustee for all reasonable costs and expenses (including reasonable legal fees and expenses) incurred by any thereof in connection therewith; provided that if such sale shall not have occurred solely because of Lessee's failure to pay the amounts hereinabove required, Lessee shall have no further right to terminate this Lease with respect to such Units. Lessee, in acting as agent for Lessor, shall have no liability to Lessor for failure to obtain the best price, shall act in its sole discretion and shall be under no duty to solicit bids publicly or in any particular market. Lessee's sole interest in acting as agent shall be to use its reasonable best efforts to sell the Units at the highest price then obtainable consistent with the terms of this Lease. Owner Participant shall have the right, but not the obligation, to obtain bids either directly or through agents other than Lessee. Section 10.3 Retention of Equipment by Lessor. Notwithstanding the provisions of Sections 10.1 and 10.2, Lessor may irrevocably elect by written notice to Lessee, not later than 60 days after receipt of Lessee's notice of termination, not to sell the Terminated Units on the Termination Date, whereupon Lessee shall (i) deliver the Terminated Units to Lessor in the same manner and condition as if delivery were made to Lessor pursuant to Section 6.1(b) and Section 6.2, and shall extend storage rights to the same extent as provided in Section 6.1(c), treating the Termination Date as the termination date of the Lease Term with respect to the Terminated Units and (ii) pay to Lessor, or to the Persons entitled thereto, all Basic Rent and all Supplemental Rent due and owing on the Termination Date and unpaid (exclusive of any Basic Rent due on such date in respect of the Terminated Units, but inclusive of any Supplemental Rent measured by the Make-Whole Amount and any unpaid Late Payment Interest in respect of the Terminated Units), so that, after receipt and application of all such payments, but without withdrawal from any Reserve Account, Owner Participant shall be entitled under the terms of the Collateral Agency Agreement to receive, and does receive, taking into account all payments of Basic Rent, in respect of all such Units, the sum of the Accumulated Equity Deficiency Amount and Late Payment Interest related thereto and any other amounts then due to Owner Participant. On any Termination Date where Lessee is required to make payments pursuant to the preceding sentence, Lessee shall pay as additional Basic Rent (or Lessor shall pay as a refund of Basic Rent) an amount equal to the Basic Rent Adjustment (or the absolute value of the negative Basic Rent Adjustment) set forth on Schedule 4-B to the Participation Agreement for the relevant Rent Payment Date. If Lessor elects not to sell the Terminated Units as provided in this Section 10.3, then Lessor shall pay, or cause to be paid, to the Indenture Trustee an amount equal to the product obtained by multiplying the unpaid principal amount of the Equipment Notes outstanding on such date (after deducting therefrom the 18 25 principal installment, if any, to be paid on such date) by a fraction, the numerator of which shall be the Equipment Cost of the Terminated Units and the denominator of which shall be the aggregate Equipment Costs of all Units then subject to this Lease. Upon payment by Lessor of the foregoing, Lessee shall pay to Lessor an amount of rent equal to the Make-Whole Amount and any unpaid Late Payment Interest in respect of the principal amount of the Equipment Notes to be prepaid together with all Basic Rent (including Basic Rent due on the Termination Date) and Supplemental Rent due and owing; provided that unless all such amounts shall have been paid to the Indenture Trustee on the Termination Date, this Lease shall continue in full force and effect. If after giving the notice referred to above Lessor shall fail to pay the amounts required pursuant to the third sentence of this Section 10.3 and as a result thereof this Lease shall not be terminated with respect to the Terminated Units on a proposed Termination Date, Lessor shall (x) thereafter no longer be entitled to exercise its election to retain such Terminated Units and (y) reimburse Lessee for any reasonable out-of-pocket expenses (including reasonable legal fees and expenses) incurred by it in attempting to sell the Terminated Units pursuant to Section 10.2 immediately prior to Lessor's exercise of such preemptive election, and Lessee may at its option at any time thereafter prior to the immediately following Rent Payment Date submit a new termination notice pursuant to Section 10.1 with respect to such Terminated Units specifying a proposed Termination Date occurring on a Determination Date occurring not earlier than 25 days from the date of such notice. Section 10.4 Termination of Lease. In the event of either (x) any such sale and receipt by Lessor and the Indenture Trustee of all of the amounts provided in Section 10.2 in respect of the Terminated Units or (y) retention of the Terminated Units and full performance by Lessor and Lessee of their respective payment obligations in compliance with Section 10.3, and upon compliance by Lessee with the other provisions of this Section 10, the obligation of Lessee to pay Basic Rent hereunder for such Terminated Units shall cease and the Lease Term for the Terminated Units shall end. Section 10.5 Funding of Accounts on Termination. Lessee will not exercise a termination option under this Section 10 with respect to all of the Units unless either (a) the full amount required to fund the Post Lease Term Reserve Account is (upon consummation of such purchase and distribution of all amounts required to be distributed by the Collateral Agent under the Collateral Agency Agreement) and will be then available to the Collateral Agent to fund such Post Lease Term Reserve Account or (b) an indemnity pursuant to Section 3.13 of the Collateral Agency Agreement has been provided. SECTION 11. Loss, Destruction Requisition, Etc. Section 11.1 Event of Loss. In the event that any Unit (i) shall suffer damage or contamination which, in Lessee's reasonable judgment (as evidenced by 19 26 an Officer's Certificate of Lessee to such effect, confirmed by an Officer's Certificate of the Manager), makes repair uneconomic or renders such Unit unfit for commercial use, (ii) shall suffer destruction which constitutes a total loss, or shall suffer theft or disappearance (after reasonable efforts by Lessee to locate the same) for a period exceeding 6 months (or, if earlier, the end of the Basic Term or Renewal Term then in effect), (iii) shall be permanently returned to the manufacturer pursuant to any patent indemnity provisions, (iv) shall have title thereto taken or appropriated by any governmental authority, agency or instrumentality under the power of eminent domain or otherwise or (v) shall be taken or requisitioned for use by any governmental authority or any agency or instrumentality thereof under the power of eminent domain or otherwise, and such taking or requisition is for a period that exceeds the remaining Basic Term or any Renewal Term then in effect (unless such taking or requisition is by any governmental authority, agency or instrumentality of Mexico or any state thereof in which case such period shall be the lesser of the period as aforesaid or 365 days) (any such occurrence being hereinafter called an "Event of Loss"), Lessee, in accordance with the terms of Section 11.2, shall promptly and fully inform Lessor and the Indenture Trustee of such Event of Loss. Section 11.2 Replacement or Payment upon Event of Loss. Upon the occurrence of an Event of Loss or the deemed occurrence of an Event of Loss pursuant to Section 9.1 or an election to replace pursuant to Section 8.1(b), Lessee shall as soon as reasonably practical and in any event within 60 days after a Responsible Officer of the Manager shall have actual knowledge of the occurrence of such Event of Loss or election to replace give Lessor and the Indenture Trustee notice thereof (which initial notice shall identify the Unit involved). Thereafter, within the 60-day period following such initial notice, Lessee shall give Lessor and the Indenture Trustee a second notice as to which of the following options Lessee shall elect to perform (it being agreed that, except in the case of an election to replace pursuant to Section 8.1(b) (in which case Lessee will comply with the provisions of Section 8.1(b)), if Lessee shall fail to give such second notice, Lessee shall be deemed to have elected to perform the option set forth in Section 11.2(ii)): (i) Upon Lessee's election to perform under this clause (i) pursuant to the above-mentioned second notice (or in the circumstances of an election described in Section 8.1(b) with respect to any Unit), as promptly as practicable following such election, and in any event on or before the 60th day following such second notice (or Section 8.1(b) election), Lessee shall comply with Section 11.4(b) and shall convey or cause to be conveyed to Lessor a replacement unit ("Replacement Unit") to be leased to Lessee hereunder, such Replacement Unit to be of the same car type of the same or newer model year (or otherwise approved by Lessor, which approval shall not be unreasonably withheld), and free and clear of all Liens (other than Permitted Liens of the type described in clause (ii) with respect to Permitted Subleases, and in clauses (iv) and (vii) of the definition thereof) and to have a fair market value, utility, residual value, remaining economic useful life and condition at least equal to the Unit so replaced (assuming such Unit was in the condition required to be maintained by the terms of this Lease) and to be (as of the date of conveyance) 20 27 then subject to a currently effective Permitted Sublease having a remaining term of not less than one year; provided, that, if only railcars of newer age or greater value are available for such replacement, Lessee may on one occasion re-substitute a railcar with a value closer to or equal to that of the Unit which originally suffered the Event of Loss or was replaced (which re-substitution shall occur within twenty-four months of the original replacement (but in no event within the three year period immediately preceding the Basic Term Expiration Date) and shall comply with this Section 11 as if an Event of Loss had occurred); provided also that, if Lessee shall elect the option under this clause (i) but shall fail to perform its obligation to effect such replacement under this clause (i) within the 60-day period hereinabove provided for, then (except in the case of a failure to perform an election to replace pursuant to Section 8.1(b)) at the end of such 60-day period Lessee shall immediately give Lessor and the Indenture Trustee notice of such failure and specify that Lessee shall pay to Lessor on the next succeeding Rent Payment Date that is at least 25 days after the end of such 60-day period, or in the case of Supplemental Rent, to the Person entitled thereto, the amounts specified in clause (ii) below as of such next succeeding Rent Payment Date, and Lessee shall pay such amounts on such Rent Payment Date; provided further that Lessee shall have no right to elect replacement or re-substitution under this clause (i) if, at the time of the notice of the Event of Loss under Section 11.2 above or at the time such replacement or resubstitution is to occur, either (A), a Lease Default pursuant to Section 14(a), 14(b), 14(g) or 14(h) or a Lease Event of Default shall have occurred and be continuing or (B) sufficient cash amounts shall not have been made available to the Collateral Agent such that all amounts then required to be applied under Section 3.4 of the Collateral Agency Agreement in order to satisfy the amounts referred to in clauses (1) through (11) thereof, inclusive shall have been distributed as specified thereby; or (ii) on the Rent Payment Date which is not less than 25 days nor more than 60 days following the date of notice of Lessee's election to perform under this clause (ii), Lessee shall pay or cause to be paid to Lessor (or in the case of Supplemental Rent, to the Persons entitled thereto) in funds of the type specified in Section 3.5, (a) an amount equal to the Stipulated Loss Amount of each such Unit suffering an Event of Loss or deemed Event of Loss determined as of such Rent Payment Date, (b) all Basic Rent payable on such date in respect of such Unit (exclusive of any Basic Rent due on such date in respect of the Unit or Units suffering the Event of Loss), (c) any unpaid Late Payment Premium in respect of the principal amount of the Equipment Notes to be prepaid in accordance with Section 2.10(b) of the Indenture and (d) all other Rent (exclusive of any Basic Rent due on such date in respect of the Unit or Units suffering the Event of Loss) then due and payable hereunder (including, without limitation, the Accumulated Equity Deficiency Amount (without duplication of amounts calculated above) and Late Payment Interest related thereto) so that, after receipt and application of all such payments, but without withdrawal from any Reserve Account, Owner Participant shall be entitled under the terms of the Collateral Agency Agreement to receive, and does receive, taking into account all payments of Basic Rent in respect of such Unit, the sum of the Accumulated Equity Deficiency Amount and Late Payment Interest related thereto and any other amounts then due to Owner Participant, it being understood that until such Stipulated 21 28 Loss Amount and such other sums are paid, there shall be no abatement or reduction of Basic Rent on account of such Event of Loss. Section 11.3 Rent Termination. Upon the replacement of any Unit or Units in compliance with Sections 11.2(i) and 11.4(b) (but only as to replaced Units and not any Replacement Unit) or upon the payment of all sums required to be paid pursuant to Section 11.2 in respect of any Unit or Units, the Lease Term with respect to such Unit or Units and the obligation to pay Basic Rent for such Unit or Units accruing subsequent to the date of payment of Stipulated Loss Amount or date of conveyance of such Replacement Unit or Units pursuant to Section 11.2 shall terminate; provided that Lessee shall be obligated to pay all Rent in respect of such Unit or Units which is payable under Section 11.2 with respect to such payment of Stipulated Loss Amount or such replacement of such Unit or Units and in respect of all other Units then continuing to remain subject to this Lease. Section 11.4 Disposition of Equipment; Replacement of Unit. (a) Upon the payment of all sums required to be paid pursuant to Section 11.2 in respect of any Unit or Units, Lessor will convey to Lessee or its designee all right, title and interest of Lessor in and to such Unit or Units, "as is", "where is", without recourse or warranty, except for a warranty as to the absence of Lessor's Liens, and shall execute and deliver to Lessee or its designee, at Lessee's cost and expense, such bills of sale and other documents and instruments as Lessee or its designee may reasonably request to evidence such conveyance. As to each separate Unit so disposed of, so long as no Lease Event of Default shall have occurred and be continuing, Lessee or its designee shall (subject to any insurer's right of subrogation, if any) be entitled to any amounts arising from such disposition, plus any awards, insurance or other proceeds and damages received by Lessee, Lessor or the Indenture Trustee by reason of such Event of Loss up to the Stipulated Loss Amount attributable thereto and any remainder shall be divided between Lessee and Lessor, as their respective interests may appear. (b) At the time of or prior to any replacement of any Unit or Replacement Unit, Lessee, at its own expense, will (A) furnish Lessor with a Bill of Sale with respect to the Replacement Unit substantially in the form delivered pursuant to Section 4.1(g) of the Participation Agreement, (B) cause a Lease Supplement substantially in the form of Exhibit A hereto, subjecting such Replacement Unit to this Lease, and duly executed by Lessee, to be delivered to Lessor for execution by the appropriate parties, it being understood that upon such execution (x) Lessee will cause such Lease Supplement to be filed for recordation in the same manner as provided for the original Lease Supplement in Section 16.1 and (y) to the extent that the Indenture has not been satisfied and discharged, Lessor shall deliver possession of the "original" counterpart of such Lease Supplement to the Indenture Trustee, (C) so long as the Indenture shall not have been satisfied and discharged, cause an Indenture Supplement substantially in the form of Exhibit A to the Indenture for such Replacement Unit, to be delivered to Lessor and to the Indenture Trustee for execution and, upon such execution, to be filed for recordation in the same manner and within the same time periods as provided for the original Indenture Supplement in Section 16.1, (D) furnish Lessor with an opinion of Lessee's counsel (which may be the General Counsel or Assistant General Counsel of Trinity), (x) to the effect that 22 29 the Bill of Sale referred to in clause (A) above constitutes an effective instrument for the conveyance of title to the Replacement Unit to Lessor, and that legal and beneficial title to the Replacement Unit has been delivered to Lessor and (y) describing all filings and recordings required pursuant to Section 16 with respect to the Replacement Units, (E) furnish to Owner Participant (and its applicable Affiliates) an agreement of Lessee to indemnify Owner Participant (and its applicable Affiliates) against any adverse tax consequences suffered as a result of such replacement that are not otherwise indemnified under the Tax Indemnity Agreement, (F) furnish Lessor with an engineer's certificate (which may be from an employee of the Manager) certifying as to the utility, condition, model year and remaining useful life required under clause (i) of Section 11.2, (G) furnish to Lessor and the Indenture Trustee an Officer's Certificate certifying that the Replacement Unit has a fair market value, utility, residual value, model year and remaining economic useful life and condition at least equal to the Unit being replaced and is free and clear of all Liens (other than Permitted Liens of the type described in clause (ii) with respect to Permitted Subleases, and in clauses (iv) and (vii) of the definition thereof), (H) furnish Lessor with an opinion from independent tax counsel reasonably acceptable to Owner Participant to the effect that Owner Participant should not suffer any adverse consequence as a result of such replacement, (I) furnish Lessor with an opinion of independent transportation counsel or in-house counsel for Manager as to the absence of Liens of record with the STB and as to the completion of all necessary STB filings and deposits with the Registrar General of Canada described in Section 16.1 hereof with respect to such Replacement Unit and (J) furnish such other documents and evidence as any Participant, Lessor or the Indenture Trustee, or their respective counsel, may reasonably request in order to establish the consummation of the transactions contemplated by this Section 11.4. For all purposes hereof, (i) Lessee shall be deemed to have complied with the requirements of this Section 11.4(b) as of the date of its delivery to Lessor, the Participants and the Indenture Trustee of the documents and instruments referred to in the foregoing clauses (A) through (J), signed by Lessee or its counsel, as applicable, in due form for any required filing or recording, and such filing or recording shall have been made if such documents and instruments have been executed and delivered by Lessor or Indenture Trustee or both of them in a timely manner, (ii) title to the Replacement Unit shall be deemed to have been transferred to Lessor as of such date and (iii) upon such passage of title thereto to Lessor the Replacement Unit shall be deemed part of the property leased hereunder and the Replacement Unit shall be deemed a "Unit" as defined herein. Upon such passage of title, Lessor will transfer to Lessee, "as is" and "where is" and without recourse or warranty (except as to Lessor's Liens), all Lessor's right, title and interest in and to the replaced Unit, and upon such transfer, Lessor will request in writing that the Indenture Trustee execute and deliver to Lessee an appropriate instrument releasing such replaced Unit from the lien of the Indenture. Lessee shall pay all reasonable out-of-pocket costs and expenses (including reasonable legal fees and expenses) incurred by Lessor, any Participant or the Indenture Trustee in connection with any replacement pursuant to this Section 11.4. Lessee further agrees that, upon receipt of fully signed counterparts of the Lease Supplement and Indenture Supplement referred to in clauses (B) and, if applicable, (C) of the first sentence of this Section 11.4(b), it will, at its sole cost and expense, cause such documents to be filed or recorded in the manner contemplated by Section 16.1. 23 30 Section 11.5 Eminent Domain. In the event that during the Lease Term the use of any Unit is requisitioned or taken by any governmental authority under the power of eminent domain or otherwise for a period which does not constitute an Event of Loss, all of Lessee's obligations under the Operative Agreements, including without limitation, Lessee's obligation to pay all installments of Basic Rent, shall continue for the duration of such requisitioning or taking. Any amount referred to in Section 11.4(a) or in Section 12 which is payable to Lessor shall be deposited in the related Non-Shared Payments Account established under the Collateral Agency Agreement. SECTION 12. Insurance. Section 12.1 Insurance. Lessee will at all times after delivery and acceptance of each Unit, at its own expense, keep or cause the Insurance Manager under the Insurance Agreement to keep such Unit insured with insurers of recognized responsibility with a rating of at least A- by A.M. Best Company (or a comparable rating by a nationally or internationally recognized rating group of comparable stature) or by other insurers approved in writing by Lessor, which approval shall not be unreasonably withheld, in amounts and against risks and with deductibles and terms and conditions not less than the insurance, if any, maintained by the Manager with respect to similar equipment which it owns or leases, but in no event shall such coverage be for amounts or against risks less than the prudent industry standard for companies engaged in leasing of railcars. Without limiting the foregoing, Lessee will in any event: (a) keep each Unit insured against physical damage (which may be accomplished pursuant to a contingent physical damage policy) in an amount not less than the Stipulated Loss Amount attributable thereto as shown on Schedule 4 to the Participation Agreement, subject to an aggregate limit for all Units of not less than $1,500,000 per occurrence, provided that such coverage may provide for deductible amounts of not more than $50,000 per occurrence; and (b) maintain public liability insurance naming Owner Participant, Lessor, the Trust Company, the Indenture Trustee and Loan Participant as additional insureds (but only with respect to liability arising out of or related to the Operative Agreements and the Units) against bodily injury, death or property damage arising out of the use or operation of the Units with general and excess liability limits of not less than $100,000,000 per occurrence or in the aggregate, provided that such coverage may provide for deductible amounts not exceeding the lesser of (w) $10,000,000 or (x) the difference (not less than zero (0)) between (i) the level of the then current deductible maintained by Manager for the Manager's Fleet (or if Manager, its successors and assigns is no longer engaged in the railcar leasing business, the average level of the then current deductible amounts maintained by the three largest companies engaged in such business in the United States) and (ii) such amount of additional coverage as may be obtained by Lessee in reduction of the then current deductible maintained by Manager for an additional incremental annual premium payable by Lessee in the aggregate in respect of the entire Partnership Fleet of up to $100,000 as adjusted by the Inflation Factor; provided, further, that such policies which are carried on a "claims made" basis shall provide for a retroactive date not 24 31 more recent than either (y) the Closing Date, or (z) a date seven years prior to the effective date of the policy. (c) It is understood and agreed that the insurance required under this Section 12.1 may be part of a company-wide insurance program of the Insurance Manager or its Affiliates, including risk-retention and self-insurance. Any policy of insurance maintained in accordance with this Section 12.1 and any policy purchased in substitution or replacement for any of such policies shall provide that if any such insurance lapses or is cancelled or terminated for any reason whatever (other than upon normal policy expiration), Lessor, the Indenture Trustee, Loan Participant and Owner Participant shall receive 30 days' prior written notice of such lapse, cancellation or termination. (d) If Lessee or the Insurance Manager shall maintain any liability coverages for the benefit of Lessee in excess of the coverages required hereunder (whether or not such excess coverage complies with the requirements under this Section 12), Lessee will cause all such coverages to name Owner Participant, Lessor, the Trust Company, the Indenture Trustee and Loan Participant as additional insureds (but only with respect to liability arising out of or related to the Operative Agreements or the Units), provided, however, that, the requirements of this Section 12 shall not otherwise apply to such coverages. Section 12.2 Physical Damage Insurance. (a) The insurance maintained pursuant to Section 12.1(a) shall provide that (i) so long as the Equipment Notes remain outstanding, the proceeds up to the Stipulated Loss Amount for any loss or damage to any Unit shall be paid to the Indenture Trustee under a standard loss payable clause, and thereafter to Lessor and (ii) so long as no Lease Event of Default shall have occurred and be continuing, Lessee will be entitled, at its own expense, to make all proofs of loss and/or take all other steps necessary to collect the proceeds of such insurance. (b) In lieu of maintaining the physical damage insurance required by Section 12.1(a), Lessee may self-insure with respect to the Units for such amounts and against such risks as shall be consented to by Lessor and the Indenture Trustee, which consent shall be based upon reasonable practices then in effect in the railcar leasing and insurance industries and upon the financial condition of Lessee taking into account Lessee's capital structure and that Lessee is a special purpose corporation. (c) The entire proceeds of any property insurance or third party payments for damages to any Unit received by Lessor or the Indenture Trustee shall be held by such party until, with respect to such Unit, the repairs referred to in clause (i) below are made as specified therein or payment of the Stipulated Loss Amount is made, and such entire proceeds will be paid, so long as no Lease Event of Default shall have occurred and be continuing, either: (i) to Lessee promptly following receipt by the Indenture Trustee or Lessor, as the case may be, of a written application signed by Lessee for payment to Lessee for repairing or restoring the Units which have been damaged so long as (1) Lessee 25 32 shall have complied with the applicable provisions of this Lease, and (2) Lessee shall have certified that any damage to such Units shall have been fully repaired or restored; or (ii) if this Lease is terminated with respect to such Unit because of an Event of Loss and Lessee has paid the Stipulated Loss Amount and all other amounts due as a result thereof, such proceeds shall be promptly paid over to, or retained by, Lessee. Section 12.3 Public Liability Insurance. (a) The public liability insurance referred to in paragraph 12.1(b) shall (i) provide that in as much as such policies cover more than one insured, all terms, conditions, insuring agreements and endorsements, with the exception of limits of liability, deductibles or retentions and liability for premiums, commissions, assessments or calls (which shall be solely a liability of Lessee), shall operate in the same manner as if there were a separate policy or policies covering each insured, (ii) waive any rights of subrogation of the insurers against Owner Participant, Lessor, the Trust Company, the Indenture Trustee, and Loan Participant (iii) provide that neither Owner Participant, Lessor, the Trust Company, the Indenture Trustee nor Loan Participant shall have any responsibility for any insurance premiums, whether for coverage before or after cancellation or termination of any such policies as to Lessee and (iv) be primary without contribution from any similar insurance maintained by Owner Participant, Lessor, the Trust Company, the Indenture Trustee or Loan Participant. (b) Lessee shall use its reasonable efforts to obtain public liability insurance policies which stipulate that coverage thereunder will not be invalidated (as to Owner Participant, Loan Participant, Lessor, as Lessor of the Units and in its individual capacity, and the Indenture Trustee) by any act or neglect of Lessee, or any breach or violation by Lessee of any warranties, declarations or conditions contained in such policies, but shall be under no obligation to obtain such policies containing such stipulations if they are not available to Lessee at commercially reasonable rates in the markets in which Lessee has then placed its insurance program. (c) In the event any public liability insurance policy or coverage thereunder which are required to be maintained under Section 12.1(b) shall not be available to Lessee in the commercial insurance market on commercially reasonable terms, Lessor shall not unreasonably withhold its agreement to waive such requirement. Lessee shall make written request for any such waiver in writing, accompanied by written reports prepared, at Lessee's option, either by (i) one independent insurance advisor chosen by Lessee and Lessor or (ii) three independent insurance advisors, one chosen by Lessor, one chosen by Lessee and one chosen by the other two advisors (one of which may be the regular insurance broker or brokers of Lessee). The fees and expenses of all such advisors shall be paid by Lessee. The written reports required hereunder shall (x) state that such insurance (or the required coverage thereunder) is not reasonably available to Lessee at commercially reasonable premiums in the commercial insurance markets within which Lessee or the Manager normally purchases its insurance from insurers, acceptable to Lessee, with a Best's rating of A- or better for railcars of similar type and capacity and (y) explain in detail the basis for such conclusions. Upon the granting of any such waiver, Lessee shall within 15 days thereafter certify to Lessor in writing the cost (on the basis of the Manager's Fleet) of liability 26 33 insurance premiums for the coverage required by Section 12.1 (b) for the immediately preceding fiscal year; and in the event that any such certificate is not received by Lessor within such 15-day period, any such waiver shall be deemed revoked. At any time after the granting of such waiver, but not more often than once a year, Lessor may make a written request for a supplemental report (in form reasonably acceptable to Lessor) from such insurance advisor(s) updating the prior report and reaffirming the conclusions set forth therein. Lessee shall provide any such required supplemental report within 60 days after receipt of the written request therefor. Any such waiver shall be effective for only as long as such insurance is not reasonably available to Lessee in the commercial markets in which Lessee normally purchases its insurance at commercially reasonable rates, it being understood that the failure of Lessee to furnish timely any such supplemental report shall be conclusive evidence that such condition no longer exists. If such supplemental report shows that such coverage is available, Lessee shall within 90 days of such report obtain such insurance coverage. During any period with respect to which such waiver has been granted and remains in effect under this Section 12.3(c), Lessee shall obtain public liability insurance as set forth in Section 12.1(b) from such carriers, in such amounts and with coverage limits and deductibles as may be reasonable in its judgment under the circumstances, but in any event (i) no less than prudent industry standards and (ii) in an amount that may be purchased for a premium equal to 200% of Lessee's cost (on a fleet-wide basis) of public liability insurance premiums for the coverage on a fleet-wide basis required by Section 12.1(b) for the final year immediately preceding the fiscal year in which such waiver first was granted. Section 12.4 Certificate of Insurance. (a) Lessee shall, prior to the Closing Date and when the renewal certificate referred to below is sent (but in any event not less than annually), furnish (or, in the case of (iii) below, use reasonable efforts to furnish) Lessor, the Indenture Trustee, Owner Participant and the Loan Participant with a certificate signed by the insurer or an independent insurance broker (i) showing the insurance then maintained by Lessee pursuant to Section 12.1, (ii) stating that, except as noted in such certificate, such insurance complies with the requirements contained in Exhibit B-1 (as to public liability insurance) and/or B-2 (as to physical/damage insurance) to the Participation Agreement, (iii) stating that, except as noted in such certificate, such insurance complies with the requirements contained in this Section 12 and (iv) to the extent that any provision that Lessee is required to use reasonable efforts to obtain is not contained in such insurance, such certificate shall so state and shall confirm that, in such broker's opinion, such provision is not reasonably obtainable. Lessor shall be entitled at its expense to review copies of all applicable insurance policies. With respect to any renewal policy or policies, certificates or binders evidencing such renewal shall be furnished as soon as practicable, but in no event later than 30 days after the earlier of the date such renewal is effected or the expiration date of the original policy or policies. Simultaneously, with the furnishing of such certificate, Lessee will provide appropriate evidence, reasonably satisfactory to Lessor and the Indenture Trustee, that all premiums due on such insurance have been paid. 27 34 (b) Lessee agrees to use reasonable efforts to cause each of its insurers to agree that, with respect to any policy of insurance maintained pursuant to Section 12.1, such insurer will provide not less than 30 days' prior written notice to Lessor, the Indenture Trustee, Loan Participant and Owner Participant of any non-renewal or material adverse change with respect to such policy. For purposes of this Section 12.4(b), "material adverse change" shall mean a material adverse change in policy limits, exclusions or deductibles or any material adverse change in policy coverage inconsistent with the requirements of Section 12.1(b). If any of Lessee's insurers delivers such notice of non-renewal, Owner Participant may attempt to obtain and provide satisfactory insurance and Lessee shall reimburse Owner Participant for reasonable and prudent expenses incurred (i) during the period 10 days prior to expiration of existing insurance policies, for all Owner Participant's expenses excluding broker fees and commissions and insurance premiums, and (ii) on and after the expiration of existing insurance policies, for all Owner Participant's expenses including broker fees and commissions and insurance premiums. Section 12.5 Additional Insurance. In the event that Lessee shall fail to maintain insurance as herein provided in Section 12.1 or, if applicable, Section 12.3, Lessor may at its option, upon prior written notice to Lessee, provide such insurance and, in such event, Lessee shall, upon demand from time to time reimburse Lessor for the cost thereof together with interest from the date of payment thereof at the Late Rate, on the amount of the cost to Lessor of such insurance which Lessee shall have failed to maintain. If after Lessor has provided such insurance, Lessee then obtains the coverage provided for in Section 12.1 which was replaced by the insurance provided by Lessor, and Lessee provides Lessor with evidence of such coverage reasonably satisfactory to Lessor, Lessor shall cancel the insurance it has provided pursuant to the first sentence of this Section 12.5. In such event, Lessee shall reimburse Lessor for all costs to Lessor of cancellation, including without limitation any short rate penalty, together with interest from the date of Lessor's payment thereof at the Late Rate. In addition, at any time Lessor (either directly or in the name of Owner Participant) may at its own expense carry insurance with respect to its interest in the Units, provided that such insurance does not interfere with Lessee's ability to insure the Units as required by this Section 12 or adversely affect Lessee's insurance or the cost thereof, it being understood that all salvage rights to each Unit shall remain with Lessee's insurers at all times. Any insurance payments received from policies maintained by Lessor pursuant to the previous sentence shall be retained by Lessor without reducing or otherwise affecting Lessee's obligations hereunder, other than with respect to Unit(s) with respect to which such payments have been made. Section 12.6 Post-Lease Term Insurance. Lessee agrees that upon the expiration or earlier termination of the Lease Term, Lessee will, with respect to the public liability insurance otherwise required to be carried under this Section 12, 28 35 either: (A) purchase a seven year extended reporting period for Owner Participant, Lessor and Owner Trustee, or (B) obtain the written agreement of the Manager in form and substance satisfactory to Owner Participant to carry or cause to be carried for such seven year period public liability insurance which satisfies the requirements of this Section 12 and which names Owner Participant, Lessor, the Collateral Agent and Owner Trustee as additional insureds. SECTION 13. Reports; Inspection. Section 13.1 Duty of Lessee to Furnish. On or before July 31, 2001, and on or before each July 31 thereafter, Lessee will furnish (or cause the Manager under the Management Agreement to furnish) to Lessor, Owner Participant, Loan Participant, the Indenture Trustee and the Rating Agency an accurate statement, as of the preceding March 31, (a) showing the amount, description and reporting marks of the Units then leased hereunder, the amount, description and reporting marks of all Units that may have suffered an Event of Loss during the 12 months ending on such March 31 (or since the Closing Date, in the case of the first such statement), and such other information regarding the condition or repair of the Units as Lessor may reasonably request, (b) stating that, in the case of all Units repainted during the period covered by such statement, the markings required by Section 4.2 hereof shall have been preserved or replaced, (c) showing the percentage of use in the United States and in each of Canada and Mexico based on the total mileage traveled by all railcars in the Total Managed Fleet (or by the Units, if and to the extent generally made available to the Manager in the ordinary course with respect to railcars in general interchange service similar to the Units) for the prior calendar year as reported to the Manager by railroads (provided, that Lessee shall cooperate with Owner Participant and Lessor and shall provide such additional information on such matters as Owner Participant or Lessor may reasonably request to enable Owner Participant and Lessor to pursue or fulfill their respective tax audit and tax litigation rights and obligations) and (d) stating that Lessee is not aware of any condition of any Unit which would cause such Unit not to comply in any material respect with the rules and regulations of the FRA and the interchange rules of the Field Manual of the AAR as they apply to the maintenance and operation of the Units in interchange and any other requirements hereunder. Section 13.2 Lessor's Inspection Rights. Lessor, Owner Participant and the Indenture Trustee each shall have the right, but not the obligation, at their respective sole cost and expense, unless a Lease Event of Default shall have occurred and be continuing, by their respective authorized representatives, to inspect the Units, all subleases thereof and Lessee's records with respect thereto. All inspections shall be conducted during Lessee's normal business hours, on the Manager's premises or in areas that are not the premises of a Sublessee to which Lessee has reasonable access, and upon reasonable prior notice to Lessee. Lessee shall not be liable for any injury to, or the death of, any Person exercising, either on behalf of Lessor, Owner 29 36 Participant, the Indenture Trustee or any prospective user, the rights of inspection granted under this Section 13.2 unless caused by Lessee's gross negligence or willful misconduct. Except following the occurrence and continuance of a Lease Event of Default, no inspection pursuant to this Section 13.2 shall interfere with the use, operation or maintenance of the Units or the ordinary course of Lessee's or any Sublessee's business, and except as provided herein, Lessee shall not be required to undertake or incur any additional liabilities in connection therewith. SECTION 14. Lease Events of Default. The following events shall constitute Lease Events of Default hereunder (whether any such event shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body) and each such Lease Event of Default shall be deemed to exist and continue so long as, but only as long as, it shall not have been remedied: (a) Lessee shall fail to (i) make or (ii) be deemed by virtue of the last sentence of Section 3.5 hereof to have made any payment of Basic Rent, Early Purchase Price, any other purchase price to be paid by Lessee for any Units pursuant to this Lease or the Participation Agreement, Stipulated Loss Amount or Termination Amount within 10 Business Days after the same shall have become due; provided, however, that so long as any Equipment Notes remain outstanding, failure to make (or be deemed to have made) any portion of Basic Rent on any Rent Payment Date shall not be a Lease Event of Default so long as the amounts applied under Section 3.4, clause (4), of the Collateral Agency Agreement are sufficient to make the distributions required under such clause (4) with respect to the obligations owed under this Lease; or (b) Lessee shall fail to (i) make or (ii) be deemed by virtue of payments made by the Collateral Agent to have made any payment of Supplemental Rent; including indemnity or tax indemnity payments, but not including Stipulated Loss Amount, Termination Amount, Early Purchase Price, or any other purchase price to be paid by Lessee for any Units pursuant to this Lease or the Participation Agreement after the same shall have become due and such failure shall continue unremedied for 10 Business Days after receipt by Lessee of written notice of such failure from Lessor, Owner Participant or the Indenture Trustee; provided, however, that so long as any Equipment Notes remain outstanding, failure to make (or be deemed to have made) payment of any of the amounts referred to in or to be applied pursuant to clauses (5) through (14) of Section 3.4 of the Collateral Agency Agreement shall not be a Lease Event of Default; or (c) Lessee shall fail to maintain in effect the insurance required by Section 12 or Section 6.4 of the Collateral Agency Agreement and such failure shall not have been waived as provided for therein; or 30 37 (d) Lessee shall use or permit the use of the Units or the Pledged Units or any portion thereof in a way which is not permitted by this Lease (with respect to the Units) or the Collateral Agency Agreement (with respect to the Pledged Units), provided that such unauthorized use shall not constitute a Lease Event of Default for a period of 45 days after the occurrence thereof so long as (i) such unauthorized use is not the result of any willful action of Lessee and (ii) such unauthorized use is capable of being cured and Lessee diligently pursues such cure throughout such 45-day period; or Lessee shall make or permit any unauthorized assignment or transfer of this Lease in violation of Section 18.2; or (e) Lessee shall fail to observe or perform in any material respect any of the covenants or agreements to be observed or performed by Lessee in Section 6.2 or 6.3 of the Collateral Agency Agreement; or (f) Any representation or warranty made by Lessee in any Lessee Agreement or any representation or warranty made by TILC or TRMI in any Operative Agreement to which any such Person is a party is untrue or incorrect in any material respect as of the date of making thereof and such untruth or incorrect-ness shall continue to be material and unremedied; provided that, if such untruth or incorrectness is capable of being remedied, no such untruth or incorrectness shall constitute a Lease Event of Default hereunder for a period of 30 days after receipt of notice from Lessor, Owner Participant or the Indenture Trustee so long as Lessee, TILC or TRMI, as the case may be, is diligently proceeding to remedy such untruth or incorrectness and shall in fact remedy such untruth or incorrectness within such period; provided that such untrue or incorrect representation or warranty shall be deemed to be remediable or remedied only after all adverse consequences thereof, if any, can be and have been remedied as applicable; or (g) Lessee or the General Partner shall (i) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect, or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or (ii) consent to any such relief or to the appointment of or taking possession by any such official in any voluntary case or other proceeding commenced against it, or (iii) admit in writing its inability to pay its debts generally as they come due, or (iv) make a general assignment for the benefit of creditors, or (v) take any corporate action to authorize any of the foregoing; or (h) An involuntary case or other proceeding shall be commenced against Lessee or the General Partner seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect, or seeking the appointment of a trustee, receiver, 31 38 liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or (i) Lessee shall fail to observe or perform any other of the covenants or agreements to be observed or performed by Lessee under any Lessee Agreement or any certificate and such failure shall continue unremedied for 30 days after notice from Lessor, Owner Participant or the Indenture Trustee to Lessee, specifying the failure and demanding the same to be remedied; provided that, if such failure is capable of being remedied, and the remedy requires an action other than, or in addition to, the payment of money, no such failure (other than one relating to the payment of such money) shall constitute a Lease Event of Default hereunder for a period of 90 days after receipt of such notice so long as Lessee is diligently proceeding to remedy such failure and shall in fact remedy such failure within such period; or (j) A Manager Default shall have occurred and be continuing under the Management Agreement, and Lessee shall have failed to exercise its rights under the Management Agreement in respect of such Manager Default for a period of 30 days after receipt by Lessee of written notice from Lessor, Owner Participant or the Indenture Trustee demanding that such action be taken; or (k) An Insurance Manager Default shall have occurred and be continuing under the Insurance Agreement, and Lessee shall have failed to exercise its rights under the Insurance Agreement in respect of such Insurance Manager Default for a period of 30 days after receipt by Lessee of written notice from Lessor, Owner Participant or the Indenture Trustee demanding that such action be taken; (1) The Administrator shall have defaulted in any material respect in the performance of any of its obligations under the Administrative Services Agreement, and Lessee shall have failed to exercise its rights under the Administrative Services Agreement in respect of such default for a period of 30 days after receipt by Lessee of written notice from Lessor, Owner Participant or the Indenture Trustee , demanding that such action be taken; or (m) A "Lease Event of Default" (as defined in the Other Lease) shall have occurred and be continuing with respect to the Other Lease. Notwithstanding anything to the contrary contained in this Lease, any failure of Lessee to perform or observe any covenant or agreement herein shall not constitute a Lease Event of Default if such failure is caused solely by reason of an event which constitutes an "Event of Loss" so long as Lessee is continuing to comply with the applicable terms of Section 11. 32 39 SECTION 15. Remedies. Section 15.1 Remedies. Upon the occurrence of any Lease Event of Default and at any time thereafter so long as the same shall be continuing, Lessor may, at its option, declare this Lease to be in default by a written notice to Lessee (except that this Lease shall, without any action on the part of Lessor, be automatically deemed to have been declared in default upon the occurrence of a Lease Event of Default described in Section 14(g) or (h)); and at any time thereafter, unless Lessee shall have remedied all outstanding Lease Events of Default prior to the commencement of the exercise by Lessor of any of its remedies hereunder, Lessor may do one or more of the following as Lessor in its sole discretion shall elect, to the extent permitted by, and subject to compliance with any mandatory requirements of, applicable law then in effect: (a) proceed by appropriate court action or actions, either at law or in equity, to enforce performance by Lessee of the applicable covenants of this Lease or to recover damages for the breach thereof; (b) by notice in writing to Lessee, Lessor may demand that Lessee, and Lessee shall, upon written demand of Lessor and at Lessee's expense (but subject to the rights of any Sublessee which has been granted the right of quiet enjoyment of the Unit by Lessee pursuant to a Sublease, so long as no event of default by the Sublessee shall have occurred and be continuing under the relevant Sublease), (i) forthwith return all or any part of the Units so demanded to Lessor or its order in the manner and condition required by, and otherwise in accordance with all of the provisions of, Section 15.5; or Lessor with or without notice or judicial process may by its agents enter upon the premises of Lessee or other premises where any of the Units may be located and take possession of and remove all or any of the Units , and Lessor may use and employ in connection with such removal any services, aids, equipment, trackage and other facilities of Lessee as is reasonably required to remove such Units and thenceforth hold, possess and enjoy the same free from any right of Lessee, or its successor or assigns, to use such Units for any purpose whatever and (ii) with respect to any Unit which is then subject to a Sublease, assign all of Lessee's right, title and interest in such Sublease to Lessor; (c) sell any Unit and/or assign any Sublease at public or private sale in such manner as Lessor may determine, free and clear of any rights of Lessee (but subject to the rights of any Sublessee which has been granted the right of quiet enjoyment of the Unit by Lessee pursuant to a Sublease, so long as no event of default by the Sublessee shall have occurred and be continuing under the relevant Sublease) and without any duty to account to Lessee or any Sublessee with respect to such sale or for the proceeds thereof (except to the extent required by paragraph (f) below if Lessor elects to exercise its rights under said paragraph), in which event Lessee's obligation to pay Basic Rent with respect to such Unit hereunder due for any periods subsequent to the date of such sale shall terminate (except to the extent that Basic Rent is to be included in computations under paragraph (e) or (f) below if Lessor elects to exercise its rights under either of said paragraphs); 33 40 (d) hold, keep idle or lease to others any Unit not then subject to a Sublease as Lessor in its sole discretion may determine, free and clear of any rights of Lessee and without any duty to account to Lessee or any Sublessee with respect to such action or inaction or for any proceeds with respect thereto, except that Lessee's obligation to pay Basic Rent with respect to such Unit due for any periods subsequent to the date upon which Lessee shall have been deprived of possession and use of such Unit pursuant to this Section 15 shall be reduced by the net proceeds, if any, received by Lessor from leasing such Unit to any Person other than Lessee; (e) whether or not Lessor shall have exercised, or shall thereafter at any time exercise, any of its rights under paragraph (a), (b), (c) or (d) above with respect to any Unit, Lessor, by written notice to Lessee specifying a payment date (which date shall be a Determination Date for the purposes of computing Stipulated Loss Amount) which shall be not less than 10 days after the date of such notice, may demand that Lessee pay to Lessor, and Lessee shall pay to Lessor, on the payment date specified in such notice, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent for such Unit due after the payment date specified in such notice), all Rent, other than Stipulated Loss Amount and Termination Amount or amounts calculated by reference thereto, due and payable, or accrued, in respect of such Unit as of the payment date specified in such notice (exclusive of any Basic Rent due on such date) plus whichever of the following amounts Lessor, in its sole discretion, shall specify in such notice: (i) an amount with respect to each such Unit which represents the excess of the present value, as of such payment date, of all rentals for such Unit which would otherwise have accrued hereunder from such payment date for the remainder of the Basic Term or any Renewal Term then in effect over the then present value of the then Fair Market Rental Value of such Unit (taking into account its actual condition) for such period discounted from the end of such Term to such payment date, such present value to be computed in each case using a per annum discount rate equal to the Debt Rate, compounded monthly from the respective dates upon which rentals would have been payable hereunder had this Lease not been terminated; or (ii) an amount equal to the excess, if any, of the Stipulated Loss Amount for such Unit computed as of the payment date specified in such notice over the Fair Market Sales Value of such Unit (taking into account its actual condition) as of the payment date specified in such notice; or (iii) if Lessor shall not have sold such Unit pursuant to the exercise of its rights under paragraph (c) above with respect to such Unit, an amount equal to the higher of Stipulated Loss Amount for such Unit computed as of the payment date specified in such notice or the Fair Market Sales Value of such Unit (assuming it is in the condition required by this Lease) as of the payment date specified in such notice; and upon payment by Lessee pursuant to said clause (iii) of such Stipulated Loss Amount or Fair Market Sales Value, as the case may be, any Late Payment Premium and of all other amounts (other than Basic Rent due on such date) payable by Lessee under this Lease and under the other Operative Agreements in respect of such Unit, Lessor shall 34 41 transfer "as is" and "where is" and without recourse or warranty all right, title and interest of Lessor in and to such Unit to Lessee or as it may direct, and Lessor shall execute and deliver such documents evidencing such transfer as Lessee shall reason-ably request; (f) if Lessor shall have sold any Unit pursuant to paragraph (c) above, Lessor, in lieu of exercising its rights under paragraph (e) above with respect to such Unit may, if it shall so elect, demand that Lessee pay to Lessor, and Lessee shall pay to Lessor, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent for such Unit due subsequent to the Rent Payment Date next preceding such sale), any accrued and unpaid Rent for such Unit as of the date of such sale (Basic Rent for this purpose accruing at a per diem rate equal to the monthly amount due on the next following Rent Payment Date divided by 30) (exclusive of any Basic Rent due on such date), plus the amount, if any, by which the Stipulated Loss Amount of such Unit computed as of the Rent Payment Date next preceding the date of such sale or, if such sale occurs on a Rent Payment Date, then computed as of such Rent Payment Date, plus the amount of any Late Payment Premium, exceeds the net proceeds of such sale (taking into account for this purpose all costs and expenses, including legal fees and expenses, incurred by Lessor in connection with such sale or otherwise exercising remedies hereunder) plus interest on such excess from the date of such sale to the date of payment at the Late Rate; and (g) Lessor may terminate the leasing of any or all Units under this Lease and/or any Sublease (except with respect to a Sublease which grants the Sublessee thereunder the right of quiet enjoyment with respect to the Unit, so long as no event of default by the Sublessee shall have occurred and be continuing under the relevant Sublease) or may exercise any other right or remedy that may be available to it under applicable law. In addition, Lessee shall be liable, except as otherwise provided above, for any and all unpaid Rent due hereunder before or during the exercise of any of the foregoing remedies (including, without limitation, Late Payment Interest, but exclusive of any Basic Rent due on such date), and for legal fees and other costs and expenses incurred by reason of the occurrence of any Lease Event of Default or the exercise of Lessor's remedies with respect thereto, including without limitation the repayment in full of any costs and expenses necessary to be expended in repairing any Unit in order to cause it to be in compliance with all maintenance and regulatory standards imposed by this Lease. In the event Lessor terminates this Lease pursuant to any provision of this Section 15.1, and the Stipulated Loss Amount is not payable, the amounts otherwise payable by Lessee hereunder shall be increased by any positive amount (as a payment for accrued but unpaid Basic Rent) of the Basic Rent Adjustment set forth on Schedule 4-A of the Participation Agreement opposite the relevant Rent Payment Date or decreased by the absolute value of any negative amount (as a rebate of prepaid Basic Rent) of the Basic Rent Adjustment set forth on Schedule 4-A of the Participation Agreement opposite the relevant Rent Payment 35 42 Date; provided, however, that to the extent that such payment or refund does not precisely reflect the difference between Basic Rent allocated and Basic Rent paid as of the date Basic Rent ceases to accrue, the amounts due hereunder shall be further adjusted to ensure that the aggregate amount of Basic Rent paid equals the aggregate amount of Basic Rent allocated as of the date Basic Rent ceases to accrue. Section 15.2 Cumulative Remedies. The remedies in this Lease provided in favor of Lessor shall not be deemed exclusive, but shall be cumulative and shall be in addition to all other remedies in its favor existing at law or in equity. Lessee hereby waives any mandatory requirements of law, now or hereafter in effect, which might limit or modify any of the remedies herein provided, to the extent that such waiver is permitted by law. Except to the extent provided in the Operative Agreements, Lessee hereby waives any and all existing or future claims of any right to assert any offset or counterclaim against the Rent payments due hereunder, and agrees to make the rent payments regardless of any offset or counterclaim or claim which may be asserted by Lessee on its behalf in connection with the lease of the Units. Lessee further agrees that Lessee's obligations to pay all Rent (including, without limitation, all Basic Rent and Supplemental Rent) and its obligations to maintain the Units pursuant to Section 8 hereof and to maintain the insurance pursuant to Section 12 hereof shall constitute monetary obligations of Lessee for all purposes of Section 365 of the Bankruptcy Code. To the extent permitted by applicable law, Lessee hereby waives any rights now or hereafter conferred by statute or otherwise that may require Lessor to sell, lease or otherwise use the Units in mitigation of Lessor's damages as set forth in Section 15.1 or that may otherwise limit or modify any of Lessor's rights and remedies provided in this Section 15. Section 15.3 No Waiver. No delay or omission to exercise any right, power or remedy accruing to Lessor upon any breach or default by Lessee under this Lease shall impair any such right, power or remedy of Lessor, nor shall any such delay or omission be construed as a waiver of any breach or default, or of any similar breach or default hereafter occurring; nor shall any waiver of a single breach or default be deemed a waiver of any subsequent breach or default. Section 15.4 Notice of Lease Default. Lessee agrees to furnish to Lessor, Owner Participant and the Indenture Trustee, promptly upon any officer acquiring actual knowledge of any condition which constituted or constitutes a Lease Default under this Lease, written notice specifying such condition and the nature and status thereof. Section 15.5 Lessee's Duty to Return Equipment Upon Default. If Lessor or any assignee of Lessor shall terminate this Lease pursuant to this Section 36 43 15 and shall have provided to Lessee the written demand specified in Section 15.1(b), Lessee shall forthwith deliver possession of the Units not then subject to a Sublease to Lessor (except where Lessor has received all amounts payable by Lessee pursuant to any notice provided by Lessor under Section 15.1(e)(iii)). For the purpose of delivering possession of any Unit not then subject to a Sublease to Lessor as above required, Lessee shall at its own cost, expense and risk (except as hereinafter stated): (a) forthwith place such Units upon such storage tracks of Lessee or any of its Affiliates or, at the expense of Lessee, on any other storage tracks, as Lessor may designate or, in the absence of such designation, as Lessee may select; (b) permit Lessor to store such Units on such tracks without charge for insurance, rent or storage until such Units have been sold, leased or otherwise disposed of by Lessor and during such period of storage Lessee shall continue to maintain all insurance required by Section 12.1 hereof; and (c) transport the Units to any place on any lines of railroad or to any connection carrier for shipment, all as Lessor may direct in writing. All such Units not then subject to a Sublease returned shall be in the condition required by Section 6.2 hereof. All amounts earned in respect of the Units after the date of termination of this Lease pursuant to this Section 15, but not exceeding amounts actually received therefor, shall be paid to Lessor or, so long as the Indenture shall not have been discharged pursuant to its terms, the Indenture Trustee, and, if received by Lessee, shall be promptly turned over to Lessor or the Indenture Trustee as aforesaid. In the event any Unit not then subject to a Sublease is not assembled, delivered and stored as hereinabove provided within 15 days after the termination of the leasing of such Unit pursuant to Section 15, Lessee shall, in addition, pay to Lessor or the Indenture Trustee as aforesaid as liquidated damages and not as a penalty, for each day thereafter an amount equal to the amount, if any, by which the daily equivalent of the average Basic Rent for the term in effect immediately prior to the expiration of the Lease for such Unit exceeds the amount, if any, received by Lessor or the Indenture Trustee as aforesaid (either directly or from Lessee) for such day for such Unit pursuant to the preceding sentence. Section 15.6 Specific Performance; Lessor Appointed Lessee's Agent. The assembling, delivery, storage and transporting of the Units not then subject to a Sublease as provided in Section 15.5 are of the essence of this Lease, and upon application to any court of equity having jurisdiction in the premises, Lessor shall be entitled to a decree against Lessee requiring specific performance of the covenants of Lessee so to assemble, deliver, store and transport the Units not then subject to a Sublease. Without in any way limiting the obligation of Lessee under the provisions 37 44 of Section 15.5, Lessee hereby irrevocably appoints Lessor as the agent and attorney of Lessee, with full power and authority, at any time while Lessee is obligated to deliver possession of any Units not then subject to a Sublease to Lessor pursuant to this Section 15, to demand and take possession of such Unit in the name and on behalf of Lessee from whosoever shall be at the time in possession of such Unit. SECTION 16. Filings; Further Assurances. Section 16.1 Filings. This Lease or a counterpart or copy hereof or evidence hereof may be filed or recorded in any public office in the United States as may be necessary or appropriate to protect the interest of Lessor, Owner Participant or the Indenture Trustee herein or in the Units. On or prior to the Closing Date Lessee will (i) cause a memorandum of each of this Lease, the Lease Supplements dated the Closing Date, the TILC Bill of Sale, the Bill of Sale, the TILC Assignment, the Assignment, the Collateral Agency Agreement, the Indenture and the Indenture Supplements dated the Closing Date (x) to be duly filed and recorded with the STB in accordance with 49 U.S.C. Section 11301 and (y) to be deposited with the Registrar General of Canada pursuant to Section 105 of the Canada Transportation Act (and all necessary actions shall have been taken for publication of such deposit in the Canada Gazette in accordance with said Section 105), (ii) cause precautionary UCC-1 financing statements to be filed in appropriate jurisdictions as reasonably requested by Lessor naming Lessor as "lessor" and Lessee as "lessee" of the Equipment and (iii) will furnish Lessor, the Indenture Trustee and Owner Participant proof thereof. Notwithstanding the foregoing, in no event shall Lessee or any of its Affiliates be required to take any action to perfect any security interest which any Person may have in any Sublease, other than the filing of a UCC-1 Financing Statement against the Partnership in the jurisdiction in which the Partnership's chief executive office is located and in the Partnership's jurisdiction of formation covering all Subleases generally. Section 16.2 Further Assurances. Lessee will duly execute and deliver to Lessor such further documents and assurances and take such further action as Lessor may from time to time reasonably request or as may be required by applicable law or regulation in order to effectively carry out the intent and purpose of this Lease and to establish and protect the rights and remedies created or intended to be created in favor of Lessor, the Participants and the Indenture Trustee hereunder, including, without limitation, the execution and delivery of supplements or amendments hereto, in recordable form, subjecting to this Lease any Replacement Unit and the recording or filing of counterparts hereof or thereof or Uniform Commercial Code financing statements in accordance with the laws of such jurisdiction as Lessor may from time to time deem advisable; provided, that in no event shall Lessee or any of its Affiliates be required to take any action to perfect any security interest which any Person may have in any Sublease, other than the filing of a UCC-1 Financing Statement against the Partnership in the jurisdiction in which the Partnership's chief executive office is 38 45 located and in the Partnership's jurisdiction of formation covering all Subleases generally. Section 16.3 Other Filings. If, at any time after the Closing Date and during the Lease Term, Mexico, or one or more states in Mexico, establishes a state or other system for filing and perfecting the ownership and/or security interests of entities such as Lessor and/or the Indenture Trustee, at the time that Lessee or the Manager takes such action with respect to other equipment similar to the Units (whether owned or leased by Lessee) and also upon the request of Lessor, any Participant, or the Indenture Trustee, Lessee shall cause any and all of the Operative Agreements to be recorded with or under such system and shall cause all other filings and recordings and all such other action required under such system to be effected and taken, in order to perfect and protect the respective right, title and interests of Lessor, Owner Participant, Loan Participant and the Indenture Trustee; provided, that in no event shall Lessee or any of its Affiliates be required to take any action to perfect any security interest which any Person may have in any Sublease. Section 16.4 Expenses. Lessee will pay all costs, charges and expenses (including reasonable attorneys fees) incident to any such filing, refiling, recording and rerecording or depositing and re-depositing of any such instruments or incident to the taking of such action. SECTION 17. Lessor's Right to Perform. If Lessee fails to make any payment required to be made by it hereunder or fails to perform or comply with any of its other agreements contained herein, Lessor may itself make such payment or perform or comply with such agreement, after giving not less than five Business Days' prior notice thereof to Lessee (except in the event that an Indenture Default resulting from a Lease Default or a Lease Event of Default shall have occurred and be continuing, in which event Lessor may effect such payment, performance or compliance to the extent necessary to cure such Indenture Default with notice given concurrently with such payment, performance or compliance), but shall not be obligated hereunder to do so, and the amount of such payment and of the reasonable expenses of Lessor incurred in connection with such payment or the performance of or compliance with such agreement, as the case may be, together with interest thereon at the Late Rate from such date of payment, to the extent permitted by applicable law, shall be deemed to be Supplemental Rent, payable by Lessee to Lessor on demand. SECTION 18. Assignment. Section 18.1 Assignment by Lessor. Lessee and Lessor hereby confirm that concurrently with the execution and delivery of this Lease, Lessor has executed and delivered to the Indenture Trustee the Indenture, which assigns as collateral security and grants a security interest in favor of the Indenture Trustee in, to and 39 46 under this Lease and certain of the Rent payable hereunder (excluding Excepted Property), all as more explicitly set forth in the Indenture. Lessor agrees that it shall not otherwise assign or convey its right, title and interest in and to this Lease or any Unit, except as expressly permitted by and subject to the provisions of the Participation Agreement, the Trust Agreement and the Indenture. Section 18.2 Assignment by Lessee. Except in the case of any requisition for use by any governmental authority or any agency or instrumentality thereof referred to in Section 11.1, Lessee will not, except as expressly permitted in the Operative Agreements, without the prior written consent of Lessor and the Indenture Trustee, assign any of its rights hereunder. Section 18.3 Sublessee's or Others Performance and Rights. Any obligation imposed on Lessee in this Lease shall require only that Lessee perform or cause to be performed such obligation, even if stated herein as a direct obligation, and the performance of any such obligation by the Manager under the Management Agreement, the Insurance Manager under the Insurance Agreement or any Sublessee under a Sublease then in effect and permitted by the terms of this Lease shall constitute performance by Lessee and discharge such obligation by Lessee. Except as otherwise expressly provided herein, any right granted to Lessee in this Lease shall grant Lessee the right to (a) exercise such right or permit such right to be exercised by the Manager or the Insurance Manager or (b) in Lessee's capacity as sublessor pursuant to any Permitted Sublease permit any Sublessee to exercise substantially equivalent rights under any such sublease as are granted to Lessee under this Lease; provided, however, that Lessee's right to terminate this Lease pursuant to Section 10 and Lessee's purchase and renewal options set forth in Section 22 may be exercised only by Lessee; provided, further, that nothing in this Section 18.3 shall or shall be deemed to (i) create any privity of contract between any such Sublessee, on the one hand, and any of Lessor, Owner Participant or any subsequent transferee or Affiliate of any such Person, on the other hand, (ii) create any duty or other liability of any nature whatsoever on the part of any of Lessor, Owner Participant or any subsequent transferee or Affiliate of any such Person, to any such Sublessee or any Affiliate thereof or (iii) modify or waive any term or provision of Section 8.3 hereof, which Section 8.3 shall control if any conflict arises between any of the provisions thereof and this Section 18.3. The inclusion of specific references to obligations or rights of any such Sublessee in certain provisions of this Lease shall not in any way prevent or diminish the application of the provisions of the two sentences immediately preceding with respect to obligations or rights in respect of which specific reference to any such Sublessee has not been made in this Lease. SECTION 19. Net Lease, Etc. This Lease is a net lease and Lessee's obligation to pay all Rent payable hereunder shall be absolute, unconditional and irrevocable and shall not be affected 40 47 by any circumstance of any character including, without limitation, (i) any set-off, abatement, counterclaim, suspension, recoupment, reduction, rescission, defense or other right that Lessee may have against Lessor, Owner Participant, the Indenture Trustee or any holder of an Equipment Note or Pass Through Certificate, any vendor or manufacturer of any Unit, or any other Person for any reason whatsoever, (ii) any defect in or failure of title, merchantability, condition, design, compliance with specifications, operation or fitness for use of all or any part of any Unit, (iii) any damage to, or removal, abandonment, requisition, taking, condemnation, loss, theft or destruction of all or any part of any Unit or any interference, interruption, restriction, curtailment or cessation in the use or possession of any Unit by Lessee or any other Person for any reason whatsoever or of whatever duration, (iv) any insolvency, bankruptcy, reorganization or similar proceeding by or against Lessee, Lessor, Owner Participant, the Indenture Trustee, Loan Participant, any holder of an Equipment Note or Pass Through Certificate or any other Person, (v) the invalidity, illegality or unenforceability of this Lease, any other Operative Agreement, or any other instrument referred to herein or therein or any other infirmity herein or therein or any lack of right, power or authority of Lessee, Lessor, Owner Participant, the Indenture Trustee, any holder of an Equipment Note or Pass Through Certificate or any other Person to enter into this Lease or any other Operative Agreement or to perform the obligations hereunder or thereunder or consummate the transactions contemplated hereby or thereby or any doctrine of force majeure, impossibility, frustration or failure of consideration, (vi) the breach or failure of any warranty or representation made in this Lease or any other Operative Agreement by Lessee, Lessor, Owner Participant, Loan Participant, the Indenture Trustee, any holder of an Equipment Note or Pass Through Certificate or any other Person, (vii) the requisitioning, seizure or other taking of title to or use of such Unit by any government or governmental authority or otherwise, whether or not by reason of any act or omission of Lessor, Lessee or the Indenture Trustee, or any other deprivation or limitation of use of such Unit in any respect or for any length of time, whether or not resulting from accident and whether or not without fault on the part of Lessee or (viii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing. To the extent permitted by applicable law, Lessee hereby waives any and all rights which it may now have or which at any time hereafter may be conferred upon it, by statute or otherwise, to terminate, cancel, quit or surrender this Lease with respect to any Unit, except in accordance with the express terms hereof. If for any reason whatsoever this Lease shall be terminated in whole or in part by operation of law or otherwise, except as specifically provided herein, Lessee nonetheless agrees, to the maximum extent permitted by law, to pay to Lessor or to the Indenture Trustee, as the case may be, an amount equal to each installment of Basic Rent and all Supplemental Rent due and owing, at the time such payment would have become due and payable in accordance with the terms hereof had this Lease not been terminated in whole or in part. Each payment of Rent made by Lessee hereunder shall be final and Lessee shall not seek or have any right to recover all or any part of such payment from Lessor or any Person for any reason whatsoever. Nothing contained 41 48 herein shall be construed to waive any claim which Lessee might have under any of the Operative Agreements or otherwise or to limit the right of Lessee to make any claim it might have against Lessor or any other Person or to pursue such claim in such manner as Lessee shall deem appropriate. SECTION 20. Notices. Unless otherwise expressly specified or permitted by the terms hereof, all communications and notices provided for herein shall be in writing or by facsimile capable of creating a written record, and any such notice shall become effective (i) upon personal delivery thereof, including, without limitation, by reputable overnight courier or (ii) in the case of notice by facsimile, upon confirmation of receipt thereof, provided such transmission is promptly further confirmed in writing by the method set forth in clause (i) addressed to the following Person at its respective address set forth below or at such other address as such Person may from time to time designate by written notice to the other Persons listed below: If to Lessor: . TRLI 2001-1A Railcar Statutory Trust . c/o State Street Bank and Trust Company of . Connecticut, National Association . 225 Asylum Street . Goodwin Square . Hartford, CT 06103 . Attention: Corporate Trust Administration . Fax No.: (617) 662-1465 . Confirmation No.: (617) 662-1680 . With copies to Owner Participant. If to Owner Participant: Trimaran Leasing, L.P. . c/o Philip Morris Capital Corporation . 225 High Ridge Road, Suite 300 . Stamford, CT 06905 Attention: Vice President, Structured Finance . Fax No.: (914) 335-8297 . Confirmation No.: (914) 335-8204 If to the Indenture Trustee: LaSalle Bank National Association 135 S. LaSalle Street, Suite 1960 . Chicago, IL 60603 Attention: Kristine Schossow Fax No.: (312) 904-2236 Confirmation No.: (312) 904-2571 If to Lessee: . Trinity Rail Leasing I L.P. 42 49 . 2525 Stemmons Freeway . Dallas, TX 75207 . Attention: Vice President Leasing Operations . Re: TRLI 2001-1A . Fax No.: (214) 589-8271 . Confirmation No.: (214) 631-4420 SECTION 21. Concerning the Indenture Trustee. Section 21.1 Limitation of the Indenture Trustee's Liabilities. Notwithstanding any provision to the contrary contained herein or in any of the Operative Agreements, the Indenture Trustee's obligation to take or refrain from taking any actions, or to use its discretion (including, but not limited to, the giving or withholding of consent or approval and the exercise of any rights or remedies under such Operative Agreements), and any liability therefor, shall, in addition to any other limitations provided herein or in the other Operative Agreements, be limited by the provisions of the Indenture, including, but not limited to, Article VI thereof. Section 21.2 Right, Title and Interest of the Indenture Trustee Under Lease. It is understood and agreed that the right, title and interest of the Indenture Trustee in, to and under this Lease and the Rent due and to become due hereunder shall by the express terms granting and conveying the same be subject to the interest of Lessee in and to the Units as created pursuant to and governed by the terms of this Lease. SECTION 22. Purchase Options; Renewal Options. Section 22.1 Early Purchase Option. In addition to the option granted Lessee pursuant to Section 6.9 of the Participation Agreement and provided that Lessee shall have duly given the notice required by the next succeeding sentence and the corresponding notice under the Other Lease and shall concurrently purchase all (but not less than all) of the units then subject to the Other Lease, Lessee shall have the right and, upon the giving of such notice, the obligation to purchase all (but not less than all) of the Units leased hereunder (as specified in such notice) on the Early Purchase Date for such Units at a price equal to the Early Purchase Price of such Units plus the other amounts specified below. Lessee shall give Lessor written notice not less than 90 days and not more than 180 days prior to the Early Purchase Date of its election to exercise the purchase option provided for in this Section 22.1, which notice shall be irrevocable. Payment of the Early Purchase Price, together with (w) all unpaid Basic Rent therefor due and payable, or accrued, prior to the Early Purchase Date, (x) any Make-Whole Amount and Late Payment Interest with respect to the Equipment Notes then being prepaid, (y) the Accumulated Equity Deficiency Amount (without duplication of amounts calculated above) and any Late Payment Interest related thereto and (z) any other Supplemental Rent due and owing by Lessee under the Operative Agreements (so that, after receipt and application of 43 50 all such payments, but without withdrawal from any Reserve Account, Owner Participant shall be entitled under the terms of the Collateral Agency Agreement to receive, and does receive, taking into account all payments of Basic Rent in respect of the Units, the sum of the Accumulated Equity Deficiency Amount and Late Payment Interest related thereto and any other amounts then due to Owner Participant) shall be made on the Early Purchase Date at the place of payment specified in Section 3.5 hereof in immediately available funds against delivery of a bill of sale transferring and assigning to Lessee all right, title and interest of Lessor in and to such Units on an "as-is" "where-is" basis and containing a warranty as to the absence of Lessor's Liens. Lessor shall not be required to make any other representation or warranty as to the condition of such Units or any other matters, and may specifically disclaim any such representations or warranties. The costs of preparing the bill of sale and all other documentation relating to any purchase by Lessee pursuant to this Section 22.1 and the costs of all necessary filings relating to such purchase will be borne by Lessee. In the event of any such purchase and receipt by Lessor of all of the amounts provided in this Section 22.1, the obligation of Lessee to pay Basic Rent hereunder shall cease and the Lease Term shall end. If Lessee elects to exercise the purchase option provided for in this Section 22.1, Lessee shall, as the purchase price therefor, in the sole discretion of Lessee, either (i) pay the Early Purchase Price, together with all other amounts due and owing by Lessee under the Operative Agreements, as specified in the paragraph above or (ii) pay the difference between the amount specified in clause (i) and the outstanding principal amount of the Equipment Notes as of the Early Purchase Date and assume on a full recourse basis all of the Owner Trustee's obligations under the Indenture in respect of the indebtedness evidenced by such Equipment Notes related to such Units as provided in Section 3.6 of the Indenture; provided, that, following such assumption, the purchased Units shall remain subject to the Lien of a separate indenture similar to the Indenture pursuant to Section 3.6 of the Indenture. Lessee will make the payments required by foregoing clause (i) or assume the indebtedness evidenced by the Equipment Notes as provided in foregoing clause (ii) on the Early Purchase Date in immediately available funds against delivery of a bill of sale transferring and assigning to Lessee all right, title and interest of Lessor in and to the Units on an "as-is" "where-is" basis and containing a warranty as to the absence of Lessor's Liens; provided, however, that Lessee shall have the option of specifying in such notice under this Section 22.1 its election to defer payment of a portion of the Early Purchase Price for such Units in four (4) installments in the amounts and on the dates set forth on Schedule 6 to the Participation Agreement so long as the portion of the Early Purchase Price payable by Lessee on the Early Purchase Date in the event of any such election by Lessee, under any circumstances and in any event, together with other amounts of Supplemental Rent payable by Lessee on such date, will be at least sufficient to pay in full, as of the date of payment thereof, the aggregate unpaid principal and accrued interest of the Equipment Notes together with any Make Whole Amount, Late Payment Interest and all other amounts owed to the 44 51 holders of the Equipment Notes under the Operative Agreements; and provided further, that such deferred portion (i) may be prepaid by Lessee at any time in whole and (ii) will be secured in favor of Lessor by a letter of credit by a bank or financial institution acceptable to Owner Participant in its sole discretion or if acceptable to Owner Participant in its sole discretion a guaranty of Trinity in form and substance reasonably satisfactory to Lessor. If Lessee shall fail to fulfill its obligations under this second paragraph of Section 22.1, all of Lessee's obligations under this Lease and the Operative Agreements, including, without limitation, Lessee's obligation to pay installments of Rent, shall continue and Lessee shall be obligated to pay all costs and expenses, including legal fees and expenses, incurred by Lessor, Owner Participant and Indenture Trustee as a result of the notice given by Lessee pursuant to this Section. Listed on Schedule 6 to the Participation Agreement as the Basic Rent Adjustment for the Early Purchase Date is the amount of Basic Rent that, as of the Early Purchase Date, has been paid for periods after the Early Purchase Date (based upon the assumption that all prior amounts of Basic Rent due have been paid) or the amount of Basic Rent that, as of the Early Purchase Date, is the amount of Basic Rent that has accrued but has not been paid for periods prior to the Early Purchase Date. If Lessee exercises its Early Purchase Option and the Basic Rent Adjustment is negative and Lessee pays all other amounts due in relation to such exercise, then Lessee shall pay an amount equal to the Early Purchase Price less the absolute value of the amount of such Basic Rent Adjustment listed on Schedule 6 to the Participation Agreement (as a rebate of such Basic Rent and not as a reduction in Early Purchase Price). If Lessee exercises the Early Purchase Option and the Basic Rent Adjustment is positive, Lessee shall pay an amount equal to the Early Purchase Price plus the Basic Rent Adjustment (as a payment of accrued, but unpaid Basic Rent and not an increase in the Early Purchase Price). If Lessee elects to pay the Early Purchase Price in installments, then the amount of Basic Rent Adjustment listed on Schedule 6 to the Participation Agreement shall increase or decrease, as the case may be, the amount of Early Purchase Price payable by Lessee on the Early Purchase Date. Notwithstanding the foregoing provisions of this Section 22.1 to the contrary, Lessee may purchase or cause an Affiliate of Lessee to purchase the Beneficial Interest in lieu of Lessee purchasing the Units pursuant to this Section 22.1 for a purchase price equal to the Beneficial Interest Purchase Price and may keep this Lease (and the Equipment Notes) in place; provided, that Lessee shall remain liable under this Lease to pay Basic Rent and all other payments hereunder in full, provided, further, that such purchase shall be made in all respects in accordance with Section 6.9 of the Participation Agreement. Section 22.2 Election to Retain or Return Equipment at End of Basic or Renewal Term. Not less than 180 days and not more than 360 days prior to the end 45 52 of the Basic Term or any Renewal Term, Lessee shall give Lessor a preliminary notice of its decision to return or retain the Units and the units subject to the Other Lease (it being understood that at the end of the Basic Term or any Renewal Term Lessee must return all (and not less than all) such Units and units if it returns any, or retain all (and not less than all) such Units and units if it retains any) at the end of the Basic Term or such Renewal Term and not less than 120 days prior to the end of the Basic Term or the end of any Renewal Term, Lessee shall give Lessor irrevocable written notice of its decision to return or retain the Units at the end of the Basic Term or such Renewal Term. If Lessee elects to retain Units, Lessee shall comply with Section 22.3 and/or 22.4 hereof, as it may elect in accordance with the provisions thereof including the notice requirements stated therein. If Lessee fails to give the 120 days' notice required by this Section 22.2, or a subsequent notice required by Section 22.3 or 22.4, Lessee shall be deemed to have irrevocably elected to return all of the Units at the end of the Basic Term or the applicable Renewal Term, as the case may be, in accordance with Section 6. Section 22.3 Purchase Option. Provided that Lessee shall have duly given the notice required by Section 22.2 and by the next succeeding sentence of this Section 22.3 and, in the case of a purchase, Lessee shall have given a corresponding notice under the Other Lease and shall upon the purchase of the Units hereunder concurrently purchase the units under the Other Lease, Lessee shall have the right and, upon the giving of such notice under this Section 22.3, the obligation to pur-chase all of the Units at a price equal to the Fair Market Sales Value of such Units, at the expiration of the Basic Term, or, if a Renewal Term is then in effect, at the end of such Renewal Term, plus all other amounts due and owing by Lessee under the Operative Agreements, including, without limitation, Late Payment Interest and any unpaid Rent (so that, after receipt and application of all such payments, but without withdrawal from any Reserve Account, Owner Participant shall be entitled under the terms of the Collateral Agency Agreement to receive, and does receive, taking into account all Basic Rent payments in respect of the Units, the sum of the Accumulated Equity Deficiency Amount and Late Payment Interest related thereto and any other amounts then due to Owner Participant). Lessee shall give Lessor written notice not less than 90 days and not more than 360 days prior to the end of the Basic Term or any Renewal Term, as the case may be, of its election to exercise the purchase option provided for in this Section 22.3, which notice shall be irrevocable. Payment of the purchase price, together with all other amounts due and owing by Lessee under the Operative Agreements shall be made at the place of payment specified in Section 3.5 hereof in immediately available funds against delivery of a bill of sale transferring and assigning to Lessee all right, title and interest of Lessor in and to such Units on an "as-is" "where-is" basis and containing a warranty as to the absence of Lessor's Liens. Lessor shall not be required to make any other representation or warranty as to the condition of such Units or any other matters, and may specifically disclaim any such representations or warranties. 46 53 Section 22.4 Renewal Option. Provided no Event of Default shall have occurred and be continuing and Lessee shall have duly given the notice required by Section 22.2, and the corresponding notice under the Other Lease and shall upon the renewal of the Units hereunder concurrently renew the units under the Other Lease and Lessee has not exercised its option to purchase the Units pursuant to Section 22.3, Lessee shall have the right and, upon the giving of a notice under this Section 22.4 as below provided, the obligation to lease pursuant to this Lease all (but not less than all) of the Units at the expiration of the Basic Term or any applicable Renewal Term. Lessee may exercise this renewal option by giving Lessor written notice not less than 90 days and not more than 360 days prior to the end of the Basic Term (or, in the circumstances described below the then Renewal Term) that Lessee elects to renew this Lease with respect to all, but not less than all, of the Units then leased hereunder at a rental payment calculated by reference to the then fair market rental value (a "Fair Market Renewal") or a fixed rental (a "Fixed Rate Renewal"). At Lessee's option, such renewal may, in the case of a Fair Market Renewal, be for a renewal term of one or more years or, in the case of a Fixed Rate Renewal, be for an initial renewal term of three years (but not to extend beyond the Outside Renewal Date) and in connection with any renewal term following the initial renewal term, a term of one year or more expiring not later than the Outside Renewal Date, in each case as Lessee shall specify in such notice, which notice shall be irrevocable. The Basic Rent for each Unit during any Renewal Term (the "Renewal Rent") shall (a) in the case of any Fixed Rate Renewal, be 1/12th of 100% of the average annual Basic Rent allocated over the period from the end of the Basic Rent Holiday through the Basic Term Expiration Date, payable monthly in arrears and (b) in the case of any Fair Market Renewal, be 100% of the Fair Market Rental Value determined as of the commencement of the applicable Renewal Term; provided, however, that in the case of the first two years of the Fair Market Renewal period(s) that immediately follow the Basic Term Expiration Date (whether under Section 22.4 or Section 6.1), be 105% of the Fair Market Rental Value determined as of the commencement of the applicable Renewal Term; provided further, however, that the preceding proviso shall not apply in the event that the Lessee provides the Lessor, at the Lessee's sole cost and expense, with an opinion of independent tax counsel selected by Lessor (which counsel shall be selected by Lessor from among four nationally recognized law firms proposed by Lessee, each of which must be experienced in leveraged leasing transactions similar to the transactions contemplated herein) to the effect that applicable Treasury Regulations (or other administrative pronouncements upon which taxpayers may rely for Federal income tax purposes) will permit rent for such Renewal Term at a rate equal to 100% of the fair market rent determined as of the time of such Renewal Term without resulting in any adverse Federal income tax consequences to the Owner Participant Parent (within the meaning of the Tax Indemnity Agreement) under Code Section 467 or any successor provision thereto. Each Renewal Term shall commence immediately upon the expiration of the Basic Term or the preceding Renewal Term, as the case may be. Lessee shall not be entitled to enter any Fixed Rate Renewal following the expiry of any Fair Market Renewal. 47 54 Section 22.5 Rent Appraisal; Outside Renewal Date. Promptly following Lessee's irrevocable written notice pursuant to Section 22.2 of its election to retain the Units at the end of the Basic Term or any Renewal Term (and, in any event, if it is anticipated that there will be any Extended Units at the end of the Basic Term or such Renewal Term), Lessor and Lessee shall determine (a) if Lessee shall have exercised a Fixed Rate Renewal, (i) the remaining useful life and Fair Market Sales Value (based on the actual condition of a reasonable sampling of such Units and determined pursuant to the appraisal procedure set forth in the definition of Fair Market Sales Value) of the Units, and (ii) the latest date such that (1) the period from the Closing Date to such date would not exceed 80% of the useful life of any Unit (as determined in subclause (i) above) from and after the Closing Date, and (2) the Fair Market Sales Value of each Unit (determined without regard to inflation or deflation from the Closing Date) on such date would not be less than 20% of the Equipment Cost of such Unit (such date determined under this subclause (ii) shall thereafter be the latest date to which this Lease may be renewed pursuant to a Fixed Rate Renewal under Section 22.4 (the "Outside Renewal Date")), (b) if Lessee shall have exercised the purchase option under Section 22.3(i) or any renewal option under Section 22.4, the Fair Market Sales Value of the applicable Units as of the end of the then existing Basic Term or Renewal Term, as applicable, in each case assuming such Units are at least in the condition required by this Lease, and (c) if Lessee shall have exercised a Fair Market Renewal (or if it is anticipated that there will be any Extended Units at the end the Basic Term or such Renewal Term), the Fair Market Rental Value of the applicable Units as of the end of the then existing Basic Term or Renewal Term, as applicable, in each case assuming such Units are at least in the condition required by this Lease. Section 22.6 Stipulated Loss Amount and Termination Amount During Renewal Term. All of the provisions of this Lease, other than Section 10, shall be applicable during any Renewal Term for such Units, except as specified in the next sentence. During any Renewal Term, the Stipulated Loss Amount and Termination Amount of any Unit shall be determined on the basis of the Fair Market Sales Value of such Unit as of the first day of such Renewal Term, reduced in equal monthly increments to the Fair Market Sales Value of such Unit as of the last day of such Renewal Term; provided that in no event during any Fixed Rate Renewal shall the Stipulated Loss Amount and Termination Amount of any Unit be less than 20% of the Equipment Cost of such Unit. Section 22.7 Deemed Renewals. If Lessee does not exercise its purchase option under Section 22.3 or its renewal option under Section 22.4 at the end of the Basic Term or any Renewal Term, then the Lease for any Unit subject to a Sublease at the end of the Basic Term or such Renewal Term shall be deemed automatically renewed for a Renewal Term expiring at the expiration of such 48 55 Sublease's term (but in no event later than three years following the expiry of the Basic Term or such Renewal Term, as applicable) (such Unit, an "Extended Unit"). The terms and conditions of any such deemed renewal of a Unit under this Section 22.7 including rent shall otherwise be those generally provided in Section 22.4 in respect of a Fair Market Renewal for the period thereof (which shall be considered a Renewal Term). Section 22.8 Funding of Accounts on Purchase. Lessee will not exercise the purchase option under this Section 22 unless either (a) the full amount required to fund the Post Lease Term Reserve Account is (upon consummation of such purchase and distribution of all amounts required to be distributed by the Collateral Agent under the Collateral Agency Agreement) and will be then available to the Collateral Agent to fund such account or (b) an indemnity pursuant to Section 3.13 of the Collateral Agency Agreement has been provided. SECTION 23. Limitation of Lessor's Liability. It is expressly agreed and understood that all representations, warranties and undertakings of Lessor hereunder (except as expressly provided herein) shall be binding upon Lessor only in its capacity as Owner Trustee under the Trust Agreement and in no case shall the Trust Company be personally liable for or on account of any statements, representations, warranties, covenants or obligations stated to be those of Lessor hereunder, except that the Trust Company shall be personally liable for its gross negligence or willful misconduct and for its breach of its covenants, representations and warranties contained herein to the extent covenanted or made in its individual capacity. SECTION 24. Investment of Security Funds. Any moneys received by Lessor or the Indenture Trustee pursuant to Section 12.2 which are required to be paid to Lessee after completion of repairs to be made pursuant to Section 12.2 or pursuant to Section 11.4(a) or 11.5, as the case may be, shall be paid directly to the appropriate Non-Shared Payments Account established under the Collateral Agency Agreement. SECTION 25. Miscellaneous. Section 25.1 Governing Law; Severability. THIS LEASE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). Whenever possible, each provision 49 56 of this Lease shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Lease shall be prohibited by or invalid under the laws of any jurisdiction, such provision, as to such jurisdiction, shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Lease in any other jurisdiction. Section 25.2 Execution in Counterparts. This Lease may be executed in any number of counterparts, each executed counterpart constituting an original and in each case such counterparts shall constitute but one and the same instrument; provided, however, that to the extent that this Lease constitutes chattel paper (as such term is defined in the Uniform Commercial Code) no security interest in this Lease may be created through the transfer or possession of any counterpart hereof other than the counterpart bearing the receipt therefor executed by the Indenture Trustee on the signature page hereof, which counterpart shall constitute the only "original" hereof for purposes of the Uniform Commercial Code. Section 25.3 Headings and Table of Contents; Section References. The headings of the sections of this Lease and the Table of Contents are inserted for purposes of convenience only and shall not be construed to affect the meaning or construction of any of the provisions hereof. All references herein to numbered sections, unless otherwise indicated, are to sections of this Lease. Section 25.4 Successors and Assigns. This Lease shall be binding upon and shall inure to the benefit of, and shall be enforceable by, the parties hereto and their respective permitted successors and permitted assigns. Section 25.5 True Lease. It is the intent of the parties to this Lease that it will be a true lease and not a "conditional sale", that Lessor shall at all times be considered to be the owner of each Unit which is the subject of this Lease for the purposes of all federal, state, city and local income taxes, that this Lease conveys to Lessee no right, title or interest in any Unit except as lessee and that the Lease will be a finance lease under the provisions of Article 2A of the New York Uniform Commercial Code. Nothing contained in this Section 25.5 shall be construed to limit Lessee's use or operation of any Unit or constitute a representation, warranty or covenant by Lessee as to tax consequences. The parties hereto hereby agree that Lessee's obligation to make payments of the type described in the definition of "Excepted Property" is a separate and independent obligation from its obligation to make other Rent payments, and that Lessee's obligation to make payments of the type described in the definition of "Excepted Property" may be independently enforced and may be assigned, pledged or otherwise transferred separately from Lessee's obligations to make other Rent payments. The obligation to make such payments has been included herein for the convenience of the parties. 50 57 Section 25.6 Amendments and Waivers. No term, covenant, agreement or condition of this Lease may be terminated, amended or compliance therewith waived (either generally or in a particular instance, retroactively or prospectively) except by an instrument or instruments in writing executed by each party hereto and except as may be permitted by the terms of the Indenture. Section 25.7 Survival. All warranties, representations, indemnities and covenants made by either party hereto, herein or in any certificate or other instrument delivered by such party or on the behalf of any such party under this Lease, shall be considered to have been relied upon by the other party hereto and shall survive the consummation of the transactions contemplated hereby on the Closing Date regard-less of any investigation made by either such party or on behalf of either such party, and to the extent having accrued and not been paid or relating to or otherwise arising in connection with the transactions contemplated by the Operative Agreements during the Lease Term, shall survive the expiration or other termination of this Lease or any other Operative Agreement. Section 25.8 Business Days. If any payment is to be made hereunder or any action is to be taken hereunder on any date that is not a Business Day, such payment or action otherwise required to be made or taken on such date shall be made or taken on the immediately succeeding Business Day with the same force and effect as if made or taken on such scheduled date and as to any payment (provided any such payment is made on such succeeding Business Day) no interest shall accrue on the amount of such payment from and after such scheduled date to the time of such payment on such next succeeding Business Day. Section 25.9 Directly or Indirectly; Performance by Managers. Where any provision in this Lease refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person. In this regard, it is understood and agreed that Lessee has entered into the Management Agreement with the Manager and the Insurance Agreement with the Insurance Manager, under which agreements certain rights and obligations of Lessee hereunder will be exercised and performed by such Persons on behalf of Lessee. Lessee agrees to instruct the Manager and the Insurance Manager to take such actions as shall be necessary or appropriate under such agreements so that Lessee shall be in compliance in all material respects with its obligations hereunder and under the other Operative Agreements. Section 25.10 Incorporation by Reference. The payment obligations set forth in Sections 7.1 and 7.2 of the Participation Agreement are hereby incorporated by reference. 51 58 IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease to be duly executed and delivered on the day and year first above written. Lessor: TRLI 2001-1A RAILCAR STATUTORY TRUST, By: State Street Bank and Trust Company of Connecticut, National Association, not in its individual capacity except as otherwise expressly provide ut solely as Owner Trustee By: ------------------------------------------ Name: ---------------------------------------- Title: --------------------------------------- Lessee: TRINITY RAIL LEASING I L.P. By TILX GP I, LLC, its General Partner By: ------------------------------------------ Name: Eric Marchetto Title: Vice President 52 59 Receipt of this original counterpart of the foregoing Lease is hereby acknowledged on the ___ day of May, 2001. LASALLE BANK NATIONAL ASSOCIATION, Indenture Trustee By: ------------------------------------------ Name: Sarah H. Webb Title: Senior Vice President 53 60 Exhibit A LEASE SUPPLEMENT NO. _____ (TRLI 2001-1A) This Lease Supplement No. ___, dated as of ____________, between TRLI 2001-1A Railcar Statutory Trust by State Street Bank and Trust Company of Connecticut, National Association, not in its individual capacity but solely as Owner Trustee under the Trust Agreement ("Lessor"), and Trinity Rail Leasing I L.P., a Texas limited partnership ("Lessee"); Witnesseth: Lessor and Lessee have heretofore entered into that certain Equipment Lease Agreement (TRLI 2001-1A) dated as of May 17, 2001 (the "Lease"). The terms used herein are used with the meanings assigned to such terms in the Lease. The Lease provides for the execution and delivery of one or more Lease Supplements substantially in the form hereof for, among other things, the purpose of particularly describing all or a portion of the Units to be leased to Lessee under the Lease. Now, therefore, in consideration of the premises and other good and sufficient consideration, and pursuant to Section 2 of the Lease, Lessor and Lessee hereby agree as follows: 1. Lessor hereby delivers and leases to Lessee, and Lessee hereby accepts and leases from Lessor, under the Lease as herein supplemented, the Units described in Schedule 1 hereto. 2. All of the terms and provisions of the Lease are hereby incorporated by reference in this Lease Supplement to the same extent as if fully set forth herein. 3. To the extent that this Lease Supplement constitutes chattel paper (as such term is defined in the Uniform Commercial Code) no security interest in this Lease Supplement may be created through the transfer or possession of any counterpart hereof other than the counterpart bearing the receipt therefor executed by the Indenture Trustee on the signature page hereof, which counterpart shall constitute the only "original" hereof for purposes of the Uniform Commercial Code. 4. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS 54 61 OF LAW PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). 5. This Lease Supplement may be executed in any number of counterparts, each executed counterpart constituting an original but all together constituting one and the same instrument. 55 62 IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement to be duly executed as of the day and year first above written and to be delivered as of the date first above written. Lessor: TRLI 2001-1A RAILCAR STATUTORY TRUST, By: State Street Bank and Trust Company of Connecticut, National Association, not in its individual capacity but solely as Owner Trustee By: ------------------------------------------- Name: ----------------------------------------- Lessee: --------------------------------------- TRINITY RAIL LEASING I L.P. By TILX GP I, LLC, its General Partner By: ------------------------------------------- Name: ----------------------------------------- Title: ---------------------------------------- (1) Receipt of this original counterpart of the foregoing Lease Supplement is hereby acknowledged on this ___ day of ____, 20___. LASALLE BANK NATIONAL ASSOCIATION, as Indenture Trustee By: ------------------------------------------- Name: ------------------------------------------ Title: ----------------------------------------- (1) This language contained in the original counterpart only. 56 63 APPENDIX A TO LEASE AGREEMENT (TRLI 2001-1A) DEFINITIONS GENERAL PROVISIONS The following terms shall have the following meanings for all purposes of the Operative Agreements referred to below, unless otherwise defined in an Operative Agreement or the context thereof shall otherwise require, and such meanings shall be equally applicable to both the singular and the plural forms of the terms herein defined. In the case of any conflict between the provisions of this Appendix A and the provisions of the main text of any Operative Agreement, the provisions of the main text of such Operative Agreement shall control the construction of such Operative Agreement. Unless otherwise required by the context, (i) references to agreements shall be deemed to mean and include such agreements as the same may be amended, supplemented and otherwise modified from time to time and (ii) references to parties to agreements shall be deemed to include the successors and permitted assigns of such parties. DEFINED TERMS "AAR" means the Association of American Railroads or any successor thereto. "Acceptable GIC Provider" means a provider of a Guaranteed Investment Contract whose long-term unsecured senior debt is rated at least "AA" by S&P or "Aa2" by Moody's (or equivalent ratings by another nationally recognized credit rating agency if both of such corporations are not in the business of rating long-term unsecured senior debt at the time of issuance) or who has provided collateral in acceptable form to S&P or Moody's with respect to such Guaranteed Investment Contract such that the rating with respect to such Guaranteed Investment Contract is at least "AA" by S&P or "Aa2" by Moody's. "Accounts" has the meaning assigned thereto in the Collateral Agency Agreement. "Accumulated Equity Deficiency Amount" means, on any Payment Date, the aggregate amount equal to the Equity Portion of Basic Rent scheduled for payment on or prior to such Payment Date and not paid plus the Equity Portion of Stipulated Loss Amount, Equity Portion of Termination Amount or Equity Portion of Early Purchase Price, if any, then due and owing. 57 64 "Adjusted Payment Amount" means, for each Adjusted Principal Period, the product of (i) the sum of all principal payments made during such Adjusted Principal Period (excluding any Prepaid Amount) and (ii) the Adjustment Multiplier for such Adjusted Principal Period. "Adjusted Principal Period" means, at any Payment Date (the "Relevant Payment Date"), (i) in the event no Prepayment has been made, the period from the Closing Date to and including the Payment Date immediately preceding the Relevant Payment Date or (ii) in the event one or more Prepayments have been made on or prior to the Relevant Payment Date, each of the following periods, without duplication: (a) the period from the Closing Date to and including the first Payment Date thereafter on which a Prepayment has been made, (b) each period, if any, between two Payment Dates on which successive Prepayments have been made, in each case excluding the Payment Date upon which such period commences to and including, the Payment Date upon which such period ends and (c) the period, if any, from but excluding the Payment Date immediately preceding the Relevant Payment Date on which a Prepayment was made to and including the Payment Date immediately preceding the Relevant Payment Date. "Adjustment Date" has the meaning assigned thereto in the definition of Basic Rent Adjustment. "Adjustment Multiplier" means at any Payment Date (the "Relevant Payment Date") for any Adjusted Principal Period, a fraction, the numerator of which shall be the aggregate Equipment Cost of all Units included in the Indenture Estate on the Relevant Payment Date (including in this numerator the Equipment Cost of any Excluded Unit for the Relevant Payment Date) and the denominator of which shall be the aggregate Equipment Cost of all Units included in the Indenture Estate at the commencement of such Adjusted Principal Period. "Administration Fee" has the meaning assigned thereto in Section 2 of the Administrative Services Agreement. "Administrative Services Agreement" means the Administrative Services Agreement, dated as of May 17, 2001, between TRMI and the Partnership. "Administrative Services Standard" means the level of care and diligence as shall be required (i) in order for the Partnership to perform its obligations under the Lease and the other Operative Agreements and (ii) in any event consistent with customary commercial practice as would be used by a prudent Person in the administration services industry and the level of care and diligence utilized by the Administrator in its own business. 58 65 "Administrator" has the meaning assigned thereto in the Administrative Services Agreement. "Affiliate" means, with respect to any Person, any other Person which directly or indirectly controls, or is controlled by, or is under a common control with, such Person; provided, however, that under no circumstance shall the Trust Company be considered to be an Affiliate of any of the Owner Participant, the Owner Trustee, the Other Owner Trustee, the Trust or the Other Trust, nor shall any of the Owner Participant, the Owner Trustee, the Other Owner Trustee, the Trust or the Other Trust be considered to be an Affiliate of the Trust Company. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "After-Tax Basis" means, with respect to any payment due to any Person, that the amount of such payment is supplemented by a further payment or payments so that the sum of all such payments, after reduction for all Taxes payable by such Person by reason of the receipt or accrual of such payments, shall be equal to the payment due to such Person. "Alternative Minimum Tax" means the alternative minimum tax imposed under Section 55 of the Code. "Applicable Period" has the meaning assigned thereto in Section 4.4(a) of the Indenture. "Appraisal" has the meaning assigned thereto in Section 4.3(a) of the Participation Agreement. "Appraiser" has the meaning assigned thereto in Section 4.3(a) of the Participation Agreement. "Arrangers" means, collectively, Dresdner Klienwort Wasserstein and PriceWaterhouseCoopers LLP. "Assignment" means the Assignment Agreement, dated as of May 17, 2001, between the Partnership and the Owner Trustee. "Assumed Debt" means any Lender Loan which has been assumed by the Partnership in connection with Section 22.1 of the Lease. "Assumed Loan Documentation" means the documentation evidencing the Assumed Debt. 59 66 "Authorized Representative" of any entity means the person or persons authorized to act on behalf of such entity. "Average Life Date" means, with respect to an Equipment Note, the date which follows (i) in the case of an Equipment Note being prepaid, the date of such prepayment or (ii) in the case of an Equipment Note not being prepaid, the date of such determination, by a period equal to the Remaining Weighted Average Life of such Equipment Note. "Bankruptcy Code" means Chapter 11 of Title 11 of the United States Code, 11 U.S.C. Section 101 et. seq. "Base Component" has the meaning assigned thereto in Section 5.2(a) of the Management Agreement. "Base Rate" means the rate of interest announced from time to time by Bank One, NA at its principal office in Chicago, Illinois as its "corporate base rate" (or its equivalent successor rate, if the corporate base rate is no longer used). "Basic Rent" means, with respect to any Unit, all rent payable by the Lessee to the Lessor pursuant to Section 3.2 of the Lease for the Basic Term for such Unit, and, upon the exercise by Lessee of its renewal option in respect of such unit, all rent payable pursuant to Section 22.4 of the Lease for any Renewal Term for such Unit. "Basic Rent Adjustment" for any date on which amount calculated by reference to Termination Value, Stipulated Loss Value or Early Purchase Price are payable (such date for purposes of this definition, the "Adjustment Date") means the sum of: (i) all amounts of Basic Rent allocated to any period prior to the Adjustment Date and not yet paid reduced by all amounts of Basic Rent paid prior to the Adjustment Date and allocated to periods after the Adjustment Date and (ii) the Basic Rent payment due and payable on the Adjustment Date. The Basic Rent Adjustments are set forth on Schedules 4-A, 4-B and 6 to the Participation Agreement. "Basic Rent Holiday" has the meaning assigned thereto in Section 3.2 of the Lease. "Basic Term" has the meaning assigned thereto in Section 3.1 of the Lease. "Basic Term Commencement Date" means the Closing Date. "Basic Term Expiration Date" means May 17, 2023. "Beneficial Interest" means the interest of the Owner Participant in the Trust Estate pursuant to the Trust Agreement. 60 67 "Beneficial Interest Purchase Price" has the meaning assigned thereto in Section 6.9(a)(i) of the Participation Agreement. "Beneficiaries" has the meaning assigned thereto in the Collateral Agency Agreement. "Beneficiary Termination Date" has the meaning assigned thereto in the Collateral Agency Agreement. "Bill of Sale" means the full warranty bill of sale, dated the Closing Date or the date that any Replacement Unit is subjected to the Lease, from the Lessee to the Owner Trustee covering the Units delivered on the Closing Date or such Replacement Unit, as the case may be. "Business Day" means any day other than a Saturday, Sunday or a day on which commercial banking institutions are authorized or required by law, regulation or executive order to be closed in New York, New York, Chicago, Illinois, the city and state in which the Collateral Agent maintains its corporate trust office, the city and state in which the principal corporate trust office of the Owner Trustee is located, or, until the Lien of the Indenture has been discharged, the city and state in which the principal corporate trust office of the Indenture Trustee is located. "Calculation Date" means the last Business Day of each calendar month. "Canadian Affiliate" has the meaning assigned thereto in Section 8.3 of the Lease. "Cash Trapping Account" means the account of that name established pursuant to Section 3.1 of the Collateral Agency Agreement. "Certificate Purchase Agreement" means the Certificate Purchase Agreement, dated as of May 17, 2001, among the Initial Purchasers and the Lessee. "Certificateholder" means the Person in whose name a Pass Through Certificate is registered in the register for Pass Through Certificates of a particular series. "Certificates" or "Pass Through Certificates" means the Pass Through Certificates issued pursuant to the Pass Through Trust Agreement. "Claims" means any and all costs, expenses, liabilities, obligations, losses, damages, penalties, actions or suits or claims of whatsoever kind or nature (whether or not on the basis of negligence, strict or absolute liability or liability in tort), 61 68 including, without limitation, all reasonable out-of-pocket costs, disbursements and expenses (including legal fees and expenses) paid or incurred in connection therewith or related thereto. "Closing" has the meaning assigned thereto in Section 2.3(b) of the Participation Agreement. "Closing Date" means the date on which the Closing occurs. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Collateral" has the meaning set forth in Section 2.1 of the Collateral Agency Agreement. "Collateral Agency Agreement" means the Collateral Agency Agreement, dated as of May 17, 2001, among the Lessee, the Collateral Agent, the Owner Trustee, the Other Owner Trustee, the Indenture Trustee, TILC, TRMI and certain other Persons. "Collateral Agency Event of Default" means a "Manager Default" as specified under Section 8.2 of the Management Agreement or an "Insurance Manager Default" as specified under Section 6.2 of the Insurance Agreement, in each case after the giving of any required notice thereunder and/or the expiration of any applicable cure period provided therein. "Collateral Agent" means Bank One Trust Company, NA, as collateral agent under the Collateral Agency Agreement, and any successor collateral agent thereunder. "Collection Account" means the account of that name established pursuant to Section 3.1 of the Collateral Agency Agreement. "Collections" for any period means, without duplication, (i) all amounts payable to the Partnership or to the Collection Account in respect of the Equipment, the Pledged Equipment, the Subleases and the Pledged Equipment Leases, including amounts received in respect of claims for damages or in respect of breaches of contract or nonpayment of any amount due thereunder, (ii) all income earned on amounts on deposit in the Accounts and (iii) all other payments of whatever kind (other than Non-Shared Payments and amounts distributed to the Partnership pursuant to Section 3.10 of the Collateral Agency Agreement) received by the Partnership pursuant to any other Partnership Document, but, excluding the proceeds from the sale of the Units to the Lessor pursuant to the Participation Agreement on the Closing Date. "Contiguous United States" means the continental United States (excluding Alaska and Hawaii). 62 69 "Control Agreement" means the Securities Accounts Control Agreement, dated as of May 17, 2001, between the Partnership and Bank One Trust Company, NA, as Collateral Agent and Securities Intermediary. "Coverage Ratio" means the Historical Coverage Ratio or the Projected Coverage Ratio. "Credit Bankrupt" means a Person which (i) is subject to any bankruptcy or insolvency proceeding or (ii) is not paying its debts generally as they become due. "Customer" means any Sublessee or Pledged Equipment Lessee. "Damages" has the meaning specified in Section 5.4 of the Collateral Agency Agreement. "Debt Rate" means an interest rate equal to 6.74% per annum (computed on the basis of a 360-day year of twelve 30-day months). "Default Interest" means interest on any amount of the Rated Amortization Amount of, or Regular Interest on, Equipment Notes that was not paid when such amount became due and payable. "Default Rate" means as of any date of determination, the lesser of (x) (i) in the case of any amount paid to or for the benefit of the Owner Participant, 2.0% plus the Base Rate in effect as of such date, and (ii) in the case of any amount other than amounts referred to in (i), 2.0% over the Debt Rate and (y) the maximum interest rate permitted by law (computed on the basis of a 360-day year of twelve 30-day months). "Designation Letter" has the meaning assigned to such term in the Collateral Agency Agreement. "Determination Date" means a Payment Date. "Early Purchase Date" means the early purchase date specified on Schedule 6 to the Participation Agreement. "Early Purchase Option" means the purchase option provided the Lessee in Section 22.1 of the Lease. 63 70 "Early Purchase Price" means, with respect to any Unit, the amount equal to the product of the percentage set forth in Schedule 6 to the Participation Agreement and the Equipment Cost for such Unit. Notwithstanding anything to the contrary contained in the Lease or in the Participation Agreement, the Early Purchase Price for a Unit (both before and after any adjustment pursuant to Section 2.6 of the Participation Agreement and after giving effect to any offset pursuant to Section 22.1 of the Lease) will, under any circumstances and in any event, be an amount which, together with any other amounts required to be paid by the Lessee under the Lease in connection with its exercise of the option under Section 22.1 of the Lease, will be at least sufficient to pay in full as of the Early Purchase Date the aggregate unpaid principal of the Equipment Notes issued in respect of such Unit, together with all unpaid interest, Late Payment Premium and Make-Whole Amount, if any, thereon accrued to the date on which such amount is paid in accordance with the terms thereof and all other Secured Amounts then due to the holders of the Equipment Notes in respect of such Unit. "Equipment" means, collectively, those items of railroad rolling stock described in the Lease Supplements and the Indenture Supplements, together with any and all replacements thereof and any and all accessions, additions, improvements to and replacements from time to time incorporated or installed in any item thereof which are the property of the Owner Trustee pursuant to the terms of a Bill of Sale or the Lease. "Equipment Cost" means, for each Unit, the purchase price therefor paid by the Owner Trustee to the Lessee pursuant to Section 2 of the Participation Agreement and as set forth in Schedule 1 to the Participation Agreement with respect to such Unit. Notwithstanding anything to the contrary contained in the Operative Agreements, the Equipment Cost for any Replacement Unit shall be deemed to be the Equipment Cost or deemed Equipment Cost of the Unit replaced by such Replacement Unit. "Equipment Lease" or "Lease" or "Lease Agreement" means the Equipment Lease Agreement (TRLI 2001-1A), relating to the Equipment, dated as of May 17, 2001, between the Owner Trustee, in the capacities described therein, as Lessor, and the Lessee. The term "Lease" shall, except where the context otherwise requires, include each Lease Supplement entered into pursuant to the terms of the Lease. "Equipment Notes" means the Equipment Notes, each substantially in the form set forth in Section 2.1 of the Indenture, issued by the Owner Trustee pursuant to Section 2.2 of the Indenture, and authenticated by the Indenture Trustee, in principal amounts, maturities and bearing interest at the rates and payable as provided in Section 2.2 of the Indenture and secured as provided in the Granting Clause of the Indenture, and shall include any Equipment Note issued in exchange therefor or replacement thereof pursuant to Section 2.7 or 2.8 of the Indenture. 64 71 "Equity Insufficiency Circumstance" means, at any date, the failure of the Owner Participant to have received under the Collateral Agency Agreement the full amount due on such date of the Accumulated Equity Deficiency Amount. "Equity Portion of Basic Rent" means, at any Payment Date, the amount represented in the column entitled "Equity Portion of Basic Rent Payment" on Schedule 3-A to the Participation Agreement corresponding to such Payment Date. "Equity Portion of Early Purchase Price" means the amount designated as such in accordance with Schedule 6 to the Participation Agreement. "Equity Portion of Stipulated Loss Amount" means, as of any date, the amount represented in the column entitled "Equity Portion of Stipulated Loss Amount" on Schedule 4-A to the Participation Agreement corresponding to such date. "Equity Portion of Termination Amount" means, as of any date, the amount represented in the column entitled "Equity Portion of Termination Amount" on Schedule 4-B to the Participation Agreement corresponding to such date. " Equity Tax Indemnitee" has the meaning assigned thereto in Section 7.1(a) of the Participation Agreement. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor law. "Event of Loss" has the meaning assigned thereto in Section 11.1 of the Lease, or if applicable with respect to the Assumed Debt, in the Assumed Loan Documentation. "Excepted Property" means (i) all indemnity payments (including, without limitation, payments pursuant to Section 7 of the Participation Agreement or payments under the Tax Indemnity Agreement) to which the Owner Participant, the Trust Company or any of their respective successors, permitted assigns, directors, officers, employees, servants and agents is entitled pursuant to the Operative Agreements, (ii) any right, title or interest of the Trust Company or the Owner Participant to any payment which by the terms of Section 17 of the Lease or any corresponding payment under Section 3.3 of the Lease shall be payable to or on behalf of the Trust Company or to the Owner Participant, as the case may be, (iii) any insurance proceeds payable under insurance maintained by the Trust Company or the Owner Participant pursuant to Section 12.5 of the Lease, (iv) any insurance proceeds payable to or on behalf of the Trust Company or to the Owner Participant, under any public liability insurance maintained by the Lessee pursuant to Section 12 of the 65 72 Lease (which shall include the amount of any self-insured retention paid by the Lessee) or by any other Person, (v) Transaction Costs or other amounts or expenses paid or payable to, or for the benefit of the Trust Company or the Owner Participant pursuant to the Participation Agreement or the Trust Agreement, (vi) all right, title and interest of the Owner Participant or the Trust Company in or relating to any portion of the Units and any other property (tangible or intangible), rights, titles or interests to the extent any of the foregoing has been released from the Lien of the Indenture pursuant to the terms thereof, (vii) upon termination of the Indenture pursuant to the terms thereof with respect to any Unit, all remaining amounts which shall have been paid or are payable by the Lessee and calculated on the basis of Stipulated Loss Value or Stipulated Loss Amount, (viii) any rights of the Owner Participant or the Trust Company to demand, collect, sue for, or otherwise receive and enforce payment of the foregoing amounts, (ix) any amount payable to the Owner Participant by any Transferee as the purchase price of the Owner Participant's interest in the Trust Estate in compliance with the terms of the Participation Agreement and the Trust Agreement and (x) the respective rights of the Trust Company or the Owner Participant to the proceeds of and interest on the foregoing. "Excepted Rights" has the meaning assigned thereto in Section 5.11 of the Indenture. "Excess Amount" has the meaning assigned thereto in Section 10.14 of the Participation Agreement. "Excess Cash Account" means the account of that name established pursuant to Section 3.1 of the Collateral Agency Agreement. "Excluded Unit" means, at any Payment Date, any Unit (i) for which the Lease is to be terminated pursuant to Section 10 of the Lease on such Payment Date, (ii) which suffers an Event of Loss or a deemed Event of Loss under Section 9.1 of the Lease and is not replaced pursuant to Section 11.2(i) prior to or on such Payment Date or (iii) which is to be purchased by the Lessee pursuant to Section 6.9 of the Participation Agreement on such Payment Date; provided that the principal amount of the Equipment Note or Notes which corresponds to the Equipment Cost of such Unit is to be prepaid in accordance with Section 2.10 of the Indenture on such Payment Date (unless Lessee shall have assumed such obligations pursuant to and in accordance with Section 3.6 of the Indenture). "Existing Equipment Subleases" means any and all railroad car lease agreements with customers of TILC in effect on the Closing Date in respect of the Equipment described on Schedule 1 to the Participation Agreement and under which TILC is the lessor, together with any automatic renewals thereof. "Existing Equipment Sublessee" means those Sublessees under Existing Equipment Subleases. 66 73 "Existing Pledged Equipment Leases" means any and all railroad car lease agreements with customers of TILC in effect on the Closing Date in respect of the Pledged Equipment described on Schedule 1-A to the Participation Agreement and any and all railroad car lease agreements with customers of TILC in effect on the Closing Date in respect of the Otherwise Encumbered Pledged Units (as defined in the Collateral Agency Agreement) which have been purchased by the Partnership as contemplated by Section 3.19 of the Collateral Agency Agreement, and in each case under which TILC is the lessor, together with any automatic renewals thereof, provided that the railroad car lease agreements in respect of the Otherwise Encumbered Pledged Units which have been purchased by the Partnership shall be deemed "Existing Pledged Equipment Leases" only on and after the date so purchased. "Existing Pledged Equipment Lessee" means those Pledged Equipment Lessees under Existing Pledged Equipment Leases. "Extended Unit" has the meaning assigned thereto in Section 22.7 of the Lease. "Fair Market Renewal" has the meaning assigned thereto in Section 22.4 of the Lease. "Fair Market Renewal Rate" has the meaning assigned thereto in Section 22.4 of the Lease. "Fair Market Rental Value" or "Fair Market Sales Value" with respect to any Unit, means the cash rent or cash price obtainable for such Unit in an arm's length lease or sale between an informed and willing lessee or purchaser under no compulsion to lease or purchase, as the case may be, and an informed and willing lessor or seller, under no compulsion to lease or sell, as the case may be, as the same shall be specified by agreement between the Lessor and the Lessee. If the parties are unable to agree upon a Fair Market Rental Value and/or a Fair Market Sales Value within 30 days after delivery of notice by the Lessee pursuant to Section 22 of the Lease, or otherwise where such determination is required, within a reasonable period of time, such value shall be determined by appraisal. The Lessee will, within 15 days after such 30-day period, provide the Lessor with the name of an appraiser that would be satisfactory to the Lessee, and the Lessor and the Lessee shall consult with each other with the intent of selecting a mutually acceptable appraiser. If a mutually acceptable appraiser is selected, the Fair Market Rental Value or the Fair Market Sales Value, as the case may be, shall be determined by such appraiser, and the Lessee shall bear the cost thereof. If the Lessee and the Lessor are unable to agree upon a single appraiser within such 15-day period, two independent qualified appraisers, one chosen by the Lessee and one chosen by the Lessor shall jointly determine such value, and the 67 74 Lessor shall bear the cost of the appraiser selected by the Lessor, and the Lessee shall bear the cost of the appraiser selected by the Lessee. If such appraisers cannot agree on the amount of such value within 15 days of appointment, such appraisers shall, within five days after such 15 day period, appoint a third appraiser, and, if no such third appraiser is appointed within the five days specified therefor, one independent qualified appraiser shall be chosen by the American Arbitration Association. All three appraisers shall make a determination within a period of 15 days following appointment, and shall promptly communicate such determination in writing to the Lessor and the Lessee. If there shall be a panel of three appraisers, the three appraisals shall be averaged, the appraisal most divergent from such average shall be discarded, the remaining two appraisals shall be averaged and such average shall be the Fair Market Rental Value or Fair Market Sales Value, as the case may be. The determination made shall be conclusively binding on both the Lessor and the Lessee. If there shall be a panel of three appraisers, the Lessee and the Lessor shall equally share the cost of the third appraiser. If such appraisal is pursuant to Section 6.1(e) of the Lease or is in connection with the exercise of remedies set forth in Section 15 of the Lease, the Lessee shall pay the costs of such appraisal. Notwithstanding any of the foregoing, for the purposes of Section 15 of the Lease, the Fair Market Rental Value or the Fair Market Sales Value, as the case may be, shall be zero with respect to any Unit if the Lessor is unable to recover possession of such Unit in accordance with the terms of paragraph (b) of Section 15.1 of the Lease. "Final Beneficiaries Termination Date" has the meaning assigned thereto in the Collateral Agency Agreement. "Fixed Rate Renewal" has the meaning assigned thereto in Section 22.4 of the Lease. "Fixed Rate Renewal Term" has the meaning assigned thereto in Section 22.4 of the Lease. "FRA" means the Federal Railroad Administration or any successor thereto. "Full Service Subleases" means Subleases and Pledged Equipment Leases pursuant to which the Partnership as lessor or sublessor thereunder is responsible for maintenance and repair of Units or Pledged Units (as applicable) that are subject thereto. "Full Service Subleases Monthly Average Lease Rate" means for any calendar month, the aggregate monthly rental rates with respect to the Total Managed Fleet for such calendar month under "full service subleases" divided by the number of railcars in the Total Managed Fleet which are subject to "full service subleases" or other "full service leases" on the last day of such calendar month. 68 75 "Functional Group" means each and all of the various groups of Units so designated in Schedule 1 to the Participation Agreement. "General Partner" means TILX GP I, LLC, a Delaware limited liability company. "Government Entity" means (a) any federal, state, provincial or similar government, and any body, board, department, commission, court, tribunal, authority, agency or other instrumentality of any such government or otherwise exercising any executive, legislative, judicial, administrative or regulatory functions of such government or (b) any other government entity having jurisdiction over any matter contemplated by the Operative Agreements or relating to the observance or performance of the obligations of any of the parties to the Operative Agreements. "Hazardous Substances" means any hazardous or toxic substances, materials or wastes, including, but not limited to, those substances, materials, and wastes listed in the United States Department of Transportation Hazardous Materials Table (49 CFR Section 172.101) or by the Environmental Protection Agency as hazardous substances (40 CFR Section 302.4), or such substances, materials and wastes which are or become regulated under any applicable local, state or federal law or the equivalent under applicable foreign laws including, without limitation, any materials, waste or substance which is (a) petroleum, (b) asbestos, (c) polychlorinated biphenyls, (d) defined as a "hazardous material," "hazardous substance" or "hazardous waste" under applicable local, state or federal law or the equivalent under applicable foreign laws, (e) designated as a "hazardous substance" pursuant to Section 311 of the Clean Water Act of 1977, (f) defined as "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act of 1976 or (g) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980. "Historical Coverage Ratio" has the meaning assigned thereto in the Collateral Agency Agreement. "Incentive Component" has the meaning assigned thereto in Section 5.3 of the Management Agreement. "Income Tax" has the meaning assigned thereto in Section 7.1(j) of the Participation Agreement. "Indemnified Expenses" has the meaning assigned thereto in the Administrative Services Agreement. "Indemnified Party" has the meaning specified in Section 5.4 of the Collateral Agency Agreement with respect to indemnifications thereunder and the meaning specified in Section 9.1 of the Management Agreement with respect to indemnifications thereunder. 69 76 "Indemnified Person" has the meaning assigned thereto in Section 7.2(b) of the Participation Agreement. "Indemnified Taxes" has the meaning assigned thereto in Section 7.1(d) of the Participation Agreement. "Indenture" or "Trust Indenture" means the Trust Indenture and Security Agreement (TRLI 2001-1A), dated as of May 17, 2001, between the Owner Trustee, in the capacities described therein, and the Indenture Trustee. The term "Indenture" or "Trust Indenture" shall include, except where the context otherwise requires, each Indenture Supplement entered into pursuant to the terms of the Indenture. "Indenture Default" means an Indenture Event of Default or an event which, with notice or the passage of time or both, would become an Indenture Event of Default. "Indenture Estate" has the meaning assigned thereto in the Granting Clause of the Indenture. "Indenture Event of Default" has the meaning assigned thereto in Section 4.1 of the Indenture. "Indenture Investment" means any obligation issued or guaranteed by the United States of America or any of its agencies for the payment of which the full faith and credit of the United States of America is pledged and with a final maturity on or before the date which is the earlier of (a) ninety days from the date of purchase thereof and (b) the first Payment Date occurring after the date of purchase thereof. "Indenture Supplement" means an Indenture Supplement (TRLI 2001-1A) dated the Closing Date or the date that any Replacement Unit is subjected to the Lien of the Indenture, substantially in the form of Exhibit A to the Indenture, between the Owner Trustee, in the capacities described therein, and the Indenture Trustee, covering the Units delivered on the Closing Date or such Replacement Unit, as the case may be. A "related" Indenture Supplement, when used with respect to any Unit or Units, means the Indenture Supplement under which such Unit or Units is or are included in the Indenture Estate. "Indenture Trustee" means LaSalle Bank National Association, a national banking association, as trustee under the Indenture and the Other Indenture and any successor institution. "Indenture Trustee Agreements" means the Operative Agreements to which the Indenture Trustee is or will be a party. 70 77 "Inflation Factor" means, with respect to any calendar year, the quotient (expressed as a decimal) obtained by dividing (i) the PPI published in respect of the most recently ended calendar year (the "New Year"), by (ii) the PPI published in respect of the calendar year immediately preceding the New Year, and subtracting 1.0 from the resulting quotient. "PPI", for purposes hereof, means, with respect to any calendar year or any period during any calendar year, the "Producer Price Index" applicable to the capital equipment sector as published by the Bureau of Labor Statistics for the United States Department of Labor. If the PPI shall be converted to a different standard reference base or otherwise revised after the date hereof, PPI shall thereafter be calculated with use of such new or revised statistical measure published by the Bureau of Labor Statistics or, if not so published, as may be published by any other reputable publisher of such price index selected by the Manager. The Inflation Factor may be a negative number. "Initial Manager" means Trinity Industries Leasing Company, a Delaware corporation. "Initial Purchasers" means, collectively, Nationwide Life Insurance Company, Nationwide Indemnity Company, Nationwide Mutual Fire Insurance Company, First SunAmerica Life Insurance Company, SunAmerica Life Insurance Company and Bankers Trust, Trustee under Trust Agreement dated 3/31/97, by and among SunAmerica Life Insurance Company, as Grantor, John Alden Life Insurance Company, as Beneficiary, and Bankers Trust Company, as Trustee. "Insurance Agreement" means the Insurance Agreement, dated as of May 17, 2001, between the Lessee and TILC. "Insurance Manager" has the meaning assigned thereto in the Insurance Agreement. "Insurance Manager Default" has the meaning assigned thereto in the Insurance Agreement. "Insurance Services Standard" has the meaning assigned thereto in the Insurance Agreement. "Interchange Rules" has the interchange rules or supplements thereto of the AAR, as the same may be in effect from time to time. "Investment Banker" means an independent investment banking institution of national standing appointed by the Lessee or, if the Indenture Trustee does not receive notice of such appointment at least ten days prior to a scheduled prepayment date or if a Lease Event of Default under the Lease shall have occurred and be 71 78 continuing, appointed by the Indenture Trustee. "Late Payment Interest" means, without duplication, (i) in the case of the Accumulated Equity Deficiency Amount, interest at the Late Rate and interest at such rate on any overdue amounts of such interest, (ii) in the case of that portion of any overdue payment of Stipulated Loss Amount or Termination Amount that is in excess of the principal amount of the Equipment Notes then outstanding and which are allocated to the Units with respect to which such payment is made, interest at the Late Rate, (iii) any Late Payment Premium, (iv) in the case of any Late Payment Premium that is overdue, interest at the rate specified in the definition of "Late Payment Premium," and (v) in respect of any other overdue amount, including Basic Rent and Supplemental Rent, interest at the Default Rate. Late Payment Premium" means, with respect to any Payment Deficiency for which a Late Payment Premium is payable on a Payment Date, an amount of interest (computed on the basis of a 360-day year of twelve 30-day months) on the Payment Deficiency, for the period from and including the Payment Date immediately preceding such Payment Date to but excluding such Payment Date, at a rate equal to 1.5% per annum. "Late Rate" means an interest rate equal to the lesser of 13.5% per annum or the maximum rate permitted by applicable law (computed on the basis of a 360-day year of twelve 30-day months). "Late Rent Premium" means the sum of (x) with respect to the Lease and on any Monthly Transfer Date, any Supplemental Rent in respect of the amounts described in the definition of Late Payment Interest which shall remain outstanding and unpaid (or deemed unpaid) as of such date, and (y) with respect to any Assumed Debt and on any Monthly Transfer Date, the sum of (i) the premiums, if any, due on any overdue portions of principal and interest in respect of any Assumed Debt at the late payment rate set forth in the Assumed Loan Documentation and (ii) the default rate interest, if any, due on any defaulted principal or interest in respect of any Assumed Debt, at the default interest rate set forth in the Assumed Loan Documentation. "Law" means (a) any constitution, treaty, statute, law, regulation, order, rule or directive of any Government Entity, and (b) any judicial or administrative interpretation or application of, or decision under, any of the foregoing. "Lease" or "Lease Agreement"or "Equipment Lease" means the Equipment Lease Agreement (TRLI 2001-1A), relating to the Equipment, dated as of May 17, 2001, between the Owner Trustee, in the capacities described therein, as Lessor, and the Lessee. The term "Lease" shall, except where the context otherwise requires, include each Lease Supplement entered into pursuant to the terms of the Lease. "Lease Default" means a Lease Event of Default or an event which, with 72 79 notice or passage of time or both, would become a Lease Event of Default. "Lease Event of Default" has the meaning assigned thereto in Section 14 of the Lease or if applicable with respect to the Assumed Debt, in the Assumed Loan Documentation. "Lease Supplement" means a Lease Supplement (TRLI 2001-1A), dated the Closing Date or the date that any Replacement Unit is subjected to the Lease, substantially in the form of Exhibit A to the Lease, between the Lessor and the Lessee, covering the Units delivered on the Closing Date or such Replacement Unit, as the case may be. A "related" Lease Supplement, when used with respect to any Unit or Units, means the Lease Supplement under which such Unit or Units is or are leased. "Lease Term" means, with respect to any Unit, the Basic Term applicable to such Unit and any Renewal Term applicable to such Unit then in effect. "Lender Agent" has the meaning assigned thereto in the Collateral Agency Agreement. "Lender Documents" means the Indenture, the Indenture Supplements, the Equipment Notes and any other document pursuant to which the Loan Participant makes a Lender Loan to the Lessor. "Lender Loan" means each Equipment Note issued by the Lessor to finance all or any part of the Equipment Cost with respect to any Unit leased to the Partner-ship pursuant to the Lease. "Lender Tax Indemnitee" has the meaning assigned thereto in Section 7.1(a) of the Participation Agreement. "Lessee" or "Partnership" means Trinity Rail Leasing I L.P., a Texas limited partnership. "Lessee Agreements" means the Operative Agreements to which the Lessee is or will be a party. "Lessor" means the Trust. "Lessor Agent" has the meaning assigned thereto in the Collateral Agency Agreement. "Lessor's Lien" means any Lien affecting, on or in respect of, the Equipment, the Lease or any other part of the Trust Estate arising as a result of (i) claims against 73 80 the Lessor (in its individual capacity or as Owner Trustee) or the Owner Participant, in each case unrelated to the transactions contemplated by the Operative Agreements, (ii) acts of the Lessor (in its individual capacity or as Owner Trustee) or the Owner Participant, in each case unrelated to the transactions contemplated by the Operative Agreements or acts or omissions in breach of any covenant or agreement of such Person set forth in any of the Operative Agreements or (iii) taxes imposed against the Lessor (in its individual capacity or as Owner Trustee) or the Owner Participant or the Trust Estate which are not required to be indemnified against by the Lessee pursuant to the Participation Agreement or under the Tax Indemnity Agreement. "Lien" means any mortgage, pledge, security interest, lien, encumbrance, lease, disposition of title or other charge of any kind on property. "Limited Partner" means TILX LP I, LLC, a Delaware limited liability company. "Limited Use Property" has the meaning set forth in Rev. Proc. 76-30, 1976-2 C.B. 647. "Liquidity Reserve Account" means the account of that name established pursuant to Section 3.1 of the Collateral Agency Agreement. "Loan Participant" means and includes each registered holder from time to time of an Equipment Note issued under the Indenture, including, so long as it holds any Equipment Notes issued thereunder, the Pass Through Trustee under the Pass Through Trust Agreement. "Loan Participant's Commitment" has the meaning assigned thereto in Section 2.2(b) of the Participation Agreement. "Majority In Interest" means, as of a particular date of determination and with respect to any action or decision of the holders of the Equipment Notes, the holders of more than 50% of the aggregate unpaid principal amount of the Equipment Notes, if any, then outstanding which are affected by such decision or action, excluding any Equipment Notes held by the Owner Participant or the Lessee or an Affiliate of the Owner Participant or the Lessee unless all Equipment Notes are so held. "Make-Whole Amount" means, with respect to the principal amount of any Equipment Note to be prepaid on any prepayment date, the amount which the Investment Banker determines as of the third Business Day prior to such prepayment date to equal the product obtained by multiplying (a) the excess, if any, of (i) the sum of the present values of all the remaining scheduled payments of principal and interest, based upon Scheduled Amortization, from the prepayment date to the Scheduled Maturity Date of such Equipment Note, discounted monthly on the day of each month at a rate equal to the Treasury Rate plus 0.50%, based upon a 360-day year of twelve 30-day months, over (ii) the aggregate unpaid principal amount of 74 81 such Equipment Note, based upon Scheduled Amortization, plus any accrued but unpaid interest thereon by (b) a fraction, the numerator of which shall be the aggregate unpaid principal amount of such Equipment Note to be prepaid on such prepayment date and the denominator of which shall be the aggregate unpaid principal amount of such Equipment Note; provided that the aggregate unpaid principal amount of such Equipment Note for the purpose of clause (a)(ii) and (b) of this definition shall be determined after deducting the principal installment, if any, due on such prepayment date. "Management Agreement" means the Railroad Car Management, Operation, Maintenance, Servicing and Remarketing Agreement, dated as of May 17, 2001, between the Partnership and the Initial Manager. "Management Fee" has the meaning assigned thereto in Section 5.1 of the Management Agreement. "Manager" means the Initial Manager and any Successor Manager under the Management Agreement. "Manager Agreements" means the Operative Agreements to which the Manager is or is to be a party (whether or not in such capacity). "Manager Default" has the meaning assigned thereto in Section 8.2 of the Management Agreement. "Manager's Fleet" means the TILC Fleet and, if a Successor Manager shall have been appointed pursuant to the Management Agreement, "Manager's Fleet" means all railcars owned, leased or managed by such Manager or its Affiliates, in either case, other than railcars in the Partnership Fleet. "Marks Company" means Trinity Marks Company, a Delaware business trust. "Marks Company Trust Agreement" means the Amended and Restated Marks Company Trust Agreement, dated as of May 17, 2001, between TILC and Wilmington Trust Company. "Marks Company Trust Supplement" means the Supplement TRLI I to the Marks Company Trust Agreement, dated as of May 17, 2001, between TILC and Wilmington Trust Company. "Marks Company Trustee" has the meaning set forth in the Marks Company Trust Agreement. "Mexican Affiliate" has the meaning assigned thereto in Section 8.3 of the Lease. 75 82 "Mexican Sublessee" has the meaning assigned thereto in Section 8.3 of the Lease. "Modification" has the meaning assigned thereto in Section 9.2 of the Lease. "Monthly Report" means the monthly report prepared by the Manager pursuant to Section 7.1 of the Management Agreement. "Monthly Report Date" means, with respect to any Monthly Transfer Date, the second preceding Business Day prior to such Monthly Transfer Date. "Monthly Transfer Date" means the 20th day of each calendar month commencing with July 20, 2001; provided, however, that if any such day shall not be a Business Day, then the Monthly Transfer Date means the next succeeding Business Day. "Moody's" means Moody's Investors Service, Inc. or any successor to such corporation's business of rating securities. "Net Economic Return" means the net after-tax yield and total after-tax cash flow expected by the original Owner Participant with respect to the Equipment (both through the Early Purchase Date and the Basic Term Expiration Date), utilizing the multiple investment sinking fund method of analysis and the same assumptions as used by such Owner Participant in making the computations of Basic Rent, Stipulated Loss Value and Termination Value, terms of Equipment Notes, Early Purchase Price initially set forth in Schedules 3, 4, 5 and 6 to the Participation Agreement. "Net Subleases" means Subleases and Pledged Equipment Leases pursuant to which a Customer thereunder is responsible for maintenance and repair of Units or Pledged Units (as applicable). "Net Subleases Monthly Average Lease Rate" means for any calendar month, the aggregate monthly rental rates with respect to the Total Managed Fleet for such calendar month under "net subleases" divided by the number of railcars in the Total Managed Fleet which are subject to "net subleases" or other "net leases" on the last day of such calendar month. "Non-Severable Modification" means any modification that is not a Severable Modification. "Non-Shared Payments" means any (a) contribution of capital by the Partners to the Partnership subsequent to the Closing Date, made expressly for the purpose of paying the Stipulated Loss Amount, Termination Amount, Early Purchase Price or other purchase price or termination sum of or relating to any Unit pursuant to the 76 83 Lease or Assumed Loan Documentation (it is expressly understood that the Partners are not required by any of the Operative Agreements or otherwise to make such contribution of capital), (b) prior to the payment of Stipulated Loss Amount, Termination Amount, Early Purchase Price or other purchase price or termination sum with respect to any Equipment, awards, insurance or other proceeds or damages received with respect to any loss or damage to any Equipment, (c) prior to the payment of Stipulated Loss Amount, Termination Amount, Early Purchase Price or other purchase price or termination sum with respect to any Equipment, proceeds of the sale of the Equipment or (d) excess cash available to the Partnership pursuant to clause (15) of Section 3.4 of the Collateral Agency Agreement that the Partnership requests the Collateral Agent to transfer to the Non-Shared Payments Account for the express purpose of paying the Stipulated Loss Amount, Termination Amount, Early Purchase Price or other purchase price or termination sum pursuant to the Lease or Assumed Loan Documentation. "Non-Shared Payments Account" means the account of that name established pursuant to Section 3.1 of the Collateral Agency Agreement. "Non-U.S. Person" means any Person other than a U.S. Person. "Notice of Delivery" has the meaning assigned thereto in Section 2.3(a) of the Participation Agreement. "Officer's Certificate" means a certificate signed (i) in the case of a corporation, by the President, any Vice President, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of such corporation, (ii) in the case of a partner-ship, by the Chairman of the Board, the President or any Vice President, the Treasurer or an Assistant Treasurer of a corporate general partner or limited liability company general partner (to the extent such limited liability company has officers), (iii) in the case of a commercial bank or trust company, by the Chairman or Vice Chairman of the Executive Committee or the Treasurer, any Trust Officer, any Vice President, any Executive or Senior or Second or Assistant Vice President, or any other officer or assistant officer customarily performing the functions similar to those performed by the persons who at the time shall be such officers, or to whom any corporate trust matter is referred because of such officer's knowledge of and familiarity with the particular subject, and (iv) in the case of a limited liability company, any manager thereof and any President, Managing Director or Vice President thereof. "Operating Account" means the account of that name established pursuant to Section 3.1 of the Collateral Agency Agreement. "Operative Agreements" means the Transfer and Assignment Agreement, the Pledged Equipment Transfer and Assignment Agreement, the TILC Bill of Sale, the Participation Agreement, the Bill of Sale, the Assignment, the Trust Agreement, the Equipment Notes, the Lease, the Lease Supplements, the Indenture, the Indenture 77 84 Supplements, the Tax Indemnity Agreement, the Collateral Agency Agreement, the Control Agreement, the Management Agreement, the Insurance Agreement, the Administrative Services Agreement, the Marks Company Trust Agreement, the Marks Company Trust Supplement, the Servicing Agreement, the OP Guaranty, the Control Agreement, the Trinity Guaranty, the TILC Assignment, the TILC Pledged Equipment Assignment and the TILC Pledged Equipment Bill of Sale. The term "Operative Agreements" shall also mean, as of the date each is entered into, any transfer and assignment agreement, any pledged equipment bill of sale and any assignment and assumption agreement by which the Otherwise Encumbered Pledged Units (as defined in the Collateral Agency Agreement) are sold and the related Existing Pledged Equipment Leases are assigned to the Partnership. "OP Guaranty" means the Owner Participant Parent Guaranty, dated as of May 17, 2001, whereby Philip Morris Capital Corporation guarantees performance of the obligations of the Owner Participant under the Operative Agreements to which the Owner Participant is a party. "Optional Modifications" means all modifications to the Equipment or the Pledged Equipment other than Required Modifications or Programmatic Optional Modifications. "Other Indenture" means the Trust Indenture and Security Agreement (TRLI 2001-1B) entered into pursuant to the Related Transaction between the Other Indenture Trustee and the Other Owner Trustee. The term "Other Indenture" shall include, except where the context otherwise requires, each indenture supplement entered into pursuant to the terms of the Other Indenture. "Other Indenture Trustee" means LaSalle Bank National Association, a national banking association, as trustee under the Other Indenture. "Other Lease" means the Equipment Lease Agreement (TRLI 2001-1B) entered into pursuant to the Related Transaction between the Lessee and the Other Owner Trustee. The term "Other Lease" shall, except where the context otherwise requires, include each lease supplement entered into pursuant to the terms of the Other Lease. "Other Owner Trustee" means the Trust Company, not in its individual capacity but solely as Owner Trustee under the Other Trust Agreement and its successors thereunder. "Other Participation Agreement" means the Participation Agreement (TRLI 2001-1B), dated as of May 17, 2001, among the Lessee, TILC, TRMI, the Owner Participant, the Other Owner Trustee, the Pass Through Trustee and the Indenture Trustee. 78 85 "Other Trust" means the trust created under the Other Trust Agreement. "Other Trust Agreement" means that certain Amended and Restated Trust Agreement (TRLI 2001-1B), dated as of May 17, 2001, between the Owner Participant and the Trust Company. "Other Unit" means each "Unit" as defined in the Other Lease. "Outside Renewal Date" has the meaning assigned thereto in Section 22.5 of the Lease. "Owner Participant" means Trimaran Leasing, L.P., a Delaware limited partnership, and its successors and permitted assigns. "Owner Participant Agreements" means the Operative Agreements to which the Owner Participant is or will be a party. "Owner Participant's Commitment" has the meaning assigned thereto in Section 2.2(a) of the Participation Agreement. "Owner Trustee" means State Street Bank and Trust Company of Connecticut, National Association, not in its individual capacity but solely as Owner Trustee under the Trust Agreement and its successors thereunder. "Owner Trustee Agreements" means the Operative Agreements to which the Owner Trustee, either in its individual or fiduciary capacity, is or will be a party. "Participants" means, collectively, the Loan Participant and the Owner Participant. "Participation Agreement" means the Participation Agreement (TRLI 2001- 1A), dated as of May 17, 2001, among the Lessee, TILC, TRMI, the Owner Participant, the Owner Trustee, the Pass Through Trustee and the Indenture Trustee. "Partner" means the General Partner or the Limited Partner. "Partnership" or "Lessee" means Trinity Rail Leasing I LP, a Texas limited partnership. "Partnership Agreement" means that certain Limited Partnership Agreement of the Partnership, dated as of May 14, 2001, between the General Partner and the Limited Partner. 79 86 "Partnership Default" has the meaning assigned thereto in Section 8.4 of the Management Agreement. "Partnership Documents" means all Subleases, all Pledged Equipment Leases, the Insurance Agreement, the Management Agreement, the Administrative Services Agreement, the Transfer and Assignment Agreement, the TILC Bill of Sale, the TILC Pledged Equipment Bill of Sale, the Bill of Sale, the TILC Pledged Equipment Transfer and Assignment Agreement, the TILC Assignment, the TILC Pledged Equipment Assignment, the Assignment, the Marks Company Trust Agreement, the Marks Company Trust Supplement, the Servicing Agreement, the 2001-1A SUBI Certificate, and as of the date each is entered into, any transfer and assignment agreement, any pledged equipment bill of sale and any assignment and assumption agreement by which the Otherwise Encumbered Pledged Units (as defined in the Collateral Agency Agreement) are sold and the related Existing Pledged Equipment Leases are assigned to the Partnership and any other agreement or document (other than an Operative Agreement) to which the Partnership is or becomes a party or under which the Partnership has rights as a third party beneficiary or otherwise. "Partnership Fleet" has the meaning assigned thereto in the Collateral Agency Agreement. "Pass Through Certificates" or "Certificates" means the Pass Through Certificates issued pursuant to the Pass Through Trust Agreement. "Pass Through Documents" means, collectively, (i) the Pass Through Trust Agreement, (ii) the Certificate Purchase Agreement, (iii) that certain Escrow and Paying Agent Agreement, dated as of May 17, 2001, among the Trust Company, as Escrow Agent, the Initial Purchasers and LaSalle Bank National Association, as Pass Through Trustee and Paying Agent, (iv) that certain Deposit Agreement, dated as of May 17, 2001, between the Trust Company, as Escrow Agent, and Chase Securities of Texas, Inc., as Depositary, (v) the Pass Through Funding Agreement and (vi) that certain Indemnity Agreement, dated as of May 17, 2001, between the Partnership and Chase Securities of Texas, Inc. or an Affiliate, as Depositary. "Pass Through Funding Agreement" means that certain Pass Through Funding Agreement, dated as of May 17, 2001, among the Partnership, LaSalle Bank National Association, as Pass Through Trustee and Paying Agent, and the Trust Company, as Escrow Agent. "Pass Through Trust Agreement" means the Pass Through Trust Agreement, dated as of May 17, 2001, between the Lessee and the Pass Through Trustee. 80 87 "Pass Through Trust Estate" means the Trust (as defined in the Pass Through Trust Agreement) created by the Pass Through Trust Agreement. "Pass Through Trustee" means LaSalle Bank National Association, a national banking association, in its capacity as trustee under the Pass Through Trust Agreement and each other Person which may from time to time act as successor trustee under the Pass Through Trust Agreement. "Pass Through Trustee Agreements" means the Pass Through Documents to which the Pass Through Trustee is or will be a party. "Payment Account" has the meaning assigned thereto in Section 6.4(c) of the Indenture. "Payment Date" means the 20th day of each month through and including the Rated Maturity Date, commencing July 20, 2001, provided that if any such date shall not be a Business Day, then "Payment Date" means the next succeeding Business Day; provided, however, that interest and Late Payment Premium payable on such Payment Date, and all other calculations as of such Payment Date, shall be computed as of the date which would have been a Payment Date if such date were a Business Day. "Payment Deficiency" has the meaning assigned thereto in Section 2.2 of the Indenture. "Permitted Liens" means: (i) the interests of the Lessee and the Owner Trustee under the Lease and the Lease Supplements; (ii) the interest of the Lessee, any Sublessee and any Pledged Equipment Lessee as provided in any Sublease or Pledged Equipment Lease, as applicable; (iii) any Liens for taxes, assessments, levies, fees and other governmental and similar charges not yet due and payable or the amount or validity of which is being contested in good faith by appropriate proceedings so long as there exists no material risk of sale, forfeiture, loss, or loss of or interference with use or possession of any Unit or interference with the payment of Rent; (iv) any Liens of mechanics, suppliers, materialmen, laborers, employees, repairmen and other like Liens arising in the ordinary course of Lessee's (or if a sublease is then in effect, any Sublessee's or Pledged Equipment Lessee's) business securing obligations which are not yet due and payable or the amount or validity of which is being contested in good faith by appropriate proceedings so long as there exists no material risk of sale, forfeiture, loss, or loss of or interference with use or possession of any Unit or interference with the payment of Rent; (v) the Lien granted to the Indenture Trustee under and pursuant to the Indenture and the Lien granted to the Collateral Agent under and pursuant to the Collateral Agency Agreement, and the respective rights of the Loan Participant, the Indenture Trustee, the Owner Participant, the Owner Trustee and the Beneficiaries under the Operative Agreements; (vi) 81 88 Liens arising out of any judgment or award against the Lessee (or any Sublessee or Pledged Equipment Lessee permitted pursuant to Section 8.3 of the Lease or Section 6.2(z) of the Collateral Agency Agreement) with respect to which an appeal or proceeding for review is being presented in good faith and for the payment of which adequate reserves have been provided as required by generally accepted accounting principles or other appropriate provisions have been made and with respect to which there shall have been secured a stay of execution pending such appeal or proceeding for review and there exists no material risk of sale, forfeiture, loss, or loss of or interference with the use or possession of any Unit or Pledged Unit or any interest therein or interference with the payment of Rent, and (vii) salvage rights of insurers under insurance policies maintained pursuant to Section 12 of the Lease or Section 6.4 of the Collateral Agency Agreement. "Permitted Leases" has the meaning assigned thereto in Section 6.2(z) of the Collateral Agency Agreement. "Permitted Subleases" has the meaning assigned thereto in Section 8.3 of the Lease. "Person" means an individual, partnership, limited liability company, corporation, trust, association or unincorporated organization, and a government or agency or political subdivision thereof. "Pledged Equipment" means, collectively, those items of equipment owned by the Partnership and listed on Schedule 1-A to the Participation Agreement and any Otherwise Encumbered Pledged Units (as defined in the Collateral Agency Agreement) which have been purchased by the Partnership as contemplated by Section 3.19 of the Collateral Agency Agreement, together with any and all replacements thereof and any and all accessions, additions, improvements to and replacements from time to time incorporated or installed in any item thereof which are property of the Lessee, provided that any Otherwise Encumbered Pledged Units which have been purchased by the Partnership shall be deemed "Pledged Equipment" only on and after the date so purchased and provided further that on and after the Second Closing Date (as defined in the Collateral Agency Agreement), "Pledged Equipment" shall exclude the Special Collateral. "Pledged Equipment Cost" means for each Pledged Unit, the purchase price therefor paid by the Lessee as set forth in the Pledged Equipment Transfer and Assignment Agreement with respect to such Pledged Units (or the pledged equipment transfer and assignment agreement entered into with respect to any Otherwise Encumbered Pledged Units (as defined in the Collateral Agency Agreement)). "Pledged Equipment Lease" means the Existing Pledged Equipment Leases and any Permitted Lease; provided that on and after the Second Closing Date (as 82 89 defined in the Collateral Agency Agreement) "Pledged Equipment Lease" shall exclude any such lease relating to the Special Collateral. "Pledged Equipment Lessees" means the lessees under the Existing Pledged Equipment Leases and any future lessees of the Pledged Equipment. "Pledged Equipment Proceeds Account" means the account of that name established pursuant to Section 3.1 of the Collateral Agency Agreement. "Pledged Equipment Transfer and Assignment Agreement" means the Pledged Equipment Transfer and Assignment Agreement, dated as of the Closing Date, between TILC and the Partnership, transferring and assigning all rights to the Pledged Equipment described on Schedule 1-A to the Participation Agreement and the Existing Pledged Equipment Leases to the Lessee. "Pledged Unit Event of Loss" has the meaning ascribed thereto in Section 6.2(aa) of the Collateral Agency Agreement. "Pledged Units" mean each unit or item of Pledged Equipment. "Post Lease-Term Reserve Account" means the account of that name established pursuant to Section 3.1 of the Collateral Agency Agreement. "Premium" or "Premium Amount" means any Make-Whole Amount and any Late Payment Premium payable pursuant to the Indenture. "Prepaid Amount" means, at any Payment Date, the aggregate principal amount that was prepaid, if any, pursuant to Section 2.10 of the Indenture prior to and including such Payment Date. "Prepayment" means a prepayment of outstanding principal under the Equipment Notes in accordance with Section 2.10 of the Indenture at any Payment Date. "Prepayment Multiplier" means, at any Payment Date, a fraction, the numerator of which shall be the aggregate Equipment Cost of all Units then included in the Indenture Estate as of such Payment Date (excluding the Equipment Cost of any Excluded Unit) and the denominator of which shall be the aggregate Equipment Cost of all Units originally included in the Indenture Estate as of the Closing Date. "Programmatic Optional Modification" means any optional modification (other than a Required Modification) to one or more Units or Other Units or one or more Pledged Units in the Partnership Fleet the aggregate cost of implementation for which in any 12-month period is reasonably expected to exceed $750,000. 83 90 "Projected Coverage Ratio" has the meaning assigned thereto in the Collateral Agency Agreement. "Railroad Mileage Credits" means the mileage credit payments made by railroads under their applicable tariffs to the registered owner of identifying marks on the railcars. "Rated Amortization" means the amount of principal of the Equipment Notes specified for each Payment Date set forth in Annex A to the Indenture. "Rated Amortization Amount" means, at any Payment Date, the excess, if any, of (i) the product of (A) the sum of all amounts specified in Annex A to the Indenture as Rated Amortization opposite the respective dates occurring on or before such Payment Date and (B) the Prepayment Multiplier, over (ii) the sum of the Adjusted Payment Amount for each Adjusted Principal Period prior to such Payment Date. "Rated Maturity Date" means April 20, 2023. "Rated Obligations Due" means, at any Payment Date, the sum of (a) the Rated Amortization Amount at such Payment Date plus (b) accrued and unpaid Regular Interest that is due and payable on such Payment Date. "Rating Agency" means, at any time, S&P or any successor to such corporation's business of rating securities which is then providing a rating for the Pass Through Certificates. "Rating Agency Confirmation" means a confirmation by the Rating Agency that, after taking into account the event which necessitated such confirmation, the Rating Agency will maintain a rating of at least AA in the case of S&P, or an equivalent rating in the case of any successor to S&P, and in any event not reduce its then current rating on the Pass Through Certificates. "Realization Proceeds Account" means the account of that name established pursuant to Section 3.1 of the Collateral Agency Agreement. "Refunding Date" has the meaning assigned thereto in Section 10.2(a) of the Participation Agreement. "Regular Interest" means interest at the Debt Rate on the unpaid portions of the principal amounts of the outstanding Equipment Notes as may from time to time be outstanding. "Reimbursable Services" has the meaning assigned thereto in Section 5.4 of the Management Agreement. 84 91 "Related Indemnitee Group" has the meaning assigned thereto in Section 7.2(b) of the Participation Agreement. "Related Party" means, with respect to any Person, an Affiliate of such Person and any director, officer, servant, employee or agent of that Person or any such Affiliate. "Related Transaction" means the additional leveraged lease transaction evidenced by, among other things, the Other Lease and the Other Indenture and with respect to which the Pass Through Trustee has agreed, subject to certain conditions, to acquire the related equipment notes. "Remaining Weighted Average Life" means, with respect to any date of prepayment or any date of determination of any Equipment Note, the number of days equal to the quotient obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining principal payment on such Equipment Note (assuming that after such date, principal payments are made only in the Scheduled Amortization Amounts) by (ii) the number of days from and including the prepayment date or date of determination to but excluding the scheduled payment date of such principal payment by (b) the unpaid principal amount of such Equipment Note. "Renewal Rent" has the meaning assigned thereto in Section 22.4 of the Lease. "Renewal Term" means, with respect to any Unit, any term in respect of which the Lessee shall have exercised its option to renew the Lease for such Unit pursuant to Section 22.4 thereof, or in respect of which the Lease Term has been deemed to have been renewed as provided in Section 22.7 of the Lease. "Rent" means all Basic Rent and Supplemental Rent. "Rent Payment Date" means the 20th day of each month occurring during the Lease Term, commencing July 20, 2001, provided that if any such date shall not be a Business Day, then "Rent Payment Date" means the next succeeding Business Day; provided, however, that interest and Late Payment Premium payable on such Rent Payment Date, and all other calculations as of such Rent Payment Date, shall be computed as of the date which would have been a Rent Payment Date if such date were a Business Day. "Replacement Pledged Unit" has the meaning assigned to that term in the Collateral Agency Agreement. 85 92 "Replacement Unit" has the meaning assigned thereto in Section 11.4 of the Lease. "Required Beneficiaries" has the meaning assigned thereto in the Collateral Agency Agreement. "Required Modification" means any alteration or modification of a Unit or Pledged Unit (as the context may require) required by the AAR, the FRA, the United States Department of Transportation or any other United States or state governmental agency or any other applicable law and required by such entity as a condition of continued use or operation of such Unit or Pledged Unit. "Reserve Accounts" means, collectively, the Cash Trapping Account, the Liquidity Reserve Account, the Special Reserve Account, the Post Lease Term Reserve Account and the Special Insurance Reserves Account. "Responsible Officer" means, with respect to the subject matter of any covenant, agreement or obligation of any party contained in any Operative Agreement, the President, or any Vice President, Assistant Vice President, Treasurer, Assistant Treasurer or other officer, who in the normal performance of his or her operational responsibility would have knowledge of such matter and the requirements with respect thereto; and with respect to the Collateral Agent, the Owner Trustee and the Indenture Trustee, any trust officer at its corporate trust office (or any other officer to whom any matter has been referred because of such officer's knowledge and familiarity with the particular subject); and when used in connection with the Lessee, "Responsible Officer" shall include any such officer of the Manager or the Insurance Manager acting on behalf of the Lessee under the Management Agreement or the Insurance Agreement, as the case may be. "S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill, Inc. or any successor to such corporation's business of rating securities, which is then providing a rating for the Pass Through Certificates. "Scheduled Amortization" mean the amount of principal of the Equipment Notes specified for each Payment Date set forth in Annex B to the Indenture. "Scheduled Amortization Amount" mean, at any Payment Date, the excess, if any, of (i) the product of (A) the sum of all amounts specified in Annex B to the Indenture as Scheduled Amortization opposite the respective dates occurring on or before such Payment Date and (B) the Prepayment Multiplier over (ii) the sum of the Adjusted Payment Amount for each Adjusted Principal Period prior to such Payment Date. "Scheduled Closing Date" has the meaning assigned thereto in Section 2.7(a) of the Participation Agreement. 86 93 "Scheduled Obligations Due" means, at any date, an amount equal to the excess, if any, of (i) the Scheduled Amortization Amount at such date over (ii) the Rated Amortization Amount at such date. "Scheduled Rent" means, as of any Rent Payment Date, that portion of the accrued and unpaid Basic Rent which equals the Scheduled Obligations Due (as defined in the Lease) thereunder. "Secured Amounts" means any amounts due pursuant to the Lien of the Indenture. "Securities Act" means the Securities Act of 1933, as amended. "Security" has the meaning assigned thereto in Section 2(1) of the Securities Act of 1933, as amended. "Services Standard" has the meaning assigned thereto in Section 3.1(a) of the Management Agreement. "Servicing Agreement" means the Management and Servicing Agreement, dated as of May 17, 2001, between TILC and the Marks Company. "Severable Modification" means any Modification that is readily removable without causing damage to the Equipment, any Unit, the Pledged Equipment or Pledged Unit (other than damage which is de minimis) and without diminishing, other than in a de minimis respect, the value, utility or useful life of the Equipment, any Unit, the Pledged Equipment or any Pledged Unit, as applicable, below the value, utility or useful life of the Equipment or such Unit or the Pledged Equipment or such Pledged Unit, as applicable, immediately prior to removal of such Modification, assuming, with respect the Equipment or such Unit, that the Equipment or such Unit was then at least in the condition required to be maintained by the terms of the Lease and assuming with respect to the Pledged Equipment or such Pledged Unit, that the Pledged Equipment or such Pledged Unit was then at least in the condition required to be maintained by the terms of the Collateral Agency Agreement. "Special Collateral" has the meaning set forth in the Collateral Agency Agreement. "Special Insurance Reserves Account" means the account of that name established pursuant to Section 3.1 of the Collateral Agency Agreement. "Special Reserves Account" means the account of that name established pursuant to Section 3.1 of the Collateral Agency Agreement. 87 94 "Special Second Closing Account" means the account of that name established pursuant to Section 3.1 of the Collateral Agency Agreement. "Specified Investments" means (i) direct obligations of, and obligations fully guaranteed as to timely payment by, the United States of America (having remaining maturities of no more than the number of remaining days until the next Monthly Transfer Date), (ii) commercial paper (other than commercial paper issued by the Partnership or any Affiliate thereof) having remaining maturities of no more than the number of days remaining until the next Monthly Transfer Date and having, at the time of the investment or contractual commitment to invest therein, a rating from each Rating Agency in its highest investment category, (iii) a Guaranteed Investment Contract (GIC) from an Acceptable GIC Provider, (iv) investments in funds rated in the highest investment category by the Rating Agency and (v) repurchase agreements and similar short term instruments. "STB" means the Surface Transportation Board of the United States Department of Transportation, or any successor thereto. "Stipulated Loss Amount" for any Unit means (a) as of any date during the Basic Term the amount determined by multiplying the Equipment Cost for such Unit by the percentage set forth in Schedule 4-A to the Participation Agreement under the caption "Stipulated Loss Amount" opposite the Rent Payment Date on which such amount is determined (as such Schedule 4-A may be adjusted from time to time as provided in Section 2.6 of the Participation Agreement) (such Stipulated Loss Amount shall equal the sum of, and shall represent, (i) a payment or reduction of Basic Rent in an amount equal to the "Basic Rent Adjustment" set forth on Schedule 4-A to the Participation Agreement, and (ii) a payment of the "Stipulated Loss Value" set forth on Schedule 4-A to the Participation Agreement) and (b) as of any date during any Renewal Term, has the meaning set forth in Section 22.6 of the Lease. Notwithstanding anything to the contrary contained in the Lease or in the Participation Agreement, Stipulated Loss Amount for such Unit (both before and after any adjustment pursuant to Section 2.6 of the Participation Agreement) will, under any circumstances and in any event, be an amount which, together with any other Secured Amounts required to be paid by the Lessee under the Lease in connection with an Event of Loss, will be at least sufficient to pay in full as of the date of payment thereof the aggregate unpaid principal of the Equipment Notes issued in respect of such Unit, together with all unpaid interest, Late Payment Premium and Make-Whole Amount, if any, thereon accrued to the date on which such amount is paid in accordance with the terms thereof and all other amounts then due to the holders of the Equipment Notes. For the avoidance of doubt, it is understood that the Basic Rent Adjustment shall constitute a payment of additional Basic Rent equal to Basic Rent that has accrued but remains unpaid or a refund of Basic Rent equal to Basic Rent that has been paid but has not accrued. 88 95 "Stipulated Loss Amount Deficiency Account" means the account of that name established pursuant to Section 3.1 of the Collateral Agency Agreement. "Stipulated Loss Value" for any Unit as of any date of determination means the amount determined by multiplying the Equipment Cost for such Unit by the percentage set forth in Schedule 4-A to the Participation Agreement under the caption "Stipulated Loss Value" opposite the Rent Payment Date on which such Stipulated Loss Value is being determined. "Storage Locations" has the meaning assigned thereto in Section 6.1 of the Lease. "Storage Period" has the meaning assigned thereto in Section 6.1(c)(i) of the Lease. "Storage Period Commencement Date" has the meaning assigned thereto in Section 6.1(c)(i) of the Lease. "Subleases" means all Existing Equipment Subleases and all Permitted Subleases. "Sublessees" means the lessees (and sub-lessees) under the Subleases. "Subsidiary" of any Person means any corporation, association, or other business entity of which more than 50% (as determined by reference to the total number of votes) of the voting stock outstanding at the time of determination shall at such time be owned, directly or indirectly, by such Person or by any other corporation, association or trust which is itself a Subsidiary within the meaning of this definition, or collectively by such Person and any one or more such Subsidiaries. "Successor Administrator" has the meaning assigned thereto in Section 4(d) of the Administrative Services Agreement. "Successor Insurance Manager" has the meaning assigned thereto in Section 6.3(b) of the Insurance Agreement. "Successor Manager" has the meaning assigned thereto in Section 8.4 of the Management Agreement. "Super-Majority in Interest" as of a particular date of determination means with respect to any action or decision of the holders of the Equipment Notes, the holders of 100% of the aggregate unpaid principal amount of the Equipment Notes, if 89 96 any, then outstanding, excluding any Equipment Notes held by the Owner Participant or the Lessee or an Affiliate of the Owner Participant or the Lessee. "Supplemental Rent" means all amounts, liabilities and obligations (other than Basic Rent) which the Lessee is obligated to pay under the Operative Agreements to or on behalf of any of the other parties thereto, including, but not limited to, Termination Amount and Stipulated Loss Amount payments. "Tax Indemnitee" has the meaning assigned thereto in Section 7.1 of the Participation Agreement. "Tax Indemnity Agreement" means the Tax Indemnity Agreement (TRLI 2001-1A), dated as of May 17, 2001, among Grant Holdings, Inc., the Partnership and Trinity. "Taxes" has the meaning assigned thereto in Section 7.1(b) of the Participation Agreement. "Terminated Units" has the meaning assigned thereto in Section 10.1 of the Lease. "Termination Amount" for any Unit (a) as of any date during the Basic Term means the amount determined by multiplying the Equipment Cost for such Unit by the percentage set forth in Schedule 4-B to the Participation Agreement under the caption "Termination Amount" opposite the Rent Payment Date on which such amount is determined (as such Schedule 4-B may be adjusted from time to time as provided in Section 2.6 of the Participation Agreement) (such Termination Amount shall equal the sum of, and shall represent, (i) a payment or reduction of Basic Rent in an amount equal to the "Basic Rent Adjustment" set forth on Schedule 4-B to the Participation Agreement, and (ii) a payment of the "Termination Value" set forth on Schedule 4B to the Participation Agreement) and (b) as of any date during any Renewal Term, has the meaning set forth in Section 22.6 of the Lease. Notwithstanding anything to the contrary contained in the Lease or in the Participation Agreement, the Termination Amount for such Unit (both before and after any adjustment pursuant to Section 2.6 of the Participation Agreement) will, under any circumstances and in any event, be an amount which, together with any other Secured Amounts required to be paid by the Lessee under the Lease in connection with such termination, will be at least sufficient to pay in full as of the date of payment thereof the aggregate unpaid principal of the Equipment Notes issued in respect of such Unit, together with all unpaid interest, Late Payment Premium and Make-Whole Amount, if any, thereon accrued to the date on which such amount is paid in accordance with the terms thereof and all other amounts then due to the holders of the Equipment Notes. For the avoidance of doubt, it is understood that the Basic Rent Adjustment shall constitute a payment of additional Basic Rent equal to Basic Rent that has accrued but remains unpaid or a refund of Basic Rent equal to Basic Rent that has been paid but has not accrued. 90 97 "Termination Date" has the meaning assigned thereto in Section 10.1 of the Lease. "Termination Value" for any Unit as of any date of determination means the amount determined by multiplying the Equipment Cost for such Unit by the percent-age set forth in Schedule 4-B to the Participation Agreement under the caption "Termination Value" opposite the Rent Payment Date on which such Termination Value is being determined. "TILC" or "Initial Manager" means Trinity Industries Leasing Company, a Delaware corporation. "TILC Agreements" means the Operative Agreements to which TILC is or will be a party. "TILC Assignment" means the TILC Assignment, dated the Closing Date and executed and delivered by TILC to the Lessee assigning the Existing Equipment Subleases to the Lessee. "TILC Bill of Sale" means the TILC Bill of Sale, dated the Closing Date and executed and delivered by TILC pursuant to the Transfer and Assignment Agreement, conveying the Equipment to the Lessee. "TILC Fleet" means all railcars owned or leased by TILC as of the Closing Date and does not include the Partnership Fleet. "TILC Pledged Equipment Assignment" means the TILC Pledged Equipment Assignment Agreement dated as of the Closing Date and executed and delivered by TILC to the Lessee assigning the Existing Pledged Equipment Leases to the Lessee. The term "TILC Pledged Equipment Assignment" shall also mean, as of the date entered into, any assignment and assumption agreement, executed and delivered by TILC to the Partnership, by which Existing Pledged Equipment Leases relating to the Otherwise Encumbered Pledged Units (as defined in the Collateral Agency Agreement) are assigned to the Partnership. "TILC Pledged Equipment Bill of Sale" means the TILC Pledged Equipment Bill of Sale dated as of the Closing Date and executed and delivered by TILC to the Lessee pursuant to the Pledged Equipment Transfer and Assignment Agreement, conveying the Pledged Equipment to the Lessee. The term "TILC Pledged Equipment Bill of Sale" shall also mean, as of the date entered into, any pledged equipment bill of sale, executed and delivered by TILC to the Partnership, by which the Otherwise Encumbered Pledged Units (as defined in the Collateral Agency Agreement) have been conveyed to the Partnership. 91 98 "Total Equipment Cost" means the sum of the Equipment Costs for each Unit. "Total Managed Fleet" means the Manager's Fleet and the Partnership Fleet; provided that if the Total Managed Fleet includes less than 6,000 railcars, then "Total Managed Fleet" shall be such other proxy for the then current railcar leasing market as the Partnership and the Required Beneficiaries shall mutually agree. "Transaction Costs" has the meaning assigned thereto in Section 2.5(a) of the Participation Agreement. "Transfer and Assignment Agreement" means the Transfer and Assignment Agreement, dated as of the Closing Date, between the Manager and the Partnership, transferring and assigning all rights to the Equipment described in Schedule 1 to the Participation Agreement and the Existing Equipment Subleases to the Lessee. "Transferee" has the meaning assigned thereto in Section 6.1(a) of the Participation Agreement. "Treasury Rate" means with respect to prepayment of each Equipment Note, a per annum rate (expressed as a monthly equivalent and as a decimal and, in the case of United States Treasury bills, converted to a bond equivalent yield), deter-mined to be the per annum rate equal to the monthly yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note, as determined by interpolation between the most recent weekly average yields to maturity for two series of United States Treasury securities, (A) one maturing as close as possible to, but earlier than, the Average Life Date of such Equipment Note and (B) the other maturing as close as possible to, but later than, the Average Life Date of such Equipment Note, in each case as published in the most recent H.15(519) (or, if a weekly average yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note is reported in the most recent H.15(519), as published in H.15(519)). H.15(519) means "Statistical Release H.15(519), Selected Interest Rates," or any successor publication, published by the Board of Governors of the Federal Reserve System. The most recent H.15(519) means the latest H.15(519) which is published prior to the close of business on the third Business Day preceding the scheduled prepayment date. "Trinity" means Trinity Industries, Inc., a Delaware corporation. "Trinity Guaranty" means the Trinity Guaranty and Indemnity Agreement, dated as of May 17, 2001, whereby Trinity guarantees performance of the obligations of TILC and TRMI under the Operative Agreements (as defined in the Participation 92 99 Agreement) and the Operative Agreements (as defined in the Other Participation Agreement) and other agreements set forth in the Trinity Guaranty to which TILC or TRMI is a party, respectively. "TRMI" means Trinity Rail Management, Inc., a Delaware corporation. "TRMI Agreements" means the Operative Agreements to which TRMI is or will be a party. "Trust" means the trust created under the Trust Agreement. "Trust Agreement" means that certain Amended and Restated Trust Agreement (TRLI 2001-1A), dated as of May 17, 2001, between the Owner Participant and the Trust Company. "Trust Company" means State Street Bank and Trust Company of Connecticut, National Association, a national banking association, in its individual capacity. "Trust Estate" has the meaning assigned thereto in Section 2.02 of the Trust Agreement. "Trust Indenture" or "Indenture" means the Trust Indenture and Security Agreement (TRLI 2001-1A), dated as of May 17, 2001, between the Owner Trustee, in the capacities described therein, and the Indenture Trustee. The term "Trust Indenture" or "Indenture" includes, except where the context otherwise requires, each Indenture Supplement entered into pursuant to the terms of the Indenture. "Trustee" means each of the Owner Trustee or the Indenture Trustee, and "Trustees" means the Owner Trustee and the Indenture Trustee, collectively. "2001-1A SUBI Certificate" has the meaning assigned to such term in the Marks Company Trust Agreement. "Unit" means each unit or item of Equipment. "Unit Monthly Fee" has the meaning assigned thereto in Section 5.2(b) of the Management Agreement. "U.S. Person" means any Person that qualifies as a "United States person" under Section 7701(a)(30) of the Code. 93 EX-10.17.01 4 d88339ex10-17_01.txt CREDIT AGREEMENT DATED JUNE 8, 2001 1 EXHIBIT 10.17 ================================================================================ [JPMORGAN LOGO] CREDIT AGREEMENT dated as of June 8, 2001 among TRINITY INDUSTRIES, INC., as Borrower, The Lenders Party Hereto, THE CHASE MANHATTAN BANK, as Administrative Agent, DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES, as Syndication Agent and THE BANK OF TOKYO - MITSUBISHI, LTD., BANK ONE, NA and SUNTRUST BANK, as Documentation Agents ---------- J.P. MORGAN SECURITIES INC. and DRESDNER KLEINWORT WASSERSTEIN SECURITIES LLC, as Co-Lead Arrangers and Joint Book Managers ================================================================================ 2 TABLE OF CONTENTS ARTICLE I DEFINITIONS SECTION 1.01 DEFINED TERMS..........................................................................1 SECTION 1.02 CLASSIFICATION OF LOANS AND BORROWINGS................................................20 SECTION 1.03 TERMS GENERALLY.......................................................................20 SECTION 1.04 ACCOUNTING TERMS; GAAP................................................................20 ARTICLE II THE CREDITS SECTION 2.01 COMMITMENTS...........................................................................21 SECTION 2.02 LOANS AND BORROWINGS..................................................................22 SECTION 2.03 REQUESTS FOR BORROWINGS...............................................................22 SECTION 2.04 COMPETITIVE BID PROCEDURE.............................................................23 SECTION 2.05 LETTERS OF CREDIT.....................................................................25 SECTION 2.06 FUNDING OF BORROWINGS.................................................................29 SECTION 2.07 INTEREST ELECTIONS....................................................................30 SECTION 2.08 TERMINATION AND REDUCTION OF COMMITMENTS..............................................31 SECTION 2.09 REPAYMENT OF LOANS; EVIDENCE OF DEBT..................................................32 SECTION 2.10 PREPAYMENT OF LOANS...................................................................32 SECTION 2.11 FEES..................................................................................33 SECTION 2.12 INTEREST..............................................................................34 SECTION 2.13 ALTERNATE RATE OF INTEREST............................................................35 SECTION 2.14 INCREASED COSTS.......................................................................36 SECTION 2.15 BREAK FUNDING PAYMENTS................................................................37 SECTION 2.16 TAXES.................................................................................38 SECTION 2.17 PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF SET-OFFS...........................38 SECTION 2.18 ILLEGALITY............................................................................40 SECTION 2.19 MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS........................................41 ARTICLE III REPRESENTATIONS AND WARRANTIES SECTION 3.01 ORGANIZATION; POWERS..................................................................42 SECTION 3.02 AUTHORIZATION; ENFORCEABILITY.........................................................42 SECTION 3.03 GOVERNMENTAL APPROVALS; NO CONFLICTS..................................................42 SECTION 3.04 FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE.......................................42 SECTION 3.05 PROPERTIES............................................................................43 SECTION 3.06 LITIGATION AND ENVIRONMENTAL MATTERS..................................................43 SECTION 3.07 COMPLIANCE WITH LAWS AND AGREEMENTS...................................................43 SECTION 3.08 INVESTMENT AND HOLDING COMPANY STATUS.................................................44 SECTION 3.09 TAXES.................................................................................44 SECTION 3.10 ERISA.................................................................................44
i 3 SECTION 3.11 SUBSIDIARIES..........................................................................44 SECTION 3.12 BURDENSOME OBLIGATIONS................................................................44 SECTION 3.13 EMPLOYEE MATTERS......................................................................44 SECTION 3.14 DISCLOSURE............................................................................45 SECTION 3.15 MARGIN STOCK..........................................................................45 SECTION 3.16 PRIMARY BUSINESS......................................................................45 ARTICLE IV CONDITIONS SECTION 4.01 EFFECTIVE DATE........................................................................45 SECTION 4.02 EACH CREDIT EVENT.....................................................................47 ARTICLE V AFFIRMATIVE COVENANTS SECTION 5.01 FINANCIAL STATEMENTS AND OTHER INFORMATION............................................47 SECTION 5.02 NOTICES OF MATERIAL EVENTS............................................................48 SECTION 5.03 EXISTENCE; CONDUCT OF BUSINESS........................................................49 SECTION 5.04 PAYMENT OF OBLIGATIONS................................................................49 SECTION 5.05 MAINTENANCE OF PROPERTIES; INSURANCE..................................................49 SECTION 5.06 BOOKS AND RECORDS; INSPECTION RIGHTS..................................................50 SECTION 5.07 COMPLIANCE WITH LAWS..................................................................50 SECTION 5.08 USE OF PROCEEDS.......................................................................50 SECTION 5.09 MAINTENANCE OF DEBT RATINGS...........................................................50 ARTICLE VI NEGATIVE COVENANTS SECTION 6.01 INDEBTEDNESS..........................................................................50 SECTION 6.02 LIENS.................................................................................52 SECTION 6.03 FUNDAMENTAL CHANGES...................................................................52 SECTION 6.04 INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND ACQUISITIONS.............................53 SECTION 6.05 HEDGING AGREEMENTS....................................................................53 SECTION 6.06 RESTRICTED PAYMENTS...................................................................53 SECTION 6.07 TRANSACTIONS WITH AFFILIATES..........................................................54 SECTION 6.08 RESTRICTIVE AGREEMENTS................................................................54 SECTION 6.09 FINANCIAL COVENANTS...................................................................54 SECTION 6.10 FISCAL YEAR...........................................................................55 SECTION 6.11 CAPITAL EXPENDITURES..................................................................55 ARTICLE VII EVENTS OF DEFAULT ARTICLE VIII AGENTS
ii 4 ARTICLE IX MISCELLANEOUS SECTION 9.01 NOTICES...............................................................................59 SECTION 9.02 WAIVERS; AMENDMENTS...................................................................59 SECTION 9.03 EXPENSES; INDEMNITY; DAMAGE WAIVER....................................................60 SECTION 9.04 SUCCESSORS AND ASSIGNS................................................................62 SECTION 9.05 SURVIVAL..............................................................................64 SECTION 9.06 COUNTERPARTS; INTEGRATION; EFFECTIVENESS..............................................64 SECTION 9.07 SEVERABILITY..........................................................................65 SECTION 9.08 RIGHT OF SETOFF.......................................................................65 SECTION 9.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS............................65 SECTION 9.10 WAIVER OF JURY TRIAL..................................................................66 SECTION 9.11 HEADINGS..............................................................................66 SECTION 9.12 CONFIDENTIALITY.......................................................................66 SECTION 9.13 INTEREST RATE LIMITATION..............................................................67 SECTION 9.14 CO-ARRANGERS; SYNDICATION AGENT; DOCUMENTATION AGENTS.................................68 SECTION 9.15 NO ORAL AGREEMENTS....................................................................68
SCHEDULES: Schedule 1.01 -- Existing Letters of Credit Schedule 2.01 -- Commitments Schedule 3.06 -- Disclosed Matters Schedule 3.11 -- Subsidiaries Schedule 3.13 -- Employee Matters Schedule 6.01 -- Existing Indebtedness Schedule 6.02 -- Existing Liens Schedule 6.03 -- Permitted Asset Sales Schedule 6.04 -- Existing Investments Schedule 6.08 -- Existing Restrictions EXHIBITS: Exhibit A -- Form of Assignment and Acceptance Exhibit B -- Form of Subsidiary Guaranty Exhibit C -- Form of Borrowing Request Exhibit D -- Form of Interest Election Request Exhibit E -- Form of Certificate of Conversion Exhibit F -- Form of Additional Revolving Loan Assumption Agreement Exhibit G -- Form of Compliance Certificate iii 5 CREDIT AGREEMENT THIS CREDIT AGREEMENT (this "Agreement") is made and entered into as of June 8, 2001, among TRINITY INDUSTRIES, INC., a Delaware corporation ("Borrower"), THE CHASE MANHATTAN BANK, individually as a Lender and Issuing Bank and as Administrative Agent, DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES, individually as a Lender and as Syndication Agent, THE BANK OF TOKYO - MITSUBISHI, LTD., BANK ONE, NA and SUNTRUST BANK, each individually as a Lender and collectively as Documentation Agents, and each of the lenders that is a signatory hereto or which hereafter becomes a party hereto as provided in Section 9.04 (individually, a "Lender" and collectively, "Lenders"). The parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.01 Defined Terms. As used in this Agreement, the following terms have the meanings specified below: "ABR", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate. "Additional Revolving Commitment" shall have the meaning set forth in Section 2.01(c) hereof. "Additional Revolving Loan" shall have the meaning set forth in Section 2.01(c) hereof. "Additional Revolving Loan Assumption Agreement" means and includes each Additional Revolving Loan Assumption Agreement in the form of Exhibit F hereto executed in accordance with Section 2.01(c) hereof. "Additional Revolving Loan Assumption Date" means each date on which one or more Additional Revolving Loan Assumption Agreements are delivered to the Administrative Agent pursuant to Section 2.01(c) hereof. "Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/32 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate. "Administrative Agent" means The Chase Manhattan Bank, in its capacity as administrative agent for the Lenders hereunder. 1 6 "Administrative Questionnaire" means an Administrative Questionnaire in a form supplied by the Administrative Agent. "Affiliate" means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. "Agents" means each of the Administrative Agent, the Syndication Agent and each Documentation Agent. "Agreement" means this Credit Agreement, as it may be amended, modified, restated or supplemented and in effect from time to time. "Alternate Base Rate" means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively. "Applicable Percentage" means, with respect to any Lender, the percentage of the total Commitments represented by such Lender's Commitment. If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments. "Applicable Rate" means, for any day, with respect to any Eurodollar Loan, or with respect to the facility fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption "Eurodollar Revolving Spread", "Eurodollar Term Spread" or "Facility Fee Rate", as the case may be, based upon the ratings by Moody's and S&P, respectively, applicable on such date to the Index Debt:
Eurodollar Eurodollar Term Facility Fee Index Debt Ratings Revolving Spread Spread Rate ------------------ ---------------- --------------- ------------- Category 1 0.525% 1.000% 0.100% A-/A3 or higher Category 2 0.625% 1.125% 0.125% BBB+/Baa1 Category 3 0.725% 1.250% 0.150% BBB/Baa2 Category 4 0.825% 1.375% 0.175% BBB-/Baa3 Category 5 1.050% 1.500% 0.200% BB+/Ba1 or lower
2 7 For purposes of the foregoing, (i) if either Moody's or S&P shall not have in effect a rating for the Index Debt (other than by reason of the circumstances referred to in the last sentence of this definition), then such rating agency shall be deemed to have established a rating in Category 5; (ii) if the ratings established or deemed to have been established by Moody's and S&P for the Index Debt shall fall within different Categories, the Applicable Rate shall be based on the higher of the two ratings unless one of the two ratings is two or more Categories lower than the other, in which case the Applicable Rate shall be determined by reference to the Category next below that of the higher of the two ratings; and (iii) if the ratings established or deemed to have been established by Moody's and S&P for the Index Debt shall be changed (other than as a result of a change in the rating system of Moody's or S&P), such change shall be effective as of the date on which it is first announced by the applicable rating agency. Each change in the Applicable Rate shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change. If the rating system of Moody's or S&P shall change, or if either such rating agency shall cease to be in the business of rating corporate or subordinated debt obligations (as applicable), the Borrower and the Lenders shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of ratings from such rating agency and, pending the effectiveness of any such amendment, the Applicable Rate shall be determined by reference to the rating most recently in effect prior to such change or cessation. "Assessment Rate" means, for any day, the annual assessment rate in effect on such day that is payable by a member of the Bank Insurance Fund classified as "well-capitalized" and within supervisory subgroup "B" (or a comparable successor risk classification) within the meaning of 12 C.F.R. Part 327 (or any successor provision) to the Federal Deposit Insurance Corporation for insurance by such Corporation of time deposits made in dollars at the offices of such member in the United States; provided that if, as a result of any change in any law, rule or regulation, it is no longer possible to determine the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual rate as shall be determined by the Administrative Agent to be representative of the cost of such insurance to the Lenders. "Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in substantially the form of Exhibit A or any other form approved by the Administrative Agent. "Asset Disposition" means any sale, securitization, assignment, lease, license, exchange, conversion or other disposition by the Borrower of any of its assets, including pursuant to any casualty or condemnation proceeding affecting such assets, but excluding (i) any of the foregoing expressly permitted by Section 6.03 hereof, and (ii) the sale of inventory in the ordinary course of business. "Assuming Lender" shall have the meaning set forth in Section 2.01(c). "Authorized Officer" means the Chairman, the President, the Chief Financial Officer, any Senior Vice President, any Vice President or the Treasurer of the Borrower or any Material Subsidiary, as applicable, or any other officer of the Borrower or any Material Subsidiary 3 8 specified to the Administrative Agent in writing by any of the aforementioned officers of the Borrower or any Material Subsidiary. "Availability Period" means the period from and including the Effective Date to but excluding the Revolving Commitment Termination Date. "Base CD Rate" means the sum of (a) the Three Month Secondary CD Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate. "Board" means the Board of Governors of the Federal Reserve System of the United States of America. "Borrower" shall have the meaning set forth in the initial paragraph hereof. "Borrowing" means (a) Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect, or (b) a Competitive Loan or group of Competitive Loans of the same Type made on the same date and as to which a single Interest Period is in effect. "Borrowing Request" means a request by the Borrower for a Borrowing in accordance with Section 2.03, in substantially the form of Exhibit C or any other form approved by the Administrative Agent. "Business Day" means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City or Dallas, Texas are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term "Business Day" shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market. "Capital Expenditures" means, as to any Person for any period, all expenditures (whether paid in cash or accrued as a liability, including the portion of Capital Lease Obligations originally incurred during such period that are capitalized on the consolidated balance sheet of the Borrower) by such Person and its Subsidiaries during such period that, in conformity with GAAP, are included in "capital expenditures," "additions to property, plant or equipment" or comparable items on the consolidated financial statements of such Person, but excluding expenditures for the restoration, repair or replacement of any fixed or capital asset that was destroyed or damaged, in whole or in part, in an amount equal to any insurance proceeds received in connection with such destruction or damage. "Capital Expenditures (Leasing Company)" means, for any period, Capital Expenditures transferred, assigned or otherwise conveyed to TILC. "Capital Expenditures (Non-Leasing Company)" means, for any period, all Capital Expenditures other than Capital Expenditures (Leasing Company). "Capital Lease Obligations" of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) 4 9 real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP. "Certificate of Conversion" means a certificate of the Borrower, executed by an Authorized Officer of the Borrower and delivered to the Administrative Agent not less than 60 days prior to the Revolving Commitment Termination Date, in substantially the form of Exhibit E, which requests the making of the Term Loans by the Lenders pursuant to Section 2.01(b). "Change in Control" means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof) of shares representing more than thirty percent (30)% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the Borrower; (b) the occupation of a majority of the seats (other than vacant seats) on the board of directors of the Borrower by Persons who were neither (i) nominated by the board of directors of the Borrower nor (ii) appointed by directors so nominated; or (c) the acquisition of direct or indirect Control of the Borrower by any Person or group. "Change in Law" means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or the Issuing Bank (or, for purposes of Section 2.14(b), by any lending office of such Lender or by such Lender's or the Issuing Bank's holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement. "Chase" means The Chase Manhattan Bank, in its individual capacity or as an Issuing Bank, as the case may be, and not as Administrative Agent. "Class", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Competitive Loans or Term Loans. "Co-Arrangers" means J.P. Morgan Securities Inc. and Dresdner Kleinwort Wasserstein Securities LLC in their capacities as Co-Lead Arrangers and Joint Book Managers. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Commitment" means, as to any Lender, such Lender's Revolving Commitment or Term Commitment then in effect, as the case may be. "Competitive Bid" means an offer by a Lender to make a Competitive Loan in accordance with Section 2.04. 5 10 "Competitive Bid Rate" means, with respect to any Competitive Bid, the Margin or the Fixed Rate, as applicable, offered by the Lender making such Competitive Bid. "Competitive Bid Request" means a request by the Borrower for Competitive Bids in accordance with Section 2.04. "Competitive Loan" means a Loan made pursuant to Section 2.04. "Consolidated Net Worth" means, at any time and from time to time, the consolidated shareholder's equity of the Borrower and its Subsidiaries, determined in accordance with GAAP. "Consolidated Subsidiaries" means, for any Person, any subsidiary or other entity the accounts of which would be consolidated with those of such Person in its consolidated financial statements. "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "Controlling" and "Controlled" have meanings correlative thereto. "Credit Exposure" means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender's Loans (other than any Competitive Loans) and its LC Exposure at such time. "Debt Offering" means the incurrence by the Borrower of Indebtedness whether or not occurring in connection with the issuance or sale of notes, bonds, debentures or other debt securities; provided that the incurrence of any Indebtedness borrowed under this Agreement or expressly permitted by Section 6.01 hereof (other than the Indebtedness described in Section 6.01(k)) will not constitute a Debt Offering for purposes of this Agreement. "Default" means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default. "Disclosed Matters" means the actions, suits and proceedings and the environmental matters disclosed in Schedule 3.06. "Documentation Agents" means The Bank of Tokyo - Mitsubishi, Ltd., Bank One, NA and SunTrust Bank, in their capacities as documentation agents for the Lenders hereunder. "dollars" or "$" refers to lawful money of the United States of America. "EBITDA" means, as to the Borrower for any period, without duplication, the amount equal to the following calculated for the Borrower and its consolidated Subsidiaries on a consolidated basis: net income determined in accordance with GAAP, plus to the extent deducted from net income, Interest Expense, depreciation, amortization, income and franchise tax expenses, 6 11 and, with respect to the Borrower's Fiscal Year ended March 31, 2001, non-cash and cash charges in an aggregate amount not to exceed $174,000,000; provided that extraordinary gains or losses for any such period, including, but not limited to, gains or losses on the disposition of assets (other than in connection with the sale of rail cars from the lease fleet in the ordinary course of business) shall not be included in EBITDA. "Effective Date" means June 11, 2001, provided that the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02). "Environmental Laws" means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters. "Environmental Liability" means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing. "Equity" means shares of capital stock or a partnership, profits, capital or member interest, or options, warrants or any other right to substitute for or otherwise acquire the capital stock or a partnership, profits, capital or member interest, of the Borrower or any of its Subsidiaries. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. "ERISA Affiliate" means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code. "ERISA Event" means (a) any "reportable event", as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate 7 12 any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA. "ETC Indebtedness" means equipment trust certificate financing created or incurred after the date hereof and secured by leased rail equipment which is pledged to a trustee acting on behalf of the certificate holders. "Eurodollar", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate (or, in the case of a Competitive Loan, the LIBO Rate). "Event of Default" has the meaning assigned to such term in Article VII. "Excluded Taxes" means, with respect to any Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.19(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender's failure to comply with Section 2.16(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.16(a). "Existing LC Exposure" means, at any time, without duplication, the sum of (a) the aggregate undrawn amount of all outstanding Existing Letters of Credit at such time plus (b) the aggregate amount of all payments made by any issuer of an Existing Letter of Credit pursuant to such Existing Letter of Credit that have not yet been reimbursed by or on behalf of the Borrower or its Subsidiaries at such time. "Existing Letters of Credit" means the letters of credit issued for the account of Borrower or its Subsidiaries outstanding on the date hereof and described on Schedule 1.01, including any extensions, renewals or replacements of such letters of credit. "Federal Funds Effective Rate" means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as 8 13 published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. "Fee Letter" means that certain Fee Letter, dated as of April 11, 2001, by and among the Borrower, Chase and JPMorgan, a Division of Chase Securities Inc., as such letter may be amended, supplemented, restated or otherwise modified from time to time. "Financial Officer" means the chief financial officer, principal accounting officer, treasurer or controller of the Borrower. "Fiscal Quarter" means the fiscal quarter of the Borrower, ending on the last day of each March, June, September and December of each year. "Fiscal Year" means the fiscal year of the Borrower, ending on March 31 of each year. "Fixed Rate" means, with respect to any Competitive Loan (other than a Eurodollar Competitive Loan), the fixed rate of interest per annum specified by the Lender making such Competitive Loan in its related Competitive Bid. "Fixed Rate Loan" means a Competitive Loan bearing interest at a Fixed Rate. "Foreign Lender" means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction. "GAAP" means generally accepted accounting principles in the United States of America. "Governmental Authority" means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. "Governmental Rule" means any statute, law, regulation, ordinance, rule, judgment, order, decree, permit, concession, grant, franchise, license, agreement, directive, requirement of, or other governmental restriction or any similar binding form of decision of or determination by, or any binding interpretation or administration of any of the foregoing by, any Governmental Authority, whether now or hereafter in effect. "Guarantee" of or by any Person (the "guarantor") means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of 9 14 guaranteeing any Indebtedness or other obligation of any other Person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. "Hazardous Materials" means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law. "Hedging Agreement" means any interest rate protection agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement. "Highest Lawful Rate" has the meaning set forth in Section 9.13. "Indebtedness" of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (j) all obligations, contingent or otherwise, of such Person in respect of bankers' acceptances and (k) liabilities of such Person in respect of any Hedging Agreement, provided that, for purposes of this definition, such liabilities of such Person in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that such Person would be required to pay if such Hedging Agreement were terminated at such time. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person's ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. 10 15 "Indemnified Taxes" means Taxes other than Excluded Taxes. "Index Debt" means, for any day, (a) with respect to S&P, the corporate debt rating of the Borrower established by S&P and in effect for such day, and (b) with respect to Moody's, the subordinated debt rating of the Borrower established by Moody's and in effect for such day. "Information Memorandum" means the Confidential Information Memorandum dated April 2001 relating to the Borrower and the Transactions. "Interest Coverage Ratio" means, on any day, the ratio of (a) EBITDA for the Rolling Period ending on the then most recent Quarterly Date to (b) cash interest payments made by the Borrower and its Subsidiaries on a consolidated basis during such Rolling Period. "Interest Election Request" means a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.07, in substantially the form of Exhibit D or any other form approved by the Administrative Agent. "Interest Expense" means, as to any Person for any period, without duplication, total interest expenses, whether paid or accrued as liabilities (including the interest component of Capital Lease Obligations), with respect to all outstanding Indebtedness, including, without limitation, all commissions, discounts, and other fees and charges owed with respect to any financing or letters of credit and net costs under any Hedging Agreement to the extent that such costs are included within interest expense under GAAP. "Interest Payment Date" means (a) with respect to any ABR Loan, the last day of each March, June, September and December, (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months' duration, each day prior to the last day of such Interest Period that occurs at intervals of three months' duration after the first day of such Interest Period, and (c) with respect to any Fixed Rate Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Fixed Rate Borrowing with an Interest Period of more than 90 days' duration (unless otherwise specified in the applicable Competitive Bid Request), each day prior to the last day of such Interest Period that occurs at intervals of 90 days' duration after the first day of such Interest Period, and any other dates that are specified in the applicable Competitive Bid Request as Interest Payment Dates with respect to such Borrowing. "Interest Period" means (a) with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as the Borrower may elect, and (b) with respect to any Fixed Rate Borrowing, the period (which shall not be less than seven days or more than 180 days) commencing on the date of such Borrowing and ending on the date specified in the applicable Competitive Bid Request; provided, that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next 11 16 succeeding Business Day unless, in the case of a Eurodollar Borrowing only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period pertaining to a Eurodollar Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing. "Issuing Bank" means Chase, in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.05(i). The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case the term "Issuing Bank" shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate. "LC Disbursement" means a payment made by the Issuing Bank pursuant to a Letter of Credit. "LC Exposure" means, at any time, without duplication, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time. "Lender Affiliate" means (a) with respect to any Lender (i) an Affiliate of such Lender, or (ii) any entity (whether a corporation, partnership, trust or otherwise) that is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Lender or an Affiliate of such Lender and (b) with respect to any Lender that is a fund which invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and similar extensions of credit and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor. "Lenders" means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to an Assignment and Acceptance, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Acceptance. "Letter of Credit" means any letter of credit issued pursuant to this Agreement. "Leverage Ratio" means, on any day, the ratio of (a) Total Debt of the Borrower and its Subsidiaries on a consolidated basis as of the date of determination to (b) EBITDA for the Rolling Period ending on the most recent Quarterly Date as of the date of determination. "LIBO Rate" means, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations 12 17 comparable to those currently provided on such page of such Service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the "LIBO Rate" with respect to such Eurodollar Borrowing for such Interest Period shall be the rate (rounded upwards, if necessary, to the next 1/32 of 1%) at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period. "Lien" means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities. "Loan Documents" means this Agreement, the Notes, the Subsidiary Guaranties, the Letters of Credit, any Certificate of Conversion, any Borrowing Request, any Interest Election Request, any Assignment and Acceptance, the Fee Letter, and all other agreements (including Hedging Agreements) relating to this Agreement entered into from time to time between or among the Borrower (or any or all of its Subsidiaries) and the Administrative Agent or any Lender (or, with respect to the Hedging Agreements, any Affiliates of any Lender), and any document delivered by the Borrower or any of its Subsidiaries in connection with the foregoing. "Loans" means the loans made by the Lenders to the Borrower pursuant to this Agreement. "Margin" means, with respect to any Competitive Loan bearing interest at a rate based on the LIBO Rate, the marginal rate of interest, if any, to be added to or subtracted from the LIBO Rate to determine the rate of interest applicable to such Loan, as specified by the Lender making such Loan in its related Competitive Bid. "Material Adverse Effect" means a material adverse effect on (a) the business, assets, operations or condition, financial or otherwise, of the Borrower and its Material Subsidiaries taken as a whole, (b) the ability of the Borrower or any Material Subsidiary to perform any of its obligations under this Agreement or any of the other Loan Documents, (c) the validity or enforceability of this Agreement or any of the other Loan Documents or (d) the rights of or benefits available to the Lenders under this Agreement or any of the other Loan Documents. "Material Indebtedness" means Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or more Hedging Agreements, of any one or more of the Borrower and its Subsidiaries in an aggregate principal amount exceeding $10,000,000. For purposes of determining Material Indebtedness, the "principal amount" of the obligations of the 13 18 Borrower or any Subsidiary in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Subsidiary would be required to pay if such Hedging Agreement were terminated at such time. "Material Subsidiary" means any Subsidiary of the Borrower which is organized under the laws of the United States of America, any State thereof, or the District of Columbia (a) with assets (including, without limitation, assets of any subsidiary of such Subsidiary) having a book value equal to or greater than ten percent (10%) of the consolidated assets of the Borrower and its Subsidiaries, (b) which accounts (together with any subsidiary of such Subsidiary) for more than ten percent (10%) of the consolidated revenues of the Borrower and its Subsidiaries, or (c) which accounts (together with any subsidiary of such Subsidiary) for more than ten percent (10%) of the consolidated net income of the Borrower and its Subsidiaries. As of the Effective Date, "Material Subsidiaries" means the Subsidiaries set forth (and designated as such) on Schedule 3.11. "Moody's" means Moody's Investors Service, Inc. "Multiemployer Plan" means a multiemployer plan as defined in Section 4001(a)(3) of ERISA. "Net Cash Proceeds" means the remainder of (a) the gross proceeds received by the Borrower from any Asset Disposition or Debt Offering, less (b) underwriter discounts and commissions, investment banking fees, legal, accounting and other professional fees and expenses, and other usual customary transaction costs, in each case only to the extent paid or payable by the Borrower in cash and related to such Asset Disposition or Debt Offering. "New York City" means New York, New York. "Note" means any promissory note of the Borrower payable to the order of a Lender and issued hereunder pursuant to Section 2.09(e) (as such promissory note may be amended, endorsed or otherwise modified from time to time), evidencing the aggregate Indebtedness of the Borrower to such Lender resulting from outstanding Loans, and also means all other promissory notes accepted from time to time in substitution therefor or renewal thereof. "Other Taxes" means any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement. "Owner Trustee" means the trustee of the Delaware business trust acting in its capacity as "Owner Trustee" under and pursuant to the terms of the documents evidencing the TRLI Equipment Lease Transaction. "PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions. 14 19 "Permitted Acquisition" means any acquisition by the Borrower or its Material Subsidiaries of the voting securities or other equity interests, or all or substantially all of the assets, of any Person (or any division or product line of such Person), but only so long as (a) no Default shall have occurred and be continuing at the time of (or would result from) such acquisition, and (b) the cash amount for such acquisitions does not exceed in the aggregate, during any Fiscal Year of the Borrower, $50,000,000. "Permitted Encumbrances" means: (a) Liens imposed by law for taxes that are not yet due or are being contested in compliance with Section 5.04; (b) carriers', warehousemen's, mechanics', materialmen's, repairmen's and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than 30 days or are being contested in compliance with Section 5.04; (c) pledges and deposits made in the ordinary course of business in compliance with workers' compensation, unemployment insurance and other social security laws or regulations; (d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business; (e) judgment liens in respect of judgments that do not constitute an Event of Default under clause (k) of Article VII; (f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower or any Subsidiary; and (g) Liens, if any, securing the Indebtedness described in Sections 6.01(i) and (j); provided that the term "Permitted Encumbrances" shall not (except as otherwise permitted by clause (g) of this definition) include any Lien securing Indebtedness. "Permitted Investments" means: (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof; 15 20 (b) investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from S&P or from Moody's; (c) investments in certificates of deposit, banker's acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000; (d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above; and (e) investments (in addition to those contemplated by clauses (a), (b), (c), and (d) of this definition, but expressly excluding any repurchase of the stock or other securities of the Borrower) measured at cost on a cumulative basis from and after the date of this Agreement not exceeding, at any time, $5,000,000. "Person" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity. "Plan" means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA. "Prime Rate" means the rate of interest per annum publicly announced from time to time by Chase as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective. "Quarterly Dates" means the last day of each March, June, September and December in each year. "Register" has the meaning set forth in Section 9.04. "Related Parties" means, with respect to any specified Person, such Person's Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person's Affiliates. "Required Lenders" means, at any time, Lenders having Credit Exposures and unused Commitments representing not less than fifty-one percent (51%) of the sum of the total Credit Exposures and unused Commitments at such time; provided that, for purposes of declaring the Loans to be due and payable pursuant to Article VII, and for all purposes after the Loans 16 21 become due and payable pursuant to Article VII or the Commitments expire or terminate, the outstanding Competitive Loans of the Lenders shall be added to their respective Credit Exposures and to the total Credit Exposures in determining the Required Lenders. "Restricted Payment" means any dividend or other distribution (whether in cash, securities or other property) with respect to any shares of any class of capital stock of the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such shares of capital stock of the Borrower or any option, warrant or other right to acquire any such shares of capital stock of the Borrower. "Revolving Commitment" means, with respect to each Lender, the commitment of such Lender to make Revolving Loans and to acquire participations in Letters of Credit hereunder, expressed as an amount representing the maximum aggregate amount of such Lender's Credit Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08, (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04, and (c) terminated pursuant to Article VII. The initial amount of each Lender's Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance or Additional Revolving Loan Assumption Agreement, pursuant to which such Lender shall have assumed its Commitment, as applicable. The initial aggregate amount of the Lenders' Commitments is $460,000,000, and such aggregate amount may be increased on each Additional Revolving Loan Assumption Date pursuant to Section 2.01(c) hereof. "Revolving Commitment Termination Date" means the earliest of: (a) June 6, 2002; (b) the date on which all of the Commitments are terminated in full or reduced to zero pursuant to Section 2.08; and (c) the date on which the Commitments otherwise are terminated in full and reduced to zero pursuant to the terms of Article VII. Upon the occurrence of any event described in clause (b) or (c), the Revolving Commitments shall terminate automatically and without any further action. "Revolving Loans" means the loans provided for in Sections 2.01(a) and (c). "Rolling Period" means any period of four consecutive Fiscal Quarters. "S&P" means Standard & Poor's. "Stated Maturity Date" means the date occurring 364 days after the Term Commitment Termination Date. "Statutory Reserve Rate" means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject (a) with respect to the Base CD Rate, for new negotiable nonpersonal time deposits in dollars of over $100,000 with maturities approximately equal to three months, and (b) with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as 17 22 "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to Regulation D of the Board. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under Regulation D of the Board or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage. "subsidiary" means, with respect to any Person (the "parent") at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent's consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. "Subsidiary" means any subsidiary of the Borrower. "Subsidiary Guaranties" means the guaranties of the Indebtedness of the Borrower arising under or in connection with this Agreement and the other Loan Documents, executed and delivered pursuant to Section 4.01(c) or Section 5.01(f), substantially in the form of Exhibit B, given by each of the Material Subsidiaries, as amended, supplemented, restated or otherwise modified from time to time. "Syndication Agent" means Dresdner Bank AG, New York and Grand Cayman Branches, in its capacity as syndication agent for the Lenders hereunder. "Taxes" means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority. "Term Commitment" means, as to any Lender, such Lender's obligation to make Term Loans pursuant to Section 2.01(b) of this Agreement in a principal amount equal to the lesser of (i) the Credit Exposure of such Lender as of the Revolving Commitment Termination Date or (ii) the Revolving Commitment of such Lender in effect as of the Revolving Commitment Termination Date. "Term Commitment Termination Date" means the earlier of (a) the Business Day after the Revolving Commitment Termination Date, and (b) the date on which the Commitments otherwise are terminated in full and reduced to zero pursuant to the terms of Article VII. Upon the occurrence of any event described in clause (b), the Term Commitments shall terminate automatically and without any further action. "Term Loans" means the loans provided for in Section 2.01(b). 18 23 "Three-Month Secondary CD Rate" means, for any day, the secondary market rate for three-month certificates of deposit reported as being in effect on such day (or, if such day is not a Business Day, the next preceding Business Day) by the Board through the public information telephone line of the Federal Reserve Bank of New York (which rate will, under the current practices of the Board, be published in Federal Reserve Statistical Release H.15(519) during the week following such day) or, if such rate is not so reported on such day or such next preceding Business Day, the average of the secondary market quotations for three-month certificates of deposit of major money center banks in New York City received at approximately 10:00 a.m., New York City time, on such day (or, if such day is not a Business Day, on the next preceding Business Day) by the Administrative Agent from three negotiable certificate of deposit dealers of recognized standing selected by it. "TILC" means Trinity Industries Leasing Company, a Delaware corporation, and a wholly-owned Subsidiary of the Borrower. "Total Debt" means, for any period, all Indebtedness of the Borrower and its Subsidiaries on a consolidated basis, excluding, without duplication, the sum of (a) LC Exposure for such period, plus (b) Existing LC Exposure for such period. "Transactions" means the execution, delivery and performance by the Borrower and its Material Subsidiaries of this Agreement and the other Loan Documents, the borrowing of the Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder. "TRLI" means Trinity Rail Leasing I LLC, a Delaware limited liability company, and a wholly-owned special purpose subsidiary of TRMI. "TRLI Equipment Lease Transaction" means the leveraged lease transaction between the Owner Trustee and TRLI pursuant to which, among other things, (i) TRLI will purchase certain railroad tank cars, covered hopper cars and other related equipment from TILC and TILC will assign to TRLI the related existing subleases of such equipment, (ii) the Owner Trustee will purchase certain of such equipment from TRLI and TRLI will assign to the Owner Trustee the related existing subleases of such equipment, (iii) the Owner Trustee will finance the acquisition of certain of such equipment through an equity investment and the issuance of certain equipment notes, and (iv) TRLI will lease certain of such equipment from the Owner Trustee and the Owner Trustee will assign to TRLI the related existing subleases of such equipment, all as such transactions are more particularly described in the TRLI Information Memorandum. "TRLI Information Memorandum" means the Confidential Preliminary Private Placement Memorandum relating to the TRLI Equipment Lease Transaction. "TRMI" means Trinity Rail Management, Inc., a Delaware corporation, and a wholly owned Subsidiary of the Borrower. "Type", when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by 19 24 reference to the Adjusted LIBO Rate, the Alternate Base Rate or, in the case of a Competitive Loan or Borrowing, the LIBO Rate or a Fixed Rate. "Withdrawal Liability" means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA. "Utilization Fee" has the meaning set forth in Section 2.11(c). "Utilization Percentage" means (i) for any day during the period from the date hereof until the Revolving Commitment Termination Date, a percentage equal to the aggregate Credit Exposure on such day divided by the aggregate Commitments of the Lenders on such day, and (ii) for any day thereafter, 100%. SECTION 1.02 Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a "Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type (e.g., a "Eurodollar Revolving Loan"). Borrowings also may be classified and referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a "Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving Borrowing"). SECTION 1.03 Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person's successors and assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. SECTION 1.04 Accounting Terms; GAAP. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), 20 25 regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. ARTICLE II THE CREDITS SECTION 2.01 Commitments. (a) Revolving Commitment. Subject to the terms and conditions set forth herein, each Lender agrees to make Revolving Loans to the Borrower from time to time during the Availability Period in an aggregate principal amount that will not result in (i) such Lender's Credit Exposure exceeding such Lender's Revolving Commitment or (ii) the sum of the total Credit Exposures plus the aggregate principal amount of outstanding Competitive Loans exceeding the total Revolving Commitments. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans. (b) Term Commitment. On the Revolving Commitment Termination Date (unless such date shall occur as a result of a termination in full of the Revolving Commitments under clause (b) or (c) of the definition of Revolving Commitment Termination Date), if (i) no Default has occurred and is continuing, (ii) the Borrower has timely delivered a Certificate of Conversion to the Administrative Agent, and (iii) further requested by the Borrower with a Borrowing Request, each Lender will make one Term Loan to the Borrower equal to such Lender's Term Commitment. No amounts paid or prepaid with respect to the Term Loans may be reborrowed. Eurodollar Loans for which the Interest Period shall not have terminated as of the Revolving Commitment Termination Date shall be continued as Eurodollar Loans for the applicable Interest Period, and ABR Loans shall be continued as ABR Loans after the Revolving Commitment Termination Date, unless the Borrower shall have elected otherwise by delivery of a Borrowing Request. Any principal repayments received on the Revolving Commitment Termination Date for Revolving Loans not converted into Term Loans shall be applied first to ABR Loans and, after ABR Loans have been paid in full, to Eurodollar Loans, unless the Borrower shall have otherwise instructed the Administrative Agent in writing. Upon a Lender making such Term Loan, its Term Commitment shall terminate and it shall have no further Commitment to make Loans. (c) Additional Revolving Loan Commitments. At any time on or after the Effective Date, with the prior written consent of the Administrative Agent, the Borrower may request one or more financial institutions (each an "Assuming Lender") to acquire an additional Revolving Commitment ("Additional Revolving Commitment") and to make additional Revolving Loans ("Additional Revolving Loans") to the Borrower, and in the sole discretion of each such Assuming Lender, any such Assuming Lender may agree to so commit; provided that (i) no Default or Event of Default then exists or would result therefrom, and (ii) after giving effect to each such increase, the aggregate amount of the Lender's Commitments shall not exceed $500,000,000. The Borrower and each such Assuming Lender which agrees to commit to make 21 26 Additional Revolving Loans shall execute and deliver to the Administrative Agent an Additional Revolving Loan Assumption Agreement (with the assumption of such Assuming Lender's Additional Revolving Commitment to be effective upon delivery of such Additional Revolving Loan Assumption Agreement to the Administrative Agent). The Administrative Agent shall promptly notify each Lender as to the occurrence of each Additional Revolving Loan Assumption Date. On each Additional Revolving Loan Assumption Date (1) Schedule 2.01 shall be deemed modified to reflect the Additional Revolving Commitment of such Lenders, and (2) the Borrower shall pay to each such Assuming Lender such upfront fee (if any) as may have been agreed among the Borrower, the Administrative Agent and such Assuming Lender. SECTION 2.02 Loans and Borrowings. (a) Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their respective Commitments. Each Competitive Loan shall be made in accordance with the procedures set forth in Section 2.04. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments and Competitive Bids of the Lenders are several and no Lender shall be responsible for any other Lender's failure to make Loans as required. (b) Subject to Section 2.13, (i) each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith, and (ii) each Competitive Borrowing shall be comprised entirely of Eurodollar Loans or Fixed Rate Loans as the Borrower may request in accordance herewith. Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement. (c) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $2,000,000 and not less than $10,000,000. At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $2,000,000 and not less than $10,000,000; provided that an ABR Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(e). Subject to Section 2.04(d), each Competitive Borrowing shall be in an aggregate amount that is an integral multiple of $2,000,000 and not less than $10,000,000. Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of five Eurodollar Borrowings outstanding. (d) Except as expressly provided in Section 2.01(b), the Borrower shall not be entitled to request any Borrowing after the Revolving Commitment Termination Date, or to elect to convert or continue any Borrowing if the Interest Period requested with respect thereto would end after the Stated Maturity Date. SECTION 2.03 Requests for Borrowings. To request a Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., Dallas, Texas time, three Business Days before 22 27 the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 10:00 a.m., Dallas, Texas time, on the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request executed by an Authorized Officer of the Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02: (i) the aggregate amount of the requested Borrowing; (ii) the date of such Borrowing, which shall be a Business Day; (iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; (iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term "Interest Period"; and (v) the location and number of the Borrower's account to which funds are to be disbursed, which shall comply with the requirements of Section 2.06. If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month's duration. Promptly following receipt of a Borrowing Request in accordance with this Section 2.03, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender's Loan to be made as part of the requested Borrowing. SECTION 2.04 Competitive Bid Procedure. (a) Subject to the terms and conditions set forth herein, from time to time during the Availability Period the Borrower may request Competitive Bids and may (but shall not have any obligation to) accept Competitive Bids and borrow Competitive Loans; provided that (a) the aggregate principal amount of outstanding Competitive Loans at any time shall not exceed $100,000,000, and (b) the sum of the total Credit Exposures plus the aggregate principal amount of outstanding Competitive Loans at any time shall not exceed the total Commitments. To request Competitive Bids, the Borrower shall notify the Administrative Agent of such request by telephone, in the case of a Eurodollar Borrowing, not later than 11:00 a.m., Dallas, Texas time, four Business Days before the date of the proposed Borrowing and, in the case of a Fixed Rate Borrowing, not later than 10:00 a.m., Dallas, Texas time, one Business Day before the date of the proposed Borrowing; provided that the Borrower may submit up to (but not more than) two (2) Competitive Bid Requests on the same day, but a Competitive Bid Request shall not be made within five Business Days after the date of any previous Competitive Bid Request, unless any and all such previous Competitive Bid Requests shall have been withdrawn or all Competitive Bids received in response thereto rejected. Each such telephonic Competitive Bid Request shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Competitive Bid Request in a form approved by the Administrative Agent and executed by an Authorized Officer of the Borrower. Each such 23 28 telephonic and written Competitive Bid Request shall specify the following information in compliance with Section 2.02: (i) the aggregate amount of the requested Borrowing; (ii) the date of such Borrowing, which shall be a Business Day; (iii) whether such Borrowing is to be a Eurodollar Borrowing or a Fixed Rate Borrowing; (iv) the Interest Period to be applicable to such Borrowing, which shall be a period contemplated by the definition of the term "Interest Period"; and (v) the location and number of the Borrower's account to which funds are to be disbursed, which shall comply with the requirements of Section 2.06. Promptly following receipt of a Competitive Bid Request in accordance with this Section 2.04, the Administrative Agent shall notify the Lenders of the details thereof by telecopy, inviting the Lenders to submit Competitive Bids. (b) Each Lender may (but shall not have any obligation to) make one or more Competitive Bids to the Borrower in response to a Competitive Bid Request. Each Competitive Bid by a Lender must be in a form approved by the Administrative Agent and must be received by the Administrative Agent by telecopy, in the case of a Eurodollar Competitive Borrowing, not later than 9:30 a.m., Dallas, Texas time, three Business Days before the proposed date of such Competitive Borrowing, and in the case of a Fixed Rate Borrowing, not later than 9:30 a.m., Dallas, Texas time, on the proposed date of such Competitive Borrowing. Competitive Bids that do not conform substantially to the form approved by the Administrative Agent may be rejected by the Administrative Agent, and the Administrative Agent shall notify the applicable Lender as promptly as practicable. Each Competitive Bid shall specify (i) the principal amount (which shall be a minimum of $10,000,000 and an integral multiple of $2,000,000 and which may equal the entire principal amount of the Competitive Borrowing requested by the Borrower) of the Competitive Loan or Loans that the Lender is willing to make, (ii) the Competitive Bid Rate or Rates at which the Lender is prepared to make such Loan or Loans (expressed as a percentage rate per annum in the form of a decimal to no more than four decimal places) and (iii) the Interest Period applicable to each such Loan and the last day thereof. (c) The Administrative Agent shall promptly notify the Borrower by telecopy of the Competitive Bid Rate and the principal amount specified in each Competitive Bid and the identity of the Lender that shall have made such Competitive Bid. (d) Subject only to the provisions of this Section 2.04(d), the Borrower may accept or reject any Competitive Bid. The Borrower shall notify the Administrative Agent by telephone, confirmed by telecopy in a form approved by the Administrative Agent, whether and to what extent it has decided to accept or reject each Competitive Bid, in the case of a Eurodollar Competitive Borrowing, not 24 29 later than 10:30 a.m., Dallas, Texas time, three Business Days before the date of the proposed Competitive Borrowing, and in the case of a Fixed Rate Borrowing, not later than 10:30 a.m., Dallas, Texas time, on the proposed date of the Competitive Borrowing; provided that (i) the failure of the Borrower to give such notice shall be deemed to be a rejection of each Competitive Bid, (ii) the Borrower shall not accept a Competitive Bid made at a particular Competitive Bid Rate if the Borrower rejects a Competitive Bid made at a lower Competitive Bid Rate, (iii) the aggregate amount of the Competitive Bids accepted by the Borrower shall not exceed the aggregate amount of the requested Competitive Borrowing specified in the related Competitive Bid Request, (iv) to the extent necessary to comply with clause (iii) above, the Borrower may accept Competitive Bids at the same Competitive Bid Rate in part, which acceptance, in the case of multiple Competitive Bids at such Competitive Bid Rate, shall be made pro rata in accordance with the amount of each such Competitive Bid, and (v) except pursuant to clause (iv) above, no Competitive Bid shall be accepted for a Competitive Loan unless such Competitive Loan is in a minimum principal amount of $10,000,000 and an integral multiple of $2,000,000; provided further that if a Competitive Loan must be in an amount less than $10,000,000 because of the provisions of clause (iv) above, such Competitive Loan may be for a minimum of $2,000,000 or any integral multiple thereof, and in calculating the pro rata allocation of acceptances of portions of multiple Competitive Bids at a particular Competitive Bid Rate pursuant to clause (iv) the amounts shall be rounded to integral multiples of $2,000,000 in a manner determined by the Borrower. A notice given by the Borrower pursuant to this Section 2.04(d) shall be irrevocable. (e) The Administrative Agent shall promptly notify each bidding Lender by telecopy whether or not its Competitive Bid has been accepted (and, if so, the amount and Competitive Bid Rate so accepted), and each successful bidder will thereupon become bound, subject to the terms and conditions hereof, to make the Competitive Loan in respect of which its Competitive Bid has been accepted. (f) If the Administrative Agent shall elect to submit a Competitive Bid in its capacity as a Lender, it shall submit such Competitive Bid directly to the Borrower at least one quarter of an hour earlier than the time by which the other Lenders are required to submit their Competitive Bids to the Administrative Agent pursuant to paragraph (b) of this Section 2.04. SECTION 2.05 Letters of Credit. (a) General. Subject to the terms and conditions set forth herein, the Borrower may request the issuance of Letters of Credit for its own account, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time during the Availability Period. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control. (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, 25 30 or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section 2.05), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by the Issuing Bank, the Borrower also shall submit a letter of credit application on the Issuing Bank's standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed $50,000,000 and (ii) the sum of the total Credit Exposures plus the aggregate principal amount of outstanding Competitive Loans shall not exceed the total Commitments. (c) Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five Business Days prior to the Stated Maturity Date. (d) Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Lender's Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Lender's Applicable Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the date due as provided in paragraph (e) of this Section 2.05, or of any reimbursement payment required to be refunded to the Borrower for any reason. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this Section 2.05(d) in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. (e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00 noon, Dallas, Texas time, on the date that such LC Disbursement is made, if the Borrower shall have received notice of such LC Disbursement prior to 10:00 a.m., Dallas, Texas time, on such date, or, if such notice has not been received by the Borrower prior to such time on such date, then not later than 12:00 noon, Dallas, Texas time, on (i) the Business Day that the Borrower receives such notice, if such notice is received prior to 10:00 a.m., Dallas, Texas time, on the day of receipt, or (ii) the Business Day immediately following the day that the Borrower receives such notice, if such notice is not received prior to such time on the day of receipt; provided that, the 26 31 Borrower may, subject to the conditions to Borrowing set forth herein, request in accordance with Section 2.03 that such payment be financed with an ABR Borrowing in an equivalent amount and, to the extent so financed, the Borrower's obligation to make such payment shall be discharged and replaced by the resulting ABR Borrowing. If the Borrower fails to make such payment when due, the Administrative Agent shall notify each Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Lender's Applicable Percentage thereof. Promptly following receipt of such notice, each Lender shall pay to the Administrative Agent its Applicable Percentage of the unreimbursed LC Disbursement, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this Section 2.05(e), the Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that Lenders have made payments pursuant to this Section 2.05(e) to reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as their interests may appear. Any payment made by a Lender pursuant to this Section 2.05(e) to reimburse the Issuing Bank for any LC Disbursement (other than the funding of ABR Loans as contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement. (f) Obligations Absolute. The Borrower's obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section 2.05 shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 2.05(f), constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower's obligations hereunder. Neither the Agents, the Lenders nor the Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Issuing Bank's failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful 27 32 misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit. (g) Disbursement Procedures. The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed by telecopy) of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Lenders with respect to any such LC Disbursement. (h) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Loans; provided that, if the Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section 2.05, then Section 2.12(d) shall apply. Interest accrued pursuant to this Section 2.05(h) shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to paragraph (e) of this Section 2.05 to reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment. (i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of the Issuing Bank. At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.11(b). From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit. (j) Cash Collateralization. If (i) any Event of Default shall occur and be continuing, on the Business Day that the Borrower receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Lenders with LC 28 33 Exposure representing not less than fifty-one percent (51%) of the total LC Exposure) demanding the deposit of cash collateral pursuant to this Section 2.05(j), (ii) on the Stated Maturity Date, or (iii) no Term Loan is made to the Borrower, on the Revolving Commitment Termination Date, the Borrower shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders, an amount in cash equal to the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower described in clause (h) or (i) of Article VII. Such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the obligations of the Borrower under this Agreement, and the Borrower will, in connection therewith, execute and deliver such security and pledge agreements in form and substance satisfactory to the Administrative Agent which the Administrative Agent may, in its discretion, require. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Borrower's risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Lenders with LC Exposure representing not less than fifty-one percent (51%) of the total LC Exposure), be applied to satisfy other obligations of the Borrower under this Agreement, and the Borrower will, in connection therewith, execute and deliver such security and pledge agreements in form and substance satisfactory to the Administrative Agent which the Administrative Agent may, in its discretion, require. If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default have been cured or waived. SECTION 2.06 Funding of Borrowings. (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, Dallas, Texas time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower maintained with the Administrative Agent in Dallas, Texas and designated by the Borrower; provided that ABR Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(e) shall be remitted by the Administrative Agent to the Issuing Bank. (b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender's share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section 2.06 and may, in reliance upon such assumption, make available to 29 34 the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of (A) the Federal Funds Effective Rate and (B) a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest rate applicable to ABR Loans. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender's Loan included in such Borrowing. SECTION 2.07 Interest Elections. (a) Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request (or an ABR Borrowing if no Type is specified) and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section 2.07. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. This Section 2.07 shall not apply to Competitive Borrowings, which may not be converted or continued. (b) To make an election pursuant to this Section 2.07, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request executed by an Authorized Officer of the Borrower. (c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02: (i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing); (ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day; (iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and 30 35 (iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term "Interest Period". If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month's duration. (d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender's portion of each resulting Borrowing. (e) If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto. SECTION 2.08 Termination and Reduction of Commitments. (a) Unless previously terminated, the Revolving Commitment of each Lender shall terminate on the Revolving Commitment Termination Date applicable to such Lender's Revolving Commitment. (b) In the event the Borrower shall, prior to the Revolving Commitment Termination Date, receive Net Cash Proceeds from any Asset Disposition or Debt Offering, the Revolving Commitment shall reduce (and the Revolving Commitments of each Lender shall reduce ratably) on such date by an amount equal to seventy-five percent (75%) of such Net Cash Proceeds. (c) The Borrower may at any time terminate, or from time to time reduce, the Revolving Commitments; provided that (i) each reduction of the Revolving Commitments shall be in an amount that is an integral multiple of $2,000,000 and not less than $10,000,000 and (ii) the Borrower shall not terminate or reduce the Revolving Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.10, the sum of the Credit Exposures plus the aggregate principal amount of outstanding Competitive Loans would exceed the total Revolving Commitments of the Lenders. (d) The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Revolving Commitments under paragraph (c) of this Section 2.08 at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section 2.08(d) shall be irrevocable; provided that a notice of 31 36 termination of the Revolving Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Revolving Commitments shall be permanent. Each reduction of the Revolving Commitments shall be made ratably among the Lenders in accordance with their respective Revolving Commitments. SECTION 2.09 Repayment of Loans; Evidence of Debt. (a) The Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Loan and Borrowing of such Lender on (A) the Stated Maturity Date, or (B) if no Term Loan is made to the Borrower, the Revolving Commitment Termination Date, and (ii) to the Administrative Agent for the account of each Lender thereof, the then unpaid principal amount of each Competitive Loan on the last day of the Interest Period applicable to such Loan. (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender's share thereof. (d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section 2.09 shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement. (e) Any Lender may request that Loans made by it be evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns). SECTION 2.10 Prepayment of Loans. (a) In the event (i) the Term Loan is made to the Borrower, and (ii) the Borrower shall receive Net Cash Proceeds from any Asset Disposition or Debt Offering, such Net Cash Proceeds shall be applied on such date toward the 32 37 prepayment of the Term Loans, such proceeds to be applied first to ABR Loans and then to Eurodollar Loans next maturing. (b) The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part; provided that (i) each prepayment pursuant to this Section 2.10(b) shall be in an amount that is an integral multiple of $2,000,000 and not less than $10,000,000, (ii) each prepayment pursuant to this Section 2.10(b) shall be subject to prior notice in accordance with paragraph (d) of this Section 2.10, (iii) the Borrower shall pay any and all costs and expenses due to the Lenders pursuant to Section 2.15 at the time of such prepayment, and (iv) the Borrower shall not have the right to prepay any Competitive Loan without the prior consent of the Lender thereof. (c) The Borrower shall, from time to time, upon demand of the Administrative Agent, prepay the Loans in such amounts as shall be necessary so that at all times the sum of the total Credit Exposures of the Lenders plus the aggregate principal amount of outstanding Competitive Loans is equal to or less than the aggregate amount of the Commitments of the Lenders. (d) The Borrower shall notify the Administrative Agent by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., Dallas, Texas time, three Business Days before the date of prepayment or (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., Dallas, Texas time, one Business Day before the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid (which amount shall be in a minimum principal amount of $10,000,000 and in $2,000,000 increments in excess thereof); provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by Section 2.08(c), then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.08(c). Promptly following receipt of any such notice relating to a Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.12. SECTION 2.11 Fees. (a) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a facility fee, which shall accrue at the Applicable Rate on the daily amount of the Revolving Commitment of such Lender (whether used or unused) during the period from and including the Effective Date to but excluding the Revolving Commitment Termination Date applicable to such Lender's Revolving Commitment. Accrued facility fees shall be payable in arrears on each Quarterly Date of each year and on the Revolving Commitment Termination Date, commencing on the first such date to occur after the Effective Date. All facility fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). (b) The Borrower agrees to pay (i) to the Administrative Agent for the account of each Lender a participation fee with respect to its participations in Letters of Credit, which 33 38 shall accrue at the same Applicable Rate as interest on Eurodollar Revolving Loans on the average daily amount of such Lender's LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date on which such Lender's Revolving Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank upon issuance of any Letter of Credit by such Issuing Bank a fronting fee equal to an amount calculated at the rate of 0.125% per annum based on the stated amount and term of such Letter of Credit, as well as the Issuing Bank's standard fees with respect to the administration, issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees shall be payable in arrears on the third Business Day following each Quarterly Date, commencing on the first such date to occur after the Effective Date; provided that all such fees shall be payable on the date on which the Commitments terminate and any such fees accruing after the date on which the Commitments terminate shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this Section 2.11(b) shall be payable within 10 days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). (c) If the Utilization Percentage for any day is greater than 33%, the Borrower shall pay to the Administrative Agent for the account of the Lenders a utilization fee (the "Utilization Fee") calculated at a rate per annum equal to 0.125% (if the Utilization Percentage is greater than 33%, but less than or equal to 50%) or 0.250% (if the Utilization Percentage is greater than 50%) multiplied by the daily aggregate Credit Exposure under this Agreement. If the Utilization Fee is owing, such fee shall be payable by the Borrower in arrears on each Quarterly Date of each year and on either (i) the Stated Maturity Date or (ii) if no Term Loan is made to the Borrower, the date the Revolving Commitments terminate. (d) The Borrower agrees to pay to the Administrative Agent, the Syndication Agent and each Documentation Agent, for their own account, fees payable in the amounts and at the times separately agreed upon in writing between the Borrower and such Agents (including, without limitation, all fees due and payable pursuant to the terms of the Fee Letter). (e) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent (or to the Issuing Bank, in the case of fees payable to it) for distribution, in the case of facility fees and participation fees, to the Lenders. Fees paid shall not be refundable under any circumstances. SECTION 2.12 Interest. (a) Subject to Section 9.13, the Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate. (b) Subject to Section 9.13, the Loans comprising each Eurodollar Borrowing shall bear interest (i) in the case of a Eurodollar Loan, at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate, or (ii) in the case of a Eurodollar Competitive Loan, at the LIBO Rate for the Interest Period in effect for such Borrowing plus (or minus, as applicable) the Margin applicable to such Loan. 34 39 (c) Subject to Section 9.13, each Fixed Rate Loan shall bear interest at the Fixed Rate applicable to such Loan. (d) Notwithstanding the foregoing, but subject to Section 9.13, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section 2.12 or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section 2.12. (e) Subject to Section 9.13, accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan; provided that (i) interest accrued pursuant to paragraph (d) of this Section 2.12 shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Loan prior to the end of the Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion. (f) Subject to Section 9.13, all interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error. SECTION 2.13 Alternate Rate of Interest. If prior to the commencement of any Interest Period for a Eurodollar Borrowing: (a) the Administrative Agent determines that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period; (b) the Administrative Agent is advised by the Required Lenders (or, in the case of a Eurodollar Competitive Loan, the Lender that is required to make such Loan) that the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period; or (c) the Administrative Agent determines that by reason of circumstances affecting the interbank dollar market generally, deposits in U.S. Dollars in the relevant interbank dollar market are not being offered for the applicable Interest Period and in an amount equal to the amount of the Eurodollar Loan requested by the Borrower; 35 40 then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective, (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing and (iii) any request by the Borrower for a Eurodollar Competitive Borrowing shall be ineffective; provided that (A) if the circumstances giving rise to such notice do not affect all the Lenders, then requests by the Borrower for Eurodollar Competitive Borrowings may be made to Lenders that are not affected thereby and (B) if the circumstances giving rise to such notice affect only one Type of Borrowings, then the other Type of Borrowings shall be permitted. SECTION 2.14 Increased Costs. (a) If any Change in Law shall: (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank; or (ii) impose on any Lender or the Issuing Bank or the London interbank market any other condition affecting this Agreement or Eurodollar Loans or Fixed Rate Loans made by such Lender or any Letter of Credit or participation therein; and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan or Fixed Rate Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or the Issuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or the Issuing Bank hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered. (b) If any Lender or the Issuing Bank determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender's or the Issuing Bank's capital or on the capital of such Lender's or the Issuing Bank's holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding company could have achieved but for such Change in Law (taking into consideration such Lender's or the Issuing Bank's policies and the policies of such Lender's or the Issuing Bank's holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding company for any such reduction suffered. 36 41 (c) A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section 2.14 shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof. (d) Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section 2.14 shall not constitute a waiver of such Lender's or the Issuing Bank's right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section 2.14 for any increased costs or reductions incurred more than 270 days prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender's or the Issuing Bank's intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof. (e) Notwithstanding the foregoing provisions of this Section 2.14, a Lender shall not be entitled to compensation pursuant to this Section 2.14 in respect of any Competitive Loan if the Change in Law that would otherwise entitle it to such compensation shall have been publicly announced prior to submission of the Competitive Bid pursuant to which such Loan was made. SECTION 2.15 Break Funding Payments. In the event of (a) the payment of any principal of any Eurodollar Loan or Fixed Rate Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.10(b) and is revoked in accordance therewith), (d) the failure to borrow any Competitive Loan after accepting the Competitive Bid to make such Loan, or (e) the assignment of any Eurodollar Loan or Fixed Rate Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.19, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section 2.15 shall be delivered to 37 42 the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof. SECTION 2.16 Taxes. (a) Any and all payments by or on account of any obligation of the Borrower hereunder shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.16) the Administrative Agent, each Lender or the Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law. (c) The Borrower shall indemnify the Administrative Agent, each Lender and the Issuing Bank, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 2.16) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error. (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent. (e) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate. SECTION 2.17 Payments Generally; Pro Rata Treatment; Sharing of Set-offs. (a) The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under 38 43 Section 2.14, 2.15 or 2.16, or otherwise) prior to 12:00 noon, Dallas, Texas time, on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at its offices at 1 Chase Manhattan Plaza, 8th Floor, New York, New York 10081, except payments to be made directly to the Issuing Bank as expressly provided herein and except that payments pursuant to Sections 2.14, 2.15, 2.16 and 9.03 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in dollars. (b) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties. (c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or participations in LC Disbursements resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and participations in LC Disbursements and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans and participations in LC Disbursements of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and participations in LC Disbursements; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, unless the Lender from which such payment is recovered is required to pay interest thereon, in which case each Lender returning funds to such Lender shall pay its pro rata share of such interest, and (ii) the provisions of this Section 2.17(c) shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this Section 2.17(c) shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to 39 44 such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation. (d) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. (e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.05(d) or (e), 2.06(b), 2.17(d) or 9.03(e), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender's obligations under such Sections until all such unsatisfied obligations are fully paid. SECTION 2.18 Illegality. (a) Notwithstanding any other provision of this Agreement to the contrary, if (i) by reason of the adoption of any applicable Governmental Rule or any change (after the Effective Date) in any applicable Governmental Rule or in the interpretation or administration thereof by any Governmental Authority or compliance by any Lender with any request or directive (whether or not having the force of law) of any central bank or other Governmental Authority or (ii) circumstances affecting the London interbank dollar market or the position of a Lender therein shall at any time make it unlawful or impracticable in the sole discretion of a Lender exercised in good faith for such lender or its applicable lending office to (A) honor its obligation to make Eurodollar Loans either generally or for a particular Interest Period provided for hereunder, or (B) maintain Eurodollar Loans either generally or for a particular Interest Period provided for hereunder, then such Lender shall promptly notify the Borrower thereof through the Administrative Agent and such Lender's obligation to make or maintain Eurodollar Loans having an affected Interest Period hereunder shall be suspended until such time as such Lender may again make and maintain Eurodollar Loans having an affected Interest Period (in which case the provisions of Section 2.18(b) hereof shall be applicable). Before giving such notice pursuant to this Section 2.18(a), such Lender will designate a different available lending office for the affected Eurodollar Loans of such Lender or take such other action as the Borrower may request if such designation or action will avoid the need to suspend such Lender's obligation to make Eurodollar Loans hereunder and will not, in the sole opinion of such Lender exercised in good faith, be disadvantageous to such Lender (provided, that such Lender shall have no obligation to so designate a lending office for Eurodollar Loans located in the United States of America). 40 45 (b) If the obligation of any Lender to make or maintain any Eurodollar Loans shall be suspended pursuant to Section 2.18(a) hereof, all Loans having an affected Interest Period which would otherwise be made by such Lender as Eurodollar Loans shall be made instead as ABR Loans (and, if such Lender so requests by notice to the Borrower with a copy to the Administrative Agent, each Eurodollar Loan having an affected Interest Period of such Lender then outstanding shall be automatically converted into an ABR Loan on the last day of the Interest Period for such Eurodollar Loans unless earlier conversion is required by applicable law) and, to the extent that Eurodollar Loans are so made as (or converted into) ABR Loans, all payments of principal which would otherwise be applied to such Eurodollar Loans shall be applied instead to such ABR Loans. SECTION 2.19 Mitigation Obligations; Replacement of Lenders. (a) If any Lender requests compensation under Section 2.14, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.14 or 2.16, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment. (b) If (i) any Lender requests compensation under Section 2.14, (ii) the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, (iii) any Lender defaults in its obligation to fund Loans hereunder, or (iv) any Lender suspends its obligation to maintain or fund Eurodollar Loans under Section 2.18, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement (other than any outstanding Competitive Loans held by it) to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent (and, if a Commitment is being assigned, the Issuing Bank), which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans (other than Competitive Loans) and participations in LC Disbursements, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.14 or payments required to be made pursuant to Section 2.16, such assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. 41 46 ARTICLE III REPRESENTATIONS AND WARRANTIES In order to induce the Agents, the Issuing Bank and the Lenders to enter into this Agreement and to make Loans and issue Letters of Credit hereunder, the Borrower represents and warrants to the Agents, the Issuing Bank and the Lenders that: SECTION 3.01 Organization; Powers. Each of the Borrower and its Consolidated Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required. SECTION 3.02 Authorization; Enforceability. The Transactions are within the Borrower's and each Material Subsidiary's corporate, partnership or limited liability company powers (as applicable) and have been duly authorized by all necessary corporate, partnership or limited liability company powers (as applicable) and, if required, stockholder action. This Agreement and the other Loan Documents have been duly executed and delivered by the Borrower and each Material Subsidiary (to the extent a party thereto) and constitute the legal, valid and binding obligations of the Borrower and each Material Subsidiary (as applicable), enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. SECTION 3.03 Governmental Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect, (b) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of the Borrower or any of its Subsidiaries or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Borrower or any of its Subsidiaries or its assets, or give rise to a right thereunder to require any payment to be made by the Borrower or any of its Subsidiaries, and (d) will not result in the creation or imposition of any Lien on any asset of the Borrower or any of its Subsidiaries. SECTION 3.04 Financial Condition; No Material Adverse Change. (a) The Borrower has heretofore furnished to the Lenders its consolidated balance sheet and statements of income, stockholders equity and cash flows (i) as of and for the Fiscal Years ended March 31, 1999 and March 31, 2000, in each case audited by Ernst & Young, LLP, independent public accountants, and (ii) as of and for the Fiscal Quarter and the portion of the Fiscal Year ended December 31, 2000, certified by one of its Financial Officers. Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Borrower and its Consolidated Subsidiaries as of such dates and for such periods in accordance 42 47 with GAAP, subject to year-end audit adjustments and the absence of footnotes in the case of the statements referred to in clause (ii) above. (b) Since December 31, 2000, and except for the Disclosed Matters, there has been no Material Adverse Effect on the Borrower and its Subsidiaries, taken as a whole. SECTION 3.05 Properties. (a) Each of the Borrower and its Consolidated Subsidiaries has good title to, or valid leasehold interests in, all its real and personal property material to its business, except for (i) Permitted Encumbrances and (ii) minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes. (b) Each of the Borrower and its Consolidated Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by the Borrower and its Consolidated Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. SECTION 3.06 Litigation and Environmental Matters. (a) There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any of its Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect (other than the Disclosed Matters) or (ii) that involve this Agreement or the Transactions. (b) Except for the Disclosed Matters and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, neither the Borrower nor any of its Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability. (c) Since the date of this Agreement, there has been no change in the status of the Disclosed Matters that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect. SECTION 3.07 Compliance with Laws and Agreements. Each of the Borrower and its Subsidiaries is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. Neither (a) a Default nor (b) any other default by the Borrower or any of its Subsidiaries under any agreement that could result in a Material Adverse Effect, has occurred and is continuing. 43 48 SECTION 3.08 Investment and Holding Company Status. Neither the Borrower nor any of its Subsidiaries is (a) an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940 or (b) a "holding company" as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935. SECTION 3.09 Taxes. Each of the Borrower and its Subsidiaries has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary, as applicable, has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect. SECTION 3.10 ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. The present value of all accumulated benefit obligations under each Plan (in each case determined based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) as of the date of the most recent financial statements reflecting such amounts, does not exceed the fair market value of the assets of such Plan (as of the date of determination of such benefit obligation amount) by an amount which, if it constituted a direct liability of the Borrower, could reasonably be expected to have a Material Adverse Effect. SECTION 3.11 Subsidiaries. Schedule 3.11 hereto accurately (a) reflects (i) the jurisdiction of incorporation or organization of the Borrower and each of its Subsidiaries, and (ii) each jurisdiction in which the Borrower and each of its Subsidiaries is qualified to transact business as a foreign corporation, foreign partnership or foreign limited liability company, and (b) specifies those Subsidiaries that are Material Subsidiaries. The Borrower has no Subsidiaries other than those listed on Schedule 3.11. SECTION 3.12 Burdensome Obligations. Neither the Borrower nor any of its Subsidiaries, nor any of their respective properties, is subject to any law or any pending or threatened Change in Law or subject to any restriction under its articles or certificate of incorporation, bylaws, regulations, partnership agreement or comparable charter or other organizational documents or under any agreement or instrument to which the Borrower or any of its Subsidiaries, or any of their respective properties, may be subject or bound, which is so unusual or burdensome as to be likely in the foreseeable future to result in a Material Adverse Effect. SECTION 3.13 Employee Matters. Except as set forth on Schedule 3.13, neither the Borrower nor any of its Subsidiaries, nor any of their respective employees, is subject to any collective bargaining agreement. There are no strikes, slowdowns, work stoppages or controversies pending or, to the knowledge of the Borrower, threatened against the Borrower or any of its Subsidiaries, or their respective employees, which could reasonably be expected to have a Material Adverse Effect. 44 49 SECTION 3.14 Disclosure. The Borrower has disclosed to the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. Neither the Information Memorandum, the TRLI Information Memorandum, nor any of the other reports, financial statements, certificates or other information furnished by or on behalf of the Borrower to the Administrative Agent or any Lender in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time. SECTION 3.15 Margin Stock. None of the proceeds of the Loans will be used for the purpose of, and neither the Borrower nor any Subsidiary of the Borrower is engaged in the business of, extending credit for the purpose of (a) purchasing or carrying any "margin stock" as defined in Regulation U of the Board of Governors of the Federal Reserve System (12 C.F.R. Part 221) or (b) reducing or retiring any indebtedness which was originally incurred to purchase or carry any margin stock, in either case in violation of Regulation U. Neither the Borrower nor any Subsidiary of the Borrower is engaged principally in the business of extending credit for the purpose of purchasing or carrying any margin stock. Neither the Borrower nor any Subsidiary of the Borrower nor any Person acting on behalf of the Borrower or any Subsidiary of the Borrower has taken or will take any action which would cause any of the Loan Documents, including this Agreement and any Subsidiary Guaranty, to violate Regulation U or any other regulation of the Board of Governors of the Federal Reserve System, or to violate any similar provision of the Securities Exchange Act of 1934 or any rule or regulation under any such provision thereof. SECTION 3.16 Primary Business. The primary business of the Borrower and its Subsidiaries taken as a whole is that of the manufacturing of transportation, construction and industrial products, and the leasing of railroad tank cars, covered hopper cars, box cars and related equipment. ARTICLE IV CONDITIONS SECTION 4.01 Effective Date. The obligations of the Lenders to make Loans and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 9.02): (a) The Administrative Agent (or its counsel) shall have received from each party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement. 45 50 (b) The Administrative Agent (or its counsel) shall have received from the Borrower a Note payable to the order of each Lender requesting same in accordance with Section 2.09(e), each in the amount of such Lender's Commitment, signed on behalf of the Borrower. (c) The Administrative Agent (or its counsel) shall have received from each Material Subsidiary either (i) a Subsidiary Guaranty signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signature page of such Subsidiary Guaranty) that such party has signed such Subsidiary Guaranty. (d) The Administrative Agent shall have received a favorable written opinion (addressed to each Agent and the Lenders and dated as of the date hereof) of Haynes & Boone, LLP, counsel for the Borrower and the Material Subsidiaries, in form and substance satisfactory to the Administrative Agent, and covering such matters relating to the Borrower, the Material Subsidiaries, this Agreement, the other Loan Documents or the Transactions as the Required Lenders shall reasonably request. (e) The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of the Borrower and its Subsidiaries, the authorization of the Transactions and any other legal matters relating to the Borrower, its Subsidiaries, this Agreement, the other Loan Documents or the Transactions, all in form and substance satisfactory to the Administrative Agent and its counsel. (f) The Administrative Agent shall have received a certificate, dated as of the date hereof and signed by the President, a Vice President or a Financial Officer of the Borrower, confirming compliance with the conditions set forth in paragraphs (a) and (b) of Section 4.02. (g) The Administrative Agent, the Syndication Agent, each Documentation Agent, the Co-Arrangers and the Lenders shall have received all fees and other amounts due and payable pursuant to the Fee Letter, this Agreement or any other Loan Document on or prior to the Effective Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder or under any other Loan Document. (h) The Administrative Agent and its counsel shall have received all information, approvals, documents or instruments as the Administrative Agent or its counsel may reasonably request. All documents executed or submitted pursuant to this Section 4.01 by and on behalf of the Borrower or any of its Subsidiaries shall be in form and substance reasonably satisfactory to the Administrative Agent and its counsel. The obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) at or prior to 2:00 p.m., Dallas, Texas time, on June 11, 2001 (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time). 46 51 SECTION 4.02 Each Credit Event. The obligation of each Lender to make a Loan on the occasion of any Borrowing, and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is subject to the satisfaction of the following conditions: (a) The representations and warranties of each Person set forth in the Loan Documents shall be true and correct on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable. (b) At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default shall have occurred and be continuing. (c) The funding of such Borrowing or the issuance, amendment, renewal or extension of any Letter of Credit and all other Borrowings to be made and/or Letter(s) of Credit to be issued, amended, renewed or extended (as applicable) on the same day under this Agreement, shall not cause the Credit Exposure of the Lenders to be greater than the aggregate amount of the Commitments of the Lenders. (d) Following the issuance of any Letter(s) of Credit, the aggregate LC Exposure of all the Lenders shall not exceed $50,000,000. (e) The Administrative Agent shall have received a Borrowing Request for any Borrowing. Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a), (b), (c) and (d) of this Section 4.02. ARTICLE V AFFIRMATIVE COVENANTS Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Agents, the Issuing Bank and each Lender that: SECTION 5.01 Financial Statements and Other Information. The Borrower will furnish to the Administrative Agent and each Lender: (a) within 90 days after the end of each fiscal year of the Borrower, its audited consolidated balance sheet and related statements of operations, stockholders' equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by Ernst & Young, LLP or other independent public accountants of recognized national standing (without a "going concern" or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial 47 52 condition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied; (b) within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, its consolidated balance sheet and related statements of operations, stockholders' equity and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes; (c) concurrently with any delivery of financial statements under clause (a) or (b) above, a certificate of a Financial Officer of the Borrower, substantially in the form of Exhibit G, (i) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating compliance with Sections 6.09(a), (b) and (c) and (iii) stating whether any change in GAAP or in the application thereof has occurred since the date of the audited financial statements referred to in Section 3.04 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate; (d) concurrently with any delivery of financial statements under clause (a) above, a certificate of the accounting firm that reported on such financial statements stating whether they obtained knowledge during the course of their examination of such financial statements of any Default (which certificate may be limited to the extent required by accounting rules or guidelines); (e) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Borrower or any Subsidiary with the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, or distributed by the Borrower to its shareholders generally, as the case may be; (f) promptly upon determination that any Subsidiary has become a Material Subsidiary, a Subsidiary Guaranty duly executed by such Material Subsidiary; and (g) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or any Subsidiary, or compliance with the terms of this Agreement or any other Loan Document, as the Administrative Agent or any Lender may reasonably request. SECTION 5.02 Notices of Material Events. The Borrower will furnish to the Administrative Agent and each Lender prompt written notice of the following: 48 53 (a) the occurrence of any Default; (b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting the Borrower or any Affiliate thereof that, if adversely determined, could reasonably be expected to result in a Material Adverse Effect; (c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in a Material Adverse Effect; (d) an announcement by Moody's or S&P of a change in the ratings established or deemed to have been established for the Index Debt or any other rating of the Borrower or any of its Subsidiaries; (e) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened or other environmental claims against the Borrower or any of its Subsidiaries or any of their respective properties pursuant to any applicable Environmental Laws which could reasonably be expected to have a Material Adverse Effect; or (f) any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect. Each notice delivered under this Section 5.02 shall be accompanied by a statement of a Financial Officer or other Authorized Officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto. SECTION 5.03 Existence; Conduct of Business. The Borrower will, and will cause each of its Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03. SECTION 5.04 Payment of Obligations. The Borrower will, and will cause each of its Subsidiaries to, pay its obligations, including Tax liabilities, before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, and the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (b) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect. SECTION 5.05 Maintenance of Properties; Insurance. The Borrower will, and will cause each of its Subsidiaries to, (a) keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and (b) maintain, with financially sound and reputable insurance companies, insurance in such 49 54 amounts and against such risks as are customarily maintained by the Borrower and its Subsidiaries. SECTION 5.06 Books and Records; Inspection Rights. The Borrower will, and will cause each of its Subsidiaries to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities. The Borrower will, and will cause each of its Subsidiaries to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested. SECTION 5.07 Compliance with Laws. The Borrower will, and will cause each of its Subsidiaries to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. SECTION 5.08 Use of Proceeds. The proceeds of the Loans will be used only for working capital and general corporate purposes of the Borrower and to Subsidiaries in the ordinary course of business. No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations T, U and X. SECTION 5.09 Maintenance of Debt Ratings. The Borrower shall use commercially reasonable efforts to ensure that the Borrower's Index Debt is rated by Moody's and S&P (as applicable). ARTICLE VI NEGATIVE COVENANTS Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full and all Letters of Credit have expired or terminated and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Agents, the Issuing Bank and each Lender that: SECTION 6.01 Indebtedness. The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness, except: (a) Indebtedness created hereunder; (b) Indebtedness existing on the date hereof and set forth in Schedule 6.01, and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof; 50 55 (c) Indebtedness of the Borrower to any Subsidiary and of any Subsidiary to the Borrower or any other Subsidiary; (d) Guarantees by the Borrower of Indebtedness of any Subsidiary and by any Subsidiary of Indebtedness of the Borrower or any other Subsidiary (including pursuant to the Subsidiary Guaranties); (e) Indebtedness of the Borrower or any Subsidiary incurred to finance the acquisition, construction or improvement of any fixed or capital assets, including Capital Lease Obligations and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof; provided that (i) such Indebtedness is incurred prior to or within 90 days after such acquisition or the completion of such construction or improvement and (ii) the aggregate principal amount of Indebtedness permitted by this clause (e) shall not exceed $25,000,000 at any time outstanding; (f) Indebtedness of any Person that becomes a Subsidiary after the date hereof; provided that (i) such Indebtedness exists at the time such Person becomes a Subsidiary and is not created in contemplation of or in connection with such Person becoming a Subsidiary and (ii) the aggregate principal amount of Indebtedness permitted by this clause (f) shall not exceed $25,000,000 at any time outstanding; (g) Indebtedness of the Borrower or any Subsidiary as an account party in respect of trade letters of credit; (h) Existing LC Exposure; (i) Indebtedness evidenced by the TRLI Equipment Lease Transaction in an amount not to exceed $150,000,000; (j) ETC Indebtedness in an aggregate amount not to exceed $200,000,000; (k) Indebtedness of the Borrower in an aggregate amount not to exceed $250,000,000 incurred solely in connection with the issuance by the Borrower of unsecured corporate bonds; and (l) other unsecured Indebtedness in an aggregate principal amount not exceeding $75,000,000 at any time outstanding (the "Debt Basket"); provided that the Debt Basket shall automatically reduce (on a dollar for dollar basis) by an amount equal to any increase in the aggregate Commitments above $460,000,000 pursuant to Section 2.01(c) hereof, but in no event shall the Debt Basket be reduced pursuant to the terms hereof below $50,000,000; provided further that the aggregate principal amount of Indebtedness of the Borrower's Subsidiaries permitted by this clause (l) shall not exceed $10,000,000 at any time outstanding (excluding any Indebtedness of any such Subsidiaries permitted by clauses (i) and (j) of this Section 6.01). 51 56 SECTION 6.02 Liens. The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except: (a) Permitted Encumbrances; (b) any Lien on any property or asset of the Borrower or any Subsidiary existing on the date hereof and set forth in Schedule 6.02; provided that (i) such Lien shall not apply to any other property or asset of the Borrower or any Subsidiary and (ii) such Lien shall secure only those obligations which it secures on the date hereof and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof; (c) any Lien existing on any property or asset prior to the acquisition thereof by the Borrower or any Subsidiary or existing on any property or asset of any Person that becomes a Subsidiary after the date hereof prior to the time such Person becomes a Subsidiary; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other property or assets of the Borrower or any Subsidiary and (iii) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date such Person becomes a Subsidiary, as the case may be, and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof; and (d) Liens on fixed or capital assets acquired, constructed or improved by the Borrower or any Subsidiary; provided that (i) such Liens secure Indebtedness permitted by clause (e) of Section 6.01, (ii) such Liens and the Indebtedness secured thereby are incurred prior to or within 90 days after such acquisition or the completion of such construction or improvement, (iii) the Indebtedness secured thereby does not exceed 100% of the cost of acquiring, constructing or improving such fixed or capital assets and (iv) such security interests shall not apply to any other property or assets of the Borrower or any Subsidiary. SECTION 6.03 Fundamental Changes. (a) The Borrower will not, and will not permit any Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or, except for (i) sales of inventory in the ordinary course of business, and (ii) the sale of assets described on Schedule 6.03 (or the sale of the voting securities or other equity interests of Subsidiaries whose only substantial assets are those described on Schedule 6.03), sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or substantially all of its assets, or all or substantially all of the stock of any of its Subsidiaries (in each case, whether now owned or hereafter acquired), or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing (A) any Subsidiary may merge into the Borrower in a transaction in which the Borrower is the surviving corporation, (B) any Subsidiary may merge into any Subsidiary in a transaction in which the surviving entity is a Subsidiary, (C) any Subsidiary may sell, transfer, lease or otherwise dispose of its assets to the Borrower or to another Subsidiary, (D) TRLI may enter into, observe and perform its obligations pursuant to, and in accordance with, the TRLI Equipment Lease Transaction, and (E) any Subsidiary may 52 57 liquidate or dissolve if the Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and is not materially disadvantageous to the Lenders; provided that any such merger involving a Person that is not a wholly owned Subsidiary immediately prior to such merger shall not be permitted unless also permitted by Section 6.04. (b) The Borrower will not, and will not permit any of its Subsidiaries to, engage to any material extent in any business other than businesses of the type conducted by the Borrower and its Subsidiaries on the date of execution of this Agreement and businesses reasonably related thereto. SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions. The Borrower will not, and will not permit any of its Subsidiaries to, purchase, hold or acquire (including pursuant to any merger with any Person that was not a wholly owned Subsidiary prior to such merger) any capital stock, evidences of indebtedness or other securities (including any option, warrant or other right to acquire any of the foregoing) of, make or permit to exist any loans or advances to, Guarantee any obligations of, or make or permit to exist any investment or any other interest in, any other Person, or purchase or otherwise acquire (in one transaction or a series of transactions) any assets of any other Person constituting a business unit, except: (a) Permitted Investments; (b) investments by the Borrower in the capital stock of its Subsidiaries; (c) loans or advances made by the Borrower to any Subsidiary and made by any Subsidiary to the Borrower or any other Subsidiary; (d) Guarantees constituting Indebtedness permitted by Section 6.01; (e) Permitted Acquisitions; and (f) investments existing on the date hereof and set forth in Schedule 6.04. SECTION 6.05 Hedging Agreements. The Borrower will not, and will not permit any of its Subsidiaries to, enter into any Hedging Agreement, other than Hedging Agreements entered into in the ordinary course of business to hedge or mitigate risks to which the Borrower or any Subsidiary is exposed in the conduct of its business or the management of its liabilities. SECTION 6.06 Restricted Payments. The Borrower will not, and will not permit any of its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except (a) the Borrower may declare and pay dividends with respect to its capital stock payable solely in additional shares of its common stock, (b) Subsidiaries may declare and pay dividends ratably with respect to their capital stock, (c) the Borrower may make Restricted Payments pursuant to and in accordance with stock option plans or other benefit plans for management or employees of the Borrower and its Subsidiaries, including, without limitation, pursuant to any severance packages for management or employees of the Borrower and its 53 58 Subsidiaries and approved by the Board of Directors of the Borrower and (d) provided no Default has occurred which is continuing, the Borrower may declare and pay an annual dividend in an aggregate amount not in excess of $30,000,000. SECTION 6.07 Transactions with Affiliates. The Borrower will not, and will not permit any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) in the ordinary course of business at prices and on terms and conditions not less favorable to the Borrower or such Subsidiary than could be obtained on an arm's-length basis from unrelated third parties, (b) transactions between or among the Borrower and its Subsidiaries not involving any other Affiliate and (c) any Restricted Payment permitted by Section 6.06. SECTION 6.08 Restrictive Agreements. The Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of the Borrower or any Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to the Borrower or any other Subsidiary or to Guarantee Indebtedness of the Borrower or any other Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law or by this Agreement, (ii) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 6.08 (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition), (iii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, (iv) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness and (v) clause (a) of the foregoing shall not apply to customary provisions in leases and other contracts restricting the assignment thereof. SECTION 6.09 Financial Covenants. (a) The Borrower will not permit the Interest Coverage Ratio to be less than 3.75 to 1.00 for each Rolling Period, commencing with the Rolling Period ending June 30, 2001. (b) The Borrower will not permit the Leverage Ratio to be greater than 3.00 to 1.00 for each Rolling Period, commencing with the Rolling Period ending June 30, 2001. (c) The Borrower will not permit Consolidated Net Worth at any time to be less than the sum of (i) $703,200,000, plus (ii) 50% of the Borrower's and its Subsidiaries' cumulative positive consolidated net income for each Fiscal Quarter beginning after the Effective Date, plus (iii) one-hundred percent (100%) of the net cash proceeds received by the Borrower at any time after the Effective Date as a result of the issuance of any Equity. 54 59 SECTION 6.10 Fiscal Year. The Borrower will not change its Fiscal Year. SECTION 6.11 Capital Expenditures. The Borrower will not, and will not permit any of its Subsidiaries to, make (a) Capital Expenditures (Leasing Company) in any Fiscal Year in excess of $205,000,000 in an aggregate amount, and (b) Capital Expenditures (Non-Leasing Company) in any Fiscal Year in excess of $85,000,000 in an aggregate amount. ARTICLE VII EVENTS OF DEFAULT If any of the following events ("Events of Default") shall occur: (a) the Borrower shall fail to pay (including, but not limited to, any failure to pay any mandatory prepayment required by Section 2.10(a)) any principal of any Loan or any reimbursement obligation in respect of any LC Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise; (b) the Borrower or any Material Subsidiary shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in clause (a) of this Article VII) payable under this Agreement or any other Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five days; (c) any representation or warranty made or deemed made by or on behalf of the Borrower or any Subsidiary in or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof, or waiver hereunder or thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement or any other Loan Document, or any amendment or modification hereof or thereof, or waiver hereunder or thereunder, shall prove to have been incorrect when made or deemed made; (d) the Borrower shall fail to observe or perform any covenant, condition or agreement contained in Section 5.01, 5.02, 5.03 (with respect to the Borrower's and its Subsidiaries' existence) or 5.08 or in Article VI; (e) the Borrower or any Material Subsidiary (as applicable) shall fail to observe or perform any covenant, condition or agreement contained in this Agreement or any other Loan Document (other than those specified in clause (a), (b) or (d) of this Article VII), and such failure shall continue unremedied for a period of 30 days after the earlier to occur of either (i) an Authorized Officer of the Borrower becoming aware of such default or (ii) notice thereof having been given to the Borrower by the Administrative Agent (which notice will be given at the request of any Lender); (f) the Borrower or any Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable; 55 60 (g) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (g) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness; (h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any Subsidiary or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; (i) the Borrower or any Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of this Article VII, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing; (j) the Borrower or any Subsidiary shall become unable, admit in writing its inability or fail generally to pay its debts as they become due; (k) one or more judgments for the payment of money in an aggregate amount in excess of $10,000,000 shall be rendered against the Borrower, any Subsidiary or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower or any Subsidiary to enforce any such judgment; (l) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in a Material Adverse Effect; or (m) a Change in Control shall occur; then, and in every such event (other than an event with respect to the Borrower described in clause (h) or (i) of this Article VII), and at any time thereafter during the continuance of such 56 61 event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to the Borrower described in clause (h) or (i) of this Article VII, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower. ARTICLE VIII AGENTS Each of the Lenders, the Issuing Bank and the other Agents hereby irrevocably appoints The Chase Manhattan Bank as Administrative Agent, Dresdner Bank AG, New York and Grand Cayman Branches, as Syndication Agent, and each of The Bank of Tokyo - Mitsubishi, Ltd., Bank One, NA, and SunTrust Bank as Documentation Agents, and authorizes each such Agent to take such actions on its behalf and to exercise such powers as are delegated to such Agents by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto. Any bank serving as an Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not the Administrative Agent hereunder. The Agents shall not have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the Agents shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) each Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that such Agent is required to exercise in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02), and (c) except as expressly set forth in the Loan Documents, the Agents shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Subsidiaries that is communicated to or obtained by the bank serving as such Agent or any of its Affiliates in any capacity. Each Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02) or in the absence of its own gross 57 62 negligence or willful misconduct; PROVIDED, HOWEVER, THAT IT IS THE INTENTION OF THE PARTIES HERETO THAT EACH OF THE AGENTS BE INDEMNIFIED IN THE CASE OF ITS OWN NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL. Each Agent shall be deemed not to have knowledge of any Default (other than, with respect to the Administrative Agent, knowledge of a Default of the types specified in clauses (a) or (b) of Article VII) unless and until written notice thereof is given to such Agent by the Borrower or a Lender, and such Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or in connection herewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to such Agent. The Agents shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. The Agents also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Agents may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. Any Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by such Agent. Any Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of such Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as an Agent. Subject to the appointment and acceptance of a successor Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders, the Issuing Bank and the Borrower. Upon any such resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent which shall be a bank with an office in Dallas, Texas, Houston, Texas or New York City, or an Affiliate of any such bank. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations 58 63 hereunder. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the Administrative Agent's resignation hereunder, the provisions of this Article and Section 9.03 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Administrative Agent. Each Lender acknowledges that it has, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document, any related agreement or any document furnished hereunder or thereunder. ARTICLE IX MISCELLANEOUS SECTION 9.01 Notices. Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows: (a) if to the Borrower, to it at Trinity Industries, Inc., 2525 Stemmons Freeway, Dallas, Texas 75207, Attention: Neil Shoop (Telecopy No.: 214-589-8824); (b) if to the Administrative Agent, to it at The Chase Manhattan Bank, 2200 Ross Avenue, 3rd Floor, Dallas, Texas, Texas 75201, Attention: Michael Lister (Telecopy No.: 214-965-2044), with a copy to The Chase Manhattan Bank, 1 Chase Manhattan Plaza, 8th Floor, New York, New York 10081, Attention: Muniram Appanna (Telecopy No.: 212-552-2261); (c) if to the Issuing Bank, to it at The Chase Manhattan Bank, 2200 Ross Avenue, 3rd Floor, Dallas, Texas, Texas 75201, Attention: Michael Lister (Telecopy No.: 214-965-2044), with a copy to The Chase Manhattan Bank, 1 Chase Manhattan Plaza, 8th Floor, New York, New York 10081, Attention: Muniram Appanna (Telecopy No.: 212-552-2261); and (d) if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire. Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt. SECTION 9.02 Waivers; Amendments. (a) No failure or delay by the Administrative Agent, the Issuing Bank or any Lender in exercising any right or power hereunder 59 64 or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or any other Loan Document or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 9.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the time. (b) Neither this Agreement nor any of the Loan Documents nor any provision hereof or thereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby, (iii) postpone the scheduled date of payment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby, (iv) change Section 2.17(b) or (c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, (v) release any Material Subsidiary from its obligations under its Subsidiary Guaranty, or (vi) change any of the provisions of this Section 9.02(b) or the definition of "Required Lenders" or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of any Agent or the Issuing Bank hereunder without the prior written consent of such Agent or the Issuing Bank, as the case may be. SECTION 9.03 Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Co-Arrangers and their respective Affiliates, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out-of-pocket expenses incurred by the Agents, the Issuing Bank or 60 65 any Lender, including the fees, charges and disbursements of any counsel for the Agents, the Issuing Bank or any Lender, in connection with the enforcement or protection of its rights in connection with this Agreement and the other Loan Documents, including its rights under this Section 9.03, or in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit. (b) The Borrower shall indemnify the Agents, the Issuing Bank, the Co-Arrangers and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an "Indemnitee") against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement or any other Loan Document, the performance by the parties to the Loan Documents of their respective obligations hereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses resulted from the gross negligence or willful misconduct of such Indemnitee (IT BEING UNDERSTOOD THAT IT IS THE INTENTION OF THE PARTIES HERETO THAT EACH OF THE INDEMNITEES BE INDEMNIFIED IN THE CASE OF ITS OWN NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL). No Indemnitee shall be liable for any damages arising from the use by others of any information or other material obtained through the Internet, Intralinks or other similar information transmission systems in connection with the Loan Documents. The Borrower agrees that no Indemnitee shall have any liability for any indirect or consequential damages in connection with its activities related to the Loan Documents. (c) To the extent that the Borrower fails to pay any amount required to be paid by it to the Agents or the Issuing Bank under paragraph (a) or (b) of this Section 9.03, each Lender severally agrees to pay to such Agents or the Issuing Bank, as the case may be, such Lender's Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Agents or the Issuing Bank in its capacity as such. (d) To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out 61 66 of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, any other Loan Document, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof. (e) All amounts due under this Section 9.03 shall be payable promptly after written demand therefor. SECTION 9.04 Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) Any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that (i) except in the case of an assignment to a Lender or a Lender Affiliate, each of the Borrower and the Administrative Agent (and, in the case of an assignment of all or a portion of a Commitment or any Lender's obligations in respect of its LC Exposure, the Issuing Bank) must give their prior written consent to such assignment (which consent shall not be unreasonably withheld or delayed), (ii) except in the case of an assignment to a Lender or a Lender Affiliate or an assignment of the entire remaining amount of the assigning Lender's Commitment, the amount of the Commitment of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall be in increments of $1,000,000 and not be less than $5,000,000 unless each of the Borrower and the Administrative Agent otherwise consent, (iii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement, except that this clause (iii) shall not apply to rights in respect of outstanding Competitive Loans, (iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500, and (v) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire; and provided further that any consent of the Borrower otherwise required under this paragraph shall not be required if an Event of Default has occurred and is continuing. Subject to acceptance and recording thereof pursuant to paragraph (d) of this Section 9.04, from and after the effective date specified in each Assignment and Acceptance the assignee thereunder shall be a party hereto and to the other Loan Documents and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an 62 67 Assignment and Acceptance covering all of the assigning Lender's rights and obligations under this Agreement and the other Loan Documents, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.15, 2.16, 2.18 and 9.03). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (e) of this Section 9.04(b). (c) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices in Houston, Texas or Dallas, Texas a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent, the Issuing Bank and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement and the other Loan Documents, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice. (d) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, the assignee's completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section 9.04 and any written consent to such assignment required by paragraph (b) of this Section 9.04, the Administrative Agent shall accept such Assignment and Acceptance and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph. (e) Any Lender may, without the consent of the Borrower, the Administrative Agent or the Issuing Bank, sell participations to one or more banks or other entities (a "Participant") in all or a portion of such Lender's rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent, the Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce the Loan Documents and to approve any amendment, modification or waiver of any provision of the Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that affects such Participant. Subject to paragraph (f) of this Section 9.04, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.14, 2.15 and 2.16 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section 9.04. To the extent permitted by law, 63 68 each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.17(c) as though it were a Lender. (f) A Participant shall not be entitled to receive any greater payment under Section 2.14 or 2.16 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower's prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.16 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.16(e) as though it were a Lender. (g) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. SECTION 9.05 Survival. All covenants, agreements, representations and warranties made by the Borrower and the Material Subsidiaries in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the other Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that any Agent, the Issuing Bank, the Co-Arrangers or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of Sections 2.14, 2.15, 2.16, 2.18 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof. SECTION 9.06 Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and any separate letter agreements with respect to fees payable to the Agents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Article IV, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a 64 69 signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement. SECTION 9.07 Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. SECTION 9.08 Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have. SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process. (a) This Agreement and the other Loan Documents shall be construed in accordance with and governed by the law of the State of Texas. (b) The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Courts of the State of Texas and of the United States District Court for the Northern District of Texas, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such Texas State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any right that the Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against the Borrower or its properties in the courts of any jurisdiction. (c) The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (b) of this Section 9.09. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. 65 70 (d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law. SECTION 9.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.10. SECTION 9.11 Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement. SECTION 9.12 Confidentiality. Each of the Agents, the Issuing Bank and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates' directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section 9.12, to any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section 9.12 or (ii) becomes available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis from a source other than the Borrower. For the purposes of this Section 9.12, "Information" means all information received from the Borrower relating to the Borrower or its business, other than any such information that is available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by the Borrower; provided that, in the case of information received from the Borrower after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same 66 71 degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. SECTION 9.13 Interest Rate Limitation. It is the intention of the parties hereto to conform strictly to applicable interest, usury and criminal laws and, anything herein to the contrary notwithstanding, the obligations of the Borrower or any Material Subsidiary to a Lender, the Issuing Bank or any Agent under this Agreement or any other Loan Document shall be subject to the limitation that payments of interest shall not be required to the extent that receipt thereof would be contrary to provisions of law applicable to such Lender, the Issuing Bank or such Agent limiting rates of interest which may be charged or collected by such Lender, the Issuing Bank or such Agent. Accordingly, if the transactions contemplated hereby or thereby would be illegal, unenforceable, usurious or criminal under laws applicable to a Lender, the Issuing Bank or any Agent (including the laws of any jurisdiction whose laws may be mandatorily applicable to such Lender or the Administrative Agent notwithstanding anything to the contrary in this Agreement or any other Loan Document) then, in that event, notwithstanding anything to the contrary in this Agreement or any other Loan Document, it is agreed as follows: (i) the provisions of this Section 9.13 shall govern and control; (ii) the aggregate of all consideration which constitutes interest under applicable law that is contracted for, taken, reserved, charged or received under this Agreement, or under any of the other aforesaid agreements or otherwise in connection with this Agreement or any other Loan Document by such Lender, the Issuing Bank or such Agent shall under no circumstances exceed the maximum amount of interest allowed by applicable law (such maximum lawful interest rate if any, with respect to such Lender, the Issuing Bank and the Agents herein called the "Highest Lawful Rate"), and any excess shall be canceled automatically and if theretofore paid shall be credited to the Borrower by such Lender, the Issuing Bank or such Agent (or, if such consideration shall have been paid in full, such excess refunded to the Borrower); (iii) all sums paid, or agreed to be paid, to such Lender, the Issuing Bank or such Agent for the use, forbearance and detention of the indebtedness of the Borrower to such Lender, the Issuing Bank or such Agent hereunder or under any Loan Document shall, to the extent permitted by laws applicable to such Lender, the Issuing Bank or such Agent, as the case may be, be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full so that the actual rate of interest is uniform throughout the full term thereof; (iv) if at any time the interest provided pursuant to this Section 9.13 or any other clause of this Agreement or any other Loan Document, together with any other fees or compensation payable pursuant to this Agreement or any other Loan Document and deemed interest under laws applicable to such Lender, the Issuing Bank or such Agent, exceeds that amount which would have accrued at the Highest Lawful Rate, the amount of interest and any such fees or compensation to accrue to such Lender, the Issuing Bank or such Agent pursuant to this Agreement or such other Loan Document shall be limited, notwithstanding anything to the contrary in this Agreement or any other Loan Document, 67 72 to that amount which would have accrued at the Highest Lawful Rate, but any subsequent reductions, as applicable, shall not reduce the interest to accrue to such Lender, the Issuing Bank or such Agent pursuant to this Agreement or such other Loan Document below the Highest Lawful Rate until the total amount of interest accrued pursuant to this Agreement or such other Loan Document, as the case may be, and such fees or compensation deemed to be interest equals the amount of interest which would have accrued to such Lender, the Issuing Bank or such Agent if a varying rate per annum equal to the interest provided pursuant to any other relevant Section hereof (other than this Section 9.13) or thereof as applicable, had at all times been in effect, plus the amount of fees which would have been received but for the effect of this Section 9.13; and (v) with the intent that the rate of interest herein shall at all times be lawful, if the receipt of any funds owing hereunder or under any other agreement related hereto (including any of the other Loan Documents) by such Lender, the Issuing Bank or such Agent would cause such Lender, the Issuing Bank or such Agent to charge the Borrower a criminal rate of interest, the Lenders, the Issuing Bank and the Agents agree that they will not require the payment or receipt thereof or a portion thereof which would cause a criminal rate of interest to be charged by such Lender, the Issuing Bank or such Agent, as applicable, and if received such affected Lender, the Issuing Bank or such Agent will return such funds to the Borrower so that the rate of interest paid by the Borrower shall not exceed a criminal rate of interest from the date this Agreement was entered into. SECTION 9.14 Co-Arrangers; Syndication Agent; Documentation Agents. None of the Co-Arrangers, the Syndication Agent or the Documentation Agents shall have any right, power, obligation, liability, responsibility or duty under this Agreement or any other Loan Document other than, except in the case of the Co-Arrangers, those applicable to all Lenders as such. Without limiting the foregoing, none of the Co-Arrangers, the Syndication Agent or the Documentation Agents shall have or be deemed to have any fiduciary relationship with any Lender or the Borrower or any of its Subsidiaries. The Borrower and each Lender acknowledge that it has not relied, and will not rely, on any of the Co-Arrangers, the Syndication Agent or the Documentation Agents in deciding to enter into this Agreement or in taking any action hereunder or under the Loan Documents. SECTION 9.15 NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN OR AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. [SIGNATURE PAGES BEGIN ON NEXT PAGE] 68 73 SIGNATURE PAGE TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., AS BORROWER, THE CHASE MANHATTAN BANK, INDIVIDUALLY AND AS ADMINISTRATIVE AGENT, AND THE LENDERS LISTED ON SCHEDULE 2.01 HERETO TRINITY INDUSTRIES, INC. By: ------------------------------ John L. Adams, Executive Vice President [Signature Page] 74 SIGNATURE PAGE TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., AS BORROWER, THE CHASE MANHATTAN BANK, INDIVIDUALLY AND AS ADMINISTRATIVE AGENT, AND THE LENDERS LISTED ON SCHEDULE 2.01 HERETO THE CHASE MANHATTAN BANK, individually and as Administrative Agent By: ------------------------------------- Name: ------------------------------ Title: ------------------------------ [Signature Page] 75 SIGNATURE PAGE TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., AS BORROWER, THE CHASE MANHATTAN BANK, INDIVIDUALLY AND AS ADMINISTRATIVE AGENT, AND THE LENDERS LISTED ON SCHEDULE 2.01 HERETO DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES, individually and as Syndication Agent By: --------------------------------------- Name: --------------------------------- Title: -------------------------------- By: --------------------------------------- Name: --------------------------------- Title: -------------------------------- [Signature Page] 76 SIGNATURE PAGE TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., AS BORROWER, THE CHASE MANHATTAN BANK, INDIVIDUALLY AND AS ADMINISTRATIVE AGENT, AND THE LENDERS LISTED ON SCHEDULE 2.01 HERETO THE BANK OF TOKYO - MITSUBISHI, LTD., individually and as a Documentation Agent By: -------------------------------------- Name: --------------------------------- Title: -------------------------------- By: -------------------------------------- Name: --------------------------------- Title: -------------------------------- [Signature Page] 77 SIGNATURE PAGE TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., AS BORROWER, THE CHASE MANHATTAN BANK, INDIVIDUALLY AND AS ADMINISTRATIVE AGENT, AND THE LENDERS LISTED ON SCHEDULE 2.01 HERETO BANK ONE, NA., individually and as a Documentation Agent By: -------------------------------------- Name: --------------------------------- Title: -------------------------------- [Signature Page] 78 SIGNATURE PAGE TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., AS BORROWER, THE CHASE MANHATTAN BANK, INDIVIDUALLY AND AS ADMINISTRATIVE AGENT, AND THE LENDERS LISTED ON SCHEDULE 2.01 HERETO SUNTRUST BANK, individually and as a Documentation Agent By: -------------------------------------- Name: --------------------------------- Title: -------------------------------- [Signature Page] 79 SIGNATURE PAGE TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., AS BORROWER, THE CHASE MANHATTAN BANK, INDIVIDUALLY AND AS ADMINISTRATIVE AGENT, AND THE LENDERS LISTED ON SCHEDULE 2.01 HERETO WACHOVIA BANK, N.A., as a Lender By: -------------------------------------- Name: --------------------------------- Title: -------------------------------- [Signature Page] 80 SIGNATURE PAGE TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., AS BORROWER, THE CHASE MANHATTAN BANK, INDIVIDUALLY AND AS ADMINISTRATIVE AGENT, AND THE LENDERS LISTED ON SCHEDULE 2.01 HERETO BNP PARIBAS, as a Lender By: -------------------------------------- Name: --------------------------------- Title: -------------------------------- By: -------------------------------------- Name: --------------------------------- Title: -------------------------------- [Signature Page] 81 SIGNATURE PAGE TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., AS BORROWER, THE CHASE MANHATTAN BANK, INDIVIDUALLY AND AS ADMINISTRATIVE AGENT, AND THE LENDERS LISTED ON SCHEDULE 2.01 HERETO THE ROYAL BANK OF SCOTLAND plc, as a Lender By: --------------------------------------- Name: ---------------------------------- Title: --------------------------------- [Signature Page] 82 SIGNATURE PAGE TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., AS BORROWER, THE CHASE MANHATTAN BANK, INDIVIDUALLY AND AS ADMINISTRATIVE AGENT, AND THE LENDERS LISTED ON SCHEDULE 2.01 HERETO THE BANK OF NOVA SCOTIA, as a Lender By: -------------------------------------- Name: --------------------------------- Title: -------------------------------- [Signature Page] 83 SIGNATURE PAGE TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., AS BORROWER, THE CHASE MANHATTAN BANK, INDIVIDUALLY AND AS ADMINISTRATIVE AGENT, AND THE LENDERS LISTED ON SCHEDULE 2.01 HERETO THE BANK OF NEW YORK, as a Lender By: -------------------------------------- Name: --------------------------------- Title: -------------------------------- [Signature Page] 84 SIGNATURE PAGE TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., AS BORROWER, THE CHASE MANHATTAN BANK, INDIVIDUALLY AND AS ADMINISTRATIVE AGENT, AND THE LENDERS LISTED ON SCHEDULE 2.01 HERETO COMERICA BANK, as a Lender By: -------------------------------------- Name: --------------------------------- Title: -------------------------------- [Signature Page] 85 EXHIBIT A [FORM OF] ASSIGNMENT AND ACCEPTANCE Reference is made to the Credit Agreement dated as of June 8, 2001 (as amended and in effect on the date hereof, the "Credit Agreement"), among Trinity Industries, Inc., the Lenders named therein, The Chase Manhattan Bank, as Administrative Agent for the Lenders, and the other Agents named therein. Terms defined in the Credit Agreement are used herein with the same meanings. The Assignor named on the reverse hereof hereby sells and assigns, without recourse, to the Assignee named on the reverse hereof, and the Assignee hereby purchases and assumes, without recourse, from the Assignor, effective as of the Assignment Date set forth on the reverse hereof, the interests set forth on the reverse hereof (the "Assigned Interest") in the Assignor's rights and obligations under the Credit Agreement and the other Loan Documents, including, without limitation, the interests set forth on the reverse hereof in the Commitment of the Assignor on the Assignment Date and Competitive Loans and Loans owing to the Assignor which are outstanding on the Assignment Date, together with the participations in Letters of Credit, LC Disbursements held by the Assignor on the Assignment Date, but excluding accrued interest and fees to and excluding the Assignment Date. The Assignee hereby acknowledges receipt of a copy of the Credit Agreement and the other Loan Documents. From and after the Assignment Date (i) the Assignee shall be a party to and be bound by the provisions of the Credit Agreement and the other Loan Documents and, to the extent of the Assigned Interest, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the extent of the Assigned Interest, relinquish its rights and be released from its obligations under the Credit Agreement and the other Loan Documents. This Assignment and Acceptance is being delivered to the Administrative Agent together with (i) if the Assignee is a Foreign Lender, any documentation required to be delivered by the Assignee pursuant to Section 2.16(e) of the Credit Agreement, duly completed and executed by the Assignee, and (ii) if the Assignee is not already a Lender under the Credit Agreement, an Administrative Questionnaire in the form supplied by the Administrative Agent, duly completed by the Assignee. The Assignee shall pay the fee payable to the Administrative Agent pursuant to Section 9.04(b) of the Credit Agreement. This Assignment and Acceptance shall be governed by and construed in accordance with the laws of the State of Texas. Date of Assignment: Legal Name of Assignor: Legal Name of Assignee: A-1 86 Assignee's Address for Notices: Effective Date of Assignment ("Assignment Date"):
Percentage Assigned of Facility/Commitment (set forth, Principal Amount Assigned to at least 8 decimals, as a (and identifying information percentage of the Facility as to individual Competitive and the aggregate Commitments of Facility Loans) all Lenders thereunder) - ----------------------------------- ---------------------------- ----------------------------------- Commitment Assigned: $ % ---------------------------- ----------------------------------- Loans: ---------------------------- ----------------------------------- Competitive Loans: =============================== ===================================
The terms set forth above and on the reverse side hereof are hereby agreed to: [Name of Assignor], as Assignor By: ------------------------------- Name: -------------------------- Title: ------------------------ [Name of Assignee], as Assignee By: ------------------------------- Name: -------------------------- Title: ------------------------- A-2 87 The undersigned hereby consent to the within assignment: Trinity Industries, Inc. The Chase Manhattan Bank, as Administrative Agent, By: By: ----------------------------- ------------------------- Name: Name: ------------------------ -------------------- Title: Title: ------------------------ ------------------- The Chase Manhattan Bank, as Issuing Bank By: ------------------------- Name: -------------------- Title: ------------------- - ---------- (1) Consents to be included to the extent required by Section 9.04(b) of the Credit Agreement. A-3 88 EXHIBIT B [FORM OF] GUARANTY THIS GUARANTY (this "Guaranty"), dated as of June 8, 2001, is made by _________________, a _________________ (the "Guarantor"), in favor of THE CHASE MANHATTAN BANK, as Administrative Agent (together with all successors and assigns thereto, the "Administrative Agent") for each of the Lender Parties. WITNESSETH: WHEREAS, pursuant to a Credit Agreement, dated as of June 8, 2001 (together with all amendments, supplements, restatements and other modifications, if any, from time to time thereafter made thereto, the "Credit Agreement"), among Trinity Industries, Inc., a Delaware corporation (the "Borrower"), the various financial institutions as are, or may from time to time become, parties to the Credit Agreement (the "Lenders"), the various financial institutions as are or may from time to time become Agents under the Credit Agreement, and The Chase Manhattan Bank, as Administrative Agent for the Lenders, the Lenders have agreed to extend Commitments to make Loans to, and the Issuing Bank has agreed to issue Letters of Credit for the account of, the Borrower; and WHEREAS, as a condition precedent to the making of the initial Loans and the issuance of the initial Letter of Credit under the Credit Agreement, the Guarantor is required to execute and deliver this Guaranty; and WHEREAS, the Guarantor has duly authorized the execution, delivery and performance of this Guaranty; and WHEREAS, it is in the best interests of the Guarantor to execute this Guaranty inasmuch as the Guarantor will derive substantial direct and indirect benefits from the Loans made from time to time to, and the Letters of Credit issued from time to time for the account of, the Borrower and its Subsidiaries by the Lenders and the Issuing Bank, as the case may be, pursuant to the Credit Agreement; NOW THEREFORE, for good and valuable consideration the receipt of which is hereby acknowledged, and in order to induce the Lenders to make Loans (including the initial Loans) to, and to induce the Issuing Bank to issue the Letters of Credit (including the initial Letter of Credit) for the account of, the Borrower and its Subsidiaries pursuant to the Credit Agreement and the Lender Parties to extend financial accommodations, the Guarantor agrees, for the benefit of each Lender Party, as follows: B-1 89 ARTICLE I DEFINITIONS SECTION 1.01 CERTAIN TERMS. The following terms (whether or not underscored) when used in this Guaranty, including its preamble and recitals, shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof): "Administrative Agent" is defined in the preamble. "Borrower" is defined in the first recital. "Credit Agreement" is defined in the first recital. "Guarantor" is defined in the preamble. "Guaranty" is defined in the preamble. "Lender Party" means, as the context may require, any Lender, any Agent, any Issuing Bank, and each of its respective successors, transferees and assigns. "Lenders" is defined in the first recital. "Loan Parties" means, collectively, the Borrower, the Guarantor and any other Subsidiary of the Borrower which executes a Loan Document, and "Loan Party" means any one of the foregoing. "Obligations" means the sum of (i) the Credit Exposures of the Lenders under the Loan Documents plus (ii) all accrued but unpaid interest and fees owing to the Lender Parties under the Loan Documents plus (iii) all other obligations (monetary or otherwise) of the Borrower or any Subsidiary of the Borrower to any Lender Party, whether or not contingent, arising under or in connection with any of the Loan Documents SECTION 1.02 CREDIT AGREEMENT DEFINITIONS. Unless otherwise defined herein or the context otherwise requires, terms used in this Guaranty, including its preamble and recitals, have the meanings provided in the Credit Agreement. ARTICLE II GUARANTY PROVISIONS SECTION 2.01 GUARANTY. The Guarantor hereby absolutely, unconditionally and irrevocably (a) guarantees the full and punctual payment when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise, of all Obligations of the Borrower and each other Loan Party now or hereafter existing under the Credit Agreement and each other Loan Document to which the Borrower or such other Loan Party is or B-2 90 may become a party, whether for principal, interest, fees, expenses or otherwise (including all such amounts which would become due but for the operation of the automatic stay under Section 362(4) of the United States Bankruptcy Code, 11 U.S.C. Section 362(4), and the operation of Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11 U.S.C. Section 502(b) and Section 506(b)), and (b) indemnifies each Lender Party for any and all costs and expenses (including reasonable attorney's fees and expenses) incurred by such Lender or such holder, as the case may be, in enforcing any rights under this Guaranty; provided, however, that the Guarantor shall be liable under this Guaranty for the maximum amount of such liability that can be hereby incurred without rendering this Guaranty, as it relates to the Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount. This Guaranty constitutes a guaranty of payment when due and not of collection, and the Guarantor specifically agrees that it shall not be necessary or required that any Lender Party exercise any right, assert any claim or demand, or enforce any remedy whatsoever against the Borrower or any other Loan Party (or any other Person) before or as a condition to the obligations of the Guarantor hereunder. SECTION 2.02 ACCELERATION OF GUARANTY. The Guarantor agrees that, in the event that the Obligations have been accelerated pursuant to Article VII of the Credit Agreement, the Guarantor will pay to the Administrative Agent for itself and as agent for the Lender Parties forthwith the full amount of all such Obligations. SECTION 2.03 GUARANTY ABSOLUTE, ETC. This Guaranty shall in all respects be a continuing, absolute, unconditional and irrevocable guaranty of payment, and shall remain in full force and effect until all Obligations of the Borrower and each other Loan Party have been paid in full, all obligations of the Guarantor hereunder shall have been paid in full and all Commitments shall have terminated and all Letters of Credit shall have terminated or expired. The Guarantor guarantees that the Obligations of the Borrower and each other Loan Party will be paid strictly in accordance with the terms of the Credit Agreement and each other Loan Document under which they arise, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Lender Party or any holder of any note with respect thereto. The liability of the Guarantor under this Guaranty shall be absolute, unconditional and irrevocable irrespective of: (a) any lack of validity, legality or enforceability of the Credit Agreement or any other Loan Document; (b) the failure of any Lender Party (i) to assert any claim or demand or to enforce any right or remedy against the Borrower, any other Loan Party or any other Person (including any other guarantor) under the provisions of the Credit Agreement, any other Loan Document, or otherwise, or (ii) to exercise any right or remedy against any other guarantor of any Obligations of the Borrower or any other Loan Party; B-3 91 (c) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations of the Borrower or any other Loan Party, or any other extension, compromise, or renewal of any Obligation of the Borrower or any other Loan Party; (d) any reduction, limitation, impairment or termination of any Obligations of the Borrower or any other Loan Party for any reason (other than indefeasible payment in full in cash of the Obligations), including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and the Guarantor hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Obligations of the Borrower, any other Loan Party or otherwise; (e) any amendment to, rescission, waiver, or other modification of, or any consent to departure from, any of the terms of the Credit Agreement or any other Loan Document; (f) any addition, exchange, release, surrender or non-perfection of any collateral, or any amendment to or waiver or release or addition of, or consent to departure from, any other guaranty, held by any Lender Party securing any of the Obligations of the Borrower or any other Loan Party; or (g) any other circumstance (other than indefeasible payment in full in cash of the Obligations) which might otherwise constitute a defense available to, or a legal or equitable discharge of, the Borrower, any other Loan Party, any surety, or any guarantor. SECTION 2.04 REINSTATEMENT, ETC. The Guarantor agrees that this Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment (in whole or in part) of any of the Obligations is rescinded or must otherwise be restored by any Lender Party, upon the insolvency, bankruptcy or reorganization of the Borrower, any other Loan Party or otherwise, all as though such payment had not been made. SECTION 2.05 WAIVER, ETC. The Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Obligations of the Borrower or any other Loan Party and this Guaranty and any requirement that the Administrative Agent or any other Lender Party protect, secure, perfect or insure any Lien, or any property subject thereto, or exhaust any right or take any action against the Borrower, any other Loan Party or any other Person (including any other guarantor) or any collateral securing the Obligations of the Borrower or any other Loan Party, as the case may be. SECTION 2.06 WAIVER OF SUBROGATION. Until the indefeasible payment in full in cash of all Obligations and the termination or expiration of all Commitments and Letters of Credit, the Guarantor hereby irrevocably waives any claim or other rights which it may now or hereafter acquire against the Borrower or any other Loan Party that arise from the existence, payment, performance or enforcement of the Guarantor's obligations under this Guaranty or any other Loan Document, including any right of subrogation, reimbursement, exoneration, or B-4 92 indemnification, any right to participate in any claim or remedy of the Lender Parties against the Borrower or any other Loan Party or any collateral which the Administrative Agent now has or hereafter acquires, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including the right to take or receive from the Borrower or any other Loan Party, directly or indirectly, in cash or other property or by set-off or in any manner, payment or security on account of such claim or other rights. If any amount shall be paid to the Guarantor in violation of the preceding sentence, such amount shall be deemed to have been paid to the Guarantor for the benefit of, and held in trust for, the Lender Parties, and shall forthwith be paid to the Administrative Agent for the benefit of the Lender Parties to be credited and applied to the Obligations, whether matured or unmatured. The Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Credit Agreement and that the waiver set forth in this Section is knowingly made in contemplation of such benefits. ARTICLE III REPRESENTATIONS AND WARRANTIES SECTION 3.01 REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and warrants unto each Lender Party as set forth in this Article. SECTION 3.02 ORGANIZATION; POWERS. The Guarantor is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required. SECTION 3.03 AUTHORIZATION; ENFORCEABILITY. The execution, delivery and performance by the Guarantor of this Guaranty and each other Loan Document executed or to be executed by it are within the Guarantor's corporate, partnership or limited liability company powers (as applicable), and have been duly authorized by all necessary corporate, partnership or limited liability company action (as applicable), and if required and applicable, stockholder action. This Guaranty has been duly executed and delivered by the Guarantor and constitutes, and each other Loan Document executed or to be executed by the Guarantor, when executed and delivered by the Guarantor, will constitute, a legal, valid and binding obligation of the Guarantor, enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. SECTION 3.04 APPROVALS; NO CONFLICTS. The execution, delivery and performance by the Guarantor of this Guaranty and each other Loan Document executed or to be executed by it, (a) do not require any approval of any Governmental Authority or other third party approvals, except such as have been obtained or made and are in full force and effect and except filings necessary to perfect Liens created in connection with this Guaranty, (b) will not violate any applicable Governmental Rule or the articles of organization, formation or B-5 93 incorporation (or comparable document), bylaws, operating agreement, partnership agreement, limited liability company agreement or similar documents (as applicable) of the Guarantor or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement, or other instrument binding upon the Guarantor or its assets, or give rise to a right thereunder to require any payment to be made by the Guarantor and (d) will not result in the creation or imposition of any Lien on any asset of the Guarantor except Liens created under the Loan Documents. SECTION 3.05 BENEFIT TO THE GUARANTOR. The Guarantor is a wholly-owned subsidiary of the Borrower; and the Guarantor's guaranty pursuant to this Guaranty reasonably may be expected to benefit, directly or indirectly, the Guarantor; and the Guarantor has determined that this Guaranty is necessary and convenient to the conduct, promotion and attainment of the business of the Guarantor and the Borrower. SECTION 3.06 LITIGATION MATTERS. Except for Disclosed Matters, there are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Guarantor, threatened against or affecting the Guarantor or any of its Subsidiaries or any of their respective properties, businesses, assets or revenues, (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect (other than the Disclosed Matters) or (ii) that question the validity or enforceability of any Loan Documents or seek to enjoin or prevent the Transactions. Since the date of this Guaranty, there has been no change in the status of the Disclosed Matters that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect. SECTION 3.07 SOLVENCY. Immediately after entering into this Guaranty, the Guarantor will be Solvent. As used herein, the term "Solvent" means, with respect to the Guarantor, a condition under which (a) the fair market value of the Guarantor's assets is, on the date of determination greater than the total amount of the Guarantor's liabilities (including contingent and unliquidated liabilities) at such time; and (b) the Guarantor is able to pay all of its liabilities as such liabilities mature. For purposes of this definition (i) the amount of the Guarantor's contingent or unliqudated liabilities at any time shall be the amount which, in light of all the facts and circumstances then existing, represents the amount which can reasonably be expected to become an actual or matured liability, (ii) the "fair saleable value" of an asset shall be the amount which may be realized within a reasonable time either through collection or sale of such asset at its regular market value, and (iii) the "regular market value" of an asset shall be the amount which a capable and diligent business person could obtain for such asset from an interested buyer who is willing to purchase such asset under ordinary selling conditions. SECTION 3.08 CREDIT AGREEMENT REPRESENTATIONS. All representations and warranties made by the Borrower with respect to the Guarantor set forth in Article III of the Credit Agreement are true and correct in all respects as of the date hereof. B-6 94 ARTICLE IV COVENANTS, ETC. SECTION 4.01 COVENANTS. Until the payment in full in cash of all Obligations and the termination or expiration of all Commitments and Letters of Credit, the Guarantor covenants and agrees that the Guarantor will perform, comply with, observe and fulfill each of the covenants, agreements and obligations contained in the Credit Agreement, including without limitation, Article V and Article VI of the Credit Agreement, pertaining or otherwise applicable to the Guarantor in its capacity as a Loan Party and a Subsidiary. The Guarantor hereby irrevocably and unconditionally agrees to be bound by such covenants, agreements and obligations applicable to it in such capacities as if the Guarantor were a party to the Credit Agreement and such covenants, agreements, and obligations applicable to it in such capacities are hereby reaffirmed by the Guarantor. ARTICLE V MISCELLANEOUS PROVISIONS SECTION 5.01 LOAN DOCUMENT. This Guaranty is a Loan Document executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions thereof. SECTION 5.02 BINDING ON SUCCESSORS, TRANSFEREES AND ASSIGNS; ASSIGNMENT. This Guaranty shall be binding upon the Guarantor and its successors, transferees and assigns and shall inure to the benefit of and be enforceable by the Administrative Agent, each other Lender Party and their respective successors, transferees and assigns permitted by Section 9.04 of the Credit Agreement. SECTION 5.03 AMENDMENTS, ETC. No amendment to or waiver of any provision of this Guaranty, nor consent to any departure by the Guarantor herefrom, shall in any event be effective unless the same shall be in writing and signed by the Administrative Agent in accordance with Section 9.02(b) of the Credit Agreement, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. SECTION 5.04 ADDRESSES FOR NOTICES TO THE GUARANTOR. All notices and other communications hereunder to the Guarantor shall be in writing (including telecopy communication) and mailed or telecopied or delivered to it, addressed to it at the address set forth below its signature hereto, or at such other address as shall be designated by the Guarantor in a written notice to the Administrative Agent at the address specified in the Credit Agreement complying as to delivery with the terms of this Section. All such notices and other communications shall be effective as provided in Section 9.01 of the Credit Agreement. SECTION 5.05 NO WAIVER REMEDIES. In addition to, and not in limitation of, Section 2.03 and Section 2.05, no failure on the part of any Lender Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the B-7 95 exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 5.06 HEADINGS. Article and Section headings used herein are for convenience of reference only, are not part of this Guaranty and shall not affect the construction of, or be taken into consideration in interpreting, this Guaranty. SECTION 5.07 SETOFF. If an Event of Default shall have occurred and be continuing, each Lender Party is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender Party to or for the credit or the account of the Guarantor or any of its Subsidiaries against any of and all the obligations of Guarantor now or hereafter existing under this Guaranty held by such Lender, irrespective of whether or not such Lender Party shall have made any demand under this Guaranty and although such obligations may be unmatured; provided, however, that any such set-off and application shall be subject to the provisions of Section 2.17 of the Credit Agreement. SECTION 5.08 SEVERABILITY. Any provision of this Guaranty held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality, and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. SECTION 5.09 GOVERNING LAWS. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF TEXAS. SECTION 5.10 WAIVER OF JURY TRIAL. GUARANTOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). GUARANTOR (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY LENDER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH LENDER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT SUCH LENDER PARTIES HAVE BEEN INDUCED TO ENTER INTO THE LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS IN THIS SECTION. SECTION 5.11 NO ORAL AGREEMENTS. THIS WRITTEN GUARANTY AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AS TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES. [SIGNATURE ON FOLLOWING PAGE] 96 IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written. --------------------------------------- By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- Address: ------------------------------- Attention: ------------------------------ Telephone: ------------------------------ Telecopy: ------------------------------ B-9 97 EXHIBIT C [FORM OF] BORROWING REQUEST ___________, 200___ The Chase Manhattan Bank as Administrative Agent for the Lenders referred to below c/o The Chase Manhattan Bank - --------------------------- - --------------------------- - --------------------------- Attention: ---------------- Facsimile: ---------------- The Chase Manhattan Bank as Administrative Agent for the Lenders referred to below c/o The Chase Manhattan Bank - --------------------------- - --------------------------- - --------------------------- Attention: ---------------- Facsimile: ---------------- Re: Credit Agreement (hereinafter defined) Dear Sirs: Reference is made to that certain Credit Agreement, dated as of June 8, 2001 (together with all amendments, if any, from time to time made thereto, the "Credit Agreement"), among Trinity Industries, Inc., a Delaware corporation (the "Borrower"), the Lenders party thereto, and The Chase Manhattan Bank, as the Administrative Agent (the "Administrative Agent"). Terms defined in the Credit Agreement are used herein with the same meanings. This notice constitutes a Borrowing Request and the Borrower hereby requests a Borrowing under the Credit Agreement, and in that connection the Borrower specifies the following information with respect to the Borrowing requested hereby: C-1 98 (A) Principal amount of Borrowing(1):_______________________ (B) Interest rate basis(2): (C) Effective date (which is a Business Day): (D) Date of maturity (which is a Business Day): (E) Interest Period(3): If the Borrowing results in an increase in the aggregate outstanding principal amount of the Loans, the Borrower hereby represents and warrants that the conditions specified in paragraphs (a) and (b) of Section 4.02 of the Credit Agreement are satisfied. The Borrower has caused this Borrowing Request to be executed and delivered by its Authorized Officer this _____ day of ___________, 200____. Very truly yours, TRINITY INDUSTRIES, INC. By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- - ---------- (1) Not less than $10,000,000 and an integral multiple of $2,000,000 (or aggregate unused balance of the Commitments in the case of an ABR Borrowing). (2) Eurodollar Borrowing or ABR Borrowing. (3) If applicable, selected period must comply with the definition of "Interest Period" and end not later than the Revolving Commitment Termination Date. C-2 99 EXHIBIT D [FORM OF] INTEREST ELECTION REQUEST The Chase Manhattan Bank as Administrative Agent for the Lenders referred to below c/o The Chase Manhattan Bank - --------------------------- - --------------------------- - --------------------------- Attention: ---------------- Facsimile: ---------------- The Chase Manhattan Bank as Administrative Agent for the Lenders referred to below c/o The Chase Manhattan Bank - --------------------------- - --------------------------- - --------------------------- Attention: ---------------- Facsimile: ---------------- Re: Credit Agreement (hereinafter defined) Dear Sirs: Reference is made to that certain Credit Agreement, dated as of June 8, 2001 (together with all amendments, if any, from time to time made thereto, the "Credit Agreement"), among Trinity Industries, Inc., a Delaware corporation (the "Borrower"), the Lenders party thereto, and The Chase Manhattan Bank, as Administrative Agent (the "Administrative Agent"). Terms defined in the Credit Agreement are used herein with the same meanings. This notice constitutes an Interest Election Request and the Borrower hereby requests the conversion or continuation of a Borrowing under the Credit Agreement, and in that connection the Borrower specifies the following information with respect to the Borrowing to be converted or continued as requested hereby: (A) Borrowing to which this request applies(1): (B) Principal amount of Borrowing to be converted/continued(2): - ---------- (1) Specify existing Type and last day of current Interest Period. D-1 100 (C) Effective date of election (which is a Business Day): (D) Interest rate basis of resulting Borrowing(3): (E) Interest Period of resulting Borrowing(4): Very truly yours, TRINITY INDUSTRIES, INC. By: -------------------------------- Name: ------------------------------ Title: ----------------------------- D-2 - ---------- (2) Not less than $10,000,000 or an integral multiple of $2,000,000. (3) Eurodollar Borrowing or ABR Borrowing. (4) Which must comply with the definition of "Interest Period" and end not later than the Revolving Commitment Termination Date. 101 EXHIBIT E [FORM OF] CERTIFICATE OF CONVERSION ____________, 2002 The Chase Manhattan Bank as Administrative Agent for the Lenders referred to below c/o The Chase Manhattan Bank - --------------------------- - --------------------------- - --------------------------- Attention: ---------------- Facsimile: ---------------- The Chase Manhattan Bank as Administrative Agent for the Lenders referred to below c/o The Chase Manhattan Bank - --------------------------- - --------------------------- - --------------------------- Attention: ---------------- Facsimile: ---------------- Re: Request for Term Loans Dear Sirs: Reference is made to the Credit Agreement, dated as of June 8, 2001 (together with all amendments, if any, from time to time made thereto, the "Credit Agreement"), among Trinity Industries, Inc., a Delaware corporation (the "Borrower"), the Lenders party thereto, and The Chase Manhattan Bank, as Administrative Agent (the "Administrative Agent"). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement. Pursuant to the terms of Section 2.01(b) of the Credit Agreement, the Borrower hereby requests the making of the Term Loans by the Lenders on the Revolving Commitment Termination Date, all in accordance with the terms of such Section 2.01(b) and the other terms and provisions of the Credit Agreement. E-1 102 To induce the Lenders to make such Term Loans on the Revolving Commitment Termination Date, the Borrower hereby represents, warrants, acknowledges, and agrees to and with each Agent and each Lender that: (a) The Authorized Officer of the Borrower signing this instrument is a duly elected, qualified and acting officer of the Borrower, holding the office indicated below such officer's signature hereto and having all necessary authority to act for the Borrower in making and delivering this Certificate of Conversion. (b) Except for the facts heretofore disclosed to the Administrative Agent under the Credit Agreement in writing, which facts (i) are not materially more adverse to the Borrower and its Subsidiaries taken as a whole, (ii) do not materially decrease the ability of the Lenders to collect the Indebtedness due and owing under the Loan Documents as and when due and payable and (iii) do not materially increase the liability of the Agents or any of the Lenders, and except for the representations set forth in the Loan Documents which, by their terms, are expressly (or by means of similar phrasing) made as of the date of the Credit Agreement, the Effective Date or any other specific date, only, the representations and warranties made in each Loan Document are true and correct in all material respects on and as of the time of delivery hereof, with the same force and effect as if made on and as of the time of delivery hereof. (c) There does not exist on the date hereof any condition or event which constitutes a Default which has not been waived in writing as provided in Section 9.02 of the Credit Agreement. (d) The Loan Documents have not been modified, amended or supplemented by any unwritten representations or promises, by any course of dealing, or by any other means not provided for in Section 9.02 of the Credit Agreement. The Credit Agreement and the other Loan Documents are hereby ratified, approved, and confirmed in all respects. The Borrower agrees that if, prior to the time of the making of the Term Loans by the Lenders requested hereby, any matter certified to herein by it will not be true and correct at such time as if then made, it will immediately so notify the Administrative Agent. Except to the extent, if any, that, prior to the time of the making of the Term Loans by the Lenders requested hereby, the Administrative Agent shall have received written notice from the Borrower to the contrary, each matter certified herein shall be deemed once again to be certified as true and correct as of the date of such making of the Term Loans by the Lenders as if then made. The Authorized Officer of the Borrower signing this instrument hereby certifies that, to the best of his knowledge, the above representations, warranties, acknowledgments and agreements of the Borrower are true, correct and complete. TRINITY INDUSTRIES, INC. By: ----------------------------- Name: --------------------------- Title: -------------------------- E-2 103 EXHIBIT F [FORM OF] ADDITIONAL REVOLVING LOAN ASSUMPTION AGREEMENT [Name(s) of Lender(s)] , ------------------- ------- Trinity Industries, Inc. 2525 Stemmons Freeway Dallas, Texas 75207 Attention: Neil Shoop re: Additional Revolving Loan Assumption Agreement Gentlemen: Reference is hereby made to the Credit Agreement, dated as of June 8, 2001 (as amended, modified or supplemented from time to time, the "Credit Agreement"), among Trinity Industries, Inc. (the "Borrower" or "you"), the lenders from time to time party thereto (the "Lenders"), The Bank of Tokyo - Mitsubishi, Ltd., Bank One, NA and SunTrust Bank, as Documentation Agents, Dresdner Bank AG, New York and Grand Cayman Branches, as Syndication Agent, and The Chase Manhattan Bank, as Administrative Agent (the "Administrative Agent"). Unless otherwise defined herein, capitalized terms used herein shall have the respective meanings set forth in the Credit Agreement. Each financial institution (each an "Assuming Lender") party to this letter agreement (this "Agreement") hereby severally agrees to provide the Additional Revolving Commitment set forth opposite its name on Annex I attached hereto (for each such Assuming Lender, its "Additional Revolving Commitment"). Each Additional Revolving Commitment provided pursuant to this Agreement shall be subject to the terms and conditions set forth in the Credit Agreement, including Section 2.01(c) thereof. Each Assuming Lender acknowledges and agrees that the Additional Revolving Commitment provided pursuant to this Agreement, in the aggregate amount set forth on Annex I hereto, shall constitute an Additional Revolving Commitment (as specified in Annex I) under, and as defined in, the Credit Agreement. Each Assuming Lender further agrees that, with respect to the Additional Revolving Commitment provided by it pursuant to this Agreement, such Assuming Lender shall receive an upfront fee equal to that amount set forth opposite its name on Annex I hereto (if any). Each Assuming Lender party to this Agreement (i) confirms that it has received a copy of the Credit Agreement and the other Loan Documents, together with copies of the financial F-1 104 statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement and to become a Lender under the Credit Agreement, (ii) agrees that it will independently and without reliance upon the Co-Arrangers, the Documentation Agents, the Syndication Agent, the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement, (iii) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement and the other Loan Documents as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto, (iv) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender, and (v) in the case of each lending institution organized under the laws of a jurisdiction outside the United States, attaches the forms prescribed by the Internal Revenue Service of the United States, certifying as to its entitlement to a complete exemption from United States withholding taxes with respect to all payments to be made under the Credit Agreement and the other Loan Documents. Upon the execution of a counterpart of this Agreement by the Administrative Agent and the Borrower, the delivery to the Administrative Agent of a fully executed copy (including by way of counterparts and by facsimile transmission) hereof and the payment of any fees (including, without limitation, the upfront fees (if any) payable pursuant to the immediately preceding paragraph) required in connection herewith, each Assuming Lender party hereto shall become a Lender pursuant to the Credit Agreement and, to the extent provided in this Agreement, shall have the rights and obligations of a Lender thereunder and under the other Loan Documents. You may accept this Agreement by signing the enclosed copies in the space provided below, and returning one copy of same to us before the close of business on ___________, _________. If you do not so accept this Agreement by such time, our Additional Revolving Commitment set forth in this Agreement shall be deemed cancelled. After the execution and delivery to the Administrative Agent of a fully executed copy of this Agreement (including by way of counterparts and by facsimile transmission) by the parties hereto, this Agreement may only be changed, modified or varied by written instrument in accordance with the requirements for the modification of Loan Documents pursuant to Section 9.02 of the Credit Agreement. [SIGNATURE PAGE TO FOLLOW] F-2 105 THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS. Very truly yours, [NAME OF LENDER], as an Assuming Lender By: ------------------------------------ Name: ------------------------------- Title: ------------------------------ Agreed and Accepted this ____ day of ___________, _______: TRINITY INDUSTRIES, INC. By: ------------------------ Name: ------------------- Title: ------------------ THE CHASE MANHATTAN BANK, as Administrative Agent By: ------------------------ Name: ------------------- Title: ------------------ F-3 106 ANNEX I TO EXHIBIT F Amount of Additional Name of Lender Revolving Commitment Upfront Fee - -------------- -------------------- ----------- Total: Annex I 107 EXHIBIT G [FORM OF] COMPLIANCE CERTIFICATE _____________, 200__ The Chase Manhattan Bank, as Administrative Agent 2200 Ross Avenue, 3rd Floor Dallas, Texas 75201 Attention: Mike Lister Ladies and Gentlemen: Reference is made to that certain Credit Agreement dated as of June 8, 2001 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the "Credit Agreement"), by and among Trinity Industries, Inc., a Delaware corporation ("Borrower"), the Lenders named therein, The Chase Manhattan Bank, as Administrative Agent to the Lenders ("Administrative Agent"), and the other Agents named therein. Capitalized terms used herein without definition and which are defined in the Credit Agreement shall have the respective meanings assigned to such terms in the Credit Agreement. Pursuant to Section 5.01(c) of the Credit Agreement, the undersigned Financial Officer of Borrower hereby certifies to Administrative Agent as follows: (a) the information furnished in the calculations attached hereto was true and correct as of the last day of the Fiscal [Year] [Quarter] ended _____________; (b) as of the date of this Compliance Certificate, there exists no Default or Event of Default or condition which would, with either or both the giving of notice or the lapse of time, result in a Default of an Event of Default; and (c) the financial statements delivered herewith were prepared in accordance with generally accepted accounting principles applied on a basis consistent with prior periods. IN WITNESS WHEREOF, the undersigned officer has executed this Compliance Certificate as of the date first written above. TRINITY INDUSTRIES, INC. By: --------------------------------- Name: ------------------------------- Title: ------------------------------ G-1 108 COMPLIANCE CERTIFICATE WORKSHEET 1. MINIMUM INTEREST COVERAGE RATIO - SECTION 6.09(a) (a) consolidated net income $ ------------- (b) to the extent deducted in the calculation of consolidated net income, Interest Expense $ ------------- (c) to the extent deducted in the calculation of consolidated net income, depreciation and amortization $ ------------- (d) to the extent deducted in the calculation of consolidated net income, income and franchise tax expenses $ ------------- (e) to the extent deducted in the calculation of consolidated net income, and with respect to Fiscal Year ended March 31, 2001 only, non-cash and cash charges (not to exceed $174,000,000) $ ------------- (f) to the extent deducted in the calculation of consolidated net income, extraordinary gains or losses, including, but not limited to, gains or losses on the disposition of assets (other than in connection with the sale of rail cars from the lease fleet in the ordinary course of business) $ ------------- (g) EBITDA (the sum of items (a), (b), (c), (d) and (e) above, minus item (f) above $ ------------- (h) cash interest payments $ ------------- (i) Interest Coverage Ratio (item (g) above divided by item (h) above) ______ to 1.00 (j) Minimum Interest Coverage Ratio (from Section 6.09(a)) 3.75 to 1.00 2. MAXIMUM LEVERAGE RATIO - SECTION 6.09(b) (a) Indebtedness $ ------------- (b) LC Exposure $ ------------- (c) Existing LC Exposure $ ------------- (d) Total Debt (item (a) above minus the sum of items (b) and (c) above) $ -------------
G-2 109 (e) EBITDA (from item 1(g) above) $ ------------ (f) Leverage Ratio (item (d) above divided by item (e) above) ___________ to 1.00 (g) Maximum Leverage Ratio (from Section 6.09(b)) ___________ 3.00 to 1.00 3. MINIMUM NET WORTH - SECTION 6.09(c) (a) Amount from Section 6.09(c)(i) of the Credit Agreement $ 703,200,000 (b) cumulative consolidated net income $ ------------------ (c) 50% of item (b) above $ ------------------ (d) 100% of net cash proceeds from the issuance of Equity $ ------------------ (e) Consolidated Net Worth $ ------------------ (f) Minimum Consolidated Net Worth (the sum of items (a), (c) and (d) above) $ ------------------ 4. CAPITAL EXPENDITURES - SECTION 6.11 (a) Capital Expenditures (Leasing Company) $ (b) Maximum Capital Expenditures (Leasing Company) per Fiscal Year (from Section 6.11(a)) $ 205,000,000 (c) Capital Expenditures (Non-Leasing Company) $ ------------------ (d) Maximum Capital Expenditures (Non-Leasing Company) per Fiscal Year (from Section 6.11 (b)) $ 85,000,000
G-3 110 SCHEDULE 1.01 EXISTING LETTERS OF CREDIT
BENEFICIARY AMOUNT APPLICANT EXPIRATION ISSUED BY - ----------- ----------- ------------------- ---------- ----------- Pacific Employers Ins. Co. $15,188,291 III Co.(4) 07/01/01 B of A Reliance Natl. Indemnity 10,000,000 III Co.(4) 07/01/01 B of A Reliance Natl. Indemnity 2,000,000 Trinity Industries 07/01/01 B of A Reliance Natl. Indemnity 20,000,000 III Co.(4) 07/01/01 DKB Reliance Natl. Indemnity 10,000,000 III Co.(4) 07/01/01 Scotia Bank Reliance Natl. Indemnity 10,000,000 III Co.(4) 07/01/01 Sun Trust Bureau of Workers 2,900,000 McConway & Torley 03/06/02 Chase Compensation - PA Energas Company 140,000 Transit Mix Concrete 11/05/01 Chase & Materials Hindusthan Development Corp. 146,371 Trinity Industries 10/31/01 Chase Unisign Produktie 392,428 Trinity Industries 08/31/01 Chase Automatisering B.V VTG-Lehnkering 2,952,411(1) Trinity GmbH 06/30/02 Dresdner Tatra Bank 761,400(1) Trinity GmbH 12/15/01 ABN-AMRO Custom House Arad 289,210(2) Astra Vagoane 07/31/01 ABN-AMRO SNP Petrom SA 4,052(1) Astra Vagoane 06/17/01 ABN-AMRO Uzinexportimport SA 14,357 Astra Vagoane 04/15/03 ABN-AMRO Deutsche Bahn Germany 928,946(3) Astra Vagoane 10/15/02 ABN-AMRO OTS Omnia Tranporti Italy 72,448(3) Astra Vagoane 07/15/01 ABN-AMRO Wagonmarket Slovakia 218,426(1) Astra Vagoane 08/31/01 ABN-AMRO Wagonmarket Slovakia 108,131(3) Astra Vagoane 10/30/01 ABN-AMRO Fahrzengtechnik Dessau 199,827(3) Astra Vagoane 10/31/01 ABN-AMRO SNCB-Belgian Natl. Railway 11,041,286(1) Wagonmarket 11/30/02 Tatra Bank SNCB-Belgian Natl. Railway 1,766,878(1) Wagonmarket 10/31/01 Tatra Bank SNCB-Belgian Natl. Railway 996,375(1) Wagonmarket 12/31/01 Tatra Bank SNCB-Belgian Natl. Railway 142,339(1) Wagonmarket 08/30/04 Tatra Bank Custom House Arad 156,424(2) Astra Vagoane 08/31/01 ABN-AMRO Custom House Arad 208,565(2) Astra Vagoane 07/31/01 ABN-AMRO Custom House Arad 1,738(2) Astra Vagoane 01/31/02 ABN-AMRO State Ownership Fund 75,000 Trinity Industries 10/31/01 ABN-AMRO TOTAL $90,704,903
(1) Euros converted to US Dollars @ 06/04/01 Exchange Rate (2) ROL converted to US Dollars @ 06/04/01 Exchange Rate (3) DEM converted to US Dollars @ 06/04/01 Exchange Rate (4) International Industrial Indemnity Co. (Trinity's Captive Insurance Subsidiary) Schedule 1.01 - 1 111 SCHEDULE 2.01 COMMITMENTS
Lender Commitments ------ ----------- The Chase Manhattan Bank $50,000,000 Dresdner Bank AG, New York and Grand Cayman Branches $ 50,000,000 The Bank of Tokyo - Mitsubishi, Ltd. $ 50,000,000 Bank One, NA $ 50,000,000 SunTrust Bank $ 50,000,000 BNP Paribas $ 50,000,000 The Royal Bank of Scotland plc $ 50,000,000 Wachovia Bank, N.A. $ 35,000,000 The Bank of Nova Scotia $ 35,000,000 The Bank of New York $ 25,000,000 Comerica Bank $ 15,000,000 TOTAL: $460,000,000
Schedule 2.01 - 1 112 SCHEDULE 3.06 DISCLOSED MATTERS None, except as disclosed in Borrower's Form 10-K and Form 10-Q reports to the Securities and Exchange Commission. Schedule 3.06 - 1 113 SCHEDULE 3.11 SUBSIDIARIES U. S. COMPANIES BELL TRUCKING COMPANY, INC. State of Incorporation: Texas Date of Incorporation: 12/9/54 Qualified: Texas COLOMBUS EQUIPMENT LEASING COMPANY State of Incorporation: Texas Date of Incorporation: 8/30/96 Qualified: Texas CONCRETE SUPPLY.NET, LLC State of Incorporation: Texas Date of Incorporation: 8/10/00 Qualified: Texas DIFCO, INC. State of Incorporation: Ohio Date of Incorporation: 12/27/54 Qualified: Ohio EXPRESS CONCRETE, INC. State of Incorporation: Texas Date of Incorporation: 8/20/96 Qualified: Texas FLO-BEND, INC. State of Incorporation: Delaware Date of Incorporation: 10/20/93 Qualified: Delaware, Oklahoma GAMBLES, INC. State of Incorporation: Alabama Date of Incorporation: 2/5/88 Qualified: Alabama Schedule 3.11 - 1 114 GREENVILLE STEEL CAR COMPANY, INC. State of Incorporation: Pennsylvania Date of Incorporation: 1/19/93 Qualified: Pennsylvania HACKNEY, INC. State of Incorporation: Texas Date of Incorporation: 1/24/83 Qualified: Texas INDUSTRIALSOUP.COM, INC. State of Incorporation: Delaware Date of Incorporation: 5/3/00 Qualified: Delaware INTERNATIONAL INDUSTRIAL INDEMNITY COMPANY State of Incorporation: Vermont Date of Incorporation: 6/19/90 Qualified: Vermont INVENTORSPORTAL.COM, INC. State of Incorporation: Delaware Date of Incorporation: 5/3/00 Qualified: Delaware IRONOX.COM, INC. State of Incorporation: Delaware Date of Incorporation: 5/3/00 Qualified: Delaware KENTUCKY GALVANIZING, INC. State of Incorporation: Kentucky Date of Incorporation: 6/1/88 Qualified: Kentucky MCT HOLDINGS, DELAWARE, INC. State of Incorporation: Delaware Date of Incorporation: Qualified: Delaware Schedule 3.11 - 2 115 MCT HOLDINGS, INC. State of Incorporation: Maryland Date of Incorporation: Qualified: Maryland MCT PROPERTIES, INC. State of Incorporation: Delaware Date of Incorporation: 7/25/95 Qualified: Delaware MCCONWAY & TORLEY CORPORATION State of Incorporation: Pennsylvania Date of Incorporation: 6/25/40 Qualified: Pennsylvania, Kansas MCCONWAY & TORLEY - ANNISTON, INC. State of Incorporation: Delaware Date of Incorporation: 7/22/97 Qualified: Delaware, Alabama MIDLAND PAVING, INC. State of Incorporation: Delaware Date of Incorporation: 4/20/94 Qualified: Delaware, Texas MOSHER STEEL COMPANY State of Incorporation: Texas Date of Incorporation: 1/24/83 Qualified: Texas PATRIOT CONCRETE PLATZER SHIPYARD, INC. State of Incorporation: Delaware Date of Incorporation: 2/22/93 Qualified: Delaware, Texas REUNION GENERAL AGENCY, INC. State of Incorporation: Texas Date of Incorporation: 12/12/66 Qualified: Texas Schedule 3.11 - 3 116 SOUTH TEXAS CONSTRUCTION, INC. State of Incorporation: Delaware Date of Incorporation: 2/22/93 Qualified: Delaware, Texas STANDARD FORGED PRODUCTS, INC. State of Incorporation: Delaware Date of Incorporation: 7/8/88 Qualified: Delaware, Pennsylvania STANDARD FORGINGS CORPORATION State of Incorporation: Delaware Date of Incorporation: 10/1/68 Qualified: Delaware, Indiana SYRO, INC. State of Incorporation: Ohio Date of Incorporation: 8/14/46 Qualified: Ohio, Utah, Texas TEXAS MCCONWAY & TORLEY, L.P. State of Incorporation: Texas Date of Incorporation: 7/27/95 Qualified: Texas TEXAS METAL FABRICATING, INC. State of Incorporation: Texas Date of Incorporation: 1/24/83 Qualified: Texas TILX LIP, LLC Delaware Limited Liability Company TILX GPI, LLC Delaware Limited Liability Company TRANSCISCO TRADING COMPANY State of Incorporation: Delaware Date of Incorporation: 10/28/89 Qualified: Delaware, California, Texas Schedule 3.11 - 4 117 TRANSIT MIX CONCRETE - BAYTOWN, INC. State of Incorporation: Texas Date of Incorporation: 9/11/98 Qualified: Texas TRANSIT MIX CONCRETE & MATERIALS COMPANY State of Incorporation: Delaware Date of Incorporation: 9/26/91 Qualified: Delaware, Texas, Colorado TRANSIT MIX CONCRETE & MATERIALS COMPANY OF LOUISIANA State of Incorporation: Delaware Date of Incorporation: 4/20/94 Qualified: Delaware, Louisiana TRANSIT MIX CONCRETE & MATERIALS COMPANY OF MIDLAND State of Incorporation: Delaware Date of Incorporation: 4/20/94 Qualified: Delaware, Texas TRIADAS, LLC State of Incorporation: Delaware Date of Incorporation: 7/11/01 Qualified: Delaware TRIMODUS, INC. State of Incorporation: Delaware Date of Incorporation: 5/3/00 Qualified: Delaware TRIN MANUFACTURING SYSTEMS, INC. State of Incorporation: Delaware Date of Incorporation: 12/20/00 Qualified: Delaware Schedule 3.11 - 5 118 TRINITY a-VENTURES, INC. State of Incorporation: Delaware Date of Incorporation: 9/11/00 Qualified: Delaware, Texas TRINITY BALCO, INC. State of Incorporation: Delaware Date of Incorporation: 12/28/89 Qualified: Delaware TRINITY CASTINGS, INC. State of Incorporation: Delaware Date of Incorporation: 7/24/97 Qualified: Delaware TRINITY DIFCO, INC. State of Incorporation: Delaware Date of Incorporation: 8/10/93 Qualified: Delaware, Ohio TRINITY EE, INC. State of Incorporation: Delaware Date of Incorporation: 6/26/97 Qualified: Delaware, Missouri, Texas TRINITY EQUIPMENT CO., INC. State of Incorporation: Delaware Date of Incorporation: 5/6/91 Qualified: Delaware, Texas TRINITY EQUIPMENT MANUFACTURING CO. State of Incorporation: Delaware Date of Incorporation: 7/30/99 Qualified: Delaware, New York, Florida, Texas TRINITY E-VENTURES, INC. State of Incorporation: Delaware Date of Incorporation: 3/17/00 Qualified: Delaware, Texas TRINITY FINANCIAL SERVICES, INC. State of Incorporation: Delaware Date of Incorporation: 8/21/96 Qualified: Delaware Schedule 3.11 - 6 119 TRINITY FITTING & FLANGE GROUP, INC. State of Incorporation: Delaware Date of Incorporation: 8/10/95 Qualified: Delaware, Arkansas, Indiana, Texas, Oklahoma, Mississippi, Kentucky TRINITY HH, INC. State of Incorporation: Delaware Date of Incorporation: 7/22/97 Qualified: Delaware TRINITY HIGHWAY SAFETY PRODUCTS, INC. State of Incorporation: Delaware Date of Incorporation: 7/30/99 Qualified: Delaware TRINITY INDUSTRIES BUFFALO, INC. State of Incorporation: Delaware Date of Incorporation: 6/26/97 Qualified: Delaware, Connecticut, New York, Tennessee, Texas, Alabama TRINITY INDUSTRIES FOUNDATION State of Incorporation: Texas Date of Incorporation: 6/16/99 Qualified: Texas TRINITY INDUSTRIES, INC. State of Incorporation: Delaware Date of Incorporation: 8/4/86 Qualified: Delaware, Alabama, Arizona, Arkansas, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Mississippi, North Carolina, Ohio, Oklahoma, Pennsylvania, Tennessee, Texas TRINITY INDUSTRIES INTERNATIONAL, INC. State of Incorporation: Delaware Date of Incorporation: 4/20/94 Qualified: Delaware TRINITY INDUSTRIES, INC. OF LOUISIANA State of Incorporation: Delaware Date of Incorporation: 12/28/92 Qualified: Delaware, Louisiana TRINITY INDUSTRIES LEASING COMPANY State of Incorporation: Delaware Date of Incorporation: 12/23/87 Qualified: Delaware, Illinois, Texas Schedule 3.11 - 7 120 TRINITY INDUSTRIES RAILCAR CORPORATION State of Incorporation: Delaware Date of Incorporation: 3/14/96 Qualified: Delaware TRINITY INDUSTRIES REAL PROPERTIES, INC. State of Incorporation: Delaware Date of Incorporation: 1/19/93 Qualified: Delaware, Texas, Georgia, Mississippi, Pennsylvania TRINITY INDUSTRIES SECURITY, INC. State of Incorporation: Texas Date of Incorporation: 6/7/84 Qualified: Texas TRINITY INDUSTRIES TRANSPORTATION, INC. State of Incorporation: Texas Date of Incorporation: 12/31/74 Qualified: Arkansas, Kentucky, Louisiana, North Carolina, Missouri, Pennsylvania, Texas, Ohio, Utah TRINITY INFORMATION SYSTEMS, INC. State of Incorporation: Delaware Date of Incorporation: 4/5/93 Qualified: Delaware, Texas TRINITY JJ, INC. STATE OF INCORPORATION: DELAWARE DATE OF INCORPORATION: 10/26/98 QUALIFIED: DELAWARE TRINITY KK, INC. State of Incorporation: Delaware Date of Incorporation: 10/26/98 Qualified: Delaware Schedule 3.11 - 8 121 TRINITY MARINE PRODUCTS, INC. State of Incorporation: Delaware Date of Incorporation: 3/14/96 Qualified: Delaware, Louisiana, Missouri, Tennessee, Kentucky TRINITY MATERIALS, INC. State of Incorporation: Delaware Date of Incorporation: 4/5/93 Qualified: Delaware, Texas TRINITY MINING SERVICES, INC. State of Incorporation: Delaware Date of Incorporation: 9/14/93 Qualified: Delaware, Alabama TRINITY MOBILE RAILCAR REPAIR, INC. State of Incorporation: Delaware Date of Incorporation: 10/20/93 Qualified: Delaware, Arizona, Illinois, Kansas, Louisiana, Nebraska, New Mexico, New York, Ohio, Pennsylvania, Tennessee, Texas, Utah TRINITY Q, INC. State of Incorporation: Delaware Date of Incorporation: 11/1/94 Qualified: Delaware, Ohio TRINITY RAIL, INC. State of Incorporation: Delaware Date of Incorporation: 10/31/85 Qualified: Delaware, Texas, California TRINITY RAIL LEASING I L.P. Texas Limited Partnership TRINITY RAIL MANAGEMENT, INC. State of Incorporation: Delaware Date of Incorporation: 8/2/90 Qualified: Delaware, California, Texas, Washington TRINITY RAIL SERVICES, INC. State of Incorporation: California Date of Incorporation: 2/15/91 Qualified: Georgia, California, Illinois, Iowa, Michigan, Montana, West Virginia, Texas, Missouri Schedule 3.11 - 9 122 TRINITY S-VENTURES, INC. State of Incorporation: Delaware Date of Incorporation: 4/6/00 Qualified: Delaware TRINITY STRUCTURAL TOWERS, INC. State of Incorporation: Delaware Date of Incorporation: 3/17/00 Qualified: Delaware, Texas TRINITY v-ALLIANCES, INC. State of Incorporation: Delaware Date of Incorporation: 9/12/00 Qualified: Delaware TRINSERV ALLIANCE, INC. STATE OF INCORPORATION: DELAWARE DATE OF INCORPORATION: 10/19/00 QUALIFIED: DELAWARE TRIPLE J SECURITIES, INC. State of Incorporation: Delaware Date of Incorporation: 8/21/96 Qualified: Delaware TRN BUSINESS TRUST State of Incorporation: Delaware Date of Incorporation: 3/14/96 Qualified: Delaware TRN, INC. State of Incorporation: Delaware Date of Incorporation: 8/10/95 Qualified: Delaware, Texas TRN INVESTMENT COMPANY State of Incorporation: Delaware Date of Incorporation: 10/25/99 Qualified: Delaware VENTEXE.COM, INC. State of Incorporation: Delaware Date of Incorporation: 7/17/00 Qualified: Delaware Schedule 3.11 - 10 123 WALDORF PROPERTIES, INC. State of Incorporation: Delaware Date of Incorporation: 3/14/96 Qualified: Delaware, Maryland, Alabama Schedule 3.11 - 11 124 FOREIGN COMPANIES APROMAT, S.A. Romania ASTRA VAGOANE ARAD, S.A. Romania TRINITY INDUSTRIES INTERNATIONAL HOLDINGS AG Switzerland MEVA, S.A. Romania TRINITY INDUSTRIES GMBH Switzerland TRINITY ARGENTINA Argentina TRINITY RAIL DO BRAZIL Brazil WAGONMARKET SPOL. S R.O. Slovakia GRUPO TATSA, S DE R.L. DE C.V Mexico TRINITY INDUSTRIES DE MEXICO, S. DE R.L. DE C.V. Mexico OFE, S. DE R.L. DE C.V. Mexico ASISTENCIA PROFESSIONAL CORPORATIVA, S. DE R.L. DE C.V. Mexico Schedule 3.11 - 12 125 SERVICIOS CORPORATIVOS TATSA, S. DE R.L. DE C.V. Mexico Schedule 3.11 - 13 126 MATERIAL SUBSIDIARIES TRANSIT MIX CONCRETE & MATERIALS COMPANY TRINITY INDUSTRIES LEASING COMPANY TRINITY MARINE PRODUCTS, INC. Schedule 3.11 - 14 127 SCHEDULE 3.13 EMPLOYEE MATTERS COLLECTIVE BARGAINING AGREEMENTS
LOCATION UNION - -------- ----- Butler, PA United Steelworkers (USW) Centerville, UT United Steelworkers (USW) Cincinnati, OH United Steelworkers (USW) Cynthiana, KY United Steelworkers (USW) Girard, OH United Steelworkers (USW) Johnstown, PA United Steelworkers (USW) Kutztown, PA Glass, Molders, etc. (McConway & Torley) Russelville, AR Boilermakers
Schedule 3.13 - 1 128 SCHEDULE 6.01 EXISTING INDEBTEDNESS
INTEREST DATE OF DATE BALANCE PAYEE RATE NOTE DUE @ 03/31/01 - ----- -------- -------- -------- ---------- TRINITY Montgomery, AL IRB 9.250% 08/01/80 08/01/05 $ 1,080,000 Pennsylvania Industrial Dev. Authority (PIDA) 6.000 11/18/88 10/01/08 187,994 Highland Parts 8.000 04/04/00 08/01/03 399,078 ----------- 1,667,072 LEASING Equip. Trust Series 8 9.440 09/09/91 09/03/01 13,617,500 Equip. Trust Series 9 8.240 06/30/92 06/30/02 5,147,565 Equip. Trust Series 10 7.650 12/30/92 12/30/02 9,242,091 Equip. Trust Series 11 6.960 06/24/93 06/24/03 6,345,780 Capital Lease (GECC) 11.306 06/01/85 05/31/03 4,162,877 ----------- 38,515,813 MCCONWAY & TORLEY State of Pennsylvania 3.000 02/01/97 02/01/04 215,087 TRINITY INDUSTRIES RAILCAR CORP Transport Capital 8.000 12/15/00 06/30/15 3,021,440 Transport Capital 8.000 12/15/00 06/30/15 422,993 TOTAL $43,842,405
Schedule 6.01- 1 129 SCHEDULE 6.02 EXISTING LIENS Equipment Trust Certificate Financings (Series 8, 9, 10, 11) Capital Lease Financing with GECC Industrial Revenue Bond Financing -- Montgomery, Alabama TRLI Equipment Lease Transaction (SPE) PIDA Financing -- Butler, PA Schedule 6.02 - 1 130 SCHEDULE 6.03 PERMITTED ASSET SALES Assets or Entities where the property listed is substantially all of the assets of a subsidiary.
PROPERTY SUBSIDIARY -------- ---------- Anniston, AL #407 McConway & Torley - Anniston, Inc. Bessemer, AL #(20) 418 Waldorf Properties, Inc. Hamburg, NY #61 Trinity Industries Buffalo, Inc. Findlay, OH #374 Difco, Inc. Houston, TX #44 (Platzer) Platzer Shipyard, Inc. Johnstown, PA #139 Trinity Industries Real Properties, Inc. Leesburg, FL #448 Trinity Equipment Manufacturing Company Springville, NY #445 Trinity Equipment Manufacturing Company
Other Assets Permitted for Sale:
PROPERTY PROPERTY -------- -------- Ackerman, MS #53 Houston, TX #62 Birmingham, AL #66 Houston, TX #05 Cynthiana, KY #369 Jacksonville, FL #12 Dallas, TX Motor Bank Property Kutztown, PA #404 Dallas, TX #74 Mt. Orab, OH #101 Ft. Worth, TX #68 Madisonville, LA Grapevine, TX Montgomery, AL Greenville, PA #102 Texas Gulf Properties
Schedule 6.03 - 1 131 SCHEDULE 6.04 EXISTING INVESTMENTS
REMAINING INVESTMENT COMPANY INTEREST COMMITMENT - ------- -------- ---------- Transport Capital 17.0% $ -0- American Made 35.0 5.0 mil Communispace 3.0 -0- Townsend Tarnell 3.5 -0- GoFigure Technologies 27.0 -0- Vellis Knowledge 25.0 -0- EPCAD 25.0 -0- 7th View 21.0 -0- Q-Hire 15.0 -0- Media Truck 10.0 -0- Alpha Biosystems 17.0 -0- K2Share 50.0 3.4 mil e-World Freight 5.0 -0- Iktan 1.0 -0- Worldo 5.0 -0- Starguide Digital 1.0 -0- Hybrigen 2.0 -0- ----- TOTAL $8.4 MIL =====
Schedule 6.04 - 1 132 SCHEDULE 6.08 EXISTING RESTRICTIONS Equipment Trust Agreements 8, 9, 10 & 11 TRLI Equipment Lease Transaction Schedule 6.08 - 1 EX-21 5 d88339ex21.txt SUBSIDIARIES OF THE REGISTRANT 1 EXHIBIT 21 Trinity Industries, Inc. Listing of Subsidiaries of the Registrant The Registrant has no parent. At March 31, 2001, the operating subsidiaries of the Registrant were:
Percentage of Organized voting securities under the owned by the Name of subsidiary laws of Registrant ------------------ ---------- ----------------- Apromat, S.A Romania 50% Astra Vagoane Arad, S.A Romania 96% Concrete Supply.Net, Inc. Texas 100% International Industrial Indemnity Co. Vermont 100% MCT Holdings, Inc. Delaware 100% McConway and Torley Corporation Pennsylvania 100% MEVA, S.A Romania 95% Reunion General Agency, Inc. Texas 100% S.C. ICPV S.A. - Arad Romania 89% Standard Forged Products, Inc. Delaware 100% Syro, Inc Ohio 100% Transit Mix Concrete - Baytown, Inc. Texas 100% Transit Mix Concrete & Materials Company Delaware 100% Transit Mix Concrete & Materials Company of Louisiana Louisiana 100% Triadas, LLC Delaware 100% Trinity Argentina S.R.L Argentina 100% Trinity DIFCO, Inc Delaware 100% Trinity E-Ventures, Inc. Delaware 100% Trinity Equipment Co., Inc Delaware 100% Trinity Fitting & Flange Group, Inc. Delaware 100% Trinity Industries Buffalo, Inc. Delaware 100% Trinity Industries de Mexico, S. de R.L. de C.V Mexico 100% Trinity Industries GmbH Switzerland 100% Trinity Industries International Holdings AG Switzerland 100% Trinity Industries Leasing Company Delaware 100% Trinity Industries Rail do Brasil Brazil 100% Trinity Industries Real Properties, Inc. Delaware 100% Trinity Industries Transportation, Inc. Texas 100% Trinity Marine Products, Inc. Delaware 100% Trinity Materials, Inc. Delaware 100% Trinity Mobile Railcar Repair, Inc. Delaware 100% Trinity Rail, Inc. Delaware 100% Trinity Rail Management, Inc. Delaware 100% Trinity Rail Services, Inc. California 100% Trin Manufacturing Systems, Inc. Delaware 100% Trinserv Alliance, Inc. Delaware 100% Waldorf Properties, Inc. Delaware 100% Wagonmarket, SPOL. S R.O Slovakia 100%
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