-----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, Cs5tmXIsfertZsgZ0KNCSZevCW5J8ijFpx6UjKYiX7lADaJiJ0uz4SDA71ECm5A6 rQXwll4b9Jj7w6dfxUClaQ== 0000950134-02-009531.txt : 20020812 0000950134-02-009531.hdr.sgml : 20020812 20020812172015 ACCESSION NUMBER: 0000950134-02-009531 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20020812 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: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06903 FILM NUMBER: 02727616 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-Q 1 d98842e10vq.txt FORM 10-Q FOR QUARTER ENDED JUNE 30, 2002 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM 10-Q ---------- (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002 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 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 [ ]. AT JULY 31, 2002 THERE WERE 45,900,144 SHARES OF THE REGISTRANT'S COMMON STOCK OUTSTANDING. TRINITY INDUSTRIES, INC. FORM 10-Q TABLE OF CONTENTS
CAPTION PAGE --------------------------------------------------------- ---- PART I FINANCIAL INFORMATION Item 1. Financial Statements..................................... 3 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...................... 14 Item 3. Quantitative and Qualitative Disclosures about Market Risks ................................................... 22 PART II OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders...... 23 Item 6. Exhibits and Reports on Form 8-K......................... 24
2 ITEM 1. FINANCIAL STATEMENTS TRINITY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2002 2001 --------------- --------------- (UNAUDITED) (IN MILLIONS EXCEPT PER SHARE AMOUNTS) Revenues .............................................. $ 366.0 $ 467.6 Operating costs: Cost of revenues .................................... 322.1 402.3 Selling, engineering and administrative expenses ......................................... 40.7 42.7 --------------- --------------- 362.8 445.0 --------------- --------------- Operating profit ...................................... 3.2 22.6 Other (income) expense: Interest income ..................................... (0.3) (1.7) Interest expense .................................... 10.3 7.6 Other, net .......................................... 0.9 1.0 --------------- --------------- 10.9 6.9 --------------- --------------- Income (loss) before income taxes ..................... (7.7) 15.7 Provision (benefit) for income taxes: Current ............................................. (16.3) (5.1) Deferred ............................................ 14.3 11.2 --------------- --------------- (2.0) 6.1 --------------- --------------- Net income (loss) ..................................... $ (5.7) $ 9.6 =============== =============== Net income (loss) per common share: Basic ............................................... $ (0.13) $ 0.26 =============== =============== Diluted ............................................. $ (0.13) $ 0.26 =============== =============== Weighted average number of shares outstanding: Basic ............................................... 45.5 37.0 Diluted ............................................. 45.5 37.1
See accompanying notes to consolidated financial statements. 3 TRINITY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2002 2001 --------------- --------------- (UNAUDITED) (IN MILLIONS EXCEPT PER SHARE AMOUNTS) Revenues .............................................. $ 750.3 $ 886.3 Operating costs: Cost of revenues .................................... 670.1 827.6 Selling, engineering and administrative expenses ......................................... 81.2 94.3 --------------- --------------- 751.3 921.9 --------------- --------------- Operating loss ........................................ (1.0) (35.6) Other (income) expense: Interest income ..................................... (0.6) (3.1) Interest expense .................................... 17.3 15.2 Other, net .......................................... 1.4 (1.3) --------------- --------------- 18.1 10.8 --------------- --------------- Loss before income taxes .............................. (19.1) (46.4) Provision (benefit) for income taxes: Current ............................................. (41.3) (19.1) Deferred ............................................ 36.5 2.8 --------------- --------------- (4.8) (16.3) --------------- --------------- Net loss .............................................. $ (14.3) $ (30.1) =============== =============== Net loss per common share: Basic ............................................... $ (0.32) $ (0.81) =============== =============== Diluted ............................................. $ (0.32) $ (0.81) =============== =============== Weighted average number of shares outstanding: Basic ............................................... 44.5 37.0 Diluted ............................................. 44.5 37.0
See accompanying notes to consolidated financial statements. 4 TRINITY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET
JUNE 30, DECEMBER 31, 2002 2001 ----------- ----------- (UNAUDITED) (IN MILLIONS) ASSETS Cash and cash equivalents ....................................... $ 10.6 $ 22.2 Receivables, net of allowance ................................... 213.6 204.3 Inventories: Raw materials and supplies .................................. 133.0 159.5 Work in process ............................................. 44.6 42.4 Finished goods .............................................. 67.1 73.3 ----------- ----------- 244.7 275.2 Property, plant and equipment, at cost .......................... 1,516.2 1,434.9 Less accumulated depreciation ................................... (610.6) (555.8) ----------- ----------- 905.6 879.1 Goodwill ........................................................ 416.0 415.7 Other assets .................................................... 140.8 155.5 ----------- ----------- $ 1,931.3 $ 1,952.0 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accrued liabilities ........................ $ 377.4 $ 424.9 Long-term debt .................................................. 454.9 476.3 Other liabilities ............................................... 69.8 41.4 ----------- ----------- 902.1 942.6 Stockholders' equity: Common stock -- shares issued and outstanding at June 30, 2002 -- 50.9; at December 31, 2001 - 51.0 ......... 50.9 51.0 Capital in excess of par value ................................ 442.2 464.7 Retained earnings ............................................. 683.5 703.4 Accumulated other comprehensive loss .......................... (18.4) (26.0) Treasury stock (5.0 shares at June 30, 2002 and 6.6 shares at December 31, 2001) ............................... (129.0) (183.7) ----------- ----------- 1,029.2 1,009.4 ----------- ----------- $ 1,931.3 $ 1,952.0 =========== ===========
See accompanying notes to consolidated financial statements. 5 TRINITY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2002 2001 ----------- ----------- (UNAUDITED) (IN MILLIONS) Operating activities: Net loss ................................................................ $ (14.3) $ (30.1) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization ....................................... 42.0 45.4 Deferred income taxes .............................................. 36.5 2.8 Gain on sale of property, plant, equipment and other assets .................................................... (0.4) (1.2) Unusual charges .................................................... -- 55.8 Other .............................................................. 1.4 (5.0) Changes in assets and liabilities, net of effects from acquisitions and unusual charges: Increase in receivables ..................................... (9.3) (37.2) Decrease in inventories ..................................... 30.5 71.9 Decrease in other assets .................................... 14.7 20.6 Decrease in accounts payable and accrued liabilities ........ (39.5) (62.2) Increase (decrease) in other liabilities .................... (8.1) 1.2 ---------- ---------- Total adjustments .......................................... 67.8 92.1 ---------- ---------- Net cash provided by operating activities ................................. 53.5 62.0 ---------- ---------- Investing activities: Proceeds from sale of property, plant, and equipment .................... 2.2 98.2 Capital expenditures .................................................... (66.3) (158.8) Payment for purchase of acquisitions, net of cash acquired .............. -- 0.2 ---------- ---------- Net cash required by investing activities ............................... (64.1) (60.4) ---------- ---------- Financing activities: Issuance of common stock ................................................ 31.2 -- Net borrowings of short-term debt ....................................... -- 15.4 Payments to retire long-term debt ....................................... (380.4) (7.4) Proceeds from issuance of long-term debt ................................ 359.0 -- Dividends paid .......................................................... (10.8) (13.2) ---------- ---------- Net cash used by financing activities ................................... (1.0) (5.2) ---------- ---------- Net decrease in cash and cash equivalents ................................. (11.6) (3.6) Cash and cash equivalents at beginning of period .......................... 22.2 14.8 ---------- ---------- Cash and cash equivalents at end of period ................................ $ 10.6 $ 11.2 ========== ==========
See accompanying notes to consolidated financial statements. 6 TRINITY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
COMMON COMMON CAPITAL ACCUMULATED SHARES STOCK IN EXCESS OTHER (100,000,000 $1.00 PAR OF PAR RETAINED COMPREHENSIVE AUTHORIZED) VALUE VALUE EARNINGS LOSS ----------- ----------- ----------- ----------- ----------- (IN MILLIONS EXCEPT SHARE AND PER SHARE DATA) Balance at December 31, 2001 ................ 50,946,351 $ 51.0 $ 464.7 $ 703.4 $ (26.0) Net loss .................................. -- -- -- (14.3) -- Currency translation adjustments ............................. -- -- -- -- 4.8 Unrealized gain on derivative financial instruments and foreign exchange contracts................................ -- -- -- -- 2.8 Comprehensive loss ................ Cash dividends ($0.12 per share) .................................. -- -- -- (5.6) -- Stock issued .............................. -- -- (19.9) -- -- Other ..................................... (8,129) (0.1) (2.6) -- -- ----------- ----------- ----------- ----------- ----------- Balance at June 30, 2002 .................... 50,938,222 $ 50.9 $ 442.2 $ 683.5 $ (18.4) =========== =========== =========== =========== =========== TREASURY TOTAL TREASURY STOCK AT STOCKHOLDERS' SHARES COST EQUITY ----------- ----------- ------------- (IN MILLIONS EXCEPT SHARE AND PER SHARE DATA) Balance at December 31, 2001 ................ (6,608,522) $ (183.7) $ 1,009.4 Net loss .................................. -- -- (14.3) Currency translation adjustments ............................. -- -- 4.8 Unrealized gain on derivative financial instruments and foreign exchange contracts................................ -- -- 2.8 ----------- Comprehensive loss ................ (6.7) Cash dividends ($0.12 per share) .................................. -- -- (5.6) Stock issued .............................. 1,500,000 51.1 31.2 Other ..................................... 68,813 3.6 0.9 ----------- ----------- ----------- Balance at June 30, 2002 .................... (5,039,709) $ (129.0) $ 1,029.2 =========== =========== ===========
See accompanying notes to consolidated financial statements. 7 TRINITY INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1. BASIS OF PRESENTATION The foregoing consolidated financial statements are unaudited and have been prepared from the books and records of Trinity Industries, Inc. and subsidiaries ("Trinity" or the "Company"). We changed our year-end in 2001 from March 31 to December 31. In the opinion of management, all adjustments, consisting only of normal and recurring adjustments necessary for a fair presentation of the financial position of the Company as of June 30, 2002 and the results of operations for the three-month and six-month periods ended June 30, 2002 and 2001 and cash flows for the six-month periods ended June 30, 2002 and 2001, in conformity with generally accepted accounting principles, have been made. Because of seasonal and other factors, the results of operations for the three-month and six-month periods ended June 30, 2002 may not be indicative of expected results of operations for the year ending December 31, 2002. These interim financial statements and notes are condensed as permitted by the instructions to Form 10-Q and should be read in conjunction with the audited consolidated financial statements of the Company included in its Form 10-K Report for the nine months ended December 31, 2001. NOTE 2. UNUSUAL CHARGES In the three months ended March 31, 2001, 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. Restructuring reserve activity for the six months ended June 30, 2002 is:
RESERVES RESERVES DECEMBER 31, JUNE 30, 2001 PAYMENT RECLASSIFICATIONS 2002 ------------- ------------- ----------------- ------------- (in millions) Property, plant & equipment -- write-downs to net realizable value to be disposed of and related shut-down costs and other asset write downs ...................................... $ 18.9 $ 6.0 $ 3.4 $ 9.5 Environmental liabilities .......................... 11.1 0.1 -- 11.0 Severance costs .................................... 4.9 1.4 -- 3.5 Adverse jury verdict ............................... 14.8 -- -- 14.8 Asset-write downs and exit cost related to wholly owned businesses ................................. 0.2 0.2 -- -- Other .............................................. 3.2 0.9 -- 2.3 ------------- ------------- ------------- ------------- $ 53.1 $ 8.6 $ 3.4 $ 41.1 ============= ============= ============= =============
NOTE 3. SEGMENT INFORMATION As of December 31, 2001, the Company modified its segment reporting to align the reportable segments with current management responsibilities and internal reporting. The new reporting format includes the following business segments: (1) the Trinity Rail group, which manufactures and sells railcars and component parts; (2) the Construction Products group, which manufactures and sells highway guardrail and safety products, concrete and aggregate, girders and beams used in the construction of highway and railway bridges and weld fittings used in pressure piping systems; (3) the Inland Barge group, which manufactures and sells barges and related products for inland waterway services; (4) the Industrial Products group, which manufactures and sells container heads and pressure and non-pressure containers for the storage and transportation of liquefied gases and other liquid and dry products; and (5) the Trinity Railcar Leasing and Management Services group, which provides services such as fleet management and leasing. Finally, All Other includes the Company's captive insurance and transportation companies, structural towers, and other peripheral businesses. 8 Sales from Trinity Rail group to Trinity Railcar Leasing and Management Services group are recorded in Trinity Rail group and eliminated in consolidation. Sales of railcars from the lease fleet are included in the Trinity Railcar Leasing and Management Services group segment. Sales among groups are recorded at prices comparable to external customers. THREE MONTHS ENDED JUNE 30, 2002
REVENUES OPERATING ------------------------------------- PROFIT OUTSIDE INTERSEGMENT TOTAL (LOSS) ---------- ------------ ---------- ---------- (IN MILLIONS) Rail Group ................... $ 101.1 $ 38.3 $ 139.4 $ (12.8) Construction Products Group .. 146.0 0.2 146.2 17.2 Inland Barge Group ........... 57.9 -- 57.9 1.1 Industrial Products Group .... 32.4 0.5 32.9 (1.6) Railcar Leasing and Management Services Group ............. 26.9 -- 26.9 7.1 All Other .................... 1.7 6.5 8.2 (0.9) Eliminations & Corporate Items ...................... -- (45.5) (45.5) (6.9) ---------- ---------- ---------- ---------- Consolidated Total ........... $ 366.0 $ -- $ 366.0 $ 3.2 ========== ========== ========== ==========
THREE MONTHS ENDED JUNE 30, 2001
REVENUES OPERATING ------------------------------------- PROFIT OUTSIDE INTERSEGMENT TOTAL (LOSS) ---------- ------------ ---------- ---------- (IN MILLIONS) Rail Group ........................ $ 187.9 $ 50.4 $ 238.3 $ 4.0 Construction Products Group ....... 155.7 2.1 157.8 16.8 Inland Barge Group ................ 49.6 -- 49.6 2.9 Industrial Products Group ......... 31.0 0.7 31.7 (0.4) Railcar Leasing and Management Services Group .................. 26.5 -- 26.5 10.1 All Other ......................... 16.9 10.1 27.0 (3.2) Eliminations & Corporate Items .... -- (63.3) (63.3) (7.6) ---------- ---------- ---------- ---------- Consolidated Total ................ $ 467.6 $ -- $ 467.6 $ 22.6 ========== ========== ========== ==========
9 SIX MONTHS ENDED JUNE 30, 2002
REVENUES OPERATING ---------------------------------------------- PROFIT OUTSIDE INTERSEGMENT TOTAL (LOSS) ------------- ------------- ------------- ------------- (IN MILLIONS) Rail Group ........................ $ 251.7 $ 58.8 $ 310.5 $ (25.0) Construction Products Group ....... 258.6 0.7 259.3 24.7 Inland Barge Group ................ 119.1 -- 119.1 3.0 Industrial Products Group ......... 63.1 1.1 64.2 (0.7) Railcar Leasing and Management Services Group .................. 53.6 -- 53.6 14.2 All Other ......................... 4.2 13.2 17.4 (3.8) Eliminations & Corporate Items ........................... -- (73.8) (73.8) (13.4) ------------- ------------- ------------- ------------- Consolidated Total ................ $ 750.3 $ -- $ 750.3 $ (1.0) ============= ============= ============= =============
SIX MONTHS ENDED JUNE 30, 2001
REVENUES OPERATING ---------------------------------------------- PROFIT OUTSIDE INTERSEGMENT TOTAL (LOSS) ------------- ------------- ------------- ------------- (IN MILLIONS) Rail Group ........................ $ 366.6 $ 165.1 $ 531.7 $ (34.6) Construction Products Group ....... 272.3 3.6 275.9 20.1 Inland Barge Group ................ 108.0 0.1 108.1 4.7 Industrial Products Group ......... 64.2 6.0 70.2 (1.5) Railcar Leasing and Management Services Group .................. 46.6 -- 46.6 17.9 All Other ......................... 28.6 25.9 54.5 (17.9) Eliminations & Corporate Items .... -- (200.7) (200.7) (24.3) ------------- ------------- ------------- ------------- Consolidated Total ................ $ 886.3 $ -- $ 886.3 $ (35.6) ============= ============= ============= =============
NOTE 4. GOODWILL The Company adopted SFAS No. 142, Goodwill and Other Intangible Assets, effective April 1, 2001. Under SFAS No. 142, goodwill is no longer amortized but reviewed for impairment annually or more frequently if certain indicators arise. The Company has completed the impairment test required upon adoption of SFAS No. 142 and determined there is no impairment to its recorded goodwill balances. There has been no material change in the carrying amount of the Company's goodwill for the six months ended June 30, 2002. Had the Company been accounting for its goodwill under SFAS No. 142 for the six months ended June 30, 2001, the Company's net loss and loss per share would have been reduced by $0.6 million and $0.02 per share. 10 NOTE 5. DEBT
JUNE 30, DECEMBER 31, 2002 2001 ------------- ------------- (IN MILLIONS) Revolving commitment ............................................ $ 80.0 $ 288.0 Term commitment ................................................. 150.0 -- Warehouse facility .............................................. 37.5 -- 6.0-9.25 percent industrial development revenue bonds payable in varying amounts through 2005 ................................. 1.0 1.0 3.0-8.0 percent promissory notes, generally payable annually through 2005 .................................................... 3.8 4.0 6.96-9.44 percent equipment trust certificates to institutional investors generally payable in semi-annual installments of varying amounts through 2003 ................... 9.3 10.5 7.755 percent equipment trust certificates to institutional investors generally payable in semi-annual installments of varying amounts through 2009 .................................. 170.0 170.0 11.3 percent notes payable monthly through 2003 ................. 1.9 2.8 Other ........................................................... 1.4 -- ------------- ------------- $ 454.9 $ 476.3 ============= =============
In June 2002, the Company completed a secured credit agreement for $425 million. The agreement includes a $275 million 3-year revolving commitment and a $150 million 5-year term commitment. The agreement calls for quarterly payments of principal on the term debt in the amount of $0.375 million beginning September 30, 2002 through June 30, 2006 and $36.0 million beginning on September 30, 2006 and ending on the maturity date. Amounts borrowed under the revolving commitment bear interest at LIBOR plus 2.00% (3.84% at June 30, 2002). Amounts borrowed under the term commitment bear interest at LIBOR plus 3.00% (4.84% at June 30, 2002). The agreement is secured by a portion of the Company's accounts receivable and inventory and a portion of its property, plant and equipment. The agreement limits the amount of capital expenditures related to the Company's leasing business, requires maintenance of ratios related to interest coverage, leverage, asset coverage, and minimum net worth and restricts the amount of dividend payments. At June 30, 2002, $230 million was borrowed under this agreement and $102.5 million was available under the facility, net of $92.5 million of letters of credit. At June 30, 2002, the most restrictive of the debt covenants based on trailing twelve month calculations as defined by the debt agreements allow $119.0 million additional principal and $15.6 million additional annual interest expense. Company projections through December 31, 2002 indicate compliance with all covenants. In June 2002 the Company's wholly-owned subsidiary Trinity Industries Leasing Company ("TILC") through a newly formed, wholly owned, business trust entered into a $200 million nonrecourse warehouse facility to finance or refinance railcars acquired or owned by TILC. The facility is secured by specific railcars and the underlying leases. Advances under the facility may not exceed 75% of the fair market value of the railcars securing the facility less any excluded assets as defined by the agreement. Advances under the facility bear interest at LIBOR plus 1.775% (3.635% at June 30, 2002) and are due no later than 30 months from the commencement date of the facility. At June 30, 2002, $162.5 million was available under this facility. The Company's wholly-owned subsidiary, TILC, sold $170,000,000 of 2002-1 Pass Through Certificates with interest at 7.755%, commencing on August 15, 2002 and due semiannually thereafter. Equipment notes issued by TILC for the benefit of the holders of the Pass Through Certificates are collateralized by interest in certain railcars owned by TILC and the leases pursuant to which such railcars are leased to customers. The equipment notes, including the obligations to make payments of principal and interest thereon are direct obligations of TILC and are fully and unconditionally guaranteed by Trinity Industries, Inc. as guarantor. 11 The proceeds of $170 million from the issuance of the equipment notes were used to repay outstanding indebtedness of Trinity as of December 31, 2001. Principal payments due during the next five years as of June 30, 2002, including the above Pass Through Certificates, are (in millions) 2003 - $14.6; 2004 - $26.3; 2005 - $134.0; 2006 - $12.3; 2007 - $187.7; and $80.0 thereafter. NOTE 6. STOCKHOLDERS' EQUITY On March 6, 2002, Trinity privately placed a total of 1.5 million unregistered shares of its common stock for net proceeds of $31.3 million. Trinity has now registered these shares. NOTE 7. DEPOSIT AGREEMENT The Company entered into a deposit agreement with Altos Hornos de Mexico, SA de C.V. ("AHMSA") which provides for funds to be deposited with AHMSA which are then used along with other funds from the Company to purchase steel from AHMSA. As of June 30, 2002, total funds on deposit including interest due amounted to approximately $42.5 million. Since May 1999 AHMSA has been operating under a judicial declaration of suspension of payments, which under applicable Mexican law, allows companies in Mexico to (1) seek a debt restructuring agreement with their creditors in an orderly fashion; (2) continue their operations; and (3) avoid declaration of bankruptcy and liquidation of assets. Should AHMSA not be able to operate under the declaration of suspension of payments because of its financial condition, AHMSA's creditors have no access to the funds on deposit and all funds on deposit with AHMSA under Mexican law should be returned to the Company. NOTE 8. OTHER, NET Other (income) expense consists of the following items (in millions):
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------------ ------------------------ 2002 2001 2002 2001 ---------- ---------- ---------- ---------- Gain on sale of property, plant and equipment ............. $ (0.2) $ -- $ (0.4) $ (1.2) Foreign exchange transactions .................... 0.8 0.5 1.0 (0.3) Loss on equity investments ..................... 0.3 0.6 1.0 0.7 Other ............................. -- (0.1) (0.2) (0.5) ---------- ---------- ---------- ---------- Other, net ...................... $ 0.9 $ 1.0 $ 1.4 $ (1.3) ========== ========== ========== ==========
NOTE 9. CONTINGENCIES In May 2002, a lawsuit was filed against the Company and a coating manufacturer by a tank barge customer seeking recovery of damages related to the customer's corrosion problem with eighteen barges purchased from the Company's Inland Barge Division. The total purchase price of the barges was $27.6 million. The Company believes that the claims are without merit. Issues raised by this litigation have created uncertainty in the industry regarding barge corrosion and its causes. As a result, the Company has had communications with customers ranging from inquiries to threatened litigation. The Company has been gathering substantial scientific and other pertinent data. While management believes, based on this data, the effect of this litigation and issues raised by the litigation related to other customers on the Company's financial position and results of operations will not be material for financial reporting purposes, the ultimate resolution is uncertain. In May of 2001, a judgment 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 judgment was accrued by the Company in fiscal 2001. The judgement is currently under appeal by the Company. 12 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, their claims and suits in the aggregate will not have a material adverse effect on the Company's consolidated financial statements. NOTE 10. ACCOUNTING CHANGES In October 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which is effective for fiscal years beginning after December 15, 2001. SFAS 144 addresses accounting and reporting of long-lived assets, except goodwill, that are held and used or disposed of through sale or other means. The Company adopted SFAS 144 as of January 1, 2002. There was no impact to the Company's financial statements. 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. GENERAL The following discussion should be read in conjunction with the unaudited consolidated financial statements and related notes thereto appearing elsewhere in this document Trinity is one of the nation's leading diversified industrial companies providing a variety of high volume, repetitive products and services for the transportation, industrial and construction sectors of the marketplace. We compete in cyclical markets and are continuously looking for opportunities to improve our competitive positions. In October 2001, we completed our merger transaction with privately owned Thrall Car Manufacturing Company (Thrall). This merger combines Trinity's strength in tank car production, Thrall's strength in auto rack manufacturing and research and development expertise across the entire spectrum of railcars. Due to the integration of Trinity and Thrall's operations, separate financial information for Thrall only is not available. During the quarter ended June 30, 2002 the Company signed a managed services contract to implement a new financial system and to outsource certain accounting and processing activities. While expected to produce an overall savings, this project is expected to add five to ten cents per share in incremental costs related to training and other transition costs over the next twelve months. The timing of the charges will depend on project progress but one to two cents per share of the front-end costs may be incurred in the quarter ending September 30, 2002. During the quarter ended June 30, 2002 the Company renewed its major insurance policies. Based on these renewals, premium increases will cost the equivalent of approximately 5 cents per share for the remainder of the current year. UNUSUAL CHARGES During the three months ended March 31, 2001, Trinity recorded special pretax charges of approximately $55.8 million, $35.7 million net of 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 May 14, 2001. All of these charges were charged to operating profit. These charges are reflected in the following income statement categories and segments for the six months end June 30, 2001. (in millions).
RAILCAR LEASING & CONSTRUCTION INLAND INDUSTRIAL MANAGEMENT CORPORATE RAIL PRODUCTS BARGE PRODUCTS SERVICES & OTHER TOTAL ----------- ----------- ----------- ----------- ----------- ----------- ----------- Cost of revenues ....................... $ 45.9 $ -- $ -- $ -- $ -- $ 8.0 $ 53.9 Selling, engineering & administrative... 1.3 -- -- -- -- 0.6 1.9 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Charged to operating profit ........... 47.2 -- -- -- -- 8.6 55.8 Operating profit (loss) before charges.. 12.6 20.1 4.7 (1.5) 17.9 (33.6) (20.2) ----------- ----------- ----------- ----------- ----------- ----------- ----------- Operating profit (loss) reported ....... $ (34.6) $ 20.1 $ 4.7 $ (1.5) $ 17.9 $ (42.2) $ (35.6) =========== =========== =========== =========== =========== =========== ===========
THREE MONTHS ENDED JUNE 30, 2002 COMPARED WITH THREE MONTHS ENDED JUNE 30, 2001 - -- RESULTS OF OPERATIONS Revenues decreased $101.6 million to $366.0 million for the three months ended June 30, 2002 compared to $467.6 million for the three months ended June 30, 2001, a decrease of 21.7%. The decline in revenues was due to the reduction in railcar shipments and a reduction in the Construction Products and All Other groups due to exiting certain lines of business. A temporary halt in the wind towers business also added to the decline in total revenues and revenues in the All Other group. 14 The following table reconciles the revenue amounts discussed under each segment with the consolidated total revenues (in millions).
THREE MONTHS ENDED JUNE 30, 2002 THREE MONTHS ENDED JUNE 30, 2001 ---------------------------------------- ---------------------------------------- REVENUES REVENUES OUTSIDE INTERSEGMENT TOTAL OUTSIDE INTERSEGMENT TOTAL ----------- ------------ ----------- ----------- ------------ ----------- Rail Group ........................... $ 101.1 $ 38.3 $ 139.4 $ 187.9 $ 50.4 $ 238.3 Construction Products Group .......... 146.0 0.2 146.2 155.7 2.1 157.8 Inland Barge Group ................... 57.9 -- 57.9 49.6 -- 49.6 Industrial Products Group ............ 32.4 0.5 32.9 31.0 0.7 31.7 Railcar Leasing and Management ........................... 26.9 -- 26.9 26.5 -- 26.5 Services Group All Other ............................ 1.7 6.5 8.2 16.9 10.1 27.0 Eliminations & Corporate Items........ -- (45.5) (45.5) -- (63.3) (63.3) ----------- ----------- ----------- ----------- ----------- ----------- Consolidated Total ................... $ 366.0 $ -- $ 366.0 $ 467.6 $ -- $ 467.6 =========== =========== =========== =========== =========== ===========
Operating profit decreased $19.4 million to $3.2 million for the three months ended June 30, 2002 compared to $22.6 million for the same period in 2001. Reduced revenues and unabsorbed overhead due to lower volumes caused operating losses in the Rail group. Operating profit for the Inland Barge group was adversely impacted by $0.9 million in cost incurred related to litigation initiated by a tank barge customer in May. The operating loss in the Industrial Products group increased due to a $2.2 million reserve established for a long-term LPG equipment lease receivable from a customer who began operating under bankruptcy protection during the quarter. Selling, engineering and administrative expenses decreased $2.0 million to $40.7 million for the three months ended June 30, 2002 compared to $42.7 million for the comparable period in 2001, a decrease of 4.7%. The decrease was a result of lower head count and cost reduction efforts. Interest expense, net of interest income, increased $4.1 million to $10.0 million for the three months ended June 30, 2002 compared to $5.9 million for the same period in 2001, an increase of 69.5%. The increase was attributable to a change in rates, to charging off debt issuance costs of $1.3 million related to debt that was replaced with other credit facilities in the current period and lower interest income. Other, net was an expense of $0.9 million for the three months ended June 30, 2002 compared to expense of $1.0 million for the comparable period in 2001 The current year effective tax rate of 26.0% is primarily due to the absence of tax benefits on certain foreign losses. Net loss for the three months ended June 30, 2002 was $5.7 million, or $0.13 per diluted share as compared to net income of $9.6 million, or $0.26 per diluted share, for the same period in 2001. TRINITY RAIL GROUP
THREE MONTHS ENDED JUNE 30, --------------------------- 2002 2001 ----------- ----------- (IN MILLIONS) Revenues .................................................................. $ 139.4 $ 238.3 Operating profit (loss) ................................................... $ (12.8) $ 4.0 Operating profit (loss) margin ............................................ (9.2)% 1.7%
15 Revenues declined 41.5% for the three months ended June 30, 2002 compared to the same period in 2001. This decline is due to the current downturn in the North American railcar market. Railcar units shipped dropped approximately 69% compared to the prior year to approximately 1,000 cars. Operating profit margins were impacted by the inefficiencies of lower production levels and price pressures in the current competitive environment. With the current railcar market, our domestic shipments are expected to be 4,000 to 5,000 in 2002. In the three months ended June 30, 2002, railcar sales to Trinity Industries Leasing Company included in the Rail Group results were $37.0 million compared to $48.1 million in the comparable period in 2001 with operating profit of $1.4 million compared to $2.6 million for the same period in 2001. Sales to Trinity Industries Leasing Company and related profits are eliminated in consolidation. In connection with the consolidation of our European railcar operations and the expected completion of a major contract by year end at our United Kingdom facility, we are preparing to close the facility at the end of the current year. As a result, we will have a short-term step-up in deliveries and profitability. This facility produced revenues of $21.9 million in the current quarter with an operating profit of $1.1 million. The Company has provided for estimated closing costs. CONSTRUCTION PRODUCTS GROUP
THREE MONTHS ENDED JUNE 30, -------------------------- 2002 2001 ----------- ----------- (IN MILLIONS) Revenues .......................... $ 146.2 $ 157.8 Operating profit .................. $ 17.2 $ 16.8 Operating profit margin ........... 11.8% 10.6%
Revenues declined 7.4% for the three months ended June 30, 2002 compared to the same period in 2001. The decrease in revenues was primarily due to the closure of two under performing concrete and aggregate locations in Louisiana and, to a lesser extent, continued foreign competition in the fittings business. Operating profit margins increased as a result of cost reduction in the concrete and aggregates and efficiency improvements in the bridge business partially offset by steel cost increases in the highway and safety business not passed on to customers in the quarter. INLAND BARGE GROUP
THREE MONTHS ENDED JUNE 30, -------------------------- 2002 2001 ----------- ----------- (IN MILLIONS) Revenues ............................ $ 57.9 $ 49.6 Operating profit .................... $ 1.1 $ 2.9 Operating profit margin ............. 1.9% 5.8%
Revenues increased 16.7% for the three months ended June 30, 2002 compared to the same period in 2001. The increase in revenues was primarily attributable to increased deliveries of hopper barges. Operating profit was adversely impacted by $0.9 million in cost incurred related to litigation initiated by a tank barge customer in May 2002. 16 INDUSTRIAL PRODUCTS GROUP
THREE MONTHS ENDED JUNE 30, --------------------------- 2002 2001 ----------- ----------- (IN MILLIONS) Revenues ............................ $ 32.9 $ 31.7 Operating profit (loss) ............. $ (1.6) $ (0.4) Operating profit (loss) margin ...... (4.9)% (1.3)%
Revenues increased 3.8% for the three months ended June 30, 2002 compared to the same period in 2001. The increase in revenues is primarily due to a return to more normal demand levels in the Mexico liquefied petroleum gas market. Operating losses increased due to a $2.2 million reserve established for a long-term LPG equipment lease receivable from a customer who began operating under bankruptcy protection during the quarter. Margins in this business have been hurt by reduced demand in the container head business, which is affected by the railcar business and the petrochemical industry. RAILCAR LEASING AND MANAGEMENT SERVICES GROUP
THREE MONTHS ENDED JUNE 30, -------------------------- 2002 2001 ----------- ----------- (IN MILLIONS) Revenues ................................. $ 26.9 $ 26.5 Operating profit ......................... $ 7.1 $ 10.1 Operating profit margin .................. 26.4% 38.1%
Revenues for this group include railcar lease revenue and management fees as well as sales of railcars from our lease fleet. Railcar lease revenue and management fees increased $5.8 million over prior year due to the increase in the size of the lease fleet that includes both on-balance sheet railcars and railcars we lease under operating leases. Operating profit was down due to the increased size of the fleet that we lease compared to the fleet we own. This shift resulted from the fact that, in the March quarter a year ago, we were building a substantial portfolio of lease cars that were subsequently moved from owned cars to leased cars later in the year in a sale and leaseback transaction described in our report on Form 10-K. The reason that leased cars result in lower operating profit margins is that operating lease expense on the railcars we lease includes both a depreciation component and an interest component that is charged to operating expense. For owned cars, only a depreciation component is charged to operating expense. Also affecting operating profit this quarter was a reduction in the lease fleet utilization and reduced pricing. Selling, engineering and administrative expense also increased due to our strategy to grow both the lease fleet and the managed car fleet. Revenues from the sale of railcars from the lease fleet were $0.3 million in the three months ended June 30, 2002 and $5.7 million in the same period in 2001. Operating profits on these sales were $0.1 million for the three months ended June 30, 2002 and $1.1 million in the same period in 2001. ALL OTHER Revenues in All Other decreased to $8.2 million in the three months ended June 30, 2002 from $27.0 million for the three months ended June 30, 2001. This decrease is primarily due to discontinuing the concrete mixer and related products business in 2001. Additionally, a temporary halt in the wind tower business this year contributed to lower revenues and operating profit. 17 Operating loss was $0.9 for the three months ended June 30, 2002, and $3.2 in the same period in 2001. The operating loss in the same period in 2001 was due primarily to operating losses associated with the discontinued e-commerce initiatives. SIX MONTHS ENDED JUNE 30, 2002 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2001 -- RESULTS OF OPERATIONS Revenues decreased $136.0 million to $750.3 million for the six months ended June 30, 2002 compared to $886.3 million for the six months ended June 30, 2001, a decrease of 15.3%. The decline in revenues was due to the reduction in railcar shipments and a reduction in the Construction Products and All Other groups due to exiting certain lines of business. A temporary halt in the wind towers business also added to the decline in total revenues and revenues in the All Other group. The following table reconciles the revenue amounts discussed under each segment with the consolidated total revenues (in millions).
SIX MONTHS ENDED JUNE 30, 2002 SIX MONTHS ENDED JUNE 30, 2001 ---------------------------------------- ---------------------------------------- REVENUES REVENUES OUTSIDE INTERSEGMENT TOTAL OUTSIDE INTERSEGMENT TOTAL ----------- ------------ ----------- ----------- ------------ ----------- Rail Group ........................ $ 251.7 $ 58.8 $ 310.5 $ 366.6 $ 165.1 $ 531.7 Construction Products Group ....... 258.6 0.7 259.3 272.3 3.6 275.9 Inland Barge Group ................ 119.1 -- 119.1 108.0 0.1 108.1 Industrial Products Group ......... 63.1 1.1 64.2 64.2 6.0 70.2 Railcar Leasing and Management Services Group .................. 53.6 -- 53.6 46.6 -- 46.6 All Other ......................... 4.2 13.2 17.4 28.6 25.9 54.5 Eliminations & Corporate Items .... -- (73.8) (73.8) -- (200.7) (200.7) ----------- ----------- ----------- ----------- ----------- ----------- Consolidated Total ................ $ 750.3 $ -- $ 750.3 $ 886.3 $ -- $ 886.3 =========== =========== =========== =========== =========== ===========
Operating loss decreased $34.6 million to $1.0 million for the six months ended June 30, 2002 compared to a loss of $35.6 million for the same period in 2001. Special charges for the six months ended June 30, 2001 were $55.8 million. Reduced revenues and unabsorbed overhead due to lower volumes caused operating losses in the Rail group. Operating profit for Inland Barge group was adversely impacted by $0.9 million in cost incurred related to litigation initiated by a tank barge customer in May. The operating loss in the Industrial Products group was impacted by a $2.2 million reserve established for a long-term LPG equipment lease receivable from a customer who began operating under bankruptcy protection during the second quarter. Improved operating profits in the Construction Products and All Other groups were due to exiting unprofitable business. Selling, engineering and administrative expenses decreased $13.1 million to $81.2 million for the six months ended June 30, 2002 compared to $94.3 million for the comparable period in 2001, a decrease of 13.9%. The decrease was a result of lower head count, cost reduction efforts and special charges recorded in the prior year. Interest expense, net of interest income increased $4.6 million to $16.7 million for the six months ended June 30, 2002 compared to $12.1 million for the same period in 2001, an increase of 38.0%. The increase was attributed to a change in rates, to charging off debt issuance costs of $1.3 million related to debt that was replaced with other credit facilities in the current period and lower interest income. Other, net was an expense of $1.4 million for the six months ended June 30, 2002 compared to income of $1.3 million for the comparable period in 2001. The decrease was due to a lesser amount of gains on sale of property, plant and equipment in the current period compared to the same period last year and foreign exchange losses in the current period compared to gains in the prior year period. The current year effective tax rate of 25.1% is primarily due to the absence of tax benefits on certain foreign losses. Net loss for the six months ended June 30, 2002 was $14.3 million, or $0.32 per diluted share as compared to a net loss of $30.1 million, or $0.81 per diluted share, the same period in 2001. 18 TRINITY RAIL GROUP
SIX MONTHS ENDED JUNE 30, --------------------------- 2002 2001 ----------- ----------- (IN MILLIONS) Revenues ......................................... $ 310.5 $ 531.7 Operating profit (loss) including unusual charges ........................................ $ (25.0) $ (34.6) Operating profit (loss) before unusual charges ........................................ $ (25.0) $ 12.6 Operating profit (loss) margin before unusual charges ................................ (8.1)% 2.4%
Revenues declined 41.6% for the six months ended June 30, 2002 compared to the same period in 2001. This decline is due to the current downturn in the North American railcar market. Railcar units shipped dropped approximately 68% compared to the prior year to approximately 2,200 cars. Operating profit (loss) margins were impacted by the inefficiencies of lower production levels and price pressures in the current competitive environment. In the six months ended June 30, 2002, railcar sales to Trinity Industries Leasing Company included in the Rail Group results were $57.0 million compared to $161.1 million in the comparable period in 2001 with operating profit of $2.2 million in 2002 compared to $8.5 million for the same period in 2001. Sales to Trinity Industries Leasing Company and related profits are eliminated in consolidation. CONSTRUCTION PRODUCTS GROUP
SIX MONTHS ENDED JUNE 30, -------------------------- 2002 2001 ----------- ----------- (IN MILLIONS) Revenues .................................... $ 259.3 $ 275.9 Operating profit ............................ $ 24.7 $ 20.1 Operating profit margin ..................... 9.5% 7.3%
Revenues declined 6.0% for the six months ended June 30, 2002 compared to the same period in 2001. The decrease in revenues was primarily attributable to closing under performing concrete and aggregate locations in Louisiana in the second quarter and exiting the sheet pile, flange and valve businesses. Operating profit margins increased as a result of cost reductions in the concrete and aggregate, elimination of unprofitable products, and efficiency improvements in the bridge business partially offset by steel cost increases in the highway and safety business not passed on to customers. 19 INLAND BARGE GROUP
SIX MONTHS ENDED JUNE 30, -------------------------- 2002 2001 ----------- ----------- (IN MILLIONS) Revenues ................................. $ 119.1 $ 108.1 Operating profit ......................... $ 3.0 $ 4.7 Operating profit margin .................. 2.5% 4.3%
Revenues increased 10.2% for the six months ended June 30, 2002 compared to the same period in 2001. The increase in revenues was primarily attributable to increased deliveries of hopper barges. Operating profit was lower primarily due to cost incurred related to litigation initiated by a tank barge customer in May 2002 and higher prior year margins on deck barges. INDUSTRIAL PRODUCTS GROUP
SIX MONTHS ENDED JUNE 30, --------------------------- 2002 2001 ----------- ----------- (IN MILLIONS) Revenues ................................. $ 64.2 $ 70.2 Operating profit (loss) .................. $ (0.7) $ (1.5) Operating profit (loss) margin ........... (1.1)% (2.1)%
Revenues decreased 8.5% for the three months ended June 30, 2002 compared to the same period in 2001. The decrease in revenues is primarily due to below normal demand levels in the Mexico liquefied petroleum gas market. Operating losses were impacted by a $2.2 million reserve established for a long-term LPG equipment lease receivable from a customer who began operating under bankruptcy protection during the second quarter. RAILCAR LEASING AND MANAGEMENT SERVICES GROUP
SIX MONTHS ENDED JUNE 30, -------------------------- 2002 2001 ----------- ----------- (IN MILLIONS) Revenues ...................................... $ 53.6 $ 46.6 Operating profit .............................. $ 14.2 $ 17.9 Operating profit margin ....................... 26.5% 38.4%
Revenues for this group include railcar lease revenue and management fees as well as sales of railcars from our lease fleet. Railcar lease revenue and management fees increased $13.6 million over prior year due to the increase in the size of the lease fleet that includes both on-balance sheet railcars and railcars we lease under operating leases. Operating profit is down due to the increased size of the fleet that we lease compared to the fleet we own. This shift resulted from the fact that, in the March quarter a year ago, we were building a substantial portfolio of lease cars that were subsequently moved from owned cars to leased cars later in the year in a sale and leaseback transaction described in our report on Form 10-K. The reason that leased cars result in lower operating profit margins is that operating lease expense on the railcars we lease includes both a depreciation component and an interest component 20 that is charged to operating expense. For owned cars, only a depreciation component is charged to operating expense. Also affecting operating profit this quarter was a reduction in the lease fleet utilization and reduced pricing. Selling, engineering and administrative expense also increased due to our strategy to grow both the lease fleet and the managed car fleet. Revenues from the sale of railcars from the lease fleet of $1.3 million in the six months ended June 30, 2002 and $7.5 million in the same period in 2001. Operating profits on these sales were $0.2 million for the six months ended June 30, 2002 and $1.4 million in the same period in 2001. ALL OTHER Revenues in All Other decreased to $17.4 million in the six months ended June 30, 2002 from $54.5 million for the six months ended June 30, 2001. This decrease is primarily due to discontinuing the concrete mixer and related products business in 2001. Additionally, a temporary slowdown in the wind tower business contributed to lower revenues and operating profits. Operating loss was $3.8 million for the six months ended June 30, 2002, and $17.9million in the same period in 2001. Restructuring charges included in the six months ended June 30, 2001 were $8.0 million primarily related to exiting the concrete mixer and related products business referred to above and environmental liabilities. Excluding restructuring charges, a larger operating loss was recorded in the same period in 2001 due primarily to operating losses associated with concrete mixer and related products business. INSERT B RANGE OF EXPECTED LOSSES Our outlook for the year is a consolidated loss per share in the range of 25 to 40 cents per share. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities for the six months ended June 30, 2002 was $53.5 million compared to $62.0 million for the same period in 2001. Reductions in working capital were offset by a net loss in the current period. Capital expenditures for the six months ended June 30, 2002 were $66.3 million, of which $55.1 million was for additions to the lease portfolio. This compares to $158.8 million of capital expenditures for the same period last year, of which $130.5 million was for additions to the lease portfolio. Proceeds from the sale of property, plant and equipment were $2.2 million for the six months ended June 30, 2002 composed primarily of the sale of cars from the lease fleet in 2002, compared to $98.2 million for the same period in 2001. We expect to finance future operating requirements with cash flows from operations, long-term and short-term debt, and privately placed equity. In June 2002, the Company completed a secured credit agreement for $425 million. The agreement includes a $275 million 3-year revolving commitment and a $150 million 5-year term commitment. The agreement calls for quarterly payments of principal on the term debt in the amount of $0.375 million beginning September 30, 2002 through June 30, 2006 and $36.0 million beginning on September 30, 2006 and ending on the maturity date. Amounts borrowed under the revolving commitment bear interest at LIBOR plus 2.00% (3.84% at June 30, 2002). Amounts borrowed under the term commitment bear interest at LIBOR plus 3.00% (4.84% at June 30, 2002). The agreement is secured by a portion of the Company's accounts receivable and inventory and a portion of its property, plant and equipment. The agreement limits the amount of capital expenditures related to the Company's leasing business, requires maintenance of ratios related to interest coverage, leverage, asset coverage, and minimum net worth and restricts the amount of dividend payments. At June 30, 2002, $230 million was borrowed under this agreement and $102.5 million was available under the facility, net of $92.5 million of letters of credit. At June 30, 2002, the most restrictive of the debt covenants based on trailing twelve month calculations as defined by the debt agreements allow $119.0 million additional principal and $15.6 million additional annual interest expense. Company projections through December 31, 2002 indicate compliance with all covenants. 21 In June 2002 the Company's wholly-owned subsidiary Trinity Industries Leasing Company ("TILC") through a newly formed, wholly owned, business trust entered into a $200 million nonrecourse warehouse facility to finance or refinance railcars acquired or owned by TILC. The facility is secured by specific railcars and the underlying leases. Advances under the facility may not exceed 75% of the fair market value of the railcars securing the facility less any excluded assets as defined by the agreement. Advances under the facility bear interest at LIBOR plus 1.775% (3.635% at June 30, 2002) and are due no later than 30 months from the commencement date of the facility. At June 30, 2002, $162.5 million was available under this facility. The Company's wholly-owned subsidiary, TILC, sold $170,000,000 of 2002-1 Pass Through Certificates with interest at 7.755%, commencing on August 15, 2002 and due semiannually thereafter. Equipment notes issued by TILC for the benefit of the holders of the Pass Through Certificates are collateralized by interest in certain railcars owned by TILC and the leases pursuant to which such railcars are leased to customers. The equipment notes, including the obligations to make payments of principal and interest thereon are direct obligations of TILC and are fully and unconditionally guaranteed by Trinity Industries, Inc. as guarantor. On March 6, 2002, we privately placed a total of 1.5 million unregistered shares of our common stock for net proceeds of $31.3 million. We have registered these shares. CONTRACTUAL OBLIGATION AND COMMERCIAL COMMITMENTS As of June 30, 2002 other commercial commitments related to letters of credit has increased to $92.5 million from $81.2 as of December 31, 2001. Other commercial commitments related to operating leases under sale/leaseback transactions were unchanged. FORWARD LOOKING STATEMENTS. This quarterly report on Form 10-Q 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 our actual results of operations to differ materially from those in the forward-looking statements include: o market conditions and demand for our products; o the cyclical nature of both the railcar and barge industries; o abnormal periods of inclement weather in areas where construction products are sold and used; o the timing of introduction of new products; o the timing of customer orders; o price erosion; o changes in mix of products sold; o the extent of utilization of manufacturing capacity; o availability of supplies and raw materials; o price competition and other competitive factors; o changing technologies; o steel prices; o interest rates and capital costs; o taxes; o the stability of the governments and political and business conditions in certain foreign countries, particularly Mexico and Romania; o changes in import and export quotas and regulations; o business conditions in emerging economies; and o legal, regulatory and environmental issues. Any forward-looking statement speaks only as of the date on which such statement is made. Trinity undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK There has been no material change in our market risks since December 31, 2001. 22 PART II ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. At the Annual Meeting of Stockholders held May 13, 2002, stockholders elected nine incumbent directors for a one-year term (Proposal 1) and approved ratification of Ernst & Young LLP as independent auditors for the year ending December 31, 2002 (Proposal 2). The vote tabulation follows for each proposal: Proposal 1 - Election of Directors
Nominee For Withheld ------------------- ---------- -------- David W. Biegler 40,139,105 441,917 Craig J. Duchossois 40,257,010 324,012 Ronald J. Gafford 40,298,171 282,851 Barry J. Galt 40,168,498 412,524 Clifford J. Grum 40,176,179 404,843 Jess T. Hay 40,219,051 361,971 Diana S. Natalicio 40,331,306 249,716 Timothy R. Wallace 40,296,710 284,312 W. Ray Wallace 40,173,264 407,758
Proposal 2 - Independent Auditors
For Against Abstentions --- ------- ----------- 39,642,850 906,350 31,822
ITEM 5. OTHER INFORMATION During the second quarter, Trinity disclosed to the U. S. Treasury Department's Office of Foreign Assets Control ("OFAC") that its Mexican subsidiary, Trinity Industries de Mexico, S.A. ("TIMSA"), last year sold, in one isolated transaction, four liquid petroleum gas ("LPG") storage tanks to a second Mexican company which were ultimately delivered to Cuba. LPG tanks are typically used to store liquefied petroleum gas for residential heating and cooking. TIMSA made this sale relying upon a legal opinion from its outside legal counsel in Mexico. Trinity did not authorize or approve the sale and only became aware of it after the LPG tanks had been delivered to Cuba. Upon learning of the sale, Trinity retained independent counsel to investigate the incident and subsequently made the voluntary disclosure to OFAC. Trinity is cooperating fully with OFAC to resolve the matter. In the opinion of management, the Company will incur no liability in connection with this matter that will be material for financial reporting purposes. 23 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits. Exhibit Number Description 10.1 Credit Agreement dated as of June 4, 2002 among Trinity Industries, Inc., as Borrower, JPMorgan Chase Bank, individually as a Lender and Issuing Bank and as Administrative Agent, and Dresdner Bank AG, New York and Grand Cayman Branches and The Royal Bank of Scotland plc., each individually as a Lender and collectively as Syndication Agents, and certain other Lenders party thereto from time to time. 10.2 Warehouse Loan Agreement dated as of June 27, 2002 among Trinity Industries Leasing Company, Trinity Rail Leasing Trust II, the Borrower, Credit Suisse First Boston, New York Branch, as Agent, and the Lenders party thereto from time to time. 10.12.3 Amendment No. 3 to the Trinity Industries, Inc. 1998 Stock Option and Incentive Plan. 99.1 Certification pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 99.2 Certification pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 8-K (1) Trinity filed a Current Report on Form 8-K dated July 25, 2002, reporting, under Item 5, operating results for the three months ended June 30, 2002. Pursuant to Form 8-K: under Item 7, the news release dated July 24, 2002 and conference call scripts of July 25, 2002 of various officers were filed. 24 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/ Jim S. Ivy Registrant ---------------------------- Jim S. Ivy Senior Vice President and Chief Financial Officer August 12, 2002 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 10.1 Credit Agreement dated as of June 4, 2002 among Trinity Industries, Inc., as Borrower, JPMorgan Chase Bank, individually as a Lender and Issuing Bank and as Administrative Agent, and Dresdner Bank AG, New York and Grand Cayman Branches and The Royal Bank of Scotland plc., each individually as a Lender and collectively as Syndication Agents, and certain other Lenders party thereto from time to time. 10.2 Warehouse Loan Agreement dated as of June 27, 2002 among Trinity Industries Leasing Company, Trinity Rail Leasing Trust II, the Borrower, Credit Suisse First Boston, New York Branch, as Agent, and the Lenders party thereto from time to time. 10.12.3 Amendment No. 3 to the Trinity Industries, Inc. 1998 Stock Option and Incentive Plan. 99.1 Certification pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 99.2 Certification pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
EX-10.1 3 d98842exv10w1.txt CREDIT AGREEMENT DATED AS OF JUNE 4, 2002 EXHIBIT 10.1 ================================================================================ JPMORGAN CREDIT AGREEMENT dated as of June 4, 2002 among TRINITY INDUSTRIES, INC., as Borrower, The FINANCIAL INSTITUTIONS NOW OR HEREAFTER PARTIES HERETO, as Lenders, JPMORGAN CHASE BANK, Individually and as Issuing Bank and as Administrative Agent, and DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES and THE ROYAL BANK OF SCOTLAND plc, Individually and as Syndication Agents Revolving Credit Facility Term Loan Facility J.P. MORGAN SECURITIES INC., as Sole Lead Arranger and Bookrunner ================================================================================ TABLE OF CONTENTS
Page No. -------- ARTICLE I DEFINITIONS SECTION 1.01 Defined Terms.................................................................1 SECTION 1.02 Classification of Loans and Borrowings.......................................23 SECTION 1.03 Terms Generally..............................................................23 SECTION 1.04 Accounting Terms; GAAP.......................................................24 ARTICLE II THE CREDITS SECTION 2.01 Commitments..................................................................24 SECTION 2.02 Loans and Borrowings.........................................................24 SECTION 2.03 Requests for Borrowings......................................................25 SECTION 2.04 Competitive Bid Procedure....................................................26 SECTION 2.05 Letters of Credit............................................................28 SECTION 2.06 Funding of Borrowings........................................................32 SECTION 2.07 Interest Elections...........................................................33 SECTION 2.08 Notes and Amortization.......................................................34 SECTION 2.09 Termination and Reduction of Commitments; Certain Prepayments................35 SECTION 2.10 Repayment of Loans; Evidence of Debt.........................................36 SECTION 2.11 Prepayment of Loans; Application of Prepayments..............................37 SECTION 2.12 Fees.........................................................................38 SECTION 2.13 Interest.....................................................................39 SECTION 2.14 Alternate Rate of Interest...................................................40 SECTION 2.15 Increased Costs..............................................................40 SECTION 2.16 Break Funding Payments.......................................................42 SECTION 2.17 Taxes........................................................................42 SECTION 2.18 Payments Generally; Pro Rata Treatment; Sharing of Set-offs..................43 SECTION 2.19 Illegality...................................................................45 SECTION 2.20 Mitigation Obligations; Replacement of Lenders...............................46 ARTICLE III REPRESENTATIONS AND WARRANTIES SECTION 3.01 Organization; Powers.........................................................47 SECTION 3.02 Authorization; Enforceability................................................47 SECTION 3.03 Governmental Approvals; No Conflicts.........................................47 SECTION 3.04 Financial Condition; No Material Adverse Change..............................47 SECTION 3.05 Properties...................................................................48 SECTION 3.06 Litigation...................................................................48 SECTION 3.07 Compliance with Laws and Agreements..........................................48 SECTION 3.08 Investment and Holding Company Status........................................49 SECTION 3.09 Taxes........................................................................49 SECTION 3.10 ERISA........................................................................49 SECTION 3.11 Subsidiaries.................................................................49
i
Page No. -------- SECTION 3.12 Burdensome Obligations.......................................................49 SECTION 3.13 Employee Matters.............................................................49 SECTION 3.14 Disclosure...................................................................50 SECTION 3.15 Margin Stock.................................................................50 SECTION 3.16 Primary Business.............................................................50 SECTION 3.17 Environmental Matters........................................................50 SECTION 3.18 Perfection Certificate; Real Property........................................51 SECTION 3.19 Schedules to other Loan Documents............................................51 ARTICLE IV CONDITIONS SECTION 4.01 Effective Date...............................................................51 SECTION 4.02 Each Credit Event............................................................54 SECTION 4.03 Post-Closing Conditions......................................................54 ARTICLE V SECURITY ARTICLE VI AFFIRMATIVE COVENANTS SECTION 6.01 Financial Statements and Other Information...................................57 SECTION 6.02 Notices of Material Events...................................................58 SECTION 6.03 Existence; Conduct of Business...............................................59 SECTION 6.04 Payment of Obligations.......................................................59 SECTION 6.05 Maintenance of Properties; Insurance.........................................59 SECTION 6.06 Books and Records; Inspection Rights.........................................60 SECTION 6.07 Compliance with Laws.........................................................60 SECTION 6.08 Use of Proceeds..............................................................60 SECTION 6.09 Maintenance of Debt Ratings..................................................60 SECTION 6.10 Compliance with Security Instruments.........................................60 SECTION 6.11 Further Assurances...........................................................60 ARTICLE VII NEGATIVE COVENANTS SECTION 7.01 Indebtedness.................................................................61 SECTION 7.02 Liens........................................................................62 SECTION 7.03 Fundamental Changes..........................................................63 SECTION 7.04 Investments, Loans, Advances, Guarantees and Acquisitions....................64 SECTION 7.05 Hedging Agreements...........................................................64 SECTION 7.06 Restricted Payments..........................................................64 SECTION 7.07 Transactions with Affiliates.................................................65 SECTION 7.08 Restrictive Agreements.......................................................65 SECTION 7.09 Financial Covenants..........................................................65 SECTION 7.10 Fiscal Year..................................................................67 SECTION 7.11 Capital Expenditures.........................................................67
ii
Page No. -------- ARTICLE VIII EVENTS OF DEFAULT ARTICLE IX AGENTS ARTICLE X MISCELLANEOUS SECTION 10.01 Notices......................................................................72 SECTION 10.02 Waivers; Amendments..........................................................72 SECTION 10.03 Expenses; Indemnity; Damage Waiver...........................................73 SECTION 10.04 Successors and Assigns.......................................................75 SECTION 10.05 Survival.....................................................................77 SECTION 10.06 Counterparts; Integration; Effectiveness.....................................78 SECTION 10.07 Severability.................................................................78 SECTION 10.08 Right of Setoff..............................................................78 SECTION 10.09 Governing Law; Jurisdiction; Consent to Service of Process...................78 SECTION 10.10 WAIVER OF JURY TRIAL.........................................................79 SECTION 10.11 Headings.....................................................................79 SECTION 10.12 Confidentiality..............................................................79 SECTION 10.13 Interest Rate Limitation.....................................................80 SECTION 10.14 Arranger; Syndication Agents.................................................81 SECTION 10.15 NO ORAL AGREEMENTS...........................................................82
iii 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 5 - Collateral Schedule 7.01 - Existing Indebtedness Schedule 7.02 - Existing Liens Schedule 7.03 - Permitted Asset Sales Schedule 7.04 - Existing Investments Schedule 7.08 - 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 Compliance Certificate Exhibit F - Form of Revolving Credit Note Exhibit G - Form of Term Note Exhibit H - Form of Security Agreement Exhibit I - Form of Pledge Agreement iv LIST OF DEFINED TERMS
Page No. -------- $.........................................................................7 ABR.......................................................................1 Adjusted LIBO Rate........................................................1 Administrative Agent......................................................1 Administrative Questionnaire..............................................1 Affiliate.................................................................1 Agents....................................................................1 Aggregate Commitments.....................................................1 Aggregate Credit Exposure.................................................1 Aggregate Revolving Commitment............................................2 Aggregate Revolving Credit Exposure.......................................2 Agreement.................................................................2 Alternate Base Rate.......................................................2 Applicable Percentage.....................................................2 Applicable Rate...........................................................2 Arranger..................................................................3 Assessment Rate...........................................................3 Asset Disposition.........................................................3 Assignment and Acceptance.................................................4 Authorized Officer........................................................4 Availability Period.......................................................4 Bailee's Letter...........................................................4 Base CD Rate..............................................................4 Board.....................................................................4 Borrower..................................................................1 Borrowing.................................................................4 Borrowing Request.........................................................4 Business Day..............................................................4 Capital Expenditures......................................................4 Capital Expenditures (Leasing Company)....................................5 Capital Expenditures (Non-Leasing Company)................................5 Capital Lease Obligations.................................................5 Change in Control.........................................................5 Change in Law.............................................................5 Class.....................................................................5 Code......................................................................5 Collateral................................................................5 Collateral Agent..........................................................6 Commitment................................................................6 Competitive Bid...........................................................6 Competitive Bid Rate......................................................6 Competitive Bid Request...................................................6
v
Page No. -------- Competitive Loan..........................................................6 Consolidated Net Worth....................................................6 Consolidated Subsidiaries.................................................6 Control...................................................................6 Credit Percentage.........................................................6 Debt Offering.............................................................6 Default...................................................................7 Disclosed Matters.........................................................7 dollars...................................................................7 EBITDA....................................................................7 Effective Date............................................................7 Environmental Laws........................................................7 Environmental Liability...................................................7 Equity....................................................................7 ERISA.....................................................................7 ERISA Affiliate...........................................................8 ERISA Event...............................................................8 Eurodollar................................................................8 Events of Default........................................................67 Excluded Taxes............................................................8 Existing Indebtedness.....................................................8 Existing LC Exposure......................................................9 Existing Letters of Credit................................................9 Federal Funds Effective Rate..............................................9 Fee Letter................................................................9 Financial Officer.........................................................9 Fiscal Quarter............................................................9 Fiscal Year...............................................................9 Fixed Rate................................................................9 Fixed Rate Loan...........................................................9 Foreign Lender............................................................9 GAAP.....................................................................10 Governmental Authority...................................................10 Governmental Rule........................................................10 Guarantee................................................................10 guarantor................................................................10 Hazardous Materials......................................................10 Hedging Agreement........................................................10 Highest Lawful Rate......................................................80 Indebtedness.............................................................10 Indemnified Taxes........................................................11 Indemnitee...............................................................74 Index Debt...............................................................11 Information..............................................................80 Information Memorandum...................................................11
vi
Page No. -------- Intercreditor Agreement..................................................11 Interest Coverage Ratio..................................................11 Interest Election Request................................................12 Interest Expense.........................................................12 Interest Payment Date....................................................12 Interest Period..........................................................12 Issuing Bank.............................................................12 JPMorgan.................................................................13 Landlord Consent and Subordination Agreement.............................13 Landlord Waiver Agreement................................................13 LC Disbursement..........................................................13 LC Exposure..............................................................13 Lender Affiliate.........................................................13 Lender Indebtedness......................................................13 Lenders..................................................................13 Letter of Credit.........................................................13 Leverage Ratio...........................................................14 LIBO Rate................................................................14 Lien.....................................................................14 Loan.....................................................................14 Loan Documents...........................................................14 Loans....................................................................14 Margin...................................................................15 Material Adverse Effect..................................................15 Material Indebtedness....................................................15 Material Subsidiaries....................................................15 Material Subsidiary......................................................15 Moody's..................................................................16 Mortgage.................................................................15 Mortgaged Real Property..................................................15 Multiemployer Plan.......................................................16 Net Cash Proceeds........................................................16 New York City............................................................16 Notes....................................................................16 Other Taxes..............................................................16 Participant..............................................................77 PBGC.....................................................................16 Perfection Certificate...................................................16 Permitted Acquisition....................................................16 Permitted Encumbrances...................................................16 Permitted Investments....................................................17 Person...................................................................18 Plan.....................................................................18 Pledge Agreement.........................................................18 Post-Closing Date........................................................18
vii
Page No. -------- Prime Rate...............................................................18 Property.................................................................18 Quarterly Date...........................................................18 Real Property............................................................18 Register.................................................................76 Related Parties..........................................................18 Required Lenders.........................................................19 Required Revolving Lenders...............................................19 Required Term Lenders....................................................19 Restricted Payment.......................................................19 Revolving Commitment.....................................................19 Revolving Commitment Termination Date....................................19 Revolving Credit Exposure................................................20 Revolving Credit Note....................................................20 Revolving Credit Percentage..............................................20 Revolving Lender.........................................................20 Revolving Loans..........................................................20 Rolling Period...........................................................20 S&P......................................................................20 Security Agreement.......................................................20 Security Instruments.....................................................20 Statutory Reserve Rate...................................................20 subsidiary...............................................................21 Subsidiary...............................................................21 Subsidiary Guaranties....................................................21 Syndication Agents.......................................................21 Taxes....................................................................21 Term Commitment..........................................................21 Term Lender..............................................................21 Term Loan Percentage.....................................................21 Term Loans...............................................................22 Term Maturity Date.......................................................22 Term Note................................................................22 Term Percentage..........................................................22 Three-Month Secondary CD Rate............................................22 TILC.....................................................................22 TILC Conduit Indebtedness................................................22 Total Debt...............................................................22 Transactions.............................................................22 Type.....................................................................23 UCC......................................................................23 Utilization Fee..........................................................39 Utilization Percentage...................................................23 Withdrawal Liability.....................................................23
viii CREDIT AGREEMENT THIS CREDIT AGREEMENT (this "Agreement") is made and entered into as of June 4, 2002, among TRINITY INDUSTRIES, INC., a Delaware corporation ("Borrower"), JPMORGAN CHASE BANK, individually as a Lender and Issuing Bank and as Administrative Agent, DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES and THE ROYAL BANK OF SCOTLAND plc, each individually as a Lender and collectively as Syndication Agents, and each of the lenders that is a signatory hereto or which hereafter becomes a party hereto as provided in Section 10.04 (individually, a "Lender" and collectively, "Lenders"). In consideration of the mutual covenants and agreements herein contained, 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. "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 JPMorgan Chase Bank, in its capacity as administrative agent for the Lenders hereunder. "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, each Syndication Agent and the Collateral Agent. "Aggregate Commitments" means the sum of all of the Lenders' Commitments. "Aggregate Credit Exposure" means the sum of all of the Lenders' Credit Exposures. 1 "Aggregate Revolving Commitment" means the sum of all Revolving Lenders' Revolving Commitments. "Aggregate Revolving Credit Exposure" means the sum of all of the Revolving Lenders' Revolving Credit Exposures. "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 (a) with respect to any Revolving Lender, such Revolving Lender's Revolving Credit Percentage, and (b) with respect to any Term Lender, such Term Lender's Term Loan Percentage, as applicable. "Applicable Rate" means, for any day, with respect to any Eurodollar Loan, or with respect to the facility fees payable hereunder, the applicable rate per annum set forth below under the caption "Eurodollar Revolving Spread," "Facility Fee Rate (Revolver)" or "Eurodollar Term Spread," as the case may be, based upon the ratings by S&P and Moody's, respectively, applicable on such date to the Index Debt:
Eurodollar Facility Fee Revolving Rate Eurodollar Index Debt Ratings Spread (Revolver) Term Spread ------------------ ---------- ------------ ----------- Category 1 BBB+/Baa1 or higher 1.350% 0.150% 2.750% Category 2 BBB/Baa2 1.425% 0.200% 2.750% Category 3 BBB-/Baa3 1.500% 0.250% 3.000% Category 4 BB+/Ba1 1.625% 0.375% 3.250% Category 5 BB/Ba2 or lower 1.750% 0.500% 3.250%
For purposes of the foregoing, (i) if either S&P or Moody's 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 S&P and Moody's for the Index Debt shall fall within different Categories, the Applicable Rate shall be 2 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 S&P and Moody's for the Index Debt shall be changed (other than as a result of a change in the rating system of S&P or Moody's), 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 S&P or Moody's 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. "Arranger" means J.P. Morgan Securities Inc., in its capacity as Sole Lead Arranger and Bookrunner. "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. "Asset Coverage Ratio" means, on any day, the ratio of (a) Asset Value to (b) the sum of (i) Aggregate Credit Exposure plus (ii) Existing LC Exposure as of the date of determination. "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 7.03 hereof, and (ii) the sale of inventory in the ordinary course of business. "Asset Value" means, as of the date of determination, the sum of the book values of the following for the Borrower and its Subsidiaries calculated on a consolidated basis and only with respect to that Property which either (i) has been pledged as Collateral hereunder to secure the Lender Indebtedness, or (ii) is otherwise unencumbered and free of all Liens (other than Permitted Encumbrances described in clauses (a) through (f) and in clause (h) of the definition thereof): (a) accounts receivable (net of applicable reserves), (b) inventory (net of applicable reserves), and (c) property, plant and equipment (net of accumulated depreciation and amortization). 3 "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 10.04), and accepted by the Administrative Agent, in substantially the form of Exhibit A or any other form approved by the Administrative Agent. "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 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. "Bailee's Letter" means a letter in form and substance acceptable to the Administrative Agent executed by any Person who is in possession of inventory on behalf of the Borrower pursuant to which such Person acknowledges the Administrative Agent's and/or Collateral Agent's Lien with respect thereto. "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 4 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, but excluding Capital Expenditures funded with proceeds of the TILC Conduit Indebtedness. "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) 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. "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 2.15(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. "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. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Collateral" means the Properties of the Borrower and its Subsidiaries described in and subject to the Liens, privileges, priorities and security interests created and granted (or purported to have been created and granted) by any Security Instrument. 5 "Collateral Agent" means JPMorgan Chase Bank, as collateral agent under the terms of the Intercreditor Agreement, and its successors and assigns. "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 Revolving Lender to make a Competitive Loan in accordance with Section 2.04. "Competitive Bid Rate" means, with respect to any Competitive Bid, the Margin or the Fixed Rate, as applicable, offered by the Revolving 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. "Credit Percentage" means, for each Lender, the percentage obtained by dividing (a) the sum of the Revolving Credit Exposure of such Lender plus the outstanding principal balance of any Term Loans held by such Lender, by (b) the sum of the Aggregate Revolving Credit Exposure plus the aggregate outstanding principal balance of all Term Loans. "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 7.01 hereof (other than Indebtedness described in Section 7.01(i), which Indebtedness will constitute a Debt Offering hereunder) will not constitute a Debt Offering for purposes of this Agreement. 6 "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. "dollars" or "$" refers to lawful money of the United States of America. "EBITDA" means, as to any Person for any period, without duplication, the amount equal to the following calculated for such Person and its consolidated subsidiaries on a consolidated basis: net income determined in accordance with GAAP, plus to the extent deducted from net income, the sum of (a) Interest Expense, depreciation, amortization, income and franchise tax expenses, plus (b) with respect to the Rolling Period ended December 31, 2001, non-cash and cash charges in an aggregate amount not to exceed $123,000,000; provided that non-recurring, non-cash gains or losses and/or 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 5, 2002, provided that the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 10.02). "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. 7 "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 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. "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 VIII. "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 2.20(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 2.17(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 2.17(a). "Existing Indebtedness" means all Indebtedness of the Borrower and its Subsidiaries on the Effective Date under and in connection with that certain Credit Agreement 8 dated as of June 8, 2001, by and among the Borrower, JPMorgan Chase Bank, as administrative agent and the lenders and other agents a party thereto, as amended prior to the date hereof. "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 that do not increase the amount of credit or exposure related thereto. "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 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 9, 2002, by and among the Borrower, JPMorgan and the Arranger, 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 December 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 Revolving 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. 9 "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 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 10.13. "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 10 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. "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, either (i) the corporate debt rating of the Borrower established by Moody's and in effect for such day, or (ii) if no corporate debt rating of the Borrower has been established by Moody's and in effect for any such day, the senior implied corporate debt rating of the Borrower based upon the subordinated debt rating of the Borrower established by Moody's and in effect for such day (i.e., a rating one level higher than 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 May 2002 relating to the Borrower and the Transactions. "Intercreditor Agreement" means that certain Intercreditor Agreement to be executed in accordance with Section 4.01(f) by the Borrower, certain of its Subsidiaries a party thereto, the Collateral Agent, the Administrative Agent and the Letter of Credit Banks (as defined therein), in the form approved by the Required Lenders and as the same may be amended or otherwise modified from time to time. "Interest Coverage Ratio" means, on any day, the ratio of (a) EBITDA (excluding any EBITDA for such Rolling Period derived from the assets pledged to the TILC Conduit Indebtedness after the closing and funding thereof) for the Rolling Period ending on the then most recent Quarterly Date less Capital Expenditures (Non-Leasing Company) for such Rolling Period to (b) cash interest payments made by the Borrower and its Subsidiaries on a consolidated basis during such Rolling Period, excluding any such interest payments (as applicable) made with respect to the TILC Conduit Indebtedness during such Rolling Period. 11 "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, each Quarterly Date, (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 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 JPMorgan, 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. 12 "JPMorgan" means JPMorgan Chase Bank, in its individual capacity or as an Issuing Bank, as the case may be, and not as Administrative Agent or Collateral Agent. "Landlord Consent and Subordination Agreement" means an agreement executed and delivered by each landlord of Real Property leased by the Borrower or any Subsidiary and subject to a Mortgage pursuant to which such landlord (a) consents to the execution and delivery of a Mortgage by the Borrower or such Subsidiary in favor of the Administrative Agent and/or Collateral Agent with respect to the leased Real Property, and (b) subordinates all of its Liens to the Liens of the Administrative Agent and/or the Collateral Agent in the Property of the Borrower or such Subsidiary located on the leased Real Property. "Landlord Waiver Agreement" means an agreement executed and delivered by each landlord of Real Property leased by the Borrower or any Subsidiary pursuant to which such landlord subordinates or waives all of its Liens to the Liens of the Administrative Agent in the Property of the Borrower or such Subsidiary located on the leased Real Property. "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 Revolving Lender at any time shall be its Revolving Credit 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. "Lender Indebtedness" means any and all amounts owing or to be owing by the Borrower or any Subsidiary to the Administrative Agent, the Issuing Bank or the Lenders with respect to or in connection with the Loans, any Letter of Credit, the Notes, any Hedging Agreement, this Agreement, or any other Loan Document and, as to Hedging Agreements, any and all amounts owing or to be owing by the Borrower or any Subsidiary thereunder to any Lender or any of its Affiliates. "Lenders" has the meaning set forth in the opening paragraph hereof, but shall not include any Person that ceases to be a Lender hereto pursuant to an Assignment and Acceptance. "Letter of Credit" means any letter of credit issued pursuant to this Agreement. 13 "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, excluding EBITDA derived from the assets pledged to the TILC Conduit Indebtedness calculated on a pro forma basis. "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 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 any interest in Property securing an obligation owed to, or claim by, a Person other than the owner of the Property, whether such interest is based on contract, constitutional, common or statutory law, and including, but not limited to, the lien or security interest arising from a mortgage, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes. The term "Lien" shall include reservations, exceptions, encroachments, easements, rights of way, covenants, conditions, restrictions, liens and other statutory, constitutional or common law rights of landlords, leases and other title exceptions and encumbrances affecting Property. For purposes of this Agreement, the Borrower and any Subsidiary shall be deemed to be the owner of any Property which it has acquired or holds subject to a conditional sale agreement, financing lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person for security purposes. "Loan" means, a Revolving Loan, a Term Loan or a Competitive Loan, and "Loans" means the Revolving Loans, Term Loans and Competitive Loans or one or more of them as provided herein. "Loan Documents" means this Agreement, the Notes, the Subsidiary Guaranties, the Security Instruments, the Intercreditor Agreement, the Letters of Credit, 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, the Loans, the Lender Indebtedness or the Collateral 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 14 by the Borrower or any of its Subsidiaries in connection with the foregoing, as such documents, instruments or agreements may be amended, modified or supplemented from time to time. "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 Competitive Loan, as specified by the Revolving Lender making such Competitive 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, (d) the rights of or benefits available to the Lenders under this Agreement or any of the other Loan Documents, or (e) the perfection or priority of any Liens securing the Lender Indebtedness. "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 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 EBITDA of the Borrower and its Subsidiaries. As of March 31, 2002, "Material Subsidiaries" means the Subsidiaries set forth (and designated as such) on Schedule 3.11. "Mortgage" means any mortgage, deed of trust, assignment of leases and rents, leasehold mortgage or other security document (and any and all amendments, supplements or modifications thereto) granting a Lien to the Administrative Agent and/or the Collateral Agent on any Mortgaged Real Property to secure the Lender Indebtedness and the other obligations described in the Intercreditor Agreement. Each Mortgage shall be satisfactory in form and substance to the Administrative Agent and the Collateral Agent. "Mortgaged Real Property" means the Real Property of the Borrower and its Subsidiaries listed on Schedule 5 hereto and all other Real Property which may hereafter (and after the Post-Closing Date) be mortgaged to the Administrative Agent and/or the Collateral Agent pursuant to a Mortgage. 15 "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. "Notes" means the Revolving Credit Notes, the Term Notes and any other promissory note of the Borrower payable to the order of a Revolving Lender and issued hereunder pursuant to Section 2.04(g). "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. "PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions. "Perfection Certificate" means the Perfection Certificate to be executed by an Authorized Officer of the Borrower in form and substance satisfactory to the Administrative Agent and the Collateral Agent and to be delivered to the Administrative Agent and/or the Collateral Agent pursuant to Section 4.03(a). "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 6.04; (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 6.04; 16 (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) pledges and 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 VIII; (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; (g) Liens, if any, securing the Indebtedness described in Sections 7.01(a), (h) and (j); and (h) matters specified in the Mortgagee's Policies of Title Insurance issued in connection with Section 4.03(b)(xv); 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; (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; 17 (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. "Pledge Agreement" means one or more pledge agreements to be executed and delivered pursuant to Section 4.01(e), Article V, Section 6.01(f) and/or the Intercreditor Agreement by the Borrower and certain of its Subsidiaries, substantially in the form of Exhibit I (with applicable conforming changes), as amended, supplemented, restated or otherwise modified from time to time. "Post-Closing Date" means September 30, 2002. "Prime Rate" means the rate of interest per annum publicly announced from time to time by JPMorgan 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. "Property" means any interest in any kind of property or asset, whether real, personal or mixed. "Quarterly Date" means the last day of each March, June, September and December in each year. "Real Property" means any right, title or interest in and to real property, including any fee interest, leasehold interest, easement or license, and any other right to use or occupy real property, including any right arising by contract. "Register" has the meaning set forth in Section 10.04. "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. 18 "Required Lenders" means, (a) at any time that no Term Loans are outstanding, Required Revolving Lenders; (b) at any time that Term Loans are outstanding but no Revolving Commitments are in effect and no Revolving Credit Exposure is outstanding, Required Term Lenders; and (c) at all other times (i) that the Revolving Commitments remain in effect, Revolving Lenders with Revolving Commitments and Term Lenders holding Term Loans in an aggregate amount equal to or in excess of fifty-one percent (51%) of the sum of the Aggregate Revolving Commitment plus the aggregate principal amount of Term Loans then outstanding, and (ii) after the Revolving Commitments have terminated, Lenders having Credit Exposure in an aggregate amount equal to or in excess of fifty-one percent (51%) of the sum of the Aggregate Credit Exposure. "Required Revolving Lenders" means Lenders having fifty-one percent (51%) or more of the Aggregate Revolving Commitment at such time, until terminated, and thereafter Revolving Lenders having fifty-one percent (51%) or more of the Aggregate Revolving Credit Exposure; provided that, for purposes of declaring the Revolving Loans to be due and payable pursuant to Article VIII, and for all purposes after the Revolving Loans become due and payable pursuant to Article VIII or the Revolving Commitments expire or terminate, the outstanding Competitive Loans of the Revolving Lenders shall be added to their respective Revolving Credit Exposures and to the Aggregate Revolving Credit Exposure in determining the Required Revolving Lenders. "Required Term Lenders" means Term Lenders holding fifty-one percent (51%) or more of the aggregate principal balance of the Term Loans then outstanding. "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 Revolving Lender, the commitment of such Revolving 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 Revolving Lender's Revolving Credit Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.09, (b) reduced or increased from time to time pursuant to assignments by or to such Revolving Lender pursuant to Section 10.04, and (c) terminated pursuant to Article VIII. The initial amount of each Revolving Lender's Revolving Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Revolving Lender shall have assumed its Revolving Commitment. The initial Aggregate Revolving Commitment is $275,000,000. "Revolving Commitment Termination Date" means the earliest of: (a) June 4, 2005; (b) the date on which all of the Revolving Commitments are terminated in full or reduced to zero pursuant to Section 2.09; and (c) the date on which the Revolving Commitments 19 otherwise are terminated in full and reduced to zero pursuant to the terms of Article VIII. Upon the occurrence of any event described in clause (b) or (c), the Revolving Commitments shall terminate automatically and without any further action. "Revolving Credit Exposure" means, at any time and as to each Revolving Lender, the sum of (a) the aggregate principal amount of Revolving Loans (other than any Competitive Loans) made by such Revolving Lender outstanding at such time plus (b) such Revolving Lender's Revolving Credit Percentage of the aggregate amount of all LC Exposure at such time. "Revolving Credit Note" means a promissory note of the Borrower described in Section 2.08(a) payable to the order of any Revolving Lender and being substantially in the form of Exhibit F, evidencing the aggregate Indebtedness of the Borrower to such Revolving Lender resulting from Revolving Loans made by such Revolving Lender, as any such promissory note may be amended, endorsed, or otherwise modified from time to time, and also means all other promissory notes accepted from time to time in substitution thereof or renewal thereof. "Revolving Credit Percentage" means, as to any Revolving Lender, the percentage of the Aggregate Revolving Commitment constituted by its Revolving Commitment (or, if the Revolving Commitments have terminated or expired, the percentage which such Revolving Lender's Revolving Credit Exposure at such time constitutes of the Aggregate Revolving Credit Exposure at such time). "Revolving Lender" means a Lender with a Revolving Commitment. "Revolving Loans" means the loans provided for in Section 2.01(a). "Rolling Period" means any period of four consecutive Fiscal Quarters. "S&P" means Standard & Poor's. "Security Agreement" means one or more security agreements to be executed and delivered pursuant to Section 4.01(d), Section 4.03(b), Article V and/or the Intercreditor Agreement by the Borrower and certain of its Subsidiaries, substantially in the form of Exhibit H (with modifications to reflect the proper Collateral), as amended, supplemented, restated or otherwise modified from time to time. "Security Instruments" means all Security Agreements, Pledge Agreements, Mortgages, financing statements and other agreements, documents or instruments now or hereafter executed and delivered by the Borrower, any of its Subsidiaries or any other Person as security for the payment and performance of the Lender Indebtedness, as any of the foregoing may be amended, modified, restated or supplemented from time to time. "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 20 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 "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 Lender Indebtedness, executed and delivered pursuant to Section 4.01(c) and/or Section 6.01(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 Agents" means Dresdner Bank AG, New York and Grand Cayman Branches and The Royal Bank of Scotland plc, in their capacities as syndication agents 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 Term Lender, such Term Lender's obligation to make Term Loans pursuant to Section 2.01(b) of this Agreement. The amount of each Term Lender's Term Commitment is set forth on Schedule 2.01. The aggregate amount of the Term Lenders' Term Commitments is $150,000,000. "Term Lender" means a Lender which holds Term Loans in its capacity as such. "Term Loan Percentage" means, as to any Term Lender, the percentage which the outstanding principal balance of the Term Loans held by such Term Lender at such time constitutes of the outstanding principal balance of Term Loans at such time. 21 "Term Loans" means the loans provided for in Section 2.01(b). "Term Maturity Date" means the earlier of (a) June 4, 2007, and (b) the date on which the Term Loans otherwise become due and payable pursuant to the terms of Article VIII. "Term Note" means a promissory note of the Borrower described in Section 2.08(b) payable to the order of any Term Lender and being substantially in the form of Exhibit G, evidencing the Term Loans held by such Term Lender, as any such promissory note may be amended, endorsed, or otherwise modified from time to time, and also means all other promissory notes accepted from time to time in substitution thereof or renewal thereof. "Term Percentage" means, as to any Term Lender, the percentage which the outstanding principal balance of the Term Loans held by such Term Lender at such time constitutes of the aggregate outstanding principal balance of all Term Loans at such time. "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. "TILC Conduit Indebtedness" means the Indebtedness created or incurred after the date hereof (including Indebtedness pursuant to the warehouse facility established by Credit Suisse First Boston, New York Branch and Wachovia Bank, N.A. and any term out of such facility) in favor of a wholly-owned special purpose subsidiary of TILC in an aggregate amount not to exceed $500,000,000, such Indebtedness to be (i) used to finance a portion of the lease fleet owned (or to be owned) by such subsidiary, (ii) secured by such applicable railcars and associated underlying third party leases, and (iii) non-recourse to the Borrower. "Total Debt" means, for any period, all Indebtedness (other than the TILC Conduit 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. 22 "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 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. "UCC" means the Uniform Commercial Code as from time to time in effect in the State of Texas or, where specifically applicable to the Borrower, any Subsidiary or Collateral, any other relevant state. "Utilization Fee" has the meaning set forth in Section 2.12(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 Revolving Credit Exposure on such day divided by the Aggregate Revolving Commitment on such day, and (ii) for any day thereafter, 100%. "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. 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. 23 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), 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 Revolving 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 Revolving Lender's Revolving Credit Exposure exceeding such Revolving Lender's Revolving Commitment or (ii) the sum of the Aggregate Revolving Credit Exposure plus the aggregate principal amount of outstanding Competitive Loans exceeding the Aggregate Revolving Commitment. 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. Subject to the terms and conditions set forth herein, on the Effective Date, each Term Lender agrees to make one Term Loan to the Borrower equal to such Term Lender's Term Commitment. No amounts paid or prepaid with respect to the Term Loans may be reborrowed. Upon a Term Lender making such Term Loan, its Term Commitment shall terminate and it shall have no further Commitment to make Term Loans. 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 2.14, (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 24 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 Aggregate Revolving Commitment 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) 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 Revolving Commitment Termination Date or Term Maturity Date (as applicable). 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 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 25 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 Revolving Lender of the details thereof and of the amount of such Revolving Lender's Revolving 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 (1) the aggregate principal amount of outstanding Competitive Loans at any time shall not exceed $50,000,000, and (2) the sum of the Aggregate Revolving Credit Exposures plus the aggregate principal amount of outstanding Competitive Loans at any time shall not exceed the Aggregate Revolving Commitment. 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 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 Revolving Lenders of the details thereof by telecopy, inviting the Revolving Lenders to submit Competitive Bids. 26 (b) Each Revolving 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 Revolving 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 Revolving 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 Competitive Loans that the Revolving Lender is willing to make, (ii) the Competitive Bid Rate or Competitive Bid Rates at which the Revolving Lender is prepared to make such Competitive Loan or Competitive 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 Competitive 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 Revolving 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 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 27 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 Revolving 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 Revolving 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 Revolving Lenders are required to submit their Competitive Bids to the Administrative Agent pursuant to paragraph (b) of this Section 2.04. (g) Any Revolving Lender which makes a Competitive Loan hereunder may request that such Competitive Loan be evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to such Revolving Lender a promissory note payable to the order of such Revolving Lender and in a form approved by the Administrative Agent. 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, 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 28 deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed $100,000,000, (ii) the sum of the Aggregate Revolving Credit Exposure plus the aggregate principal amount of outstanding Competitive Loans shall not exceed the Aggregate Revolving Commitment and (iii) no Default shall have occurred and be continuing. (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 Revolving Commitment Termination 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 Revolving Lenders, the Issuing Bank hereby grants to each Revolving Lender, and each Revolving Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Revolving Lender's Revolving Credit Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Revolving Lender's Revolving Credit 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 Revolving 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 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 Revolving Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and 29 such Revolving Lender's Revolving Credit Percentage thereof. Promptly following receipt of such notice, each Revolving Lender shall pay to the Administrative Agent its Revolving Credit Percentage of the unreimbursed LC Disbursement, in the same manner as provided in Section 2.06 with respect to Revolving Loans made by such Revolving Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Revolving 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 Revolving Lenders have made payments pursuant to this Section 2.05(e) to reimburse the Issuing Bank, then to such Revolving Lenders and the Issuing Bank as their interests may appear. Any payment made by a Revolving 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 Revolving 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 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 30 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 Revolving 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 2.13(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 Revolving Lender pursuant to paragraph (e) of this Section 2.05 to reimburse the Issuing Bank shall be for the account of such Revolving 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 Revolving 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 2.12(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 Revolving Lenders (or, if the maturity of the Revolving Loans has been accelerated, Revolving Lenders with LC 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), and/or otherwise (ii) on the Revolving Commitment Termination Date, the 31 Borrower shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Revolving 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 VIII. 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 Revolving Loans has been accelerated (but subject to the consent of Revolving 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 Revolving Lender prior to the proposed date of any Borrowing that such Revolving Lender will not make available to the Administrative Agent such Revolving Lender's share of such Borrowing, the Administrative Agent may assume that such Revolving 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 the Borrower a corresponding amount. In such 32 event, if a Revolving Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Revolving 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 Revolving 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 Revolving Lender pays such amount to the Administrative Agent, then such amount shall constitute such Revolving Lender's Revolving 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 33 (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 applicable 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 Notes and Amortization. (a) Revolving Credit Notes. The Borrower's obligation to pay the principal of, and interest on, the Revolving Loans made by each Revolving Lender shall be further evidenced by the Borrower's issuance, execution and delivery of a Revolving Credit Note payable to the order of each such Revolving Lender in the amount of such Revolving Lender's Revolving Credit Commitment, and shall be dated as of the date of issuance of such Revolving Credit Note. The principal amount of each Revolving Credit Note shall be payable on or before the Revolving Commitment Termination Date. (b) Term Notes and Amortization. The Borrower's obligation to pay the principal of, and interest on, the Term Loans maintained outstanding by each Term Lender shall be further evidenced by the Borrower's issuance, execution and delivery of a Term Note payable to the order of each such Term Lender in the principal amount of such Term Lender's Term Commitment, and shall be dated as of the date of issuance of such Term Note. The aggregate principal amount of the Term Notes applicable to the aggregate Term Loans of all the Term Lenders shall be payable in quarterly installments of the amounts set forth below: 34 Quarterly Date Amount -------------- -------------------------- September 30, 2002 $ 375,000 December 31, 2002 $ 375,000 March 31, 2003 $ 375,000 June 30, 2003 $ 375,000 September 30, 2003 $ 375,000 December 31, 2003 $ 375,000 March 31, 2004 $ 375,000 June 30, 2004 $ 375,000 September 30, 2004 $ 375,000 December 31, 2004 $ 375,000 March 31, 2005 $ 375,000 June 30, 2005 $ 375,000 September 30, 2005 $ 375,000 December 31, 2005 $ 375,000 March 31, 2006 $ 375,000 June 30, 2006 $ 375,000 September 30, 2006 $36,000,000 December 31, 2006 $36,000,000 March 31, 2007 $36,000,000 Term Maturity Date Aggregate Unpaid Principal Balance The first such quarterly installment shall be payable on September 30, 2002, and the remaining quarterly installments shall be payable on each Quarterly Date thereafter, with the final installment in the amount of the aggregate unpaid principal balance then owing being payable on or before the Term Maturity Date. SECTION 2.09 Termination and Reduction of Commitments; Certain Prepayments. (a) Unless previously terminated, the Revolving Commitment of each Revolving Lender shall terminate on the Revolving Commitment Termination Date applicable to such Revolving Lender's Revolving Commitment. (b) The Term Commitment of each Term Lender shall terminate on the Effective Date upon such Term Lender making its Term Loan. (c) In the event the Borrower shall, prior to the Revolving Commitment Termination Date, receive Net Cash Proceeds from any Asset Disposition or any Debt Offering, an amount equal to seventy-five percent (75%) of such Net Cash Proceeds shall be applied on such date to the prepayment of the Term Loans and the reduction of the Revolving Commitments as set forth in Section 2.11(e). 35 (d) 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 Revolving Loans in accordance with Section 2.11(c), the sum of the Aggregate Revolving Credit Exposure plus the aggregate principal amount of outstanding Competitive Loans would exceed the Aggregate Revolving Commitment. (e) The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Revolving Commitments under paragraph (d) of this Section 2.09 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 Revolving Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section 2.09(e) shall be irrevocable; provided that a notice of 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 Revolving Lenders in accordance with their respective Revolving Commitments. SECTION 2.10 Repayment of Loans; Evidence of Debt. (a) The Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each Revolving Lender the then unpaid principal amount of each Revolving Loan and Borrowing of such Revolving Lender on the Revolving Commitment Termination Date, (ii) to the Administrative Agent for the account of each Revolving Lender thereof, the then unpaid principal amount of each Competitive Loan on the last day of the Interest Period applicable to such Competitive Loan, (iii) to the Administrative Agent for the account of each Term Lender, the then unpaid principal amount of each Term Loan on the Term Maturity Date, and (iv) the amounts specified in Sections 2.08 and 2.11 on the dates specified in each such Section. The Borrower hereby further agrees to pay interest on the unpaid principal amount of the Loans made to the Borrower, from time to time outstanding from the date hereof until payment in full thereof at the rates per annum, and on the dates set forth in Section 2.13. (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 36 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 2.10 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. SECTION 2.11 Prepayment of Loans; Application of Prepayments. (a) In the event the Borrower shall, after the Revolving Commitment Termination Date, receive Net Cash Proceeds from any Asset Disposition or Debt Offering, such Net Cash Proceeds shall be applied on such date toward the prepayment of the Loans as set forth in Section 2.11(e). (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 2.11(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 2.11(b) shall be subject to prior notice in accordance with paragraph (d) of this Section 2.11, (iii) the Borrower shall pay any and all costs and expenses due to the Lenders pursuant to Section 2.16 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 Revolving Lender thereof. (c) The Borrower shall, from time to time, upon demand of the Administrative Agent, prepay the Revolving Loans in such amounts as shall be necessary so that at all times the sum of the Aggregate Revolving Credit Exposure plus the aggregate principal amount of outstanding Competitive Loans is equal to or less than the Aggregate Revolving Commitment. (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 Revolving Commitments as contemplated by Section 2.09(e), then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.09(e). 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 2.13. 37 (e) Amounts to be applied in connection with prepayments and Revolving Commitment reductions made pursuant to Section 2.09(c) and Section 2.11(a) shall be applied, first, to the prepayment of the Term Loans (applied ratably to each of the scheduled principal installments due and owing pursuant to Section 2.08(b) at the time of such prepayment), and second, to reduce permanently the Revolving Commitments (as applicable), any such reduction to be applied proportionately to the Revolving Commitment of each Revolving Lender. Any such reduction of the Revolving Commitment shall be accompanied by a prepayment of the Revolving Loans to the extent required by Section 2.11(c). Subject to the terms hereof, each prepayment of Loans and reduction of the Revolving Commitment shall be made ratably among the Lenders in accordance with their Commitments. The application of any prepayment of the Loans shall be applied first to ABR Loans and then to Eurodollar Loans next maturing. SECTION 2.12 Fees. (a) The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender a facility fee, which shall accrue at the Applicable Rate on the daily amount of the Revolving Commitment of such Revolving 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 Revolving 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 Revolving Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the same Applicable Rate as interest on Eurodollar Revolving Loans on the average daily amount of such Revolving 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 Revolving Lender's Revolving Commitment terminates and the date on which such Revolving 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 Revolving Commitments terminate and any such fees accruing after the date on which the Revolving Commitments terminate shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this Section 2.12(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). 38 (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 Revolving 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 Revolving 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 the Revolving Commitment Termination Date. (d) The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon in writing between the Borrower and the Administrative Agent (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, participation fees and Utilization Fees, to the Revolving Lenders. Fees paid shall not be refundable under any circumstances. SECTION 2.13 Interest. (a) Subject to Section 10.13, the Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate. (b) Subject to Section 10.13, 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. (c) Subject to Section 10.13, each Fixed Rate Loan shall bear interest at the Fixed Rate applicable to such Loan. (d) Notwithstanding the foregoing, but subject to Section 10.13, 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 2.13 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 2.13. (e) Subject to Section 10.13, 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 2.13 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 39 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 10.13, 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 2.14 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; 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 2.15 Increased Costs. (a) If any Change in Law shall: 40 (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. (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 2.15 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 2.15 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 2.15 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 41 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 2.15, a Lender shall not be entitled to compensation pursuant to this Section 2.15 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 2.16 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 2.11(d) 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 2.20, 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 2.16 shall be delivered to 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 2.17 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 2.17) 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. 42 (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 2.17) 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 2.18 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 Section 2.15, 2.16 or 2.17, 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 2.15, 2.16, 2.17 and 10.03 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 43 interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in dollars. (b) Each Borrowing of Revolving Loans shall be made, each payment on account of any facility fee, participation fee or Utilization Fee in respect of the Revolving Commitments hereunder shall be allocated by the Administrative Agent, and any reduction of the Revolving Commitments of the Revolving Lenders shall be allocated by the Administrative Agent, pro rata according to the relevant Revolving Credit Percentages of the Revolving Lenders. Each payment (including each prepayment) on account of principal of and interest on any Revolving Loans shall be allocated by the Administrative Agent pro rata according to the respective outstanding principal amounts of such Revolving Loans then held by the Revolving Lenders. Each payment (including each prepayment) on account of principal of and interest on any Term Loans shall be allocated by the Administrative Agent pro rata according to the respective outstanding principal amounts of such Term Loans then held by the Term Lenders. Further, 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. All proceeds (including proceeds from the realization upon the Collateral) received after acceleration of the maturity of the Loans, shall be applied first, to reimbursement of expenses and indemnities provided for in this Agreement and the other Loan Documents, second, to the other Lender Indebtedness until repaid in full pro rata to each Lender, and third, to any other Person entitled to receive such proceeds in accordance with applicable law. (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 2.18(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 44 Section 2.18(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 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), 2.18(d) or 10.03(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 2.19 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 2.19(b) hereof shall be applicable). Before giving such notice pursuant to this Section 2.19(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 45 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). (b) If the obligation of any Lender to make or maintain any Eurodollar Loans shall be suspended pursuant to Section 2.19(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 2.20 Mitigation Obligations; Replacement of Lenders. (a) If any Lender requests compensation under Section 2.15, 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 2.17, 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 2.15 or 2.17, 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 2.15, (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 2.17, (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 2.19, 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 10.04), 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 Revolving 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 2.15 or payments required to be made pursuant to Section 2.17, such assignment will result in a reduction in such compensation or payments. A 46 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. ARTICLE III REPRESENTATIONS AND WARRANTIES In order to induce the Administrative Agent, the Syndication 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 47 calendar year ended December 31, 2001, audited by Ernst & Young, LLP, independent public accountants, and (ii) as of and for the Fiscal Quarter and the portion of the calendar year ended March 31, 2002, 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 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, 2001, 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 Property material to its business (including its Collateral), 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 (including its Collateral), 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. (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) 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. 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. 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, 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. SECTION 3.17 Environmental Matters. (a) 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. (b) Except for the Disclosed Matters, all Hazardous Materials or solid waste generated at any and all Property of the Borrower or any Subsidiary have in the past been transported, treated and disposed of only by carriers maintaining valid 50 permits under any Environmental Law, and only at treatment, storage and disposal facilities maintaining valid permits under any Environmental Law, which carriers and facilities have been and are operating in compliance with such permits. (c) The Borrower and each Subsidiary have taken all reasonable steps necessary to determine and have determined that no Hazardous Materials or solid waste has been disposed of or otherwise released and there has been no threatened release of any Hazardous Materials on or to any Property of the Borrower or any Subsidiary except in compliance with Environmental Laws, and except for releases that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. SECTION 3.18 Perfection Certificate; Real Property. Schedule 5 hereto accurately reflects, as of the date hereof and as of the Post-Closing Date, the location and value of certain of the Borrower's and its Subsidiaries' Property which shall comprise a portion of the Collateral. The Perfection Certificate, when delivered in accordance with Section 4.03(a), accurately reflects as of the date thereof and as of the Post-Closing Date, in respect of each parcel of Real Property described thereon, the name of the Person which is the owner and holder of record title thereto, the nature of the interest of the Borrower or such Subsidiary (as applicable) therein (e.g. fee, leasehold or other), and, in the case of any leasehold interest described therein, the name of the landlord under such lease and a description of such lease, including all amendments thereto. All other information in the Perfection Certificate is true, correct and complete in all material respects. SECTION 3.19 Schedules to other Loan Documents. All information set forth in all disclosure schedules to the other Loan Documents is true, correct and complete in all material respects. ARTICLE IV CONDITIONS SECTION 4.01 Effective Date. This Agreement and 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 10.02): (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. (b) The Administrative Agent (or its counsel) shall have received from the Borrower (i) a Revolving Credit Note payable to the order of each Revolving Lender, each in the amount of such Revolving Lender's Revolving Commitment, signed on behalf of the Borrower, and (ii) a Term Note payable to the order of each Term Lender, each in the amount of such Term Lender's Term Commitment, signed on behalf of the Borrower. 51 (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 (or its counsel) shall have received from the Borrower and certain of its Subsidiaries a Security Agreement signed on behalf of the Borrower and such Subsidiaries. (e) The Administrative Agent (or its counsel) shall have received from each of the Borrower and Trinity Rail Group, LLC, a Pledge Agreement signed on behalf of the Borrower and Trinity Rail Group, LLC, respectively. (f) The Administrative Agent (or its counsel) shall have received the Intercreditor Agreement executed by the Borrower, certain of its Subsidiaries a party thereto and all other parties thereto. (g) The Administrative Agent shall have received such UCC, tax and judgment lien search reports listing all documentation on file against the Borrower, each Subsidiary and such other Persons as the Administrative Agent may require in each jurisdiction in which Borrower, such Subsidiaries and such other Persons has a principal place of business and/or jurisdiction of organization and in which any Collateral is or has been located. (h) The Administrative Agent shall have received such executed documentation and other Property as the Administrative Agent may require or deem necessary to perfect or protect the Administrative Agent's Lien in the Property of the Borrower and its Subsidiaries granted pursuant to the Security Agreement, the Pledge Agreements and the other Security Instruments, including, without limitation, (i) stock certificates and other applicable certificates representing all of the outstanding Equity in each Material Subsidiary, duly endorsed for transfer to the Administrative Agent or such other duly executed assignments of such Equity as are acceptable to the Administrative Agent (or its counsel), (ii) all Collateral the possession of which is necessary to perfect the Lien therein, (iii) financing statements under the UCC, (iv) all other applicable documentation under the laws of any jurisdiction required with respect to the creation, perfection and protection of Liens, and (v) all third party or governmental approvals and consents required for the pledge of the Collateral under the Security Agreement, the Pledge Agreements and the other Security Instruments. (i) The Administrative Agent shall have received such duly executed UCC-3 termination statements and such other documentation as shall be necessary to terminate or release all Liens encumbering the Collateral not otherwise permitted by this Agreement. (j) The Administrative Agent shall have received evidence that the insurance required by Section 6.05 is in effect. 52 (k) The Administrative Agent shall have received a favorable written opinion (addressed to the Administrative Agent and the Lenders and dated as of the date hereof) of Haynes & Boone, LLP, counsel for the Borrower and the Subsidiaries a party to any Loan Document, in form and substance satisfactory to the Administrative Agent, and covering such matters relating to the Borrower, such Subsidiaries, this Agreement, the other Loan Documents and/or the Transactions as the Required Lenders shall reasonably request. (l) 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 and/or the Transactions, all in form and substance satisfactory to the Administrative Agent and its counsel. (m) 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. (n) The Administrative Agent, the Arranger 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. (o) All Existing Indebtedness of the Borrower shall have been paid in full. (p) The Administrative Agent shall have received Bailee's Letters duly executed and delivered by any Person who is in possession of inventory on behalf of the Borrower. (q) The representations and warranties of each Person set forth in the Loan Documents shall be true and correct on and as of the date hereof. (r) 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 10.02) at or prior to 2:00 p.m., Dallas, Texas time, on June 4, 2002 (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time). 53 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 further 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 Revolving Credit Exposure of the Revolving Lenders to be greater than the Aggregate Revolving Commitment. (d) Following the issuance of any Letter(s) of Credit, the aggregate LC Exposure of all the Revolving Lenders shall not exceed $100,000,000. (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. SECTION 4.03 Post-Closing Conditions. The Borrower shall deliver, or cause to be delivered, to the Administrative Agent and/or the Collateral Agent, each document, instrument or agreement, and take each action, or cause to be taken each action, set forth in this Section 4.03, in each case on or prior to the date specified in this Section 4.03: (a) on or before June 30, 2002, the Borrower shall deliver to the Administrative Agent and/or the Collateral Agent the Perfection Certificate, fully completed and executed by an Authorized Officer of the Borrower; (b) on or before the Post-Closing Date, the Borrower shall deliver, or cause to be delivered to the Administrative Agent and/or the Collateral Agent, each of the following, all in form and substance acceptable to the Administrative Agent and the Required Lenders in their sole discretion: (i) a Security Agreement duly executed by the Borrower and certain of its Subsidiaries granting to the Collateral Agent a first priority security interest in all of the personal property of the Borrower and such Subsidiaries described on, or otherwise located at the locations set forth on, Schedule 5 as security for the Lender Indebtedness; 54 (ii) Mortgages duly executed by the Borrower and certain of its Subsidiaries granting to the Collateral Agent a first priority perfected Lien in and to all Mortgaged Real Property owned by the Borrower and such Subsidiaries as of the Post-Closing Date, subject to Permitted Encumbrances; (iii) completed UCC-1 financing statements necessary to perfect the Liens and security interests created by the Security Agreements and the Mortgages; (iv) in addition to the UCC-1 financing statements required by clause (iii) preceding, such other documents, instruments and agreements as the Administrative Agent and/or the Collateral Agent may reasonably request to fully evidence and perfect the Liens created by the Security Instruments; (v) Landlord Consent and Subordination Agreements duly executed and delivered by each landlord of Mortgaged Real Property, in form and substance satisfactory to the Administrative Agent and/or the Collateral Agent; (vi) Landlord Waiver Agreements duly executed and delivered by each landlord of Real Property leased by the Borrower or any Subsidiary (other than Mortgaged Real Property), in form and substance satisfactory to the Administrative Agent and/or the Collateral Agent; (vii) all Property in which the Administrative Agent and/or Collateral Agent shall, at such time, be entitled to have a Lien pursuant to this Agreement or any other Loan Document shall have been physically delivered to the possession of the Administrative Agent and/or the Collateral Agent to the extent that such possession is necessary for the purpose of perfecting the Administrative Agent's and/or Collateral Agent's Lien in such Collateral; (viii) the Administrative Agent shall have received such UCC, tax and judgment lien search reports listing all documentation on file against the Borrower, each Subsidiary and such other Persons as the Administrative Agent may require in each jurisdiction in which Borrower, such Subsidiaries and such other Persons has a principal place of business and/or jurisdiction of organization and in which any Collateral is or has been located; (ix) the Administrative Agent shall have received such duly executed UCC-3 termination statements and such other documentation as shall be necessary to terminate or release all Liens encumbering the Collateral not otherwise permitted by this Agreement; (x) the Administrative Agent shall have received evidence that the insurance required by Section 6.05 is in effect; (xi) the Administrative Agent shall have received a favorable written opinion (addressed to the Administrative Agent and the Lenders and dated as of the Post-Closing Date) of (A) Haynes & Boone, LLP, counsel for the Borrower and the Subsidiaries a party to any Loan Document, and (B) counsel for the Borrower and its Subsidiaries in each 55 jurisdiction where any Mortgaged Real Property or other Collateral is located, in form and substance satisfactory to the Administrative Agent, and covering such matters as the Administrative Agent or the Required Lenders shall reasonably request; (xii) 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 and/or the Transactions, all in form and substance satisfactory to the Administrative Agent and its counsel; (xiii) the Administrative Agent shall have received a certificate, dated as of the Post-Closing Date 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; (xiv) the Administrative Agent, the Arranger 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 Post-Closing 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; (xv) the Administrative Agent shall have received a Commitment for a Mortgagee's Policy of Title Insurance in form and substance satisfactory to the Administrative Agent with respect to the Mortgaged Real Property, together with evidence satisfactory to the Administrative Agent that Mortgagee's Policies of Title Insurance will be issued pursuant to each such commitment and all premiums therefore have been paid; (xvi) the Administrative Agent shall have received surveys in form and substance acceptable to the Administrative Agent with respect to all Mortgaged Real Property; and (xvii) 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 4.03 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. ARTICLE V SECURITY The Lender Indebtedness and the other obligations described in the Intercreditor Agreement shall be secured by perfected, first priority Liens on and encumbering (a) all accounts receivable and inventory of the Borrower and certain of its Subsidiaries (including, without 56 limitation, its Material Subsidiaries) a party to the Security Agreements, whether now owned or hereafter acquired and wherever located, (b) all Mortgaged Real Property, (c) all other Property of the Borrower and its Subsidiaries described on Schedule 5 hereto or otherwise described in the Security Instruments, and (d) all of the issued and outstanding Equity owned by the Borrower and its Subsidiaries of each existing and future Material Subsidiary. In furtherance of the foregoing, the Borrower hereby agrees to execute and deliver (and to cause any other appropriate Person to execute and deliver) to the Administrative Agent and/or the Collateral Agent for the benefit of the Lenders and the Creditors (as defined in the Intercreditor Agreement), promptly upon request by the Administrative Agent and/or the Collateral Agent, but subject to Article IV hereof, such Security Instruments and other documents, instruments, agreements and certificates, as the Administrative Agent and/or Collateral Agent shall deem necessary or appropriate in its or their sole discretion to create, evidence and perfect the Liens contemplated by this Article V. The Borrower hereby consents and authorizes the Administrative Agent and the Collateral Agent, and their agents, successors and assigns to file any and all necessary financing statements under the UCC, amendments, "in lieu" filings or assignments or continuation statements as necessary from time to time (in the Administrative Agent's and Collateral Agent's discretion) to perfect or continue perfection of the Liens granted pursuant to the Loan Documents. ARTICLE VI 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 Administrative Agent, the Syndication Agents, the Issuing Bank and each Lender that: SECTION 6.01 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 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 57 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 E, (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 7.09(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, (i) a Subsidiary Guaranty duly executed by such Material Subsidiary, (ii) a Pledge Agreement duly executed by the Borrower (or any applicable Subsidiary) granting the Administrative Agent and/or Collateral Agent a perfected first priority Lien on and evidencing all of the issued and outstanding Equity owned by the Borrower (or any applicable Subsidiary) of such Material Subsidiary, together with such certificates, financing statements and other Property as necessary to perfect the Administrative Agent's and/or Collateral Agent's Lien in such Equity, and (iii) such resolutions, member or partner consents, certificates, legal opinions and such other related documents as the Administrative Agent may reasonably request, all in form and substance satisfactory to the Administrative Agent; 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 6.02 Notices of Material Events. The Borrower will furnish to the Administrative Agent and each Lender prompt written notice of the following: (a) the occurrence of any Default; 58 (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; (f) the occurrence of any event or circumstance concerning or changing any of the Collateral that could reasonably be expected to have a Material Adverse Effect; or (g) any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect. Each notice delivered under this Section 6.02 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 6.03 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 7.03. SECTION 6.04 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 6.05 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, 59 with financially sound and reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained by the Borrower and its Subsidiaries. SECTION 6.06 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, the Collateral 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 6.07 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 6.08 Use of Proceeds. The proceeds of (a) the Revolving Loans will be used only (i) to refinance existing indebtedness of the Borrower, and (ii) for working capital and general corporate purposes of the Borrower and its Subsidiaries in the ordinary course of business, and (b) the Term Loans shall be used only (i) to refinance existing indebtedness of the Borrower, (ii) for working capital and general corporate purposes of the Borrower and its Subsidiaries in the ordinary course of business, and (iii) to pay fees and expenses related to the closing and consummation of the Transactions. 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 6.09 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). SECTION 6.10 Compliance with Security Instruments. The Borrower will, and will cause each of its Subsidiaries to, comply with its obligations under the Security Instruments arising in connection with the formation or acquisition of any Material Subsidiary within ten (10) Business Days after such Material Subsidiary is formed or acquired. SECTION 6.11 Further Assurances. The Borrower will, and will cause each of its Subsidiaries to, cure promptly any defects in the creation and issuance of the Notes, and the execution and delivery of the Loan Documents, including this Agreement. The Borrower at its expense will, as promptly as practical, execute and deliver to the Administrative Agent or the Issuing Bank upon request all such other and further documents, agreements and instruments (or cause any of its Subsidiaries (as applicable) to take such action) in compliance with or performance of the covenants and agreements of the Borrower and its Subsidiaries in the Loan Documents, including this Agreement, or to further evidence and more fully describe the Collateral, or to correct any omissions in the Loan Documents, or more fully to state the security obligations set out herein or in any of the Loan Documents, or to perfect, protect or preserve any 60 Liens created pursuant to any of the Loan Documents, or to make any recordings, to file any notices, or obtain any consents, all as may be necessary or appropriate in connection therewith. ARTICLE VII 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 Administrative Agent, the Syndication Agents, the Issuing Bank and each Lender that: SECTION 7.01 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 7.01, and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof; (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; 61 (h) Existing LC Exposure; (i) 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; (j) the TILC Conduit Indebtedness; and (k) other unsecured Indebtedness in an aggregate principal amount not exceeding $50,000,000 at any time outstanding; provided that the aggregate principal amount of Indebtedness of the Borrower's Subsidiaries permitted by this clause (k) shall not exceed $10,000,000 at any time outstanding (excluding any Indebtedness of any such Subsidiaries permitted by clause (j) of this Section 7.01). SECTION 7.02 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 and Liens created by the Security Instruments; (b) any Lien on any property or asset of the Borrower or any Subsidiary existing on the date hereof and set forth in Schedule 7.02; 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, removals 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 7.01, (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. 62 SECTION 7.03 Fundamental Changes. (a) Except as otherwise set forth herein, the Borrower will not, and will not permit any Subsidiary to, (i) merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it; (ii) except for (A) sales of inventory in the ordinary course of business, and (B) the sale of assets described on Schedule 7.03 (or the sale of the voting securities or other equity interests of Subsidiaries whose only substantial assets are those described on Schedule 7.03), (y) 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 (z) sell, transfer, lease or otherwise dispose of any Collateral; provided, that the Borrower may sell, transfer or otherwise dispose of the Collateral if each of the following conditions is satisfied: (1) the Borrower shall have provided the Administrative Agent and the Collateral Agent with not less than thirty (30) Business Days prior written notice of such sale, transfer or other disposition, (2) no Default has occurred which is continuing and no Default will result after giving effect to such sale, transfer or disposition, (3) without limiting the foregoing, after giving effect to such sale, transfer or other disposition, the Borrower shall be in compliance with Section 7.09(d), (4) the Borrower will immediately upon the consummation of such sale, transfer or other disposition submit additional Property owned by the Borrower or its Subsidiaries and reasonably acceptable to the Administrative Agent, the Collateral Agent and Required Lenders with a value (as determined by the Administrative Agent and Collateral Agent in their sole discretion) equal to or greater than the disposed of Collateral as security for the Obligations, and (5) simultaneously with submission of additional Property pursuant to clause (4) above, the Borrower shall deliver to the Administrative Agent and the Collateral Agent such Security Instruments and other documents, instruments, financing statements, certificates and agreements (including, without limitation, title policies and surveys, as applicable) as the Administrative Agent or Collateral Agent shall deem necessary or appropriate in its sole discretion to create, evidence and perfect the Liens contemplated by this Agreement and the Security Instruments; or (iii) 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)(i) the Borrower may sell, transfer, lease or otherwise dispose of its assets to any Subsidiary, and (ii) any Subsidiary may sell, transfer, lease or otherwise dispose of its assets to the Borrower or any other Subsidiary, and (D) any Subsidiary may 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 7.04. (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. 63 SECTION 7.04 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, and investments by such Subsidiaries in the capital stock of their respective 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 7.01; (e) Permitted Acquisitions; and (f) investments existing on the date hereof and set forth in Schedule 7.04. SECTION 7.05 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 7.06 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 Subsidiaries and approved by the Board of Directors of the Borrower and (d) provided no Default has occurred which is continuing, the Borrower may (i) for the period commencing on the Effective Date and continuing through December 31, 2002, declare and pay (A) dividends in an aggregate amount not in excess of $12,000,000, and (ii) for each Fiscal Year thereafter, commencing with the Fiscal Year ending December 31, 2003, declare and pay dividends in an aggregate amount not in excess of $15,000,000; provided, that, in the event the ratings established by S&P and Moody's for the Index Debt are increased to BBB- (stable)/Ba1 (stable) or above, and for so long as such Index Debt remains at or above such level or category with respect to both S&P and Moody's (and further provided no Default has occurred which is continuing), the Borrower may declare and pay dividends in an aggregate amount not in excess of 64 $20,000,000 for any Fiscal Year; provided, further that, in the event the ratings established by S&P and Moody's for the Index Debt are increased to BBB- (stable)/Baa3 (stable) or above, and for so long as such Index Debt remains at or above such level or category with respect to both S&P and Moody's (and further provided no Default has occurred which is continuing), the Borrower may declare and pay dividends in an aggregate amount not in excess of $35,000,000 for any Fiscal Year. SECTION 7.07 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 7.06. SECTION 7.08 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 in favor of the Administrative Agent or Collateral Agent 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 7.08 (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, (v) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to Liens on property or assets permitted by Section 7.02(c) hereof if such restrictions or conditions apply only to the property or assets contemplated therein, (vi) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to purchase money Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets being financed thereunder, and (vii) clause (a) of the foregoing shall not apply to customary provisions in leases and other contracts restricting the assignment thereof. SECTION 7.09 Financial Covenants. (a) The Borrower will not permit the Interest Coverage Ratio to be less than the ratio for each Rolling Period indicated below: 65
Period Ratio ------ ----- Rolling Period ending June 30, 2002 1.50 to 1.00 Rolling Period ending September 30, 2002 1.50 to 1.00 Rolling Period ending December 31, 2002 1.75 to 1.00 Rolling Period ending March 31, 2003 1.75 to 1.00 Rolling Period ending June 30, 2003 1.75 to 1.00 Rolling Period ending September 30, 2003 1.75 to 1.00 Each Rolling Period thereafter 2.00 to 1.00
(b) The Borrower will not permit the Leverage Ratio to be greater than the ratio for each Rolling Period indicated below:
Period Ratio ------ ----- Rolling Period ending June 30, 2002 4.75 to 1.00 Rolling Period ending September 30, 2002 4.50 to 1.00 Rolling Period ending December 31, 2002 4.50 to 1.00 Rolling Period ending March 31, 2003 4.25 to 1.00 Rolling Period ending June 30, 2003 4.25 to 1.00 Rolling Period ending September 30, 2003 4.00 to 1.00 Rolling Period ending December 31, 2003 4.00 to 1.00 Each Rolling Period thereafter 3.50 to 1.00
(c) The Borrower will not permit Consolidated Net Worth at any time to be less than the sum of (i) $800,000,000, 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. (d) The Borrower will not permit the Asset Coverage Ratio to be less than 2.00 to 1.00 at any time. 66 SECTION 7.10 Fiscal Year. The Borrower will not change its Fiscal Year. SECTION 7.11 Capital Expenditures. The Borrower will not, and will not permit any of its Subsidiaries to, make Capital Expenditures (Leasing Company) in any Fiscal Year in excess of $150,000,000 in an aggregate amount. ARTICLE VIII 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 2.11(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 VIII) 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 4.03, Article V, Section 6.01, 6.02, 6.03 (with respect to the Borrower's and its Subsidiaries' existence), 6.08 or in Article VII; (e) the Borrower or any 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 VIII), 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; 67 (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 VIII, (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; (m) a Change in Control shall occur; (n) any Lien purported to be created under any Loan Document shall cease to be, or shall be asserted by the Borrower or any of its Subsidiaries not to be, a valid and perfected 68 Lien on any Collateral, with the priority required hereby or by the Intercreditor Agreement, except as a result of the sale or other disposition of the applicable Collateral in a transaction permitted under the Loan Documents; (o) either any Subsidiary Guaranty, any Security Agreement, any Pledge Agreement, any Mortgage, the Intercreditor Agreement or any other Security Instrument shall for any reason cease to be in full force and effect and valid, binding and enforceable in accordance with its terms after its date of execution, or the Borrower or any of its Subsidiaries shall so state in writing; or (p) the occurrence of an Event of Default under and as defined in the Intercreditor Agreement; then, and in every such event (other than an event with respect to the Borrower described in clause (h) or (i) of this Article VIII), and at any time thereafter during the continuance of such 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 VIII, 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. In addition to the other rights and remedies that the Lenders may have upon the occurrence of an Event of Default, the Required Lenders may direct the Administrative Agent and, in accordance with the terms of, and subject to the necessary consent of the other parties to, the Intercreditor Agreement, the Collateral Agent, to exercise the rights and remedies available to the Administrative Agent and the Collateral Agent under the Security Agreements, the Pledge Agreements, the Mortgages and the other Security Instruments. ARTICLE IX AGENTS Each of the Lenders, the Issuing Bank and the other Agents hereby irrevocably appoint JPMorgan Chase Bank as Administrative Agent, and each of Dresdner Bank AG, New York and Grand Cayman Branches and The Royal Bank of Scotland plc as Syndication Agents, and authorize 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. Without limiting the foregoing, the Administrative Agent is hereby authorized to execute and deliver the Intercreditor Agreement on behalf of each 69 Lender and bind each Lender to the terms thereof as if each Lender were directly a party thereto. Further, each Lender hereby irrevocably appoints JPMorgan Chase Bank as Collateral Agent for the Lenders under the Intercreditor Agreement and the Security Instruments (as applicable). 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 10.02, or further, with respect to the Collateral Agent, such other number or percentage of Persons as necessary or required by the terms of the Intercreditor Agreement), 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 10.02) or in the absence of its own gross 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 VIII) 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 70 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 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 10.03 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. 71 ARTICLE X MISCELLANEOUS SECTION 10.01 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 JPMorgan Chase Bank, 2200 Ross Avenue, 3rd Floor, Dallas, Texas, Texas 75201, Attention: Michael Lister (Telecopy No.: 214-965-2044), with a copy to JPMorgan Chase 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 JPMorgan Chase Bank, 2200 Ross Avenue, 3rd Floor, Dallas, Texas, Texas 75201, Attention: Michael Lister (Telecopy No.: 214-965-2044), with a copy to JPMorgan Chase 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 10.02 Waivers; Amendments. (a) No failure or delay by the Administrative Agent, the Issuing Bank or any Lender in exercising any right or power hereunder 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 10.02, 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. 72 (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 2.18(b) or (c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender directly affected thereby, (v) release any Material Subsidiary from its obligations under its Subsidiary Guaranty, without the written consent of each Lender, (vi) release any material portion of the Collateral without the written consent of each Lender and each party otherwise required to consent thereto pursuant to the terms of the Intercreditor Agreement, except as otherwise expressly permitted hereby, and provided that the Administrative Agent and the Collateral Agent shall release (without consent from the Lenders or any other Person) any Collateral sold, transferred or otherwise disposed of as permitted by Section 7.03 hereof, (vii) waive any of the conditions set forth in Section 4.01 to the making of the Loans without the consent of each Lender affected thereby, or (viii) change any of the provisions of this Section 10.02(b) or the definition of "Required Lenders," "Required Revolving Lenders" or "Required Term 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 directly affected thereby; 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. Further, to the extent any contemplated or proposed waiver, amendment or modification affects only Revolving Loans and/or Revolving Lenders, or only Term Loans and/or Term Lenders, any such waiver, amendment or modification may be effectuated with the consent of the requisite number of Revolving Lenders or Term Lenders, as the case may be, affected thereby, in accordance with the provisions of this Section 10.2(b). SECTION 10.03 Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Arranger 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 any Lender, including the fees, 73 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 10.03, 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 Arranger 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 10.03, 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, 74 indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out 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 10.03 shall be payable promptly after written demand therefor. SECTION 10.04 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 Revolving Commitment and the Loans at the time owing to it) by executing, and causing the assignee thereof to execute, an Assignment and Acceptance; 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 Revolving Commitment or any Revolving 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 an assigning Revolving Lender's Revolving Commitment, the aggregate amount of the Revolving Commitments assigned to an assignee, and the aggregate amount of the Revolving Commitments retained by the assignor after giving effect to such assignment, shall not be less than $10,000,000 (provided, that, if the Revolving Commitments have expired or terminated, such limits shall apply to the amount of the Revolving Credit Exposure assigned and retained), (iii) except in the case of an assignment to a Lender or a Lender Affiliate or an assignment of the entire remaining amount of an assigning Revolving Lender's Revolving Commitment, the aggregate amount of the Revolving Commitments of the assigning Revolving 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, (iv) except in the case of an assignment to a Lender or a Lender Affiliate, or an assignment of the entire interest of a Term Lender in the Term Loans held by it, the aggregate amount of the Term Loans of the assigning Term Lender subject to each such assignment (determined as of the date the Assignment and 75 Acceptance with respect to such assignment is delivered to the Administrative Agent) shall be in increments of $1,000,000 and not less than $1,000,000, unless each of the Borrower and the Administrative Agent otherwise consent, (v) 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 (v) shall not apply to rights in respect of outstanding Competitive Loans, (vi) 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, except in the case of an assignment to a Lender Affiliate, in which case no processing and recordation fee shall be payable, and (vii) 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 10.04, 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 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 2.15, 2.16, 2.17, 2.19 and 10.03). 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 10.04(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 10.04 and any written consent to such assignment required by paragraph (b) of this Section 10.04, 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. 76 (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 Revolving 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 10.02(b) that affects such Participant. Subject to paragraph (f) of this Section 10.04, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section 10.04. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.18(c) as though it were a Lender. (f) A Participant shall not be entitled to receive any greater payment under Section 2.15 or 2.17 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 2.17 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 2.17(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 10.05 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 Arranger 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 77 Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of Sections 2.15, 2.16, 2.17, 2.19 and 10.03 and Article IX 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 10.06 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 signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement. SECTION 10.07 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 10.08 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 10.09 SECTION 10.09 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 78 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 10.09. 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. (d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 10.01. 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 10.10 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 10.11 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 10.12 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 79 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 10.12, 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 10.12 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 10.12, "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 non-confidential 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 degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. SECTION 10.13 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 10.13 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 80 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 10.13 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, 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 10.13) 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 10.13; 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 10.14 Arranger; Syndication Agents. None of the Arranger or the Syndication 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 Arranger, those applicable to all Lenders as such. Without limiting the foregoing, none of the Arranger or the Syndication Agents shall have or be deemed to have any fiduciary relationship with any Lender 81 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 Arranger or the Syndication Agents in deciding to enter into this Agreement or in taking any action hereunder or under the Loan Documents. SECTION 10.15 NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN OR AMONG THE PARTIES WITH RESPECT 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. 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] 82 SIGNATURE PAGE TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., AS BORROWER, JPMORGAN CHASE 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] SIGNATURE PAGE TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., AS BORROWER, JPMORGAN CHASE BANK, INDIVIDUALLY AND AS ADMINISTRATIVE AGENT, AND THE LENDERS LISTED ON SCHEDULE 2.01 HERETO JPMORGAN CHASE BANK, as a Revolving Lender, a Term Lender and as Administrative Agent By: ------------------------------- Name: -------------------------- Title: ------------------------- [Signature Page] SIGNATURE PAGE TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., AS BORROWER, JPMORGAN CHASE BANK, INDIVIDUALLY AND AS ADMINISTRATIVE AGENT, AND THE LENDERS LISTED ON SCHEDULE 2.01 HERETO DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES, as a Revolving Lender, a Term Lender and as a Syndication Agent By: ------------------------------- Name: -------------------------- Title: ------------------------- By: ------------------------------- Name: -------------------------- Title: ------------------------- [Signature Page] SIGNATURE PAGE TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., AS BORROWER, JPMORGAN CHASE BANK, INDIVIDUALLY AND AS ADMINISTRATIVE AGENT, AND THE LENDERS LISTED ON SCHEDULE 2.01 HERETO THE ROYAL BANK OF SCOTLAND plc, as a Revolving Lender and as a Syndication Agent By: ------------------------------- Name: -------------------------- Title: ------------------------- [Signature Page] SIGNATURE PAGE TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., AS BORROWER, JPMORGAN CHASE BANK, INDIVIDUALLY AND AS ADMINISTRATIVE AGENT, AND THE LENDERS LISTED ON SCHEDULE 2.01 HERETO BNP PARIBAS, as a Revolving Lender By: ------------------------------- Name: -------------------------- Title: ------------------------- By: ------------------------------- Name: -------------------------- Title: ------------------------- [Signature Page] SIGNATURE PAGE TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., AS BORROWER, JPMORGAN CHASE BANK, INDIVIDUALLY AND AS ADMINISTRATIVE AGENT, AND THE LENDERS LISTED ON SCHEDULE 2.01 HERETO THE BANK OF NOVA SCOTIA, as a Revolving Lender and a Term Lender By: ------------------------------- Name: -------------------------- Title: ------------------------- [Signature Page] SIGNATURE PAGE TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., AS BORROWER, JPMORGAN CHASE BANK, INDIVIDUALLY AND AS ADMINISTRATIVE AGENT, AND THE LENDERS LISTED ON SCHEDULE 2.01 HERETO WACHOVIA BANK, N.A., as a Revolving Lender and a Term Lender By: -------------------------------- Name: --------------------------- Title: --------------------------- [Signature Page] SIGNATURE PAGE TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., AS BORROWER, JPMORGAN CHASE BANK, INDIVIDUALLY AND AS ADMINISTRATIVE AGENT, AND THE LENDERS LISTED ON SCHEDULE 2.01 HERETO BANK ONE, NA, as a Revolving Lender By: -------------------------------- Name: --------------------------- Title: -------------------------- [Signature Page] SIGNATURE PAGE TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., AS BORROWER, JPMORGAN CHASE BANK, INDIVIDUALLY AND AS ADMINISTRATIVE AGENT, AND THE LENDERS LISTED ON SCHEDULE 2.01 HERETO THE BANK OF TOKYO - MITSUBISHI, LTD., as a Revolving Lender By: ---------------------------------- Name: ----------------------------- Title: ----------------------------- By: ---------------------------------- Name: ----------------------------- Title: ----------------------------- [Signature Page] SIGNATURE PAGE TO CREDIT AGREEMENT BY AND AMONG TRINITY INDUSTRIES, INC., AS BORROWER, JPMORGAN CHASE BANK, INDIVIDUALLY AND AS ADMINISTRATIVE AGENT, AND THE LENDERS LISTED ON SCHEDULE 2.01 HERETO CREDIT SUISSE FIRST BOSTON, CAYMAN ISLANDS BRANCH, as a Revolving Lender By: ------------------------------- Name: -------------------------- Title: ------------------------- [Signature Page] EXHIBIT A [FORM OF] ASSIGNMENT AND ACCEPTANCE Reference is made to the Credit Agreement dated as of June 4, 2002 (as amended and in effect on the date hereof, the "Credit Agreement"), among Trinity Industries, Inc., the Lenders named therein, JPMorgan Chase 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 Revolving 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 2.17(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 10.04(b) of the Credit Agreement (to the extent required by such Section 10.04(b)). 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 Assignee's Address for Notices: Effective Date of Assignment ("Assignment Date"): ================================================================================ Principal Amount Percentage Assigned of Assigned Facility/Commitment (and identifying (set forth, to at least 8 decimals, information as to as a percentage of the Facility individual Competitive and the aggregate Commitments Facility Loans) of 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 The undersigned hereby consent to the within assignment: Trinity Industries, Inc. JPMorgan Chase Bank, as Administrative Agent By: By: -------------------------------- -------------------------------- Name: Name: ------------------------- ------------------------- Title: Title: ------------------------- ------------------------- JPMorgan Chase Bank, as Issuing Bank By: -------------------------------- Name: ------------------------- Title: ------------------------- - --------------- (1) Consents to be included to the extent required by Section 10.04(b) of the Credit Agreement. A-3 EXHIBIT B [FORM OF] GUARANTY THIS GUARANTY (this "Guaranty"), dated as of ____________, 200_, is made by _________________, a _________________ (the "Guarantor"), in favor of JPMORGAN CHASE 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 4, 2002 (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 JPMorgan Chase 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 ARTICLE 1 DEFINITIONS Section 1.1 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 Indebtedness" is defined in the Credit Agreement. "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. Section 1.2 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 2 GUARANTY PROVISIONS Section 2.1 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 Lender Indebtedness 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 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. ss.362(4), and the operation of Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11 U.S.C. ss.502(b) and ss.506(b)), and B-2 (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 2.2 ACCELERATION OF GUARANTY. The Guarantor agrees that, in the event that the Lender Indebtedness has been accelerated pursuant to Article VIII 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 Lender Indebtedness. Section 2.3 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 Lender Indebtedness of the Borrower and each other Loan Party has 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 Lender Indebtedness 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 (1) 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 (2) to exercise any right or remedy against any other guarantor of any Lender Indebtedness of the Borrower or any other Loan Party; (c) any change in the time, manner or place of payment of, or in any other term of, all or any of the Lender Indebtedness of the Borrower or any other Loan Party, or any B-3 other extension, compromise, or renewal of any Lender Indebtedness of the Borrower or any other Loan Party; (d) any reduction, limitation, impairment or termination of any Lender Indebtedness of the Borrower or any other Loan Party for any reason (other than indefeasible payment in full in cash of the Lender Indebtedness), 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, non-genuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Lender Indebtedness 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 Lender Indebtedness of the Borrower or any other Loan Party; or (g) any other circumstance (other than indefeasible payment in full in cash of the Lender Indebtedness) 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 2.4 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 Lender Indebtedness 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 2.5 WAIVER, ETC. The Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Lender Indebtedness 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 Lender Indebtedness of the Borrower or any other Loan Party, as the case may be. Section 2.6 WAIVER OF SUBROGATION. Until the indefeasible payment in full in cash of all Lender Indebtedness 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 indemnification, any right to participate in any claim or remedy of the Lender Parties against the B-4 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 Lender Indebtedness, 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 3 REPRESENTATIONS AND WARRANTIES Section 3.1 REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and warrants unto each Lender Party as set forth in this Article. Section 3.2 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 3.3 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 3.4 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 incorporation (or comparable document), bylaws, operating agreement, partnership agreement, limited liability company agreement or similar documents (as applicable) of the Guarantor or any B-5 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 3.5 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 3.6 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 3.7 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 unliquidated 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 3.8 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. ARTICLE 4 COVENANTS, ETC. Section 4.1 COVENANTS. Until the payment in full in cash of all Lender Indebtedness and the termination or expiration of all Commitments and Letters of Credit, the Guarantor B-6 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 VI and Article VII 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 5 MISCELLANEOUS PROVISIONS Section 5.1 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 5.2 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 10.04 of the Credit Agreement. Section 5.3 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 10.02(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 5.4 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 10.01 of the Credit Agreement. Section 5.5 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 exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. Section 5.6 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. B-7 Section 5.7 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 2.18 of the Credit Agreement. Section 5.8 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 5.9 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] B-8 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 EXHIBIT C [FORM OF] BORROWING REQUEST ___________, 200___ JPMorgan Chase Bank as Administrative Agent for the Lenders referred to below c/o JPMorgan Chase Bank - ---------------------------------------- - ---------------------------------------- - ---------------------------------------- Attention: ----------------------------- Facsimile: ----------------------------- JPMorgan Chase Bank as Administrative Agent for the Lenders referred to below c/o JPMorgan Chase Bank - ---------------------------------------- - ---------------------------------------- - ---------------------------------------- Attention: ----------------------------- Facsimile: ----------------------------- Re: Credit Agreement (hereinafter defined) Dear Sirs: Reference is made to that certain Credit Agreement, dated as of June 4, 2002 (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 JPMorgan Chase 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: (A) Principal amount of Borrowing(1): ------------------------------- (B) Interest rate basis(2): - --------------- (1) Not less than $10,000,000 and an integral multiple of $2,000,000 (or aggregate unused balance of the Revolving Commitments in the case of an ABR Borrowing). (2) Eurodollar Borrowing or ABR Borrowing. C-1 (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: ----------------------------- - --------------- (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 EXHIBIT D [FORM OF] INTEREST ELECTION REQUEST JPMorgan Chase Bank as Administrative Agent for the Lenders referred to below c/o JPMorgan Chase Bank - ---------------------------------------- - ---------------------------------------- - ---------------------------------------- Attention: ----------------------------- Facsimile: ----------------------------- JPMorgan Chase Bank as Administrative Agent for the Lenders referred to below c/o JPMorgan Chase Bank - ---------------------------------------- - ---------------------------------------- - ---------------------------------------- Attention: ----------------------------- Facsimile: ----------------------------- Re: Credit Agreement (hereinafter defined) Dear Sirs: Reference is made to that certain Credit Agreement, dated as of June 4, 2002 (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 JPMorgan Chase 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): (C) Effective date of election (which is a Business Day): - --------------- (1) Specify existing Type and last day of current Interest Period. (2) Not less than $10,000,000 or an integral multiple of $2,000,000 D-1 (D) Interest rate basis of resulting Borrowing(3): (E) Interest Period of resulting Borrowing(4): Very truly yours, TRINITY INDUSTRIES, INC. By: ------------------------------------ Name: ----------------------------- Title: ----------------------------- - --------------- (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 or the Term Maturity Date, as applicable. D-2 EXHIBIT E [FORM OF] COMPLIANCE CERTIFICATE _____________, 200__ JPMorgan Chase 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 4, 2002 (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, JPMorgan Chase 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 6.01(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: ----------------------------- E-1 COMPLIANCE CERTIFICATE WORKSHEET 1. MINIMUM INTEREST COVERAGE RATIO - SECTION 7.09(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 the Rolling Period ended December 31, 2001 only, non-cash and cash charges (not to exceed $123,000,000) (f) to the extent deducted in the calculation of $____________ consolidated net income, non-recurring, non-cash gains or losses and/or 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) EBITDA derived from the assets pledged to the TILC $____________ Conduit Indebtedness (i) Capital Expenditures (Non-Leasing Company) $____________ (j) cash interest payments (excluding such payments made $____________ with respect to the TILC Conduit Indebtedness) (k) Interest Coverage Ratio (item (g) above less items (h) _____to 1.00 and (i) above divided by item (j) above) (l) Minimum Interest Coverage Ratio (from section 7.09(a)) _____to 1.00 2. MAXIMUM LEVERAGE RATIO - SECTION 7.09(b) (a) Indebtedness (other than the TILC Conduit Indebtedness) $____________ E-2 (b) LC Exposure $____________ (c) Total Debt (item (a) above minus item (b) above) $____________ (d) EBITDA (from item 1(g) above) less item 1(h) above $____________ (e) Leverage Ratio (item (c) above divided by item (d) _____to 1.00 above) (f) Maximum Leverage Ratio (from section 7.09(b)) _____to 1.00 3. MINIMUM NET WORTH - SECTION 7.09(c) (a) Amount from Section 7.09(c)(i) of the Credit Agreement $ 800,000,000 (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. MINIMUM ASSET COVERAGE RATIO - SECTION 7.09(d) (a) Book Value of accounts receivable (net of applicable $____________ reserves) (b) Book Value of inventory (net of applicable reserves) $____________ (c) Book Value of property, plant and equipment (net) $____________ (d) Asset Value (the sum of items (a), (b) and (c) above) $____________ (e) Aggregate Credit Exposure $____________ (f) Existing LC Exposure $____________ (g) Asset Coverage Ratio (item (d) above divided by the sum _____to 1.00 of items (e) and (f) above) (h) Minimum Asset Coverage Ratio 2.00 to 1.00 5. CAPITAL EXPENDITURES - SECTION 7.11 (a) Capital Expenditures (Leasing Company) $____________ E-3 (b) Maximum Capital Expenditures (Leasing Company) per $ 150,000,000 Fiscal Year (from section 7.11) E-4 EXHIBIT F [FORM OF] REVOLVING CREDIT NOTE $_______________ ___________, 200_ FOR VALUE RECEIVED, the undersigned, TRINITY INDUSTRIES, INC., a Delaware corporation (the "Borrower"), promises to pay to the order of ____________________________ (the "Lender") on the Revolving Commitment Termination Date the principal sum of ___________ MILLION AND NO/100 DOLLARS ($________) or, if less, the aggregate unpaid principal amount of all Revolving Loans made by the Lender pursuant to that certain Credit Agreement, dated as of June 4, 2002 (together will all amendments and other modifications, if any, from time to time thereafter made thereto, the "Credit Agreement"), among the Borrower, the Lenders party thereto (including the Lender), Dresdner Bank AG, New York and Grand Cayman Branches, and The Royal Bank of Scotland plc, as Syndication Agents, and JPMorgan Chase Bank, as Administrative Agent (the "Administrative Agent"). The Borrower also promises to pay interest on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity (whether by acceleration or otherwise) and, after maturity, until paid, at the rates per annum and on the dates specified in the Credit Agreement. Payments of both principal and interest are to be made in lawful money of the United States of America in same day or immediately available funds to the account designated by the Administrative Agent pursuant to the Credit Agreement. This Revolving Credit Note is one of the Revolving Credit Notes referred to in, and evidences Indebtedness incurred under, the Credit Agreement, to which reference is made for a description of the security for this Revolving Credit Note and for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Indebtedness evidenced by this Revolving Credit Note and on which such Indebtedness may be declared to be immediately due and payable. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement. All parties hereto, whether as makers, endorsers, or otherwise, severally waive presentment for payment, demand, protest and notice of dishonor. THIS REVOLVING CREDIT NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS. TRINITY INDUSTRIES, INC. By: ------------------------------------ Name: ----------------------------- Title: ----------------------------- F-1 REVOLVING LOANS AND PRINCIPAL PAYMENTS Interest Amount of Unpaid Amount of Period (if Principal Principal Notation Date Loan Made applicable) Repaid Balance Total Made By - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- F-2 EXHIBIT G [FORM OF] TERM NOTE $_________________ ___________, 200_ FOR VALUE RECEIVED, the undersigned, TRINITY INDUSTRIES, INC., a Delaware corporation (the "Borrower"), promises to pay to the order of ____________________________ (the "Lender") on the Term Maturity Date the principal sum of ______________ MILLION AND NO/100 DOLLARS ($______________) or, if less, the aggregate unpaid principal amount of all Term Loans made by the Lender pursuant to that certain Credit Agreement, dated as of June 4, 2002 (together with all amendments and other modifications, if any, from time to time thereafter made thereto, the "Credit Agreement"), among the Borrower, the Lenders party thereto (including the Lender), Dresdner Bank AG, New York and Grand Cayman Branches, and The Royal Bank of Scotland plc, as Syndication Agents, and JPMorgan Chase Bank, as Administrative Agent (the "Administrative Agent"). The Borrower also promises to pay interest on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity (whether by acceleration or otherwise) and, after maturity, until paid, at the rates per annum and on the dates specified in the Credit Agreement. Payments of both principal and interest are to be made in lawful money of the United States of America in same day or immediately available funds to the account designated by the Administrative Agent pursuant to the Credit Agreement. This Term Note is one of the Term Notes referred to in, and evidences Indebtedness incurred under, the Credit Agreement, to which reference is made for a description of the security for this Term Note and for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Indebtedness evidenced by this Term Note and on which such Indebtedness may be declared to be immediately due and payable. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement. All parties hereto, whether as makers, endorsers, or otherwise, severally waive presentment for payment, demand, protest and notice of dishonor. THIS TERM NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS. TRINITY INDUSTRIES, INC. By: ------------------------------------ Name: ----------------------------- Title: ----------------------------- G-1 TERM LOANS AND PRINCIPAL PAYMENTS Interest Amount of Unpaid Amount of Period (if Principal Principal Notation Date Loan Made applicable) Repaid Balance Total Made By - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- G-2 EXHIBIT H [FORM OF] SECURITY AGREEMENT THIS SECURITY AGREEMENT (this "Agreement") dated as of June 4, 2002, is by and among TRINITY INDUSTRIES, INC., a Delaware corporation (the "Borrower") and the undersigned subsidiaries of the Borrower and any subsidiary who hereafter becomes a party hereto (each, including the Borrower, a "Debtor" and collectively the "Debtors") and JPMORGAN CHASE BANK, as collateral agent for certain parties under the hereafter defined Intercreditor Agreement (the "Agent"). R E C I T A L S: The Debtors, the Agent and certain other parties have entered into that certain Intercreditor Agreement dated as of June 4, 2002 (as the same may be amended, restated or otherwise modified from time to time, the "Intercreditor Agreement"). This Agreement is executed pursuant to the terms of the Intercreditor Agreement and as required by the terms of the Transaction Documents (as such term is defined in the Intercreditor Agreement). NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the adequacy, receipt and sufficiency of which are hereby acknowledged, and in fulfillment of the requirements of the Transaction Documents, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS Section 1.01 Definitions. As used in this Agreement, the following terms have the following meanings: "Collateral" has the meaning specified in Section 2.01 of this Agreement. "Obligations" has the meaning ascribed to such term in the Intercreditor Agreement; provided that with respect to each Debtor, the obligations secured hereby shall be limited, with respect to each Debtor, to an aggregate amount equal to the largest amount that would not render such Debtor's obligations hereunder and under all other Transaction Documents subject to avoidance under Section 544 or 548 of the United States Bankruptcy Code or under any applicable state law relating to fraudulent transfers or conveyances. "Subsidiary Joinder Agreement" means a Subsidiary Joinder Agreement in substantially the form of Exhibit A hereto. "UCC" means the Uniform Commercial Code as in effect in the State of Texas from time to time. Section 1.01 Other Definitional Provisions. Terms used herein that are defined in the Intercreditor Agreement and are not otherwise defined herein shall have the meanings therefor specified in the Intercreditor Agreement. References to "Sections," "subsections," "Exhibits" and "Schedules" shall be to Sections, subsections, Exhibits and Schedules, respectively, of this Agreement unless otherwise specifically provided. All definitions contained in this Agreement are equally applicable to the singular and plural forms of the terms defined. All references to statutes and regulations shall include H-1 any amendments of the same and any successor statutes and regulations. References to particular sections of the UCC should be read to refer also to parallel sections of the Uniform Commercial Code as enacted in each state or other jurisdiction where any portion of the Collateral is or may be located. Terms used herein, which are defined in the UCC, unless otherwise defined herein or in the Intercreditor Agreement, shall have the meanings determined in accordance with the UCC. ARTICLE II SECURITY INTEREST Section 2.01 Security Interest. As collateral security for the prompt payment and performance in full when due of the Obligations (whether at stated maturity, by acceleration or otherwise), each Debtor pledges and assigns to the Agent, and grants to the Agent a continuing lien on and security interest in, all of the Debtor's right, title and interest in and to the following, whether now owned or hereafter arising or acquired and wherever located (collectively with respect to any Debtor or all Debtors, as the context requires, the "Collateral"): (a) all accounts, and all documents, chattel paper, instruments, general intangibles and all books and records pertaining to or otherwise related to, all accounts receivable, and all products and proceeds thereof; and (b) all inventory and all accessions thereto and all products and proceeds thereof. Section 2.02 Debtor Remains Liable. Notwithstanding anything to the contrary contained herein, (a) each Debtor shall remain liable under the documentation included in the Collateral to the extent set forth therein to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by the Agent of any of its rights or remedies hereunder shall not release any Debtor from any of its duties or obligations under such documentation, (c) the Agent shall not have any obligation under any of such documentation included in the Collateral by reason of this Agreement, and (d) the Agent shall not be obligated to perform any of the obligations of any Debtor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder. ARTICLE III REPRESENTATIONS AND WARRANTIES As of the date of this Agreement, each Debtor represents and warrants to the Agent and the Creditors that: Section 3.01 Location of Inventory; Third Parties in Possession. All of its inventory is located at the places specified in Schedule 3.01 for such Debtor. Schedule 3.01 correctly identifies the landlords or mortgagees, if any, of each of its locations identified in Schedule 3.01. Except for the Persons identified on Schedule 3.01 who hold Collateral in the capacity designated on Schedule 3.01, no Person other than the Debtors and the Agent has possession of any of the Collateral. None of its Collateral has been located in any location within the past four months other than as set forth on Schedule 3.01 for such Debtor. Section 3.02 Office Locations; Fictitious Names; Tax I.D. Number. Its principal place of business, chief executive office and jurisdiction of organization are located at the place or places identified for it on Schedule 3.01. Within the last four months it has not had any other chief place of business, chief executive office, or jurisdiction of organization except as disclosed on Schedule 3.01. H-2 Schedule 3.01 also sets forth all other places where it keeps its books and records and all other locations where it has a place of business. It does not do business and has not done business during the past five years under any trade-name or fictitious business name except as disclosed on Schedule 3.02. Schedule 3.02 sets forth an accurate list of all names of all of its predecessor companies including the names of any entities it acquired (by stock purchase, asset purchase, merger or otherwise), the chief place of business, chief executive office and jurisdiction of organization of each such predecessor company and each jurisdiction in which any collateral purchased from such companies was located at the time of purchase. For purposes of the foregoing, a "predecessor company" shall mean, with respect to a Debtor, any Person whose assets or equity interests are acquired by such Debtor or who was merged with or into such Debtor within the last four months prior to the date hereof. Its United States Federal Income Tax I.D. Number and organizational identification number are set forth on Schedule 3.02. Section 3.03 Delivery of Collateral. Each Debtor has delivered to the Agent all Collateral the possession of which is necessary to perfect the security interest of the Agent therein. Section 3.04 Organization; Powers. Each Debtor 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 on such Debtor or its Collateral, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required. Section 3.05 Authorization; Enforceability. This Agreement and the other Transaction Documents to be entered into by each Debtor are within their respective corporate powers and have been duly authorized by all necessary corporate and, if required, stockholder action. This Agreement has been duly executed and delivered by each Debtor and constitutes, and each other Transaction Document to which any Debtor is to be a party, when executed and delivered, will constitute, a legal, valid and binding obligation of such Debtor (as the case may be), enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar 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 3.06 Governmental Approvals; No Conflicts. The execution, performance and delivery of the Transaction Documents by each Debtor (a) do not require any consent or approval of, registration or filing with (other than the inclusion of this Agreement as an exhibit to routine filings under the Securities Exchange Act of 1934 and filings required to perfect the security interests herein granted required by the Uniform Commercial Code), or any other action by, any governmental authority, (b) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of any Debtor or any order of any governmental authority, (c) will not violate in any material respect or result in a material default under any indenture, material agreement or other instrument binding upon any Debtor or its assets, or give rise to a right thereunder to require any payment to be made by any Debtor, and (d) will not result in the creation or imposition of any security interest or lien on any asset of any Debtor except as specifically contemplated hereby. ARTICLE IV COVENANTS Each Debtor covenants and agrees with the Agent that until the Obligations are paid an performed in full and the Intercreditor Agreement terminates: H-3 Section 4.01 Accounts. It shall, in accordance with its customary business practices, endeavor to collect or cause to be collected from each account debtor under its accounts, as and when due, any and all amounts owing under such accounts. Without the prior written consent of the Agent, it shall not, except in the ordinary course of business when no Event of Default exists, (a) grant any extension of time for any payment with respect to any of its accounts beyond 120 days after such payment's due date, (b) compromise, compound, or settle any of its accounts for less than the full amount thereof, (c) release, in whole or in part, any Person liable for payment of any of its accounts, (d) allow any credit or discount for payment with respect to any of its accounts other than trade or other customary discounts granted in the ordinary course of business, or (e) release any lien, security interest or guaranty securing any of its accounts unless the account has been paid. Section 4.02 Further Assurances; Exceptions to Perfection. At any time and from time to time, upon the request of the Agent, and at its sole expense, it shall, promptly execute and deliver all such further agreements, instruments and documentation and take such further action as the Agent may reasonably deem necessary or appropriate to preserve and perfect its security interest in the Collateral and carry out the provisions and purposes of this Agreement or to enable the Agent to exercise and enforce its rights and remedies hereunder with respect to any of the Collateral. Without limiting the generality of the foregoing, it shall upon reasonable request by the Agent, (i) execute and deliver to the Agent such financing statements as the Agent may from time to time require (each Debtor also hereby authorizes the Agent to file such financing statements without Debtor's signature naming it as debtor, the Agent as secured party and describing the Collateral, in each case as the Agent may deem appropriate); (ii) take such action as the Agent may request to permit the Agent to have control over any deposit account; (iii) deliver to the Agent all Collateral the possession of which is necessary to perfect the security interest therein, duly endorsed and/or accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to the Agent; and (iv) execute and deliver to the Agent such other agreements, instruments and documentation as the Agent may reasonably require to perfect and maintain the validity, effectiveness and priority of the security interests intended to be created by this Agreement; except that, prior to the occurrence of a Potential Default: (a) the Debtors may retain and utilize in the ordinary course of business proceeds of accounts; (b) the Debtors may retain and utilize in the ordinary course of business any letters of credit received in the ordinary course of business; (c) the Debtors may retain any documents received and further negotiated in the ordinary course of business; and (d) no Debtor shall be required to grant the Agent control over any deposit, commodity or security account. If a Potential Default occurs and the Agent requests, then the Debtors shall take such action as the Agent may reasonably request to perfect and protect the security interests of the Agent in all of the Collateral, including without limitation, the following actions: (A) the delivery to the Agent of all Collateral the possession of which is necessary to perfect the security interest of the Agent therein; (B) instructing all account debtors to make payment on accounts and any other Collateral to a post office box or boxes or to a deposit account under the control and in the name of the Agent and (C) any other of the actions described in Section 4.02(i) through Section 4.02(iv) above. H-4 Section 4.03 Third Parties in Possession of Collateral. The Debtors shall not permit any third Person (including any warehouseman, bailee, agent, consignee or processor) to hold any Collateral, unless it shall: (a) notify such third Person of the security interests created hereby; (b) instruct such Person to hold all such Collateral for the Agent's account subject to the Agent's instructions; and (c) subject to Section 4.02, take all other actions the Agent reasonably deems necessary to perfect and protect its and the Debtors' interests in such Collateral pursuant to the requirements of the Uniform Commercial Code of the applicable jurisdiction where the warehouseman, bailee, consignee, agent, processor or other third Person is located (including the filing of a financing statement in the proper jurisdiction naming the applicable third Person as debtor and it as secured party and notifying the third Person' secured lenders of its interest in such Collateral before the third Person receives possession of the Collateral in question). Section 4.04 Corporate Changes. It shall not change its name, identity, jurisdiction of organization, or corporate structure in any manner that might make any financing statement filed in connection with this Agreement seriously misleading or its United States Federal Tax I.D. Number or organizational identification number unless it shall have given the Agent thirty (30) days prior written notice thereof and shall have taken all action reasonably deemed necessary or desirable by the Agent to protect its security interest in the Collateral with the perfection and priority thereof required by the Transaction Documents and this Agreement. It shall not change its principal place of business, chief executive office or the place where it keeps its books and records unless it shall have given the Agent thirty (30) days prior written notice thereof and shall have taken all action deemed necessary or desirable by the Agent to cause its security interest in the Collateral to be perfected with the priority required by the Transaction Documents and this Agreement. Section 4.05 Inventory. It shall keep its inventory at (or in transit to) any of its locations specified on Schedule 3.01 hereto or at such other places within the United States of America as provided in a written notice to the Agent. Section 4.06 Warehouse Receipts Non-Negotiable. It agrees that if any warehouse receipt or receipt in the nature of a warehouse receipt is issued in respect of any portion of the Collateral, such warehouse receipt or receipt in the nature thereof shall not be "negotiable" (as such term is used in Section 7.104 of the UCC) unless such warehouse receipt or receipt in the nature thereof is delivered to the Agent. ARTICLE V RIGHTS OF THE AGENT Section 5.01 POWER OF ATTORNEY. EACH DEBTOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS THE AGENT AND ANY OFFICER OR AGENT THEREOF, WITH FULL POWER OF SUBSTITUTION, AS ITS TRUE AND LAWFUL ATTORNEY-IN-FACT WITH FULL IRREVOCABLE POWER AND AUTHORITY IN THE NAME OF SUCH DEBTOR OR IN ITS OWN NAME, TO TAKE, WHEN A POTENTIAL DEFAULT EXISTS, ANY AND ALL ACTIONS AND TO EXECUTE ANY AND ALL DOCUMENTS AND INSTRUMENTS WHICH THE AGENT AT ANY TIME AND FROM TIME TO TIME DEEMS NECESSARY OR DESIRABLE TO ACCOMPLISH THE PURPOSES OF THIS AGREEMENT AND, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, IT HEREBY GIVES THE AGENT THE POWER AND RIGHT ON ITS BEHALF AND IN ITS OWN NAME TO DO ANY OF THE FOLLOWING WHEN A POTENTIAL DEFAULT EXISTS, WITH NOTICE TO THE BORROWER BUT WITHOUT THE CONSENT OF ANY DEBTOR: H-5 (a) to demand, sue for, collect or receive, in the name of it or in its own name, any money or property at any time payable or receivable on account of or in exchange for any of the Collateral and, in connection therewith, endorse checks, notes, drafts, acceptances, money orders, documents of title or any other instruments for the payment of money under the Collateral or any policy of insurance; (b) to pay or discharge taxes, liens or other encumbrances levied or placed on or threatened against the Collateral; (c) to notify post office authorities to change the address for delivery of mail of the Debtor to an address designated by the Agent and to receive, open, and dispose of mail addressed to the Debtor; (d) (1) to direct account debtors and any other parties liable for any payment under any of the Collateral to make payment of any and all monies due and to become due thereunder directly to the Agent or as the Agent shall direct (each Debtor agrees that if any proceeds of any Collateral (including payments made in respect of accounts) shall be received by it while a Potential Default exists, it shall promptly deliver such proceeds to the Agent with any necessary endorsements, and until such proceeds are delivered to the Agent, such proceeds shall be held in trust by it for the benefit of the Agent and shall not be commingled with any other funds or property of it); (2) to receive payment of and receipt for any and all monies, claims and other amounts due and to become due at any time in respect of or arising out of any Collateral; (3) to sign and endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, proxies, stock powers, verifications and notices in connection with accounts and other documents relating to the Collateral; (4) to commence and prosecute any suit, action or proceeding at law or in equity in any court of competent jurisdiction to collect the Collateral or any part thereof and to enforce any other right in respect of any Collateral; (5) to defend any suit, action or proceeding brought against it with respect to any Collateral; (6) to settle, compromise or adjust any suit, action or proceeding described above and, in connection therewith, to give such discharges or releases as the Agent may deem appropriate; (7) to exchange any of the Collateral for other property upon any merger, consolidation, reorganization, recapitalization or other readjustment of the issuer thereof and, in connection therewith, deposit any of the Collateral with any committee, depositary, transfer agent, registrar or other designated agency upon such terms as the Agent may determine; (8) to add or release any guarantor, endorser, surety or other party to any of the Collateral; (9) to renew, extend or otherwise change the terms and conditions of any of the Collateral; (10) to grant or issue any exclusive or nonexclusive license under or with respect to any of the intellectual property (subject to the rights of third parties under pre-existing licenses); (11) to endorse its name on all applications and other documentation necessary or desirable in order for the Agent to use any intellectual property; (12) to make, settle, compromise or adjust any claims under or pertaining to any of the Collateral (including claims under any policy of insurance); and (13) to sell, transfer, pledge, convey, make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Agent were the absolute owner thereof for all purposes, and to do, at the Agent's option and the Debtors' expense, at any time, or from time to time, all acts and things which the Agent deems necessary to protect, preserve, maintain, or realize upon the Collateral and the Agent's security interest therein. THIS POWER OF ATTORNEY IS A POWER COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH SECTION 7.11. The Agent shall be under no duty to exercise or withhold the exercise of any of the rights, powers, privileges and options expressly or implicitly granted to the Agent in this Agreement, and shall not be liable for any failure to do so or any delay in doing so. Neither the Agent nor any Person H-6 designated by the Agent shall be liable for any act or omission or for any error of judgment or any mistake of fact or law, except any of the same resulting from its or their gross negligence or willful misconduct. This power of attorney is conferred on the Agent solely to protect, preserve, maintain and realize upon its security interest in the Collateral. The Agent shall not be responsible for any decline in the value of the Collateral and shall not be required to take any steps to preserve rights against prior parties or to protect, preserve or maintain any lien or security interest given to secure the Collateral. Section 5.02 Assignment by the Agent. The Agent and each Creditor may at any time assign or otherwise transfer all or any portion of their rights and obligations under this Agreement and the other Transaction Documents (including, without limitation, the Obligations) to any other Person, to the extent permitted by, and upon the conditions contained in, the Transaction Documents, and such Person shall thereupon become vested with all the benefits thereof granted to the Agent and the Creditors, respectively, herein or otherwise. Section 5.03 Possession; Reasonable Care. The Agent may, from time to time, in its sole discretion, appoint one or more agents to hold physical custody, for the account of the Agent, of any or all of the Collateral that the Agent has a right to possess. The Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which the Agent accords its own property, it being understood that the Agent shall not have any responsibility for taking any necessary steps to preserve rights against any parties with respect to any Collateral. ARTICLE VI DEFAULT Section 6.01 Rights and Remedies. If an Event of Default exists, the Agent shall have the following rights and remedies: (a) In addition to all other rights and remedies granted to the Agent in this Agreement or in any other Transaction Document or by applicable law, the Agent shall have all of the rights and remedies of a secured party under the UCC (whether or not the UCC applies to the affected Collateral). Without limiting the generality of the foregoing, the Agent may (1) without demand or notice to any Debtor, collect, receive or take possession of the Collateral or any part thereof and for that purpose the Agent may enter upon any premises on which the Collateral is located and remove the Collateral therefrom or render it inoperable, and/or (2) sell, lease or otherwise dispose of the Collateral, or any part thereof, in one or more parcels at public or private sale or sales, at the Agent's offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Agent may deem commercially reasonable or otherwise as may be permitted by law. The Agent shall have the right at any public sale or sales, and, to the extent permitted by applicable law, at any private sale or sales, to bid (which bid may be, in whole or in part, in the form of cancellation of indebtedness) and become a purchaser of the Collateral or any part thereof free of any right or equity of redemption on the part of any Debtor, which right or equity of redemption is hereby expressly waived and released by each Debtor. Upon the request of the Agent, each Debtor shall assemble its Collateral and make it available to the Agent at any place designated by the Agent that is reasonably convenient to it and the Agent. Each Debtor agrees that the Agent shall not be obligated to give more than ten (10) days prior written notice of the time and place of any public sale or of the time after which any private sale may take place and that such notice shall constitute reasonable notice of such matters. The Agent shall not be obligated to make any sale of Collateral if it shall determine not to do so, regardless of the fact that notice of sale of Collateral may have been given. The Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place H-7 fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. Each Debtor shall be liable for all reasonable expenses of retaking, holding, preparing for sale or the like, and all reasonable attorneys' fees, legal expenses and other costs and expenses incurred by the Agent in connection with the collection of the Obligations and the enforcement of the Agent's rights under this Agreement. Each Debtor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral applied to the Obligations are insufficient to pay the Obligations in full to the extent provided in the Transaction Documents. The Agent shall apply the proceeds of Collateral against the Obligations as provided in the Intercreditor Agreement. Each Debtor waives all rights of marshalling, valuation and appraisal in respect of the Collateral. Any cash held by the Agent as Collateral and all cash proceeds received by the Agent in respect of any sale of, collection from or other realization upon all or any part of the Collateral may, in the discretion of the Agent, be held by the Agent as collateral for, and then or at any time thereafter applied in whole or in part by the Agent against, the Obligations in the order permitted by the Intercreditor Agreement. The Agent shall have no obligation to invest or otherwise pay interest on any amounts held by it in connection with or pursuant to this Agreement or the Intercreditor Agreement. (b) The Agent may cause any or all of the Collateral held by it to be transferred into the name of the Agent or the name or names of the Agent's nominee or nominees. (c) The Agent may exercise any and all of the rights and remedies of any Debtor under or in respect of the Collateral, including, without limitation, any and all rights of it to demand or otherwise require payment of any amount under, or performance of any provision of, any of the Collateral. (d) The Agent may collect or receive all money or property at any time payable or receivable on account of or in exchange for any of the Collateral, but shall be under no obligation to do so. (e) On any sale of the Collateral, the Agent is hereby authorized to comply with any limitation or restriction with which compliance is necessary, in the view of the Agent's counsel, in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any applicable governmental authority. (f) For purposes of enabling the Agent to exercise its rights and remedies under this Section 6.01 and enabling the Agent and its successors and assigns to enjoy the full benefits of the Collateral in each case as the Agent shall be entitled to exercise its rights and remedies under this Section 6.01, each Debtor hereby grants to the Agent an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to it) to, if an Event of Default exists, use, assign, license or sublicense any of its intellectual property, including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and all computer programs used for the completion or printout thereof and further including in such license such rights of quality control and inspection as are reasonably necessary to prevent the trademarks included in such license from claims of invalidation. This license shall also inure to the benefit of all successors, assigns and transferees of the Agent. ARTICLE VII MISCELLANEOUS Section 7.01 No Waiver; Cumulative Remedies. No failure on the part of the Agent to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or H-8 privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right, power, or privilege. The rights and remedies provided for in this Agreement are cumulative and not exclusive of any rights and remedies provided by law. Section 7.02 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of each Debtor and the Agent and respective successors and assigns, except that no Debtor may assign any of its rights or obligations under this Agreement without the prior written consent of the Creditors. Section 7.03 AMENDMENT; ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO. Except as contemplated by the execution and delivery of a Subsidiary Joinder Agreement (which only needs to be signed by the party thereto), the provisions of this Agreement may be amended or waived only by an instrument in writing signed by the parties hereto and the number of Creditors required by the Intercreditor Agreement. Section 7.04 Notices. All notices and other communications provided for in this Agreement shall be given or made in accordance with the Intercreditor Agreement. Section 7.05 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas and applicable laws of the United States of America. Section 7.06 Headings. The headings, captions, and arrangements used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement. Section 7.07 Survival of Representations and Warranties. All representations and warranties made in this Agreement or in any certificate delivered pursuant hereto shall survive the execution and delivery of this Agreement, and no investigation by the Agent shall affect the representations and warranties or the right of the Agent or any Creditor to rely upon them. Section 7.08 Counterparts. This Agreement may be executed in any number of counterparts and on facsimile counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. Section 7.09 Waiver of Bond. In the event the Agent seeks to take possession of any or all of the Collateral by judicial process, each Debtor hereby irrevocably waives any bonds and any surety or security relating thereto that may be required by applicable law as an incident to such possession, and waives any demand for possession prior to the commencement of any such suit or action. Section 7.10 Severability. Any provision of this Agreement which is determined by a court of competent jurisdiction to be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. H-9 Section 7.11 Termination. If all of the Obligations shall have been paid and performed in full, all commitments of the Agent and the Creditors under the Transaction Documents shall have expired or terminated, the Agent shall, upon the written request of a Debtor, execute and deliver to the Debtor a proper instrument or instruments acknowledging the release and termination of the security interests created by this Agreement, and shall duly assign and deliver to each Debtor (without recourse and without any representation or warranty) such of the Collateral as may be in the possession of the Agent and has not previously been sold or otherwise applied pursuant to this Agreement. Section 7.12 Obligations Absolute. All rights and remedies of the Agent hereunder, and all obligations of each Debtor hereunder, shall be absolute and unconditional irrespective of: (a) any lack of validity or enforceability of any of the Transaction Documents; (b) any change in the time, manner, or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from any of the Transaction Documents; (c) any exchange, release, or non-perfection of any Collateral, or any release or amendment or waiver of or consent to any departure from any guarantee, for all or any of the Obligations; or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, a third party pledgor. [Signature Page to Follow] H-10 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first written above. DEBTORS: ------- TRINITY INDUSTRIES, INC. TRANSIT MIX CONCRETE & MATERIALS COMPANY TRINITY INDUSTRIES LEASING COMPANY TRINITY MARINE PRODUCTS, INC. TRINITY RAIL GROUP, LLC TRINITY TANK CAR, INC. TRINITY RAIL COMPONENTS & REPAIR, INC. THRALL TRINITY FREIGHT CAR, INC. By: ------------------------------------ -----------------------------------, Authorized Officer for all Debtors H-11 AGENT: JPMORGAN CHASE BANK, as the Collateral Agent under the Intercreditor Agreement By: ------------------------------------ Michael J. Lister, Vice President H-12 Index to Schedules and Exhibits to Security Agreement Schedules - --------- Schedule 3.01 - Locations Schedule 3.02 - Trade and Other Names, Tax ID Number Exhibits - -------- Exhibit A - Subsidiary Joinder Agreement H-13 SCHEDULE 3.01 TO TRINITY INDUSTRIES, INC. SECURITY AGREEMENT Locations 1. TRINITY INDUSTRIES, INC. I. Chief Place of Business and Chief Executive Office of Debtor: Name and Address of Location Landlord or Mortgagee of Premises -------- --------------------------------- 2525 Stemmons Freeway Dallas, Texas 75207 II. Jurisdiction of Organization: Delaware III. Organizational I.D. Number: 2098029 IV. Other Locations: Alabama Arizona Arkansas Florida Georgia Illinois Indiana Kentucky Louisiana H - Schedule 3.01 - Page 1 Maryland Mississippi North Carolina Ohio Oklahoma Pennsylvania Tennessee Texas A. Other Leased or Owned Locations:
Name and Address of Landlord or Street Address City ST Zip Code County Lease/Own Mortgagee of Premises (if any) -------------- ---- -- -------- ------ --------- -------------------------------
H - Schedule 3.01 - Page 2 V. Third Parties in Possession: _______________ 2. TRANSIT MIX CONCRETE & MATERIALS COMPANY I. Chief Place of Business and Chief Executive Office of Debtor: Name and Address of Location Landlord or Mortgagee of Premises -------- --------------------------------- 2525 Stemmons Freeway Dallas, Texas 75207 II. Jurisdiction of Organization: Delaware III. Organizational I.D. Number: 2274660 IV. Other Locations: Colorado Louisiana Texas V. Third Parties in Possession: ____________ 3. TRINITY INDUSTRIES LEASING COMPANY I. Chief Place of Business and Chief Executive Office of Debtor: Name and Address of Location Landlord or Mortgagee of Premises -------- --------------------------------- 2525 Stemmons Freeway Dallas, Texas 75207 II. Jurisdiction of Organization: Delaware III. Organizational I.D. Number: 2147288 H - Schedule 3.01 - Page 3 IV. Other Locations: Illinois Texas V. Third Parties in Possession: _____________________ 4. TRINITY MARINE PRODUCTS, INC. I. Chief Place of Business and Chief Executive Office of Debtor: Name and Address of Location Landlord or Mortgagee of Premises -------- --------------------------------- 2525 Stemmons Freeway Dallas, Texas 75207 II. Jurisdiction of Organization: Delaware III. Organizational I.D. Number: 2602621 IV. Other Locations: Kentucky Louisiana Missouri Tennessee V. Third Parties in Possession: _______________ H - Schedule 3.01 - Page 4 5. TRINITY RAIL GROUP, LLC I. Chief Place of Business and Chief Executive Office of Debtor: Name and Address of Location Landlord or Mortgagee of Premises -------- --------------------------------- 2521 State Street Chicago, Illinois 60411 II. Jurisdiction of Organization: Delaware III. Organizational I.D. Number: 3474715 IV. Other Locations: ______________ V. Third Parties in Possession: _______________ 6. TRINITY TANK CAR, INC. I. Chief Place of Business and Chief Executive Office of Debtor: Name and Address of Location Landlord or Mortgagee of Premises -------- --------------------------------- 2525 Stemmons Freeway Dallas, Texas 75207 II. Jurisdiction of Organization: Delaware III. Organizational I.D. Number: 3450692 IV. Other Locations: _______________ V. Third Parties in Possession: _______________ H - Schedule 3.01 - Page 5 7. TRINITY RAIL COMPONENTS & REPAIR, INC. I. Chief Place of Business and Chief Executive Office of Debtor: Name and Address of Location Landlord or Mortgagee of Premises -------- --------------------------------- 2525 Stemmons Freeway Dallas, Texas 75207 II. Jurisdiction of Organization: Delaware III. Organizational I.D. Number: 3450691 IV. Other Locations: _______________ V. Third Parties in Possession: _______________ 8. THRALL TRINITY FREIGHT CAR, INC. I. Chief Place of Business and Chief Executive Office of Debtor: Name and Address of Location Landlord or Mortgagee of Premises -------- --------------------------------- 2521 State Street Chicago, Illinois 60411 II. Jurisdiction of Organization: Delaware III. Organizational I.D. Number: 3450694 IV. Other Locations: _______________ V. Third Parties in Possession: _______________ H - Schedule 3.01 - Page 6 SCHEDULE 3.02 TO TRINITY INDUSTRIES, INC. SECURITY AGREEMENT Trade And Other Names; Tax I.D. Number 1. TRINITY INDUSTRIES, INC. I. Trade and Other Names: Texas New Industries, Inc. Trinity Industries Manufacturing and Fabrication, Inc. II. United States Federal Income Tax I.D. Number: 75-0225040 III. Predecessor Companies: __________________
Company Name Jurisdiction of Organization Chief Executive Office Other Locations ------------ ---------------------------- ---------------------- ---------------
2. TRANSIT MIX CONCRETE & MATERIALS COMPANY I. Trade and Other Names: __________________ II. United States Federal Income Tax I.D. Number: _______________ III. Predecessor Companies: __________________ H - Schedule 3.02 - Page 1 3. TRINITY INDUSTRIES LEASING COMPANY I. Trade and Other Names: __________________ II. United States Federal Income Tax I.D. Number: _______________ III. Predecessor Companies: __________________ 4. TRINITY MARINE PRODUCTS, INC. I. Trade and Other Names: __________________ II. United States Federal Income Tax I.D. Number: _______________ III. Predecessor Companies: __________________ 5. TRINITY RAIL GROUP, INC. I. Trade and Other Names: __________________ II. United States Federal Income Tax I.D. Number: _______________ III. Predecessor Companies: __________________ H - Schedule 3.02 - Page 2 6. TRINITY TANK CAR, INC. I. Trade and Other Names: __________________ II. United States Federal Income Tax I.D. Number: _______________ III. Predecessor Companies: __________________ 7. TRINITY RAIL COMPONENTS & REPAIR, INC. I. Trade and Other Names: __________________ II. United States Federal Income Tax I.D. Number: _______________ III. Predecessor Companies: __________________ 8. THRALL TRINITY FREIGHT CAR, INC. I. Trade and Other Names: __________________ II. United States Federal Income Tax I.D. Number: _______________ III. Predecessor Companies: __________________ H - Schedule 3.02 - Page 3 EXHIBIT A TO TRINITY INDUSTRIES, INC. SECURITY AGREEMENT SUBSIDIARY JOINDER AGREEMENT This SUBSIDIARY JOINDER AGREEMENT (this "Agreement") dated as of ____________________, 200_ is executed by the undersigned (the "Debtor") for the benefit of JPMORGAN CHASE BANK in its capacity as agent for the Creditors a party to the hereafter identified Intercreditor Agreement (in such capacity herein, the "Agent") and for the benefit of such Creditors in connection with that certain Intercreditor Agreement dated as of June 4, 2002, among the Agent, TRINITY INDUSTRIES, INC. (the "Borrower"), certain of the Borrower's subsidiaries and the Creditors a party thereto (as modified, the "Intercreditor Agreement", and capitalized terms not otherwise defined herein being used herein as defined in the Intercreditor Agreement). The Debtor is a newly formed or newly acquired Subsidiary and is required to execute this Agreement pursuant to the Intercreditor Agreement. NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Debtor hereby agrees as follows: 1. The Debtor assumes all the obligations of a "Debtor" under the Security Agreement and agrees that it is a "Debtor" and bound as a "Debtor" under the terms of the Security Agreement as if it had been an original signatory thereto. In furtherance of the foregoing, the Debtor hereby assigns, pledges and grants to Agent a security interest in all of its right, title and interest in and to Debtor's Collateral (as defined in the Security Agreement) to secure the Obligations under the terms of the Security Agreement. 2. Schedules 3.01, 3.02 and 3.03 of the Security Agreement are hereby amended to add the information relating to Debtor set out on Schedules 3.01, 3.02 and 3.03 hereof. The Debtor hereby confirms that the representations and warranties set forth in Article III of the Security Agreement applicable to it and its Collateral are true and correct after giving effect to such amendment to the Schedules. 3. In furtherance of its obligations under Section 4.02 of the Security Agreement but subject to Section 4.02 of the Security Agreement, Debtor agrees to execute and deliver such UCC financing statements naming the Debtor as debtor, the Agent as secured party and describing its Collateral and such other documentation (including intellectual property security agreements) as the Agent may require to evidence, protect and perfect the security created by the Security Agreement as modified hereby. 4. This Agreement shall be deemed to be part of, and a modification to, the Security Agreement and shall be governed by all the terms and provisions of the Security Agreement, which terms are incorporated herein by reference, are ratified and confirmed and shall continue in full force and effect as valid and binding agreements of Debtor enforceable against Debtor. The Debtor hereby waives notice of Agent's or any Creditor's acceptance of this Agreement. H - EXHIBIT A-1 IN WITNESS WHEREOF, the Debtor has executed this Agreement as of the day and year first written above. Debtor: ---------------------------------------- By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- H - EXHIBIT A-2 EXHIBIT I [FORM OF] PLEDGE AGREEMENT THIS PLEDGE AGREEMENT (this "Agreement") is made as of June 4, 2002, by TRINITY INDUSTRIES, INC., a Delaware corporation [Subsidiary] ("Pledgor"), in favor of JPMORGAN CHASE BANK, as collateral agent (in such capacity, "Secured Party") for certain parties under the hereafter defined Intercreditor Agreement. RECITALS: Pledgor, Secured Party and certain other parties have entered into that certain Intercreditor Agreement dated as of June 4, 2002 (as the same may be amended, restated or otherwise modified from time to time, the "Intercreditor Agreement"). This Agreement is executed pursuant to the terms of the Intercreditor Agreement and as required by the terms of the Transaction Documents (as such term is defined in the Intercreditor Agreement). NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the adequacy, receipt and sufficiency of which are hereby acknowledged, and in fulfillment of the requirements of the Transaction Documents, the parties hereto hereby agree as follows: 1. AGREEMENT. (a) Pledge. Upon the terms hereof, for value received, Pledgor hereby irrevocably and unconditionally pledges, assigns, hypothecates and transfers to Secured Party, for the ratable benefit of the Creditors a party to the Intercreditor Agreement, a first and prior pledge and security interest in (1) all capital stock, equity and other ownership interests of ______________________________, ___________________________, ____________________________ and ________________________ (collectively, the "Pledged Equity Issuers") owned beneficially or of record by Pledgor, and described on Exhibit A attached hereto (together with any certificate or instrument evidencing such interest) (the foregoing interests being referred to herein as the "Pledged Equity"), (2) any and all proceeds or other sums arising from or by virtue of, and all dividends and distributions (cash or otherwise) payable and/or distributable with respect to, all or any of the Pledged Equity, and (3) all cash, securities, dividends and other property at any time and from time to time receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Equity and any other property substituted or exchanged therefor (all of the foregoing described in clauses (1), (2) and (3) being collectively referred to herein as the "Collateral"). Unless otherwise defined in this Agreement, terms used herein shall have the meanings set forth in the Intercreditor Agreement or the Revolver/Term Agreement (as defined in the Intercreditor Agreement) as the context shall require. Notwithstanding any contrary provision in this Agreement, however, the pledge hereunder is limited to the extent, if any, required so that such pledge is not subject to avoidance under applicable bankruptcy or other debtor relief laws. 2. OBLIGATIONS. The following obligations (collectively, the "Obligations") are secured by this Agreement: (a) All Obligations (as such term is defined in the Intercreditor Agreement). (b) Without limiting the foregoing, all costs incurred by Secured Party to obtain, preserve, perfect and enforce this Agreement, the other Transaction Documents, and the pledge and I-1 security interest granted hereby, collect the Obligations, and maintain, preserve, collect and enforce the Collateral, including, without limitation, taxes, assessments, attorneys' fees and legal expenses, and expenses of sale. (c) Interest on the above amounts as agreed to by Pledgor under the Transaction Documents, including, without limitation, interest, fees and other charges that would accrue or become owing both prior to and subsequent to and but for the commencement of any proceeding against or with respect to Pledgor under any chapter of the Bankruptcy Code of 1978, 11 U.S.C. ss. 101 et seq. whether or not a claim is allowed for the same in any such proceeding. 3. COVENANTS, REPRESENTATIONS AND WARRANTIES. (a) Representations and Warranties. (1) Representations and Warranties Concerning Pledgor. Pledgor represents and warrants that (A) Pledgor is duly organized under the laws of the state of Delaware; (B) the chief place of business and chief executive office of Pledgor and the office where Pledgor keeps all of its records is located at 2525 Stemmons Freeway, Dallas, Texas 75270; (C) no consent of any other Person and no authorization, approval or other action by, and no notice to or filing with, any Governmental Authority is required (i) for the pledge by Pledgor of the Collateral pledged by it hereunder, for the grant by Pledgor of the security interest granted hereby or for the execution, delivery or performance of this Agreement by Pledgor, (ii) for the perfection or maintenance of the pledge, assignment and security interest created hereby (including the first priority nature of such pledge, assignment and security interest), or (iii) for the exercise by Secured Party of the rights provided for in this Agreement or in the Intercreditor Agreement, or the remedies in respect of the Collateral pursuant to this Agreement or the Intercreditor Agreement; (D) Pledgor possesses all material licenses and permits, required for its ownership of the Collateral and the operations of its business; (E) Pledgor is not, nor will the execution, delivery and performance and compliance with the terms of this Agreement cause Pledgor to be in violation of any applicable material law or in default (nor has any event occurred which, with notice or lapse of time or both, could constitute a default) under any debt or other contractual obligation of Pledgor; (F) except as disclosed in the Revolver/Term Agreement, there is no litigation, arbitration or other proceeding pending or threatened against or affecting Pledgor or its assets or properties; and (G) Pledgor has full power, authority and legal right to execute, deliver and perform this Agreement. (2) Representations and Warranties Concerning the Collateral. Pledgor represents and warrants that (A) the ownership interests pledged hereunder are duly authorized, validly issued, fully paid and non-assessable; (B) Pledgor is the sole legal and beneficial owner of the Collateral pledged by it and the pledge, assignment and delivery of the Collateral create a valid first and prior perfected security interest in the Collateral, and no other security agreement covering the Collateral, or any part thereof, has been made, and no pledge or security interest, other than the one herein created, has attached or been perfected in the Collateral or in any part thereof; and (C) no dispute, right of setoff, counterclaim or defense exists with respect to any part of the Collateral. The delivery at any time by Pledgor to Secured Party of Collateral shall constitute a representation and warranty by Pledgor under this Agreement that, (i) with respect to such Collateral, and each item thereof, Pledgor is the sole legal and beneficial owner of, with good title to, the Collateral, and (ii) the matters warranted in this paragraph are true and correct. I-2 (b) Covenants. (1) Affirmative Covenants. Pledgor covenants and agrees (A) promptly to deliver to Secured Party all instruments, certificates, documents or agreements evidencing any of the Collateral; (B) from time to time promptly to execute and deliver to Secured Party all such other assignments, certificates, supplemental writings and financing statements, and do all other acts or things, as Secured Party or any Creditor may reasonably request in order more fully to evidence and perfect the security interest and pledge herein created or to effect the purposes of this Agreement; (C) promptly to furnish Secured Party with any information or writings which Secured Party or any Creditor may reasonably request concerning the Collateral; (D) to allow Secured Party or any Creditor to inspect all records of Pledgor relating to the Collateral, and to make and take away copies of such records, at Pledgor's expense, at such reasonable times and as often as may be reasonably requested by Secured Party or any such Creditor; (E) promptly to notify Secured Party of any change in any fact or circumstances warranted or represented by Pledgor in this Agreement or in any other writings furnished by or on behalf of Pledgor to Secured Party or any Creditor in connection with the Collateral; (F) promptly to notify Secured Party of any claim, action or proceeding affecting title to the Collateral, or any part thereof, or the security interest therein, and, at the request of Secured Party, appear in and defend, at Pledgor's expense, any such action or proceeding; and (G) promptly to pay to Secured Party the amount of all costs and attorneys' fees incurred by Secured Party hereunder or in connection with the enforcement hereof. (2) Negative Covenants. Except as otherwise provided in the Revolver/Term Agreement, Pledgor covenants and agrees that Pledgor will not (A) sell, assign or transfer any of Pledgor's rights in the Collateral; (B) create any other security interest or pledge in, mortgage or otherwise encumber the Collateral or any part thereof, or permit the same to be or become subject to any Lien, attachment, execution, sequestration, other legal or equitable process, or any encumbrance of any kind or character, except for Liens permitted by Section 7.02 of the Revolver/Term Agreement; (C) approve any amendment to the certificate or articles of incorporation, the bylaws, or other charter documents of any Pledged Equity Issuer (other than ministerial amendments which would not adversely affect the rights of Secured Party or the Creditors hereunder). Notwithstanding anything to the contrary contained herein, in the event of any conflict between the terms and provisions of this Section 3(b) and the terms and provisions of Article VI or Article VII of the Revolver/Term Agreement, the terms and provisions of Article VI and/or Article VII of the Revolver/Term Agreement shall control. 4. RIGHTS OF SECURED PARTY. (a) Rights to Dividends, Distributions, and Payments. With respect to such instruments which are certificates, bonds or other securities, Secured Party may demand of the obligor issuing the same, and may receive and receipt for, any and all dividends and other distributions (other than cash dividends) payable in respect thereof, whether ordinary or extraordinary. Secured Party shall have the authority, following the occurrence and during the continuance of an Event of Default and without notice to Pledgor, to have such certificates, bonds or other securities registered either in Secured Party's name or in the name of a nominee. If, while this Agreement is in effect, Pledgor shall become entitled to receive or shall receive any certificate (including, without limitation, any certificate representing a stock or ownership interest dividend or a distribution in connection with any reclassification, increase or reduction of capital, or issued in connection with any reorganization), option I-3 or rights, whether as an addition to, in substitution of, as a conversion of or in exchange for any of the Collateral, or otherwise, Pledgor agrees to accept the same as Secured Party's agent and to hold the same in trust on behalf of and for the benefit of Secured Party, and to deliver the same forthwith to Secured Party in the exact form received, with appropriate undated stock powers, duly executed in blank, to be held by Secured Party, subject to the terms hereof, as additional collateral security for the Obligations. Until and unless an Event of Default shall have occurred and be continuing, Pledgor shall be entitled to receive and utilize all cash dividends, principal, and interest paid in respect of the Collateral. After the occurrence and during the continuance of an Event of Default, Secured Party shall be entitled to all cash dividends and to any sums paid upon or in respect of the Collateral upon the liquidation, dissolution or reorganization of the issuer thereof which shall be paid to Secured Party to be held by it as additional collateral security for the Obligations. In case any distribution shall be made on or in respect of the Collateral pursuant to the reorganization, liquidation or dissolution of the issuer thereof, the property so distributed shall be delivered to Secured Party to be held by it as additional collateral security for the Obligations. After the occurrence and during the continuance of an Event of Default, all sums of money and property so paid or distributed in respect of the Collateral (other than proceeds of any liquidation or similar proceeding) which are received by Pledgor shall, until paid or delivered to Secured Party, be held by Pledgor in trust as additional Collateral for the Obligations. (b) Preservation of Collateral. Neither Secured Party nor any Creditor shall have any duty to fix or preserve rights against prior parties to the Collateral, nor be liable for any delay in the collection of, or failure to use diligence to collect on, the Obligations or any amount payable in respect of the Collateral. (c) Performance by Secured Party. Should any covenant, duty or agreement of Pledgor fail to be performed in accordance with its terms hereunder, Secured Party may, but shall never be obligated to, perform or attempt to perform such covenant, duty or agreement on behalf of Pledgor, and any amount expended by Secured Party in such performance or attempted performance shall become a part of the Obligations, shall be payable upon demand and shall bear interest at a per annum rate equal to the lesser of (1) the Highest Lawful Rate, or (2) the rate set forth in Section 2.13(d) of the Revolver/Term Agreement. (d) Voting Rights. It is expressly understood and agreed that Pledgor shall retain all voting rights to the Collateral until the occurrence and during the continuance of an Event of Default, at which time such voting rights for purposes of collateral preservation shall transfer to Secured Party, at its sole discretion and in accordance with Section 4(e) hereof; provided, however, that no voting, corporate or management rights shall be exercised or vote cast or consent, waiver or ratification given or action taken by Pledgor that would impair the Collateral or be inconsistent with or violate any provision of this Agreement or any other Transaction Documents. (e) Power of Attorney. PLEDGOR HEREBY IRREVOCABLY GRANTS TO SECURED PARTY PLEDGOR'S PROXY (EXERCISABLE FROM AND AFTER THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT WHICH IS CONTINUING) TO VOTE ANY COLLATERAL AND APPOINTS SECURED PARTY AS PLEDGOR'S ATTORNEY-IN-FACT TO PERFORM ALL OBLIGATIONS OF PLEDGOR UNDER THIS AGREEMENT AND TO EXERCISE ALL OF SECURED PARTY'S RIGHTS HEREUNDER. THE PROXY AND POWER OF ATTORNEY HEREIN GRANTED, AND EACH STOCK POWER AND SIMILAR POWER NOW OR HEREAFTER GRANTED (INCLUDING ANY EVIDENCED BY A SEPARATE WRITING) ARE COUPLED WITH AN INTEREST AND ARE IRREVOCABLE PRIOR TO FINAL PAYMENT IN FULL OF THE OBLIGATIONS. I-4 5. DEFAULT. (a) Rights and Remedies. Upon the occurrence and during the continuance of an Event of Default, in addition to any and all other rights and remedies which Secured Party or any Creditor may then have hereunder, under any other Transaction Documents, under applicable law or otherwise, Secured Party at its option may, subject to any limitation or restriction imposed by any applicable bankruptcy, insolvency or other law relating to the relief of debtors, (1) obtain from any Person information regarding Pledgor, any issuer of the Collateral, or any of their businesses, which information any such Person may furnish without liability to Pledgor; (2) require Pledgor to give possession or control of any of the Collateral to Secured Party; (3) unless earlier permitted hereunder, take control of funds generated by the Collateral and any other proceeds and exercise all other rights which an owner of such Collateral may exercise; (4) declare the entire unpaid balance of principal and interest on the Obligations immediately due and payable, without notice, demand or presentment, which are hereby expressly waived; (5) reduce its claim to judgment, foreclose or otherwise enforce its security interest in all or any part of the Collateral by any available judicial procedure; (6) after notification, if any, provided for in this Agreement or any other Transaction Documents, sell or otherwise dispose of, at the office of Secured Party, all or any part of the Collateral, and any such sale or other disposition shall be in accordance with applicable law, and may be as a unit or in parcels, by public or private proceedings, and by way of one or more contracts (it being agreed that the sale of any part of the Collateral shall not exhaust Secured Party's power of sale, but sales may be made from time to time until all of the Collateral has been sold or until the Obligations have been paid in full), and at any such sale it shall not be necessary to exhibit the Collateral; (7) at its discretion, retain the Collateral in satisfaction of the Obligations whenever the circumstances are such that Secured Party is entitled to do so under applicable law; (8) apply by appropriate judicial proceedings for appointment of a receiver for the Collateral, or any part hereof, and Pledgor hereby consents to any appointment; (9) buy the Collateral at any public sale; and (10) buy the Collateral at any private sale, subject to any restrictions imposed by applicable law. Pledgor agrees that, if notice is required to be given by applicable law, ten days' advance written notice shall constitute reasonable notice. Secured Party shall apply the proceeds of any collection, sale, disposition or other realization upon any Collateral as follows: First, to the payment of the costs and expenses of such collection, sale, disposition, or other realization, including reasonable out-of-pocket costs and expenses of Secured Party and the fees and expenses of its agents and counsel; Next, to the payment of the Obligations, as provided in the Intercreditor Agreement, and in such manner consistent with applicable laws as Secured Party in its discretion shall decide; and Finally, to the payment to Pledgor, or its successors or assigns, or as a court of competent jurisdiction may direct, of any surplus then remaining. If the proceeds of collection, sale, disposition, or other realization are insufficient to cover the costs and expenses of such realization and the payment in full of the Obligations, Pledgor shall remain liable for any deficiency. (b) Securities Laws; Transfer. (1) Immediately upon the occurrence and during the continuance of an Event of Default, Pledgor hereby grants to Secured Party the right to have the Collateral, or any portion thereof, registered and sold under the Securities Act of 1933, as amended ("Securities I-5 Act"), or under any applicable state blue sky laws. If Secured Party shall determine to exercise its right to sell any or all of the Collateral pursuant to the terms hereof, and if in the reasonable opinion of Secured Party it is necessary or advisable to have the Collateral (or that portion thereof to be sold) registered under the provisions of the Securities Act, Pledgor will cause the issuer of the Collateral to execute and deliver, and cause the directors and officers thereof to execute and deliver, all at Pledgor's and/or such issuer's expense, all such instruments and documents, and to do or cause to be done all such other acts and things as may be necessary or, in the opinion of Secured Party, advisable to register such Collateral under the provisions of the Securities Act and to cause the registration statement relating thereto to become effective and to remain effective for a period of one year from the date of the first public offering of such Collateral, or that portion thereof to be sold, and to make all amendments thereto and/or to the related prospectus which, in the opinion of Secured Party, are necessary or advisable, all in conformity with the requirements of applicable law. Pledgor agrees to cause the issuer of the Collateral to comply with the provisions of the securities or "blue sky" laws of any jurisdiction which Secured Party shall designate and to cause the issuer of the Collateral to make available to its security holders, as soon as practicable, an earnings statement which will satisfy the provisions of Section 11(a) of the Securities Act. (2) Pledgor recognizes that Secured Party may be unable to effect a public sale of any or all of the Collateral by reason of certain prohibitions contained in the Securities Act and applicable state securities laws, but may be compelled to resort to one or more private sales thereof to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such Collateral for their own account for investment and not with a view to the distribution or resale thereof. Pledgor acknowledges and agrees that any such private sale conducted in the manner described herein may result in prices and other terms less favorable to the seller than if such sale were a public sale and, notwithstanding such circumstances, agrees that any private sale shall be made in a commercially reasonable manner. Secured Party shall be under no obligation to delay a sale of any of the Collateral for the period of time necessary to permit the issuer of the Collateral to register such Collateral for public sale under the Securities Act, or under applicable state securities laws, even if the issuer of the Collateral would agree to do so. (3) Pledgor further agrees to do or cause to be done all such other acts and things as may be necessary to make any sales of any portion or all of the Collateral pursuant to paragraphs (b)(1) and (b)(2) of this Section 5 valid and binding and in compliance with any and all applicable laws (including, without limitation, the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Securities and Exchange Commission applicable thereto), regulations, orders, writs, injunctions, decrees or awards of any and all courts, arbitrators or governmental instrumentalities, domestic or foreign, having jurisdiction over any such sale or sales, all at Pledgor's expense. Pledgor further agrees that a breach of any of the covenants contained in this Section 5 will cause irreparable injury to Secured Party and that Secured Party may not have an adequate remedy at law in respect of such breach. As a consequence, Pledgor agrees that each and every covenant contained in this Section shall be specifically enforceable against Pledgor. To the extent permitted by applicable law, Pledgor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants. (4) Pledgor agrees (A) that in the event Secured Party shall, upon any Event of Default, sell the Collateral or any portion thereof, at a private sale or sales, Secured Party shall have the right to rely upon the advice and opinion of a member of a nationally recognized I-6 investment banking firm acceptable to Secured Party, as to the best price reasonably obtainable upon such a private sale thereof, and (B) in the absence of fraud, willful misconduct and gross negligence, that such reliance shall be conclusive evidence that Secured Party handled such matter in a commercially reasonable manner under the UCC. (c) Governmental Approvals. In connection with the exercise by Secured Party of its rights hereunder, it may be necessary to obtain the prior consent or approval of a Governmental Authority or other Persons to the exercise of rights with respect to the Collateral, and any representations and warranties made by Pledgor herein shall be deemed appropriately amended to reflect this fact. Pledgor hereby agrees to execute, deliver and file, and hereby appoints (to the extent permitted under applicable law) Secured Party as its attorney to execute, deliver and file on Pledgor's behalf and in Pledgor's name, all applications, certificates, filings, instruments and other documents (including without limitation any application for an assignment or transfer of control or ownership) that may be necessary or appropriate, in Secured Party's opinion, to obtain such consents or approvals. Pledgor further agrees to use its best efforts to obtain such consents or approvals. Pledgor acknowledges that there is no adequate remedy at law for failure by it to comply with the provisions of this Section and that such failure would not be adequately compensable in damages, and therefore agrees that Pledgor's efforts to obtain any approval required by this Section may be specifically enforced. (d) Notice. Notification of the time and place of any public sale of the Collateral, or reasonable notification of the time after which any private sale or other intended disposition of the Collateral is to be made, shall be sent to Pledgor and to any other Person entitled under applicable law to notice. 6. GENERAL. (a) Secured Party's Duties. The Creditors have appointed Secured Party to act as their agent as provided herein. In the event Secured Party is replaced pursuant to Section 6.04 of the Intercreditor Agreement, the successor Secured Party appointed in accordance with Section 6.04 of the Intercreditor Agreement shall be the Secured Party hereunder. The powers conferred on Secured Party hereunder are solely to protect the Creditors interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, Secured Party shall have no duty as to any Collateral, as to ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders, or other matters relative to any Collateral, whether or not Secured Party or any Creditor has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any reasonable care in the custody and preservation of any Collateral in its possession if such Collateral is accorded treatment substantially equal to that which Secured Party accords its own property. Except as set forth herein Secured Party shall not have any duty or liability to protect or preserve any Collateral or to preserve rights pertaining thereto. Nothing contained in this Agreement shall be construed as requiring or obligating Secured Party, and Secured Party shall not be required or obligated, (1) to present or file any claim or notice or take any action, with respect to any Collateral or in connection therewith or (2) to notify Pledgor of any decline in the value of any Collateral. (b) Cumulative Rights. All rights and remedies of Secured Party hereunder are cumulative of each other and of every other right or remedy which Secured Party may otherwise have at law or in equity or under any other contract or other writing for the enforcement of the security interest herein or the collection of the Obligations, and the exercise of one or more rights or remedies shall not prejudice or impair the concurrent or subsequent exercise of other rights or remedies. I-7 (c) Waiver. Should any part of the Obligations be payable in installments, the acceptance by any Creditor at any time and from time to time of partial payment of the aggregate amount of all installments then matured shall not be deemed as a waiver of any Event of Default then existing. No waiver by Secured Party or any Creditor of any Event of Default shall be deemed to be a waiver of any other subsequent Event of Default, nor shall any such waiver by Secured Party be deemed to be a continuing waiver. No delay or omission by Secured Party or any Creditor in exercising any right or power hereunder, or under any other Transaction Documents, shall impair any such right or power or be construed as a waiver thereof or an acquiescence therein, nor shall any single or partial exercise of any such right or power preclude other or further exercise thereof, or the exercise of any other right or power of Secured Party or any Creditor hereunder or under such other writings. (d) Interest; Limitation of Law. No provision herein or in any Transaction Document shall require the payment or permit the collection of interest in excess of the maximum permitted by applicable law. If, in any contingency whatsoever, Secured Party or any Creditor shall receive anything of value from Pledgor deemed interest under applicable law which would exceed the maximum amount of interest permissible under applicable law, the provisions of the Transaction Documents shall govern. (e) Parties Bound. This Agreement shall be binding on Pledgor and its successors, assigns and legal and personal representatives, administrators, executors, beneficiaries and heirs and shall inure to the benefit of Secured Party and the Creditors, and their successors, assigns and legal representatives; provided, however, that Pledgor may not assign its rights or obligations hereunder without the prior written consent of Secured Party. The rights, powers and interests held by Secured Party hereunder may be transferred and assigned by Secured Party, in whole or in part, at such time and upon such terms as permitted by the Transaction Documents. (f) Notice. All notices, requests and other communications to any party hereunder shall be in writing (including, telecopy or similar teletransmission or writing) and shall be given to such party at its address or telecopy number set forth on the signature pages hereof or such other address or telecopy number as such party may hereafter specify by notice to the other party. Each such notice, request or other communication shall be effective (1) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid, or (2) if given by any other means (including, but not limited to, by air courier), when delivered at the address specified in this Section 6(f); provided that notices to Secured Party shall not be effective until actually and physically received. (g) Waivers by Pledgor. Pledgor waives notices of the creation, advance, increase, existence, extension or renewal of, and of any indulgence with respect to, the Obligations; waives presentment, demand, notice of dishonor and protest; waives notice of the amount of the Obligations outstanding at any time, notice of any change in financial condition of any Person liable for the Obligations or any part thereof, notice of any Event of Default and all other notices respecting the Obligations; waives all rights of redemption, appraisal, or valuation; and agrees that maturity of the Obligations and any part thereof may be accelerated, increased, extended or renewed one or more times by Secured Party in their discretion, without notice to Pledgor. (h) Modifications. No provision hereof shall be modified or limited except by a written agreement expressly referring hereto and to the provisions so modified or limited and signed by Secured Party, nor by course of conduct, usage of trade or mercantile law. I-8 (i) Control. Notwithstanding anything herein to the contrary, this Agreement and the transactions contemplated hereby do not and will not constitute, create, or have the effect of constituting or creating, directly or indirectly, actual or practical ownership of Pledgor or the issuer of the Collateral by Secured Party, or control, affirmative or negative, direct or indirect, by Secured Party, over the management or any aspect of the day-to-day operation of Pledgor or the issuer of the Collateral, which control remains in Pledgor, the issuer of the Collateral, and their respective shareholders and boards of directors. (j) Governing Law; Submission to Jurisdiction; etc. (1) Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND, TO THE EXTENT CONTROLLING, LAWS OF THE UNITED STATES OF AMERICA. (2) Submission to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF TEXAS, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, PLEDGOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. PLEDGOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, BUT NOT LIMITED TO, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS. (3) Waiver of Jury Trial and Consequential Damages. TO THE MAXIMUM EXTENT ALLOWED BY APPLICABLE LAW, EACH OF PLEDGOR AND SECURED PARTY (A) IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY TRANSACTION DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN, (B) IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (C) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; AND (D) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY BASED UPON, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION. (4) Service of Process. Pledgor irrevocably consents to service of process in the manner provided for notices in Section 6(f). Nothing herein shall affect the right of Secured Party or any Creditor to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against Pledgor in any other jurisdiction. I-9 (k) Entire Agreement. THIS AGREEMENT, TOGETHER WITH THE OTHER TRANSACTION DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. IN WITNESS WHEREOF, Pledgor has executed this Agreement as of the date first above written. REMAINDER OF PAGE LEFT INTENTIONALLY BLANK I-10 TRINITY INDUSTRIES, INC., a Delaware corporation [Subsidiary] TRINITY INDUSTRIES, INC. By: 2525 Stemmons Freeway ------------------------------------ Dallas, Texas 75207 Name: Attn: Neil Shoop ----------------------------------- Telephone: 214-589-8561 Title: Telecopy: 214-589-8824 ---------------------------------- I-11 Address of Secured Party: JPMORGAN CHASE BANK, as Secured Party JPMORGAN CHASE BANK 2200 Ross Avenue, 3rd Floor Dallas, Texas 75201 By: Attn: Michael Lister ------------------------------------ Telephone: (214) 965-2891 Michael J. Lister, Telecopy: (214) 965-2044 Vice President I-12 EXHIBIT A NUMBER OF SHARES/ ENTITY CERTIFICATE NO. RECORD OWNER OWNERSHIP INTERESTS ------ --------------- ------------ ------------------- - ------------- ------------------- ---------------- --------------------- - ------------- ------------------- ---------------- --------------------- - ------------- ------------------- ---------------- --------------------- - ------------- ------------------- ---------------- --------------------- I - Exhibit A-1 SCHEDULE 1.01 EXISTING LETTERS OF CREDIT (to be attached) Schedule 1.01 - 1 SCHEDULE 2.01 COMMITMENTS Revolving Lender Commitments Term Commitments - ------ ----------- ---------------- JPMorgan Chase Bank $ 44,000,000 $134,000,000 Dresdner Bank AG, New York and $ 44,000,000 $ 3,000,000 Grand Cayman Branches The Royal Bank of Scotland plc $ 44,000,000 N/A BNP Paribas $ 35,000,000 N/A The Bank of Nova Scotia $ 30,000,000 $ 3,000,000 Wachovia Bank, N.A. $ 25,000,000 $ 10,000,000 Bank One, NA $ 23,000,000 N/A The Bank of Tokyo - Mitsubishi, Ltd. $ 20,000,000 N/A Credit Suisse First Boston, $ 10,000,000 N/A Cayman Islands Branch TOTAL: $275,000,000 $150,000,000 Schedule 2.01 - 1 SCHEDULE 3.06 DISCLOSED MATTERS None, except as disclosed in Borrower's Form 10K and Form 10Q reports to the Securities and Exchange Commission. Schedule 3.06 - 1 SCHEDULE 3.11 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 U.S. SUBSIDIARIES 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.COM, 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 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 GREENVILLE STEEL CAR COMPANY, INC. State of Incorporation: Pennsylvania Date of Incorporation: 1/19/93 Qualified: Pennsylvania Schedule 3.11 - 1 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 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 Schedule 3.11 - 2 MIDLAND PAVING, INC. State of Incorporation: Delaware Date of Incorporation: 2/22/93 Qualified: Delaware, Texas MOSHER STEEL COMPANY State of Incorporation: Texas Date of Incorporation: 1/24/83 Qualified: Texas 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 SAGINAW RAILCAR REPAIR, INC. State of Incorporation: Delaware Date of Incorporation: 5/17/02 Qualified: Delaware 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 Schedule 3.11 - 3 TEXAS METAL FABRICATING, INC. State of Incorporation: Texas Date of Incorporation: 1/24/83 Qualified: Texas THRALL COMPANY State of Incorporation: Delaware Date of Incorporation: 7/30/99 Qualified: Delaware THRALL INTERNATIONAL HOLDINGS LLC State of Incorporation: Illinois Date of Incorporation: 3/23/95 Qualified: Illinois and United Kingdom THRALL CAR GRANTOR CORP. State of Incorporation: Delaware Date of Incorporation: 6/9/97 Qualified: Delaware THRALL TRINITY FREIGHT CAR, INC. State of Incorporation: Delaware Date of Incorporation: 10/25/01 Qualified: Delaware, Georgia, Illinois, Michigan, Texas TILX LP I, LLC Delaware Limited Liability Company Date of Formation: 12/12/66 Qualified: Texas TILX GP I, LLC Delaware Limited Liability Company Date of Formation: 12/12/66 Qualified: Texas 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 Schedule 3.11 - 4 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 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 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 Schedule 3.11 - 5 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 TRINITY FITTINGS 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 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 INTERNATIONAL State of Incorporation: Delaware Date of Incorporation: 4/20/94 Qualified: Delaware Schedule 3.11 - 6 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 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: 6/7/846 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 - 7 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 Q, INC. State of Incorporation: Delaware Date of Incorporation: 11/1/94 Qualified: Delaware, Ohio TRINITY 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 RAIL COMPONENTS & REPAIR, INC. State of Incorporation: Delaware Date of Incorporation: 10/25/01 Qualified: Delaware, Georgia, Idaho, Illinois, Kansas, Montana, Nebraska, New Mexico, North Carolina, Pennsylvania, Tennessee, Texas TRINITY RAIL GROUP LLC State of Incorporation: Delaware Date of Incorporation: 12/28/01 Qualified: Illinois TRINITY RAIL, INC. State of Incorporation: Delaware Date of Incorporation: 9/14/93 Qualified: Delaware, Alabama Schedule 3.11 - 8 TRINITY RAIL LEASING I L.P. State of Incorporation: Delaware Date of Incorporation: 5/14/01 Qualified: Delaware 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 TANK CAR, INC. State of Incorporation: Delaware Date of Incorporation: 12/25/01 Qualified: Delaware, Illinois, Texas TRINITY V-ALLIANCES, INC. State of Incorporation: Delaware Date of Incorporation: 9/12/00 Qualified: Delaware TRISERV 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 Schedule 3.11 - 9 TRN INVESTMENT COMPANY State of Incorporation: Delaware Date of Incorporation: 10/25/99 Qualified: Delaware WALDORF PROPERTIES, INC. State of Incorporation: Delaware Date of Incorporation: 3/14/96 Qualified: Delaware, Maryland, Alabama Schedule 3.11 - 10 FOREIGN SUBSIDIARIES APROMAT, S.A. Jurisdiction: Romania Date of Incorporation: 3/2/1990 ASTRA VAGOANE ARAD, S.A. Jurisdiction: Romania Date of Incorporation: 1/2/1990 MEVA, S.A. Jurisdiction: Romania Date of Incorporation: 3/29/1991 ICPV, S.A. Jurisdiction: Romania Date of Incorporation: 3/2/1991 THRALL EUROPA, s.r.o. Jurisdiction: Czech Republic Date of Incorporation: 3/03/1999 THRALL EUROPA UK Jurisdiction: England & Wales Date of Incorporation: 6/16/1997 THRALL INTERNATIONAL HOLDINGS, LLC Jurisdiction: Switzerland Date of Incorporation: 3/23/1995 THRALL VAGONKA STUDENKA Jurisdiction: Slovak Republic Date of Incorporation: 1/01/1994 RAIL PROJECT, s.r.o. Jurisdiction: Slovak Republic Date of Incorporation: 12/20/1993 TRINITY RAIL GmbH Jurisdiction: Switzerland Date of Incorporation: 7/13/2000 Schedule 3.11 - 11 TRINITY INDUSTRIES INTERNATIONAL HOLDINGS AG Jurisdiction: Switzerland Date of Incorporation: 10/1983 TRINITY ARGENTINA Jurisdiction: Argentina Date of Incorporation: 11/16/1999 TRINITY RAIL DO BRASIL Jurisdiction: Brazil Date of Incorporation: 10/29/1998 WAGONMARKET spol. s r.o. Jurisdiction: Slovakia Date of Incorporation: 5/4/1992 GRUPO TATSA, S de R.L. de C.V. Jurisdiction: Mexico Date of Incorporation: 12/23/1981 TRINITY INDUSTRIES DE MEXICO, S. DE R.L. DE C.V. Jurisdiction: Mexico Date of Incorporation: 12/31/1963 OFE, S. DE R.L. DE C.V. Jurisdiction: Mexico Date of Incorporation: 5/13/1955 ASISTENCIA PROFESSIONAL CORPORATIVA, S. DE R.L. DE C.V. Jurisdiction: Mexico Date of Incorporation: 3/25/1999 SERVICIOS CORPORATIVOS TATSA, S. DE R.L. DE C.V. Jurisdiction: Mexico Date of Incorporation: 3/03/1998 PROTECTOR NACIONAL, S.A. de C.V. JURISDICTION: Mexico Date of Incorporation: 2/27/1984 INDUSTRIAS TANQUE METAL, S.A. de C.V. JURISDICTION: Mexico Date of Incorporation: 10/4/1968 Schedule 3.11 - 12 MATERIAL SUBSIDIARIES TRANSIT MIX CONCRETE & MATERIALS COMPANY TRINITY INDUSTRIES LEASING COMPANY TRINITY MARINE PRODUCTS, INC. TRINITY RAIL GROUP, LLC THRALL TRINITY FREIGHT CAR, INC. TRINITY TANK CAR, INC. TRINITY RAIL COMPONENTS & REPAIR, INC. Schedule 3.11 - 13 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) Girard, OH United Steelworkers (USW) Johnstown, PA United Steelworkers (USW) Kutztown, PA Glass, Molders, etc. (McConway & Torley) Russelville, AR Boilermakers Schedule 3.13 - 1 SCHEDULE 5 COLLATERAL (to be attached) Schedule 5 - 1 SCHEDULE 7.01 EXISTING INDEBTEDNESS
INTEREST DATE OF DATE BALANCE PAYEE RATE NOTE DUE @ 03/31/02 - ----- -------- -------- -------- ------------ TRINITY Montgomery, AL IRB 9.250% 08/01/80 08/01/05 $870,000 Pennsylvania Industrial Dev. Authority (PIDA) 6.000 11/18/88 10/01/08 169,280 Camerson Credit Union (Highland Parts) 8.000 04/04/00 08/01/03 270,299 Bank Credit Facility 270,000,000 LEASING Equip. Trust Series 9 8.240 06/30/92 06/30/02 1,785,578 Equip. Trust Series 10 7.650 12/30/92 12/30/02 4,794,423 Equip. Trust Series 11 6.960 06/24/93 06/24/03 3,936,897 Equip. Trust Series 12 7.755 02/15/02 02/15/09 170,000,000 Capital Lease (GECC) 11.306 06/01/85 05/31/03 2,221,615 MCCONWAY & TORLEY State of Pennsylvania 3.000 02/01/97 02/01/04 141,250 TRINITY INDUSTRIES RAILCAR CORP Transport Capital 8.000 12/15/00 06/30/15 3,021,440 Transport Capital 8.000 12/15/00 06/30/15 422,999 ------------ TOTAL $457,633,781 ============
Schedule 7.01 - 1 SCHEDULE 7.02 EXISTING LIENS Equipment Trust Certificate Financing (Series 9, 10 and 11) Capital Lease Financing with GECC Industrial Revenue Bond Financing - Montgomery, Alabama TRLI Equipment Lease Transaction (SPE) PIDA Financing - Butler, PA Pass Through Equipment Trust Financing Schedule 7.02 - 1 SCHEDULE 7.03 PERMITTED ASSET SALES (to be attached) Schedule 7.03 - 1 SCHEDULE 7.04 EXISTING INVESTMENTS REMAINING INVESTMENT COMPANY INTEREST COMMITMENT - ------- -------- ---------- Transport Capital 17.0% $ -0- American Made 41.0 3.3 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- Knowledge 2 Share 50.0 -0- e-World Freight 5.0 -0- Iktan 1.0 -0- WorldO.com 5.0 -0- Starguide Digital 1.0 -0- Hybrigen 2.0 -0- Point to Point 10.0 -0- -------- TOTAL $3.3 MIL ======== Schedule 7.04 - 1 SCHEDULE 7.08 EXISTING RESTRICTIONS Equipment Trust Agreements 9, 10 & 11 TRLI Equipment Lease Transaction Pass Through Equipment Trust Financing Schedule 7.08 - 1 EX-10.2 4 d98842exv10w2.txt WAREHOUSE LOAN AGREEMENT DATED JUNE 27, 2002 EXHIBIT 10.2 - -------------------------------------------------------------------------------- U.S. $200,000,000 WAREHOUSE LOAN AGREEMENT dated as of June 27, 2002 among TRINITY INDUSTRIES LEASING COMPANY, TRINITY RAIL LEASING TRUST II, THE COMMITTED LENDERS AND THE CONDUIT LENDERS FROM TIME TO TIME PARTY HERETO and CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH, as Agent - -------------------------------------------------------------------------------- TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS Section 1.01 Defined Terms........................................................ 1 Section 1.02 Computation of Time Periods and Other Definitional Provisions........ 26 ARTICLE II THE CREDIT FACILITY Section 2.01 Commitment to Lend................................................... 27 Section 2.02 Procedures for Borrowing............................................. 27 Section 2.03 Notice to Lenders; Funding of Loans.................................. 28 Section 2.04 Evidence of Loans.................................................... 30 Section 2.05 Interest............................................................. 31 Section 2.06 Maturity of Loans.................................................... 31 Section 2.07 Prepayments.......................................................... 31 Section 2.08 Adjustment of Commitments............................................ 36 Section 2.09 Fees................................................................. 39 Section 2.10 Pro-rata Treatment................................................... 39 Section 2.11 Sharing of Payments.................................................. 39 Section 2.12 Payments; Computations............................................... 40 ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY Section 3.01 Taxes................................................................ 41 Section 3.02 Illegality........................................................... 43 Section 3.03 Increased Costs and Reduced Return................................... 43 Section 3.04 Funding Losses....................................................... 44 ARTICLE IV CONDITIONS Section 4.01 Conditions to Closing................................................ 45 Section 4.02 Conditions to Each Funding Date...................................... 49 ARTICLE V REPRESENTATIONS AND WARRANTIES Section 5.01 Organization and Good Standing....................................... 51 Section 5.02 Power; Authorization; Enforceable Obligations........................ 52 Section 5.03 No Conflicts......................................................... 52 Section 5.04 No Default........................................................... 52 Section 5.05 Financial Condition.................................................. 52 Section 5.06 No Material Change................................................... 53 Section 5.07 Title to Properties.................................................. 53 Section 5.08 Litigation........................................................... 54 Section 5.09 Taxes................................................................ 54 Section 5.10 Compliance with Law.................................................. 54 Section 5.11 ERISA................................................................ 54
-i- TABLE OF CONTENTS (continued)
Page ---- Section 5.12 Subsidiaries......................................................... 55 Section 5.13 Governmental Regulations, Etc........................................ 55 Section 5.14 Purpose of Loans..................................................... 55 Section 5.15 Labor Matters........................................................ 55 Section 5.16 Environmental Matters................................................ 55 Section 5.17 Intellectual Property................................................ 56 Section 5.18 Solvency............................................................. 56 Section 5.19 Disclosure........................................................... 56 Section 5.20 Security Documents................................................... 56 Section 5.21 Ownership............................................................ 56 Section 5.22 Lease Documents...................................................... 57 Section 5.23 Sole Business of the Borrower........................................ 57 Section 5.24 Separate Corporate Structure; No Employees........................... 57 Section 5.25 Leases............................................................... 58 Section 5.26 Railcars............................................................. 59 ARTICLE VI AFFIRMATIVE COVENANTS Section 6.01 Information.......................................................... 59 Section 6.02 Preservation of Existence and Franchises; Authorizations, Approvals and Recordations......................................... 61 Section 6.03 Books and Records.................................................... 61 Section 6.04 ERISA................................................................ 61 Section 6.05 Payment of Taxes and Other Debt...................................... 61 Section 6.06 Insurance; Certain Proceeds.......................................... 61 Section 6.07 Operation, Use and Maintenance....................................... 63 Section 6.08 Replacement of Parts; Modifications and Improvements................. 64 Section 6.09 Use of Proceeds...................................................... 64 Section 6.10 Audits/Inspections/Appraisals........................................ 64 Section 6.11 Stamp Tax............................................................ 65 Section 6.12 Follow-On Leases..................................................... 65 Section 6.13 Accounts............................................................. 66 Section 6.14 Manager.............................................................. 66 Section 6.15 Action after an Event of Default..................................... 67 Section 6.16 Depositary Agreement, Etc............................................ 67 ARTICLE VII NEGATIVE COVENANTS Section 7.01 Limitation on Debt................................................... 67 Section 7.02 Restriction on Liens................................................. 67 Section 7.03 Nature of Business................................................... 67 Section 7.04 Consolidation, Merger and Dissolution................................ 67 Section 7.05 Asset Dispositions................................................... 67 Section 7.06 Investments.......................................................... 68 Section 7.07 Restricted Payments, etc............................................. 68 Section 7.08 Transactions with Affiliates......................................... 68
-ii- TABLE OF CONTENTS (continued)
Page ---- Section 7.09 Fiscal Year; Organization and Other Documents........................ 69 Section 7.10 Additional Negative Pledges.......................................... 69 Section 7.11 Impairment of Security Interests..................................... 69 Section 7.12 Debt Service Coverage Ratio.......................................... 69 Section 7.13 No Amendments to the Lease Documents................................. 69 Section 7.14 Lease Default........................................................ 69 Section 7.15 Consolidation with Any Other Person.................................. 70 Section 7.16 Limitations on Employees, Subsidiaries............................... 70 Section 7.17 Independence of Covenants............................................ 70 ARTICLE VIII OTHER COVENANTS Section 8.01 Quiet Enjoyment...................................................... 70 ARTICLE IX DEFAULTS Section 9.01 Events of Default.................................................... 70 Section 9.02 Acceleration; Remedies............................................... 73 ARTICLE X AGENCY PROVISIONS Section 10.01 Appointment; Authorization........................................... 74 Section 10.02 Delegation of Duties................................................. 74 Section 10.03 Exculpatory Provisions............................................... 74 Section 10.04 Reliance on Communications........................................... 75 Section 10.05 Notice of Default.................................................... 75 Section 10.06 Credit Decision; Disclosure of Information by Agent.................. 75 Section 10.07 Indemnification...................................................... 76 Section 10.08 Agent in Its Individual Capacity..................................... 76 Section 10.09 Successor Agents..................................................... 77 Section 10.10 Request for Documents................................................ 77 ARTICLE XI MISCELLANEOUS Section 11.01 Notices and Other Communications..................................... 77 Section 11.02 No Waiver; Cumulative Remedies....................................... 78 Section 11.03 Amendments, Waivers and Consents..................................... 78 Section 11.04 Expenses............................................................. 80 Section 11.05 Indemnification...................................................... 81 Section 11.06 Successors and Assigns............................................... 83 Section 11.07 Confidentiality...................................................... 86 Section 11.08 Set-off.............................................................. 86 Section 11.09 Interest Rate Limitation............................................. 87 Section 11.10 Counterparts......................................................... 87 Section 11.11 Integration.......................................................... 87 Section 11.12 Survival of Representations and Warranties........................... 88
-iii- TABLE OF CONTENTS (continued)
Page ---- Section 11.13 Severability......................................................... 88 Section 11.14 Headings............................................................. 88 Section 11.15 Marshalling; Payments Set Aside...................................... 88 Section 11.16 Performance by the Agent............................................. 88 Section 11.17 Third Party Beneficiaries............................................ 88 Section 11.18 No Proceedings....................................................... 88 Section 11.19 Governing Law; Submission to Jurisdiction............................ 89 Section 11.20 Waiver of Jury Trial................................................. 90 Section 11.21 Binding Effect....................................................... 90
Schedules: Schedule 1.01 - Lenders and Commitments Schedule 5.02 - Required Consents, Authorizations, Notices and Filings Schedule 6.06 - Insurance Schedule 11.01 - Notice Addresses; Agent's Office Exhibits: Exhibit A-1 - Form of Request Exhibit A-2 - Form of Notice of Borrowing Exhibit A-3 - Form of Additional Collateral Certificate Exhibit A-4 - Form of Financing Notice Exhibit A-5 - Form of Monthly Report Exhibit A-6 - Form of Borrowing Base Certificate Exhibit B - Form of Note Exhibit C - Form of Assignment and Acceptance Exhibit D-1 - Form of Opinion of Counsel for the Borrower, the Manager and Trinity Exhibit D-2 - Form of Opinion of In-House Counsel for the Borrower, the Manager and Trinity Exhibit D-3 - Form of Opinion of Delaware Trust Counsel for the Borrower Exhibit D-4 - Form of True Sale Opinion Exhibit D-5 - Form of Nonconsolidation Opinion Exhibit D-6 - Form of Opinion of Special STB Counsel for the Borrower Exhibit D-7 - Form of Opinion of Special Canadian Counsel for the Agent Exhibit D-8 - Form of Opinion of Counsel for the Depositary Exhibit D-9 - Form of Opinion of Counsel for the Marks Company Exhibit E-1 - Form of Security Agreement Exhibit E-2 - Form of Perfection Certificate Exhibit E-3 - Form of Lessee Consent and Agreement Exhibit E-4 - Form of Notice of Lease Assignment Exhibit F - Form of Depository Agreement Exhibit G - Form of Performance Guaranty Exhibit H - Form of Management Agreement Exhibit I - Form of Insurance Management Agreement Exhibit J-1 - Form of Full Service Railcar Lease Agreement -iv- TABLE OF CONTENTS (continued) Exhibit J-2 - Form of Net Railcar Lease Agreement Exhibit K - Form of Asset Contribution and Purchase Agreement Exhibit L - Form of Administrative Services Agreement -v- WAREHOUSE LOAN AGREEMENT This Warehouse Loan Agreement is dated as of June 27, 2002 and is among TRINITY INDUSTRIES LEASING COMPANY, a Delaware corporation (the "Manager"), TRINITY RAIL LEASING TRUST II, a Delaware business trust (the "Borrower"), the banks and other lending institutions from time to time party hereto (each a "Lender" and, collectively, the "Lenders") and CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH, as Agent for the Lenders (in such capacity, the "Agent"). The parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.01 DEFINED TERMS. The following terms, as used herein, have the following meanings: "A.A.R." means the Association of American Railroads, and its successors. "Accounts" means, collectively, the Collection Account, the Maintenance Reserve Account, the Modification and Improvements Account and the Liquidity Reserve Account. "Additional Collateral Certificate" means a certificate substantially in the form of Exhibit A-3 hereto, with appropriate insertions and deletions or with such other changes as may be reasonably agreed to by the Agent, and which certificate contains a description of the Railcars and related Leases which are to become Portfolio Railcars and Portfolio Leases, as the case may be. "Adjusted Eurodollar Rate" means, for each Interest Period, the quotient obtained (rounded upward, if necessary, to the next higher 1/100th of 1%) by dividing (i) the applicable London Interbank Offered Rate for such Interest Period by (ii) 1.00 minus the Eurodollar Reserve Percentage. "Administrative Questionnaire" means, with respect to each Lender, an administrative questionnaire in the form prepared by the Agent and submitted to the Agent (with a copy to the Borrower) duly completed by such Lender. "Administrative Services Agreement" means the Administrative Services Agreement, substantially in the form of Exhibit L hereto, dated as of the Closing Date between the Borrower and TILC. "Advance Rate" means 75%. "Affiliate" means, with respect to any Person, (i) any Person that directly, or indirectly through one or more intermediaries, controls such Person (including all directors and officers of such Person) (a "Controlling Person") or (ii) any other Person which is controlled by or is under common control with a Controlling Person. As used herein, the term "control" means (i) with respect to any Person having voting shares or their equivalent and elected directors, managers or Persons performing similar functions, the possession, directly or indirectly, of the power to vote 10% or more of the Equity Interests having ordinary voting power of such Person, (ii) the ownership, directly or indirectly, of 10% or more of the Equity Interests in any Person or (iii) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting shares or their equivalent, by contract or otherwise. "Agent" means Credit Suisse First Boston, New York Branch, in its capacity as agent for the Lenders hereunder and under the other Loan Documents, and its successor or successors in such capacity. "Agent's Office" means the Agent's address and, as appropriate, account as set forth and identified as such in Schedule 11.01, or such other address and account as the Agent may from time to time notify to the Borrower and the Lenders. "Aggregate FMV" means, as of any date of determination with respect to any specified group of Railcars, the aggregate of the Fair Market Values of all such Railcars (including, if calculated on a Funding Date, any such Railcars which will become Portfolio Railcars on such Funding Date, but excluding any such Railcars which will cease to be Portfolio Railcars at the time of such determination pursuant to Section 8.10 of the Security Agreement or otherwise). "Agreement" means this Warehouse Loan Agreement, as amended, supplemented, amended and restated or otherwise modified from time to time. "Applicable Law" means, with reference to any Person, all laws (foreign or domestic), statutes, rulings, codes, ordinances and treaties, including the FRA and the Interchange Rules, and all judgments, decrees, injunctions, writs and orders of any court, arbitrator or other Governmental Authority, and all rules, regulations, orders, interpretations, directives, licenses and permits of any governmental body, instrumentality, agency or other regulatory authority applicable to such Person or its property or in respect of its operations. "Applicable Rate" means with respect to any Loan for any day during any Interest Period, (i) so long as no Event of Default has occurred and is continuing, the sum of the Adjusted Eurodollar Rate for such Interest Period plus the Facility Margin or (ii) at any time during which an Event of Default has occurred and is continuing, the sum of the Corporate Base Rate for such day plus the Default Margin. "Appraised Fair Market Value", with respect to any Railcar, means the amount set forth in the most recent Independent Appraisal with respect thereto as the amount, expressed in terms of currency, that may reasonably be expected for property exchanged between a willing buyer and a willing seller with equity to both, neither under any compulsion to buy or sell and both fully aware of all relevant, reasonably ascertainable facts. "Approved Fund" means (i) with respect to any Committed Lender, an entity (whether a corporation, partnership, limited liability company, 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 managed by such Committed Lender or an Affiliate of such Committed Lender, (ii) with respect to any Committed Lender that is a fund that 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 Committed Lender or by an Affiliate of such investment advisor, (iii) any Conduit Lender, and (iv) with respect to any Conduit Lender, any of its Support Parties. "Asset Contribution and Purchase Agreement" means the Asset Contribution and Purchase Agreement dated as of the date hereof, substantially in the form of Exhibit K hereto, between TILC and the Borrower. "Asset Disposition" means any sale, lease or other disposition by the Borrower (other than the lease of a Railcar pursuant to an Eligible Lease) of any Portfolio Railcar, Portfolio Lease or other item of Collateral, whether by sale, lease, transfer, Casualty, Condemnation or otherwise. -2- "Assignment and Acceptance" means an Assignment and Acceptance, substantially in the form of Exhibit C hereto, under which an interest of a Lender hereunder is transferred to an Eligible Assignee pursuant to Section 11.06(b). "Availability Period" means the period from the Closing Date to the Revolving Termination Date. "Available Commitment" means, with respect to any Committed Lender, the aggregate of such Committed Lender's Commitment less the aggregate principal amount of outstanding Loans held by such Committed Lender (or any Conduit Lender designated by such Committed Lender) under this Agreement. "Bank Credit Facility" means the Credit Agreement dated as of June 4, 2002 among Trinity, as borrower, the banks and other lending institutions party thereto from time to time, JPMorgan Chase Bank, as Administrative Agent, and Dresdner Bank AG, New York and Grand Cayman Branches, and The Royal Bank of Scotland plc, as Syndication Agents. "Bankruptcy Code" means the United States Bankruptcy Reform Act of 1978, as amended, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization or similar debtor relief laws of the United States or other applicable jurisdiction from time to time affecting the rights of creditors generally. "Bill of Sale" means a bill of sale delivered to the Borrower from the seller with respect to a Railcar and, if applicable, any related Lease in connection with the Borrower's purchase of such Railcar and related Lease from such Seller. "Borrower" means Trinity Rail Leasing Trust II, a Delaware business trust, and its successors. "Borrower Change of Control" means either (i) Trinity shall cease to own directly 100% of the Equity Interests of the Manager on a fully-diluted basis assuming the conversion and exercise of all outstanding Equity Equivalents (whether or not such securities are then convertible or unexercisable), (ii) TILC shall cease to own directly 100% of the Equity Interests of each of the Partners on a fully diluted basis assuming the conversion and exercise of all outstanding Equity Equivalents (whether or not such securities are then currently convertible or exercisable), (iii) the Partners, collectively, shall cease to own directly 100% of the Equity Interests of the Partnership on a fully diluted basis assuming the conversion and exercise of all outstanding Equity Equivalents (whether or not such securities are then currently convertible or exercisable) or (iv) the Partnership shall cease to own directly 100% of the Equity Interests of the Borrower on a fully diluted basis assuming the conversion and exercise of all outstanding Equity Equivalents (whether or not such securities are then currently convertible or exercisable). "Borrowing" means a borrowing of Loans pursuant to Section 2.01 hereof. "Borrowing Base" means at any time a Dollar amount equal to 75% of the difference of (i) the Aggregate FMV of all Eligible Railcars at such time less (ii) the Excluded Assets Amount at such time. "Borrowing Base Certificate" means a certificate of the chief financial officer or chief accounting officer of the Borrower (or of the Manager on behalf of the Borrower), in the form of Exhibit A-6 hereto or such other form as may hereafter be agreed by the Borrower (and/or the Manager, as applicable) and the Agent, delivered to the Lenders pursuant to Section 2.02(c) or 6.01(d), as -3- applicable, and setting forth in reasonable detail the calculation of the Borrowing Base as of the date required by such Section. "Business Day" means any day of the week, other than a Saturday or a Sunday, on which banks are open for business in London for the conduct of transactions in the London interbank market and on which commercial banks in New York City, Charlotte, North Carolina and Dallas, Texas are open for business and are not required or authorized by law, executive order or governmental decree to be closed. "Calculation Date" means with respect to any Settlement Date, the last day of the calendar month immediately preceding such Settlement Date. "Capital Lease" of any Person means any lease of property (whether real, personal or mixed) by such Person as lessee which would, in accordance with GAAP, be required to be accounted for as a capital lease on the balance sheet of such Person. "Cash Equivalents" means: (i) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof) having maturities of not more than 12 months from the date of acquisition; (ii) Dollar-denominated certificates of deposit of (A) any Lender, (B) any domestic commercial bank of recognized standing having capital and surplus in excess of $500,000,000 or (C) any bank whose short-term commercial paper rating from S&P is at least A-1 or the equivalent thereof or from Moody's is at least P-1 or the equivalent thereof (any such bank being an "Approved Lender"), in each case with maturities of not more than 270 days from the date of acquisition; (iii) commercial paper and variable or fixed rate notes issued by any Approved Lender (or by the parent company thereof) or any variable rate notes issued by, or guaranteed by, any domestic corporation not an Affiliate of the Borrower rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or better by Moody's and maturing within six months of the date of acquisition; (iv) repurchase agreements with a bank or trust company (including any of the Lenders) or recognized securities dealer having capital and surplus in excess of $500,000,000 for direct obligations issued by or fully guaranteed by the United States of America in which the Borrower or one or more of its Subsidiaries shall have a perfected first priority security interest (subject to no other Liens) and having, on the date of purchase thereof, a fair market value of at least 100% of the amount of the repurchase obligations; and (v) Investments, classified in accordance with GAAP as current assets, in money market investment programs registered under the Investment Company Act of 1940, as amended, which are administered by reputable financial institutions having capital of at least $500,000,000 and the portfolios of which are limited to Investments of the character described in the foregoing clauses (i) through (iv). "Cash Flow" means all amounts received by or on behalf of, or credited to the Borrower from any source under or in respect of a Lease or otherwise from the ownership or operation of the Portfolio, including, without limitation, Monthly Rent, service charges, rentals, excess mileage charges, -4- delivery costs reimbursed by a Lessee and cancellation or penalty payments, as well as all other amounts paid under each Lease or any other Lease Document as reimbursement, indemnity, fees or commissions, or on account of assumed financial responsibility or liability or otherwise, other than Excepted Payments. "Casualty" means any Event of Loss or other casualty, loss, damage, destruction or other similar loss with respect to any Portfolio Railcar or other item of Collateral. "Casualty Insurance Policy" means any insurance policy maintained by or on behalf of the Borrower covering losses with respect to Casualties involving one or more Portfolio Railcars or other items of Collateral. "Casualty Proceeds" means all proceeds under any Casualty Insurance Policy, and all other insurance proceeds, damages, awards, claims and rights of action of the Borrower with respect to any Casualty. "Chattel Paper Legend" means the following statement: "COUNTERPART No. ___ OF ___ SERIALLY NUMBERED COUNTERPARTS. TO THE EXTENT THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE IN EFFECT IN ANY APPLICABLE JURISDICTION, NO SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1". "Closing Date" means the date on or after the Effective Date when the first Borrowing occurs in accordance with Section 4.01. "Code" means the Internal Revenue Code of 1986, as amended, and any successor statute thereto, as interpreted by the rules and Treasury Regulations issued thereunder, in each case as in effect from time to time. Reference to particular sections of the Code shall be construed also to refer to any successor sections. "Collateral" means all of the property which is subject or is purported to be subject to the Liens granted by the Collateral Documents. "Collateral Deficiency" means, as of any date of determination, the Dollar amount of the excess, if any, of the aggregate outstanding principal amount of the Loans as of such date over the Borrowing Base calculated as of such date. "Collateral Documents" means, collectively, the Security Agreement, each Perfection Certificate, the Depositary Agreement, any additional pledges, security agreements, patent, trademark or copyright filings or mortgages required to be delivered pursuant to the Loan Documents and any instruments of assignment, control agreements, lockbox letters or other instruments or agreements executed pursuant to the foregoing. "Collection Account" means the Collection Account established by the Depositary pursuant to the Depository Agreement. "Commitment" means, with respect to any Committed Lender, the commitment of such Lender, in an aggregate principal amount at any time outstanding of up to such Lender's Commitment Percentage of the Committed Amount, to make Loans in accordance with the provisions of Section 2.01, in each case as set forth on Schedule 1.01 or in the applicable Assignment and Acceptance as its Commitment, as any such amount may be increased or decreased from time to time pursuant to this Agreement. -5- "Commitment Percentage" means, for each Committed Lender, the percentage identified as its Commitment Percentage on Schedule 1.01 hereto, as such percentage may be modified in connection with any assignment made in accordance with the provisions of Section 11.06(b). "Committed Amount" means $200,000,000 or such lesser amount to which the Committed Amount may be reduced pursuant to Section 2.08. "Committed Lender" means a Lender listed on Schedule 1.01 and shown as having a Commitment hereunder as of the Closing Date or which thereafter acquires a Commitment hereunder in accordance with Section 11.06(b). "Competitor of the Borrower" means a Person who either (i) is engaged in the full service railcar leasing or manufacturing business or (ii) has a material non-passive investment interest (whether held directly or indirectly) in, or is otherwise an Affiliate of, a Person that is engaged in the full service railcar leasing business; provided, however, that a Person which is a commercial bank, savings institution, insurance company, trust company or national banking association or an Affiliate of any thereof, or a Person regularly engaged (or a Person which is a Subsidiary of a Person regularly engaged) in the business of acting as the lessor or equity participant in a trust or business trust acting as the lessor in net financial leases, in each case acting for its own account, shall be deemed not to be a Competitor of the Borrower, unless the Borrower and/or the Manager has notified the Agent and each Lender in writing that such Person is a Competitor of the Borrower. "Condemnation" means any taking of property or assets, or any part thereof or interest therein, for public or quasi-public use under the power of eminent domain, by reason of any public improvement or condemnation or in any other manner. "Condemnation Award" means all proceeds of any Condemnation or transfer in lieu thereof with respect to any Portfolio Railcar or other item of Collateral. "Conduit Lender" shall mean any Lender which is designated as a Conduit Lender pursuant to Section 11.06(h). "Contractual Obligation" means, as to any Person, any provision of any security issued by such Person or of any indenture, loan agreement, mortgage, deed of trust, contract or other agreement, instrument or undertaking to which such Person is a party or by which it or any of its property or assets is bound. "Corporate Base Rate" shall mean for any day, the higher of (i) the prime rate per annum announced from time to time by Credit Suisse First Boston in New York in effect on such day or (ii) the Federal Funds Rate plus one-half of one percent (0.50%). (The Corporate Base Rate is not intended to represent the lowest rate charged by Credit Suisse First Boston for extensions of credit.) "Credit Exposure" has the meaning set forth in the definition of "Required Lenders" in this Section 1.01. "Credit Obligations" means, without duplication: (i) all principal of and interest (including, without limitation, any interest which accrues after the commencement of any bankruptcy or insolvency proceeding with respect to the Borrower, whether or not allowed or allowable as a claim under the Bankruptcy Code) on any Loan under, or any Note issued pursuant to, this Agreement or any other Loan Document; -6- (ii) all fees, expenses, indemnification obligations and other amounts of whatever nature now or hereafter payable by any Facility Party (including, without limitation, any amounts which accrue after the commencement of any bankruptcy or insolvency proceeding with respect to such Facility Party, whether or not allowed or allowable as a claim under the Bankruptcy Code) pursuant to this Agreement or any other Loan Document; (iii) all expenses of the Agent as to which the Agent has a right to reimbursement under Section 11.04 of this Agreement or under any other similar provision of any other Loan Document, including, without limitation, any and all sums advanced by the Agent to preserve the Collateral or preserve its security interests in the Collateral; and (iv) all amounts paid by any Indemnitee as to which such Indemnitee has the right to reimbursement under Section 11.05 of this Agreement or under any other similar provision of any other Loan Document; together in each case with all renewals, modifications, consolidations or extensions thereof. "Creditor" means each Lender, each Derivatives Creditor, the Agent, each Protected Party and each Indemnitee and their respective successors and assigns, and "Creditors" means any two or more of such Creditors. "Debt" of any Person means at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person to the extent of the value of such property (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business), (iv) all obligations of such Person to pay the deferred purchase price of property or services (other than current accounts payable arising in the ordinary course of business), (v) the capitalized amount of all Capital Leases of such Person that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, (vi) all obligations (other than obligations in respect of like kind exchanges) of such Person in respect of securities repurchase agreements or otherwise to purchase securities or other property which arise out of or in connection with the sale of the same or substantially similar securities or property, (vii) all non-contingent obligations (and, for purposes of Section 7.01 and Section 9.01(f), all contingent obligations) of such Person to reimburse any bank or other Person in respect of amounts paid under a letter of credit, bankers' acceptance or similar instrument, (viii) all obligations of others secured by (or for which the holder of such obligations has an existing right, contingent or otherwise, to be secured by) a Lien on, or payable out of the proceeds of production from, any property or asset of such Person, whether or not such obligation is assumed by such Person; provided that the amount of any Debt of others that constitutes Debt of such Person solely by reason of this clause (viii) shall not for purposes of this Agreement exceed the greater of the book value or the fair market value of the properties or assets subject to such Lien, (ix) all Guaranty Obligations of such Person, (x) all Disqualified Stock of such Person, (xi) all Derivatives Obligations of such Person and (xii) the Debt of any other Person (including any partnership in which such Person is a general partner and any unincorporated joint venture in which such Person is a joint venturer) to the extent such Person would be liable therefor under applicable law or any agreement or instrument by virtue of such Person's ownership interest in or other relationship with such entity, except to the extent the terms of such Debt provide that such person shall not be liable therefor. "Debt Service Coverage Ratio" means, with respect to any Settlement Date, the ratio of (i) the average of the aggregate amount of Monthly Rent actually collected and paid into the Collection Account during each of the three most recent Measuring Periods ended on or prior to the Calculation Date -7- immediately preceding such Settlement Date to (ii) the sum of (A) the average of the aggregate amount of (y) interest expense accrued on the Loans plus (z) Liquidity Fees accrued hereunder, in each case with respect to each of the three most recent Measuring Periods ended on or prior to the Calculation Date immediately preceding such Settlement Date plus (B) the average of the aggregate amount of Monthly Depreciation with respect to each of the three most recent Measuring Periods ended on or prior to the Calculation Date immediately preceding such Settlement Date. "Default" means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default. "Default Margin" means 500 basis points. "Depositary" means Wilmington Trust Company, or a successor thereto appointed pursuant to the Depository Agreement. "Depository Agreement" means a Depository Agreement, substantially in the form of Exhibit F hereto, with such changes thereto as may be reasonably acceptable to the Agent, among the Borrower, the Agent, the Manager and the Depositary. "Depreciated Purchase Price" means with respect to any Railcar at any time, the original purchase price of such Railcar paid by the Borrower (in the case of Railcars purchased by the Borrower from a seller other than TILC) or TILC (in the case of Railcars transferred to the Borrower under the Asset Contribution and Purchase Agreement) net of the aggregate amount of Monthly Depreciation accumulated with respect thereto since the date of such acquisition by the Borrower or TILC, as applicable. "Derivatives Agreement" means (i) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement and (ii) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement or any other master agreement. "Derivatives Creditor" means any Lender or any Affiliate of any Lender from time to time party to one or more Derivatives Agreements with the Borrower (even if any such Lender for any reason ceases after the execution of such agreement to be a Lender hereunder), and its successors and assigns, and "Derivatives Creditors" means any two or more of such Derivatives Creditors. "Derivatives Obligations" of any Person means all obligations (including, without limitation, any amounts which accrue after the commencement of any bankruptcy or insolvency proceeding with respect to such Person, whether or not allowed or allowable as a claim under the Bankruptcy Code) of such Person in respect of any Derivatives Agreement, excluding any amounts which such Person is entitled to set-off against its obligations under applicable law. -8- "Derivatives Termination Value" means, at any date after the termination of any Derivatives Agreement, after taking into account the effect of any legally enforceable netting agreements relating to such Derivatives Agreement, the amount payable by (in which case the amount shall be positive) or payable to (in which case the amount shall be negative), the Borrower as a result of the termination of such Derivatives Agreement. "Designated Ineligible Type" means with respect to Portfolio Railcars and Portfolio Leases, Railcars or Leases, as the case may be, which are of a type which the Agent, in its reasonable discretion, has theretofore designated (by written notice to the Borrower) as ineligible for inclusion in the Borrowing Base hereunder. "Designated Type" means when used with respect to Railcars, Railcars which are classified as covered hopper grain cars or as coal cars (each of which shall be a separate "type" of Railcar). "Discretionary Account" means a demand deposit account maintained by the Borrower and designated and identified to the Agent as the "Discretionary Account" hereunder. "Disqualified Stock" of any Person means any Equity Interest of such Person which by its terms (or by the terms of any security for which it is convertible or for which it is exchangeable or exercisable), or upon the happening of any event or otherwise (including an event which would constitute a Change of Control), (A) matures or is mandatorily redeemable or subject to any mandatory repurchase requirement, pursuant to a sinking fund or otherwise, (B) is convertible into or exchangeable for Debt or Disqualified Stock or (C) is redeemable or subject to any repurchase requirement arising at the option of the holder thereof, in whole or in part, on or prior to the first anniversary of the Final Maturity Date. "Dollars" and the sign "$" means lawful money of the United States. "Effective Date" means the date this Agreement becomes effective in accordance with Section 11.21. "Eligible Assignee" means (i) any Lender, (ii) any Affiliate of a Lender, (iii) any Approved Fund and (iv) any other Person (other than a natural Person) approved by the Agent. "Eligible Lease" means, as of any date of determination, a Lease: (i) in the form or substantially in the form of Exhibit J-1 or Exhibit J-2 hereto or such other form as may have been approved by the Agent in its reasonable discretion; (ii) which constitutes an operating lease in accordance with GAAP; (iii) which represents a transaction with respect to a related Railcar which is either (A) evidenced by a single lease agreement between the Borrower and the related Lessee governing only (y) the lease of such specific Railcar and (z) other identified Railcars which have been or will be transferred concurrently to the Borrower and are or will become Portfolio Railcars, or (B) evidenced by a specific schedule to a master lease agreement between the Borrower and related Lessee, which schedule identifies as the subject of (and sets forth the specific economic terms of) a lease transaction only as to (y) such specific Railcar and (z) other identified Railcars which have been or will be transferred concurrently to the Borrower and are or will become Portfolio Railcars (i.e., Railcars subject to the same single lease agreement or single schedule to a master lease agreement have not been and will not be transferred to the Borrower by virtue of separate or "split" transfers); -9- (iv) which is not a Designated Ineligible Type of Lease; (v) under which the Lessee is a Person (other than a natural Person) organized under the laws of the United States or Canada (or any Province thereof) or otherwise approved in writing by the Agent as evidenced by the approval of the related Funding Package; (vi) which provides for payment in Dollars; (vii) which complies with all Applicable Laws of the jurisdiction in which it was originated; (viii) which represents the legal, valid and binding obligation of the Lessee thereunder, is enforceable against such Lessee in accordance with its terms (subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors' rights generally and to general equitable principles) and was duly executed by parties having legal capacity to do so; (ix) which is not the subject of, and with respect to which there does not exist and are not overtly threatened, any actions, suits, investigations or legal, equitable or arbitrative or administrative proceedings against or affecting any Facility Party, either Partner or the Partnership; (x) which has not been satisfied, subordinated or rescinded and remains in full force and effect; and (xi) in respect of which the Security Agreement is effective to create a valid and perfected first priority Lien in favor of the Agent, subject only to Permitted Liens. "Eligible Railcar" means, as of any date of determination, a Railcar: (i) other than a Railcar which the Agent has determined and has previously notified the Borrower in writing is of a type which could, if included in the Portfolio, cause the Loans or any Securitization of Portfolio assets to receive a long term rating or a shadow rating of below "A" from S&P or below "A2" from Moody's or which is otherwise a Designated Ineligible Type of Railcar; (ii) other than a Railcar which as of such date of determination, if leased, is leased to a third party pursuant to a Lease which is not an Eligible Lease; (iii) in respect of which the Security Agreement is effective to create a valid and perfected first priority Lien in favor of the Agent, subject only to Permitted Liens; and (iv) other than a Railcar (it being understood and agreed that Railcars deemed ineligible under this clause (iv) shall be excluded from the "Eligible Railcars" in descending order by age, beginning with the oldest Portfolio Railcar) which, when taken together with all of the other Portfolio Railcars, causes the weighted average age (weighted by Fair Market Values) of all Eligible Portfolio Railcars from their respective dates of manufacture to exceed six years. "Environmental Laws" means any current or future legal requirement of any Governmental Authority pertaining to (i) the protection of health, safety, and the environment, (ii) the conservation, management or use of natural resources and wildlife, (iii) the protection or use of surface -10- water and groundwater or (iv) the management, manufacture, possession, presence, use, generation, transportation, treatment, storage, disposal, release, threatened release, abatement, removal, remediation or handling of, or exposure to, any hazardous or toxic substance or material and includes, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 USC 9601 et seq., Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendment of 1984, 42 USC 6901 et seq., Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33 USC 1251 et seq., Clean Air Act of 1966, as amended, 42 USC 7401 et seq., Toxic Substances Control Act of 1976, 15 USC 2601 et seq., Hazardous Materials Transportation Act, 49 USC App. 1801 et seq., Occupational Safety and Health Act of 1970, as amended, 29 USC 651 et seq., Oil Pollution Act of 1990, 33 USC 2701 et seq., Emergency Planning and Community Right-to-Know Act of 1986, 42 USC 11001 et seq., National Environmental Policy Act of 1969, 42 USC 4321 et seq., Safe Drinking Water Act of 1974, as amended, 42 USC 300(f) et seq., any analogous implementing or successor law, and any amendment, rule, regulation, order or directive issued thereunder. "Equity Equivalents" means with respect to any Person any rights, warrants, options, convertible securities, exchangeable securities, indebtedness or other rights, in each case exercisable for or convertible or exchangeable into, directly or indirectly, Equity Interests of such Person or securities exercisable for or convertible or exchangeable into Equity Interests of such Person, whether at the time of issuance or upon the passage of time or the occurrence of some future event. "Equity Interests" means all shares of capital stock, partnership interests (whether general or limited), limited liability company membership interests, beneficial interests in a trust and any other interest or participation that confers on a Person the right to receive a share of profits or losses, or distributions of assets, of an issuing Person, but excluding any debt securities convertible into such Equity Interests. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute, as interpreted by the rules and regulations thereunder, all as the same may be in effect from time to time. References to sections of ERISA shall be construed also to refer to any successor sections. "ERISA Affiliate" means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code). "ERISA Event" means: (i) a Reportable Event with respect to a Pension Plan; (ii) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA; (iii) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (iv) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (v) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (vi) the imposition of any liability under Title IV or ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate. "Eurodollar Reserve Percentage" means for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve -11- System (or any other entity succeeding to the functions currently performed thereby) for determining the maximum reserve requirement for a member bank of the Federal Reserve System in New York City with deposits exceeding five billion Dollars in respect of "Eurocurrency liabilities", whether or not a Lender has any Eurocurrency liabilities subject to such reserve requirement at that time. Loans shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credits for prorations, exceptions or offsets that may be available from time to time to a Lender. The Adjusted Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Eurodollar Reserve Percentage. "Event of Default" has the meaning set forth in Section 9.01. "Event of Loss", with respect to any Portfolio Railcar, means any of the following events: (a) during the term of any Lease with respect to such Railcar, such events with respect to such Railcar as are included in the definition of "Event of Loss", "Total Loss", "Casualty Occurrence" or equivalent term, as the case may be, in such Lease; and (b) when no Lease of such Railcar is in effect, any of the following events with respect to such Railcar: (i) loss of the such Railcar or the use of such Railcar for a period in excess of 180 days due to destruction of or damage to such property or any other casualty which renders repair uneconomic or which renders such property permanently unfit for normal use; (ii) any damage to such Railcar which results in the receipt of Casualty Proceeds by the Agent with respect to such Railcar on the basis of an actual, constructive or compromised total loss; (iii) the theft or disappearance of such Railcar for a period in excess of 180 consecutive days; (iv) the confiscation, seizure of or requisition or taking of title to or other Condemnation of such Railcar by any Governmental Authority other than an instrumentality or agency of the United States whose obligations bear the full faith and credit of the United States, for a period of more than 365 consecutive days; or (v) as a result of any law, rule, regulation, order or other action by the STB or other Governmental Authority having jurisdiction, use of such Railcar in the normal course of business of rail transportation is prohibited for a period of longer than 365 consecutive days. "Excepted Payments" means "excepted payments" or "excluded payments" (as such terms or similar terms are defined and used in any Portfolio Lease) payable to or for the benefit of the Borrower, the Manager, the Agent or any Lender (or any similar party as defined and used in such Lease), including, without limitation, (i) proceeds of public liability insurance (or other insurance maintained by or on behalf of the Borrower for its own account) payable to or for the benefit of the Borrower or the Lessee (or governmental indemnities in lieu thereof) and (ii) any rights to enforce and collect the same. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. -12- "Excluded Assets Amount" means, as of any date of determination, the sum (without duplication) of the following amounts (including in such calculation, if calculated on a Funding Date, amounts in respect of Eligible Railcars which will become Portfolio Railcars on such Funding Date, but excluding amounts in respect of any Eligible Railcars which will cease to be Portfolio Railcars at the time of such determination pursuant to Section 8.10 of the Security Agreement or otherwise): (i) the amount by which (x) the Aggregate FMV of all Eligible Railcars which are either (A) not subject to a Lease or (B) subject to a Lease with respect to which any payment obligation owed by the applicable Lessee is more than 120 days past the stated due date therefor exceeds (y) 5% of the Aggregate FMV of all Eligible Railcars; plus (ii) for each single Lessee whose unsecured, unsubordinated, non-credit enhanced long-term indebtedness for money borrowed is rated at least BBB- by S&P and Baa3 by Moody's, the amount by which (x) the Aggregate FMV of all Eligible Railcars subject to one or more Eligible Leases to such Lessee exceeds (y) 20% of the Commitment Amount; plus (iii) the amount by which (x) the Aggregate FMV of all Eligible Railcars subject to one or more Eligible Leases to Lessees whose unsecured, unsubordinated, non-credit enhanced long-term indebtedness for money borrowed is rated lower than BBB- by S&P or Baa3 by Moody's exceeds (y) 50% of the Commitment Amount; plus (iv) for each single Lessee whose unsecured, unsubordinated, non-credit enhanced long-term indebtedness for money borrowed is rated below BBB- by S&P or Baa3 by Moody's, the amount by which (x) the Aggregate FMV of all Eligible Railcars subject to one or more Eligible Leases to such Lessee exceeds (y) 10% of the Commitment Amount; plus (v) the amount by which (x) the Aggregate FMV of all Eligible Railcars leased by the five Lessees who, collectively, lease Eligible Railcars having the greatest Aggregate FMV, exceeds (y) 50% of the Commitment Amount; plus (vi) the amount by which (x) the Aggregate FMV of all Eligible Railcars which are "foreign use assets" exceeds (y) 15% of the Commitment Amount; plus (vii) the Aggregate FMV of all Eligible Railcars which are subject to one or more Eligible Leases to Lessees who are then subject to any proceeding of the type described in Section 9.01(g); plus (viii) the Aggregate FMV of all Eligible Railcars which are, or which are subject to one or more Eligible Leases which are, subject to any Lien other than Permitted Liens; plus (ix) the Aggregate FMV of all Eligible Railcars which otherwise fail to meet the specifications and requirements established from time to time by, or are otherwise deemed excluded from the Borrowing Base by, the Agent, in each case in its reasonable discretion and following written notice by the Agent to the Borrower and the Manager of such specifications and/or requirements or deemed exclusions. "Facility Margin" means (i) at any time during the Availability Period, 125 basis points and (ii) thereafter, 125 basis points plus an additional 25 basis points for each period of three consecutive Interest Periods during which any Loan remains outstanding. -13- "Facility Party" means each of the Manager and the Borrower, and "Facility Parties" means both of the foregoing. "Failed Loan" has the meaning set forth in Section 2.03(e). "Fair Market Value" means, with respect to any Railcar, the lesser of (i) the Appraised Fair Market Value as set forth in the Independent Appraisal with respect thereto then most recently delivered to the Agent (if any) and (ii) the Depreciated Purchase Price of such Railcar. "Federal Funds Rate" means for any day the rate per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (i) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate quoted to Credit Suisse First Boston, New York Branch, on such day on such transactions as determined by the Agent. "Fee Letter" means the warehouse fee letter agreement dated as of June 27, 2002 among the Borrower, TILC and Credit Suisse First Boston, New York Branch regarding certain fees payable to Credit Suisse First Boston, New York Branch and/or its Affiliates in connection with the transactions contemplated herein. "Final Maturity Date" means the date which is 18 months after the Revolving Termination Date. "Financing Notice" means a notice in substantially the form of Exhibit A-4 hereto, with appropriate insertions. "Follow-On Lease" has the meaning specified in Section 6.12. "FRA" means the Federal Railroad Administration Rules and Regulations, as such regulations are amended from time to time, or corresponding provisions of future regulations. "Funding Date" means each date on which a Loan is made to the Borrower in accordance with this Agreement. "Funding Package" means with respect to each Railcar: (i) all related Lease Documents; (ii) an Independent Appraisal, if required under Section 6.10; (iii) a Physical Inspection Report, if required under Section 6.10; (iv) the following information: (A) the Manufacturer, type, model and car number, including whether such Railcar is a Designated Type; -14- (B) the Mark that is, or after acquisition by the Borrower will be applicable to such Railcar and the identity of the registered holder of such Mark; (C) the Lessee or proposed Lessee, if applicable; (D) the seller of the Railcar and whether it is an Affiliate of the Borrower; (E) the proposed Purchase Price and information on any material modifications (including, but not limited to, prospective material modifications) to the Railcar that relate to such Purchase Price; (F) the terms of the Lease or proposed Lease, if any, with respect to such Railcar, including, without limitation, the terms, Monthly Rent, maintenance reserves (if any), security deposit (if any), return conditions and detailed financial and credit information regarding the Lessee or proposed Lessee; (G) if Trinity or any of its Affiliates then owns or owned such Railcar at any time prior to the purchase of such Railcar by the Borrower, (A) the dates of such ownership, (B) the purchase price paid by Trinity and/or any such Affiliate for such Railcar and (C) such further information as the Agent may reasonably request; (H) search reports as of a recent date from all public offices (including, without limitation, the STB and the Office of the Registrar General of Canada) in which a filing or recording is required or would be effective to perfect a Lien on the interests of the Borrower or the applicable seller in such Railcar and any related Lease; and (I) if such Railcar is then subject to a Lien of record of any Person, information regarding all such Liens including, but not limited to, (A) the name of such lienholder, (B) a description of the collateral granted to such lienholder to secure each such Lien and (C) the payoff amount required to satisfy each such Lien; (v) a memorandum addressed to the Agent and each Lender describing all material differences, if any, between any related Lease and the applicable form of Lease attached hereto as Exhibit J-1 or J-2; and (vi) a favorable opinion of counsel addressed to the Agent and each Lender confirming that, based upon the records of the Borrower, such Railcar has not been the subject of any transfer or pledge by the Borrower to any other Person; provided that to the extent one or more Lease Documents relating to a Railcar that is or is intended to be subject to a Lease that will become a Portfolio Lease on the applicable Funding Date has not been executed at the time such Funding Package is delivered to the Agent, drafts of such documents may be included in such Funding Package, and provided, further, that if drafts of the foregoing are submitted, final versions of such documents must be received by the Agent at least three days prior to the applicable Funding Date. "GAAP" means at any time generally accepted accounting principles as then in effect in the United States, applied on a basis consistent (except for changes with which TILC's independent -15- public accountants have concurred) with the financial statements of TILC delivered to the Lenders at the Closing pursuant to Section 4.01(m). "Governmental Authority" means any federal, state, local, provincial or foreign government, authority, agency, central bank, quasi-governmental or regulatory authority, court or other body or entity, and any arbitrator with authority to bind a party at law. "Granting Lender" has the meaning specified in Section 11.06(h). "Guaranty Obligation" means, with respect to any Person, without duplication, any obligation (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) guarantying, intended to guaranty, or having the economic effect of guarantying, any Debt of any other Person in any manner, whether direct or indirect, and including without limitation any obligation, whether or not contingent, (i) to purchase any such Debt or other obligation or any property constituting security therefor, (ii) to advance or provide funds or other support for the payment or purchase of such indebtedness or obligation or to maintain working capital, solvency or other balance sheet condition of such other Person (including, without limitation, maintenance agreements, comfort letters, take or pay arrangements, put agreements or similar agreements or arrangements) for the benefit of the holder of Debt of such other Person, (iii) to lease or purchase property, securities or services primarily for the purpose of assuring the owner of such Debt or (iv) to otherwise assure or hold harmless the owner of such Debt or obligation against loss in respect thereof. The amount of any Guaranty Obligation hereunder shall (subject to any limitations set forth therein) be deemed to be an amount equal to the outstanding principal amount (or maximum principal amount, if larger) of the Debt in respect of which such Guaranty Obligation is made. "Illegality Event" has the meaning specified in Section 3.02. "Increased Cost" has the meaning specified in Section 3.03(a). "Indemnified Liabilities" has the meaning set forth in Section 11.05. "Indemnitee" has the meaning set forth in Section 11.05. "Independent Appraisal" means a document executed by an Independent Appraiser setting forth the Appraised Fair Market Value of the item of equipment being appraised and the data and explanation, all in reasonable detail, supporting such Appraised Fair Market Value. "Independent Appraiser" means Rail Solutions, Inc., or, in substitution of any of the foregoing appraiser, any independent railcar appraisal expert of recognized standing selected by the Agent in consultation with, and satisfactory to, the Borrower; provided that no such consultations with, or satisfaction of, the Borrower shall be required so long as a Default, a Manager Event of Default or an Event of Default shall have occurred and be continuing. "Insurance Management Agreement" means the Insurance Management Agreement, substantially in the form of Exhibit I hereto, dated as of the date hereof between the Borrower and the Manager. "Interchange Rules" means the interchange rules and supplements thereto promulgated by the A.A.R., as in effect from time to time. "Interest Period" means (i) initially, the period from the Closing Date to the first Calculation Date, and (ii) thereafter, the period from the last day of the immediately preceding Interest -16- Period to the next succeeding Calculation Date; provided that the final Interest Period shall end on but exclude the Final Maturity Date. "Interim Maturity Date" means each of (i) the first Settlement Date which falls 180 days or more after the Revolving Termination Date and (ii) the sixth Settlement Date thereafter. "Investment" in any Person means (i) the acquisition (whether for cash, property, services, assumption of Debt, securities or otherwise) of assets, Equity Interests, bonds, notes, debentures, time deposits or other securities of such other Person, (ii) any deposit with, or advance, loan or other extension of credit to or for the benefit of such Person (other than deposits made in connection with the purchase of equipment or inventory in the ordinary course of business) or (iii) any other capital contribution to or investment in such Person, including by way of Guaranty Obligations of any obligation of such Person, any support for a letter of credit issued on behalf of such Person incurred for the benefit of such Person or any release, cancellation, compromise or forgiveness in whole or in part of any Debt owing by such Person. "Lease" means, with respect to any Railcar, (i) any lease (excluding any head lease or sublease), entered into by the Borrower, as lessor, and any and all supplements and amendments thereto or (ii) any such lease transferred to the Borrower pursuant to a Sale Agreement. "Lease Default" means the occurrence of any default (other than a default which has been waived in compliance with Section 7.14, excluding the proviso therein) under a Lease which is not or has not become, through the giving of notice and/or passage of time or otherwise, a Lease Event of Default. "Lease Documents" means (i) each of the Leases, Notices of Lease Assignments and Sale Agreements and (ii) each other document, certificate or opinion delivered or caused to be delivered to or for the benefit of the Borrower pursuant thereto. "Lease Event of Default" means any default (other than a default which has been waived with the specific written consent of the Agent under Section 7.14, excluding the proviso thereof) under a Lease which, through the giving of notice, the passage of time or otherwise, has become an "event of default" or similar term (as defined and used in such Lease) thereunder, it being the intention that a Lease Event of Default shall mean a default under a Lease as to which the cure period, if any, has expired or which has no cure period. "Lender" means each Committed Lender and each Eligible Assignee which acquires or funds a Commitment or Loan pursuant to Section 11.06(b) or 11.06(h), and their respective successors. "Lessee" means any lessee under any Lease. "Lien" means, with respect to any asset, any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement or memorandum of lien under the Uniform Commercial Code or comparable laws of any jurisdiction), including the interest of a purchaser of accounts receivable, chattel paper, payment intangibles or promissory notes. "Liquidity Fee" has the meaning set forth in Section 2.09(a). "Liquidity Reserve Account" means the Liquidity Reserve Account established by the Depositary pursuant to the Depository Agreement. -17- "Liquidity Reserve Target Amount", as calculated on any Calculation Date, means an amount equal to two times the aggregate interest expense payable on the Loans for the Interest Period ending on such Calculation Date; provided that, in the discretion of the Agent, the "Liquidity Reserve Target Amount" shall be increased to an amount equal to up to six times the aggregate interest expense payable on the Loans for the Interest Period ending on a Calculation Date if the Agent determines that such increase is necessary to achieve a more favorable rating of up to "Aa2" from Moody's and/or "AA" from S&P. "Liquidity Reserves" means amounts deposited in the Liquidity Reserve Account. "Loan" means a loan made under Section 2.01. "Loan Documents" means this Agreement, the Notes, the Performance Guaranty and the Collateral Documents, collectively, and all other related agreements and documents issued or delivered hereunder or thereunder or pursuant hereto or thereto, in each case as the same may be amended, modified or supplemented from time to time. "London Interbank Offered Rate" means, for any Interest Period: (i) the rate per annum equal to the rate determined by the Agent to be the offered rate that appears on the page of the Telerate screen (or any successor thereto) that displays an average British Bankers Association Interest Settlement Rate for one-month deposits in Dollars (for delivery on the first day of such Interest Period), determined as of approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period; or (ii) if the rate referred to in clause (i) above does not appear on such Telerate page or service or such page or service shall cease to be available, the rate per annum equal to the rate determined by the Agent to be the offered rate that appears on such other page or service that displays an average British Bankers Association Interest Settlement Rate for one-month deposits in Dollars (for delivery on the first day of such Interest Period), determined as of approximately 11:00 A.M. two Business Days prior to the first day of such Interest Period; or (iii) if the rates referenced in the preceding clauses (i) and (ii) are not available, the rate per annum determined by the Agent as the rate of interest (rounded upwards to the next 1/16th of 1%) at which one-month deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Loans held by Credit Suisse First Boston, New York Branch, as would be offered by the principal London Office of Credit Suisse First Boston to major banks in the offshore Dollar market at their request at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period; or (iv) the rates referenced in the preceding clauses (i), (ii) and (iii) are not available or are not established for any reason for any Interest Period, the "London Interbank Offered Rate" shall equal the Corporate Base Rate for each day during such Interest Period. "Maintenance Reserve Account" means the Maintenance Reserve Account established by the Depositary pursuant to the Depository Agreement. "Management Agreement" means the Management Agreement, substantially in the form of Exhibit H hereto, dated as of the date hereof, among the Borrower, the Agent and the Manager. -18- "Management Documents" means the Management Agreement, the Insurance Management Agreement, the Administrative Services Agreement and the Marks Company Servicing Agreement, collectively. "Manager" means TILC, and its successors and permitted assigns. "Manager Advances" means any advance (other than any advance giving rise to a Reimbursement Amount) made by the Manager (from time to time in the Manager's sole discretion) to the Borrower in respect of one or more delinquent Lease payments which the Manager determines will ultimately be recoverable to be deposited in the Collection Account on any Settlement Date or otherwise. Outstanding Manager Advances shall bear interest at a rate per annum equal to the Applicable Rate and shall be repaid on each Settlement Date in the order of priority of payments set forth in the applicable provisions of Section 2.07(c). "Manager Default" means a "Manager Default" as defined in the Management Agreement. "Manager Event of Default" means a "Manager Event of Default" as defined in the Management Agreement. "Manager's Fee" means as of any Settlement Date an amount equal to (i) the Base Component (as defined in the Management Agreement, without giving effect to any adjustment, amendment or other modification thereto not expressly approved in writing by the Agent (acting with the consent of the Required Lenders), if the Manager is TILC or one of its Affiliates or (ii) such other percentage as may be agreed among the Manager, the Borrower and the Agent, if the Manager is not TILC or one of its Affiliates, in either case of the Monthly Rent actually collected under the Portfolio Leases during the measuring period ending on the Calculation Date immediately preceding such Settlement Date. "Manufacturer" means the relevant manufacturer of each Railcar. "Margin Stock" means "margin stock" as such term is defined in Regulation U. "Marks" means identification marks of Railcars. "Marks Company" means Trinity Marks Company, a Delaware business trust, and its successors. "Marks Company Delaware Trustee" means Wilmington Trust Company, in its capacity as Delaware trustee for the Marks Company, and its successor or successors in such capacity. "Marks Company Interests" means all beneficial interests, including, without limitation all special units of beneficial interests, now or hereafter issued to or for the benefit of the Borrower representing the right of the Borrower to receive payments of all Railroad Mileage Credits received by the Marks Company in respect of Portfolio Railcars. "Marks Company Servicing Agreement" means the Management and Servicing Agreement dated as of May 17, 2001 between TILC and the Marks Company. "Marks Company Trust Agreement" means the Amended and Restated Marks Company Trust Agreement dated as of May 17, 2001 between TILC, as Settlor, UTI Trustee and Initial Beneficiary, and the Marks Company, as Delaware Trustee. -19- "Material Adverse Effect" means (i) any material adverse effect upon the operations, business, properties or condition (financial or otherwise) of Trinity or any Facility Party (after taking into account any applicable insurance and any applicable indemnification (to the extent the provider of such insurance or indemnification has the financial ability to support its obligations with respect thereto and is not disputing or refusing to acknowledge the same), (ii) a material adverse effect on the ability of Trinity, the Borrower or any other Facility Party to consummate the transactions contemplated hereby to occur on the Closing Date, (iii) a material impairment of the ability of Trinity or any Facility Party to perform any of its obligations under any Transaction Document or (iv) a material impairment of the rights and benefits of the Lenders under any Loan Document. "Measuring Period", as determined with respect to any Settlement Date, means the period from the second preceding Calculation Date to the then most recent Calculation Date. "Modification and Improvements Accounts" means the Modification and Improvements Account established by the Depositary pursuant to the Depository Agreement. "Monthly Depreciation" means with respect to any Measuring Period, the aggregate depreciation expense of the Borrower for such Measuring Period in respect of the Portfolio Railcars, calculated for each such Railcar based upon the original purchase price therefor paid by the Borrower (in the case of Railcars purchased by the Borrower from a seller other than TILC) or TILC (in the case of Railcars transferred to the Borrower under the Asset Contribution and Purchase Agreement), using the straight-line method of depreciation and assuming a 10% residual value and a useful life of 25 years from the date of manufacture. "Monthly Rent" means the aggregate amount of monthly "Basic Rent" payments (or other similar term used to describe scheduled monthly payments) payable by each Lessee under the applicable Lease; provided that if any Lease requires scheduled payments of rent other than on a monthly basis, an amount of such rent shall be allocated to each month on a pro rata basis for the purpose of determining the aggregate amount of "Monthly Rent". "Monthly Report" means a report by the Manager in substantially the form of Exhibit A-5 hereto or such other form as may hereafter be agreed by the Manager and the Agent, with appropriate insertions, or with such other changes as may be reasonably agreed to by the Agent. "Moody's" means Moody's Investors Service, Inc., a Delaware corporation, and its successors or, absent any such successor, such nationally recognized statistical rating organization as the Borrower and the Agent may select. "Multiemployer Plan" means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding three calendar years, has made or been obligated to make contributions. "Net Cash Proceeds" means: (i) with respect to any Asset Disposition (other than pursuant to a Securitization), (A) the gross amount of cash proceeds (including Casualty Proceeds and Condemnation Awards in the case of any Casualty or Condemnation) actually paid to or actually received by the Borrower in respect of such Asset Disposition (including any cash proceeds received as income or other proceeds of any noncash proceeds of any Asset Disposition as and when received), less (B) the sum of (x) the amount, if any, of all taxes (other than income taxes) (to the extent that the amount of such taxes shall have been set aside for the purpose of paying -20- such taxes when due), and customary fees, brokerage fees, commissions, costs and other expenses (excluding all such fees, brokerage fees, commissions, costs and other expenses payable to any Affiliates of the Borrower other than as reimbursement for such amounts incurred for the benefit of the Borrower and paid by such Affiliates to unrelated third parties on behalf of the Borrower) that are incurred in connection with such Asset Disposition and are payable by the Borrower, but only to the extent not already deducted in arriving at the amount referred to in clause (i)(A) above, and (B) appropriate amounts that must be set aside as a reserve in accordance with GAAP against any liabilities associated with such Asset Disposition; and (ii) with respect to any Securitization, the gross amount of cash proceeds paid to or received by the Borrower in respect of the closing of such Securitization, net of underwriting discounts and commissions or placement fees, investment banking fees, legal fees, consulting fees, accounting fees and other customary fees and expenses directly incurred by the Borrower in connection therewith (other than those payable to any Affiliate of the Borrower). "Non-U.S. Lender" has the meaning set forth in Section 3.01(d). "Note" means a promissory note, substantially in the form of Exhibit B hereto, evidencing the obligation of the Borrower to repay outstanding Loans, as such note may be amended, modified, supplemented, extended, renewed or replaced from time to time. "Notice of Borrowing" means a request by the Borrower for a Borrowing, substantially in the form of Exhibit A-2 hereto. "Notice of Lease Assignment" means with respect to each Portfolio Lease, a Notice of Lease Assignment, substantially in the form of Exhibit E-4, with respect thereto, duly executed by the Borrower and delivered to the Agent. "Obligations" means, at any date, (i) all Credit Obligations and (ii) all Derivatives Obligations of the Borrower owed or owing to any Derivatives Creditor. "Organization Documents" means: (i) with respect to any corporation, the certificate or articles of incorporation and the bylaws; (ii) with respect to any limited liability company, the articles of formation and operating agreement; and (iii) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation with the secretary of state or other department in the state or other jurisdiction of its formation, in each case as amended from time to time. "Other Taxes" has the meaning set forth in Section 3.01(b). "Part" or "Parts" means all appliances, parts, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature, which may from time to time be installed on, incorporated in or attached to, a Railcar and, so long as such items remain subject to this Agreement, all such items which are subsequently removed therefrom and which are owned by the Borrower. "Partners" means TILX GP II, LLC, a Delaware limited liability company, as general partner, TILX LP II, LLC, a Delaware limited liability company, as limited partner, and their respective successors. "Partnership" means Trinity Rail Leasing II, L.P., a Delaware limited partnership, and its successors. -21- "PBGC" means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any entity succeeding to any or all of its functions under ERISA. "Pension Plan" means an "employee pension benefit plan" (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes or has an obligation to contribute, in which in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during the immediately preceding five plan years. "Perfection Certificate" means a certificate, substantially in the form of Exhibit E-2 to this Agreement, completed and supplemented with the schedules and attachments contemplated thereby to the satisfaction of the Agent and duly executed by the Vice President-Capital Markets and the chief legal officer of the Manager (on behalf of the Borrower) or TILC, as applicable. "Performance Guaranty" means the Performance Guaranty, substantially in the form of Exhibit G hereto, dated as of the date hereof, by Trinity in favor of the Agent for the benefit of the Lenders. "Permit" means any license, permit, franchise, right or privilege, certificate of authority or order, or any waiver of the foregoing, issued or issuable by any Governmental Authority. "Permitted Liens" means with respect to any Portfolio Railcar: (i) the Liens granted by the Borrower to the Agent under the Loan Documents; (ii) the respective rights of a Lessee under the Lease with respect to such Railcar; (iii) Liens for Taxes payable by the Borrower either not yet due or being contested in good faith by appropriate proceedings diligently conducted so long as such proceedings do not involve any imminent danger of the sale, forfeiture or loss of such Railcar or any interest therein; (iv) materialmen's, suppliers', mechanics', workmen's, repairmen's, employees' or other like Liens arising in the ordinary course of business for amounts the payment of which is either not yet delinquent or is being contested in good faith by appropriate proceedings diligently conducted so long as such proceedings do not involve any imminent danger of the sale, forfeiture or loss of such Railcar or any interest therein; (v) Liens arising out of judgments or awards against the Borrower that do not give rise to any Default or Event of Default and with respect to which there shall have been secured a stay of execution pending such appeal or review; and (vi) customary salvage and similar rights of insurers under policies of insurance maintained with respect to the Collateral. "Person" means an individual, a corporation, a partnership, an association, a limited liability company, a trust or an unincorporated association or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Physical Inspection Report" means with respect to each Railcar, a physical inspection report of an independent inspector mutually acceptable to the Borrower and the Agent, which report shall set forth, among other things, the total number of hours and miles with respect to such Railcar. "Portfolio" means, collectively, all of the Portfolio Railcars and the Portfolio Leases. "Portfolio Lease" means a Lease with respect to a Portfolio Railcar. "Portfolio Railcars" means a Railcar which is owned by the Borrower and which has been funded in whole or in part by a Loan hereunder or included as a Replacement Railcar or otherwise added to the Portfolio in accordance with Sections 2.02(a) and (b). -22- "Protected Party" means the Agent, each Creditor, each Support Party and any participant, successor or permitted assign of any thereof. "Purchase Price" with respect to any Railcar, means the aggregate purchase price payable by the Borrower under the applicable Sale Agreement, as such purchase price is certified in the applicable Request. "Railcar" means a covered hopper car, tank car, boxcar, flat car or other railcar or unit of railroad rolling stock (other than a locomotive), including (i) any and all Parts relating thereto and (ii) any Replacement Railcars and any and all Parts relating thereto, together with any and all accessions, additions, improvements and replacements from time to time incorporated or installed in any item thereof and together with all options, warranties, service contracts, program services, test rights, maintenance rights, support rights, improvement rights and indemnifications relating to any of the foregoing. "Railcar Documentation" means with respect to each Railcar, (i) the documents (including microfilm), data, manuals, diagrams and other written information originally furnished by the Manufacturer and/or the seller thereof on or about the relevant Funding Date, (ii) the documents, records, logs and other data maintained (or required to be maintained) in respect of the Railcars pursuant to the terms of Leases related to such Railcars during the term of such Leases, (iii) the documents, records, logs and other data maintained (or required to be maintained) in respect of the Railcars pursuant to any Applicable Law and (iv) the documents, records, logs and other data maintained (or recommended to be maintained) in respect of the Railcars pursuant to the applicable Manufacturer's recommendations. "Railroad Mileage Credits" means the mileage credit payments made by the railroads under their applicable tariffs to the owner of the Marks on the Railcar. "Register" has the meaning set forth in Section 11.06(d). "Regulation O, T, U or X" means Regulation O, T, U or X, respectively, of the Board of Governors of the Federal Reserve System as amended, or any successor regulation. "Reimbursable Amounts" has the meaning set forth in the Management Agreement. "Reimbursement Amount" has the meaning specified in Section 2.07(c)(i). "Replacement Railcar" means (i) with respect to any Lease, a Railcar that qualifies under the terms of such Lease to replace a Railcar subject to such Lease and to thereby become a "car" as defined in such Lease and (ii) with respect to Railcars not subject to a Lease, a Railcar or Railcars having (in the aggregate) a Fair Market Value and utility at least equal to, and being in at least as good an operating and maintenance condition as, and having been maintained in a substantially similar or better manner as, the Railcar being replaced (assuming that such Railcar had been maintained in accordance with this Agreement). "Reportable Event" means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30-day notice period has been waived. "Request" means a Request in substantially the form attached hereto as Exhibit A-1, with appropriate insertions, or with such other changes as may be reasonably agreed to by the Agent. "Required Lenders" means Lenders whose aggregate Credit Exposure (as hereinafter defined) constitutes more than 66 2/3% of the Credit Exposure of all Lenders at such time. For purposes of the preceding sentence, the term "Credit Exposure" as applied to each Lender shall mean (i) in the case -23- of a Committed Lender at any time prior to the termination of the Commitments, the difference of (A) the Commitment Percentage of such Lender multiplied by the Committed Amount less (B) the aggregate principal amount of all outstanding Loans funded by a Conduit Lender on behalf of such Committed Lender, and (ii) in the case of a Conduit Lender and in the case of a Committed Lender at any time after the termination of the Commitments, the aggregate principal balance of the outstanding Loans of such Lender. "Responsible Officer" means with respect to any Facility Party, the president, any vice president, chief financial officer, treasurer or assistant treasurer of such Facility Party (or, in the case of a Facility Party which is a partnership, limited liability company or trust, any such officer of the general partner, manager, trustee or Person performing similar management functions in respect thereof). Any document delivered hereunder that is signed by a Responsible Officer of a Facility Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Facility Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Facility Party. "Restricted Payment" means (i) any dividend or other distribution, direct or indirect, on account of any class of Equity Interests or Equity Equivalents of the Borrower, now or hereafter outstanding, (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any class of Equity Interests or Equity Equivalents of the Borrower, now or hereafter outstanding, (iii) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire any class of Equity Interests or Equity Equivalents of the Borrower, now or hereafter outstanding, and (iv) any loan, advance, tax sharing payment or indemnification payment to, or investment in, any Affiliate of the Borrower. "Revolving Termination Date" means the earlier of (i) the date which is 364 days after the Closing Date, or such later date to which the Revolving Termination Date may have been extended pursuant to Section 2.08, (ii) unless waived by the Required Lenders, the date upon which any Manager Event of Default shall occur or (iii) such earlier date upon which the Commitments shall have been terminated in their entirety in accordance with this Agreement. "S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill, Inc., a New York corporation, and its successor or, absent any such successor, such nationally recognized statistical rating organization as the Borrower and the Agent may select. "Sale Agreement" means, with respect to any Railcar and related Lease, if applicable, the Asset Contribution and Purchase Agreement, or such other agreement or agreements, in each case in form and substance acceptable to the Agent in its reasonable discretion, between the applicable seller thereof and the Borrower as shall provide for the purchase of such Railcar and related Lease, if applicable, by the Borrower. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Securitization" means any asset-backed offering sponsored by the Borrower, Trinity and/or their Affiliates, and involving all or any of the Portfolio Railcars and Portfolio Leases. "Security Agreement" means the Security Agreement, substantially in the form of Exhibit E-1 hereto, dated as of the date hereof between the Borrower and the Agent. -24- "Settlement Date" means the 15th calendar day of each calendar month occurring after July 31, 2002; provided that if such day is not a Business Day, the applicable "Settlement Date" shall be the next succeeding Business Day. "Solvent" means, with respect to any Person as of a particular date, that on such date (i) such Person is able to pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (ii) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature in their ordinary course, (iii) such Person is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which such Person's assets would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged or is to engage, (iv) the fair value of the assets of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person and (v) the aggregate fair saleable value (i.e., the amount that may be realized within a reasonable time, considered to be six months to one year, either through collection or sale at the regular market value, conceiving the latter as the amount that could be obtained for the assets in question within such period by a capable and diligent businessman from an interested buyer who is willing to purchase under ordinary selling conditions) of the assets of such Person will exceed its debts and other liabilities (including contingent, subordinated, unmatured and unliquidated debts and liabilities). For purposes of this definition, "debt" means any liability on a claim, and "claim" means (i) a right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured, or (ii) a right to an equitable remedy for breach of performance if such breach gives rise to a payment, whether or not such right is an equitable remedy, is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. "STB" means the United States Surface Transportation Board and its successors. "Subsidiary" means with respect to any Person, any corporation, partnership, limited liability company, association or other business entity of which (i) if a corporation, more than 50% of the total voting power of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, limited liability company, association or business entity other than a corporation, more than 50% of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have more than 50% ownership interest in a partnership, limited liability company, association or other business entity if such Person or Persons shall be allocated more than 50% of partnership, association or other business entity gains or losses or shall be or control the managing director, manager or a general partner of such partnership, association or other business entity. "Support Facility" shall mean any liquidity or credit support agreement or other facility with a Conduit Lender which relates, either generally or specifically, to this Agreement (including any agreement to purchase an assignment of or participation in, or to make loans or other advances in respect of, Notes or Loans). "Support Party" shall mean any bank, insurance company or other entity extending or having a commitment to extend funds to or for the account of a Conduit Lender (including by agreement to purchase an assignment of or participation in, or to make loans or other advances in respect of, Notes or Loans) under a Support Facility. -25- "Taxes" has the meaning set forth in Section 3.01. "TILC" means Trinity Industries Leasing Company, a Delaware corporation, and its successors and permitted assigns. "Transaction Documents" means the Loan Documents and the Management Documents, collectively. "Treasury Regulations" means the regulations, including temporary and proposed regulations, promulgated by the United States Department of Treasury with respect to the Code, as such regulations are amended from time to time, or corresponding provisions of future regulations. "Trinity" means Trinity Industries, Inc., a Delaware corporation, and its successors and permitted assigns. "Trinity Change of Control" means the occurrence of any of the following events: (i) any "person" or "group" (within the meaning of Section 13(d) or 14(d) of the Exchange Act) has become the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to have "beneficial ownership" of all securities that any such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), by way of merger, consolidation or otherwise, of 35% or more of the Equity Interests of Trinity on a fully-diluted basis after giving effect to the conversion and exercise of all outstanding Equity Equivalents (whether or not such securities are then currently convertible or exercisable); or (ii) during any period of two consecutive calendar years, individuals who at the beginning of such period constituted the board of directors (or persons performing similar functions) of Trinity together with any new members of such board of directors whose elections by such board of directors or whose nominations for election by the stockholders of Trinity was approved by a vote of a majority of the members of such board of directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the directors of Trinity still in office. "Unfunded Pension Liability" means at any date the excess of a Pension Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan's assets, determined in accordance with the assumptions used for finding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year. "United States" means the United States of America, including the States and the District of Columbia but excluding its territories and possessions. "Unused Commitment Amount" means, as of any date of determination, the amount by which (i) the then applicable Committed Amount exceeds (ii) the aggregate principal amount of all outstanding Loans as of such date. SECTION 1.02 COMPUTATION OF TIME PERIODS AND OTHER DEFINITIONAL PROVISIONS. For purposes of computation of periods of time hereunder, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding". All references to time herein shall be references to Eastern Standard time or Eastern Daylight time, as the case may be, unless specified otherwise. References in this Agreement to Articles, Sections, Schedules, Appendices or Exhibits shall be to -26- Articles, Sections, Schedules, Appendices or Exhibits of or to this Agreement unless otherwise specifically provided. The definitions in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined. ARTICLE II THE CREDIT FACILITY SECTION 2.01 COMMITMENT TO LEND. Each Committed Lender severally agrees, subject to the Agent's determination that the terms and conditions of Sections 2.02 and 4.02 applicable to any Funding Date have been satisfied or waived by the Agent and on the other terms and conditions set forth in this Agreement, to make Loans to the Borrower pursuant to this Section 2.01 on each Funding Date during the Availability Period in order to fund the acquisition of Railcars and related Leases by the Borrower on such Funding Date. The Loans advanced on any Funding Date with respect to any Railcars and related Leases shall not: (i) in the case of any Committed Lender, exceed (after giving effect to all Loans of such Committed Lender and any Conduit Lender designated by such Committed Lender repaid concurrently with the making of such Loans) its Available Commitment; (ii) exceed the lesser of (A) the Unused Commitment Amount and (B) the product of the Advance Rate multiplied by the aggregate Fair Market Value of all Eligible Railcars included in such Railcars; or (iii) when added to the aggregate amount of the Loans then outstanding (after giving effect to all Loans repaid concurrently with the making of such Loans), exceed the lesser of (A) the Commitment Amount and (B) the Borrowing Base (after giving effect to the addition to and/or removal of the respective Fair Market Values of any Eligible Railcars to be added to or removed from the Portfolio on such Funding Date). Each Borrowing shall be in an aggregate principal amount of $5,000,000, in the case of the first Borrowing hereunder, or $1,000,000, in the case of subsequent Borrowings, or, in each case, any larger amount (except that any such Borrowing may be in the aggregate amount of the unused Commitments) and shall be made from the several Committed Lenders ratably in proportion to their respective Commitments. The Lenders have no obligation to make any Loan hereunder except as expressly set forth in this Agreement. Within the foregoing limits, the Borrower may borrow under this Section 2.01, repay, or, to the extent permitted by Section 2.07, prepay, Loans and reborrow under this Section 2.01. In connection with the transactions on any Funding Date, the Agent may in its sole discretion grant the Borrower an extension of time in performing its obligations under Section 2.02 and in fulfilling the conditions set forth in Section 4.02. SECTION 2.02 PROCEDURES FOR BORROWING. (a) Requests; Delivery of Funding Packages. The Borrower may from time to time provide the Agent with a Request, signed by a Responsible Officer of the Borrower, to add additional Railcars to the Portfolio. Concurrent with the delivery of the Request, the Borrower shall deliver to the Agent the Funding Package for each such Railcar. The Borrower shall also set forth in such Request for each Lease in effect prior to the proposed Funding Date, a statement that, to the knowledge of the Facility Parties, (i) the Lessee has made rent payments on time (giving effect to any applicable grace periods) under such Lease or, if not, a description of any late payments of which any Facility Party is aware during the one-year period (or shorter period, if any) prior to such Request and a summary description of any earlier such defaults, if any, of which any Facility Party is aware and (ii) no Lease Default or Lease Event of Default under such Lease has occurred during the one-year period (or shorter period, if any), prior to the date of such Request or, if that is not the case, a description of any such Lease Default or Lease Event of Default of which any Facility Party is aware. The Borrower shall supplement the Request with whatever additional information the Agent reasonably requests about the proposed transaction. (b) Determination of Acceptability by the Agent. The Agent shall determine, with exercise of its sole discretion, whether or not to include, each Railcar and Lease described in any Request and related Funding Package in the Portfolio; provided that, in the case of any Railcar of any Designated -27- Type which, if included in the Portfolio, would cause the Aggregate FMV of all Portfolio Railcars of such Designated Type to exceed 30% of the Commitment Amount, the consent of the Required Lenders shall be required to approve such Railcar for inclusion in the Portfolio. Within six Business Days of receipt of the Request and a complete Funding Package with respect to such Railcar, the Agent shall inform the Borrower in writing if the Railcar and Lease referred to in the Request and Funding Package may be added (subject to the terms and conditions of this Agreement) to the Portfolio. In exercising its discretion to determine whether to include a transaction that is the subject of a Request in the Portfolio, the Agent shall consider the following factors, among others: the current and future anticipated value of the Railcar, the current and anticipated users of the Railcar and maintenance issues related to the Railcar; the credit quality of the proposed Lessee, its ability to perform its obligations under the proposed Lease, its performance record with respect to other leases and debt obligations and its maintenance and operational standards; whether the transaction is appropriate to be included in a Securitization; and whether the Securitization contemplated by the Borrower can be completed prior to the Final Maturity Date. (c) Notice of Borrowings. Upon approval by the Agent (with the consent of the Required Lenders, if required) of a Railcar and any related Lease in the Portfolio in accordance with Section 2.02(b) (but in any event no more frequently than once in any week), the Borrower may, subject to the terms and conditions of this Agreement, borrow Loans in respect of each such Railcar and related Lease which is an Eligible Railcar and/or Eligible Lease, as applicable. In such event, the Borrower shall give the Agent a Notice of Borrowing not later than 11:00 A.M. on the second Business Day prior to the date of the proposed Funding Date, specifying: (A) the proposed Funding Date of such Borrowing, which shall be a Business Day; (B) the aggregate amount of the Borrowing to be made on such Funding Date; and (C) a description of the Eligible Railcars to be financed and the Eligible Lease(s) to be pledged on such Funding Date (which may be by cross reference to or attachment of the related Request); and attaching a pro forma Borrowing Base Certificate giving effect to all Loans requested pursuant to such Notice of Borrowing and the pledge of all Railcars and Leases to be added to the Portfolio on the proposed Funding Date. In addition, the Borrower shall concurrently deliver to each Committed Lender a copy of the Funding Package with respect to all Railcars to be funded on the proposed Funding Date. SECTION 2.03 NOTICE TO LENDERS; FUNDING OF LOANS. (a) Notice to Lenders. Upon receipt of a Notice of Borrowing, the Agent shall promptly deliver to each Committed Lender a Financing Notice notifying such Committed Lender of such Funding Date and of such Committed Lender's ratable share of the Loans referred to therein. (b) Funding of Loans. Not later than 11:00 A.M. on the applicable Funding Date, each Lender shall make available or instruct (followed by diligent attention to such instruction until such time as the Agent shall have received such Loan) its correspondent bank, if any, to make available its share of such Borrowing, in Federal or other immediately available funds, to the Agent at the Agent's Office. Unless the Agent determines that any applicable condition specified in Article IV has not been satisfied, the Agent shall, by 2:30 P.M., make the amount of such Borrowing available to the Borrower at the general deposit account in the United States designated by the Borrower in immediately available funds in a wire transfer. In the event that the conditions as set forth in Section 4.02 for such Loan are not -28- satisfied or waived on the applicable Funding Date, the Agent shall return to the Lenders their respective Loans advanced pursuant to this Section 2.03. A Notice of Borrowing, once delivered to the Agent, shall be irrevocable and binding on the Borrower. Following such Notice of Borrowing, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill, on or before the proposed Funding Date specified in the Notice of Borrowing, the conditions set forth in Section 4.02, including any loss, cost or expense incurred by reason of the liquidation or re-employment of deposits or such funds acquired by the Lenders to fund the Loans to be made pursuant to this Section 2.03(b). Any such loss, cost or expense shall be paid in accordance with Section 2.07(c) after any Lender shall have furnished to the Borrower and the Agent, with reasonable supporting calculations, a notice specifying the amounts thereof. (c) Funding by the Agent in Anticipation of Amounts Due from the Lenders. Unless the Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Agent such Lender's share of such Borrowing, the Agent may assume that such Lender has made such share available to the Agent on the Funding Date of such Loan in accordance with subsection (b) of this Section, and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such share available to the Agent, such Lender and the Borrower (if and to the extent such corresponding amount was made available by the Agent hereunder) severally agree to repay to the Agent forthwith on demand such corresponding amount, together with interest thereon for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent at (i) a rate per annum equal to the higher of the Federal Funds Rate and the interest Applicable Rate, in the case of the Borrower, and (ii) the Federal Funds Rate, in the case of such Lender. If such Lender shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Lender's Loan included in such Borrowing for purposes of this Agreement. (d) Obligations of Lenders Several. The failure of any Lender to make a Loan required to be made by it as part of any Borrowing hereunder shall not relieve any other Committed Lender of its obligation, if any, hereunder to make any Loan on the Funding Date of such Borrowing, but, except as otherwise provided in Section 11.06(h), no Lender shall be responsible for the failure of any other Lender to make the Loan to be made by such other Lender on such Funding Date. (e) Failed Loans. If any Committed Lender shall fail to make any Loan (a "Failed Loan") which such Committed Lender is otherwise obligated hereunder to make to the Borrower on the Funding Date of any Borrowing and the Agent shall not have received notice from the Borrower or such Committed Lender that any condition precedent to the making of the Failed Loan has not been satisfied, then, until such Committed Lender shall have made or be deemed to have made (pursuant to the last sentence of this subsection (e)) the Failed Loan in full or the Agent shall have received notice from the Borrower or such Committed Lender that any condition precedent to the making of the Failed Loan was not satisfied at the time the Failed Loan was to have been made, whenever the Agent shall receive any amount from the Borrower for the account of such Lender, (i) the amount so received (up to the amount of such Failed Loan) will, upon receipt by the Agent, be deemed to have been paid to the Committed Lender in satisfaction of the obligation for which paid, without actual disbursement of such amount to the Committed Lender, (ii) the Committed Lender will be deemed to have made the same amount available to the Agent for disbursement as a Loan to the Borrower (up to the amount of such Failed Loan) and (iii) the Agent will disburse such amount (up to the amount of the Failed Loan) to the Borrower -29- or, if the Agent has previously made such amount available to the Borrower on behalf of such Committed Lender pursuant to the provisions hereof, reimburse itself (up to the amount made available to the Borrower); provided, however, that the Agent shall have no obligation to disburse any such amount to the Borrower or otherwise apply it or deem it applied as provided herein unless the Agent shall have determined in its sole discretion that to so disburse such amount will not violate any law, rule, regulation or requirement applicable to the Agent. Upon any such disbursement by the Agent, such Committed Lender shall be deemed to have made a Loan to the Borrower in satisfaction, to the extent thereof, of such Committed Lender's obligation to make the Failed Loan. SECTION 2.04 EVIDENCE OF LOANS. (a) Lender Accounts. Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement. (b) Agent Records. The Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, (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 Agent hereunder from the Borrower and each Lender's share thereof. (c) Evidence of Debt. The entries made in the accounts maintained pursuant to subsections (a) and (b) of this Section 2.04 shall be conclusive evidence (absent manifest error) of the existence and amounts of the obligations therein recorded; provided, however, that the failure of any Lender or the Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of the Borrower to repay the Loans in accordance with their terms. (d) Notes. Notwithstanding any other provision of this Agreement, if any Lender shall request and receive a Note or Notes as provided in Section 11.06 or otherwise, then the Loans of such Lender shall be evidenced by a single Note substantially in the form of Exhibit B, and payable to the order of such Lender in an amount equal to the aggregate unpaid principal amount of such Lender's Loans. (e) Note Endorsements. Each Lender having a Note shall record the date and amount of each Loan made by it and the date and amount of each payment of principal made by the Borrower with respect thereto, and may, if such Lender so elects in connection with any transfer or enforcement of its Note, endorse on the reverse side or on the schedule, if any, forming a part thereof appropriate notations to evidence the foregoing information with respect to each outstanding Loan evidenced thereby; provided that the failure of any Lender to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under any such Note. Each Lender is hereby irrevocably authorized by the Borrower so to endorse its Note and to attach to and make a part of its Note a continuation of any such schedule as and when required. When the Borrower has paid a Note in full and the applicable Lender no longer has any Commitment outstanding, such Lender will promptly return such Note to the Agent, who will return such Note to the Borrower, against receipt therefor, marked "PAID IN FULL". (f) Lost, Mutilated and Destroyed Notes, etc. If any Note issued to a Lender pursuant to this Agreement shall become mutilated, destroyed, lost or stolen, the Borrower shall, upon the written request of the holder of such Note, execute and deliver to the Agent, who shall endorse and deliver to the applicable Lender in replacement thereof a new Note, payable to the same holder in the same principal amount and dated the same date as the Note so mutilated, destroyed, lost or stolen. If the Note being replaced has become mutilated, such Note shall be surrendered to the Borrower for cancellation and if the Note being replaced has been destroyed, lost or stolen, the holder of such Note shall furnish to the Borrower such indemnification as may be required by the Borrower to hold the -30- Borrower harmless and evidence reasonably satisfactory to the Borrower of the destruction, loss or theft of such Note and of the ownership thereof; provided, however, that if the holder of such Note is a Committed Lender, the written undertaking of such Lender shall be sufficient indemnity for purposes of this Section 2.04(f). SECTION 2.05 INTEREST. (a) Applicable Rate. Each Loan shall bear interest on the outstanding principal amount thereof, for each day during each Interest Period applicable thereto, at a rate per annum equal to the Applicable Rate for such day. Such interest shall be payable in arrears on each Settlement Date and on the Final Maturity Date. (b) Determination and Notice of Interest Rates. The Agent shall determine each interest rate applicable to the Loans hereunder as provided herein. The Agent shall give prompt notice to the Borrower and the participating Lenders of each rate of interest so determined, and its determination thereof shall be conclusive in the absence of manifest error. SECTION 2.06 MATURITY OF LOANS. On each Interim Maturity Date, the Borrower shall repay, and there shall become due and payable (together with accrued interest thereon), one-third of the aggregate principal amount of the Loans outstanding as of the Revolving Termination Date, and the Loans of each Lender shall be ratably repaid. On the Final Maturity Date, the Borrower shall repay, and there shall become due and payable (together with accrued interest thereon), the aggregate principal amount of all Loans then outstanding, and the Loans of each Lender shall be ratably repaid. For the avoidance of doubt, principal amounts of the Loans prepaid after the Revolving Termination Date in accordance with Section 2.07(a) or (b) below shall not reduce the amount of any repayment scheduled to become due and payable on any Interim Maturity Date in accordance with this Section 2.06. SECTION 2.07 PREPAYMENTS. (a) Voluntary Prepayments. The Borrower shall have the right voluntarily to prepay Loans in whole or in part without premium or penalty; provided, however, that (i) each partial prepayment of Loans shall be in a minimum principal amount of $1,000,000 and integral multiples of $1,000,000 in excess thereof and (ii) the Borrower shall have given prior written or telecopy notice (or telephone notice promptly confirmed by written or telecopy notice) to the Agent by 10:00 A.M., at least five Business Days prior to the date of prepayment. Each notice of prepayment shall specify the prepayment date and the principal amount to be prepaid. Each notice of prepayment shall be irrevocable and shall commit the Borrower to prepay such Loan by the amount stated therein on the date stated therein. All prepayments under this Section 2.07(a) shall be accompanied by accrued interest on the principal amount being prepaid to the date of payment together with any amounts owed to any Lender pursuant to Section 3.04 hereof. (b) Mandatory Prepayments. (i) On each Settlement Date, an aggregate amount equal to the amount of all Cash Flow and other amounts on deposit in the Collection Account (as of the Calculation Date immediately preceding such Settlement Date in the case of any Settlement Date occurring prior to the Revolving Termination Date) and, at the Agent's discretion (subject to Section 6.13(c)), the Liquidity Reserve Account shall be applied (and the Loans, together with other Obligations then due, shall be prepaid to the extent of cash available therefore) in accordance with the provisions of Section 2.07(c)(i), 2.07(c)(ii) or 2.07(c)(iii), as applicable. -31- (ii) Following the occurrence of an Event of Default and acceleration of the Loans, the outstanding Loans shall be paid immediately, together with accrued interest thereon to the date of such prepayment, the amount, if any, owed to each Lender pursuant to Section 3.04 hereof and other Obligations owed hereunder. (iii) If on any Settlement Date, the Agent notifies the Borrower that a Collateral Deficiency exists, the Borrower shall on or prior to the next succeeding Settlement Date (or, if such Collateral Deficiency exists solely as a result of an exclusion of a designation by the Agent of any Designated Ineligible Type of Railcar or Lease or as a result of an exclusion of one or more Eligible Railcars pursuant to clause (ix) of the definition of "Excluded Assets Amount", the second succeeding Settlement Date) either (A) pay the amount of such Collateral Deficiency together with accrued interest thereon and the amount, if any, owed to each Lender pursuant to Section 3.04 hereof to the Collection Account, and on the following Settlement Date, or at the sole discretion of the Agent upon receipt, such payment shall be applied by the Agent in accordance with the then applicable provisions of Section 2.07(c) or (B) pledge additional Eligible Railcars and/or Eligible Leases approved by the Agent in its sole discretion pursuant to Section 2.02 and/or other collateral acceptable to the Agent so that such Collateral Deficiency no longer exists. (c) Application of Payments and Prepayments. (i) Application of Collections During the Availability Period. Subject to Section 2.07(c)(iii), so long as no Manager Default or Manager Event of Default has occurred and is continuing, on each Settlement Date during the Availability Period, all amounts on deposit in the Collection Account as of the Calculation Date immediately preceding such Settlement Date and amounts which the Agent elects to apply from the then current balance of the Liquidity Reserve Account shall be applied by the Depositary in the following order of priority: first, to the Manager, for distribution to the Lessees, if any, whose payments in respect of the applicable Leases are not made net of any Railroad Mileage Credits due and owing to such Lessee, an amount equal to the Railroad Mileage Credits due to such Lessee for which an allocation has not previously been made pursuant to this clause (or any corresponding clause of any other subsection in this Section 2.07(c)) as certified to the Agent by the Manager not later than the Calculation Date immediately preceding such Settlement Date; second, to the payment of any fees (including the Liquidity Fee and, if the Manager is not TILC or one of its Affiliates, the Manager's Fee payable on such Settlement Date, together with the aggregate amount of any Manager's Fees which were due and payable on any previous Settlement Date and remain unpaid) or indemnities payable or expenses (including, if the Manager is not TILC or one of its Affiliates, the aggregate amount of any Reimbursable Amounts payable on such Settlement Date, together with the aggregate amount of any Reimbursable Amounts which were due and payable on any previous Settlement Date and remain unpaid) permitted under this Agreement or any other Loan Document, in each case as approved by the Agent; third, to reimburse the Agent for any fees and expenses incurred by the Agent (including, without limitation, reasonable attorney's fees and expenses and the fees and expenses of any person appointed by the Agent to replace the Manager pursuant to the Management Agreement) in connection with any Manager Event of Default or Event of -32- Default and the exercise by the Agent of any right or remedy hereunder and not previously reimbursed by the Lenders; fourth, to the reimbursement of the Lenders for any amounts paid by the Lenders to the Agent in compensation for fees and expenses incurred by the Agent and described in clause second; fifth, ratably (x) to the payment of accrued and unpaid interest on the Loans and (y) to the payment of Derivatives Obligations, if any, then due and payable; sixth, to the payment of all indemnities in respect of Taxes, Other Taxes, stamp taxes, funding losses referred to in Section 3.04, increased costs referred to in Section 3.03, losses, costs and expenses referred to in Section 2.03(b) and other amounts, other than principal of or interest on the Loans, payable to any Protected Party in accordance with the Loan Documents; seventh, deposit to the Liquidity Reserve Account the positive difference (if any) between (x) the Liquidity Reserve Target Amount and (y) the balance of the Liquidity Reserve Account, in each case as determined on the immediately preceding Calculation Date; eighth, if the Manager is TILC or one of its Affiliates, the Manager's Fee and/or Reimbursable Amounts payable on such Settlement Date, together with the aggregate amount of any Manager's Fees and/or Reimbursable Amounts which were due and payable on any previous Settlement Date and remain unpaid. ninth, if (A) any amount (a "Reimbursement Amount") paid by a Lessee into the Collection Account since the last Settlement Date was specifically paid to reimburse any expense paid by the Manager under the Management Agreement (but not to include payments by the Manager in respect of unpaid Monthly Rent amounts) because the Lessee had failed to pay an amount due or perform an obligation under the applicable Lease, (B) the Lessee has cured all payment defaults under the applicable Lease and (C) the Manager has provided the Agent with documentation that enables the Agent to verify the amounts distributable under this clause ninth, to reimburse the Manager for such payment in an amount up to but not exceeding, the Reimbursement Amount; tenth, to the ratable payment of the unpaid principal of the Loans in an amount not exceeding an amount such that, after giving effect to such payment, no Collateral Deficiency then exists; eleventh, to reimburse the Manager for outstanding Manager Advances, together with accrued interest thereon; twelfth, deposit to the Maintenance Reserve Account and/or the Modification and Improvements Account, in each case the amount determined by the Borrower in its sole discretion; and thirteenth, deposit to the Discretionary Account or, subject to Section 7.07, otherwise at the direction of the Borrower. -33- (ii) Application of Collections Following the Availability Period. Subject to Section 2.07(c)(iii), all amounts on deposit in the Collection Account as of the Calculation Date immediately preceding such Settlement Date, amounts which the Agent elects to apply from the then current balance of the Liquidity Reserve Account and all other payments received and all amounts held or realized by or for the benefit of the Agent (including any amount realized by the Agent after the exercise of any remedy as set forth herein or in any other Loan Document and all proceeds of the Collateral), and all payments or amounts then held or thereafter received by or for the benefit of the Agent hereunder or under the Loan Documents, in the Accounts or elsewhere shall be applied by the Depositary (A) on each Settlement Date during the Availability Period on which a Manager Default or Manager Event of Default has occurred and is continuing and (B) on each Settlement Date occurring on or after the Revolving Termination Date in the following order of priority: first, to the Manager, for distribution to the Lessees, if any, whose payments in respect of the applicable Leases are not made net of any Railroad Mileage Credits due and owing to such Lessee, an amount equal to the Railroad Mileage Credits due to such Lessee for which an allocation has not previously been made pursuant to this clause (or any corresponding clause of any other subsection in this Section 2.07(c)) as certified to the Agent by the Manager not later than the Calculation Date immediately preceding such Settlement Date; second, to the payment of any fees (including the Liquidity Fee and, if the Manager is not TILC or one of its Affiliates, the Manager's Fee payable on such Settlement Date, together with the aggregate amount of any Manager's Fees which were due and payable on any previous Settlement Date and remain unpaid) or indemnities payable or expenses (including, if the Manager is not TILC or one of its Affiliates, the aggregate amount of any Reimbursable Amounts payable on such Settlement Date, together with the aggregate amount of any Reimbursable Amounts which were due and payable on any previous Settlement Date and remain unpaid) permitted under this Agreement or any other Loan Document, in each case as approved by the Agent; third, to reimburse the Agent for any fees and expenses incurred by the Agent (including, without limitation, reasonable attorney's fees and expenses and the fees and expenses of any person appointed by the Agent to replace the Manager pursuant to the Management Agreement) in connection with any Manager Event of Default or Event of Default and the exercise by the Agent of any right or remedy hereunder and not previously reimbursed by the Lenders; fourth, to the reimbursement of the Lenders for any amounts paid by the Lenders to the Agent in compensation for fees and expenses incurred by the Agent and described in clause second; fifth, ratably (x) to the payment of interest on the Loans and (y) to the payment of Derivatives Obligations, if any, then due and payable; sixth, to the payment of all indemnities in respect of Taxes, Other Taxes, stamp taxes, funding losses referred to in Section 3.04, increased costs referred to in Section 3.03, losses, costs and expenses referred to in Section 2.03(b) and other amounts, other than principal of or interest on the Loans, payable to any Protected Party in accordance with the Loan Documents; -34- seventh, deposit to the Liquidity Reserve Account the positive difference (if any) between (x) the Liquidity Reserve Target Amount and (y) the balance of the Liquidity Reserve Account, in each case as determined on the immediately preceding Calculation Date; eighth, if the Manager is TILC or one of its Affiliates, the Manager's Fee and/or Reimbursable Amounts payable on such Settlement Date, together with the aggregate amount of any Manager's Fees and/or Reimbursable Amounts which were due and payable on any previous Settlement Date and remain unpaid; ninth, to the ratable payment of the unpaid principal amount of the Loans; tenth, (A) if (x) the Lessee has paid a Reimbursement Amount, (y) the Lessee has cured all payment defaults under the applicable Lease and (z) the Manager has provided the Agent with documentation that enables the Agent to verify the amounts distributable under this clause tenth, to reimburse the Manager for such payment in an amount up to but not exceeding, the Reimbursement Amount and (B) to reimburse the Manager for outstanding Manager Advances, together with accrued interest thereon; eleventh, deposit to the Maintenance Reserve Account and/or the Modification and Improvements Account, in each case the amount determined by the Borrower in its sole discretion; and twelfth, deposit to the Discretionary Account or, subject to Section 7.07, otherwise at the direction of the Borrower. (iii) Payment if an Event of Default is Continuing. Notwithstanding anything to the contrary set forth in this Agreement or any other Loan Document, if any Event of Default has occurred and is continuing, unless the Agent shall elect, with the consent of the Required Lenders, to apply such amounts in accordance with Section 2.07(c)(ii) above, all amounts on deposit in the Collection Account, amounts which the Agent elects to apply from the then current balance of the Liquidity Reserve Account and all other payments received and all amounts held or realized by or for the benefit of the Agent (including any amount realized by the Agent after the exercise of any remedy as set forth herein or in any other Loan Document and all proceeds of the Collateral), and all payments or amounts then held or thereafter received by or for the benefit of the Agent hereunder or under the Loan Documents, in the Accounts shall be applied by the Depositary in the following order of priority: first, to the Manager, for distribution to the Lessees, if any, whose payments in respect of the applicable Leases are not made net of any Railroad Mileage Credits due and owing to such Lessee, an amount equal to the Railroad Mileage Credits due to such Lessee for which an allocation has not previously been made pursuant to this clause (or any corresponding clause of any other subsection in this Section 2.07(c)) as certified to the Agent by the Manager not later than the Calculation Date immediately preceding such Settlement Date; second, to the payment of any fees (including the Liquidity Fee and, if the Manager is not TILC or one of its Affiliates, the Manager's Fee payable on such Settlement Date, together with the aggregate amount of any Manager's Fees which were due and payable on any previous Settlement Date and remain unpaid) or indemnities payable and expenses (including, if the Manager is not TILC or one of its Affiliates, the -35- aggregate amount of any Reimbursable Amounts payable on such Settlement Date, together with the aggregate amount of any Reimbursable Amounts which were due and payable on any previous Settlement Date and remain unpaid) permitted under this Agreement or any other Loan Document, in each case as approved by the Agent; third, to reimburse or pay the Agent for any fees and expenses incurred by the Agent (including, without limitation, reasonable attorney's fees and expenses and the fees and expenses of any person appointed by the Agent to replace the Manager pursuant to the Management Agreement) in connection with any Manager Event of Default or Event of Default and the exercise by the Agent of any right or remedy hereunder and not previously reimbursed or paid by the Lenders; fourth, to the reimbursement of the Lenders for any amounts paid by the Lenders to the Agent in compensation for fees and expenses incurred by the Agent as described in clause second; fifth, ratably (x) to the payment of accrued and unpaid interest on the Loans and (y) to the payment of Derivatives Obligations, if any, then due and payable; sixth, to the payment of all indemnities in respect of Taxes, Other Taxes, stamp taxes, funding losses referred to in Section 3.04, increased costs referred to in Section 3.03, losses, costs and expenses referred to in Section 2.03(b) and other amounts, other than principal of or interest on the Loans, payable to any Protected Party in accordance with the Loan Documents; seventh, to the ratable payment of the unpaid principal amount of the Loans; eighth, provided that no Manager Event of Default has occurred and is continuing and provided that the Manager is TILC or one of its Affiliates, the Manager's Fee and/or Reimbursable Amounts payable on such Settlement Date, together with the aggregate amount of any Manager's Fees and/or Reimbursable Amounts which were due and payable on any previous Settlement Date and remain unpaid; ninth, (A) if (x) the Lessee has paid any Reimbursement Amount and (y) the Manager has provided the Agent with documentation that enables the Agent to verify the amounts distributable under this clause ninth, to reimburse the Manager for such payment in an amount up to, but not exceeding, the Reimbursement Amount and (B) to reimburse the Manager for outstanding Manager Advances, together with accrued interest thereon; and tenth, deposit to the Discretionary Account or, subject to Section 7.07, otherwise at the direction of the Borrower. (iv) Earnings on Cash Equivalents. Any earnings on Cash Equivalents shall constitute part of the Collateral and shall be applied in accordance with Section 2.07(c). Any losses resulting from any Cash Equivalents shall be for the Borrower's account, and under no circumstances shall the Agent or any Lender have any liability or responsibility therefor. -36- SECTION 2.08 ADJUSTMENT OF COMMITMENTS. (a) Optional Termination or Reduction of Commitments (Pro Rata). The Borrower may from time to time permanently reduce or terminate the Committed Amount in whole or in part (in minimum amounts of $20,000,000 or in integral multiples of $5,000,000 in excess thereof (or, if less, the full remaining amount of the then applicable Committed Amount)) upon five Business Days' prior written or telecopy notice to the Agent, which notice shall be irrevocable once delivered to the Agent; provided, however, no such termination or reduction shall be made which would cause the aggregate principal amount of the outstanding Loans to exceed the lesser of (i) the Committed Amount as so reduced and (ii) the Borrowing Base at such time. The Agent shall promptly notify each affected Lender of the receipt by the Agent of any notice from the Borrower pursuant to this Section 2.08(a). Any partial reduction of the Committed Amount pursuant to this Section 2.08(a) shall be applied to the Commitments of the Committed Lenders pro-rata based upon their respective Commitment Percentages. (b) Optional Termination of Commitments (Non-Pro-Rata). If (i) any Lender or other Protected Party has demanded compensation or indemnification pursuant to Section 3.01, 3.03 or 3.04, (ii) the obligation of any Lender to fund its Loans at the Adjusted Eurodollar Rate has been suspended pursuant to Section 3.02 or (iii) any Lender has failed to consent to a proposed amendment, waiver, discharge or termination which pursuant to the terms of Section 11.01 or any other provision of any Loan Document requires the consent of the Required Lenders or all of the Lenders, the Borrower shall have the right, with the prior written consent of the Agent, to (i) remove such Lender and all related Protected Parties by terminating the Commitment of the related Committed Lender in full or (ii) replace such Lender and all related Protected Parties by causing the related Committed Lender to assign its Commitment to one or more existing Committed Lenders or Eligible Assignees pursuant to Section 11.06. The replacement of a Lender pursuant to this Section 2.08(b) shall be effective on the tenth Business Day (the "Replacement Date") following the date of notice of such replacement to the Lenders through the Agent, subject to the satisfaction of the following conditions: (i) each replacement Committed Lender and/or Eligible Assignee, and each Protected Party subject to replacement, shall have satisfied the conditions to an Assignment and Acceptance set forth in Section 11.06(b) and, in connection therewith, the replacement Committed Lender(s) and/or Eligible Assignee(s) shall pay to each Protected Party subject to replacement an amount equal in the aggregate to the sum of (A) the principal of, and all accrued but unpaid interest on, its outstanding Loans and (B) all accrued but unpaid fees owing to it pursuant to Section 2.09; and (ii) the Borrower shall have paid (from the Discretionary Account or otherwise) to the Agent for the account of each replaced Protected Party an amount equal to all obligations owing to such replaced Protected Party by the Borrower pursuant to this Agreement and the other Loan Documents (other than those obligations of the Borrower referred to in clause (i)(A) above). In the case of the removal of a Protected Party pursuant to this Section 2.08(b), upon payment by the Borrower (from the Discretionary Account or otherwise) to the Agent for the account of the Protected Party subject to such removal of an amount equal to the sum of (i) the aggregate principal amount of all Loans held by such Protected Party and (ii) all accrued interest, fees and other amounts owing to such Protected Party hereunder, including, without limitation, all amounts payable by the Borrower to such Protected Party under Article III or Sections 11.05 and 11.06, such Protected Party shall cease to constitute a Protected Party hereunder; provided that the provisions of this Agreement (including, without limitation, the provisions of Article III and Sections 11.05 and 11.06) shall continue to govern the rights -37- and obligations of a removed Protected Party with respect to any Loans made or any other actions taken by such removed Protected Party while it was a Protected Party. (c) Automatic Termination. The Commitments of the Committed Lenders shall automatically terminate on the Revolving Termination Date. (d) Optional Extensions of Commitments. (i) If the Borrower shall request, by notice to the Agent not less than 30 days and not more than 60 days prior to the Revolving Termination Date then in effect, that the Availability Period be extended until the date which is 364 days after such Revolving Termination Date, then the Agent shall promptly (but in no event later than 2 days after receipt notify each Committed Lender of such request, and each Committed Lender shall notify the Borrower and the Agent not more than 15 Business Days after the date on which the Agent shall have received the Borrower's request (which date shall be set forth in the notice of such request given by the Agent) of its election so to extend or not extend the Availability Period. Any Committed Lender which shall not timely notify the Agent of such election shall be deemed to have elected not to extend such Availability Period. (ii) If one or more Committed Lenders shall timely notify the Agent pursuant to clause (c)(i) of this Section 2.08 of its election not to extend the Availability Period or shall be deemed to have elected not to extend the Availability Period by virtue of having not timely notified the Agent of its election to extend such Availability Period, then the Agent shall so advise the Borrower and the remaining Lenders, and the remaining Lenders then maintaining a Commitment or any of them shall have the right (but not the obligation), upon notice to the Agent not later than the Business Day immediately preceding the applicable Revolving Termination Date, to increase their respective Commitments by an amount equal in the aggregate to the Commitments of the Committed Lenders who have, or have been deemed to have, elected not to extend the Availability Period. Each Lender electing to increase its Commitment hereunder shall specify in its notice to the Agent the amount by which it is willing to increase its Commitment; provided that if the aggregate amount of proposed increases by all remaining Lenders shall equal or exceed the aggregate Commitments of those Lenders who have, or have been deemed to have, elected not to extend the Availability Period, the amount of any increase in Commitments shall not exceed for any Lender the product of (A) the quotient of (x) such Lender's Commitment divided by (y) the aggregate Commitments of all the remaining Lenders (in each case determined before giving effect to any increase in the Commitments of the remaining Lenders pursuant to this subsection (c)) multiplied by (B) the aggregate Commitments of the Lenders who have, or have been deemed to have, elected not to extend the Availability Period. Each increase in the Commitment of a Lender hereunder shall be evidenced by a written instrument executed by such Lender and the Agent and shall take effect on the Revolving Termination Date in effect for the Lenders who have, or have been deemed to have, elected not to extend the Availability Period. (iii) If the aggregate Commitments of the Lenders shall exceed the aggregate amount by which the remaining Lenders have agreed to increase their Commitments pursuant to subsection (c)(ii) of this Section 2.08, the Borrower may, with the approval of the Agent, designate one or more Eligible Assignees willing to extend Commitments until the date which is 364 days after the Revolving Termination Date in effect for the Lenders who have, or have been deemed to have, elected not to extend the Availability Period in an aggregate amount not greater than such excess. Any such Eligible Assignee shall, on or prior to the Revolving Termination Date in effect for the Lenders who have, or have been deemed to have, elected not to extend the Availability Period, execute and deliver to the Borrower, the Agent and each remaining Lender an -38- instrument, satisfactory to the Borrower and the Agent, setting forth the amount of its Commitment and containing its agreement to become, and to perform all the obligations of, a Lender hereunder. The Commitment of such Eligible Assignee shall become effective, and such Eligible Assignee shall become a Committed Lender hereunder, on the Revolving Termination Date then in effect for the Lenders who have, or have been deemed to have, elected not to extend the Availability Period. (iv) The Borrower shall deliver to each Eligible Assignee (upon request of such Eligible Assignee), on the Revolving Termination Date in effect for the Lenders who have, or have been deemed to have, elected not to extend the Availability Period, a Note evidencing the Borrower's obligation to pay Loans made by such Eligible Assignee pursuant to this Agreement. (v) If, after giving effect to any increase in the Commitments of one or more remaining Lenders pursuant to clause (ii) above and any assignments to or new of one or more Eligible Assignees pursuant to (iii) above, the extension of the Period as provided in this Section 2.08(c) shall have been approved by Lenders holding Commitments equal in the aggregate to 100% of the Committed, then the Availability Period shall not be extended but continue in effect until the Revolving Termination Date and shall then terminate. If Lenders holding Commitments equal in the aggregate to 100% of the Committed Amount shall have elected to extend the Availability Period as provided in this Section 2.08(c), then (A) the Availability Period with respect to the Commitments of such Lenders and any which becomes a Lender hereunder shall continue until the date which is 364 days after the Revolving Termination Date in effect prior to such election and, as to such Lenders, the term "Revolving Termination Date", as used herein, shall mean such 364th day; (B) the Commitments of the Lenders who have, or have been deemed to have, elected not to extend the Availability Period shall continue in effect until the Revolving Termination Date in effect prior to such extension and shall then terminate, and, as to such Lenders, the term "Revolving Termination Date", as used herein, shall continue to mean such Revolving Termination Date; and (C) on the Revolving Date in effect prior to such extension, each who has, or has been deemed to have, elected not to the Availability Period shall cease to be a Lender hereunder; provided that the provisions of this Agreement (including, without limitation, the provisions of Article III and Sections 11.04 and 11.05) shall continue to govern the rights and obligations of such Lender with respect to any Loans made. SECTION 2.09 FEES. (a) Liquidity Fee. On each Settlement Date, the Borrower shall pay to the Agent for the account of each Committed Lender a fee (the "Liquidity Fee") on such Lender's Commitment Percentage of the daily average Unused Committed Amount for the Measuring Period ended most recently prior to such Settlement Date, computed at a per annum rate for each day at a rate equal to 40 basis points. The Liquidity Fee shall commence to accrue on the Closing Date and shall be due and payable in arrears on each Settlement Date for the Measuring Period ending most recently prior to such date, beginning with the first of such dates to occur after the Closing Date. (b) Fee Letter. On each Settlement Date, the Borrower shall pay the Agent for its account such fee or fees as shall be payable at such time in accordance with the Fee Letter. SECTION 2.10 PRO-RATA TREATMENT. Except to the extent otherwise provided herein, each Borrowing, each payment or prepayment of principal of or interest on any Loan, each payment of fees, each reduction of the Committed Amount and each conversion or continuation of any Loan, shall be allocated pro-rata among the relevant Lenders in accordance with the respective Commitment Percentages -39- of such Lenders (or, if the Commitments of such Lenders have expired or been terminated, in accordance with the respective principal amounts of the outstanding Loans of such Lenders); provided that, in the event any amount paid to any Lender pursuant to this Section 2.10 is rescinded or must otherwise be returned by the Agent, each Lender shall, upon the request of the Agent, repay to the Agent the amount so paid to such Lender, with interest for the period commencing on the date such payment is returned by the Agent until the date the Agent receives such repayment at a rate per annum equal to, during the period to but excluding the date two Business Days after such request, the Federal Funds Rate, and thereafter, the Corporate Base Rate plus two percent per annum. SECTION 2.11 SHARING OF PAYMENTS. The Lenders agree among themselves that, except to the extent otherwise provided herein, if any Lender shall obtain payment in respect of any Loan or any other obligation owing to such Lender under this Agreement through the exercise of a right of setoff, banker's lien or counterclaim, or pursuant to a secured claim under Section 506 of the Bankruptcy Code or other security or interest arising from, or in lieu of, such secured claim, received by such Lender under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means, in excess of its pro-rata share of such payment as provided for in this Agreement, such Lender shall promptly pay in cash or purchase from the other Lenders a participation in such Loans and other obligations in such amounts, and make such other adjustments from time to time, as shall be equitable to the end that all Lenders share such payment in accordance with their respective ratable shares as provided for in this Agreement. The Lenders further agree among themselves that if payment to a Lender obtained by such Lender through the exercise of a right of setoff, banker's lien, counterclaim or other event as aforesaid shall be rescinded or must otherwise be restored, each Lender which shall have shared the benefit of such payment shall, by payment in cash or a repurchase of a participation theretofore sold, return its share of that benefit (together with its share of any accrued interest payable with respect thereto) to each Lender whose payment shall have been rescinded or otherwise restored. The Borrower agrees that any Lender so purchasing such a participation may, to the fullest extent permitted by law, exercise all rights of payment, including setoff, banker's lien or counterclaim, with respect to such participation as fully as if such Lender were a holder of such Loan or other obligation in the amount of such participation. If under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a setoff to which this Section 2.11 applies, such Lender shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders under this Section 2.11 to share in the benefits of any recovery on such secured claim. SECTION 2.12 PAYMENTS; COMPUTATIONS. (a) Payments by the Borrower. Each payment of principal of and interest on Loans and fees hereunder shall be paid not later than 11:00 A.M. on the date when due, in Federal or other funds immediately available to the Agent at the Collection Account. Each such payment shall be made irrespective of any set-off, counterclaim or defense to payment which might in the absence of this provision be asserted by the Borrower or any Affiliate against the Agent or any Lender. Payments received after 2:00 P.M. (unless such failure to receive payment is solely caused by failure of the Depository to timely remit payments in accordance with the Depositary Agreement and such failure is cured and all amounts required to be dispersed to the Lenders on such Settlement Date are so disbursed on the applicable payment dates) shall be deemed to have been received on the next Business Day. The Borrower shall, at the time it makes any payments under this Agreement, specify to the Agent the Loan, fees or other amounts payable by the Borrower hereunder to which such payment is to be applied (and if it fails to specify or if such application would be inconsistent with the terms hereof, the Agent shall, subject to Section 2.10, distribute such payment to the Lenders in such manner as the Agent may deem appropriate in accordance with Section 2.07(c)). The Agent will distribute such payments to the applicable Lenders on the date of receipt thereof, if such payment is received prior to 2:00 P.M. (unless such failure to receive payment is solely caused by failure of the Depository to timely remit payments in -40- accordance with the Depositary Agreement and such failure is cured and all amounts required to be dispersed to the Lenders on such Settlement Date are so disbursed on the applicable payment dates); otherwise the Agent will distribute such payment to the applicable Lenders on the next succeeding Business Day. Whenever any payment hereunder shall be due on a day which is not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day. If the date for any payment of principal is extended by operation of law or otherwise, interest thereon shall be payable for such extended time. The Borrower hereby authorizes and directs the Agent to debit any account maintained by the Borrower with the Agent to pay when due any amounts required to be paid from time to time under this Agreement. (b) Distributions by the Agent. Unless the Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Lenders hereunder that the Borrower will not make such payment in full, the Agent may assume that the Borrower has made such payment in full to the Agent on such date, and the Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent that the Borrower shall not have so made such payment, each Lender shall repay to the Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Agent, at the Federal Funds Rate for the first three Business Days after demand by the Agent and at the Applicable Rate thereafter until the date such Lender repays such amount to the Agent. (c) Computations. All computations of interest and fees hereunder shall be made on the basis of the actual number of days elapsed over a year of 360 days. Interest shall accrue from and include the date of borrowing but exclude the date of payment. ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY SECTION 3.01 TAXES. (a) Payments Net of Certain Taxes. Any and all payments by the Borrower to or for the account of any Protected Party hereunder or under any other Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Protected Party, taxes imposed on its net income, and franchise, branch profits, capital or net worth taxes imposed on it, in each case by the jurisdiction under the laws of which such Protected Party is organized or has an office or place of business, other than solely on account of being a party to, receiving a payment or income under, or enforcing, this Agreement or any other Loan Document, or any political subdivision thereof (all such non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be required by law to deduct or withhold any Taxes from or in respect of any sum payable under this Agreement or any other Loan Document to any Protected Party, (i) the sum payable shall be increased as necessary so that after making all required deductions and withholdings (including deductions and withholdings applicable to additional sums payable under this Section 3.01) such Protected Party 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 withholdings, (iii) the Borrower shall pay the full amount deducted or withheld to the relevant taxation authority or other authority in accordance with Applicable Law and (iv) the Borrower shall furnish to the Agent, at the Agent's Office, the original or a certified copy of a receipt evidencing payment thereof. (b) Other Taxes. In addition, the Borrower agrees to pay any and all present or future stamp or documentary, excise or property taxes or similar levies which arise from any payment -41- made under this Agreement or any other Loan Document or from the execution or delivery of, or otherwise with respect to, this Agreement or any other Loan Document (hereinafter referred to as "Other Taxes"). (c) Additional Taxes. The Borrower agrees to indemnify each Protected Party for the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 3.01) paid by such Protected Party and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. (d) Tax Forms and Certificates. Each Lender organized under the laws of a jurisdiction outside the United States (a "Non-U.S. Lender") shall , on or prior to the date of its execution and delivery of this Agreement in the case of each Lender listed on the signature pages thereof and on or prior to the date on which it becomes a Lender in the case of each other Lender, and from time to time thereafter as required by law on or prior to the expiration of the form or certificate most recently provided, provide the Borrower and the Agent with true, complete and correct (i) Internal Revenue Service Form W-8 BEN or W-8 ECI, as appropriate, or any successor form prescribed by the Internal Revenue Service, certifying that such Lender is entitled to benefits under an income tax treaty to which the United States is a party which reduces to zero the rate of withholding tax on payments of interest or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States or (ii) any other form or certificate required by any United States taxing authority (including any certificate required by Sections 871(h) and 881(c) of the Internal Revenue Code), certifying that such Lender is entitled to an exemption from tax on payments pursuant to this Agreement or any of the other Loan Documents. Additionally, if a Lender or Protected Party sells, assigns or transfers any participation in a Loan to another Person, such Lender or Protected Party shall provide any new forms required as a result of such sale or transfer (including, if necessary, Internal Revenue Service Form W-8IMY). (e) Failure to Provide Tax Forms and Certificates. For any period with respect to which a Lender has failed to provide the Borrower and the Agent with the appropriate form or certificate in the manner and as prescribed by Section 3.01(d) (unless such failure is due to a change in treaty, law or regulation occurring subsequent to the date on which a form originally was required to be provided), neither such Lender nor any related Protected Party shall be entitled to indemnification under Section 3.01(a) or 3.01(b) with respect to Taxes imposed by the United States or any political subdivision therein as a result of such failure; provided, however, that should a Protected Party, which is otherwise exempt from or subject to a reduced rate of withholding tax, become subject to Taxes because of its or any related Lender's failure to deliver a form required to be delivered hereunder, the Borrower shall take such steps as such Lender or Protected Party shall reasonably request at such Protected Party's cost to assist such Protected Party to recover such Taxes. (f) Obligations in Respect of Non-U.S. Lenders. The Borrower shall not be required to indemnify any Non-U.S. Lender or related Protected Party or to pay any additional amounts to any Non-U.S. Lender or related Protected Party, in respect of United States Federal withholding tax pursuant to subsections (a) or (b) above to the extent that the obligation to withhold amounts with respect to United States Federal withholding tax existed on the date such Non-U.S. Lender became a party to this Agreement (or, in the case of a participant, on the date such participant acquired its participation interest) or to the extent such obligation to withhold amounts with respect to United States federal withholding tax arises after such date as a result of a change in residence, place of incorporation, principal place of business, or office or location in which Loans governed by -42- this Agreement are booked or recorded by such Lender or Protected Party; provided, however, that this subsection (f) shall not apply (i) to any participant that becomes a participant as a result of an assignment, participation, transfer or designation made at the request of the Borrower or where a change of office or location in which Loans governed by this Agreement are booked or recorded is made at the request of the Borrower and (ii) to the extent the indemnity payment or additional amounts any participant would be entitled to receive (without regard to this subsection (f)) do not exceed the indemnity payment or additional amounts that the Person making the assignment, participation or transfer to such participant would have been entitled to receive in the absence of such assignment, participation, transfer or designation. (g) Mitigation. If the Borrower is required to pay additional amounts to or for the account of any Protected Party pursuant to this Section 3.01, then such Protected Party will agree to use reasonable efforts to eliminate or reduce any such additional payment which may thereafter accrue if such change, in the judgment of such Protected Party, is not otherwise disadvantageous to such Lender. (h) Tax Receipts. Within thirty days after the date of any payment of Taxes, the Borrower shall furnish to the Agent the original or a certified copy of a receipt evidencing such payment (to the extent one is so provided). (i) Survival. Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in subsections (a) through (h) above shall survive the payment in full of principal and interest hereunder and under any instrument delivered hereunder. SECTION 3.02 ILLEGALITY. If, on or after the date of this Agreement, the adoption of any Applicable Law, or any change in any Applicable Law, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for any Lender to make, maintain or fund any of its Loans at a rate based upon the Adjusted Eurodollar Rate (such event being hereinafter referred to as an "Illegality Event") and such Lender shall so notify the Agent, the Agent shall forthwith give notice thereof to the other Lenders and the Borrower, whereupon until such Lender notifies the Borrower and the Agent that the circumstances giving rise to such suspension no longer exist, interest on the Loans of such Lender shall accrue and be payable at the Corporate Base Rate. If an Illegality Event does not affect all Lenders, the Agent shall make a good faith effort to cause the Lenders that are not affected by such Illegality Event to purchase the Loans held by the affected Lenders. The foregoing shall not delay or otherwise affect the Borrower's obligation to pay interest at the Corporate Base Rate as provided in this paragraph. SECTION 3.03 INCREASED COSTS AND REDUCED RETURN. (a) If, on or after the date hereof, the adoption of or any change in any Applicable Law or in the interpretation or application thereof applicable to any Protected Party, or compliance by any Protected Party with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority, in each case made subsequent to the Effective Date (or, if later, the date on which such Protected Party becomes a Protected Party): (i) shall subject such Protected Party to any tax of any kind whatsoever with respect to any Loans made by it or its Note or its obligation to make Loans, or change the basis of taxation of payments to such Protected Party in respect thereof (except for (A) Taxes and Other Taxes covered by Section 3.01 and (B) changes in taxes measured by or imposed upon the net income or franchise tax (imposed in lieu of such net income tax), of such Protected Party or any Affiliate thereof)); (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or -43- for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Protected Party which is not otherwise included in the determination of the Adjusted Eurodollar Rate hereunder; or (iii) shall impose on such Protected Party any other condition; and the result of any of the foregoing is to increase the cost to such Protected Party of making, converting into, continuing or maintaining any Loans or to reduce any amount receivable hereunder in respect thereof (any such increased cost or reduction hereinafter referred to as an "Increased Cost"), then, in any such case, upon notice to the Borrower from such Protected Party, through the Agent, in accordance herewith, the Borrower shall be obligated to pay such Protected Party, in accordance with Section 2.07(c), any additional amounts necessary to compensate such Protected Party on an after-tax basis (after taking into account applicable deductions and credits in respect of the amount indemnified) for such increased cost or reduced amount receivable. (b) If any Protected Party shall have determined that the adoption or the becoming effective of, or any change in, or any change by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof in the interpretation or administration of, any Applicable Law, regarding capital adequacy, or compliance by such Protected Party, or its parent corporation, with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Protected Party's (or parent corporation's) capital or assets as a consequence of its commitments or obligations hereunder to a level below that which such Protected Party, or its parent corporation, could have achieved but for such adoption, effectiveness, change or compliance (taking into consideration such Protected Party's (or parent corporation's) policies with respect to capital adequacy), then, upon notice from such Protected Party to the Borrower, the Borrower shall be obligated to pay to such Protected Party in accordance with Section 2.07(c), such additional amount or amounts as will compensate such Protected Party on an after-tax basis (after taking into account applicable deductions and credits in respect of the amount indemnified) for such reduction. Each determination by any such Protected Party of amounts owing under this Section shall, absent manifest error, be conclusive and binding on the parties hereto. (c) A certificate of each Protected Party setting forth such amount or amounts as shall be necessary to compensate such Protected Party or its holding company as specified in subsection (a) or (b) above, as the case may be, shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay each Protected Party the amount shown as due on any such certificate delivered by it on the next succeeding Settlement Date in accordance with Section 2.07(c). (d) Promptly after any Protected Party becomes aware of any circumstance that will, in its sole judgment, result in a request for increased compensation pursuant to this Section, such Protected Party shall notify the Borrower thereof. Failure on the part of any Protected Party so to notify the Borrower or to demand compensation for any increased costs or reduction in amounts received or receivable or reduction in return on capital with respect to any period shall not constitute a waiver of such Protected Party's right to demand compensation with respect to such period or any other period. The protection of this Section shall be available to each Protected Party regardless of any possible contention of the invalidity or inapplicability of the law, rule, regulation, guideline or other change or condition which shall have occurred or been imposed. SECTION 3.04 FUNDING LOSSES. The Borrower shall indemnify each Protected Party against any loss or reasonable expense (but excluding in any event loss of anticipated profit) which such Protected Party may sustain or incur as a consequence of (i) any failure by the Borrower to fulfill on the -44- date of any Borrowing hereunder the applicable conditions set forth in Article IV, so long as any such failure is not solely due to the failure of the Agent or any Lender to comply with its obligations hereunder in all material respects, (ii) any failure by the Borrower to borrow or to refinance any Loan hereunder after irrevocable notice of such Borrowing, or refinancing has been given pursuant to Section 2.02 or 2.07, so long as any such failure is not solely due to the failure of the Agent or any Lender to comply with its obligations hereunder in all material respects or (iii) any payment or prepayment of a Loan, whether voluntary or involuntary, pursuant to any other provision of this Agreement or otherwise made on a date other than the last day of the Interest Period applicable thereto, so long as any such payment, prepayment or conversion is not solely due to the failure of the Agent or any Lender to comply with its obligations hereunder in all material respects. Such loss or reasonable expense shall be determined by each Protected Party in its sole discretion and shall include an amount equal to the excess, if any, as reasonably determined by such Protected Party, of (i) its cost of obtaining the funds for the Loan being paid, prepaid or not borrowed (based on the applicable London Interbank Offered Rate), for the period from the date of such payment, prepayment or failure to borrow to the last day of the then applicable Interest Period (or, in the case of a failure to borrow, the Interest Period for such Loan which would have been applicable to such Loan on the date of such failure to borrow) over (ii) the amount of interest (as reasonably determined by such Protected Party) that would be realized by such Protected Party in reemploying the funds so paid, prepaid or not borrowed or continued for such period or Interest Period, as the case may be. A certificate of any Protected Party setting forth any amount or amounts which such Protected Party is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. ARTICLE IV CONDITIONS SECTION 4.01 CONDITIONS TO CLOSING. The obligation of each Committed Lender to make a Loan on the Closing Date is subject to the satisfaction of the following conditions: (a) Executed Loan Documents. Receipt by the Agent of duly executed copies of: (i) this Agreement; (ii) the Notes (if requested under Section 2.04); (iii) the Collateral Documents (other than the Depositary Agreement); and (iv) all other Loan Documents, each in form and substance satisfactory to the Agent in its sole discretion. (b) Management Documents. Receipt by the Agent of a duly executed copy of each Management Document, in each case in form and substance satisfactory to the Agent in its sole discretion. (c) Sale Agreement, etc. Receipt by the Agent of a duly executed copy of the Asset Contribution and Purchase Agreement, in form and substance satisfactory to the Agent in its sole discretion. (d) Organization Documents. After giving effect to the transactions contemplated by the Transaction Documents, the ownership, capital, corporate, organizational and legal structure of each Facility Party shall be reasonably satisfactory to the Lenders, and the Agent shall have received: (i) a copy of the Organizational Documents of Trinity, each Facility Party, each Partner, the -45- Partnership and the Marks Company, certified as of a recent date by the Secretary of State of its respective state of organization, and a certificate as to the good standing of Trinity, each Facility Party, each Partner, the Partnership and the Marks Company, from such Secretary of State, as of a recent date; (ii) a certificate of the Secretary or Assistant Secretary of Trinity, each Facility Party, each Partner, the Partnership and the Marks Company dated the Closing Date and certifying (A) that the certificate or articles of incorporation or other Organizational Documents, as applicable, of Trinity, such Facility Party, each Partner, the Partnership or the Marks Company, as applicable, have not been amended since the date of the last amendment thereto shown on the related certificate furnished pursuant to clause (i) above; (B) that attached thereto is a true and complete copy of the agreement of limited partnership, operating agreement or by-laws of Trinity, such Facility Party, each Partner, the Partnership or the Marks Company, as applicable, as in effect on the Closing Date and at all times since a date prior to the date of the resolutions described in clause (C) below, (C) that attached thereto is a true and complete copy of resolutions duly adopted by the board of directors or other governing body of Trinity, such Facility Party, each Partner, the Partnership or the Marks Company, as applicable, authorizing the execution, delivery and performance of the Transaction Documents to which it is to be a party and, in the case of the Borrower, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect; and (D) as to the incumbency and specimen signature of each officer executing any Transaction Document or any other document delivered in connection herewith or therewith on behalf of Trinity, such Facility Party, each Partner, the Partnership or the Marks Company; (iii) a certificate of another officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing the certificate pursuant to clause (ii) above; and (iv) such other documents as the Agent or Mayer, Brown, Rowe & Maw, counsel for the Agent, may reasonably request. (e) Officer's Certificate. The Agent shall have received a certificate, dated the Closing Date and signed by a Responsible Officer of each Facility Party, confirming compliance with the conditions precedent set forth in paragraphs (b), (c), (d), (g) and (n) of Section 4.02. (f) Opinions of Counsel. On the Closing Date, the Agent shall have received: (i) favorable written opinions (including, without limitation, as to true sale and nonconsolidation matters) of Winston & Strawn, counsel to the Borrower, the Manager and Trinity, addressed to the Agent and each Lender, dated the Closing Date, substantially in the form of each of Exhibits D-1, D-4 and D-5 hereto and covering such additional matters incident to the transactions contemplated hereby as the Agent or the Required Lenders may reasonably request; (ii) a favorable written opinion of Theis Rice, in-house counsel to each of the Borrower, the Manager and Trinity, addressed to the Agent and each Lender, dated the Closing Date, substantially in the form of Exhibit D-2 hereto and covering such additional matters incident to the transactions contemplated hereby as the Agent or the Required Lenders may reasonably request; (iii) from special Delaware trust counsel to the Borrower and Wilmington Trust Company, as Delaware trustee for the Borrower, an opinion addressed to the Agent and each Lender, dated the Closing Date, substantially in the form of Exhibit D-3 hereto and covering such additional matters incident to the transactions contemplated hereby as the Agent or the Required Lenders may reasonably request; (iv) from special STB counsel to the Borrower, an opinion addressed to the Agent and each Lender, dated the Closing Date, substantially in the form of Exhibit D-6 hereto and covering such additional matters incident to the transactions contemplated hereby as the Agent or the Required Lenders may reasonably request; (v) from special Canadian counsel to the Agent, an opinion addressed to the Agent and each Lender, dated the Closing Date, substantially in the form of Exhibit D-7 hereto and covering such additional matters incident to the transactions contemplated hereby as the Agent or the Required Lenders may reasonably request; and -46- (vi) from special counsel to the Marks Company, an opinion addressed to the Agent and each Lender, dated the Closing Date, substantially in the form of Exhibit D-8 hereto and covering such additional matters incident to the transactions contemplated hereby as the Agent or the Required Lenders may reasonably request. (g) Perfection of Security Interests; Search Reports. On or prior to the Closing Date, the Agent shall have received: (i) a Perfection Certificate from each Facility Party, each such Perfection Certificate and all information set forth therein to be correct and complete in all respects; (ii) a fully executed consent substantially in the form of Exhibit B to the Security Agreement with respect to each Letter of Credit Right of the Borrower (if any); (iii) appropriate financing statements (Form UCC-1 or such other financing statements or similar notices as shall be required by local law) fully executed for filing under the Uniform Commercial Code or other applicable local law of each jurisdiction in which the filing of a financing statement or giving of notice may be required, or reasonably requested by the Agent, to perfect the security interests intended to be created by the Collateral Documents; (iv) all of the Marks Company Interests issued or to be issued to the Borrower on or prior to the Closing Date, which Marks Company Interests shall be in suitable form for transfer by delivery or shall be accompanied by duly executed instruments of transfer or assignment in blank, with signatures appropriately guaranteed, accompanied in each case by any required transfer tax stamps, all in form and substance satisfactory to the Agent; (v) copies of reports from CSC The United States Corporation Company or other independent search service reasonably satisfactory to the Agent listing all effective financing statements that name the Borrower or any other Facility Party, as such (under its present name and any previous name and, if requested by the Agent, under any trade names), as debtor or seller that are filed in the jurisdictions wherein such filing would be effective to perfect a Lien in the Collateral or any portion thereof, together with copies of such financing statements (none of which shall cover the Collateral except to the extent evidencing Permitted Liens or for which the Agent shall have received termination statements (Form UCC-3 or such other termination statements as shall be required by local law) fully executed for filing); and (vi) evidence of the completion of all other filings and recordings of or with respect to the Collateral Documents, including, without limitation, all filings and recordings specified in Schedule 3.02 to the Security Agreement, and of all other actions as may be necessary or, in the opinion of the Agent, desirable to perfect the security interests intended to be created by the Collateral Documents. (h) Marks Company Documents. The Agent shall have received (i) evidence satisfactory to the Agent that the UTI Trustee under the Marks Company Trust Agreement shall have identified and allocated or caused to be identified and allocated on the books and records of the Marks Company a separate portfolio of trust assets consisting of all of the Marks relating to Portfolio Railcars and all rights of the Marks Company with respect thereto, including, without limitation, the right to payment of Railroad Mileage Credits, and that the Marks Company Delaware Trustee shall have executed and delivered to the Borrower on behalf of the Marks Company a certificate evidencing such special unit of beneficial interests, (ii) a supplement to the Marks Company Trust Agreement, duly executed by TILC and the Marks Company Delaware Trustee, and certified by a Responsible Officer of the Marks Company -47- Delaware Trustee as a true and correct copy thereof, creating the special unit of beneficial interests referred to in clause (ii) above and containing such other provisions as the Agent reasonably may request and (iii) evidence satisfactory to the Agent that TILC, as servicer of the Marks Company, shall have been instructed, and shall have agreed, to remit all receipts in respect of the trust assets allocated to the special unit of beneficial interests referred to in clauses (i) and (ii) above directly to the Depositary in accordance with the Marks Company Servicing Agreement. (i) Evidence of Insurance. Receipt by the Agent of copies of insurance policies or certificates of insurance of the Borrower evidencing liability and casualty insurance meeting the requirements set forth in the Loan Documents, including, but not limited to, naming the Agent as additional insured and sole loss payee on behalf of the Lenders. (j) Consents and Approvals. On the Closing Date, all necessary governmental (domestic or foreign), regulatory and third party approvals in connection with the transactions contemplated by the Transaction Documents and otherwise referred to herein or therein shall have been obtained and remain in full force and effect. (k) Material Adverse Effect. There shall not have occurred since December 31, 2001 any development or event relating to or affecting Trinity or a Facility Party which has had or could be reasonably expected to have a Material Adverse Effect. (l) Litigation; Judgments. On the Closing Date, there shall be no actions, suits, proceedings or investigations pending or threatened (i) with respect to this Agreement or any other Transaction Document or the transactions contemplated hereby or thereby, (ii) against the Borrower or (iii) against Trinity, the Manager, either Partner, the Partnership or the Marks Company and which the Agent or the Required Lenders shall determine could reasonably be expected to have a Material Adverse Effect. Additionally, there shall not exist any judgment, order, injunction or other restraint issued or filed or a hearing seeking injunctive relief or other restraint pending or notified prohibiting or imposing materially adverse conditions upon the consummation of the transactions contemplated by the Transaction Documents and otherwise referred to herein or therein. (m) Solvency Certificate. On or prior to the Closing Date, the Borrower shall have delivered or caused to be delivered to the Agent a solvency certificate from the chief financial or chief accounting officer of the Manager (on behalf of the Borrower), in form and substance satisfactory to the Agent, setting forth the conclusions that, after giving effect to the consummation of all financings contemplated herein, the Borrower will be Solvent. (n) Financial Information. The Agent shall be reasonably satisfied that the financial statements referred to in Section 5.05 are not materially inconsistent with the financial information most recently delivered to the Agent prior to the Closing Date. (o) Due Diligence. The Agent shall have completed, and be satisfied with the results of, its business and legal due diligence review with respect to Trinity and the Facility Parties and the transactions contemplated hereby, including, without limitation, a due diligence review of the financial statements of Trinity and the Facility Parties, the tax status of Trinity and the Facility Parties and an environmental, employee benefits and insurance due diligence review. (p) Appointment of Agent for Service of Process. The Agent shall have received a letter from CT Corporation System, presently located at 111 Eighth Avenue, New York, New York 10011, indicating its consent to its appointment by Trinity and each of the Facility Parties as its agent to -48- receive service of process as specified in Section 11.19(b) hereof and/or any comparable provision of any other Loan Document or any Management Document, as applicable. (q) Payment of Fees. All costs, fees and expenses due to the Agent and the Lenders on or before the Closing Date shall have been paid, in each case to the extent invoiced or otherwise notified to the Borrower in writing. (r) Counsel Fees. The Agent shall have received full payment of the fees and expenses of Mayer, Brown, Rowe & Maw described in Section 11.04 which are billed through the Closing Date. All corporate and legal proceedings and instruments and agreements relating to the transactions contemplated by this Agreement and the other Transaction Documents or in any other document delivered in connection herewith or therewith shall be satisfactory in form and substance to the Agent and its counsel, and the Agent shall have received all information and copies of all documents and papers, including records of corporate proceedings, governmental approvals, good standing certificates and bring-down telegrams, if any, which the Agent reasonably may have requested in connection therewith, such documents and papers where appropriate to be certified by proper corporate or Governmental Authorities. The documents referred to in this Section shall be delivered to the Agent no later than the Closing Date. The certificates and opinions referred to in this Section shall be dated the Closing Date. The requirement that any document, agreement, certificate or other writing be satisfactory to the Required Lenders shall be deemed to be satisfied if (i) such document, agreement, certificate or other writing was delivered to the Lenders not less than two Business Days prior to the Closing Date, (ii) such document, agreement, certificate or other writing is satisfactory to the Agent and (iii) Lenders holding at least 50% of the Commitments have not objected in writing to such document, agreement, certificate or other writing to the Agent prior to the Closing Date. Promptly after the Closing Date occurs, the Agent shall notify the Borrower and the Lenders of the Closing Date, and such notice shall be conclusive and binding on all parties hereto. If the Closing Date does not occur before 5:00 P.M. on July 16, 2002, the Commitments shall terminate at the close of business on such date and all unpaid facility fees accrued to such date shall be due and payable on such date. SECTION 4.02 CONDITIONS TO EACH FUNDING DATE. The obligation of any Committed Lender to make a Loan on the occasion of any Borrowing is subject to the prior approval by the Agent (and the Required Lenders, as applicable) at the Borrower's request to add the applicable Railcars and Leases to be acquired on such Funding Date to the Portfolio in accordance with Section 2.02, and to the satisfaction of the following conditions: (a) Notice. The Borrower shall have delivered to the Agent an appropriate Notice of Borrowing, duly executed and completed, by the time specified in Section 2.02. (b) Representations and Warranties. The representations and warranties made by Trinity and each Facility Party in any Transaction Document to which it is a party are true and correct in all material respects at and as if made as of such date except to the extent they expressly relate to an earlier date. (c) No Default. No Default, Event of Default, Manager Default or Manager Event of Default shall exist or be continuing either prior to or after giving effect thereto. -49- (d) No Collateral Deficiency. Immediately after giving effect to the making of a Loan (and the application of the proceeds thereof), there shall not exist any Collateral Deficiency. (e) Leases; Additional Collateral Certificate. Subject to the provisions of Section 3.17(h) of the Asset Contribution and Purchase Agreement, receipt by the Agent of (i) the originally executed chattel paper counterpart of each Lease applicable to each Railcar which is to become a Portfolio Railcar on such Funding Date, in each case bearing the Chattel Paper Legend and marked as "Counterpart No. 1" or, if the Agent determines in its sole discretion that an originally executed counterpart of a Lease for any such Railcar with such legend and marking does not exist and is not necessary to perfect assignment of such Lease to the Agent hereunder, an originally executed counterpart of such Lease without such legend and marking; (ii) a Notice of Lease Assignment with respect to such Lease, duly executed and delivered by the Borrower, (iii) an originally executed Additional Collateral Certificate with respect to each relevant Railcar and Lease and (iv) if required under the terms of any applicable Lease, a Consent and Agreement, substantially in the form of Exhibit E-3 hereto, duly executed by the Borrower and the applicable Lessee. (f) Recordations and Filings. The Agent shall have received evidence satisfactory to it in its reasonable discretion from the official records of the STB and the Registrar General of Canada (and a legal opinion in form and substance reasonably acceptable to the Agent) that the Security Agreement (or a memorandum thereof) and each applicable Bill of Sale, Security Agreement Supplement (as defined in the Security Agreement) and/or Additional Collateral Certificate have been registered, recorded or filed for recordation in accordance with Applicable Law, together with evidence that all necessary publications with respect thereto in the Canada Gazette have been made or arranged to be made promptly following such Funding Date. (g) Title to the Collateral. The Borrower shall have good and marketable title to each applicable Railcar and good title to all other items of applicable Collateral, free and clear of all Liens created or incurred by it or permitted to exist by it other than Permitted Liens. (h) Insurance. The Agent shall have received certificates of insurance and, where required by any applicable Lease, reinsurance from underwriters or insurers reasonably satisfactory to the Agent together with evidence that the Agent has been named as loss payee in such policies and that the Agent and the Lenders are named as additional insureds in respect of the insurance referred to in each such Lease. (i) Assignment of Leases and Permits. A duly executed counterpart of any agreement required to establish a perfected first priority Lien in favor of the Agent for the benefit of the Lenders relating to the Lease of each Railcar being funded on such Funding Date, dated as of the applicable Funding Date, satisfactory in form and substance to the Agent, and evidence from the official records of the STB and the Registrar General of Canada (or a legal opinion in form and substance reasonably acceptable to the Agent) that such agreement (or a memorandum thereof) has been registered, recorded or filed for recordation in accordance with Applicable Law, together with evidence that all necessary publications with respect thereto in the Canada Gazette have been made or arranged to be made promptly following such Funding Date. In addition, the Agent shall have received satisfactory evidence that any Permits needed to make all required payments under each such Lease to the Borrower in Dollars have been obtained and are in full force and effect. (j) Acceptance. The Agent shall have received a copy of the certificate of acceptance of each such Railcar signed by the Borrower. -50- (k) Marks Company Matters. The Agent shall have received evidence satisfactory to it in its reasonable discretion that the Marks relating to the Railcars to be funded on such date have been added to the separate portfolio of trust assets of the Marks Company referred to in Section 4.01(h)(i). (l) Letters of Credit. The Agent shall have received a fully executed consent substantially in the form of Exhibit B to the Security Agreement with respect to each letter of credit (if any) of the Borrower supporting the obligations of any Lessee under any Lease to be pledged as a Portfolio Lease on such Funding Date. (m) Funding Package. Receipt of the complete Funding Package for each such Railcar, including a Bill of Sale and a Physical Inspection Report (if required), based upon a physical inspection of such Railcar conducted not earlier than 90 days before the proposed Funding Date, not later than 13 Business Days prior to such Funding Date. The Independent Appraisal (if required) included within such Funding Package shall be issued and dated within 30 days of the proposed Funding Date. (n) Eligibility. The Borrower shall have certified to the Agent and each Lender that (i) each Railcar which is to become a Portfolio Railcar on such Funding Date is an Eligible Railcar and (ii) each Lease which is to become a Portfolio Lease on such Funding Date is an Eligible Lease. (o) Other Documents. Originals of each of the documents (including all Railcar Documentation) delivered to the Borrower pursuant to the relevant Lease Documents shall have been provided to the Agent. (p) Notice to Lessee. The Borrower shall have given the notice to the Lessee of such Railcar required by Section 6.13(a) hereof. (q) Fees. The Borrower shall have paid, or shall concurrently pay with such funding, the then due and payable fees pursuant to the Fee Letter and the costs and expenses then payable by the Borrower under Section 11.04 of this Agreement to the extent then invoiced or otherwise notified to the Borrower in writing. (r) Payoff Letter. A payoff letter from all Persons (if any) holding Liens of record (other than Permitted Liens) on or prior to the applicable Funding Date with respect to any applicable Railcar shall have been delivered to the Agent. (s) Other Documents and Action. The Borrower and the Manager shall deliver to the Agent such other instruments, agreements and documents and take such other action as the Agent may reasonably request in connection with the Loans to be made on such Funding Date. The delivery of each Notice of Borrowing shall constitute a representation and warranty by the Borrower of the correctness of the matters specified in subsections (b), (c), (d), (g) and (n) above. ARTICLE V REPRESENTATIONS AND WARRANTIES Each Facility Party represents and warrants that: SECTION 5.01 ORGANIZATION AND GOOD STANDING. The Borrower is a business trust duly formed, validly existing and in good -51- standing under the laws of the jurisdiction of its formation, has all trust powers and all material governmental business authorizations, consents and approvals required to carry on its business as now conducted and is duly qualified as a foreign trust, licensed and in good standing in each jurisdiction where qualification or licensing is required by the nature of its business or the character and location of its property, business or customers and in which the failure to so qualify or be licensed or in good standing, as the case may be, in the aggregate, could have a Material Adverse Effect. Each Facility Party (other than the Borrower) is a corporation duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its formation, has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted and is duly qualified as a foreign corporation, licensed and in good standing in each jurisdiction where qualification or licensing is required by the nature of its business or the character and location of its property, business or customers and in which the failure to so qualify or be licensed or in good standing, as the case may be, in the aggregate, could have a Material Adverse Effect. SECTION 5.02 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Each Facility Party has the corporate or other necessary power and authority, and the legal right to execute, deliver and perform the Transaction Documents to which it is a party and, in the case of the Borrower, to obtain extensions of credit hereunder, and has taken all necessary corporate or other action to authorize the borrowings and other actions on the terms and conditions of this Agreement and to authorize the execution, delivery and performance by it of the Transaction Documents to which it is a party. No consent, approval, licenses, validation or authorization of, filing, recording or registration with, notice to, exemption by or other similar act by or in respect of, any Governmental Authority or any other Person (including, without limitation, any stockholder, certificateholder or creditor of any Facility Party or any of their respective Subsidiaries) is required to be obtained or made by or on behalf of any Facility Party in connection with the borrowings or other extensions of credit hereunder, the execution, delivery, performance, validity or enforceability by or against it of the Transaction Documents or the exercise of the rights and remedies of the Agent or any Protected Party pursuant to this Agreement or any other Loan Document, except for (i) consents, authorizations, notices and filings disclosed in Schedule 5.02, all of which have been obtained or made, (ii) filings to perfect and maintain the perfection of the Liens created by the Collateral Documents and (iii) consents, authorizations, notices and filings in connection with the disposal of Collateral required by laws affecting the offering and sale of securities. This Agreement has been, and each other Transaction Document to which any Facility Party is a party will be, duly executed and delivered on behalf of such Person. This Agreement constitutes, and each other Transaction Document to which any Facility Party is a party when executed and delivered will constitute, a legal, valid and binding obligation of each Facility Party party thereto, enforceable against such Person in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by equitable principles of general applicability (regardless of whether enforcement is sought by proceedings in equity or at law). SECTION 5.03 NO CONFLICTS. Neither the execution and delivery by the Facility Parties of the Transaction Documents to which each is a party, nor the consummation of the transactions contemplated therein, nor performance of and compliance with the terms and provisions thereof by the Borrower, nor the exercise of remedies by the Agent and the Lenders under the Loan Documents, will (i) violate or conflict with any provision of the Organization Documents of any Facility Party, (ii) violate, contravene or conflict with any Applicable Law (including Regulation U or Regulation X), (iii) violate, contravene or conflict with any Contractual Obligation to which any Facility Party is a party or by which any Facility Party may be bound, or (iv) result in or require the creation of any Lien (other than the Lien of the Collateral Documents) upon or with respect to the properties of any Facility Party. SECTION 5.04 NO DEFAULT. No Facility Party is in default in any respect under any Contractual Obligation to which it is a party or by which any of its properties is bound, in each case which default has had or could reasonably be expected to have a Material Adverse Effect. No Default, Manager Default, Manager Event of Default or Event of Default has occurred and is continuing. -52- SECTION 5.05 FINANCIAL CONDITION. (a) Audited Financial Statements. The consolidated balance sheet of each of Trinity and TILC and their respective consolidated Subsidiaries as of December 31, 2001 and the related consolidated and consolidating statements of income and cash flows for the fiscal year then ended, reported on by Ernst & Young LLP, copies of which have been delivered to each of the Lenders, fairly present, in conformity with GAAP, the consolidated financial position of each of Trinity and TILC and their respective consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such fiscal year. (b) Interim Financial Statements. The unaudited consolidated balance sheet of each of Trinity and TILC and their respective consolidated Subsidiaries as of March 31, 2002 and the related unaudited consolidated statements of income and cash flows for the three months then ended, copies of which have been delivered to each of the Lenders, fairly present, in conformity with GAAP applied on a basis consistent with the financial statements referred to in subsection (a) of this Section, the consolidated financial position of each of Trinity and TILC and their respective consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such three-month period (subject to normal year-end audit adjustments). During the period from March 31, 2002 to and including the Closing Date, there has been no sale, transfer or other disposition by Trinity or TILC or any of their respective consolidated Subsidiaries of any material part of the business or property of Trinity or TILC and their respective consolidated Subsidiaries, in each case taken as a whole, and no purchase or other acquisition by them of any business or property (including any Equity Interests of any other Person) material in relation to the consolidated financial condition of Trinity or TILC and their respective consolidated Subsidiaries, as applicable, taken as a whole, which is not reflected in the foregoing financial statements or in the notes thereto. The balance sheets and the notes thereto included in the financial statements referred to in this subsection (b) and in subsection (a) above disclose all liabilities, actual or contingent, of Trinity or TILC and their respective consolidated Subsidiaries as of the date thereof required to be disclosed therein in accordance with GAAP. (c) Post-Closing Financial Statements. The financial statements to be delivered to the Lenders pursuant to Section 6.01(a) and (b), if any, (i) will have been prepared in accordance with GAAP (except as may otherwise be permitted under Section 6.01(a) and (b)) and (ii) will present fairly (on the basis disclosed in the footnotes to such financial statements, if any) the consolidated and consolidating financial condition, results of operations and cash flows of each of Trinity and TILC and their respective consolidated Subsidiaries as of the respective dates thereof and for the respective periods covered thereby. (d) No Undisclosed Liabilities. Except as set forth in the financial statements described in subsections (a) and (b) above, the Debt incurred under this Agreement and the Debt incurred under the Bank Credit Facility, (i) there were as of the Closing Date (and after giving effect to any Loans made on such date), no liabilities or obligations (excluding current obligations incurred in the ordinary course of business) with respect to Trinity or any Facility Party of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether or not due and including obligations or liabilities for taxes, long-term leases and unusual forward or other long-term commitments), and (ii) no Facility Party knows of any basis for the assertion against Trinity or any Facility Party of any such liability or obligation which, either individually or in the aggregate, are or could reasonably be expected to have, a Material Adverse Effect. SECTION 5.06 NO MATERIAL CHANGE. Since December 31, 2001 there has been no Material Adverse Effect, and no event or development has occurred which could reasonably be expected to result in a Material Adverse Effect. -53- SECTION 5.07 TITLE TO PROPERTIES. On the Closing Date and during the term of this Agreement, the Borrower shall be the sole legal and beneficial owner of and shall have good and marketable title to each Portfolio Railcar and Portfolio Lease and all of its other material properties and assets, except, in the case of assets other than Portfolio Railcars and Portfolio Leases, for minor defects in title that do not interfere with its ability to conduct its business as currently conducted. All such Portfolio Railcars and Portfolio Leases and other material properties and assets are and will be free and clear of Liens other than Permitted Liens. SECTION 5.08 LITIGATION. There are no actions, suits, investigations or legal, equitable, arbitration or administrative proceedings pending or overtly threatened (or any basis therefor known to any Facility Party) against or affecting any Facility Party, either Partner or the Partnership that (i) involve any Transaction Document or (ii) could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect. SECTION 5.09 TAXES. Each Facility Party, each Partner or the Partnership have filed, or caused to be filed, all tax returns (including federal, state, local and foreign tax returns) the failure of which to be filed could reasonably be expected to result in a Material Adverse Effect and paid (i) all amounts of taxes shown thereon to be due (including interest and penalties) and (ii) all other material taxes, fees, assessments and other governmental charges (including mortgage recording taxes, documentary stamp taxes and intangible taxes) owing by it, except for such taxes (A) which are not yet delinquent or (B) that are being contested in good faith and by proper proceedings diligently pursued, and against which adequate reserves are being maintained in accordance with GAAP. No Facility Party knows of any pending investigation of any Facility Party, either Partner or the Partnership by any taxing authority or proposed tax assessments against any Facility Party, either Partner or the Partnership. SECTION 5.10 COMPLIANCE WITH LAW. Each Facility Party is in compliance with all requirements of Applicable Law (including Environmental Laws) applicable to it or to its properties, except where such failures to comply could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect. Neither any Facility Party nor any of their respective material properties or assets is subject to or in default with respect to any judgment, writ, injunction, decree or order of any court or other Governmental Authority, except where such defaults could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect. No Facility Party has received any written communication from any Governmental Authority that alleges that any of them is not in compliance in any material respect with any Applicable Law, except for allegations that have been satisfactorily resolved and are no longer outstanding. SECTION 5.11 ERISA. (a) Each Pension Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Applicable Laws. Each Pension Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the best knowledge of the Facility Parties, nothing has occurred which would prevent, or cause the loss of such qualification. The Borrower and each ERISA Affiliate have made all required contributions to each Pension Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Pension Plan. (b) There are no pending or, to the best knowledge of the Facility Parties, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Pension Plan that could be reasonably be expected to have a Material Adverse Effect. There has been no prohibited -54- transaction or violation of the fiduciary responsibility rules with respect to any Pension Plan that has resulted or could be reasonably expected to result in a Material Adverse Effect. (c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA. SECTION 5.12 SUBSIDIARIES. The Borrower has no Subsidiaries. SECTION 5.13 GOVERNMENTAL REGULATIONS, ETC. (a) The Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying "margin stock" within the meaning of Regulation U. No proceeds of the Loans will be used, directly, or indirectly, for the purpose of purchasing or carrying any "margin stock" within the meaning of Regulation U. If requested by any Lender or the Agent, the Borrower will furnish to the Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR Form U-1 referred to in Regulation U. "Margin stock" within the meaning of Regulation U does not constitute more than 25% of the value of the assets of the Borrower. None of the transactions contemplated by this Agreement (including the direct or indirect use of the proceeds of the Loans) will violate or result in a violation of the Securities Act, as amended, the Exchange Act or regulations issued pursuant thereto, or Regulation T, U or X. (b) The Borrower is not subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act or the Investment Company Act of 1940, each as amended. In addition, the Borrower is not (i) an "investment company" registered or required to be registered under the Investment Company Act of 1940, as amended, (ii) controlled by such a company, or (iii) a "holding company", a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended. (c) No director, executive officer or principal holder of any Equity Interest of any Facility Party is a director, executive officer or principal shareholder of any Lender. For the purposes hereof, the terms "director", "executive officer" and "principal shareholder" (when used with reference to any Lender) have the respective meanings assigned thereto in Regulation O. SECTION 5.14 PURPOSE OF LOANS. The proceeds of the Loans made on each Funding Date will be used solely to fund the Purchase Price of Eligible Railcars and related Eligible Leases added to the Portfolio on such Funding Date and to pay fees and expenses incurred in connection therewith. SECTION 5.15 LABOR MATTERS. There are no strikes against any Facility Party, other than any strikes that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. The hours worked and payments made to employees of each Facility Party have not been in violation in any material respect of the Fair Labor Standards Act or any other applicable law dealing with such matters. All payments due from any Facility Party, or for which any claim may be made against any Facility Party, on account of wages and employee health and welfare insurance and other benefits have been paid or accrued as a liability on the books of the applicable Facility Party. The -55- consummation of the transactions contemplated by the Transaction Documents and/or Lease Documents will not give rise to a right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which each Facility Party is a party or by which it (or any predecessor) is bound, other than collective bargaining agreements which, individually or in the aggregate, are not material to any Facility Party. SECTION 5.16 ENVIRONMENTAL MATTERS. Each Facility Party has complied in all respects with all applicable federal, state, local and regional statutes, ordinances, orders, judgments, rulings and regulations relating to any matters of pollution or of environmental regulation or control, except where the failure to comply could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect. No Facility Party has received written notice of any actual or claimed or asserted failure so to comply which alone, or together with any other such notices which have been previously or concurrently received, could reasonably be expected to result in a Material Adverse Effect, other than in connection with failures which have been corrected. No hazardous wastes, hazardous substances, hazardous materials, toxic substances or toxic pollutants, as those terms are used in the Resource Conservation and Recovery Act, the Comprehensive Environmental Response Compensation and Liability Act, the Hazardous Materials Transportation Act, the Toxic Substance Control Act, the Clean Air Act and the Clean Water Act, are managed on any property of any Facility Party in violation of any regulations promulgated pursuant thereto or any other Applicable Law, except as could not reasonably be expected to result in a Material Adverse Effect. SECTION 5.17 INTELLECTUAL PROPERTY. Each Facility Party owns, or possesses the right to use, all of the Marks, trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other rights that are reasonably necessary for the operation of its business, without conflict with the rights of any other Person. To the best knowledge of the Facility Parties, no slogan or other advertising devise, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by any Facility Party infringes upon any rights held by any other Person. No claim or litigation regarding any of the foregoing is pending or overtly threatened, and no patent, invention, device, application, principle or any statute, law, rule, regulation, standard or code is pending or, to the knowledge of any Facility Party, proposed, which, in either case, could reasonably be expected to have a Material Adverse Effect. SECTION 5.18 SOLVENCY. The Borrower is and, after consummation of the transactions contemplated hereby and by the other Transaction Documents and Lease Documents, will be Solvent. SECTION 5.19 DISCLOSURE. No statement, information, report, representation, or warranty made by any Facility Party in any Transaction Document or furnished to the Agent or any Lender by or on behalf of any Facility Party in connection with any Transaction Document (considered together with all other such information so furnished) contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. SECTION 5.20 SECURITY DOCUMENTS. (a) The Security Agreement is effective to create in favor of the Agent, for the ratable benefit of the Creditors, a legal, valid and enforceable security interest in the Collateral and, when the filings, recordations or other actions described in Section 3.02 of the Security Agreement shall have been completed, the Security Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the grantors thereunder in the Collateral, in each case to the extent provided in such Section 3.02. (b) The Agent, for the ratable benefit of the Creditors, will at all times have the Liens provided for in the Collateral Documents and, subject to the filing by the Agent of continuation -56- statements to the extent required by the Uniform Commercial Code, the Collateral Documents will at all times constitute valid and continuing liens of record and first priority perfected security interests in all the Collateral referred to therein, except as priority may be affected by Permitted Liens. SECTION 5.21 OWNERSHIP. Trinity owns good, valid and marketable title to all the outstanding common stock of TILC. TILC owns good, valid and marketable title to all outstanding membership interests of each of the Partners, the Partners, collectively, own good, valid and marketable title to all outstanding partnership interests of the Partnership, and the Partnership owns good, valid and marketable title to all outstanding beneficial interests of the Borrower, free and clear of all Liens of every kind, whether absolute, matured, contingent or otherwise, and TILC owns good, valid and marketable title to all outstanding beneficial interests of the Marks Company, free and clear of all Liens of every kind (other than Liens encumbering SUBI Certificates issued by the Marks Company which do not relate to Marks applicable to any Portfolio Railcar), whether absolute, matured, contingent or otherwise. SECTION 5.22 LEASE DOCUMENTS. The Borrower has delivered or caused to be delivered (i) to the Agent, to the extent required under Section 4.02(e), the original executed counterpart bearing the Chattel Paper Legend and marked as "Counterpart No. 1" of the Portfolio Leases (or such other original executed counterpart as is accepted by the Agent) and any other Lease Document to which the Borrower is a party and (ii) to the Lenders true and complete copies of the Lease Documents and any amendments or supplements thereto to which the Borrower is a party, and, except for amendments so disclosed to the Agent and the Lenders, such documents have not been amended or modified. SECTION 5.23 SOLE BUSINESS OF THE BORROWER. The sole business of the Borrower is the ownership, leasing and financing of Railcars. The Borrower has not engaged in any activities since its organization (other than those incidental to its organization and other appropriate steps and arrangement for the payment of fees to, and director's and officer's insurance for, the officers and directors of the Borrower, the acquisition and leasing of the Portfolio Railcars and the funding of the Purchase Price thereof, the authorization and issuance of the Notes, the execution of this Agreement, and the other Transaction Documents and the Lease Documents to which it is a party and the activities referred to in or contemplated by such agreements), and the Borrower has not paid any dividends or other distributions since its organization, except as permitted pursuant to Section 7.07 hereof. SECTION 5.24 SEPARATE CORPORATE STRUCTURE; NO EMPLOYEES. (i) The Borrower is operated as an independent corporation from Trinity, the Manager and their Affiliates and will observe all corporate formalities necessary to remain a legal entity separate and distinct from, and independent of, Trinity, the Manager and their Affiliates. (ii) The Borrower has satisfied the minimum capitalization requirements under the laws of the State of Delaware for purposes of conducting its business. (iii) The Borrower has complied in all respects with the requirements set forth in its Organization Documents. (iv) The Borrower currently corresponds with all third parties with regard to the business of the Borrower on stationery with letterhead identifying the Borrower and containing no reference to Trinity, the Manager or their Affiliates (other than the Borrower). -57- (v) The Borrower keeps complete and accurate entity records, books, accounts and minutes separate from those of Trinity, the Manager and any of their Affiliates (other than the Borrower) or any other Person. (vi) The Borrower has held itself out to the public (including to creditors of the Borrower, Trinity, the Manager and their Affiliates) under the Borrower's own name as a separate and distinct entity. (vii) The Borrower has not directly or indirectly entered into any transaction with Trinity, the Manager or any of their Affiliates except as expressly permitted by the Loan Documents and then in an arm's-length bargain. (viii) The Borrower has not loaned funds to, guaranteed or become obligated with respect to claims against, Trinity, the Manager or any of their Affiliates or any other Person or entity except as expressly permitted by the Loan Documents or as provided by operation of consolidated group principles of U.S. federal income tax and ERISA laws. (ix) The Borrower has kept its assets and liabilities as reflected in its books and records separate from those of Trinity, the Manager and their Affiliates and has not and at all times will not commingle such assets and liabilities (except as expressly permitted pursuant to this Agreement). (x) The Borrower has kept adequate records to permit the segregation of its assets and liabilities from those of Trinity, the Manager and their Affiliates. (xi) The Borrower has not held itself out to the public as a division of Trinity or the Manager, or Trinity or the Manager as a division of the Borrower. (xii) The Borrower has not induced third parties to rely on the creditworthiness of Trinity (other than in standard parent guarantees of lessor obligations) or the Manager in order to have third parties enter into contracts with the Borrower. (xiii) The Borrower has and will pay its obligations in the ordinary course of business as a legal entity separate and distinct from Trinity, the Manager and their Affiliates. (xiv) The Borrower has and will keep its funds separate and distinct from any funds of Trinity, the Manager and their Affiliates (except as contemplated in the delayed establishment of the Depository Agreement provided for in Section 6.16, and except for misdirected Lease payments), and will receive, deposit, withdraw and disburse such funds separate from any funds of Trinity, the Manager and their Affiliates. (xv) The Borrower has no employees. (xvi) The Borrower is otherwise in compliance with the corporate governance and other factual assumptions applicable to it set forth in the "nonconsolidation" opinion delivered by Winston & Strawn on the Closing Date. SECTION 5.25 LEASES. (i) Each Lease shown as an Eligible Lease on the Monthly Report most recently delivered to the Agent and the Lenders in accordance with Section 6.01(f) was an Eligible Lease as of the date of such Monthly Report, (ii) except as otherwise disclosed in writing by the Borrower to the Agent, no Lease Default or Lease Event of Default known to the Borrower or the Manager after due -58- inquiry is in existence under any Portfolio Lease and each Portfolio Lease is in full force and effect and (iii) the description of Lease Defaults or Lease Events of Default occurring under a Lease, if any, included in a Request and any supplement thereto accurately describes in all material respects Lease Defaults or Lease Events of Default during the periods described of which any Facility Party is aware after due inquiry as of the relevant Funding Date. SECTION 5.26 RAILCARS. Each Railcar shown as an Eligible Railcar on the Monthly Report most recently delivered to the Agent and the Lenders in accordance with Section 6.01(f) was an Eligible Railcar as of the date of such Monthly Report. ARTICLE VI AFFIRMATIVE COVENANTS Each Facility Party agrees that so long as any Lender has any Commitment hereunder or any Obligation or other amount payable hereunder or under any Note or other Loan Document remains unpaid: SECTION 6.01 INFORMATION. The Borrower will furnish, or cause to be furnished, to the Agent and each of the Lenders: (a) Annual Financial Statements. As soon as available, and in any event within 120 days after the end of each fiscal year of each of Trinity and TILC, a consolidated balance sheet and income statement of each of Trinity and TILC and their respective consolidated Subsidiaries, as of the end of such fiscal year, and the related consolidated statements of operations and retained earnings and cash flows for such fiscal year, setting forth in comparative form figures for the preceding fiscal year, all such financial statements to be in reasonable form and detail and audited by Ernst & Young, LLP or other independent certified public accountants of recognized national standing reasonably acceptable to the Agent and accompanied by an opinion of such accountants (which shall not be qualified or limited in any material respect) to the effect that such financial statements have been prepared in accordance with GAAP and present fairly the consolidated financial position and results of operations and cash flows of each of Trinity and TILC and their respective consolidated Subsidiaries in accordance with GAAP consistently applied (except for changes with which such accountants concur). (b) Quarterly Financial Statements. As soon as available, and in any event within 45 days after the end of each of the first three fiscal quarters in each fiscal year of each of Trinity and TILC, a consolidated balance sheet of each of Trinity and TILC and their respective consolidated Subsidiaries as of the end of such fiscal quarter, together with related consolidated statements of operations and retained earnings and cash flows for such fiscal quarter and the then elapsed portion of such fiscal year, setting forth in comparative form figures for the corresponding periods of the preceding fiscal year, all such financial statements to be in form and detail and reasonably acceptable to the Agent, and accompanied by a certificate of the chief financial officer of Trinity or TILC, as applicable, to the effect that such financial statements have been prepared in accordance with GAAP and present fairly in all material respects the consolidated financial position and results of operations and cash flows of each of Trinity and TILC in accordance with GAAP consistently applied, subject to changes resulting from normal year-end audit adjustments and the absence of footnotes required by GAAP. (c) Officer's Certificate. At the time of delivery of the financial statements provided for in Sections 6.01(a) and 6.01(b) above, a certificate of the chief financial officer, principal accounting officer, treasurer or controller of the Borrower (or of the Manager or its behalf) (i) demonstrating compliance with the financial covenant contained in Section 7.12 by calculation thereof as of the end of the fiscal period covered by such financial statements and (ii) stating that no Default, Manager Default, -59- Manager Event of Default or Event of Default exists, or if any Default, Manager Default, Manager Event of Default or Event of Default does exist, specifying the nature and extent thereof and what action each Facility Party proposes to take with respect thereto. (d) Borrowing Base Certificates. Not later than the second Business Day prior to each Settlement Date, a Borrowing Base Certificate as of the end of the immediately preceding calendar month, substantially in the form of Exhibit A-6 hereto and certified by a Responsible Officer of the Manager (on behalf of the Borrower) to be true and correct as of the date thereof. (e) Notices Regarding Collateral. Promptly upon receipt from any Manufacturer, the Manager, any Lessee or any Lessee's insurance carrier or broker, copies of any material notice, communication, document or agreement related to any Portfolio Railcar or other Collateral. Promptly upon a Responsible Officer of any Facility Party obtaining knowledge thereof, notice of Liens with respect to any Portfolio Railcar other than Permitted Liens. (f) Monthly Report. Not later than the second Business Day prior to each Settlement Date a Monthly Report setting forth the information contained in such Monthly Report for the Measuring Period ending most recently prior to such date (provided that if and to the extent such information is available only from a Lessee or the Agent, the Borrower's obligation to provide such information shall be limited to providing such information as the Facility Parties are able to obtain from the Agent and such Lessee through commercially reasonable efforts to enforce applicable provisions of the applicable Lease), including a complete list showing the make, manufacturer, model, car number and Mark of each Portfolio Railcar and each Lease with respect thereto. The Agent shall review the Monthly Report and, in its sole discretion, provide the Borrower with any corrections or supplemental information regarding the Loans or amounts paid into or held in the Accounts, which corrections and/or information the Borrower shall include in a revised Monthly Report. The Agent shall provide the Lenders with a copy of the Monthly Report, as revised pursuant to the preceding sentence. (g) Annual Good Standing Certificates. Within the period for the delivery of the annual financial statements provided for in Section 6.01(a) above, a certificate of good standing, existence or its equivalent with respect to each Facility Party certified as of a recent date by the appropriate Governmental Authority of each Facility Party's state of organization. (h) Auditor's Reports. Promptly upon receipt thereof, a copy of any other report or "management letter" submitted by independent accountants to Trinity or any Facility Party in connection with any annual, interim or special audit of the books of Trinity or such Facility Party. (i) Notices. Prompt notice of: (i) the occurrence of any Default, Manager Default, Manager Event of Default or Event of Default; (ii) the occurrence of any Lease Default or Lease Event of Default; and (iii) any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including: (A) breach or non-performance of, or any default under, a Contractual Obligation of Trinity or any Facility Party; (B) any dispute, litigation, investigation or proceeding between Trinity or any Facility Party and any Governmental Authority; (C) any litigation, investigation or proceeding affecting Trinity or any Facility Party in which the amount involved exceeds $0, in the case of the Borrower, or $10,000,000, in the case of Trinity or any other Facility Party, or in which injunctive relief or similar relief is sought, which relief, if granted, could be reasonably expected to have a Material Adverse Effect; (D) the occurrence of any ERISA Event; and (E) any material change in accounting policies or financial reporting practice by Trinity or TILC. Each notice pursuant to this Section 6.01(i) or 6.01(ii) shall (i) be accompanied by a statement of a Responsible Officer of the Borrower (or the Manager on its behalf) setting forth details of the occurrence referred to therein and stating what action each Facility Party has taken and proposes to take with respect thereto and (ii) if applicable, describe with -60- particularity any and all provisions of this Agreement or the other Loan Documents that have been breached. (j) Domestication in Other Jurisdiction. Not less than 30 days prior to any change in the form or jurisdiction of organization of any Facility Party, a copy of all documents and certificates intended to be filed or otherwise executed to effect such change. (k) Other Information. With reasonable promptness upon request therefor, such other information regarding the business, properties or financial condition of Trinity or any Facility Party as the Agent or the Required Lenders may reasonably request. SECTION 6.02 PRESERVATION OF EXISTENCE AND FRANCHISES; AUTHORIZATIONS, APPROVALS AND RECORDATIONS. Each Facility Party will do all things necessary to preserve the legality, validity, binding effect or enforceability of this Agreement, the Notes or any other Lease Document or Transaction Document, or permit the making of any payment or the transfer or remittance of any funds by the Borrower under this Agreement, the Notes or any other Lease Document or Transaction Document. SECTION 6.03 BOOKS AND RECORDS. The Borrower will keep complete and accurate books and records of its transactions in accordance with good accounting practices on the basis of GAAP (including the establishment and maintenance of appropriate reserves) and shall keep full and accurate books relating to the Collateral, including, but not limited to, the originals of all documentation with respect thereto (other than original executed copies of the Portfolio Leases delivered to the Agent or its nominee under the Loan Documents), all credits granted thereon, all merchandise returned and all other dealings therewith, and the Borrower will make the same available to the Agent for inspection, at the Borrower's own cost and expense, as provided in Section 6.10(a). Upon direction of the Agent, the Borrower shall stamp or otherwise mark such books and records in such manner as the Agent may reasonably require in order to reflect the Security Interests. The Borrower will keep, or, with respect to the Portfolio Railcars and the Portfolio Leases, cause the Manager to keep, at all times books of record and account adequate to identify the Portfolio Railcars and Portfolio Leases and to locate the Portfolio Railcars and Portfolio Leases and, to the extent that the Lessee is required to provide such information pursuant to the applicable Portfolio Lease, to disclose its use, maintenance, condition and the income generated to the Borrower through the use thereof, in which full, true and correct entries will be made. SECTION 6.04 ERISA. The Borrower will not maintain or otherwise be or become liable in respect of any Pension Plan or Multiemployer Plan. SECTION 6.05 PAYMENT OF TAXES AND OTHER DEBT. Each Facility Party will pay and discharge (i) all material taxes, assessments and other governmental charges or levies imposed upon it, or upon its income or profits, or upon any of its properties, before they shall become delinquent, (ii) all lawful claims (including claims for labor, materials and supplies) which, if unpaid, might give rise to a Lien upon any of the Collateral and (iii) all of its other Debt as it shall become due; provided, however, that no Facility Party shall be required to pay any such tax, assessment, charge, levy, claim or Debt which is being contested or negotiated in good faith by appropriate proceedings diligently pursued and as to which adequate reserves have been established in accordance with GAAP, unless the failure to make any such payment could reasonably be expected to have a Material Adverse Effect. SECTION 6.06 INSURANCE; CERTAIN PROCEEDS. (a) The Borrower will at all times maintain in full force and effect insurance in such amounts, covering such risk and liabilities and with such deductibles or self-insurance retentions as are in accordance with normal industry practice (or as are otherwise required by the Collateral Documents), and in any event in compliance with the requirements of Schedule 6.06 hereof. Notwithstanding the generality of the foregoing, (i) with respect to any Portfolio -61- Railcar subject to a Lease, the Borrower agrees that it (or the Manager acting on its behalf) shall enforce the provisions of the Lease against the applicable Lessee as to all required insurance pursuant to the terms thereof, and (ii) with respect to any Portfolio Railcar not subject to a Lease, in addition to its covenants with respect to the Collateral described herein, the Borrower shall comply with the provisions of the Management Documents regarding insurance for the Railcar. The Agent shall be named as loss payee or mortgagee, as its interest may appear, with respect to all such property and casualty policies and additional insured with respect to all such other policies (other than workers' compensation and employee health policies, if any), and each provider of any such insurance shall agree, by endorsement upon the policy or policies issued by it or by independent instruments furnished to the Agent, (i) that the insurance carrier shall pay all proceeds otherwise payable to the Borrower under such policies directly to the Agent or its nominee (which agreement shall be evidenced by a "standard" or "New York" lender's loss payable endorsement in the name of the Agent on Accord Form 27), (ii) to waive all claims for insurance premiums against the Agent and the Secured Parties (as defined in the Security Agreement), (iii) to provide coverage to the Agent for the benefit of the Secured Parties regardless of the breach by the Borrower of any warranty or representation made therein, (iv) that no such policy is subject to co-insurance, (v) that it will give the Agent thirty days' prior written notice before any such policy or policies shall be materially altered, terminated or canceled, and that no act or default of any Facility Party or any other Person (other than non-payment of premiums) shall affect the rights of the Agent or the Lenders under such policy or policies and (vi) that it will accept payment or other performance by the Agent (which payment or performance may be tendered in the discretion of the Agent but shall not be required) following a default by the Borrower or by the Manager acting on its behalf. The Borrower assumes all liability and responsibility in connection with the Portfolio and other property and assets acquired by it and the liability of the Borrower to pay the Obligations shall in no way be affected or diminished by reason of the fact that any such property may be lost, destroyed, stolen, damaged or for any reason whatsoever unavailable to the Borrower. (b) Any cash receipts from an Event of Loss, Casualty or Condemnation (whether by way of Casualty Proceeds or Lessee indemnity payments or otherwise) shall be paid directly to the Depositary for deposit to the Collection Account and, subject to Section 2.07(c)(iii), applied pursuant to Section 2.07(c)(i) or Section 2.07(c)(ii), as applicable (except for Excepted Payments, which shall be payable to the Persons for whose benefit any such payment is made). The Agent shall pay to the Depositary for deposit and application pursuant to the Depository Agreement all Casualty Proceeds from time to time received by the Agent in respect of occurrences not constituting an Event of Loss with respect to the applicable Portfolio Railcar. Upon the request of the Agent from time to time, the Borrower will promptly and duly execute and deliver any and all such further instruments and documents as may be specified in such request which are reasonably necessary to perfect, preserve or protect the security interests created or intended to be created for the Replacement Railcars referred to herein, or to establish that the Borrower has title to such Railcars. (c) The Borrower shall not operate any Portfolio Railcar or suffer any Portfolio Railcar to be operated in violation of any provision of any insurance policy in effect with respect to such Railcar or in any jurisdiction where all of the insurance required hereunder shall not remain in full force and effect or in violation of any law, treaty, statute, rule, directive, regulation or order of any Governmental Authority having jurisdiction over such Portfolio Railcar or in violation of any applicable certificate, license or registration relating to such Portfolio Railcar issued by any such Governmental Authority. (d) In connection with the covenants set forth in this Section 6.06, it is understood and agreed that: -62- (i) none of the Agent, the Lenders or their respective agents or employees shall be liable for any loss or damage insured by the insurance policies required to be maintained under this Section 6.06, it being understood that (A) the Borrower shall look solely to its insurance companies or any other parties other than the aforesaid parties for the recovery of such loss or damage and (B) such insurance companies shall have no rights of subrogation against the Agent, the Lenders or their agents or employees; provided, however, that if the insurance policies do not provide waiver of subrogation rights against such parties, as required above, then the Borrower hereby agrees to waive its right of recovery, if any, against the Agent, the Lenders and their agents and employees, to the extent permitted by law; (ii) the Borrower will permit an insurance consultant retained by the Agent, at the expense of the Borrower, to review from time to time the insurance policies maintained by or on behalf of the Borrower annually or upon the occurrence of an Event of Default; and (iii) the Required Lenders shall have the right from time to time to require the Borrower to keep other insurance in such form and amount as the Agent or the Required Lenders may reasonably request; provided that such insurance shall be obtainable on commercially reasonable terms; and provided, further, that the designation of any form, type or amount of insurance coverage by the Agent or the Required Lenders under this Section 6.06 shall in no event be deemed a representation, warranty or advice by the Agent or the Lenders that such insurance is adequate for the purposes of the business of the Borrower or the protection of its properties. SECTION 6.07 OPERATION, USE AND MAINTENANCE. (a) Operation and Use. The Borrower will and will require each Lessee to use the Portfolio Railcars only for lawful purposes and shall use and operate and require each Lessee to use and operate the Portfolio Railcars in compliance in all material respects with Applicable Law, except for so long as the Borrower or a Lessee is contesting in good faith by appropriate proceedings diligently conducted the validity or application of such Applicable Law in any reasonable manner. The Portfolio Railcars may not be located or used in any country other than the United States, Canada or Mexico. (b) Maintenance. The Borrower will and will require each Lessee to keep, repair and maintain the Portfolio Railcars (i) in good order and operating condition according to industry practice for Railcars of similar age and vintage, ordinary wear and tear excepted, (ii) in compliance in all material respects with Applicable Law, except for so long as the Borrower or a Lessee is contesting in good faith by appropriate proceedings diligently conducted the validity or application of such Applicable Law in any reasonable manner, (iii) suitable for use in interchange in accordance with the Interchange Rules and (iv) at least as well in all material respects as it would for other similar equipment owned or operated by the Borrower. In addition to (but without limitation of) the foregoing obligation of the Borrower, (i) with respect to any Portfolio Railcar subject to a Lease, the Borrower will use reasonable commercial efforts to cause the Lessee of such Railcar to comply with the maintenance requirements set forth in such Lease, and (ii) with respect to any Portfolio Railcar not subject to a Lease, the Borrower will cause the Railcar to comply with the maintenance requirements set forth in the Management Agreement. -63- (c) Identification Numbers. The Borrower may change or permit to be changed the identifying number of any Portfolio Railcar in accordance with its or the Manager's normal business practices at the time applied in a nondiscriminatory manner. Concurrently with the delivery of each Monthly Report or promptly upon request of the Agent if there exists an Event of Default, the Borrower (or the Manager on its behalf) shall deliver to the Agent a list of the identifying numbers of all Portfolio Railcars that have been changed within the period covered by such Monthly Report and prior thereto to the extent not previously disclosed by the Borrower and evidence of the filing, recording or depositing in such public offices where the Security Agreement (or memoranda or notices thereof) have been filed, recorded or deposited reflecting any changes in identifying numbers which have occurred within such period and prior thereto to the extent not previously disclosed by the Borrower as may be necessary to preserve and perfect the interest of the Agent and the Lenders in the Portfolio Railcars whose identifying numbers have changed. (d) Insignia. Except as provided in Section 6.07(c), the Borrower will not allow the name of any Person to be placed on any Railcar as a designation that might be interpreted as a claim of ownership; provided, however, that the Borrower may permit any of the Portfolio Railcars to be lettered with the names, trademarks, initials or other insignia customarily used by the Borrower or its Affiliates (including the Marks Company), or any Lessee or its Affiliates, on railroad equipment used or leased by such Person of the same or a similar type for convenience of identification of its right to use such Portfolio Railcar under any applicable Lease, and any of the Portfolio Railcars may be lettered in an appropriate manner for convenience of identification of the interest of the Borrower or any Lessee therein. SECTION 6.08 REPLACEMENT OF PARTS; MODIFICATIONS AND IMPROVEMENTS. (a) Replacement of Parts. The Borrower, at its sole cost and expense (whether from the Maintenance Reserve Account, by reimbursement of expenses incurred by the Manager, approved by the Agent and paid pursuant to Section 2.07(c) or otherwise), will as promptly as practicable replace, or cause any Lessee to replace, all Parts with respect to Portfolio Railcars that may from time to time become worn out, obsolete, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use for any reason whatsoever. In addition, in the course of maintenance, service, repair, overhaul or testing, the Borrower or a Lessee, at its sole cost and expense, may remove any Part, whether or not worn out, obsolete, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use. All replacement Parts shall be selected and installed in accordance with the Borrower's or the Manager's normal business practices at that time applied in a nondiscriminatory manner, and shall be free and clear of all Liens except Permitted Liens and shall be in good operating condition. (b) Modifications and Improvements. The Borrower, at its expense (whether from the Modification and Improvement Account, by reimbursement of expenses incurred by the Manager, approved by the Agent and paid pursuant to Section 2.07(c) or otherwise), shall make or cause to be made such modifications and improvements to each Portfolio Railcar: (i) to the extent required of the Borrower by the terms of the applicable Lease or (ii) as may be (A) set forth as requiring present compliance in any mandatory directives adopted by any Governmental Authority or (B) required from time to time to meet the applicable standards of the Governmental Authority having jurisdiction over it or the appropriate Railcar or the standards of any applicable maintenance program, unless the validity of such standard is being contested in good faith by appropriate proceedings. (c) Except as expressly provided in this Section 6.08, the Borrower shall not make or permit to be made any modifications and improvements to any Portfolio Railcar without the prior written consent of the Agent, which consent may be granted or withheld in the Agent's reasonable discretion. -64- SECTION 6.09 USE OF PROCEEDS. The Borrower will use the proceeds of the Loans solely for the purposes set forth in Section 5.14. SECTION 6.10 AUDITS/INSPECTIONS/APPRAISALS. (a) Audits and Inspections. Upon reasonable notice and during normal business hours, each Facility Party will permit representatives appointed by the Agent or the Required Lenders, including independent accountants, agents, employees, attorneys and appraisers, to visit and inspect its property and operations, including its books, records, reports and other papers related to the Collateral or to its accounts receivable and inventory, its facilities and its other business assets, and to make photocopies or photographs thereof and to write down and record any information such representatives obtain and shall permit the Agent or such representatives to investigate and verify the accuracy of information provided to the Lenders and to discuss all such matters with the officers and independent accountants and representatives of each Facility Party. The Borrower will, from time to time upon the reasonable request of the Agent, permit the Agent or professionals (including investment bankers, consultants, attorneys, accountants and appraisers) retained by the Agent to (i) conduct evaluations and appraisals of (A) the Borrower's practices in the computation of the Borrowing Base and (B) subject to the provisions of Section 6.10(b) below, in the case of Railcars the assets included in the Collateral and (ii) subject to restrictions and procedures on inspection of the Portfolio Railcars in any applicable Lease, conduct a physical inspection of any Portfolio Railcar or otherwise obtain a Physical Inspection Report with respect thereto at any time after the occurrence and during the continuance of an Event of Default, and the Borrower will pay the reasonable fees and expenses of such professionals in accordance with Section 11.04. In addition to the foregoing, the Borrower agrees that (i) not later than the 60th day after the Closing Date, the Borrower will deliver to the Agent a Physical Inspection Report with respect to a representative sampling of not less than five percent and up to ten percent of the Railcars intended to become Portfolio Railcars on the Closing Date and (ii) thereafter, (A) a copy of any Physical Inspection Report obtained by the Borrower (or by the Manager on its behalf) with respect to any Portfolio Railcar or proposed Portfolio Railcar and (B) in the event the Borrower acquires a group of Railcars from a seller other than the relevant Manufacturer thereof, a Physical Inspection Report with respect to a representative sampling of 10% or such higher percentage of such group of Railcars as may be agreed by the Borrower and the Agent. (b) Appraisals. (i) At the request of the Agent, not more frequently than twice in any calendar year, and (ii) at any time after the occurrence and during the continuation of any Event of Default, the Borrower shall at its expense provide an Independent Appraisal with respect to one or more Railcars designated by the Agent (which may include all of the Portfolio Railcars). The Agent also may at any time and from time to time obtain an Independent Appraisal of any Railcar (in addition to the Independent Appraisal required pursuant to this Section 6.10(b)) at its own expense. Each Independent Appraisal delivered pursuant to this Section 6.10(b) shall be in form and substance reasonably satisfactory to the Agent; provided that with respect to any Railcar, when appropriate and acceptable to the Agent, any such Independent Appraisal may be in the form of a letter from an Independent Appraiser confirming the Independent Appraisal previously delivered by such Independent Appraiser with respect to such Railcar. Without limitation of the foregoing, subsequent Independent Appraisals of such Railcar shall be based on the most recent Physical Inspection Report of such Railcar. SECTION 6.11 STAMP TAX. If any jurisdiction in which any Portfolio Railcar is registered, operated or located, from time to time, requires the payment of a stamp tax, fee or its equivalent in order to perfect the Agent's security interest in such Railcar or otherwise to allow the Agent to realize upon the Collateral, the Borrower shall pay the amount of such stamp tax, fee or its equivalent in accordance with Section 2.07(c). -65- SECTION 6.12 FOLLOW-ON LEASES. Prior to entering into a Portfolio Lease which was not in place as of the applicable Funding Date (and described in the applicable Notice of Borrowing) (a "Follow-On Lease"), the Borrower (or the Manager on its behalf) shall forward the proposed Follow-On Lease to the Agent together with all related Lease Documents, financial and credit information regarding the proposed Lessee, and such other information reasonably requested by the Agent. The Borrower will not enter into such Follow-On Lease until (i) such form of Follow-On Lease is approved by the Agent, (ii) the proposed Lessee under the proposed Follow-On Lease is approved by the Agent and (iii) the conditions precedent described in Section 4.02 hereof have been satisfied with respect to such Follow-On Lease, as determined in the Agent's sole and exclusive discretion. SECTION 6.13 ACCOUNTS. (a) On or prior to July 16, 2002, the Borrower shall cause to be established one or more accounts with the Depositary pursuant to the Depositary Agreement in the name of the Borrower. The Borrower shall cause the Depositary to create a Collection Account, a Liquidity Reserve Account, a Maintenance Reserve Account and a Modification and Improvements Account, in each case in accordance with the terms of the Depositary Agreement. The Borrower shall notify (and the Borrower hereby authorizes the Agent so to notify), in each case following the occurrence and during the continuation of a Manager Default or an Event of Default, each Lessee and other account debtors of the Borrower in writing that each Lease and other accounts receivable of the Borrowers has been assigned to the Agent under the Loan Documents for the benefit of the Secured Parties (as defined in the Security Agreement). Upon establishment of the Collection Account under the Depositary Agreement, the Borrower also shall notify and instruct each Lessee that all payments due or to become due under each Portfolio Lease (except for Excepted Payments (which shall be payable to the Persons for whose benefit any such payment is made)) or otherwise in respect of amounts and other receivables of the Borrower are to be made directly to the Collection Account. Prior to the establishment of the Collection Account in accordance with the Depositary Agreement, all Cash Flow and other amounts received by the Borrower or by the Manager on its behalf shall be received and held in trust for the benefit of the Agent and the Secured Parties, such amounts to be remitted to the Depositary for deposit to the Collection Account promptly following establishment of the Collection Account. (b) Any amounts from time to time held in the Collection Account, the Maintenance Reserve Account, the Modification and Improvements Account and the Liquidity Reserve Account may be invested in Cash Equivalents (subject to the provisions of the Depository Agreement), at the Borrower's risk as directed in writing by the Borrower, until the application thereof in accordance with Section 2.07(c) hereof. Upon the occurrence and during the continuance of an Event of Default, the Agent may direct by notice the Depositary to pay to the Agent the amount specified in such notice from the Account(s) specified in such notice, and the Agent shall apply such amounts received from the Depositary to the repayment of the Obligations in accordance with the applicable provisions of Section 2.07(c). (c) Subject to the provisions of the Depository Agreement, the Agent may from time to time in its sole discretion (and, to the extent such application would have the effect of curing a Default under Section 9.01(a) hereof or if the Loans have become or been declared immediately due and payable pursuant to Section 9.02, shall) instruct the Depositary to pay the Agent any amounts from time to time on deposit in the Liquidity Reserve Account; provided that, so long as no Event of Default shall have occurred and then be continuing, (i) the Agent shall have consulted with the Borrower prior to giving such instruction and (ii) if and to the extent determined by the Agent and the Borrower that a reserve is required to be held in the Accounts in respect of anticipated claims by a Lessee for payment of deposit, maintenance reserves or insurance or indemnity payments, such reserve shall be retained in the Accounts. -66- (d) The Agent shall apply any amounts received by it under this Section 6.17 in accordance with Section 2.07(c). SECTION 6.14 MANAGER. The Borrower acknowledges and agrees that, subject to the provisions of the next sentence, while any Obligation remains outstanding, TILC shall remain the Manager. The Borrower, the Manager and the Agent further agree that the Agent (acting at the direction of the Required Lenders), without the consent of any Facility Party, shall have the right to remove the Manager and terminate any Management Document(s) upon the occurrence and continuance of an Event of Default, a Manager Default or a Manager Event of Default and as otherwise provided in the Management Documents. SECTION 6.15 ACTION AFTER AN EVENT OF DEFAULT. Following the occurrence and during the continuance of an Event of Default, each Facility Party shall, in connection with taking any action or exercising any rights or remedies under any Lease Document or Management Document, comply with all applicable written instruction from the Agent (it being understood that such Facility Party will not be considered in breach of this Section 6.15 or any other provision of any Transaction Document by virtue of complying or failing to comply with such written instructions). SECTION 6.16 DEPOSITARY AGREEMENT, ETC. On or prior to July 16, 2002, the Borrower shall deliver to the Agent (i) the Depositary Agreement, duly executed and delivered by the Borrower, the Agent and the Depositary, (ii) a favorable written opinion of counsel to the Depositary covering such matters incident to the transactions contemplated hereby as the Agent or the Required Lenders may reasonably request and (iii) a deposit account control agreement substantially in the form of Exhibit D to the Security Agreement, covering the Discretionary Account and duly executed and delivered by the Borrower and the bank or other financial institution which maintains the Discretionary Account. ARTICLE VII NEGATIVE COVENANTS Each Facility Party agrees that so long as any Lender has any Commitment hereunder or any Obligations or other amount payable hereunder or under any Note or other Loan Document remains unpaid: SECTION 7.01 LIMITATION ON DEBT. The Borrower will not incur, create, assume or permit to exist any Debt, including, without limitation, Derivatives Obligations except: (i) Debt of the Borrower under this Agreement and the other Loan Documents; and (ii) Derivatives Obligations of the Borrower under Derivatives Agreements to the extent entered into after the Closing Date with the express written consent of the Agent to manage interest rate risks and not for speculative purposes. SECTION 7.02 RESTRICTION ON LIENS. The Borrower will not create, incur, assume or permit to exist any Lien on any property or assets now owned or hereafter acquired by it or on any income or rights in respect of any thereof, except Permitted Liens. SECTION 7.03 NATURE OF BUSINESS. The Borrower will not alter the character or conduct of the business conducted by it as of the Closing Date and activities directly related thereto. -67- SECTION 7.04 CONSOLIDATION, MERGER AND DISSOLUTION. The Borrower will not enter into any transaction of merger or consolidation or liquidate, wind up or dissolve itself or its affairs (or suffer any liquidations or dissolutions). SECTION 7.05 ASSET DISPOSITIONS. The Borrower will not make or permit or consent to any Asset Disposition; provided that (i) the Borrower may make or permit or consent to any Asset Disposition by way of Event of Loss, Casualty or Condemnation, so long as the Net Cash Proceeds of such Asset Disposition shall have or upon receipt shall be delivered to the Depositary in accordance with Section 6.06, (ii) the Borrower may make or permit or consent to any Asset Disposition to a Lessee pursuant to a purchase option in the applicable Lease if (A) the consideration therefore is cash or Cash Equivalents; (B) no Collateral Deficiency shall result or shall be increased as a result of such Asset Disposition and (C) the Net Cash Proceeds of such Asset Disposition shall have or simultaneously therewith be delivered to the Depositary for deposit to the Collection Account and (iii) with the prior written consent of the Agent, to be granted or withheld in the Agent's sole discretion, the Borrower may make or permit or consent to any other Asset Disposition (including in connection with a Securitization) if (A) the consideration therefor is cash or Cash Equivalents; (B) no Collateral Deficiency shall exist immediately before or immediately after giving effect to such transaction, (C) no Default or Event of Default shall have occurred and be continuing immediately before or immediately after giving effect to such transaction and (D) the Net Cash Proceeds of such Asset Disposition shall have or simultaneously therewith be delivered to the Depositary for deposit to the Collection Account. Upon consummation of an Asset Disposition permitted under this Section 7.05, the Agent shall (to the extent applicable) deliver to the Borrower, upon the Borrower's request and at the Borrower's expense, such documentation as is reasonably necessary to evidence the release of the Agent's security interests, if any, in the assets being disposed of, including amendments or terminations of Uniform Commercial Code Financing Statements, if any. SECTION 7.06 INVESTMENTS. The Borrower will not hold, make or acquire, any Investment in any Person, except that: (i) the Borrower may invest in cash and Cash Equivalents pursuant to this Agreement and the Depositary Agreement; (ii) the Borrower may acquire and hold receivables owing to it, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; (iii) the Borrower may acquire and own Investments (including Debt obligations) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business; and (iv) the Borrower may purchase Eligible Railcars, Eligible Leases and other related inventory, machinery and equipment in the ordinary course of business. SECTION 7.07 RESTRICTED PAYMENTS, ETC. The Borrower will not declare or pay any Restricted Payments (other than Restricted Payments payable solely in Equity Interests (exclusive of Disqualified Stock) of the Borrower, except that, so long as no Manager Default, Default or Event of Default has occurred and is continuing, the Borrower may make Restricted Payments from time to time to the extent cash is made available to the Borrower pursuant to Section 2.07(c). -68- SECTION 7.08 TRANSACTIONS WITH AFFILIATES. The Borrower will not engage in any transaction or series of transactions with (i) any officer, director, holder of any Equity Interest in or other Affiliate of the Borrower or (ii) any Affiliate of any such officer, director, holder or Affiliate, other than (A) the payment of the Manager's Fees as provided in Section 2.07(c), (B) reimbursement of Reimbursement Amounts and Manager Advances pursuant to the Management Agreement and Section 2.07(c), (C) transfers of assets permitted by Section 7.05, (D) as otherwise expressly provided for or contemplated in any Loan Document and (E) so long as no Default or Event of Default has occurred and is continuing, other transactions (including the purchase of Railcars) which are engaged in by the Borrower in the ordinary course of its business on terms and conditions as favorable to it as would be obtainable by it in a comparable arms'-length transaction with an independent, unrelated third party. SECTION 7.09 FISCAL YEAR; ORGANIZATION AND OTHER DOCUMENTS. The Borrower will not (i) change its fiscal year, (ii) enter into any amendment, modification or waiver to its Organization Documents, (iii) except with the consent of the Agent, amend, modify, extend, renew, cancel or terminate the Asset Contribution and Purchase Agreement, any Bill of Sale, any other Sale Document, any Management Document, any Lease Document or any other Assigned Agreement (as defined in the Security Agreement), waive any default under or breach of any such agreement, compromise or settle any material dispute, claim, suit or legal proceeding relating to any such agreement, sell or assign any such agreement or interest therein, consent to or permit or accept any prepayment of amounts to become due under or in connection with any such agreement, except as expressly provided therein, or take any other action in connection with any such agreement which would impair the value of the interests or rights of the Borrower thereunder or which would impair the interests or rights of the Agent under this Agreement, except that, unless the Agent shall have notified the Borrower upon the occurrence of an Event of Default that this exception is no longer available or if the same would otherwise be adverse in any material respect to the interests of the Agent and the Lenders, the Borrower may (or may permit the Manager to) modify, make adjustments with respect to, extend or renew any Assigned Agreements in the ordinary course of business, and except that Sections 7.13 and 7.14 shall govern the right of the Borrower to waive or permit the waiver of a Lease Default or Lease Event of Default or (iv) enter into any amendment, modification or waiver which is in any manner adverse to the interests of the Agent and the Lenders to any Management Document or the Asset Contribution and Purchase Agreement, in each case as in effect on the Closing Date. The Borrower will promptly provide the Lenders with copies of all amendments to the foregoing documents and instruments as in effect as of the Closing Date. SECTION 7.10 ADDITIONAL NEGATIVE PLEDGES. The Borrower will not enter into, assume or become subject to any agreement prohibiting or otherwise restricting the creation or assumption of any Lien upon its properties or assets, whether now owned or hereafter acquired, or requiring the grant of any security for an obligation if security is given for some other obligation, except pursuant to this Agreement and the other Loan Documents. SECTION 7.11 IMPAIRMENT OF SECURITY INTERESTS. No Facility Party will take or omit to take any action which action or omission might or would materially impair the security interests in favor of the Agent with respect to the Collateral. SECTION 7.12 DEBT SERVICE COVERAGE RATIO. The Debt Service Coverage Ratio as of any Settlement Date will not be less than 1.10 to 1.00. SECTION 7.13 NO AMENDMENTS TO THE LEASE DOCUMENTS. Without prior written consent of the Agent or as expressly provided by the terms of this Agreement, no Facility Party will amend, modify, consent to or permit any change in the terms or otherwise alter or grant any consent or approval under any Lease Document in a manner which would materially and adversely affect the Agent or Lenders. -69- SECTION 7.14 LEASE DEFAULT. Without the prior written consent of the Agent, which consent may be granted or withheld at the Agent's sole discretion, no Facility Party will waive (or permit the waiver of) a Lease Default or Lease Event of Default under a Lease; provided, however, that unless a Default arising from the failure to make a payment when due hereunder or an Event of Default has occurred and is continuing, the Borrower may elect, in its reasonable discretion and upon written notice to the Agent, to give such waiver (or permit such waiver), so long as such waiver is limited to the particular facts giving rise to such Lease Default or Lease Event of Default and does not prejudice the Borrower's (or Agent's, by assignment) rights under the relevant Lease to exercise remedies with respect to any other or future Lease Defaults or Lease Events of Default; provided, further, that any such waiver without the prior written consent of the Agent shall not cause a Lease which otherwise would cease or fail to be an Eligible Lease to be an Eligible Lease. SECTION 7.15 CONSOLIDATION WITH ANY OTHER PERSON. The Borrower will not operate in a manner that would result in substantive consolidation of the "estate" (as defined in Section 541(c) of the Bankruptcy Code) of the Borrower with the "estate" of any other Person, and in such connection the Borrower shall observe all corporate formalities, and maintain records separately and independently from those of any other Person. SECTION 7.16 LIMITATIONS ON EMPLOYEES, SUBSIDIARIES. The Borrower will not employ or maintain any employees other than as required by Applicable Law; provided that officers and directors shall not be deemed to be employees for purposes of this Section 7.16. SECTION 7.17 INDEPENDENCE OF COVENANTS. All covenants contained herein shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that such action or condition would be permitted by an exception to, or otherwise be within the limitations of, another covenant shall not avoid the occurrence of a Default if such action is taken or condition exists. ARTICLE VIII OTHER COVENANTS SECTION 8.01 QUIET ENJOYMENT. The Agent and each Lender hereby covenant and agree that so long as no Lease Event of Default has occurred and is continuing, it shall not take or cause to be taken any action contrary to any Lessee's or any permitted sublessee's right to quiet enjoyment of, and the continuing possession, use and operation of, the relevant Portfolio Railcar during the term of such Lease and in accordance with the terms of such Lease. To the extent reasonably requested by a Lessee in connection with a Funding Date, the Agent and each Lender shall confirm this Section 8.01. ARTICLE IX DEFAULTS SECTION 9.01 EVENTS OF DEFAULT. An Event of Default shall exist upon the occurrence of any of the following specified events or conditions (each an "Event of Default"): (a) Payment. Any default shall occur in the payment when due (whether by scheduled maturity, acceleration or otherwise) of any principal of or any interest on the Loans, or any default shall occur, which default shall continue for 15 days after notice thereof has been given to the Borrower by the Agent, in the payment when due of any fees or other amounts owing hereunder, under any of the other Loan Documents or in connection herewith or therewith. -70- (b) Out of Formula. A Collateral Deficiency shall exist on any two consecutive Settlement Dates (after giving effect to all Loans made pursuant to Section 2.01 and all amounts applied to repay the Loans pursuant to Section 2.07(c) on each such Settlement Date), unless such Collateral Deficiency exists solely as a result of a designation by the Agent of any Designated Ineligible Type of Railcar or Lease or as a result of an exclusion of one or more Eligible Railcars pursuant to clause (ix) of the definition of "Excluded Asset Amount", in which case such Collateral Deficiency shall exist on any three consecutive Settlement Dates (after giving effect to all Loans made pursuant to Section 2.01 and all amounts applied to repay the Loans pursuant to Section 2.07(c) on each such Settlement Date). (c) Representations. Any representation, warranty or statement made or deemed to be made by Trinity or any Facility Party herein, in any of the other Loan Documents or in any Management Document, or in any statement or certificate delivered or required to be delivered pursuant hereto or thereto shall prove untrue in any material respect on the date as of which it was made or deemed to have been made; provided, that with respect to any of the foregoing as to which rescission of transfer is a remedy available under Section 4.11 of the Asset Purchase and Contribution Agreement, no Event of Default shall exist as a result of such event unless and until there has been a failure by TILC (or the Performance Guarantor) to make the rescission payment described in said Section 4.11. (d) Covenants. Trinity or any Facility Party shall: (i) default in the due performance or observance by it of any term, covenant or agreement contained in Sections 6.01(a), 6.01(b), 6.02 (with respect only to such Facility Party's existence), 6.06, 6.09, 6.12, 6.13, 6.14, 6.15, 6.16 or Article VII of this Agreement or in the Performance Guaranty; (ii) default in the due performance or observance by it of any term, covenant or agreement contained in Section 6.01(d) or 6.01(f) and such default shall continue unremedied for a period of 2 Business Days; or (iii) default in the due performance or observance by it of any term, covenant or agreement contained in Article VI or Article VII (other than those referred to in subsections (a), (b), (c), (d)(i), (d)(ii) or (d)(iii) of this Section 9.01) and such default shall continue unremedied for a period of 15 days after the earlier of an executive officer of Trinity or a Facility Party becoming aware of such default or notice thereof given by the Agent; or (iv) default in the due performance or observance by it of any term, covenant or agreement (other than those referred to in subsections (a), (b), (c) or (d)(i), (d)(ii), or (d)(iii) of this Section 9.01) contained in this Agreement and such default shall continue unremedied for a period of 30 days after the earlier of an executive officer of a Facility Party becoming aware of such default or notice thereof given by the Agent. (e) Loan Documents. Except pursuant to the terms thereof, any Loan Document shall (i) fail to be in full force and effect or Trinity or any Facility Party shall so assert or (ii) fail to give the Agent and/or the Lenders the security interests, liens, rights, powers and privileges purported to be created thereby. (f) Cross-Default. (i) Either Trinity or the Manager (A) fails to make payment when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), regardless of amount, in respect of any Debt or Guaranty Obligation (in either case, other than in -71- respect of Derivatives Agreements) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $10,000,000, (B) fails to perform or observe any other condition or covenant, or any other event shall occur or condition shall exist, under any agreement or instrument relating to any such Debt or Guaranty Obligation, if the effect of such failure, event or condition is to cause, or to permit the holder or holders or beneficiary or beneficiaries of such Debt or Guaranty Obligation (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, such Debt to be declared to be due and payable prior to its stated maturity, or such Guaranty Obligation to become payable, or cash collateral in respect thereof to be demanded or (C) shall be required by the terms of such Debt or Guaranty Obligation to offer to prepay or repurchase such Debt or the primary Debt underlying such Guaranty Obligation (or any portion thereof) prior to the stated maturity thereof. (ii) There occurs under any Derivatives Agreement an Early Termination Date (as defined in such Derivatives Agreement) resulting from (A) any event of default under such Derivatives Agreement as to which the Borrower is the Defaulting Party (as defined in such Derivatives Agreement) or (B) any Termination Event (as so defined) as to which the Borrower is an Affected Party (as so defined), and, in either event, the Derivatives Termination Value owed by the Borrower as a result thereof is greater than $10,000,000. (g) Insolvency Events. (i) Trinity or any Facility Party shall 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 shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing or (ii) an involuntary case or other proceeding shall be commenced against Trinity or any Facility Party 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, 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 any order for relief shall be entered against Trinity or any Facility Party under the federal bankruptcy laws as now or hereafter in effect. (h) Judgments. One or more judgments, orders, decrees or arbitration awards is entered against Trinity or any Facility Party involving in the aggregate a liability (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage), as to any single or related series of transactions, incidents or conditions, of $100,000 (in the case of the Borrower) or $10,000,000 (in the case of Trinity or any other Facility Party) or more, and the same shall remain undischarged, unvacated and unstayed pending appeal for a period of 30 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 Trinity, the Manager or the Borrower to enforce any such judgment or Borrower shall enter into any agreement to settle or compromise any pending or threatened litigation, as to any single or related series of claims, involving payment of $100,000 or more by the Borrower, or any non-monetary judgment, order or decree is entered against Trinity or any Facility Party which has or would reasonably be expected to have a Material Adverse Effect, and there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect. -72- (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of the Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of $0, in the case of the Borrower, or $10,000,000, in the case of any other ERISA Affiliate. (j) Impairment of Collateral. Any security interest purported to be created by any Collateral Document shall cease to be, or shall be asserted by Trinity or any Facility Party not to be, a valid, perfected, first-priority (except as otherwise expressly provided in such Collateral Document) security interest in the securities, assets or properties covered thereby. (k) Ownership. There shall occur a Borrower Change of Control. SECTION 9.02 ACCELERATION; REMEDIES. Upon the occurrence of an Event of Default, and at any time thereafter unless and until such Event of Default has been waived in writing by the Required Lenders (or all of the Lenders as may be required pursuant to Section 11.03), the Agent shall, upon the request and direction of the Required Lenders, by written notice to the Borrower, take any of the following actions without prejudice to the rights of the Agent or any Lender to enforce its claims against Trinity or the Facility Parties except as otherwise specifically provided for herein: (a) Termination of Commitments. Declare the Commitments terminated whereupon the Commitments shall be immediately terminated. (b) Acceleration of Loans. Declare the unpaid principal of and any accrued interest in respect of all Loans and any and all other indebtedness or obligations of any and every kind owing by the Borrower to any of the Lenders hereunder to be due whereupon the same shall be immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower. (c) Enforcement of Rights. Enforce any and all rights and interests created and existing under the Loan Documents, including, without limitation, all rights and remedies existing under the Collateral Documents and all rights of set-off. (d) Deliver the Notices of Lease Assignment to the applicable Lessees with respect to any or all of the Portfolio Leases. Notwithstanding the foregoing, if an Event of Default specified in Section 9.01(g) shall occur, then the Commitments shall automatically terminate and all Loans, all accrued interest in respect thereof and all accrued and unpaid fees and other indebtedness or obligations owing to the Lenders hereunder and under the other Loan Documents shall immediately become due and payable without the giving of any notice or other action by the Agent or the Lenders, which notice or other action is expressly waived by the Borrower. Notwithstanding the fact that enforcement powers reside primarily with the Agent, each Lender has, to the extent permitted by law, a separate right of payment and shall be considered a separate "creditor" holding a separate "claim" within the meaning of Section 101(5) of the Bankruptcy Code or any other insolvency statute. -73- In case any one or more of the covenants and/or agreements set forth in this Agreement or any other Loan Document shall have been breached by any Facility Party, then the Agent may proceed to protect and enforce the Lenders' rights either by suit in equity and/or by action at law, including an action for damages as a result of any such breach and/or an action for specific performance of any such covenant or agreement contained in this Agreement or such other Loan Document. Without limitation of the foregoing, the Borrower agrees that failure to comply with any of the covenants contained herein may cause irreparable harm and that specific performance shall be available as a remedy in the event of any breach thereof. The Agent acting pursuant to this paragraph shall be indemnified by the Borrower against all liability, loss or damage, together with all reasonable costs and expenses related thereto (including reasonable legal and accounting fees and expenses) in accordance with Section 11.05. In the event a required rescission payment is received in the Collection Account, then the Agent agrees to release to the Borrower, free and clear of the lien of the Security Agreement, the relevant Lease(s) and Railcar(s) the subject of such rescission payment, to enable the Borrower to comply with its obligation to return such assets to TILC as described in Section 4.11 of the Asset Purchase and Contribution Agreement. ARTICLE X AGENCY PROVISIONS SECTION 10.01 APPOINTMENT; AUTHORIZATION. (a) Appointment. Each Lender hereby designates and appoints Credit Suisse First Boston, New York Branch, as Agent of such Lender to act as specified herein and in the other Loan Documents, and each such Lender hereby authorizes the Agent, as the agent for such Lender, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated by the terms hereof and of the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere herein and in the other Loan Documents, the Agent shall not have any duties or responsibilities, except those expressly set forth herein and therein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any of the other Loan Documents, or shall otherwise exist against the Agent. In performing its functions and duties under this Agreement and the other Loan Documents, the Agent shall act solely as an agent of the Lenders and does not assume and shall not be deemed to have assumed any obligation or relationship of agency or trust with or for any Facility Party. Without limiting the generality of the foregoing two sentences, the use of the term "agent" herein and in the other Loan Documents with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any Applicable Law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. The provisions of this Article X (other than Section 10.09) are solely for the benefit of the Agent and the Lenders and none of the Facility Parties shall have any rights as a third party beneficiary of the provisions hereof (other than Section 10.09). (b) Release of Collateral. The Lenders irrevocably authorize the Agent, at the Agent's option and in its discretion, to release any security interest in or Lien on any Collateral granted to or held by the Agent (i) upon termination of this Agreement and the other Loan Documents, termination of the Commitments and payment in full of all Obligations, including all fees and indemnified costs and expenses that are payable pursuant to the terms of the Loan Documents, (ii) if such Collateral constitutes property sold or to be sold or disposed of as part of or in connection with any disposition permitted pursuant to the terms of this Agreement or (iii) if approved by the Required Lenders or Lenders, as applicable, pursuant to the terms of Section 11.03. Upon the request of the Agent, the Lenders will -74- confirm in writing the Agent's authority to release particular types or items of Collateral pursuant to this Section 10.01(b). SECTION 10.02 DELEGATION OF DUTIES. The Agent may execute any of its duties hereunder or under the other Loan Documents by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it in the absence of gross negligence or willful misconduct. SECTION 10.03 EXCULPATORY PROVISIONS. Neither the Agent nor any of its directors, officers, employees or agents shall be (i) liable for any action lawfully taken or omitted to be taken by any of them under or in connection herewith or in connection with any of the other Loan Documents or the transactions contemplated hereby or thereby (except for its own gross negligence or willful misconduct in connection with its duties expressly set forth herein) or (ii) responsible in any manner to any of the Lenders or participants for any recitals, statements, representations or warranties made by any of the Facility Parties contained herein or in any of the other Loan Documents or in any certificate, report, document, financial statement or other written or oral statement referred to or provided for in, or received by the Agent under or in connection herewith or in connection with the other Loan Documents, or enforceability or sufficiency therefor of any of the other Loan Documents, or for any failure of any Facility Party to perform its obligations hereunder or thereunder or be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained herein or therein or as to the use of the proceeds of the Loans or of the existence or possible existence of any Default or Event of Default or to inspect the properties, books or records of the Facility Parties. SECTION 10.04 RELIANCE ON COMMUNICATIONS. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex, teletype or e-mail message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to any of the Facility Parties, independent accountants and other experts selected by the Agent in the absence of gross negligence or willful misconduct). The Agent may deem and treat each Lender as the owner of its interests hereunder for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Agent in accordance with Section 11.06(b). The Agent shall be fully justified in failing or refusing to take any action under this Agreement or under any of the other Loan Documents unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder or under any of the other Loan Documents in accordance with a request of the Required Lenders (or to the extent specifically provided in Section 11.03, all the Lenders) and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders (including their successors and assigns). Where this Agreement expressly permits or prohibits an action unless the Required Lenders otherwise determine, the Agent shall, and in all other instances the Agent may, but shall not be required to, initiate any solicitation for the consent or vote of the Lenders. SECTION 10.05 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default, Manager Event of Default or Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Agent for the accounts of the Lenders, unless the Agent has received notice from a Lender, the Manager or the Borrower referring to this Agreement or the Management Agreement, as applicable, describing such -75- Default, the Manager or Event of Default and stating that such notice is a "notice of default". If the Agent receives such a notice, the Agent shall give prompt notice thereof to the Lenders. The Agent shall take such action with respect to such Default, Manager Event of Default or Event of Default as shall be reasonably directed by the Required Lenders; provided, however, that unless and until the Agent has received any such direction, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default, Manager Event of Default or Event of Default or it shall deem advisable or in the best interest of the Lenders. SECTION 10.06 CREDIT DECISION; DISCLOSURE OF INFORMATION BY AGENT. Each Lender expressly acknowledges that the Agent has not made any representations or warranties to it and that no act by the Agent hereinafter taken, including any consent to and acceptance of any assignment or review of the affairs of any Facility Party or any Affiliate thereof, shall be deemed to constitute any representation or warranty by the Agent to any Lender as to any matter, including whether the Agent has disclosed material information in its possession. Each Lender represents to the Agent that it has, independently and without reliance upon the Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, assets, operations, property, financial and other condition, prospects and creditworthiness of the Facility Parties, and all requirements of Applicable Law, and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the 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 analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, assets, operations, property, financial and other conditions, prospects and creditworthiness of the Borrower and the other Facility Parties. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Agent hereunder, the Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, assets, property, financial or other conditions, prospects or creditworthiness of any Facility Party or their respective Affiliates which may come into the possession of the Agent. SECTION 10.07 INDEMNIFICATION. Whether or not the transactions contemplated hereby are consummated, the Lenders agree, severally but not jointly, to indemnify the Agent (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Commitments (or if the Commitments have expired or been terminated, in accordance with the respective principal amounts of outstanding Loans of the Lenders), from and against any and all Indemnified Liabilities which may at any time (including without limitation at any time following payment in full of the Obligations) be imposed on, incurred by or asserted against the Agent in its capacity as such in any way relating to or arising out of this Agreement or the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment to the Agent of any portion of such Indemnified Liabilities resulting from such Person's gross negligence or willful misconduct; provided, however, that no action taken in accordance with the directions of the Required Lenders shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section. If any indemnity furnished to the Agent for any purpose shall, in the opinion of the Agent, be insufficient or become impaired, the Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished. Without limitation of the foregoing, each Lender shall reimburse the Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including fees and disbursements of counsel) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or -76- responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that the Agent is not reimbursed for such expenses by or on behalf of the Borrower. The agreements in this Section shall survive the payment of the Obligations and all other obligations and amounts payable hereunder and under the other Loan Documents. SECTION 10.08 AGENT IN ITS INDIVIDUAL CAPACITY. The Agent and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire Equity Interests in, and generally engage in any kind of banking, trust, financial advisory, underwriting and other business with the Borrower or any other Facility Party as though the Agent were not the Agent hereunder or under another Loan Document. The Lenders acknowledge that, pursuant to any such activities, the Agent or its Affiliates may receive information regarding any Facility Party or its Affiliates (including information that may be subject to confidentiality obligations in favor of such Facility Party or such Affiliate) and acknowledge that the Agent shall not be under any obligation to provide such information to them. With respect to the Loans made by and all obligations owing to it, the Agent shall have the same rights and powers under this Agreement as any Lender and may exercise the same as though it was not the Agent, and the terms "Lender" and "Lenders" shall include the Agent in its individual capacity. SECTION 10.09 SUCCESSOR AGENTS. The Agent may, at any time, resign upon 30 days' written notice to the Lenders. If the Agent resigns under a Loan Document, the Required Lenders shall appoint from among the Lenders a successor Agent, which successor Agent, if other than a Committed Lender, shall be consented to by the Borrower at all times other than during the existence of an Event of Default (which consent of the Borrower shall not be unreasonably withheld or delayed). If no successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment prior to the effective date of the resignation of the resigning Agent, then the resigning Agent shall have the right, after consulting with the Lenders and the Borrower, to appoint a successor Agent; provided such successor is a Lender hereunder or a commercial bank organized under the laws of the United States and has a combined capital and surplus of at least $500,000,000. If no successor Agent is appointed prior to the effective date of the resignation of the resigning Agent, the resigning Agent may appoint, after consulting with the Lenders and the Borrower, a successor Agent from among the Lenders. Upon the acceptance of any appointment as an Agent hereunder by a successor, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations as an Agent, as appropriate, under this Agreement and the other Loan Documents and the provisions of this Section 10.09 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was an Agent under this Agreement. If no successor Agent has accepted appointment as Agent within 60 days after the retiring Agent's giving notice of resignation, the retiring Agent's resignation shall nevertheless become effective and the Lenders shall perform all duties of the Agent hereunder until such time, if any, as the Required Lenders appoint a successor Agent as provided for above. SECTION 10.10 REQUEST FOR DOCUMENTS. The Agent shall from time to time upon reasonable request therefor furnish each Lender with copies of Funding Packages, Railcar Documentation, Lease Documents and/or Loan Documents (to the extent such Funding Packages, Railcar Documentation, Lease Documents and/or Loan Documents are provided by the Borrower or other third parties, in the form and to the extent provided to the Agent by the Borrower or such third parties). -77- ARTICLE XI MISCELLANEOUS SECTION 11.01 NOTICES AND OTHER COMMUNICATIONS. (a) General. Unless otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including by facsimile transmission) and mailed, faxed or delivered, to the address, facsimile number or (subject to subsection (c) below) electronic mail address specified for notices as set forth on Schedule 11.01 or at such other address as shall be designated by such party in a notice to the Borrower and the Agent. All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the intended recipient and (ii) (A) if delivered by hand or by courier, when signed for by the intended recipient; (B) if delivered by mail, four Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed by telephone; and (D) if delivered by electronic mail (which form of delivery is subject to the provisions of subsection (c) below), when delivered; provided, however, that notices and other communications to the Agent pursuant to Article II shall not be effective until actually received by such Person. Any notice or other communication permitted to be given, made or confirmed by telephone hereunder shall be given, made or confirmed by means of a telephone call to the intended recipient at the number specified on Schedule 11.01, it being understood and agreed that a voicemail message shall in no event be effective as a notice, communication or confirmation hereunder. (b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be transmitted and/or signed by facsimile. The effectiveness of any such documents and signatures shall, subject to requirements of Applicable Law, have the same force and effect as manually-signed originals and shall be binding on all Facility Parties, the Agent and the Lenders. The Agent may also require that any such documents and signatures be confirmed by a manually-signed original thereof; provided, however, that the failure to request or deliver the same shall not limit the effectiveness of any facsimile document or signature. (c) Limited Use of Electronic Mail. Electronic mail and internet and intranet websites may be used only to distribute routine communications, such as financial statements and other information, and to distribute Loan Documents for execution by the parties thereto, and may not be used for any other purpose. (d) Reliance by Agent and Lenders. The Agent and the Lenders shall be entitled to rely and act upon any notices purportedly given by or on behalf of the Borrower or any other Facility Party even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify the Agent and each Lender from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower. All telephonic notices to and other communications with the Agent may be recorded by the Agent, and each of the parties hereto hereby consents to such recording. SECTION 11.02 NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part of the Agent or any Lender in exercising any right, power or privilege hereunder or under any other Loan Document and no course of dealing between the Agent or any Lender and any of the Facility Parties shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Loan Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights and remedies provided -78- herein are cumulative and not exclusive of any rights or remedies which the Agent or any Lender would otherwise have. No notice to or demand on any Facility Party in any case shall entitle the Facility Parties to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Agent or the Lenders to any other or further action in any circumstances without notice or demand. SECTION 11.03 AMENDMENTS, WAIVERS AND CONSENTS. Neither this Agreement nor any other Loan Document nor any of the terms hereof or thereof may be amended, changed, waived, discharged or terminated except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Facility Parties, the Agent, and the Required Lenders or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Borrower, any other Facility Parties party thereto and the Agent; provided that the foregoing shall not restrict the ability of the Required Lenders to waive any Event of Default prior to the time the Agent shall have declared, or the Required Lenders shall have requested the Agent to declare, the Loans immediately due and payable pursuant to Article IX; provided, however, that: (i) no such amendment, change, waiver, discharge or termination shall, without the consent of each Lender affected thereby: (A) extend the Final Maturity Date or extend or waive any Interim Maturity Date or any payment of the Loans due thereon; provided that this clause (A) shall not restrict the ability of the Required Lenders to waive any Event of Default (other than an Event of Default the waiver of which would effectively result in any such extension or waiver), prior to the time the Agent shall have declared, or the Required Lenders shall have requested the Agent to declare, the Loans immediately due and payable pursuant to Article IX; (B) reduce the rate, or extend the time of payment, of interest (other than as a result of waiving the applicability of any post-default increase in interest rates) thereon or fees hereunder; (C) reduce or waive the principal amount of any Loan; (D) increase the Commitment of a Lender over the amount thereof in effect (it being understood and agreed that a waiver of any Default, Manager Default, Manager Event of Default or Event of Default or a mandatory reduction in the Commitments shall not constitute a change in the terms of any Commitment of any Lender); (E) release all or substantially all of the Collateral securing the Credit Obligations hereunder (provided that the Agent may, without consent from any other Lender, release any Collateral that is sold or transferred by the Borrower in compliance with Section 7.05, or released in compliance with Section 10.01(b)); (F) release any Facility Party from its respective obligations under the Loan Documents and/or the Management Documents; (G) amend, modify or waive any provision of this Section 11.03 or reduce any percentage specified in, or otherwise modify, the definition of Required Lenders; -79- (H) amend or modify or, if applicable, waive the effects of the definition of "Advance Rate", "Excluded Assets Amount" and/or "Borrowing Base"; or (I) consent to the assignment or transfer by the Borrower or the Manager of any of its rights and obligations under (or in respect of) the Loan Documents and the Management Agreement, except as permitted thereby. (ii) no provision of Article X may be amended without the consent of the Agent. Notwithstanding the fact that the consent of all the Lenders is required in certain circumstances as set forth above, (i) each Lender is entitled to vote as such Lender sees fit on any bankruptcy reorganization plan that affects the Loans, and each Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy Code supersede the unanimous consent provisions set forth herein and (ii) the Required Lenders may consent to allow the Borrower to use cash collateral in the context of a bankruptcy or insolvency proceeding. The various requirements of this Section 11.03 are cumulative. Each Lender and each holder of a Note shall be bound by any waiver, amendment or modification authorized by this Section 11.03 regardless of whether its Note shall have been marked to make reference therein, and any consent by any Lender or holder of a Note pursuant to this Section 11.03 shall bind any Person subsequently acquiring a Note from it, whether or not such Note shall have been so marked. SECTION 11.04 EXPENSES. The Borrower shall pay promptly on demand, but in any event by the next Settlement Date following demand, all out-of-pocket expenses (including, without limitation, all reasonable attorneys' fees and expenses of the Lenders) incurred by the Agent (and its Affiliates) and the Committed Lenders: (i) in connection with the preparation, execution, delivery, administration, modification and amendment of the Loan Documents including, without limitation, (A) due diligence, collateral review, syndication, transportation, computer, duplication, audit, insurance, consultant, search, filing and recording fees and expenses and (B) the reasonable fees and expenses of counsel for the Agent with respect thereto, with respect to advising the Agent as to its rights and responsibilities, or the perfection, protection or preservation of rights and interests, under the Loan Documents and Lease Documents, (ii) in connection with wire transfers to be made by the Agent in connection with the distribution of proceeds under this Agreement and (iii) in connection with any amendment, refinancing, modification, supplement (or, if related to a request by any Facility Party or any Lessee, interpretation), or waiver under any of the Notes or other Loan Documents and Lease Documents whether or not such amendment, refinancing, modification, supplement, interpretation or waiver is obtained or becomes effective, and in connection with the consideration of any potential, actual or proposed restructuring or workout of the transactions contemplated hereby or by the other Loan Documents. The Borrower shall pay promptly on demand, but in any event by the next Settlement Date following demand, (i) all reasonable filing fees and attorneys' fees and expenses incurred by the Agent and the Lenders and all reasonable fees and expenses of special STB or other collateral or regulatory counsel (and other local counsel reasonably engaged by the Agent), as the case may be, in connection with the preparation and review of the Collateral Documents and the other Loan Documents and Lease Documents from time to time entered into or reviewed pursuant to this Agreement and all documents related thereto, the search of railcar conveyance and Lien records, the recordation of documents with the STB or other applicable Governmental Authority, inspection and appraisal fees and the making of the Loans hereunder, whether or not any Funding Date or other transaction contemplated hereby closes and (ii) all taxes which the Agent or any Secured Party (as defined in the Security -80- Agreement) may be required to pay by reason of the security interests granted in the Collateral (including any applicable transfer taxes) or to free any of the Collateral from the lien thereof. In addition, the Borrower shall pay promptly on demand, but in any event by the next Settlement Date following demand, all reasonable out-of-pocket expenses (including, without limitation, reasonable attorneys' fees and expenses and fees and expenses of any expert witnesses) incurred by the Agent and the Lenders in connection with the enforcement and protection of the rights of the Agent and the Lenders under any of the Loan Documents and any amendments thereto and waivers thereof and any Manager Event of Default, Default or Event of Default, including without limitation, the performance by the Agent or the Lenders of any act any Facility Party has covenanted to do under the Loan Documents and/or the Management Documents to the extent such Facility Party fails to comply with any such covenant. The Borrower shall pay all fees and expenses in connection with the Depositary Agreement including, without limitation, all fees (including any annual fee payable to the Depositary pursuant to the Depositary Agreement), expenses and any indemnity payments to the Depositary and all fees and expenses in creating, maintaining and administrating the Accounts. Notwithstanding the foregoing, in the event that the Borrower does not pay any amounts described in this Section 11.04 when due, TILC shall be liable for and shall pay such amounts on demand of the party entitled thereto. SECTION 11.05 INDEMNIFICATION. Whether or not the transactions contemplated hereby are consummated, the Facility Parties, jointly and severally, agree to indemnify, save and hold harmless the Agent, each Lender, each other Protected Party and their respective Affiliates, directors, officers, employees, counsel, agents and attorneys-in-fact (collectively the "Indemnitees") from and against (and without duplication of amounts payable or the provisions which relate to such payment under the other provisions of the Loan Documents): (i) any and all claims, demands, actions or causes of action that are asserted against any Indemnitee by any Person (other than the Agent or any Lender) relating directly or indirectly to a claim, demand, action or cause of action that such Person asserts or may assert against Trinity or any Facility Party, any Affiliate of Trinity or any Facility Party or any of their respective officers or directors; (ii) any and all claims, demands, actions or causes of action that may at any time (including at any time following repayment of the Obligations and the resignation or removal of the Agent or the replacement of any Lender) be asserted or imposed against any Indemnitee, arising out of or relating to, the Loan Documents, any predecessor Loan Documents, the Commitments, the use of or contemplated use of the proceeds of any Loan, or the relationship of Trinity, any Facility Party, the Agent and the Lenders under this Agreement or any other Loan Document; (iii) any administrative or investigative proceeding by any Governmental Authority arising out of or related to a claim, demand, action or cause of action described in clause (i) or (ii) above; (iv) any Loan Document, Lease Document, other Transaction Document or any document contemplated hereby or thereby and payments made pursuant hereto or thereto or any transaction contemplated hereby or thereby or the exercise of rights and remedies hereunder or thereunder, any breach by Trinity or any Facility Party of any Transaction Document or Lease Document or a Lessee of any Lease Document, (v) any Railcar, any Part or the Borrower's acquisition or ownership of, or the selection, design, financing, lease, control, operation, condition, location, storage, modification, repair, sale, use, maintenance, possession, registration, delivery, nondelivery, transportation, transfer or disposition of, any Railcar or Part; (vi) any liability arising under or in respect of any Environmental Law, in each case relating to any Railcar or the use, operation or ownership thereof, whether by Trinity or any Facility Party, any Lessee or any other Person; (vii) any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, suits, judgments, costs and expenses of any kind, including, without limitation, the reasonable fees and disbursements of counsel, which may be incurred by, imposed on or asserted against such Indemnitee in -81- connection with any investigation or administrative or judicial proceeding (whether or not such Indemnitee) shall be designated a party thereto) brought or threatened relating to or arising out of any Collateral Document or in any other way connected with the enforcement of any of the terms of, or the presentation of any rights under, or in any way relating to or arising out of the manufacture, ownership, ordering, purchasing, delivery, control, acceptance, lease, financing, possession, operation, condition, sale, return or other disposition or use of the Collateral (including, without limitation, intent or other defects, whether or not discoverable) the violation of any laws of any country, state or other governmental body or unit, or any tort (including, without limitation, any claims, arising or imposed under the doctrine of strict liability, or for or on account of injury to or the death of any Person (including any Indemnities), or property damage or contract claim; and (viii) any and all liabilities (including liabilities under indemnities), losses, costs or expenses (including fees and disbursements of counsel) that any Indemnitee suffers or incurs as a result of the assertion of any foregoing claim, demand, action, cause of action or proceeding, or as a result of the preparation of any defense in connection with any foregoing claim, demand, action, cause of action or proceeding, in all cases, and whether or not an Indemnitee is a party to such claim, demand, action, cause of action, or Proceeding (all the foregoing, collectively; the "Indemnified Liabilities"). THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY OR CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY INDEMNITEE; provided that no Indemnitee shall be entitled to indemnification for any claim caused by its own gross negligence or willful misconduct and provided further, that no Indemnitee shall be entitled to indemnification for any claim arising solely out of (i) the bankruptcy, insolvency or other financial inability of one or more Lessees to make payments under a related Lease or (ii) the decline in market value of a Portfolio Railcar, to the extent not attributable to the failure of a Facility Party to perform an obligation with respect to such Portfolio Railcar under a Transaction Document. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 11.05 applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by Trinity, any Facility Party, their respective directors, shareholders or creditors or an Indemnitee or any other Person or any Indemnitee is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. Each Facility Party agrees not to assert any claim against the Agent, any Lender, any other Creditor, any of their Affiliates or any of their respective directors, officers, employees, attorneys, agents and advisers, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to the Loan Documents, any of the transactions contemplated herein or therein or the actual or proposed use of the proceeds of the Loans. Without prejudice to the survival of any other agreement of the Facility Parties hereunder and under the other Loan Documents, the agreements and obligations of the Facility Parties contained in this Section 11.05 shall survive the repayment of the Loans and other obligations under the Loan Documents and the termination of the Commitments hereunder. The Facility Parties shall, no later than 20 days following demand, reimburse any Indemnitee for any Indemnified Liability referred to above or, upon request from any Indemnitee, shall pay such amounts directly. Any payment made to or on behalf of any Indemnitee pursuant to this Section 11.05 shall be adjusted to such amount as will, after taking into account all Taxes imposed with respect to the accrual or receipt of such payment (as the same may be increased pursuant to this sentence), equal the amount of the payment. To the extent that any Facility Party in fact indemnifies any Indemnitee pursuant to the provisions of this Section 11.05 (other than in respect of Taxes), such Facility Party shall be subrogated to such Indemnitee's rights in the affected transaction and shall have a right to determine the settlement of claims therein. If a claim of the type described above is made against an Indemnitee and such Indemnitee has notice thereof, such Indemnitee shall promptly, upon receiving such notice, give notice of such claim -82- to the Borrower; provided that the failure to provide such notice shall not release any Facility Party from any of its obligations hereunder except if and to the extent that such failure results in an increase in any Facility Party's indemnification obligations hereunder. The Facility Parties shall be entitled, in each case at their sole cost and expense, acting through counsel reasonably acceptable to the relevant Indemnitee: (i) in any judicial or administrative proceeding that involves solely a claim of the type described above, to assume responsibility for and control thereof, (ii) in any judicial or administrative proceeding involving a claim of the type described above and other claims related or unrelated to the transactions contemplated by this Agreement or any other Loan Document (other than with respect to Taxes), to assume responsibility for and control of such claim, to the extent that the same may be and is severed from such other claims (and such Indemnitee shall use its best efforts to obtain such severance), and (iii) in any other case, to be consulted by such Indemnitee with respect to judicial proceedings subject to the control of such Indemnitee. Notwithstanding anything in the foregoing to the contrary, no Facility Party shall be entitled to assume responsibility for and control of any such judicial or administrative proceedings: (A) while an Event of Default shall have occurred and be continuing; (B) if such proceedings will involve any risk of criminal liability or a material risk of the sale, forfeiture or loss of any part of the Collateral; or (C) to the extent that the Indemnitee has defenses available to it which are not available to Trinity or any Facility Party and allowing Trinity and/or such Facility Party to assert such defenses will be prejudicial to the interests of such Indemnitee; provided that the limitation on the Facility Parties' ability to control such judicial or administrative proceeding shall apply only to those aspects of such proceeding which address issues with respect to which such defenses are available. The relevant Indemnitee shall supply the Borrower with such information reasonably requested by the Borrower as is necessary or advisable for the Borrower and/or any other Facility Party to control or participate in any proceeding to the extent permitted by this Section 11.05. Such Indemnitee shall not enter into a settlement or other compromise with respect to any covered claim without the prior written consent of the Borrower, which consent shall not be unreasonably withheld or delayed, unless such Indemnitee waives its right to be protected with respect to such covered claim. SECTION 11.06 SUCCESSORS AND ASSIGNS. (a) Generally. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto; provided that no Facility Party may assign or transfer any of its interests and obligations without the prior written consent of either the Required Lenders or the Lenders, as the terms set forth in Section 11.03 may require; (b) Assignments. Any Lender may assign all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Loans and its Commitments); provided, however, that (i) each such assignment shall be to an Eligible Assignee who, unless otherwise consented to by the Borrower, is not a Competitor of the Borrower; (ii) except in the case of an assignment to another Lender, an Affiliate of an existing Lender or any Approved Fund (A) the aggregate amount of the Commitment of the assigning Lender subject to such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Agent) shall not, without the consent of the Borrower and the Agent, be less than $5,000,000 and an integral multiple of $1,000,000 (or such other amount as shall equal the assigning Lender's entire Commitment) and (B) after giving effect to such assignment, unless otherwise consented to by the Borrower, the aggregate amount of the Commitment and/or Loans of the assigning Lender shall not be less than -83- $2,500,000 (unless the assigning Lender shall have assigned its entire Commitment and/or the entire balance of the outstanding Loans); (iii) the parties to such assignment shall execute and deliver to the Agent for its acceptance an Assignment and Acceptance in the form of Exhibit C, together with any Note subject to such assignment and a processing fee of $3,500, payable or agreed between the assigning Lender and the assignee. (c) Assignment and Acceptance. By executing and delivering an Assignment and Acceptance in accordance with this Section 11.06, the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows: (i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim and the assignee warrants that it is an Eligible Assignee; (ii) except as set forth in clause (i) above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement, any of the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any of the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto or the financial condition of the Facility Parties or the performance or observance by any Facility Party of any of its obligations under this Agreement, any of the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (iii) such assignee represents and warrants that it is legally authorized to enter into such assignment agreement; (iv) such assignee confirms that it has received a copy of this Agreement, the other Loan Documents, together with copies of the most recent financial statements delivered pursuant to Section 6.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (v) such assignee will independently and without reliance upon the Agent, such assigning Lender 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 this Agreement and the other Loan Documents; (vi) such assignee appoints and authorizes the Agent to take such action on its behalf and to exercise such powers under this Agreement or any other Loan Document as are delegated to the Agent by the terms hereof or thereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Agreement and the other Loan Documents are required to be performed by it as a Lender. Upon execution, delivery, and acceptance of such Assignment and Acceptance, the assignee thereunder shall be a party hereto and, to the extent of such assignment, have the obligations, rights, and benefits of a Lender hereunder and the assigning Lender shall, to the extent of such assignment, relinquish its rights and be released from its obligations under this Agreement. Upon the consummation of any assignment pursuant to this Section 11.06(c), the assignor, the Agent and the Facility Parties shall make appropriate arrangements so that, if required, new Notes are issued to the assignor and the assignee. If the assignee is not a United States person under Section 7701(a)(30) of the Code, it shall deliver to the Borrower and the Agent certification as to exemption from deduction or withholding of Taxes in accordance with Section 3.01. (d) Register. The Borrower hereby designates the Agent to serve as the Borrower's agent, solely for purposes of this subsection 11.06(d), to (i) maintain a register (the "Register") on which the Agent will record the Commitments from time to time of each Lender, the Loans made by each Lender and each repayment in respect of the principal amount of the Loans of each Lender and to (ii) retain a copy of each Assignment and Acceptance delivered to the Agent pursuant to this Section. Failure to make any such recordation, or any error in such recordation, shall not affect the Borrower's obligation in respect of such Loans. The entries in the Register shall be conclusive, in the absence of manifest error, -84- and the Borrower, the Agent and the Lenders shall treat each Person in whose name a Loan and the Note evidencing the same is registered as the owner thereof for all purposes of this Agreement, notwithstanding notice or any provision herein to the contrary. With respect to any Lender, the assignment or other transfer of the Commitments of such Lender and the rights to the principal of, and interest on, any Loan made and any Note issued pursuant to this Agreement shall not be effective until such assignment or other transfer is recorded on the Register and, except to the extent provided in this subsection 11.06(d), otherwise complies with Section 11.06, and prior to such recordation all amounts owing to the transferring Lender with respect to such Commitments, Loans and Notes shall remain owing to the transferring Lender. The registration of assignment or other transfer of all or part of any Commitments, Loans and Notes for a Lender shall be recorded by the Agent on the Register only upon the acceptance by the Agent of a properly executed and delivered Assignment and Acceptance and payment of the administrative fee referred to in Section 11.06(b)(iii). The Register shall be available at the offices where kept by the Agent for inspection by the Borrower and any Lender at any reasonable time upon reasonable prior notice to the Agent. (e) Participations. Each Lender may, without the consent of the Borrower or the Agent, sell participations to one or more Persons in all or a portion of its rights, obligations or rights and obligations under this Agreement (including all or a portion of its Commitment or the Loans owing to it and any Notes held by it); provided, however, 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, (iii) the participant shall be entitled to the benefit of right of setoff contained in Section 11.08 and the yield protection provisions contained in Sections 3.01, 3.03 and 3.04 to the same extent that the Lender from which such participant acquired its participation would be entitled to the benefits of such yield protections; provided that the Borrower shall not be required to reimburse any participant pursuant to Sections 3.01, 3.03 or 3.04 in an amount which exceeds the amount that would have been payable thereunder to such Lender had such Lender not sold such participation and (iv) the Facility Parties, the Agent 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, and such Lender shall retain the sole right to enforce the obligations of the Facility Parties relating to the Obligations owing to such Lender and to approve any amendment, modification or waiver of any provision of this Agreement (other than amendments, modifications or waivers decreasing the amount of principal of or the rate at which interest is payable on such Loans or Notes, extending any scheduled principal payment date or date fixed for the payment of interest on such Loans or Notes or extending its Commitment). (f) Other Assignments. Any Lender may at any time (i) assign all or any portion of its rights under this Agreement and any Notes to a Federal Reserve Bank, (ii) pledge or assign a security interest in all or any portion of its interest and rights under this Agreement (including all or any portion of its Notes, if any) to secure obligations of such Lender and (iii) grant to a Conduit Lender referred to in subsection (h) below identified as such in writing from time to time by such Lender to the Agent and the Borrower the option to provide to the Borrower all or any part of any Loans that such Lender would otherwise be obligated to make to the Borrower pursuant to the Agreement; provided that no such assignment, option, pledge or security interest shall release a Lender from any of its obligations hereunder or substitute any such Federal Reserve Bank or other person to which such option, pledge or assignment has been made for such Lender as a party hereto. (g) Information. Any Lender may furnish any information concerning any Facility Party in the possession of such Lender from time to time to assignees and participants (including prospective assignees and participants), subject, however, to the provisions of Section 11.07. (h) Conduit Lenders, etc. Notwithstanding anything to the contrary contained herein, any Lender, (a "Granting Lender") may grant to a conduit lender sponsored by such Granting -85- Lender, identified as such in writing from time to time by the Granting Lender to the Agent and the Borrower (a "Conduit Lender") the option to fund all or any part of any Loan that such Granting Lender would otherwise be obligated to fund pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any Conduit Lender to fund any Loan and (ii) if a Conduit Lender elects not to exercise such option or otherwise fails to fund all or any part of such Loan, the Granting Lender shall be obligated to fund such Loan pursuant to the terms hereof. The funding of a Loan by a Conduit Lender hereunder shall utilize the Commitment of the Granting Lender to the same extent that, and as if, such Loan were funded by such Granting Lender. Each party hereto hereby agrees that no Conduit Lender shall be liable for any indemnity or payment under this Agreement for which a Lender would otherwise be liable for so long as, and to the extent, the Granting Lender provides such indemnity or makes such payment. Notwithstanding anything to the contrary contained in this Agreement, any Conduit Lender may disclose on a confidential basis any non-public information relating to its funding of Loans to any rating agency, commercial paper dealer or provider of any surety or guarantee to such Conduit Lender. This subsection (h) may not be amended without the prior written consent of each Granting Lender, all or any part of whose Loan is being funded by a Conduit Lender at the time of such amendment. Credit Suisse First Boston, New York Branch, hereby designates each of Alpine Securitization Corp., Greenwich Funding Corporation and Gramercy Capital Corporation as "Conduit Lenders" for all purposes of this Agreement and the other Loan Documents and grants to each such Conduit Lender the option to fund all or any portion of the Loans contemplated to be made hereunder by Credit Suisse First Boston, New York Branch. Wachovia Bank, National Association, hereby designates Variable Funding Capital Corporation as a "Conduit Lender" for all purposes of this Agreement and the other Loan Documents and grants to such Conduit Lender the option to fund all or any portion of the Loans contemplated to be made hereunder by Wachovia Bank, National Association. SECTION 11.07 CONFIDENTIALITY. Each of the Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (i) 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); (ii) to the extent requested by any regulatory authority with jurisdiction over the Agent or Lender, as applicable; (iii) to the extent required by Applicable Laws or regulations or by any subpoena or similar legal process; (iv) to any other party to this Agreement; (v) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or any other Loan Documents or the enforcement of rights hereunder or thereunder; (vi) subject to an agreement containing provisions substantially the same as those of this Section, to (A) any Eligible Assignee of or participant in, or any prospective Eligible Assignee of or participant in, any of its rights or obligations under this Agreement, (B) any direct or indirect contractual counterparty or prospective counterparty (or such contractual counterparty's or prospective counterparty's professional advisor) to any credit derivative transaction relating to obligations of the Borrower or (C) any Support Party or any managing agent of a Lender that is a commercial paper conduit; (vii) with the written consent of the Borrower; (viii) to the extent such information (A) becomes publicly available other than as a result of a breach of this Section or (B) becomes available to the Agent or any Lender on a nonconfidential basis from a source other than the Borrower; or (ix) to the National Association of Insurance Commissioners or any other similar organization or any nationally recognized rating agency that requires access to information about a Lender's or its Affiliates' investment portfolio in connection with ratings issued with respect to such Lender or its Affiliates. For the purposes of this Section, "Information" means all information received from or on behalf of any Facility Party relating to any Facility Party or its respective business, other than any such information that is available to the Agent or any Lender on a nonconfidential basis prior to disclosure by or on behalf of a Facility Party; provided that, in the case of information received from or on behalf of a Facility Party after the date hereof, such information is clearly identified in writing at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as -86- provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. SECTION 11.08 SET-OFF. In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, upon the occurrence and during the continuance of an Event of Default, each Lender (and each of its Affiliates) is authorized at any time and from time to time, without presentment, demand, protest or other notice of any kind (all of such rights being hereby expressly waived), to set-off and to appropriate and apply any and all deposits (general or specific) and any other indebtedness at any time held or owing by such Lender (including, without limitation, branches, agencies or Affiliates of such Lender wherever located) to or for the credit or the account of the Borrower against obligations and liabilities of the Borrower to the Lenders hereunder, under the Notes, under the other Loan Documents or otherwise, irrespective of whether the Agent or the Lenders shall have made any demand hereunder and although such obligations, liabilities or claims, or any of them, may be contingent or unmatured, and any such set-off shall be deemed to have been made immediately upon the occurrence of an Event of Default even though such charge is made or entered on the books of such Lender subsequent thereto. The Borrower hereby agrees that to the extent permitted by law any Person purchasing a participation in the Loans and Commitments hereunder may exercise all rights of set-off with respect to its participation interest as fully as if such Person were a Lender hereunder and any such set-off shall reduce the amount owed by the Borrower to the Lender. SECTION 11.09 INTEREST RATE LIMITATION. The Agent, the Lenders and the Facility Parties and any other parties to the Loan Documents intend to contract in strict compliance with applicable usury law from time to time in effect. In furtherance thereof such Persons stipulate and agree that none of the terms and provisions contained in the Loan Documents shall ever be construed to create a contract to pay, for the use, forbearance or detention of money, interest in excess of the maximum amount of interest permitted to be charged by Applicable Law from time to time in effect (the "Maximum Rate"). Neither any Facility Party nor any present or future guarantors, endorsers, or other Persons hereafter becoming liable for payment of any Credit Obligation shall ever be liable for unearned interest thereon or shall ever be required to pay interest thereon in excess of the maximum amount that may be lawfully charged under Applicable Law from time to time in effect, and the provisions of this section shall control over all other provisions of the Loan Documents which may be in conflict or apparent conflict herewith. The Lenders and the Agent expressly disavow any intention to charge or collect excessive unearned interest or finance charges in the event the maturity of any Credit Obligation is accelerated. If (i) the maturity of any Credit Obligation is accelerated for any reason, (ii) any Credit Obligation is prepaid and as a result any amounts held to constitute interest are determined to be in excess of the legal maximum, or (iii) any Lender of any other holder of any or all of the Credit Obligations shall otherwise collect moneys which are determined to constitute interest which would otherwise increase the interest on any or all of the Credit Obligations to an amount in excess of that permitted to be charged by Applicable Law then in effect, then all sums determined to constitute interest in excess of such legal limit shall, without penalty, be promptly applied to reduce the then outstanding principal of the related Credit Obligations or, at such Lender's or holder's option, promptly returned to the Borrower or the other payor thereof upon such determination. In determining whether or not the interest paid or payable, under any specific circumstance, exceeds the maximum amount permitted under Applicable Law, the Agent, the Lenders and the Facility Parties (and any other payors thereof) shall to the greatest extent permitted under Applicable Law, (i) characterize any non-principal payment as an expense, fee or premium rather than as interest, (ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize, prorate, allocate, and spread the total amount of interest throughout the entire contemplated term of the instruments evidencing the Credit Obligations in accordance with the amounts outstanding from time to time thereunder and the maximum legal rate of interest from time to time in effect under Applicable Law in order to lawfully charge the maximum amount of interest permitted under Applicable Law. In the event Applicable Law provides for -87- an interest ceiling under Chapter 303 of the Texas Finance Code (the "Texas Finance Code") as amended, for that day, the ceiling shall be the "weekly ceiling" as defined in the Texas Finance Code; provided that if any Applicable Law permits greater interest, the Law permitting the greatest interest shall apply. As used in this Section 11.09 the term "Applicable Law" includes, without limitation the laws of the State of Texas, the laws of the State of New York or the laws of the United States of America, whichever laws allow the greatest interest, as such laws now exist or may be changed or amended or come into effect in the future. SECTION 11.10 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. It shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. SECTION 11.11 INTEGRATION. THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT OF 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 BETWEEN THE PARTIES. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, the provisions of this Agreement shall control; provided that the inclusion of supplemental rights or remedies in favor of the Agent or the Lenders in any other Loan Document shall not be deemed a conflict with this Agreement. Each Loan Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof. SECTION 11.12 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Agent and each Lender, regardless of any investigation made by the Agent or any Lender or on their behalf and notwithstanding that the Agent or any Lender may have had notice or knowledge of any Default or Event of Default at the time of any Borrowing, and shall continue in full force and effect as long as any Loan or any other Obligation shall remain unpaid or unsatisfied. SECTION 11.13 SEVERABILITY. Any provision of this Agreement and the other Loan Documents to which any Facility Party is a party that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions thereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 11.14 HEADINGS. The headings of the sections and subsections hereof are provided for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement. SECTION 11.15 MARSHALLING; PAYMENTS SET ASIDE. Neither the Agent nor any Lender shall be under any obligation to marshal any assets in favor of the Borrower or any other party or against or in payment of any or all of the Obligations. To the extent that the Borrower makes a payment or payments to the Agent (or to the Agent for the benefit of the Lenders), or the Agent enforces any security interests or exercises its rights of set-off, and such payment or payments or the proceeds of such enforcement or set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any -88- bankruptcy law, any other state or federal law, common law or any equitable cause, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor or related thereto, shall be revived and continued in full force and effect as if such payment or payments had not been made or such enforcement or set-off had not occurred. SECTION 11.16 PERFORMANCE BY THE AGENT. If any Facility Party fails to perform any of its obligations under this Agreement or any other Loan Document or any Management Document in a timely fashion, the Agent shall be entitled, but not obliged, to perform such obligation at the expense of the Borrower and without waiving any rights that it may have with respect to such breach. SECTION 11.17 THIRD PARTY BENEFICIARIES. Each Protected Party, including without limitation each Support Party, is an express third party beneficiary hereof. SECTION 11.18 NO PROCEEDINGS. (a) Each party hereto hereby agrees that it will not institute against any Conduit Lender, or join any other Person in instituting against any Conduit Lender, any bankruptcy, insolvency, receivership, liquidation or similar proceeding from the Closing Date until one year plus one day following the last day on which all commercial paper notes and other publicly or privately placed indebtedness for borrowed money of such Conduit Lender shall have been indefeasibly paid in full. (b) No recourse under any obligation, covenant or agreement of Conduit Lender as contained in any Loan Document shall be had against any incorporator, stockholder, affiliate, officer, employee or director of the Conduit Lender, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute or otherwise; it being expressly agreed and understood that the agreements of each Conduit Lender contained in any Loan Document are solely corporate obligations of such Conduit Lender and that no personal liability whatsoever shall attach to or be incurred by the incorporators, stockholders, affiliates, officers, employees or directors of such Conduit Lender, under or by reason of any of the respective obligations, covenants or agreements of such Conduit Lender contained in any Loan Document, or implied therefrom, and that any and all personal liability of every such incorporator, stockholder, affiliate, officer, employee or director of such Conduit Lender for breaches by such Conduit Lender of any such obligation, covenant or agreement, which liability may arise either at common law or in equity, by statute or constitution, or otherwise, is hereby expressly waived as a condition of and in consideration for the execution of this Agreement. The provisions of this Section 11.18 shall survive the termination of this Agreement. (c) Notwithstanding anything contained in this Agreement to the contrary, no Conduit Lender shall have any obligation to pay any amount required to be paid by it hereunder or thereunder to any party hereto, in excess of any amount available to such Conduit Lender after paying or making provision for the payment of its commercial paper notes. All payment obligations of each Conduit Lender hereunder are contingent upon the availability of funds in excess of the amounts necessary to pay commercial paper notes; and each of the parties hereto agree that they shall not have a claim under Section 101(5) of the United States Bankruptcy Code if and to the extent that any such payment obligation exceeds the amount available to such Conduit Lender to pay such amounts after paying or making provision for the payment of its commercial paper notes. SECTION 11.19 GOVERNING LAW; SUBMISSION TO JURISDICTION. (a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION -89- SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. Chapter 346 of the Texas Finance Code (which regulates certain revolving credit loan accounts and revolving tri-party accounts) does not apply to this Agreement or to any other Loan Document. Any legal action or proceeding with respect to this Agreement or any other Loan Document may be brought in the courts of the State of New York in New York County, or of the United States for the Southern District of New York and, by execution and delivery of this Agreement, each Facility Party hereby irrevocably accepts for itself and in respect of its property, generally and unconditional, the nonexclusive jurisdiction of such courts. Each Facility Party irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such court and any claim that any such proceeding brought in any such court has been brought in an inconvenient forum. (b) Each Facility Party hereby irrevocably appoints C.T. Corporation System its authorized agent to accept and acknowledge service of any and all process which may be served in any suit, action or proceeding of the nature referred to in this Section 11.19 and consents to process being served in any such suit, action or proceeding upon C.T. Corporation System in any manner or by the mailing of a copy thereof by registered or certified mail, postage prepaid, return receipt requested, to such Facility Party's address referred to in Section 11.01. Each Facility Party agrees that such service (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by law, be taken and held to be valid personal service upon and personal delivery to it. Nothing in this Section 11.19 shall affect the right of any Lender to serve process in any manner permitted by law or limit the right of any Lender to bring proceedings against the Borrower in the courts of any jurisdiction or jurisdictions. SECTION 11.20 WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. SECTION 11.21 BINDING EFFECT. This Agreement shall become effective at such time when it shall have been executed by the Facility Parties and the Agent, and the Agent shall have received copies hereof (telefaxed or otherwise) which, when taken together, bear the signatures of each Committed Lender, and thereafter this Agreement shall be binding upon and inure to the benefit of the Facility Parties, the Agent and each Lender and their respective successors and assigns; provided, however, unless the conditions set forth in Section 4.01 have been satisfied by the Facility Parties or waived by the Lenders on or before July 16, 2002, none of the Facility Parties, the Agent or the Lenders shall have any obligations under this Agreement. [Signature Pages Follow] -90- 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. TRINITY INDUSTRIES LEASING COMPANY By:_______________________________ Name: Title: TRINITY RAIL LEASING TRUST II By: ______________________________ Name: Title: CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH as Agent and as a Committed Lender By: ______________________________ Name: Title: By: ______________________________ Name: Title: GRAMERCY CAPITAL CORPORATION, as a Conduit Lender By: ______________________________ Name: Title: By: ______________________________ Name: Title: S-1 GREENWICH FUNDING CORPORATION, as a Conduit Lender By: ______________________________ Name: Title: By: ______________________________ Name: Title: ALPINE SECURITIZATION CORP, as a Conduit Lender By: ______________________________ Name: Title: By: ______________________________ Name: Title: WACHOVIA BANK, NATIONAL ASSOCIATION, as a Committed Lender By: ______________________________ Name: Title: VARIABLE FUNDING CAPITAL CORPORATION, as a Conduit Lender By: WACHOVIA SECURITIES, INC., as attorney-in-fact By: ______________________________ Name: Title: S-2 EX-10.12.3 5 d98842exv10w12w3.txt AMEND. NO.3 TO 1998 STOCK OPTION & INCENTIVE PLAN EXHIBIT 10.12.3 AMENDMENT NO. 3 TO 1998 STOCK OPTION AND INCENTIVE PLAN The Trinity Industries, Inc. 1998 Stock Option and Incentive Plan (the "1998 Plan") is hereby amended as follows: 1. The first sentence in Section 2 of the Plan is amended to read in its entirety as follows: "A committee designated by the Board of Directors which shall consist of not less than two members of the Board who shall be appointed by or in accordance with authority delegated by the Board." 2. The effective date of this Amendment to the 1998 Plan shall be May 3, 2002. IN WITNESS WHEREOF, the Company has caused this Amendment to be executed by a duly authorized officer of the Company as of May 3, 2002. TRINITY INDUSTRIES, INC. By: ------------------------------------ EX-99.1 6 d98842exv99w1.txt CERTIFICATION PURSUANT TO 18 U.S.C SECTION 1350 EXHIBIT 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Trinity Industries, Inc. (the "Company") on Form 10-Q for the period ended June 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Timothy R. Wallace, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ Timothy R. Wallace Timothy R. Wallace President and Chief Executive Officer August 12, 2002 EX-99.2 7 d98842exv99w2.txt CERTIFICATION PURSUANT TO 18 U.S.C SECTION 1350 EXHIBIT 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Trinity Industries, Inc. (the "Company") on Form 10-Q for the period ending June 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jim S. Ivy, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ Jim S. Ivy Jim S. Ivy Senior Vice President and Chief Financial Officer August 12, 2002 -----END PRIVACY-ENHANCED MESSAGE-----