e10vq

-----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, Gg/9oF1SIdBrqJaR+jeg4sIreMiNnZr22tMRYnqLVIWdcLIhRRzk1uCRWCLAEcGo AT2ZBHIOKQwCvdk+qeObpg== 0000950134-04-016237.txt : 20041103 0000950134-04-016237.hdr.sgml : 20041103 20041103105008 ACCESSION NUMBER: 0000950134-04-016237 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 20040930 FILED AS OF DATE: 20041103 DATE AS OF CHANGE: 20041103 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: 041115137 BUSINESS ADDRESS: STREET 1: 2525 STEMMONS FREEWAY CITY: DALLAS STATE: TX ZIP: 75207-2401 BUSINESS PHONE: 214-631-4420 FORMER COMPANY: FORMER CONFORMED NAME: TRINITY STEEL CO INC DATE OF NAME CHANGE: 19720407 10-Q 1 d19332e10vq.htm FORM 10-Q e10vq

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004


o		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 þ No o.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o.

At October 29, 2004 there were 47,557,191 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		20
Item 3	Quantitative and Qualitative Disclosures About Market Risk		29
Item 4	Controls and Procedures		29
PART II	OTHER INFORMATION
Item 1	Legal Proceedings		30
Item 6	Exhibits and Reports on Form 8-K		31
SIGNATURES			32
CERTIFICATIONS
Equipment Lease Agreement
Participation Agreement
Amendment No. 4 to the Warehouse Loan Agreement
Amendment No. 5 to the Warehouse Loan Agreement
Amendment No. 6 to the Warehouse Loan Agreement
Amendment No. 7 to the Warehouse Loan Agreement
Computation of Ratio of Earnings to Fixed Charges
Certification of Chief Executive Officer
Certification of Chief Financial Officer
Certification Pursuant to Section 906
Certification Pursuant to Section 906

Item 1. Financial Statements

Trinity Industries, Inc. and Subsidiaries
Consolidated Statements of Operations


	Three Months Ended September 30,
	2004			2003
	(unaudited)
	(in millions except per share amounts)
Revenues	$	567.2		$	363.4
Operating costs:
Cost of revenues		519.5			314.2
Selling, engineering and administrative expenses		43.9			39.1

		563.4			353.3

Operating profit		3.8			10.1
Other (income) expense:
Interest income		(8.8	)		(0.1	)
Interest expense		11.1			8.4
Other, net		(0.2	)		(0.2	)

		2.1			8.1

Income before income taxes		1.7			2.0
Provision for income taxes		0.8			0.2

Net income		0.9			1.8
Dividends on Series B preferred stock		(0.8	)		(0.8	)

Net income applicable to common shareholders	$	0.1		$	1.0

Net income applicable to common shareholders per common share:
Basic	$	0.00		$	0.02

Diluted	$	0.00		$	0.02

Weighted average number of shares outstanding:
Basic		46.5			45.6
Diluted		47.5			46.2

See accompanying notes to consolidated financial statements.

Trinity Industries, Inc. and Subsidiaries
Consolidated Statements of Operations


	Nine Months Ended September 30,
	2004			2003
	(unaudited)
	(in millions except per share amounts)
Revenues	$	1,570.8		$	1,018.3
Operating costs:
Cost of revenues		1,436.0			901.1
Selling, engineering and administrative expenses		123.2			108.1

		1,559.2			1,009.2

Operating profit		11.6			9.1
Other (income) expense:
Interest income		(9.5	)		(0.4	)
Interest expense		32.1			26.3
Other, net		(1.7	)		(3.6	)

		20.9			22.3

Loss before income taxes		(9.3	)		(13.2	)
Provision (benefit) for income taxes		(3.0	)		(4.0	)

Net loss		(6.3	)		(9.2	)
Dividends on Series B preferred stock		(2.3	)		(0.8	)

Net loss applicable to common shareholders	$	(8.6	)	$	(10.0	)

Net loss applicable to common shareholders per common share:
Basic	$	(0.19	)	$	(0.22	)

Diluted	$	(0.19	)	$	(0.22	)

Weighted average number of shares outstanding:
Basic		46.4			45.6
Diluted		46.4			45.6

See accompanying notes to consolidated financial statements.

Trinity Industries, Inc. and Subsidiaries
Consolidated Balance Sheets


	September 30,			December 31,
	2004			2003
	(unaudited)			(as reported)
	(in millions)
Assets
Cash and cash equivalents	$	154.2		$	46.0
Receivables, net of allowance		263.4			198.1
Inventories:
Raw materials and supplies		231.2			158.4
Work in process		104.7			60.0
Finished goods		47.3			39.6

		383.2			258.0
Property, plant and equipment, at cost		1,491.7			1,627.1
Less accumulated depreciation		(699.8	)		(681.9	)

		791.9			945.2
Goodwill		420.3			415.1
Other assets		167.7			145.5

	$	2,180.7		$	2,007.9

Liabilities and Stockholders’ Equity
Accounts payable and accrued liabilities	$	484.5		$	460.2
Debt:
Recourse		475.3			298.5
Non-recourse		47.1			96.7

		522.4			395.2
Deferred income		44.4			32.2
Other liabilities		62.9			58.7

		1,114.2			946.3
Series B redeemable convertible preferred stock, no par value, $0.1 liquidation value		58.1			57.8
Stockholders’ equity:
Preferred stock - 1.5 shares authorized and unissued		—			—
Common stock — shares issued and outstanding at September 30, 2004 - 50.9; at December 31, 2003 - 50.9		50.9			50.9
Capital in excess of par value		432.7			434.7
Retained earnings		632.8			649.9
Accumulated other comprehensive loss		(26.4	)		(27.3	)
Treasury stock (3.4 shares at September 30, 2004 and 4.3 shares at December 31, 2003)		(81.6	)		(104.4	)

		1,008.4			1,003.8

	$	2,180.7		$	2,007.9

See accompanying notes to consolidated financial statements.

Trinity Industries, Inc. and Subsidiaries
Consolidated Statements Cash Flows


	Nine Months Ended September 30,
	2004			2003
	(unaudited)
	(in millions)
Operating activities:
Net loss	$	(6.3	)	$	(9.2	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		66.5			64.7
Deferred income taxes		(3.0	)		26.6
Gain on sale of property, plant, equipment and other assets		(4.4	)		(6.0	)
Other		(5.6	)		2.8
Changes in assets and liabilities:
Increase in receivables		(65.6	)		(43.1	)
Decrease in tax receivable		—			23.7
Increase in inventories		(124.2	)		(12.3	)
(Increase) decrease in other assets		(18.6	)		9.4
Increase in accounts payable and accrued liabilities		24.4			21.2
Increase (decrease) in other liabilities		7.5			(12.1	)

Net cash (required) provided by operating activities		(129.3	)		65.7

Investing activities:
Proceeds from sale of property, plant, equipment and other assets		230.4			33.6
Capital expenditures — lease subsidiary		(112.5	)		(188.5	)
Capital expenditures — other		(24.4	)		(16.7	)
Payment for purchase of acquisitions, net of cash acquired		(15.7	)		—
Sale of investment in equity trust		8.5			—

Net cash provided (required) by investing activities		86.3			(171.6	)

Financing activities:
Issuance of redeemable preferred stock		—			57.6
Payments to retire debt		(297.0	)		(145.6	)
Proceeds from issuance of debt		449.8			194.4
Proceeds from issuance of common stock, net		9.5			2.4
Dividends paid to common shareholders		(8.4	)		(8.4	)
Dividends paid to preferred shareholders		(2.7	)		—

Net cash provided by financing activities		151.2			100.4

Net increase in cash and cash equivalents		108.2			(5.5	)
Cash and cash equivalents at beginning of period		46.0			19.1

Cash and cash equivalents at end of period	$	154.2		$	13.6

Interest paid for the nine months ended September 30, 2004 and 2003 was $30.6 and $26.3, respectively. Taxes paid, net of refunds received, were $5.9 for the nine months ended September 30, 2004 and taxes received, net of payments made were $43.5 for the nine months ended September 30, 2003.

See accompanying notes to consolidated financial statements.

Trinity Industries, Inc. and Subsidiaries
Consolidated Statement of Stockholders’ Equity


	Common		Common		Capital						Accumulated
	Shares		Stock		in Excess						Other						Treasury			Total
	(100,000,000		$1.00 Par		of Par			Retained			Comprehensive			Treasury			Stock at			Stockholders'
	Authorized)		Value		Value			Earnings			Loss			Shares			Cost			Equity
	(unaudited)
	(in millions except share and per share data)
Balance at December 31, 2003		50,940,351	$	50.9	$	434.7		$	649.9		$	(27.3	)		(4,260,860	)	$	(104.4	)	$	1,003.8
Net loss		—		—		—			(6.3	)		—			—			—			(6.3	)
Currency translation adjustments		—		—		—			—			0.1			—			—			0.1
Unrealized loss on derivative financial instruments		—		—		—			—			0.7			—			—			0.7

Comprehensive net loss																					(5.5	)
Cash dividends ($0.18 per common share)		—		—		—			(8.4	)		—			—			—			(8.4	)
Dividends on Series B preferred stock		—		—		—			(2.3	)		—			—			—			(2.3	)
Restricted shares issued		—		—		3.1			—			—			383,400			7.9			11.0
Stock options exercised		—		—		(4.8	)		—			—			415,025			14.1			9.3
Other		—		—		(0.3	)		(0.1	)		0.1			25,425			0.8			0.5

Balance at September 30, 2004		50,940,351	$	50.9	$	432.7		$	632.8		$	(26.4	)		(3,437,010	)	$	(81.6	)	$	1,008.4

See accompanying notes to consolidated financial statements.

Trinity Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(unaudited)

Note 1. Summary of Significant Accounting Policies

Basis of Presentation

The foregoing consolidated financial statements are unaudited and have been prepared from the books and records of Trinity Industries, Inc. (“Trinity” or the “Company”). 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 September 30, 2004 and the results of operations for the three-month and nine-month periods ended September 30, 2004 and 2003, and cash flows for the nine-month periods ended September 30, 2004 and 2003, 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 nine-month periods ended September 30, 2004 may not be indicative of expected results of operations for the year ending December 31, 2004. 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 for the year ended December 31, 2003.

Stock Based Compensation

The Company has elected to apply the accounting provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” (APB No. 25) and its interpretations and, accordingly, no compensation expense has been recorded for the stock options. The effect of computing compensation expense in accordance with Statement of Accounting Standards No. 123, “Accounting for Stock Based Compensation,” using the Black-Scholes option pricing method for the three and nine months ended September 30, 2004 and 2003 are shown in the accompanying table (in millions).


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2004			2003			2004			2003
Pro forma Net income (loss) applicable to common shareholders, as reported	$	0.1		$	1.0		$	(8.6	)	$	(10.0	)
Add: Stock compensation expense related to restricted stock		0.9			0.5			2.2			1.4
Deduct: Total stock based employee compensation expense determined under fair value based method for all awards, net of related income tax effects		(1.5	)		(1.4	)		(4.2	)		(4.4	)

Pro forma net income (loss) applicable to common shareholders	$	(0.5	)	$	0.1		$	(10.6	)	$	(13.0	)

Pro forma net income (loss) applicable to common shareholders per diluted share	$	(0.01	)	$	0.00		$	(0.23	)	$	(0.29	)

Net income (loss) applicable to common shareholders per diluted share — as reported	$	0.00		$	0.02		$	(0.19	)	$	(0.22	)

Net Loss Applicable to Common Shareholders

Diluted net income applicable to common shareholders is based on the weighted average shares outstanding plus the dilutive impact of stock options and Series B preferred stock. Basic net income applicable to common shareholders is based on the weighted average number of common shares outstanding for the period. The numerator for basic net income (loss) applicable to common shareholders is net income (loss) adjusted for dividends on the Series B preferred stock in 2004 and 2003. The numerator for diluted net income (loss) applicable to common shareholders is net income (loss), adjusted for dividends on the Series B preferred stock in 2004 and 2003. The difference between the denominator in the basic calculation and the denominator in the diluted calculation for the three months ended September 30, 2004 and September 30, 2003 was

attributable to the effect of employee stock options. Employee stock options were antidilutive for all other periods presented. The Series B preferred stock was antidilutive for all periods presented and therefore not considered in the diluted net income (loss) per common share calculation.

Reclassifications

Certain reclassifications have been made to prior year statements to conform to the current period presentation.

Note 2. Segment Information

The Company reports operating results in the following business segments: (1) the Rail Group, which manufactures and sells railcars and component parts; (2) the Constructions Products Group, which manufactures and sells highway safety products, concrete and aggregates, 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 tank heads and pressure and non-pressure containers for the storage and transportation of liquefied gases and other liquid and dry products; and (5) the Railcar Leasing and Management Services Group, which provides fleet management, maintenance and leasing services. Finally, All Other includes the Company’s captive insurance and transportation companies, structural towers, and other peripheral businesses.

Sales and related profits from the Rail Group to Railcar Leasing and Management Services Group are recorded in Rail Group and eliminated in consolidation. Sales of railcars from the lease fleet are included in the Railcar Leasing and Management Services Group. Sales between groups are recorded at prices comparable to those charged to external customers.

Three Months Ended September 30, 2004 (in millions)


	Revenues								Operating
									Profit
	Outside		Intersegment			Total			(Loss)
Rail Group	$	279.8	$	35.4		$	315.2		$	(14.5	)
Construction Products Group		170.3		0.5			170.8			18.5
Inland Barge Group		46.2		—			46.2			(1.7	)
Industrial Products Group		33.0		2.0			35.0			4.5
Railcar Leasing and Management Services Group		36.5		—			36.5			7.9
All Other		1.4		7.9			9.3			(1.7	)
Corporate		—		—			—			(7.2	)
Eliminations		—		(45.8	)		(45.8	)		(2.0	)

Consolidated Total	$	567.2	$	—		$	567.2		$	3.8

Three Months Ended September 30, 2003 (in millions)


	Revenues								Operating
									Profit
	Outside		Intersegment			Total			(Loss)
Rail Group	$	126.4	$	63.8		$	190.2		$	2.9
Construction Products Group		133.3		0.4			133.7			11.4
Inland Barge Group		42.5		—			42.5			0.3
Industrial Products Group		30.1		1.4			31.5			2.7
Railcar Leasing and Management Services Group		29.9		—			29.9			9.3
All Other		1.2		6.7			7.9			(2.0	)
Corporate		—		—			—			(9.6	)
Eliminations		—		(72.3	)		(72.3	)		(4.9	)

Consolidated Total	$	363.4	$	—		$	363.4		$	10.1

Nine Months Ended September 30, 2004 (in millions)


	Revenues								Operating
									Profit
	Outside		Intersegment			Total			(Loss)
Rail Group	$	729.6	$	120.1		$	849.7		$	(17.2	)
Construction Products Group		443.5		1.1			444.6			35.0
Inland Barge Group		153.6		—			153.6			(12.8	)
Industrial Products Group		97.7		4.5			102.2			9.2
Railcar Leasing and Management Services Group		143.3		—			143.3			31.9
All Other		3.1		22.1			25.2			(2.0	)
Corporate		—		—			—			(23.8	)
Eliminations		—		(147.8	)		(147.8	)		(8.7	)

Consolidated Total	$	1,570.8	$	—		$	1,570.8		$	11.6

Nine Months Ended September 30, 2003 (in millions)


	Revenues								Operating
									Profit
	Outside		Intersegment			Total			(Loss)
Rail Group	$	317.2	$	176.8		$	494.0		$	(13.5	)
Construction Products Group		368.9		0.6			369.5			29.8
Inland Barge Group		129.8		—			129.8			0.5
Industrial Products Group		85.5		3.0			88.5			4.3
Railcar Leasing and Management Services Group		112.7		—			112.7			30.5
All Other		4.2		18.7			22.9			(5.0	)
Corporate		—		—			—			(25.0	)
Eliminations		—		(199.1	)		(199.1	)		(12.5	)

Consolidated Total	$	1,018.3	$	—		$	1,018.3		$	9.1

Note 3. Property, Plant and Equipment

The following table summarizes the components of property, plant and equipment as of September 30, 2004 and December 31, 2003 (in millions).


	September 30,			December 31,
	2004			2003
Corporate/Manufacturing:
Property, plant and equipment	$	872.9		$	868.6
Less accumulated depreciation		(581.6	)		(569.0	)

		291.3			299.6

Leasing:
Property, plant and equipment		618.8			758.5
Less accumulated depreciation		(118.2	)		(112.9	)

		500.6			645.6

	$	791.9		$	945.2

Note 4. Deposit Agreement

The Company had a deposit agreement with Altos Hornos de Mexico, SA de C.V. (“AHMSA”) that provided funds on deposit with AHMSA that were used along with other funds from the Company to purchase steel from AHMSA. The balance of this deposit has been collected in full, including $8.1 million of accrued interest which was recognized as income on a cash basis in the quarter ended September 30, 2004.

Note 5. Warranties

The Company provides for the estimated cost of product warranties at the time revenue is recognized and assesses the adequacy of the resulting reserves on a quarterly basis. The change in the accruals for warranties (included in accounts payable and accrued liabilities) for the three and nine months ended September 30, 2004 and 2003 was as follows (in millions):


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2004			2003			2004			2003
Beginning balance	$	20.3		$	21.5		$	23.0		$	20.8
Additions
		3.2			2.6			9.2			9.6
Reductions
		(3.4	)		(3.4	)		(12.1	)		(9.7	)

Ending balance	$	20.1		$	20.7		$	20.1		$	20.7

Note 6. Debt

The following table summarizes the components of debt as of September 30, 2004 and December 31, 2003 (in millions).


	September 30,		December 31,
	2004		2003
Corporate/Manufacturing — Recourse:
Revolving commitment	$	—	$	—
Term commitment		—		122.8
Senior Notes		300.0		—
Other		5.3		5.7

		305.3		128.5

Leasing — Recourse
Equipment trust certificates		170.0		170.0

		170.0		170.0

		475.3		298.5

Leasing — Non-recourse
Warehouse facility		47.1		71.1
Trust debt		—		25.6

		47.1		96.7

Total debt	$	522.4	$	395.2

In March 2004, the Company issued $300 million aggregate principal amount 6 1/2% senior notes (Senior Notes) due 2014, through a private offering. Interest on the Senior Notes is payable semiannually commencing September 15, 2004. The Senior Notes rank equally with all of the Company’s existing and future senior debt and are subordinated to all the Company’s existing and future secured debt to the extent of the value of the assets securing such debt. The Company may redeem some or all of the Senior Notes at any time on or after March 15, 2009 at a redemption price of 103.25% in 2009, 102.167% in 2010, 101.083% in 2011 and 100.0% in 2012 and thereafter plus accrued interest. The Company may also redeem up to 35% of the aggregate principal amount of the Senior Notes using the proceeds from certain public equity offerings completed on or before March 15, 2007 at a redemption price of 106.5% of the principal amount plus accrued and unpaid interest. The Senior Notes could restrict the Company’s ability to incur additional debt; make certain distributions, investments and other restricted payments; create certain liens; merge; consolidate; or sell substantially all or a portion of its assets. The Company applied approximately $163 million of the net proceeds of the offering to repay all indebtedness under its existing bank credit facility. In September 2004, as required by the contract with the purchasers of the Senior Notes due 2014, the Company made an offer to exchange all of the privately placed Senior Notes for an equal principal amount of the Senior Notes due 2014, which are registered with the Security and Exchange Commission and have substantially identical terms. As of September 30, 2004 all of the privately placed Senior Notes were exchanged for Senior Notes due 2014.

In connection with the issuance of the Senior Notes, the Company extended its secured credit agreement to provide for a three-year, $250 million revolving credit facility. Amounts borrowed under the revolving credit facility for periods after the first quarter of 2004 will bear interest at LIBOR plus a margin based upon financial performance. The Company’s accounts receivable and inventory secure the agreement. The agreement limits the amount of capital expenditures related to the Company’s leasing business, requires maintenance of ratios related to interest coverage for the leasing and manufacturing operations, leverage, asset coverage and minimum net worth, and restricts the amount of dividend payments based upon the

current credit rating of the Company not to exceed $25 million annually. At September 30, 2004, there were no borrowings under the revolving credit facility.

Trinity Industries Leasing Company (“TILC”), through a wholly owned and consolidated business trust, has $47.1 million outstanding of a $300 million non-recourse warehouse facility to finance or refinance railcars acquired or owned by TILC. The warehouse facility is due August 2005 and unless renewed would be payable in three equal installments in February 2006, August 2006, and February 2007. Railcars financed by the warehouse facility have historically been refinanced under long-term financing agreements. Specific railcars and the underlying leases secure the facility. Advances under the facility may not exceed 75% of the fair market value of the eligible railcars securing the facility as defined by the agreement. Advances under the facility bear interest at LIBOR plus 1.375% (3.0524% at September 30, 2004). At September 30, 2004, $252.9 million was available under this facility.

As of December 31, 2003, the Railcar Leasing and Management Services Group (“Leasing Group”) had an equity ownership in a trust formed to finance the purchase of railcars. This trust was capitalized with $9.5 million from the Leasing Group and outside debt of $25.6 million. Because this trust is a variable interest entity for which the equity investor is the primary beneficiary, the financial statements of the trust were consolidated with the Company’s financial statements as of and for the year ended December 31, 2003. In February 2004, the Leasing Group sold its equity ownership in the trust to a third party. Consequently, the trust, including the non-recourse debt of $25.6 million, is no longer consolidated in the Company’s financial statements.

Terms and conditions of other debt are described in the Annual Report.

The remaining principal payments under existing debt agreements as of September 30, 2004 are as follows (in millions):


	Remaining
	three months of
	2004		2005		2006		2007		2008		Thereafter
Recourse:
Corporate/Manufacturing	$	0.2	$	1.0	$	0.3	$	0.3	$	0.1	$	303.4
Leasing — equipment trust certificates (Note 7)		—		39.9		10.3		43.4		14.2		62.2
Non-recourse:
Leasing -warehouse facility (Note 7)		0.4		1.0		30.5		15.2		—		—

Total principal payments	$	0.6	$	41.9	$	41.1	$	58.9	$	14.3	$	365.6

Note 7. Railcar Leasing and Management Services Group

The Leasing Group provides fleet management, maintenance and leasing services. Selected combined financial information for the Leasing Group is as follows (in millions):


	September 30,			December 31,
	2004			2003
Balance Sheet
Cash	$	14.8		$	5.3
Leasing equipment, net Machinery		32.7			31.0
Equipment on lease		585.5			725.8
Construction in progress		0.6			1.7

		618.8			758.5
Less accumulated depreciation		(118.2	)		(112.9	)

		500.6			645.6
Restricted Assets		44.4			39.5
Debt
Recourse		170.0			170.0
Non-recourse		47.1			96.7


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2004		2003		2004		2003
Statement of Operations
Revenues	$	36.5	$	29.9	$	143.3	$	112.7
Operating Profit	$	7.9	$	9.3	$	31.9	$	30.5

The decline in the Leasing Group operating profit for the three months ended September 30, 2004 was due to the refinancing of railcars under the non-recourse warehouse facility with long-term, fixed rate, off-balance sheet, sale/leaseback financings in November 2003 and August 2004 which effectively converted interest expense (which is not deducted from operating profit) to lease expense (which is deducted from operating profit).

Interest expense, which is not a component of operating profit, was $4.7 and $14.0 for the three and nine month periods ended September 30, 2004 and $4.1 and $12.2 for the same periods last year.

During the quarter ended September 30, 2004, the Leasing Group completed a transaction whereby $180.1 million of railcars were sold to independent trusts. These trusts financed the purchase of the railcars with $134.0 million in debt and $46.1 million in third party equity. The equity participants in the trusts are the primary beneficiaries of the trusts. The Leasing Group, through a newly formed, wholly owned qualified subsidiary, leased railcars from the trusts under operating leases with terms of 22 years and subleased the railcars to independent third parties under shorter term operating leases. This qualified subsidiary had total assets of $49.7 million as of September 30, 2004 including cash of $6.1 million, and Leasing Group railcars of $43.6 million. The cash and railcars are pledged to collateralize the lease obligations to the trusts and are included in the consolidated financial statements of the Company. Trinity does not guarantee the performance of the subsidiary’s lease obligations. Under the terms of the operating lease agreement, the Leasing Group has options to purchase at a predetermined, fixed price, certain of the railcars from the trusts in 2019. The Leasing Group also has options to purchase the railcars at the end of the lease agreement at the then fair market value of the railcars as determined by a third party, independent appraisal. At the expiration of the operating lease agreement, the Leasing Group’s qualified subsidiary has no further obligation.. An independent trustee for the trust has authority for appointment of the railcar fleet manager, which at September 30, 2004 was TILC. As fleet manager, TILC is required to endeavor, consistent with customary commercial practice as would be used by a prudent person, to maintain railcars under lease for the benefit of the trusts. TILC receives management fees under the terms of the agreement for services it provides. Certain ratios and cash deposits must be maintained by the Leasing Group’s subsidiaries in order for excess cash flow, as defined in the agreements, from the third parties leases, to be available to Trinity. The sales of railcars by Trinity to the trusts were accounted for as a sale/leaseback transaction. No revenue or profit was recorded at the time of the transactions and all profit was deferred and is being amortized over the terms of the operating leases. Neither the assets, the liabilities, nor equity of the trusts are reflected on the balance sheet of Trinity.

Equipment on lease, as shown in the table above, consists primarily of railcars leased to third parties with terms generally ranging between one and twenty years, wherein equipment manufactured by Trinity is leased for a specified type of service over the term of the lease.

As lessor, the Company primarily enters into operating leases. Future minimum rental revenues to be received by the Company on such leases, including the leases in the transaction described above, as of September 30, 2004 are as follows: the remaining three months of 2004 — $25.9 million; 2005 — $95.9 million; 2006 — $82.9 million; 2007 — $71.9 million; 2008 — $59.6 million and $316.4 million thereafter.

The Leasing Group’s debt consists of both recourse and non-recourse debt. See Note 6 for maturities for the debt. Leasing Group equipment with a net book value of $304.9 million is pledged as collateral for debt.

Note 8. Other, Net

Other (income) expense consists of the following items (in millions):


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2004			2003			2004			2003
Gains on sale of property, plant and equipment	$	(1.4	)	$	(1.6	)	$	(4.4	)	$	(6.0	)
Foreign currency exchange transactions		0.4			0.8			1.5			0.8
Loss on equity investments		0.6			0.6			1.4			1.6
Other		0.2			–			(0.2	)		–

Other, net	$	(0.2	)	$	(0.2	)	$	(1.7	)	$	(3.6	)

Note 9. Benefit Plans

The following table summarizes the components of net periodic pension cost for the Company (in millions):


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2004			2003			2004			2003
Service cost	$	2.5		$	1.9		$	7.4		$	6.9
Interest		3.7			3.3			11.1			11.8
Expected return on assets		(3.9	)		(2.9	)		(11.6	)		(10.4	)
Amortization and deferral		0.3			0.3			0.9			1.0
Profit sharing		0.8			0.6			2.6			2.3
Other		–			0.1			–			0.5

Net expense	$	3.4		$	3.3		$	10.4		$	12.1

The Company contributed $13.2 million and $8.8 million, respectively, to the Company’s defined benefit pension plan for the three month periods ended September 30, 2004 and 2003 and $16.8 million and $9.3 million, respectively, for the nine month periods ended September 30, 2004 and 2003. Total contributions to the Company’s pension plan in 2004 are expected to be approximately $17.8 million.

Note 10. Contingencies

In March 2004, the Company and its wholly owned subsidiary, Trinity Marine Products, Inc. (“TMP”), settled a lawsuit filed by Florida Marine Transporters, Inc. (“FMT”) related to twenty-eight tank barges owned and/or operated by FMT. The settlement involves, among other elements, a joint monitoring of the barge coatings and void compartment maintenance procedures, and a mutual release of all claims against one another.

The Company and TMP, and certain material suppliers and others, are named as co-defendants in four separate lawsuits filed by multiple plaintiffs on various dates. In one of these four cases the plaintiff has petitioned the court for certification of a class which, if certified by the court, could increase the total number of barges involved in that case. Absent certification of the class, the four suits involve 24 tank barges sold at an average price of approximately $1.4 million, and 140 hopper barges sold at an average price of approximately $280,000. All four cases allege similar causes of action related to defects in coating materials supplied by a co-defendant and coatings application workmanship by TMP. The plaintiffs seek both compensatory and punitive damages and/or rescission of the barge purchase contracts. Independent experts investigating the claims have expressed the opinion that technical arguments presented by the plaintiffs in this litigation are without merit. The Company and TMP are defending these cases vigorously. As of September 30, 2004, one of the plaintiffs owes TMP approximately $8.9 million related to contracts for barges not involved in the litigation. TMP has filed suit for collection of the past due amount.

In a proceeding unrelated to the foregoing litigation, the Company and TMP filed a declaratory judgment action petitioning the Court to declare the Company’s and TMP’s obligations related to allegations of certain barge owners as to exterior coatings and coatings application on 65 tank barges and TMP’s rights and remedies relative to an insurance policy in which TMP was named as an additional insured (which policy is applicable to the coatings on the 65 barges). On December 9, 2003, the barge owners filed a response proceeding to the declaratory judgment action claiming actual damages of $6.5 million and

punitive damages of $10 million.

A subsidiary of the Company, Transit Mix Concrete and Materials Company, Inc., is named as a defendant in a case involving the death of an employee of an independent contractor following an accident that occurred while the decedent was working at a Company owned facility. Following a jury verdict in favor of the plaintiff, the presiding judge entered a final judgment in the amount of $38.1 million (inclusive of fees, costs, and judgment interest). This case has been appealed by Transit Mix and its insurers. Management believes liability in this case, if any, exceeding $3.0 million, will be covered by insurance.

The Company is also involved in other claims and lawsuits incidental to its business. Based on information currently available, it is management’s opinion that the ultimate outcome of all current litigation and other claims, including settlements, in the aggregate will not have a material adverse effect on the Company’s overall financial condition for purposes of financial reporting. However, resolution of certain claims or lawsuits by settlement or otherwise could have a significant impact on the operating results of the reporting period in which such resolution occurs.

The Company is subject to federal, state, local, and foreign laws and regulations relating to the environment and to the workplace. The Company believes that it is currently in substantial compliance with such laws and regulations.

The Company is involved in various proceedings relating to environmental matters. The Company has reserved $12.6 million to cover probable and estimable liabilities of the Company with respect to investigation and remedial response to such matters, taking into account currently available information and the Company’s contractual rights to indemnification. However, estimates of future remedial 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.

Note 11: Financial Statements for Guarantors of the Senior Notes

On March 10, 2004, $300,000,000 of Senior Notes due 2014 were issued by Trinity Industries, Inc. (Parent) which includes the corporate operations and certain operations of the Construction Products Group and the Industrial Products Group. The Senior Notes are fully and unconditionally and jointly and severally guaranteed by certain of Trinity’s wholly owned subsidiaries: Transit Mix Concrete & Material Company, Trinity Industries Leasing Company, Trinity Marine Products, Inc., Trinity Rail Group, LLC, Thrall Trinity Freight Car, Inc., Trinity Tank Car, Inc., and Trinity Rail Components and Repair, Inc. No other subsidiaries guarantee the Senior Notes. As of September 30, 2004, assets held by the non guarantor subsidiaries include $44.4 million of restricted assets that are not available for distribution to the Parent, $57.7 million of assets securing certain debt held by the non guarantor subsidiaries, and $254.2 million of assets located in foreign locations.

Condensed Consolidating Statements of Income for the Three Months Ended September 30, 2004


				Combined		Combined
				Guarantor		Non Guarantor
	Parent			Subsidiaries		Subsidiaries			Eliminations			Consolidated
Revenues	$	89.7		$	335.1	$	183.8		$	(41.4	)	$	567.2
Operating costs:
Cost of revenues		67.0			308.4		185.5			(41.4	)		519.5
Selling, engineering and administrative expenses		12.9			18.6		12.4			—			43.9

		79.9			327.0		197.9			(41.4	)		563.4

Operating profit (loss)		9.8			8.1		(14.1	)		—			3.8
Other (income) expense		9.5			1.4		(13.0	)		4.2			2.1

Income (loss) before income taxes		0.3			6.7		(1.1	)		(4.2	)		1.7
Provision (benefit) for income taxes		(0.6	)		2.5		(1.1	)		—			0.8

Net income (loss)	$	0.9		$	4.2	$	—		$	(4.2	)	$	0.9

Condensed Consolidating Statements of Income for the Nine Months Ended September 30, 2004


				Combined		Combined
				Guarantor		Non Guarantor
	Parent			Subsidiaries		Subsidiaries			Eliminations			Consolidated
Revenues	$	203.3		$	887.4	$	542.6		$	(62.5	)	$	1,570.8
Operating costs:
Cost of revenues		160.1			806.3		532.1			(62.5	)		1,436.0
Selling, engineering and administrative expenses		37.5			52.8		32.9			—			123.2

		197.6			859.1		565.0			(62.5	)		1,559.2

Operating profit (loss)		5.7			28.3		(22.4	)		—			11.6
Other (income) expense		19.7			6.8		(21.9	)		16.3			20.9

Income (loss) before income taxes		(14.0	)		21.5		(0.5	)		(16.3	)		(9.3	)
Provision (benefit) for income taxes		(7.7	)		9.2		(4.5	)		—			(3.0	)

Net loss	$	(6.3	)	$	12.3	$	4.0		$	(16.3	)	$	(6.3	)

Condensed Consolidating Statements of Income for the Three Months Ended September 30, 2003


				Combined			Combined
				Guarantor			Non Guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Revenues	$	57.7		$	175.0		$	159.8		$	(29.1	)	$	363.4
Operating costs:
Cost of revenues		37.3			157.8			148.2			(29.1	)		314.2
Selling, engineering and administrative Expenses		12.4			15.1			11.6			—			39.1

		49.7			172.9			159.8			(29.1	)		353.3

Operating profit (loss)		8.0			2.1			—			—			10.1
Other (income) expense		7.0			5.3			(6.9	)		2.7			8.1

Income (loss) before income taxes		1.0			(3.2	)		6.9			(2.7	)		2.0
Provision (benefit) for income taxes		(0.8	)		(1.0	)		2.0			—			0.2

Net income (loss)	$	1.8		$	(2.2	)	$	4.9		$	(2.7	)	$	1.8

Condensed Consolidating Statements of Income for the Nine Months Ended September 30, 2003


				Combined		Combined
				Guarantor		Non Guarantor
	Parent			Subsidiaries		Subsidiaries			Eliminations			Consolidated
Revenues	$	151.4		$	465.3	$	446.1		$	(44.5	)	$	1,018.3
Operating costs:
Cost of revenues		109.7			398.9		437.0			(44.5	)		901.1
Selling, engineering and administrative Expenses		36.2			42.2		29.7			—			108.1

		145.9			441.1		466.7			(44.5	)		1,009.2

Operating profit (loss)		5.5			24.2		(20.6	)		—			9.1
Other (income) expense		19.5			12.7		(11.7	)		1.8			22.3

Income (loss) before income taxes		(14.0	)		11.5		(8.9	)		(1.8	)		(13.2	)
Provision (benefit) for income taxes		(4.8	)		3.3		(2.5	)		—			(4.0	)

Net income (loss)	$	(9.2	)	$	8.2	$	(6.4	)	$	(1.8	)	$	(9.2	)

Condensed Consolidating Balance Sheets as of September 30, 2004


			Combined			Combined
			Guarantor			Non Guarantor
	Parent		Subsidiaries			Subsidiaries			Eliminations			Consolidated
Assets
Cash and cash equivalents	$	106.0	$	0.9		$	47.3		$	—		$	154.2
Receivables, net of allowance		81.5		143.9			38.0			—			263.4
Inventories		56.1		204.1			123.0			—			383.2
Property, plant and equipment, net		52.3		357.4			382.2			—			791.9
Investments in subsidiaries / intercompany receivable (payable), net		1,111.5		(242.8	)		100.4			(969.1	)		—
Other assets		205.1		354.1			156.5			(127.7	)		588.0

	$	1,612.5	$	817.6		$	847.4		$	(1,096.8	)	$	2,180.7

Liabilities and Stockholders’ Equity
Accounts payable and accrued liabilities	$	181.0	$	178.8		$	124.7		$	—		$	484.5
Deferred income		28.2		3.0			13.2			—			44.4
Other liabilities		32.4		163.3			(5.1	)		(127.7	)		62.9
Debt		304.4		170.1			47.9			—			522.4
Redeemable convertible preferred stock		58.1		—			—			—			58.1
Total stockholder’s equity		1,008.4		302.4			666.7			(969.1	)		1,008.4

	$	1,612.5	$	817.6		$	847.4		$	(1,096.8	)	$	2,180.7

Condensed Consolidating Balance Sheets as of December 31, 2003


			Combined			Combined
			Guarantor			Non Guarantor
	Parent		Subsidiaries			Subsidiaries		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	31.5	$	1.0		$	13.5	$	—		$	46.0
Receivables, net of allowance		51.1		97.5			49.5		—			198.1
Inventories		19.8		127.9			110.3		—			258.0
Property, plant and equipment, net		60.0		458.2			427.0		—			945.2
Investments in subsidiaries / intercompany receivable (payable), net		1,050.4		(266.0	)		168.3		(952.7	)		—
Other assets		194.6		351.7			141.3		(127.0	)		560.6

	$	1,407.4	$	770.3		$	909.9	$	(1,079.7	)	$	2,007.9

Liabilities and Stockholder’ Equity
Accounts payable and accrued liabilities	$	171.0	$	154.3		$	134.9	$	—		$	460.2
Deferred income		18.6		3.1			10.5		—			32.2
Other liabilities		29.0		152.6			4.1		(127.0	)		58.7
Debt		127.2		170.2			97.8		—			395.2
Redeemable convertible preferred stock		57.8		—			—		—			57.8
Total stockholder’s equity		1,003.8		290.1			662.6		(952.7	)		1,003.8

	$	1,407.4	$	770.3		$	909.9	$	(1,079.7	)	$	2,007.9

Condensed Consolidating Statements of Cash Flow for the Nine Months Ended September 30, 2004


				Combined			Combined
				Guarantor			Non Guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations		Consolidated
Net cash provided (required) by operating activities	$	(104.8	)	$	(88.1	)	$	63.6		$	—	$	(129.3	)
Net cash provided (required) by investing activities		3.7			88.1			(5.5	)		—		86.3
Net cash provided by financing activities		175.6			(0.1	)		(24.3	)		—		151.2

Net increase in cash and cash equivalents		74.5			(0.1	)		33.8			—		108.2
Cash and cash equivalents at beginning of period		31.5			1.0			13.5			—		46.0

Cash and cash equivalents at end of period	$	106.0		$	0.9		$	47.3		$	—	$	154.2

Condensed Consolidating Statements of Cash Flow for the Nine Months Ended September 30, 2003


				Combined			Combined
				Guarantor			Non Guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations		Consolidated
Net cash provided (required) by operating activities	$	0.5		$	17.5		$	47.7		$	—	$	65.7
Net cash provided (required) by investing activities		—			(15.2	)		(156.4	)		—		(171.6	)
Net cash provided by financing activities		(2.8	)		(2.2	)		105.4			—		100.4

Net increase (decrease) in cash and cash equivalents		(2.3	)		0.1			(3.3	)		—		(5.5	)
Cash and cash equivalents at beginning of period		3.5			2.6			13.0			—		19.1

Cash and cash equivalents at end of period	$	1.2		$	2.7		$	9.7		$	—	$	13.6

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.

Three Months Ended September 30, 2004 Compared with Three Months Ended September 30, 2003 — Results of Operations

Our consolidated net income for the three months ended September 30, 2004 was $0.9 million compared to a net income of $1.8 million for the same period last year. Net income applicable to common shareholders for the three months ended September 30, 2004 was $0.1 million ($0.00 per diluted share) as compared to $1.0 million ($0.02 per diluted share) for the three months ended September 30, 2003. The difference between net income and net income applicable to common shareholders for the three months ended September 30, 2004 and 2003 was the $0.8 million in accrued dividends and accreted discount costs on the Series B preferred stock.

Revenues. Revenues were $567.2 million for the three months ended September 30, 2004 compared to $363.4 million for the three months ended September 30, 2003. The increase was primarily due to a significant increase in outside sales by the Rail Group. The increase in revenues for the Construction Products Group was the result of increased market demand in the Highway Safety and Fittings businesses and the acquisitions made by Concrete and Aggregates business during the latter part of 2003 and early 2004. The increased revenue from the Railcar Leasing and Management Services Group was a result of an increase in the size of the fleet as well as an improvement in utilization and an increase in lease fleet sales.

The following table reconciles the revenue amounts discussed under our operating segments with the consolidated total revenues (in millions).


	Three Months Ended September 30, 2004								Three Months Ended September 30, 2003
	Revenues								Revenues
	Outside		Intersegment			Total			Outside		Intersegment			Total
Rail Group	$	279.8	$	35.4		$	315.2		$	126.4	$	63.8		$	190.2
Construction Products Group		170.3		0.5			170.8			133.3		0.4			133.7
Inland Barge Group		46.2		—			46.2			42.5		—			42.5
Industrial Products Group		33.0		2.0			35.0			30.1		1.4			31.5
Railcar Leasing and Management Services Group		36.5		—			36.5			29.9		—			29.9
All Other		1.4		7.9			9.3			1.2		6.7			7.9
Eliminations		—		(45.8	)		(45.8	)		—		(72.3	)		(72.3	)

Consolidated Total	$	567.2	$	—		$	567.2		$	363.4	$	—		$	363.4

Operating Profit (Loss)


	Three Months
	Ended
	September 30,
	2004			2003
	(in millions)
Rail Group	$	(14.5	)	$	2.9
Construction Products Group		18.5			11.4
Inland Barge Group		(1.7	)		0.3
Industrial Products Group		4.5			2.7
Railcar Leasing and Management Services Group		7.9			9.3
All Other		(1.7	)		(2.0	)
Corporate		(7.2	)		(9.6	)
Eliminations		(2.0	)		(4.9	)

Consolidated Total	$	3.8		$	10.1

Operating profit decreased $6.3 million to $3.8 million for the three months ended September 30, 2004 compared to $10.1 million for the same period in 2003. This decrease is primarily the result of significant increases in steel and component costs and temporary shortages of steel and components, primarily in our Rail and Inland Barge Groups as well as an increase in lease expense in the Railcar Leasing and Management Services Group associated with the refinancing of cars under the non-recourse warehouse facility with long-term, fixed rate, off-balance sheet, sale/leaseback financings in November 2003 and August 2004 which effectively converted interest expense (which is not deducted from operating profit) to lease expense (which is deducted from operating profit), partially offset by an increase in our leasing fleet size and utilization.

Other Income and Expenses. Other income and expense included interest income, interest expense and other, net. Interest expense, net of interest income decreased $6.0 million to $2.3 million for the three months ended September 30, 2004 compared to $8.3 million for the same period in 2003, a decrease of 72.3%. Interest income increased $8.7 million over the same period last year. This increase is primarily related to interest of $8.1 million received on the AMSHA deposit (See Note 4). Interest expense increased $2.7 million over the same period last year, primarily due to an increase in debt balances associated with the Senior Notes.

Income Taxes. The current year effective tax rate of 32.6% was less than the statutory rate of 35% due to foreign income which has lower effective tax rates. The prior year effective tax rate of 30.2% was due to the absence of tax benefits on certain foreign losses.

Rail Group


	Three Months
	Ended
	September 30,
	2004			2003
	(in millions)
Revenues:
North American Rail	$	263.2		$	130.5
Europe Rail		25.5			33.6
Components		26.5			26.1

Total revenues	$	315.2		$	190.2
Operating profit (loss)	$	(14.5	)	$	2.9
Operating profit (loss) margin		(4.6	)%		1.5	%

Railcars shipped in North America increased 90.0% to approximately 4,150 cars during the three months ended September 30, 2004 compared to the same period in 2003, resulting in a revenue increase for the North American Rail operations of 101.7% over the same period last year. As of September 30, 2004, the North American backlog increased 71.5% to approximately 19,800 cars compared to the same date last year.

Revenues for the European operations decreased 24.1% over the same period in 2003 due to a change in product mix and a 36.4% decrease in railcars shipped in Europe to approximately 330 cars, primarily due to a scheduled plant shut-down for maintenance. As of September 30, 2004, the European backlog was approximately 1,700 cars compared to 2,100 for the same date last year.

The operating profit for the Rail Group decreased $17.4 million to a loss of $14.5 million for the three months ended September 30, 2004 compared to the same period last year. Operating profit was adversely affected primarily by increased steel and component costs of $17.0 million compared to costs anticipated for contracts that existed at the beginning of the year, including a $4.6 million contract loss on railcars to be delivered in 2005, and an increased operating loss in Europe of $1.2 million as a result of a third quarter plant shut-down for maintenance. While we have taken steps to mitigate the impact of cost volatility, such as adding price escalation clauses to sales contracts and other measures, steel and component cost and availability could continue to adversely impact operations going forward. At September 30, 2004, approximately 71% of our North American railcar backlog orders included price escalation clauses. Escalation clauses vary and may be less than 100% effective in passing costs through to customers. Material cost increases above increases anticipated for contracts that existed at the beginning of the year that cannot be passed on to customers are expected to reduce operating profit in the last three months of 2004 by $13.2 million.

In the three months ended September 30, 2004 railcar sales to the Railcar Leasing and Management Services Group included in the Rail Group results were $34.3 million compared to $63.6 million in the comparable period in 2003 with profit of $2.0 million compared to $4.9 million for the same period in 2003. Sales to the Railcar Leasing and Management Services Group and related profits are eliminated in consolidation.

Construction Products Group


	Three Months
	Ended
	September 30,
	2004			2003
	(in millions)
Revenues	$	170.8		$	133.7
Operating profit	$	18.5		$	11.4
Operating profit margin		10.8	%		8.5	%

Revenues increased 27.7% for the three months ended September 30, 2004 compared to the same period in 2003. The increase in revenues was primarily attributable to an increase in the Highway Safety, Fittings, and Concrete and Aggregates businesses. Market demand for selected Highway Safety products has steadily improved in 2004. In addition, there have been price increases resulting from the increase in raw material costs in both the Highway Safety and Fittings businesses. The Concrete and Aggregates business has increased due to acquisitions in the latter part of 2003 and early 2004. The improvement in operating profit percentage for the quarter over the same period last year is a result of improved efficiencies and lower operating costs and a result of an increase in demand in both our Highway Safety and Fittings businesses.

Inland Barge Group


	Three Months
	Ended
	September 30,
	2004			2003
	(in millions)
Revenues	$	46.2		$	42.5
Operating profit (loss)	$	(1.7	)	$	0.3
Operating profit (loss) margin		(3.7	)%		0.7	%

Revenues increased $3.7 million for the three months ended September 30, 2004 compared to the same period in 2003. This was primarily due to an increase in sales of hopper barges. Operating loss in the current quarter was $1.7 million, a change of $2.0 million compared to $0.3 million in operating profit for the same period last year. This was primarily due to steel costs increases which were approximately $2.5 million in excess of costs anticipated at the beginning of the year. Barge litigation and related costs were $1.0 and $1.1 million for the three months ended September 30, 2004 and 2003, respectively.

Industrial Products Group


	Three Months
	Ended
	September 30,
	2004			2003
	(in millions)
Revenues	$	35.0		$	31.5
Operating profit	$	4.5		$	2.7
Operating profit margin		12.9	%		8.6	%

Revenues increased 11.1% for the three months ended September 30, 2004 compared to the same period in 2003. This increase of $3.5 million was due to increased sales of domestic tanks in the U.S. and an increase in the sale of heads used for tank car production and other railcar equipment. The operating profit margin for the current quarter was higher than the same quarter last year due to improved efficiencies based on increased volume and increased sales of tank car heads and other railcar equipment.

Railcar Leasing and Management Services Group


	Three Months
	Ended
	September 30,
	2004			2003
	(in millions)
Revenues:
Leasing and management	$	35.5		$	29.4
Lease fleet sales		1.0			0.5

Total revenues	$	36.5		$	29.9
Operating Profit (loss):
Leasing and management	$	8.2		$	9.1
Lease fleet sales		(0.3	)		0.2

Total operating profit	$	7.9		$	9.3
Operating profit margin		21.6	%		31.1	%
Fleet utilization		98.5	%		96.8	%

Total revenues increased $6.6 million for the three months ended September 30, 2004 compared to the same period last year. This increase of 22.1% was due to lease fleet sales and increased rental revenues related to additions to the lease fleet and improved fleet utilization of 98.5%.

The Company continues to expand its lease fleet size. To fund the expansion of its lease fleet to meet this demand, the Leasing Group uses its non-recourse warehouse line to provide initial financing for a portion of the manufacturing costs of the cars. Subsequently, the Leasing Group generally obtains long-term financing for the cars in the lease fleet through long-term recourse debt such as equipment trust certificates or long-term non-recourse operating leases pursuant to sales/leaseback transactions.

The decline in the Leasing Group operating profit in the third quarter was due to the refinancing of cars under the non-recourse warehouse facility with long-term, fixed rate, off-balance sheet, sale/leaseback financings in November 2003 and August 2004 which effectively converted interest expense (which is not deducted from operating profit) to lease expense (which is deducted from operating profit). The Company uses a non-GAAP measure to compare performance between periods. This non-GAAP measure is EBITDAR, which is Operating Profit of the Leasing Group plus depreciation and rental or lease expense. We use this measure to eliminate the costs resulting from financings. EBITDAR should not be considered as an alternative to operating profit or other GAAP financial measurements as an indicator of our operating performance. EBITDAR is shown below (in millions):


	Three Months Ended							Three Months Ended
	September 30, 2004							September 30, 2003
	Leasing and							Leasing and
	Management		Lease Fleet Sales			Total		Management		Lease Fleet Sales		Total
Operating profit (loss)	$	8.2	$	(0.3	)	$	7.9	$	9.1	$	0.2	$	9.3
Add: Depreciation		5.5		0.0			5.5		6.1		0.0		6.1
Rental expense		10.2		0.0			10.2		5.1		0.0		5.1

EBITDAR	$	23.9	$	(0.3	)	$	23.6	$	20.3	$	0.2	$	20.5

The increase in EBITDAR for the three months ended September 30, 2004 was due to the increase size of the fleet and improved utilization.

As of September 30, 2004, the Leasing and Management Services Group’s rental fleet of approximately 19,700 owned or leased railcars has an average age of 5.42 years and an average remaining lease term of 6.02 years.

All Other

Revenues in All Other increased to $9.3 million for the three months ended September 30, 2004 from $7.9 million for the same period last year. This increase was primarily attributable to an increase in intersegment sales by our transportation company. Operating loss was $1.7 million for the three months ended September 30, 2004 compared to $2.0 million in the same period in 2003. The decrease is primarily due to severance costs of approximately $0.4 million related to our transportation company that was paid in the prior year.

Nine Months Ended September 30, 2004 Compared with Nine Months Ended September 30, 2003 — Results of Operations

Our consolidated net loss for the nine months ended September 30, 2004 was $6.3 million compared to a net loss of $9.2 million for the same period last year. Net loss applicable to common shareholders for the nine months ended September 30, 2004 was $8.6 million ($0.19 per diluted share) as compared to $10.0 million ($0.22 per diluted share) for the nine months ended September 30, 2003. The difference between net loss and net loss applicable to common shares for the nine months ended September 30, 2004 and 2003 was $2.3 million and $0.8 million, respectively in accrued dividends and accreted discount costs on the Series B preferred stock.

Revenues. Revenues were $1,570.8 million for the nine months ended September 30, 2004 compared to $1,018.3 million for the nine months ended September 30, 2003. The increase was primarily due to a significant increase in outside sales by the Rail Group. The increase in revenues for the Construction Products Group was the result of increased market demand in the Highway Safety and Fittings businesses and the acquisitions made by Concrete and Aggregates during the latter part of 2003 and early 2004. The increased revenue from the Railcar Leasing and Management Services Group resulted from an increase in the size of the fleet, an improvement in utilization, and an increase in sales from the lease fleet.

The following table reconciles the revenue amounts discussed under our operating segments with the consolidated total revenues (in millions).


	Nine Months Ended September 30, 2004								Nine Months Ended September 30, 2003
	Revenues								Revenues
	Outside		Intersegment			Total			Outside		Intersegment			Total
Rail Group	$	729.6	$	120.1		$	849.7		$	317.2	$	176.8		$	494.0
Construction Products Group		443.5		1.1			444.6			368.9		0.6			369.5
Inland Barge Group		153.6		—			153.6			129.8		—			129.8
Industrial Products Group		97.7		4.5			102.2			85.5		3.0			88.5
Railcar Leasing and Management Services Group		143.3		—			143.3			112.7		—			112.7
All Other		3.1		22.1			25.2			4.2		18.7			22.9
Eliminations		—		(147.8	)		(147.8	)		—		(199.1	)		(199.1	)

Consolidated Total	$	1,570.8	$	—		$	1,570.8		$	1,018.3	$	—		$	1,018.3

Operating Profit (Loss)


	Nine Months
	Ended
	September 30,
	2004			2003
	(in millions)
Rail Group	$	(17.2	)	$	(13.5	)
Construction Products Group		35.0			29.8
Inland Barge Group		(12.8	)		0.5
Industrial Products Group		9.2			4.3
Railcar Leasing and Management Services Group		31.9			30.5
All Other		(2.0	)		(5.0	)
Corporate		(23.8	)		(25.0	)
Eliminations		(8.7	)		(12.5	)

Consolidated Total	$	11.6		$	9.1

Operating profit increased $2.5 million to $11.6 million for the nine months ended September 30, 2004 compared to an operating profit of $9.1 million for the same period in 2003. This improvement was primarily the result of increased production volumes and an increase in our leasing fleet size and utilization. Improvements have been partially offset by significant increases in steel and component costs and temporary shortages of steel and components, primarily in our Rail and Inland Barge Groups and barge litigation and related costs.

Other Income and Expenses. Other income and expense included interest income, interest expense and other, net. Interest expense, net of interest income decreased $3.3 million to $22.6 million for the nine months ended September 30, 2004 compared to $25.9 million for the same period in 2003, a decrease of 12.7%. Interest income increased $9.1 million to $9.5 million for the nine months ended September 30, 2004 compared to $0.4 million for the same period last year. This increase was primarily attributable to an increase in interest income of $8.1 million received on our AMSHA deposit. Interest expense increased $5.8 million to $32.1 million for the nine months ended September 30, 2004 compared to $26.3 million for the same period last year, an increase of 22.1%. This increase is due to the write-off of deferred loan fees of $1.2 million in connection with early retirement of the term loan in March of 2004 and an increase in debt balances during the second quarter, primarily associated with the senior notes.

Other, net was income of $1.7 million for the nine months ended September 30, 2004 compared to income of $3.6 million for the comparable period in 2003. The decrease was primarily due to a decrease of $1.6 million in the amount of gains on sales of property, plant, and equipment and an increase of $0.7 million in foreign currency losses in 2004.

Rail Group


	Nine Months
	Ended
	September 30,
	2004			2003
	(in millions)
Revenues:
North American Rail	$	628.0		$	318.4
Europe Rail		134.6			104.3
Components		87.1			71.3

Total revenues	$	849.7		$	494.0
Operating loss	$	(17.2	)	$	(13.5	)
Operating loss margin		(2.0	)%		(2.7	)%

Railcars shipped in North America increased 88% to approximately 10,100 cars during the nine months ended September 30, 2004 compared to the same period in 2003, resulting in a revenue increase for the North American operations of 97.2% over the same period last year.

Revenues for the European operations increased 29.1% over the same period in 2003 due to a 10% increase in railcars shipped in Europe to approximately 1,750 cars and a change in product mix.

The operating loss for the Rail Group increased $3.7 million to $17.2 million for the nine months ended September 30, 2004 compared to the same period last year. Operating profit was adversely affected by the mix of orders which were completed during the first quarter as well as increased material costs above costs anticipated for contracts that existed at the beginning of the year ($23.5 million), shortages of materials and unanticipated plant shut-downs ($6.6 million), start-up costs related to reopening manufacturing facilities ($1.9 million), and unabsorbed costs in the third quarter related to the shut-down of a European plant for maintenance ($1.2 million). While we have taken steps to mitigate the impact of cost volatility, such as adding price escalation clauses to sales contracts and other measures, steel and component cost and availability could continue to adversely impact operations going forward. Material cost increases above increases anticipated for contracts that existed at the beginning of the year that cannot be passed on to customers are expected to reduce operating profit in the last three months of 2004 by $13.2 million.

In the nine months ended September 30, 2004 railcar sales to the Railcar Leasing and Management Services Group included in the Rail Group results were $117.0 million compared to $173.8 million in the comparable period in 2003 with profit of $8.7 million compared to $12.5 million for the same period in 2003. Sales to the Railcar Leasing and Management Services Group and related profits are eliminated in consolidation.

Construction Products Group


	Nine Months
	Ended
	September 30,
	2004			2003
	(in millions)
Revenues	$	444.6		$	369.5
Operating profit	$	35.0		$	29.8
Operating profit margin		7.9	%		8.1	%

Revenues increased 20.3% for the nine months ended September 30, 2004 compared to the same period in 2003. The increase in revenues was primarily attributable to an increase in the Highway Safety, Concrete and Aggregates, and Fittings business units. The Highway Safety business increased due to favorable weather conditions in the first quarter as well as an improvement in the market demand for selected products and price increases resulting from an increase in raw material costs. The Concrete and Aggregates business increased due to acquisitions in the latter part of 2003 and early 2004, offset by

unfavorable weather conditions in the second quarter. The increase in revenues in the Fittings business was also attributable to an increase in market demand as well as price increases resulting from an increase in raw material costs. Operating profit percentage for the nine months ended September 30, 2004 decreased over the same period last year as a result of the steel price increases in the Structural Bridge portion of this segment and competitive pricing pressure in certain markets of our Concrete and Aggregates business as well as the impact of year over year unfavorable weather, offset by the increase in production volumes in our Highway Safety and Fittings businesses.

Inland Barge Group


	Nine Months
	Ended
	September 30,
	2004			2003
	(in millions)
Revenues	$	153.6		$	129.8
Operating profit (loss)	$	(12.8	)	$	0.5
Operating profit (loss) margin		(8.3	)%		0.4	%

Revenues increased $23.8 million for the nine months ended September 30, 2004 compared to the same period in 2003. This was primarily due to an increase in hopper barge sales volume. Operating loss for the nine months ended September 30, 2004 was $12.8 million, a decrease of $13.3 million compared to $0.5 million in operating profit for the same period last year. This was primarily due to steel cost increases which were approximately $12.4 million in excess of costs anticipated at the beginning of the year and increased barge litigation and related costs. Steel cost increases in excess of costs anticipated at the beginning of the year for the quarter ending December 31, 2004 are presently estimated to be $2.9 million. Where such increases have resulted in expected loss on contracts, the estimated losses have been recorded during the nine months ended September 30, 2004. The loss reserve balance related to barges to be delivered in the next two quarters is $7.0 million at September 30, 2004. Barge litigation and related costs were $4.1 million and $2.5 million for the nine months ended September 30, 2004 and 2003, respectively.

Industrial Products Group


	Nine Months
	Ended
	September 30,
	2004			2003
	(in millions)
Revenues	$	102.2		$	88.5
Operating profit	$	9.2		$	4.3
Operating profit margin		9.0	%		4.9	%

Revenues increased 15.5% for the nine months ended September 30, 2004 compared to the same period in 2003. The increase of $13.7 million was due to increased sales of domestic tanks in the U.S. and an increase in the sale of heads used for tank car production and other railcar equipment. The operating profit margin for the current nine months was higher than the same period last year due to improved efficiencies based on increased volume and increased sales of tank car heads and other railcar equipment.

Railcar Leasing and Management Services Group


	Nine Months
	Ended
	September 30,
	2004			2003
	(in millions)
Revenues:
Leasing and management	$	105.5		$	86.0
Lease fleet sales		37.8			26.7

Total revenues	$	143.3		$	112.7
Operating Profit:
Leasing and management	$	27.4		$	27.0
Lease fleet sales		4.5			3.5

Total operating profit.	$	31.9		$	30.5
Operating profit margin		22.3	%		27.1	%
Fleet utilization		98.5	%		96.8	%

Total revenues increased $30.6 million for the nine months ended September 30, 2004 compared to the same period last year. This increase of 27.2% was due to increased lease fleet sales and increased rental revenues related to additions to the lease fleet and improved fleet utilization.

The Company continues to expand its lease fleet size. To fund the expansion of its lease fleet to meet this demand, the Leasing Group uses its non-recourse warehouse line to provide initial financing for a portion of the manufacturing costs of the railcars. Subsequently, the Leasing Group generally obtains long-term financing for the cars in the lease fleet through long-term recourse debt such as equipment trust certificates or long-term non-recourse operating leases pursuant to sales/leaseback transactions.


	Nine Months Ended						Nine Months Ended
	September 30, 2004						September 30, 2003
			Lease						Lease
	Leasing and		Fleet				Leasing and		Fleet
	Management		Sales		Total		Management		Sales		Total
Operating profit (loss)	$	27.4	$	4.5	$	31.9	$	27.0	$	3.5	$	30.5
Add: Depreciation		17.3		0.0		17.3		18.2		0.0		18.2
Rental expense		28.6		0.0		28.6		15.3		0.0		15.3

EBITDAR	$	73.3	$	4.5	$	77.8	$	60.5	$	3.5	$	64.0

The increase in EBITDAR for the nine months ended September 30, 2004 was due to the increase size of the fleet and improved utilization.

All Other

Revenues in All Other increased to $25.2 million for the nine months ended September 30, 2004. This increase was primarily attributable to an increase in intersegment sales by our transportation company. Operating loss was $2.0 million for the nine months ended September 30, 2004 compared to an operating loss of $5.0 million in the same period in 2003.

Liquidity and Capital Resources

2004 Financing Activity

In March 2004, we issued $300 million aggregate principal amount 6 1/2% senior notes (Senior Notes) due 2014, through a private offering. Interest on the Senior Notes is payable semiannually commencing September 15, 2004. The Senior Notes rank equally with all of our existing and future senior debt and are subordinated to all our existing and future secured debt to the extent of the value of the assets securing such debt. We may redeem some or all of the Senior Notes at any time on or after March 15, 2009 at a redemption price of 103.25% in 2009, 102.167% in 2010, 101.083% in 2011 and 100.0% in 2012 and thereafter plus accrued interest. We may also redeem up to 35% of the aggregate principal amount of the Senior Notes using the proceeds from certain public equity offerings completed on or before March 15, 2007 at a redemption price of 106.5% of the principal amount plus accrued and unpaid interest. The Senior Notes could restrict our ability to incur additional debt; make certain distributions, investments and other restricted payments; create certain liens; merge; consolidate; or sell substantially all or a portion of our assets. We applied approximately $163 million of the net proceeds of the offering to repay all indebtedness under our existing bank credit facility. In September 2004, as required by the contract with the purchasers of the Senior Notes due 2014, the Company made an offer to exchange all of the privately placed Senior Notes for an equal principal amount of the Senior Notes due 2014, which are registered with the Security and Exchange Commission and have substantially identical terms. As of September 30, 2004 all of the privately placed Senior Notes were exchanged for Senior Notes due 2014.

In connection with the issuance of our Senior Notes, we extended our secured credit agreement to provide for a three-year, $250 million revolving credit facility and repaid the existing term loan facility. Amounts borrowed under the revolving credit facility for periods after the first quarter of 2004 will bear interest at LIBOR plus a margin based upon financial performance. Our accounts receivable and inventory secure the agreement. The agreement limits the amount of capital expenditures related to our leasing business, requires maintenance of ratios related to interest coverage for the leasing and manufacturing operations, leverage, asset coverage and minimum net worth, and restricts the amount of dividend payments based upon our current credit rating not to exceed $25 million annually. At September 30, 2004, there were no borrowings under the revolving credit facility.

Cash Flows

Operating Activities. Net cash required by operating activities for the nine months ended September 30, 2004 was $129.3 million compared to $65.7 million net cash provided by operating activities for the same period in 2003. This was partially due to an increase in working capital related to increased production volumes. In addition, a tax refund of $48.5 million was collected in the nine months ended September 30, 2003. The increase in working capital needs is reflective of the upturn in our businesses.

Investing Activities. Net cash provided by investing activities for the nine months ended September 30, 2004 was $86.3 million compared to $171.6 million net cash required for the same period last year. Capital expenditures for the nine months ended September 30, 2004 were $136.9 million, of which $112.5 million were for additions to the lease subsidiary. This compares to $205.2 million of capital expenditures for the same period last year, of which $188.5 million was for additions to the lease subsidiary. Proceeds from the sale of property, plant and equipment were $230.4 million for the nine months ended September 30, 2004 composed primarily of railcar sales from the lease fleet and the sale of non-operating assets, compared to $33.6 million for the same period in 2003 composed primarily of railcar sales from the lease fleet. In addition, $15.7 million of cash was required for an acquisition by our Construction Products Group and $8.5 million of cash was provided by the sale of the Leasing’s Group equity ownership in a trust.

Financing Activities. Net cash provided by financing activities during the nine months ended September 30, 2004 was $151.2 million compared to $100.4 million for the same period in 2003. During the first quarter of 2004, we issued $300 million aggregate principal amount 6 1/2% senior notes due 2014 (Senior Notes) through a private offering. We applied approximately $163 million of the net proceeds of the offering to repay all indebtedness under our existing credit facility. In September 2004, as required by the contract with the purchasers of the Senior Notes due 2014, the Company made an offer to exchange all of the privately placed Senior Notes for an equal principal amount of the Senior Notes due 2014, which are registered with the Securities and Exchange Commission and have substantially identical terms. As of September 30, 2004 all of the privately placed Senior Notes were exchanged for Senior Notes due 2014.

Off-Balance Sheet Arrangements. During the quarter ended September 30, 2004, the Leasing Group completed a transaction whereby $180.1 million of railcars were sold to independent trusts. These trusts financed the purchase of the railcars with $134.0 million in debt and $46.1 million in third party equity. The equity participants in the trusts are the primary beneficiaries of the trusts. The Leasing Group, through a newly formed, wholly owned qualified subsidiary, leased railcars from the trusts under operating leases with terms of 22 years and subleased the railcars to independent third parties under shorter term operating leases. This qualified subsidiary had total assets of $49.7 million as of September 30, 2004 including cash of $6.1 million, and Leasing Group railcars of $43.6 million. The cash and railcars are pledged to collateralize the lease obligations to the trusts and are included in the consolidated financial statements of the Company. Trinity does not guarantee the performance of the subsidiary’s lease obligations. Under the terms of the operating lease agreement, the Leasing Group has options to purchase at a predetermined, fixed price, certain of the railcars from the trusts in 2019. The Leasing Group also has options to purchase the railcars at the end of the lease agreement at the then fair market value of the railcars as determined by a third party, independent appraisal. At the expiration of the operating lease agreement, the Leasing Group’s qualified subsidiary has no further obligation. An independent trustee for the trust has authority for appointment of the railcar fleet manager, which at September 30, 2004 was Trinity Industries Leasing Company (“TILC”), a wholly owned subsidiary of the Company. As fleet manager, TILC is required to endeavor, consistent with customary commercial practice as would be used by a prudent person, to maintain railcars under lease for the benefit of the trusts. TILC receives management fees under the terms of the agreement for services it provides. Certain ratios and cash deposits must be maintained by the Leasing Group’s subsidiaries in order for excess cash flow, as defined in the agreements, from the third parties leases, to be available to Trinity. The sales of railcars by Trinity to the trusts were accounted for as a sale/leaseback transaction. No revenue or profit was recorded at the time of the transactions and all profit was deferred and is being amortized over the terms of the operating leases. Neither the assets, the liabilities, nor equity of the trusts are reflected on the balance sheet of Trinity.

Contractual Obligation and Commercial Commitments

As of September 30, 2004 other commercial commitments related to letters of credit have decreased to $113.8 million from $116.4 million as of December 31, 2003. Refer to Note 6 in the financial statements for changes to our outstanding debt and maturities. Other commercial commitments that relate to operating leases under sale/leaseback transactions were basically 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 among others:

• market conditions and demand for our products;

• the cyclical nature of both the railcar and barge industries;

• variations in weather in areas where construction products are sold and used;

• the timing of introduction of new products;

• the timing of customer orders;

• price changes;

• changes in mix of products sold;

• the extent of utilization of manufacturing capacity;

• availability and costs of component parts, supplies, and raw materials;

• competition and other competitive factors;

• changing technologies;

• steel prices;

• surcharges added to fixed pricing agreements for raw materials;

• interest rates and capital costs;

• long-term funding of our leasing warehouse facility;

• taxes;

• the stability of the governments and political and business conditions in certain foreign countries, particularly Mexico and Romania;

• changes in import and export quotas and regulations;

• business conditions in emerging economies;

• results of litigation; and

• 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 Disclosures About Market Risk

There has been no material change in our market risks since December 31, 2003.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

The Company maintains controls and procedures designed to ensure that it is able to collect the information it is required to disclose in the reports it files with the SEC, and to process, summarize, and disclose this information within the time periods specified in the rules of the SEC. The Company’s Chief Executive and Chief Financial Officers are responsible for establishing and maintaining these procedures and, as required by the rules of the SEC, evaluate their effectiveness. Based on their evaluation of the Company’s disclosure controls and procedures which took place as of the end of the period covered by this report, the Chief Executive and Chief Financial Officers believe that these procedures are effective to ensure that the Company is able to collect, process, and disclose the information it is required to disclose in the reports it files with the SEC within the required time periods.

Internal Controls

The Company maintains a system of internal controls designed to provide reasonable assurance that: transactions are executed in accordance with management’s general or specific authorization; transactions are recorded as necessary (1) to permit preparation of financial statements in conformity with generally accepted accounting principles, and (2) to maintain accountability for assets; access to assets is permitted only in accordance with management’s general or specific authorization; and the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

During the period covered by this report, there have been no changes in the Company’s internal control over financial reporting that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II

Item 1. Legal Proceedings

On March 15, 2004, the Company and its wholly owned subsidiary, Trinity Marine Products, Inc. (“TMP”), settled its claims in a case filed by Florida Marine Transporters, Inc. (“FMT”) related to twenty-eight tank barges owned and/or operated by FMT. The settlement involves, among other elements, a joint monitoring of the barge coatings and void compartment maintenance procedures, and a mutual release of all claims against one another.

The Company and TMP, and certain material suppliers and others, are named as co-defendants in four separate lawsuits filed by J. Russell Flowers, Inc. (“Flowers”) on October 7, 2002, Marquette Transportation Company and Iowa Fleeting Services, Inc. (“Marquette”) on March 7, 2003, Waxler Transportation Company, Inc. (“Waxler”) on April 7, 2003 and LeBeouf Bros. Towing (“LeBeouf”) on July 3, 2003. The Marquette and Waxler cases are pending in the 25th Judicial District Court in Plaquemines Parish, Louisiana, and the Flowers case is pending in the U.S. District Court, Northern District of Mississippi, Greenville, Mississippi, and the LeBeouf case is pending in the U.S. District Court for the Eastern District of Louisiana. In Waxler, the plaintiff has petitioned the court for certification of a class which if certified by the court, could increase the total number of barges involved in the Waxler litigation. Absent certification of a class in the Waxler case, the Waxler and LeBeouf suits currently involve 24 tank barges sold at an approximate average price of $1.4 million and the Marquette and Flowers suits involve 140 hopper barges sold at an approximate average price of $280,000. Each of the four cases set forth allegations pertaining to damages arising from alleged defects in coating materials supplied by a co-defendant and coatings application workmanship by TMP. The plaintiffs seek both compensatory and punitive damages and/or rescission of the barge purchase contracts. Independent experts investigating the claims on behalf of the Company and TMP have expressed the opinion that technical arguments presented by the plaintiffs in the litigation are without merit. As of September 30, 2004, one of the four plaintiffs owes TMP approximately $8.9 million related to contracts for barges not involved in the litigation. TMP has filed suit for collection of the past due amounts.

Item 6. Exhibits and Reports on Form 8-K

a) Exhibits.


Exhibit Number		Description


10.1		Equipment Lease Agreement (TRL IV 2004-1A) between TRL IV 2004-1A Statutory Trust, lessor, and Trinity Rail Leasing IV L.P., lessee.

10.1.1		Participation Agreement (TRL IV 2004-1A) among Trinity Rail Leasing IV, L.P., lessee, et. al.

10.17.4		Amendment No. 4 to the Warehouse Loan Agreement, amending the Warehouse Loan Agreement dated June 27, 2002.

10.17.5		Amendment No. 5 to the Warehouse Loan Agreement, amending the Warehouse Loan Agreement dated June 27, 2002.

10.17.6		Amendment No. 6 to the Warehouse Loan Agreement, amending the Warehouse Loan Agreement dated June 27, 2002.

10.17.7		Amendment No. 7 to the Warehouse Loan Agreement, amending the Warehouse Loan Agreement dated June 27, 2002.

12		Computation of Ratio of Earnings to Fixed Charges

31.1		Rule 13a-15(e) and 15d-15(e) Certification of Chief Executive Officer.

31.2		Rule 13a-15(e) and 15d-15(e) Certification of Chief Financial Officer.

32.1		Certification pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		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 during the quarter ended September 30, 2004.

(1) Trinity filed a current Report on Form 8-K dated August 5, 2004, reporting, under Item 9 and 12, operating results for the second quarter of 2004, and attaching a news release dated August 4, 2004 and a script of the conference call dated May 6, 2004.

(1) Trinity filed a current Report on Form 8-K dated August 5, 2004, reporting, under item 5 and 7 a Statement of computation of Ratio of Earnings to Fixed Charges and Selected Historical Consolidated Financial Data, each reflecting updated financial information for the six month period ending June 30, 2004.

(2) Trinity filed a current Report on Form 8-K dated October 14, 2004, reporting, under Item 8.01 the elimination of the position of Chief Executive Officer of Trinity Rail Group, LLC.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


TRINITY INDUSTRIES, INC. Registrant		By /s/ JIM S. IVY Jim S. Ivy Senior Vice President and Chief Financial Officer November 3, 2004

INDEX TO EXHIBITS


Exhibit Number		Description


10.1		Equipment Lease Agreement (TRL IV 2004-1A) between TRL IV 2004-1A Statutory Trust, lessor, and Trinity Rail Leasing IV L.P., lessee.

10.1.1		Participation Agreement (TRL IV 2004-1A) among Trinity Rail Leasing IV, L.P., lessee, et. al.

10.17.4		Amendment No. 4 to the Warehouse Loan Agreement, amending the Warehouse Loan Agreement dated June 27, 2002.

10.17.5		Amendment No. 5 to the Warehouse Loan Agreement, amending the Warehouse Loan Agreement dated June 27, 2002.

10.17.6		Amendment No. 6 to the Warehouse Loan Agreement, amending the Warehouse Loan Agreement dated June 27, 2002.

10.17.7		Amendment No. 7 to the Warehouse Loan Agreement, amending the Warehouse Loan Agreement dated June 27, 2002.

12		Computation of Ratio of Earnings to Fixed Charges

31.1		Rule 13a-15(e) and 15d-15(e) Certification of Chief Executive Officer.

31.2		Rule 13a-15(e) and 15d-15(e) Certification of Chief Financial Officer.

32.1		Certification pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		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 2 d19332exv10w1.txt EQUIPMENT LEASE AGREEMENT EXHIBIT 10.1 EXECUTION COPY --------------------------------------- EQUIPMENT LEASE AGREEMENT (TRLIV 2004-1A) Dated as of August 19, 2004 between TRLIV 2004-1A RAILCAR STATUTORY TRUST, a Connecticut Statutory Trust, Lessor and TRINITY RAIL LEASING IV L.P., Lessee Tank Cars and Freight Cars --------------------------------------- CERTAIN OF THE RIGHT, TITLE AND INTEREST OF LESSOR IN AND TO THIS LEASE, THE EQUIPMENT COVERED HEREBY AND THE RENT DUE AND TO BECOME DUE HEREUNDER HAVE BEEN ASSIGNED AS COLLATERAL SECURITY TO, AND ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF, WILMINGTON TRUST COMPANY, NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS INDENTURE TRUSTEE UNDER A TRUST INDENTURE AND SECURITY AGREEMENT (TRLIV 2004-1A), DATED AS OF AUGUST 19, 2004 BETWEEN SAID INDENTURE TRUSTEE, AS SECURED PARTY, AND LESSOR, AS DEBTOR. INFORMATION CONCERNING SUCH SECURITY INTEREST MAY BE OBTAINED FROM THE INDENTURE TRUSTEE AT ITS ADDRESS SET FORTH IN SECTION 20 OF THIS LEASE. SEE SECTION 25.2 FOR INFORMATION CONCERNING THE RIGHTS OF THE ORIGINAL HOLDER AND HOLDERS OF, THE VARIOUS COUNTERPARTS HEREOF. --------------------------------------- Table of Contents

i Table of Contents (continued)

ii Table of Contents (continued)

iii Table of Contents (continued)

iv EQUIPMENT LEASE AGREEMENT (TRLIV 2004-1A) This Equipment Lease Agreement (TRLIV 2004-1A), dated as of August 19, 2004 (this "Lease"), is by and between TRLIV 2004-1A Railcar Statutory Trust, a Connecticut statutory trust, as Lessor, and Trinity Rail Leasing IV L.P., a Texas limited partnership, as Lessee. In consideration of the mutual agreements herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: SECTION 1. Definitions. Unless otherwise defined herein or required by the context, all capitalized terms used herein shall have the respective meanings assigned to such terms in Appendix A hereto for all purposes of this Lease. SECTION 2. Acceptance and Leasing of Equipment. Subject to Section 4 of the Participation Agreement, Lessor hereby agrees to accept delivery of each Unit from Lessee and to lease such Unit to Lessee hereunder, and Lessee hereby agrees, immediately following such acceptance by Lessor, to lease from Lessor hereunder such Unit, such acceptance by Lessor and lease by Lessee to be evidenced by the execution and delivery by Lessee and Lessor of a Lease Supplement covering such Unit, all in accordance with Section 2.3(b) of the Participation Agreement. Lessee hereby agrees that its execution and delivery of a Lease Supplement covering any Unit shall, without further act, irrevocably constitute acceptance by Lessee of such Unit for all purposes of this Lease. SECTION 3. Term and Rent. Section 3.1 Lease Term. The basic term of this Lease (the "Basic Term") shall commence on the Basic Term Commencement Date and, subject to earlier termination pursuant to Section 10, 11, 15 or 22.1, shall expire at 11:59 p.m. (Chicago, Illinois time) on the date immediately prior to the Basic Term Expiration Date. Subject and pursuant to Section 22.4, Lessee may elect one Renewal Term. Section 3.2 Basic Rent. Lessee hereby agrees to pay to Lessor Basic Rent for each Unit throughout the Basic Term applicable thereto in consecutive monthly installments payable on each Rent Payment Date. Each such monthly payment of Basic Rent shall be in an amount equal to the product of the Equipment Cost for each Unit subject to lease hereunder multiplied by the Basic Rent percentage set forth opposite such Rent Payment Date on Schedule 3-A to the Participation Agreement (as such Schedule 3-A shall be adjusted pursuant to Section 2.6 of the Participation Agreement). Notwithstanding Lessee's payment obligations set forth in the preceding two sentences, Lessee's liability on account of the use of the Units during each Lease Period shall accrue and be allocated within the meaning of Treasury Regulation Section 1.467-1(c)(2)(ii)(A)(2) to each Lease Period as set forth on Schedule 3-B to the Participation Agreement. Basic Rent shall be allocated to each calendar year in the Basic Term based upon the assumption that each calendar year in the Basic Term is 360 days, consisting of four 90-day quarters and twelve 30-day months. It is the intention of Lessor and Lessee that (x) the allocations of Basic Rent set forth on Schedule 3-B to the Participation Agreement constitute specific allocations of fixed rent within the meaning of Treasury Regulation Section 1.467-1(c)(2)(ii) and (y) the first three Lease Periods shall constitute a rent holiday to which no Basic Rent is allocated. Stipulated Loss Amounts and Termination Amounts have been calculated on the basis that (i) any Basic Rents actually due on the date of such calculation shall not have been paid and (ii) any Basic Rents scheduled to have been paid prior to the date of such calculation are assumed to have been paid and have been appropriately reflected in such calculations. Lessor and Lessee agree to include in income and deduct the Basic Rents allocated to each Lease Period and calendar year according to Schedule 3-B of the Participation Agreement. It is the intention of the parties hereto that Basic Rent shall constitute "fixed rent" within the meaning of Treasury Regulation Section 1.467-1(h)(3) and that Basic Rent paid shall always equal Basic Rent allocated. In the event that (i) the amount of fixed rent payable under the Lease is deemed to be less than or more than the aggregate amount of Basic Rent identified on Schedule 3-A to the Participation Agreement and (ii) such increase is deemed to be an increase of fixed rent (within the meaning of Treasury Regulation Section 1.467-1(h)(3)) or such decrease is deemed to be a decrease of fixed rent (within the meaning of Treasury Regulation Section 1.467-1(h)(3)), then the amount of Basic Rent allocated on Schedule 3-B to the Participation Agreement for each Lease Period shall be increased or decreased, as the case may be, by an amount equal to the deemed increase or decrease in Basic Rent payments multiplied by a fraction, the numerator of which is equal to the amount of Basic Rent allocated for such Lease Period on Schedule 3-B to the Participation Agreement and the denominator of which is the aggregate amount of the Basic Rent allocated for all Lease Periods on Schedule 3-B to the Participation Agreement. The adjusted Basic Rent allocated shall constitute Basic Rent allocated for all purposes of this Lease. Notwithstanding anything to the contrary contained herein or in the Participation Agreement, each installment of Basic Rent (both before and after any adjustment pursuant to Section 2.6 of the Participation Agreement) shall be, under any circumstances and in any event, in an amount at least sufficient for Lessor to pay in full as of the due date of such installment, an amount equal to the sum of (x) any payment of principal of and interest on the Equipment Notes required to be paid by Lessor pursuant to the Indenture on such due date in accordance with the Scheduled Amortization and (y) the Policy Provider Base Premium Amount required to be paid on the due date of such installment. Section 3.3 Supplemental Rent. Lessee also agrees to pay to Lessor, or to whosoever shall be entitled thereto, any and all Supplemental Rent, as and when due, or where no due date is specified, promptly after demand by the Person entitled thereto, and in the event of any failure on the part of Lessee to pay any Supplemental Rent, Lessor shall have all rights, powers and remedies provided for herein or by law or equity or otherwise as in the case of nonpayment of Basic Rent. Lessee will also pay, as Supplemental Rent, (i) on demand, to the extent permitted by applicable law, an amount equal to Late Payment Interest on any part of any installment of Basic Rent not paid when due for any period for which the same shall be overdue and on any payment of Supplemental Rent not paid when due or promptly after demanded for the period from such due date or demand date, as applicable, until the same shall be paid and (ii) as 2 and when due in accordance with the Trust Indenture or the Participation Agreement, any Make-Whole Amount payable with respect to any Equipment Note, including, without limitation, amounts of Make-Whole Amount due in the case of the termination of this Lease with respect to any Unit pursuant to Section 6.9 (other than clause 6.9(a)(C) thereof) of the Participation Agreement, and in the case of any refinancing of the Equipment Notes pursuant to Section 10.2 of the Participation Agreement but excluding any Make-Whole Amount payable pursuant to Section 4.4(b) of the Indenture. All Supplemental Rent to be paid pursuant to this Section 3.3 shall be payable in the type of funds and in the manner set forth in Section 3.5. Section 3.4 Adjustment of Rent. Lessee and Lessor agree that the payments and allocations of Basic Rent, Stipulated Loss Values, Stipulated Loss Amounts, Termination Values and Termination Amount percentages and the Early Purchase Price shall be adjusted to the extent provided in Section 2.6 of the Participation Agreement. Section 3.5 Manner of Payments. All Rent (other than Supplemental Rent payable to Persons other than Lessor, which shall be payable to such other Persons in accordance with written instructions furnished to Lessee by such Persons, as otherwise provided in any of the Operative Agreements or as required by law) shall be paid by Lessee to Lessor at its office at 225 Asylum Street, 23rd Floor, Hartford, CT 06103, Attention: Corporate Trust Department, provided, that so long as the Indenture shall not have been discharged pursuant to the terms thereof, Lessor hereby directs, and Lessee hereby agrees, that all Rent (excluding Excepted Property) payable to Lessor shall be paid from the Payment Account directly to the Indenture Trustee at the times and in funds of the type specified in this Section 3.5 at the office of the Indenture Trustee at Rodney Square North, 1100 N. Market Street, Wilmington, DE 19890-0001, ABA No. 031100092, Account No. 067435-000, Ref: Trinity Rail-TRLIV 2004-1A, or at such other location in the United States of America as the Indenture Trustee may otherwise direct. All Rent shall be paid by Lessee to the recipient not later than 11:00 a.m. Chicago, Illinois time on the date of such payment in funds consisting of lawful currency of the United States of America, which shall be immediately available. Notwithstanding anything contained in this Lease to the contrary, any amounts received by any Person pursuant to distribution from any of the Accounts shall for all purposes hereof be deemed payment in satisfaction of the related obligation hereunder to which such distribution relates and any failure by Lessor, the Indenture Trustee or any Indemnified Party to receive from the Collateral Agent the full amount of any such distribution measured by reference to Basic Rent, Supplemental Rent or any component thereof shall be deemed a failure by Lessee to pay such Basic Rent or Supplemental Rent hereunder, as the case may be. SECTION 4. Ownership and Marking of Equipment. Section 4.1 Retention of Title. Lessor shall and hereby does retain full legal title to and beneficial ownership of each Unit for all purposes (including for all tax purposes) notwithstanding the delivery to and possession and use of such Unit by Lessee hereunder or any Sublessee under any sublease permitted hereby. Section 4.2 Duty to Number and Mark Equipment. With respect to the Units to be delivered on the Closing Date, Lessee represents that Manager has caused, and on or prior to the date on which a Lease Supplement is executed and delivered in respect of a Replacement 3 Unit pursuant to Section 11.4(b) (or, if the applicable Replacement Unit is not in the possession of Lessee or the Manager, as soon as practicable and in any event no later than ten Business Days after the earliest date on which Lessee or the Manager obtains possession of such Replacement Unit (whether for purposes of repair or maintenance or otherwise)), Lessee will cause, each Unit to be numbered with the reporting mark shown on the Lease Supplement dated the date on which such Unit was delivered and covering such Unit, and will from and after such date keep and maintain, plainly, distinctly, permanently and conspicuously marked by a plate or stencil printed in contrasting colors upon each side of each Unit, in letters not less than one inch in height, a legend substantially as follows: "OWNERSHIP SUBJECT TO A SECURITY AGREEMENT FILED WITH THE SURFACE TRANSPORTATION BOARD" with appropriate changes thereof and additions thereto as from time to time may be required by law in order to protect Lessor's right, title and interest in and to such Unit, its rights under this Lease and the rights of the Indenture Trustee. Except as provided hereinabove, Lessee will not place any such Units in operation or exercise any control or dominion over the same until the required legend shall have been so marked on both sides thereof, and will replace promptly any such word or words in such legend which may be removed, defaced, obliterated or destroyed. In the event of a change in the reporting mark of any Unit, as soon as practicable (and in any event within 60 days after a Responsible Officer of the Manager has received notice of any such changed mark) a statement of the new reporting mark to be substituted therefor shall be delivered by Lessee to Lessor and, so long as the Indenture shall not have been discharged pursuant to its terms, to the Indenture Trustee. As soon as practicable, but in any event within 30 days, after the delivery of such statement a supplement to this Lease and, if not so discharged, the Indenture, with respect to such new reporting marks, shall be filed or recorded in all public offices where this Lease and the Indenture shall have been filed or recorded and in such other places, if any, where Lessor and, so long as the Indenture shall not have been discharged pursuant to its terms, the Indenture Trustee may reasonably request in order to protect, preserve and maintain its right, title and interest in the Units. The costs and expenses of all such supplements, filings and recordings shall be borne by Lessee. Section 4.3 Prohibition Against Certain Designations. Except as provided in Section 4.2 above, Lessee will not allow or permit the name of any Person to be placed on any Unit as a designation that might reasonably be interpreted as a claim of ownership and shall not, and shall not permit the Manager, any Sublessee or any other Person to, alter the reporting marks with respect to any Unit. Lessee may cause or permit any Unit to be lettered with the names or initials or other insignia (other than reporting marks) customarily used by Lessee or any applicable Permitted Sublessee or any of their respective Affiliates on railcars used by it of the same or a similar type for convenience of identification of the right of Lessee to use such Unit hereunder or such Permitted Sublessee to use such Unit pursuant to a Permitted Sublease. SECTION 5. Disclaimer of Warranties. Section 5.1 Disclaimer of Warranties. Without waiving any claim Lessee may have against any seller, supplier or manufacturer, LESSEE ACKNOWLEDGES AND AGREES THAT (i) EACH UNIT IS OF A SIZE, DESIGN, CAPACITY AND MANUFACTURE 4 SELECTED BY AND ACCEPTABLE TO LESSEE, (ii) LESSEE IS SATISFIED THAT EACH UNIT IS SUITABLE FOR ITS PURPOSES AND LESSEE HAS ACCEPTED EACH UNIT, (iii) NEITHER LESSOR NOR OWNER PARTICIPANT IS A MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND OR HAS INSPECTED THE UNITS PRIOR TO DELIVERY TO AND ACCEPTANCE BY LESSEE, (iv) EACH UNIT IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS AND GOVERNMENTAL REGULATIONS NOW IN EFFECT OR HEREAFTER ADOPTED AND (v) LESSOR LEASES AND LESSEE TAKES EACH UNIT "AS-IS", "WHERE-IS" AND "WITH ALL FAULTS", IN WHATEVER CONDITION IT MAY BE, AND LESSEE ACKNOWLEDGES THAT NONE OF LESSOR, AS LESSOR OR IN ITS INDIVIDUAL CAPACITY, INDENTURE TRUSTEE, ANY LOAN PARTICIPANT, THE POLICY PROVIDER OR THE OWNER PARTICIPANT MAKES NOR SHALL BE DEEMED TO HAVE MADE, AND EACH EXPRESSLY DISCLAIMS, ANY AND ALL RIGHTS, CLAIMS, WARRANTIES OR REPRESENTATIONS EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, USE, CONDITION, FITNESS FOR ANY PARTICULAR PURPOSE, DESIGN, OPERATION, MERCHANTABILITY THEREOF OR AS TO THE TITLE OF ANY UNIT, THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREOF OR CONFORMITY THEREOF TO SPECIFICATIONS, FREEDOM FROM PATENT, COPYRIGHT OR TRADEMARK INFRINGEMENT, THE ABSENCE OF ANY LATENT OR OTHER DEFECT, WHETHER OR NOT DISCOVERABLE, OR AS TO THE ABSENCE OF ANY OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WHATSOEVER WITH RESPECT THERETO AND EACH OF LESSOR, INDENTURE TRUSTEE, ANY LOAN PARTICIPANT, THE POLICY PROVIDER AND OWNER PARTICIPANT EXPRESSLY DISCLAIMS SELECTION OF THE UNITS, except that Lessor, in its individual capacity, represents and warrants that on the Closing Date, Lessor shall have received whatever title to each Unit as was conveyed to Lessor by Lessee and each Unit will be free of Lessor's Liens attributable to Lessor and provided that the foregoing disclaimer in clause (v) shall not extend to Owner Participant's representation and warranty contained in Section 3.5(e) of the Participation Agreement. Lessee's delivery of a Lease Supplement shall be conclusive evidence as between Lessee and Lessor that all Units described therein are in all the foregoing respects satisfactory to Lessee, and Lessee will not assert any claim of any nature whatsoever against Lessor based on any of the foregoing matters. Section 5.2 Rights and Obligations Under Subleases. Unless a Lease Event of Default shall have occurred and be continuing under Section 14 and Lessor shall have given written notice to Lessee, Lessor agrees to make available to Lessee such rights as Lessor may have, and Lessee shall be entitled to exercise all rights of Lessor under, each Sublease in each case, subject to the applicable provisions of this Lease and the Collateral Agency Agreement, if any. Lessor hereby delegates to Lessee, and Lessee hereby assumes and shall be obligated to perform, all obligations of Lessor under each Sublease, in each case subject to the applicable provisions of this Lease and Collateral Agency Agreement, if any. SECTION 6. Return of Equipment; Storage. Section 6.1 Return; Holdover Rent. (a) Not less than 180 days prior to the end of the Basic Term or the end of the Renewal Term, if Lessee has elected to return the Units under Section 22.2, Lessee will provide Lessor with a list of not less than ten (10) alternative storage 5 locations ("Storage Locations") used by Lessee for the storage of rolling stock within the Contiguous United States with sufficient available storage capacity to store the Units and the available storage capacities of such locations. Unless Lessee shall have purchased the Units pursuant to Section 22 of this Lease or pursuant to Section 6.9 of the Participation Agreement, not less than 90 days prior to the end of the Lease Term, Lessor will give Lessee irrevocable notice of its decision either to take possession of or store the Units. If Lessor shall have decided to take possession of the Units, the terms of Section 6.1(b) will apply. If Lessor shall have decided to store the Units, the terms of Section 6.1(c) will apply. (b) Unless Lessee shall have purchased the Units pursuant to Section 22 of this Lease or pursuant to Section 6.9 of the Participation Agreement, if Lessor shall have decided to take possession of the Units, Lessee will, at its sole risk and expense, deliver possession of the Units at any storage location(s), f.o.b. such location(s), (i) as may be agreed upon by Lessor and Lessee in writing or (ii) in the absence of such agreement as Lessor may reasonably select by written notice to Lessee on or before the 90th day before the end of the Lease Term; provided, that (x) with respect to all Units being so delivered, there shall be no more than ten (10) locations (each of which shall be located within the Contiguous United States and shall have adequate storage capacities) and (y) Lessor's notice shall specify the total number and type of Units to be delivered to each location. (c) (i) Unless Lessee shall have purchased the Units pursuant to Section 22 of this Lease or pursuant to Section 6.9 of the Participation Agreement, if Lessor shall have elected to store the Units upon the expiration of the Lease Term with respect thereto, Lessee shall store the Units free of charge and at the risk and expense of Lessee for a period (the "Storage Period") beginning, for any particular Storage Location, on the expiration of the Lease Term for such Units (the "Storage Period Commencement Date") and ending not more than 120 days after the later of (i) the date of such expiration and (ii) the date on which such Unit is in compliance with the conditions set forth in Section 6.2. On or before the 120th day before the end of the Lease Term, Lessor shall provide Lessee with written notice designating its choices from among the Storage Locations provided by Lessee pursuant to Section 6.1(a). Any storage provided by Lessee during the Storage Period shall be at the sole risk and expense of Lessee, and Lessee shall maintain the insurance required by Section 12.1 with respect to all stored Units. During the Storage Period, Lessee will permit Lessor or any Persons designated by it, including the authorized representative or representatives of any prospective purchaser or user of such Units, to restencil the marks on such Units and to inspect the same during Lessee's normal business hours upon at least three Business Days' prior written or telephonic notice; provided, however, that such inspection and restenciling shall not interfere with the normal conduct of Lessee's business; and provided, further, that (x) such inspection and restenciling shall be at such Person's own risk and expense, (y) Lessee shall be indemnified by Lessor against any loss or damage incurred by it in connection with any such inspection or restenciling by such Person and (z) Lessee (except in the case of Lessee's gross negligence or willful misconduct) shall not be liable for any injury to, or the death of, any person exercising, either on behalf of Lessor or any prospective purchaser or user, the rights of inspection and restenciling granted pursuant hereto. Lessee shall not be required to store any Unit after the Storage Period. If Lessee does store any Unit after the expiration of the Storage Period, such storage shall be at the sole risk and expense of Lessor. 6 (ii) Upon the request and direction of Lessor (and at Lessor's sole risk and expense), on not more than one occasion with respect to each stored Unit and upon not less than 15 days' prior written notice from Lessor to Lessee, Lessee will, on or before the expiration of the Storage Period, transport such Unit to any railroad interchange point or points within the Contiguous United States on any railroad lines or to any connecting carrier for shipment (with appropriate instructions to cause such Unit to be transported to such locations in the Contiguous United States as Lessor shall direct), whereupon Lessee shall have no further liability or obligation with respect to such Unit. (iii) Upon receipt of Lessor's written notice designating its choices from among the alternative Storage Locations provided by Lessee under Section 6.1(a), Lessee shall have the option to instead store such Units at such Storage Locations as it shall choose in which case the Storage Period shall be at the sole risk and expense of Lessee for a period of 60 days, during which period Lessee shall be obligated to insure such Units as provided in Section 12. Upon receipt of such notice, Lessee will promptly give notice to Lessor of the locations at which Lessee will store such Units. If Lessee shall exercise such option, Lessee shall on or before the expiration of the Storage Period transport the Units to any railroad interchange point or points within the Contiguous United States on any railroad lines or to any connecting carrier for shipment (with appropriate instructions to cause such Units to be transported to such locations designated by Lessor upon not less than 15 days' prior written notice). The movement of any Unit from such Unit's location as designated by Lessee pursuant to this Section 6.1(c)(iii) to an interchange point thereafter designated by Lessor in accordance with the foregoing sentence will be at the risk and expense of Lessee. During any Storage Period, Lessee shall store the Units in such manner as the Manager normally stores similar units of railroad equipment owned or managed by it. (d) Upon the latest of (i) expiration of the Lease Term with respect to a Unit, (ii) tender of such Unit at the location determined in accordance with Section 6.1(b) or, as applicable, the tender of such Unit for storage in accordance with Section 6.1(c) and (iii) compliance by such Unit with Section 6.2, this Lease and the obligation to pay Basic Rent for such Unit accruing subsequent to the expiration of the Lease Term with respect to such Unit shall terminate. (e) In the event any Unit is not (i) returned to Lessor in accordance with the provisions of Section 6.1(b) on the last day of the Lease Term with respect thereto, or, if requested by Lessor pursuant to Section 6.1(c), delivered and stored on such last day of the Lease Term, and, in either case, in the condition specified in Section 6.2 or (ii) deemed automatically renewed in accordance with the provisions of Section 22.7, the Lease with respect to such Unit shall continue in effect and Lessee shall pay to Lessor for each such day from the scheduled expiration of the Lease Term with respect to such Unit until the date on which such Unit is returned to Lessor in accordance with the provisions of Section 6.1(b) and in the condition specified in Section 6.2, as liquidated damages and not as a penalty, an amount equal to the daily equivalent of the average Basic Rent for the Basic Term or the Renewal Term, as applicable, to such Unit. Notwithstanding the foregoing, nothing in this Section 6.1(e) shall be construed as permitting or authorizing Lessee to fail to meet, or be construed as Lessor consenting to or waiving any failure by Lessee to perform, Lessee's obligation to return the Units in accordance with the requirements of this Lease. Nothing herein shall be in abrogation of Lessor's right to 7 terminate this Lease under Section 15 as a result of such failure or to have such Unit returned to it for possession or storage. (f) The assembling, delivery, storage and transporting of the Units as hereinbefore provided are of the essence of this Lease, and, upon application to any court of equity having jurisdiction on the premises, the Lessor shall be entitled to a decree against the Lessee requiring specific performance thereof. All rent earned in respect of the Units after the date of termination of this Lease shall belong to the Lessor and, if received by the Lessee, shall be promptly turned over to the Lessor. Section 6.2 Condition of Equipment. Each Unit when returned to Lessor pursuant to Section 6.1 shall be (i) capable of performing the functions for which it was designed, with all loading and unloading components operating in good working order with allowance for normal wear and tear, (ii) suitable for continued commercial use in the commodity last carried immediately prior to such return, (iii) suitable for use in interchange in accordance with then applicable Federal regulations, the Field Manual of the AAR, the Interchange Rules and FRA rules and regulations, (iv) in all material respects in the condition required by Section 8.1, (v) in conformance with any requirement pertaining to warranties of the Manufacturer of the Units during the warranty period then in effect, (vi) empty, (vii) cleaned in accordance with Prudent Industry Practice, including with respect to Hazardous Substances and (viii) free and clear of all Liens except Lessor's Liens. All logs, records, books and other materials, or appropriate copies of any thereof, relating to the maintenance of such Unit shall be delivered to Lessor or its designee upon the return of such Unit. Lessor shall have the right to inspect any Unit that is returned pursuant to Section 6.1 to ensure that such Unit is in compliance with the conditions set forth in this Section 6.2, at Lessor's sole cost, expense and risk (including, without limitation, the risk of personal injury or death), by its authorized representatives, during Lessee's normal business hours and upon reasonable prior notice to Lessee; provided, however, that Lessee shall not be liable for any injury to, or the death of, any Person exercising, on behalf of Lessor, the rights of inspection granted under this Section 6.2 unless caused by Lessee's gross negligence or willful misconduct); and provided further that if as a result of such inspection any Unit is found to be not in compliance with this Section 6.2, the Lessee will (i) promptly take such steps as are necessary to bring such Unit in compliance with the conditions set forth in this Section 6.2 and (ii) pay the reasonable cost and expense of the original inspection of such Unit and any reinspection of such Unit conducted by Lessor required because of such non-compliance with Section 6.2. No inspection pursuant to this Section 6.2 shall interfere with the normal conduct of Lessee's business or the normal conduct of any Sublessee's business, and Lessee shall not be required to undertake or incur any additional liabilities in connection therewith. A Unit shall not be deemed to have been returned for purposes of this Lease unless and until it is in compliance with the conditions set forth in this Section 6.2. SECTION 7. Liens. Lessee will not directly or indirectly create, incur, assume, permit or suffer to exist any Lien, including without limitation any Lease or Sublease, on or with respect to any Unit or Lessee's leasehold interest therein under this Lease, except Permitted Liens, Lessor's Liens and Liens described in Section 6.4(a) and 6.4(b) of the Participation Agreement. Lessee shall promptly, at its own expense, take such action or cause such action to be taken as maybe 8 necessary to duly discharge (or bond to the reasonable satisfaction of Lessor and Indenture Trustee) any such Lien not excepted above if the same shall arise at any time. SECTION 8. Maintenance; Possession; Compliance with Laws. Section 8.1 Maintenance and Operation. (a) Lessee, at its own cost and expense, shall maintain, repair and keep each Unit, and cause the Manager under the Management Agreement to maintain, repair and keep each Unit, (i) according to Prudent Industry Practice and in all material respects, in good working order, and in good physical condition for railcars of a similar age and usage, normal wear and tear excepted, (ii) in a manner in all material respects consistent with maintenance practices used by the Manager in respect of railcars owned, leased or managed by the Manager similar in type to such Unit or, with respect to (A) any Equipment subject to an Existing Equipment Sublease that is a Net Sublease, maintenance practices used by the applicable Sublessee in respect of railcars similar in type to such Unit used by such Sublessee on its domestic routes in the United States; (provided further, however that after the return to the Manager of any Unit which was subject to a Net Sublease immediately prior to such return, such Unit shall be maintained and repaired in all material respects in a manner consistent with maintenance practices used by the Manager in respect of railcars owned, leased or managed by the Manager similar in type to such Unit) and (B) any Permitted Sublease that is a Net Sublease entered into after the Closing Date where (x) the long term senior unsecured debt of the applicable Sublessee is rated at least BBB- by S&P and Baa3 by Moody's (or at least BBB- by S&P or Baa3 by Moody's if then rated by only one such rating agency) or similarly rated by any rating agency, (y) the applicable Sublessee is organized under the laws of the United States or any State thereof and (z) the applicable Sublessee is the owner or lessee of at least 250 railcars used primarily on domestic routes in the United States, maintenance practices used by such Sublessee in respect of railcars similar in type to such Unit, (iii) in accordance with all manufacturer's warranties in effect but only to the extent that the lack of compliance therewith would reasonably be expected to adversely affect the coverage thereunder and in accordance with all applicable provisions, if any, of insurance policies required to be maintained pursuant to Section 12 and (iv) in compliance in all material respects with any applicable laws and regulations from time to time in effect, including, without limitation, the Field Manual of the AAR, FRA rules and regulations and Interchange Rules as they apply to the maintenance and operation of the Units in interchange regardless of upon whom such applicable laws and regulations are nominally imposed; provided, however, that, so long as the Manager or, with respect to any Equipment subject to an Existing Equipment Sublease which is a Net Sublease, the applicable Sublessee, as applicable, is similarly contesting such law or regulation with respect to all other similar equipment owned or operated by Manager or, with respect to any Equipment subject to an Existing Equipment Sublease which is a Net Sublease, the applicable Sublessee, as applicable, Lessee (or such Sublessee) may, in good faith and by appropriate proceedings diligently conducted, contest the validity or application of any such standard, rule or regulation in any manner that does not (w) materially interfere with the use, possession, operation or return of any of the Units, (x) materially adversely affect the rights or interests of Lessor, Policy Provider or the Indenture Trustee in the Units or hereunder, (y) expose Lessor, Policy Provider or the Indenture Trustee to criminal sanctions or (z) violate any maintenance requirements contained in any insurance policy required to be maintained by the Lessee under this Lease or the Collateral Agency Agreement if such violation would reasonably be expected to adversely affect the coverage thereunder; provided further, that Lessee shall promptly notify 9 Lessor, Policy Provider and Indenture Trustee in reasonable detail of any such contest. In no event shall Lessee discriminate in any material respect as to the use or maintenance of any Unit (including the periodicity of maintenance or recordkeeping in respect of such Unit) as compared to equipment of a similar nature which the Manager owns or manages. Lessee will maintain all records, logs and other materials required by relevant industry standards or any governmental authority having jurisdiction over the Units required to be maintained in respect of any Unit, all as if Lessee were the owner of such Units, regardless of whether any such requirements, by their terms, are nominally imposed on Lessee, Lessor or Owner Participant. (b) Without the written waiver or consent of Lessor (which waiver or consent will not be unreasonably withheld), Lessee shall not change, or permit any Sublessee to change, a DOT/AAR classification (as provided for in 49 C.F.R. Part 179 or any successor thereto), or permit any Sublessee to operate any Unit under a different DOT/AAR classification, from that classification in effect for such Unit on the Closing Date, except for any change in tank test pressure rating provided such change does not increase the pressure rating of the Unit above the tank test pressure to which the Unit was manufactured; provided however, that in the event Lessor shall not have provided Lessee with a written waiver or consent to such a reclassification or operation of any Unit within 10 Business Days after receipt of Lessee's written request therefor (or Lessor expressly rejects such a request by Lessee), Lessee may elect to replace such Unit in accordance with and subject to the provisions of Sections 11.2(a)(i), 11.3 and 11.4. (c) Lessor hereby appoints and constitutes Lessee its agent and attorney-in-fact during the Lease Term to assert and enforce, from time to time, in the name and for the account of Lessor and Lessee, as their interests may appear, but in all cases at the sole cost and expense of Lessee, whatever claims and rights Lessor may have as owner of each Unit against the manufacturers or any prior owner thereof, and Lessee agrees that it shall and shall cause the Manager to, assert and enforce all such claims and rights; provided, however, that if at any time a Lease Event of Default shall have occurred and be continuing, at Lessor's option, such power of attorney shall terminate, and Lessor may assert and enforce, at Lessee's sole cost and expense, such claims and rights. Section 8.2 Possession and Use. Lessee shall be entitled to the possession of the Units and to the use of the Units by it or any Affiliate in the United States and, subject to the remaining provisions of this Section 8.2 and Section 8.3, Canada and Mexico, only in the manner for which it was designed and intended and so as to subject it only to ordinary wear and tear. In no event shall Lessee use, store or permit the use or storage of any Unit in any jurisdiction not included in the insurance coverage required by Section 12. The Units shall be used primarily on domestic routes in the United States, and in no event shall more than seventeen and one half percent (17.5%) of the Units (as determined by mileage records and measured annually on a calendar year basis) be used outside the Contiguous United States; provided, that such maximum percentage shall be increased to (i) 25% on the sixth anniversary of the date hereof and (ii) 40% on the ninth anniversary of the date hereof. In addition, in no event shall more than 30% of the Units, the Other Units and the Pledged Units in the aggregate (as determined by mileage records and measured at the end of each calendar quarter for the 12 month period ending on the last day of the calendar quarter immediately preceding such calendar quarter) be used in Mexico. Nothing in this Section 8.2 shall be deemed to constitute permission by Lessor to any Person that 10 acquires possession of any Unit to take any action inconsistent with the terms and provisions of this Lease or any of the other Operative Agreements. Section 8.3 Sublease. Lessee shall be entitled, without the prior approval of Lessor, to enter into Permitted Subleases. A "Permitted Sublease" means each (a) Existing Equipment Sublease (including any renewal or extension thereof to the extent such renewal or extension complies with clauses (i), (iii), (iv), (v), (vi) and (vii) below) and (b) a sublease, car contract or other agreement granting permission for the use of a Unit, which sublease, car contract or other agreement meets all of the following requirements: (i) the sublessee or user thereunder is a Permitted Sublessee and, after giving effect to the entering into of such agreement, the number of Units, Pledged Units and Other Units leased or subleased to such sublessee or user and all of its Affiliates, in the aggregate, does not exceed 10% (or 12.2% with respect to Commercial Metals Company) of the sum of the aggregate number of Units then subject to this Lease, the aggregate number of Other Units subject to the Other Leases and the aggregate number of Pledged Units then subject to the Lien of the Collateral Agency Agreement; provided, that for purposes of this clause (i), "sublessee" shall mean each Person leasing such Units from the Lessee as well as each Person subleasing such Units from any other sublessee or other Person; (ii) if such agreement permits the sublessee or user thereunder to further sublease any of the Units subject to such agreement, then such agreement shall require that any such further sublease be conditioned on (A) the sublessee obtaining Lessee's (as sublessor) prior consent to such further sublease, (B) the sublessee agreeing that any such further sublease will have provisions making it terminable (as to the sub-sublessee) at the request of the Lessor or Lessee, as applicable, and prohibiting any further subleasing by the sub-sublessee and will not contain any purchase option in favor of the sub-sublessee, (C) such agreement providing that no such further sublease shall relieve the sublessee or user under the sublease from liability thereunder and (D) the applicable sub-sublessee satisfying the requirements for a "Permitted Sublessee" set forth below; (iii) such agreement was on an arm's length basis with fair market terms on the date of its execution, and does not require any prepayment of rental payments throughout the term of such agreement; (iv) such agreement does not contain any purchase option in favor of the sublessee or user thereunder; (v) such agreement (or any related consent, acknowledgment of assignment, side letter or similar written instrument executed by such sublessee) permits the assignment, pledge, mortgage or other similar disposition of the lease of the related railcar without notice to or consent by the sublessee (or, in the case of a written instrument described in the foregoing parenthetical, any further notice to or consent by the sublessee), it being understood that the inclusion within such permission or written instrument of language to the effect that such sublessee consent is conditioned on the assignees' agreement that it takes its interest in the railcar 11 and/or related sublease subject to the rights of the sublessee in such railcar under the sublease, shall not in and of itself be deemed to constitute the sublease as other than a Permitted Sublease; (vi) such agreement contains a legend in bold-faced capitalized print stating that "This sublease and the railcars subleased hereunder have been assigned to TRLIV 2004-1A Railcar Statutory Trust by Trinity Rail Leasing Trust II pursuant to an Assignment and Assumption and a Bill of Sale each dated as of August 19, 2004 and TRLIV 2004-1A Railcar Trust has further assigned this sublease and such railcars to Wilmington Trust Company, as secured party, in its capacity as Indenture Trustee under the Trust Indenture and Security Agreement dated as of August 19, 2004 between TRLIV 2004-1A Railcar Statutory Trust and Wilmington Trust Company, as Indenture Trustee"; (vii) such agreement does not extend more than two years beyond the end of the Basic Term (without the prior written consent of the Owner Participant); and (viii) such agreement contains a provision substantially similar to Article 6 in the Form of Net Sublease attached as Exhibit B-1 hereto or Article 4 in the Form of Full Service Sublease attached as Exhibit B-2 hereto; provided that this clause (viii) shall not apply if such agreement is subject to the terms of, or entered into pursuant to, an existing master lease agreement dated on or prior to the Closing Date which does not contain such a provision. As used herein, a "Permitted Sublessee" means any of the following: (i) a railroad company or companies (that is not a Credit Bankrupt, Trinity or any Affiliate of Trinity) organized under the laws of the United States of America or any state thereof or the District of Columbia, Canada or any province thereof, or Mexico or any state thereof, upon lines of railroad owned or operated by such railroad company or companies or over which such railroad company or companies have trackage rights or rights for operation of their trains, and upon connecting and other carriers in the usual interchange of traffic; (ii) responsible companies (i.e., a company with which the Manager would do business in the ordinary course of its business with respect to railcars which it owns or manages) (other than railroad companies, Trinity, Affiliates of Trinity or Credit Bankrupts) for use in their business; provided, however, that the credit profile of sublessees of the Units shall not vary materially from the credit profile of sublessees of other railcars owned, leased or managed by the Manager; or (iii) wholly-owned Subsidiaries of Trinity organized under the laws of (x) Canada or any political subdivision thereof or (y) Mexico or any political subdivision thereof, in each case so long as such subleases are on an arm's length basis; provided, however, that a Person organized under the laws of Mexico or any state thereof (a "Mexican Sublessee") shall not constitute a Permitted Sublessee unless after giving effect to the contemplated sublease to such Mexican Sublessee, the percentage of Units, Other Units and Pledged Units in the aggregate (as measured by number of Units, Other Units and Pledged Units and not mileage records) subleased (or sub-subleased by a sublessee organized under the laws of the United States of America or any state thereof or the District of Columbia, Canada or any 12 province thereof to a sub-sublessee organized under the laws of Mexico or any state thereof, as applicable) to all Mexican Sublessees does not exceed 15% of the sum of the Units, the Other Units and the Pledged Units in the aggregate, provided further, that at no time shall more than 10% of the Units, the Other Units and the Pledged Units, in the aggregate be subleased (or sub-subleased by a sublessee organized under the laws of the United States of America or any state thereof or the District of Columbia, Canada or any province thereof to a sub-sublessee organized under the laws of Mexico or any state thereof, as applicable) to Mexican Sublessees, the long term senior unsecured debt of which is unrated or rated below BBB- or Baa3, as determined by S&P and Moody's, as applicable. Notwithstanding the foregoing, in no event shall Lessee or any of its Affiliates be required to take any action to perfect any security interest which any Person may have in any Sublease, other than the filing of a UCC-1 Financing Statement against the Partnership in the Partnership's jurisdiction of formation and/or other similar filings with the STB, the Registrar General of Canada and any applicable Canadian provinces covering all Subleases generally and delivery of the original copies of the applicable Subleases in the manner set forth in the Collateral Agency Agreement. Lessee will use commercially reasonable efforts to have each Sublease other than Existing Equipment Subleases be substantially in the form attached as Exhibit B-1 or Exhibit B-2 and contain provisions relating to the requirement that such Sublease be subject and subordinate to the rights of assignees and/or security interest grantees in respect thereof. Promptly after the execution of each Sublease, Lessee shall deliver the original, fully executed counterpart number one of each such Sublease to the Collateral Agent in accordance with the provisions of the Collateral Agency Agreement or, if the circumstance described in Section 2.5(d) of the Collateral Agency Agreement shall have occurred, to the custodian described in such Section 2.5(d). No sublease entered into by Lessee hereunder shall relieve Lessee of any liability or obligation hereunder, which shall be and remain those of a principal and not a surety. Nothing in this Section 8.3 shall be deemed to constitute permission to any Person in possession of any Unit pursuant to any such sublease to take any action inconsistent with the terms and provisions of this Lease or any of the other Operative Agreements. As used in this Section 8.3, "sublease" as a noun means a sublease, car contract or other contract granting permission for the use of a Unit and "sublease" as a verb means to enter into any of the foregoing. SECTION 9. Modifications. Section 9.1 Required Modifications. In the event a Required Modification to a Unit is required, Lessee agrees to make or cause to be made such Required Modification at its own expense; provided, however, that Lessee (or applicable Sublessee) may, in good faith and by appropriate proceedings diligently conducted, contest the validity or application of any such law, regulation, requirement or rule in any manner that does not materially interfere with the use, possession, subleasing, operation, maintenance or return of any Unit or materially adversely affect the rights or interests of Lessor or the Indenture Trustee in the Units or Subleases or expose Lessor, Policy Provider or the Indenture Trustee to criminal sanctions. Title to any Required Modification shall immediately vest in Lessor. Notwithstanding anything herein to the contrary, if Lessee determines in its reasonable judgment consistent with Prudent Industry 13 Practice (as evidenced by an Officer's Certificate of Lessee to such effect, confirmed by an Officer's Certificate of the Manager) that any Required Modification to a Unit would be economically impractical, in lieu of making the Required Modification as provided above, Lessee may provide written notice of such determination to Lessor in such Officer's Certificate and treat such Unit as if an Event of Loss had occurred as of the date of such written notice with respect to such Unit and in such event the provisions of Sections 11.2(ii), 11.3 and 11.4 shall apply with respect to such Unit; provided, however, that Lessee shall not discriminate against such Unit in making such determination of economic impracticability as compared with other equipment of the same type and similarly situated that is owned or leased by Lessee or managed by Manager. Section 9.2 Optional Modifications. Lessee at any time may or may permit a Sublessee to, in its discretion and at its own or such Sublessee's cost and expense, modify, alter or improve any Unit in a manner which is not required by Section 9.1 (a "Modification"); provided that no Modification (i) shall diminish the fair market value, residual value, utility or remaining economic useful life of such Unit below the fair market value, residual value, utility or remaining economic useful life thereof immediately prior to such Modification, in more than a de minimis respect, assuming such Unit was then at least in the condition required to be maintained by the terms of this Lease or (ii) cause such Unit to become "limited use property" within the meaning of Revenue Procedure 2001-28 or Revenue Procedure 2001-29. Title to any Non-Severable Modification shall be immediately vested in Lessor. Title to any Severable Modification (other than Required Modifications) shall remain with Lessee or the Sublessee as applicable. If Lessee shall at its cost cause such Severable Modifications (other than Required Modifications) to be made to any Unit, Lessor shall have the right, upon 90 days prior written notice in the case of the return of such Unit pursuant to Section 6.1, to purchase any such Severable Modifications (other than Severable Modifications consisting of proprietary or communications equipment) title to which is held by Lessee at their then Fair Market Sales Value (taking into account their actual condition). If Lessor does not so elect to purchase such Severable Modifications, Lessee may remove such Severable Modifications at Lessee's cost and expense, and if requested (which request shall be made by not less than 90 days prior written notice in the case of a return other than pursuant to Section 15.6) by Lessor will so remove such Severable Modifications at Lessee's cost and expense, and Lessee shall, at its expense, repair any damage resulting from the removal of any such Severable Modifications in a manner consistent with Section 8.1; provided that such removal shall not (i) diminish the fair market value, residual value, utility or remaining economic useful life of the Unit to which such Severable Modifications relate below the fair market value, residual value, utility or remaining economic useful life thereof immediately prior to the addition of such Severable Modifications, in more than a de minimis respect, assuming such Unit was then at least in the condition required to be maintained by the terms of this Lease or (ii) cause such Unit to become "limited use property" within the meaning of Revenue Procedure 2001-28 or Revenue Procedure 2001-29. If Lessee has not removed any Severable Modification prior to the return of the related Unit as provided herein, title to such Severable Modification shall pass to Lessor as of the date of such return. Section 9.3 Removal of Property; Replacements. Lessee may, in the ordinary course of maintenance or repair of any Unit, remove any item of property constituting a part of such Unit, and unless the removal of such item is required by Section 9.1 hereof, Lessee shall replace such item as promptly as practicable by an item of property that is free and clear of all 14 Liens (other than Permitted Liens) and in as good operating condition as, and with a fair market value, residual value, utility and remaining economic useful life at least equal to, the item of property being replaced, assuming that such replaced item was in the condition required to be maintained by the terms of this Lease; provided that Lessee may not remove any item if such removal would cause such Unit to become "limited use property" within the meaning of Revenue Procedure 2001-28 or Revenue Procedure 2001-29. Any item of property removed from such Unit in the ordinary course of maintenance and repair as provided in the preceding sentence shall remain the property of Lessor until replaced in accordance with the terms of such sentence, but shall then, without further act, become the property of Lessee. Any replacement property which is incorporated into a Unit in the ordinary course of maintenance and repair shall, without further act, become the property of Lessor and be deemed part of such Unit for all purposes hereof. SECTION 10. Voluntary Termination. Section 10.1 Right of Termination. Lessee shall have the right, at its option at any time or from time to time during the Basic Term on or after February 14, 2012 to terminate the Lease with respect to any or all of the Units (provided that, Lessee shall exercise such termination hereunder and under the comparable provisions contained in the Other Leases (i) with respect to at least 100 railcars and, (ii) the determination as to which Units are subject to termination shall otherwise be made by Lessee on a random basis without discrimination based on maintenance status, operating condition of the Units in question or otherwise) (such Units, the "Terminated Units") if (x) Lessee determines in good faith (as evidenced by a certified copy of a resolution adopted by the General Partner's Board of Directors and a certificate executed by the Chief Financial Officer of the General Partner and the Chief Financial Officer of the Manager) that such Units have become obsolete or surplus to Lessee's requirements, (y) Lessor has received (i) an Officer's Certificate from Lessee and the Manager to the effect that there has been no discrimination in the selection of the Terminated Units when measured against the other Units, and that, following the termination of this Lease with respect to the Terminated Units, the Units remaining subject to this Lease will constitute a pool of Units which is of a sufficient quantity and quality to sustain over the remaining Basic Term the Coverage Ratios applicable at the time of such termination and (ii) a Rating Agency Confirmation and (z) Lessee delivers at least 120 days' prior notice to Lessor and the Indenture Trustee specifying a proposed date of termination for such Units (the "Termination Date"), which date shall be a Rent Payment Date, any such termination to be effective on the Termination Date upon Lessee's compliance with this Section 10. Notwithstanding anything herein contained to the contrary, there shall be no determination that a Unit is surplus or obsolete for purposes of this Lease if, on the Termination Date, such Unit is subject to a Sublease. Except as expressly provided otherwise herein, there will be no conditions to Lessee's right to terminate this Lease with respect to the Terminated Units pursuant to this Section 10.1. So long as (a) Lessor shall not have given Lessee a notice of election to retain the Terminated Units in accordance with Section 10.3 or (b) notice of prepayment of the Equipment Notes shall not have been given pursuant to Section 2.10 of the Indenture, Lessee may withdraw the termination notice referred to above at any time prior to the 60th day prior to the scheduled Termination Date, whereupon this Lease shall continue in full force and effect with respect to the Terminated Units; provided that Lessee may not exercise its right to withdraw a termination notice more than once annually or more than four times during the Basic Term (irrespective of which Units are covered thereby). Lessee agrees that whether or not it withdraws a termination notice it will reimburse Lessor, the Policy Provider and the 15 Indenture Trustee for all reasonable out-of-pocket costs and expenses (including reasonable legal fees and expenses) incurred by any thereof in connection with such termination or proposed termination. Section 10.2 Sale of Equipment. During the period from the date of such notice given pursuant to Section 10.1 to the Termination Date, Lessee, as non-exclusive agent for Lessor and, except as provided in Section 10.3, at Lessee's sole cost and expense, shall use reasonable best efforts to obtain bids from Persons other than Lessee, the Manager or any of their respective Affiliates for the cash purchase of the Terminated Units, and Lessee shall promptly, and in any event at least five Business Days prior to the proposed date of sale, certify to Lessor in writing the amount and terms of each such bid, the proposed date of such sale and the name and address of the party submitting such bid. Unless Lessor shall have elected to retain the Terminated Units in accordance with Section 10.3, on the Termination Date: (i) Lessee shall deliver the Terminated Units (excluding any optional Severable Modifications removed by Lessee pursuant to Section 9.2) to the bidder (which shall not be Lessee or Manager or an Affiliate of Lessee or Manager (for the avoidance of doubt the bidder may be a Customer, or a customer of the Manager, and neither the Manager nor any Affiliate shall be prohibited from managing the Units for such bidder after the purchase by such bidder)) that shall have submitted the highest cash bid prior to such date (or to such other bidder as Lessee and Lessor shall agree) and (ii) subject to the prior or concurrent receipt (x) by Lessor of all amounts owing to Lessor pursuant to the next sentence and (y) by the Persons entitled thereto of all unpaid Supplemental Rent due on or before the Termination Date, Lessor shall, without recourse or warranty (except as to the absence of any Lessor's Lien) simultaneously therewith transfer all of its right, title and interest in and to the Terminated Units to such bidder. The net proceeds of sale realized at such sale shall be paid to Lessor and, in addition, on the Termination Date, Lessee shall pay to Lessor (A) all Basic Rent with respect to such Terminated Units due and payable prior to the Termination Date (exclusive of any Basic Rent with respect to the Terminated Units due on such date), (B) the excess, if any, of (1) the Termination Amount for the Terminated Units computed as of the Termination Date over (2) the net cash sales proceeds (after the deduction of all applicable sales, transfer or similar taxes) of the Terminated Units, (C) an amount equal to any unpaid Late Payment Interest in respect of any Rent in respect of the Terminated Units not paid when due (including, for the avoidance of doubt, Rent corresponding to the principal amount of the Equipment Notes to be prepaid in accordance with Section 2.10(a) of the Indenture) and (D) all other Rent in respect of the Terminated Units (exclusive of any Basic Rent on the Terminated Units due on such date) then due and payable hereunder (which shall include, without limitation, a portion of the Policy Provider Amounts and Policy Provider Reimbursement Costs, if any, equal to the product obtained by multiplying the unpaid Policy Provider Amounts and Policy Provider Reimbursement Costs by a fraction, the numerator of which shall be the Equipment Cost of the Terminated Units and the denominator of which shall be the aggregate Equipment Costs of all Units then subject to this Lease), so that, after receipt and application of all such payments, but without withdrawal from any CAA Accounts other than the applicable Non-Shared Payments Account, (i) Lessor shall be entitled under the terms of the Collateral Agency Agreement to receive, and does receive, taking into account all payments of Basic Rent, in respect of all such Units, the sum of the portion of the Accumulated Equity Deficiency Amount allocable to the Terminated Units and Late Payment Interest related thereto and any other amounts then due to Lessor and (ii) the Policy Provider has received the portion of Policy Provider Amounts and Policy Provider Reimbursement Costs calculated above. If no sale shall 16 have occurred, whether as a result of Lessee's failure to pay all of the amounts hereinabove required or otherwise, this Lease shall continue in full force and effect with respect to such Units and Lessee agrees to reimburse Lessor, Policy Provider and the Indenture Trustee for all reasonable costs and expenses (including reasonable legal fees and expenses) incurred by any thereof in connection therewith. Lessee, in acting as agent for Lessor, shall have no liability to Lessor for failure to obtain the best price, shall act in its sole discretion and shall be under no duty to solicit bids publicly or in any particular market. Owner Participant shall have the right, but not the obligation, to obtain bids either directly or through agents other than Lessee. Section 10.3 Retention of Equipment by Lessor. Notwithstanding the provisions of Sections 10.1 and 10.2, Lessor may irrevocably elect by written notice to Lessee, (with a copy to the Policy Provider) not later than 60 days after receipt of Lessee's notice of termination, not to sell the Terminated Units on the Termination Date, whereupon Lessee shall (i) deliver the Terminated Units to Lessor in the same manner and condition as if delivery were made to Lessor pursuant to Section 6.1(b) and Section 6.2, and shall extend storage rights to the same extent as provided in Section 6.1(c), treating the Termination Date as the termination date of the Lease Term with respect to the Terminated Units and (ii) pay to Lessor, or to the Persons entitled thereto, all Basic Rent due and owing on the Termination Date and unpaid (exclusive of any Basic Rent due on such date in respect of the Terminated Units), any unpaid Late Payment Interest in respect of any Rent in respect of the Terminated Units not paid when due (including, for the avoidance of doubt, Rent corresponding to the principal amount of the Equipment Notes to be prepaid in accordance with Section 2.10(a) of the Indenture), and all other Rent in respect of the Terminated Units (exclusive of any Basic Rent on the Terminated Units due on such date) then due and payable hereunder (including, without limitation, a portion of the Policy Provider Amounts and Policy Provider Reimbursement Costs, if any equal to the product obtained by multiplying the unpaid Policy Provider Amounts and Policy Provider Reimbursement Costs by a fraction, the numerator of which shall be the Equipment Costs of the Terminated Units and the denominator of which shall be the aggregate Equipment Costs of all Units then subject to this Lease), so that, after receipt and application of all such payments, but without withdrawal from any CAA Accounts other than the applicable Non-Shared Payments Account, Lessor shall be entitled under the terms of the Collateral Agency Agreement to receive, and does receive, taking into account all payments of Basic Rent, in respect of all such Units, the sum of the portion of the Accumulated Equity Deficiency Amount allocable to the Terminated Units and Late Payment Interest related thereto and any other amounts then due to Lessor and the Policy Provider has received the portion of the Policy Provider Amounts and Policy Provider Reimbursement Costs calculated above. On any Termination Date where Lessee is required to make payments pursuant to the preceding sentence, Lessee shall pay as additional Basic Rent (or Lessor shall pay as a refund of Basic Rent) an amount equal to the Basic Rent Adjustment (or the absolute value of the negative Basic Rent Adjustment) set forth on Schedule 4-B to the Participation Agreement for the relevant Rent Payment Date. Also on such date, Lessor shall pay, or cause to be paid, to the Indenture Trustee an amount equal to the product obtained by multiplying the unpaid principal amount of the Equipment Notes outstanding on such date (after deducting therefrom the principal installment, if any, to be paid on such date) by a fraction, the numerator of which shall be the Equipment Cost of the Terminated Units and the denominator of which shall be the aggregate Equipment Costs of all Units then subject to this Lease; provided, that if the Lessor or Owner Participant is the Lessee or an Affiliate of the Lessee, Lessee shall pay to Lessor such additional amounts as are necessary to pay in full all then unpaid Policy Provider Amounts and, 17 without duplication, all then unpaid Policy Provider Reimbursement Costs, in each case, as defined in this Lease and as defined in the Other Lease described in clause (i) of the definition thereof. Unless all amounts described above in this Section 10.2 shall have been paid to the Persons entitled thereto on the Termination Date, this Lease shall continue in full force and effect with respect to the Terminated Units. Lessor agrees that in the event that Lessor elects to retain (and does retain) the Terminated Units as provided in this Section 10.3, for a period of one year after payment by Lessor of all amounts due and owing by Lessor under this Section 10.3, Lessor may not sell or lease any of such Terminated Units to Lessee or any of its Affiliates. If after giving the notice referred to above Lessor shall fail to pay the amounts required pursuant to the third sentence of this Section 10.3 and as a result thereof this Lease shall not be terminated with respect to the Terminated Units on a proposed Termination Date, Lessor shall (x) thereafter no longer be entitled to exercise its election to retain such Terminated Units and (y) reimburse Lessee for any reasonable out-of-pocket expenses (including reasonable legal fees and expenses) incurred by it in attempting to sell the Terminated Units pursuant to Section 10.2 immediately prior to Lessor's exercise of such preemptive election, and Lessee may at its option at any time thereafter prior to the immediately following Rent Payment Date submit a new termination notice pursuant to Section 10.1 with respect to such Terminated Units specifying a proposed Termination Date occurring on a Determination Date occurring not earlier than 25 days from the date of such notice. Section 10.4 Termination of Lease. In the event of either (x) any such sale and receipt by Lessor and the Indenture Trustee of all of the amounts provided in Section 10.2 in respect of the Terminated Units or (y) retention of the Terminated Units and full performance by Lessor and Lessee of their respective payment obligations in compliance with Section 10.3, and upon compliance by Lessee with the other provisions of this Section 10, the obligation of Lessee to pay Basic Rent hereunder for such Terminated Units shall cease and the Lease Term for the Terminated Units shall end. SECTION 11. Loss, Destruction Requisition, Etc. Section 11.1 Event of Loss. In the event that any Unit (i) shall suffer damage or contamination which, in Lessee's reasonable judgment (as evidenced by an Officer's Certificate of Lessee to such effect, confirmed by an Officer's Certificate of the Manager), makes repair uneconomic or renders such Unit unfit for commercial use, (ii) shall suffer destruction which constitutes a total loss, or shall suffer theft or disappearance (after reasonable efforts by Lessee to locate the same) for a period exceeding 6 months (or, if earlier, the end of the Basic Term or Renewal Term then in effect), (iii) shall have title thereto taken or appropriated by any governmental authority, agency or instrumentality under the power of eminent domain or otherwise, or (iv) shall be taken or requisitioned for use by any governmental authority or any agency or instrumentality thereof under the power of eminent domain or otherwise, and such taking or requisition is for a period that exceeds the shorter of (A) 180 days and (B) the remaining Basic Term or any Renewal Term then in effect (any such occurrence being hereinafter called an "Event of Loss"), Lessee, in accordance with the terms of Section 11.2, shall promptly and fully inform Lessor and the Indenture Trustee of such Event of Loss. Section 11.2 Replacement or Payment upon Event of Loss; Substitution. (a) Upon the occurrence of an Event of Loss or the deemed occurrence of an Event of Loss pursuant 18 to Section 9.1, an election to replace pursuant to Section 8.1(b) or an election to substitute pursuant to Section 11.2(b), in each case with respect to any Unit (an "Affected Unit"), Lessee shall within 60 days (or promptly in the case of an Event of Loss described in clause (iv) of Section 11.1) after a Responsible Officer of the Manager shall have actual knowledge of the occurrence of such Event of Loss or election to replace or substitute as provided in Section 11.2(b) give Lessor and the Indenture Trustee notice thereof (which initial notice shall identify the Unit involved). Thereafter, within the 60-day (or 30-day period in the case of an Event of Loss described in clause (iv) of Section 11.1) period following such initial notice, Lessee shall give Lessor and the Indenture Trustee a second notice as to which of the following options Lessee shall elect to perform (it being agreed that, except in the case of an election to replace pursuant to Section 8.1(b) or an election to substitute pursuant to Section 11.2(b) (in which case Lessee will comply with the provisions of Section 8.1(b) or 11.2(b) as applicable), if Lessee shall fail to give such second notice within such period, Lessee shall be deemed to have elected to perform the option set forth in Section 11.2(a)(ii)): (i) Upon Lessee's election to perform under this clause (i) pursuant to the above-mentioned second notice (or in the circumstances of an election described in Section 8.1(b) with respect to any Unit), as promptly as practicable following such election, and in any event on or before the 60th day (or 30th day in the case of an Event of Loss described in clause (iv) of Section 11.1) following such second notice (or Section 8.1(b) or 11.2(b) election), Lessee shall comply with Section 11.4(b) and shall convey or cause to be conveyed to Lessor a replacement unit ("Replacement Unit") for each such Affected Unit, with such Replacement Unit to be leased to Lessee hereunder, such Replacement Unit to be of the same car type of the same or newer model year (or otherwise approved by Lessor, which approval shall not be unreasonably withheld), and free and clear of all Liens (other than Permitted Liens of the type described in clause (ii) with respect to Permitted Subleases, and in clauses (iv) and (vii) of the definition thereof) and to have a fair market value (except to a de minimis extent), residual value, utility, remaining economic useful life and condition at least equal to the Unit so replaced (assuming such Unit to be replaced was in the condition required to be maintained by the terms of this Lease) and to be (as of the date of conveyance) then subject to a currently effective Permitted Sublease and not to be "limited use property" within the meaning of Revenue Procedure 2001-28 or Revenue Procedure 2001-29; provided, however, that, if only railcars of newer age or greater value are available for such replacement, Lessee may on one occasion re-substitute a railcar with a value closer to or equal to that of the Unit which originally suffered the Event of Loss or was replaced; or (ii) on the Rent Payment Date which is not less than 25 days nor more than 60 days following the date of notice of Lessee's election to perform under this clause (ii), Lessee shall pay or cause to be paid to Lessor (or in the case of Supplemental Rent, to the Persons entitled thereto) in funds of the type specified in Section 3.5, (a) an amount equal to the Stipulated Loss Amount of each such Unit suffering an Event of Loss or deemed Event of Loss determined as of such Rent Payment Date, (b) all Basic Rent due and owing on such date and unpaid in respect of such Unit or Units (exclusive of any Basic Rent due on such date in respect of such Unit or Units), (c) any unpaid Late Payment Interest in respect of any Rent with respect to such Unit or Units not paid when due (including, for the avoidance of doubt, Rent corresponding to the principal amount of the Equipment Notes to be prepaid in accordance with Section 2.10(b) of the Indenture) and (d) all other Rent in respect of such Unit or Units 19 (exclusive of any Basic Rent due on such date in respect of the Unit or Units suffering the Event of Loss) then due and payable hereunder (including, without limitation, a portion of the Policy Provider Amounts and Policy Provider Reimbursement Costs, if any, equal to the product obtained by multiplying the unpaid Policy Provider Amounts and Policy Provider Reimbursement Costs by a fraction, the numerator of which shall be the Equipment Cost of the Terminated Units and the denominator of which shall be the aggregate Equipment Costs of all Units then subject to this Lease (without duplication of amounts calculated above) and Late Payment Interest related thereto) so that, after receipt and application of all such payments, but without withdrawal from any Reserve Account (or the Special Reserves Account or Transition Expense Account, as such terms are defined in the Collateral Agency Agreement), Lessor shall be entitled under the terms of the Collateral Agency Agreement to receive, and does receive, taking into account all payments of Basic Rent in respect of such Unit, the sum of the portion of the Accumulated Equity Deficiency Amount allocable to such Unit or Units and Late Payment Interest related thereto and any other amounts then due to Lessor and the Policy Provider has received the portion of Policy Provider Amounts and Policy Provider Reimbursement Costs calculated above, it being understood that until such Stipulated Loss Amount and such other sums are paid, there shall be no abatement or reduction of Basic Rent on account of such Event of Loss. (b) (i) In the event that at any time during the term of this Lease, a Sublessee shall notify the Lessee that it intends to exercise its purchase option with respect to any Units ("Sublessee Purchased Units"), the Lessee shall either (I) pay the greater of (x) the proceeds received from the Sublessee in respect of the purchase of such Units as increased or decreased by any Basic Rent Adjustment and (y) the applicable Termination Amount (such greater amount, the "Sublessee Purchased Units Price") plus all other amounts payable in respect of such Units in accordance with the provisions of clause (ii) of this Section 11.2(b) or (II) substitute a Replacement Unit for each such Sublessee Purchased Unit in accordance with and subject to the provisions of Sections 11.2(a)(i), 11.3 and 11.4, with such payment or substitution to be made not later than the date on which the Sublessee Purchased Units are to be conveyed to the applicable Sublessee. (ii) If Lessee elects to pay the Sublessee Purchased Unit Price as provided in Section 11.2(b)(i)(I), then Lessee shall pay, or cause to be paid, to the Lessor an amount equal to the Sublessee Purchased Unit Price with respect to each Sublessee Purchased Unit, which amount shall be paid without withdrawal from any CAA Account other than the applicable Non-Shared Payments Account. Concurrently with the payment by Lessee of the foregoing, Lessee shall also pay to Lessor (1) any unpaid Late Payment Interest in respect of the Sublessee Purchased Units (including in respect of the principal amount of the Equipment Notes to be prepaid), together with all Basic Rent then due and payable with respect to such Units (excluding any Basic Rent due on the date of the payment of such Sublessee Purchased Unit Price as set forth above) and (2) a portion of the Policy Provider Amounts and Policy Provider Reimbursement Costs, if any, equal to the product obtained by multiplying the unpaid Policy Provider Amounts and Policy Provider Reimbursement Costs by a fraction, the numerator of which shall be the Equipment Cost of the Terminated Units and the denominator of which shall be the aggregate Equipment Costs of all Units then subject to this Lease; provided, that if the Lessor or Owner Participant is the Lessee or an Affiliate of the Lessee, Lessee shall pay to Lessor such additional amounts as are necessary to pay in full all then unpaid Policy Provider 20 Amounts and, without duplication, all then unpaid Policy Provider Reimbursement Costs, in each case, as defined in this Lease and as defined in the Other Lease described in clause (i) of the definition thereof. (c) The Lessor and the Lessee hereby agree to cooperate in good faith, and to take such actions as each shall reasonably request, to permit each to treat the substitution of a Replacement Unit for a Sublessee Purchased Unit as part of a tax deferred exchange under section 1031 of the Code (an "Exchange Transaction") including allowing the Exchange Transaction to occur after the Sublessee's notification of its intention to exercise its purchase option but prior to the Sublessee's exercise of its purchase option. Section 11.3 Rent Termination. Upon the replacement or substitution of any Unit or Units in compliance with Sections 11.2(a)(i) or 11.4(b) (but only as to replaced Units and not any Replacement Unit) or upon the payment of all sums required to be paid pursuant to Section 11.2 in respect of any Unit or Units, the Lease Term with respect to such Unit or Units and the obligation to pay Basic Rent for such Unit or Units accruing subsequent to the date of payment of Stipulated Loss Amount or date of conveyance of such Replacement Unit or Units pursuant to Section 11.2 shall terminate; provided that Lessee shall be obligated to pay all Rent in respect of such Unit or Units which is payable under Section 11.2 with respect to such payment of Stipulated Loss Amount or such replacement of such Unit or Units and in respect of all other Units then continuing to remain subject to this Lease. Section 11.4 Disposition of Equipment; Replacement of Unit. (a) Upon the payment of all sums required to be paid pursuant to Section 11.2 in respect of any Unit or Units, Lessor will convey to Lessee or its designee all right, title and interest of Lessor in and to such Unit or Units, "as is", "where is", without recourse or warranty, except for a warranty as to the absence of Lessor's Liens, and shall execute and deliver to Lessee or its designee, at Lessee's cost and expense, such bills of sale and other documents and instruments as Lessee or its designee may reasonably request to evidence such conveyance. As to each separate Unit so disposed of, Lessor shall (subject to any insurer's right of subrogation, if any) be entitled to any amounts in excess of Stipulated Loss Amount arising from such disposition, plus any awards, insurance or other proceeds and damages received by Lessee, Lessor or the Indenture Trustee by reason of such Event of Loss. (b) At the time of or prior to any replacement or substitution of any Unit or Replacement Unit, Lessee, at its own expense, will (A) furnish Lessor with a Bill of Sale with respect to the Replacement Unit substantially in the form delivered pursuant to Section 4.1(g) of the Participation Agreement, (B) cause a Lease Supplement substantially in the form of Exhibit A hereto, subjecting such Replacement Unit to this Lease, and duly executed by Lessee, to be delivered to Lessor for execution by the appropriate parties, it being understood that upon such execution (x) Lessee will cause such Lease Supplement to be filed for recordation in the same manner as provided for the original Lease Supplement in Section 16.1 and (y) to the extent that the Indenture has not been satisfied and discharged, Lessor shall deliver possession of the "original" counterpart of such Lease Supplement to the Indenture Trustee, (C) so long as the Indenture shall not have been satisfied and discharged, cause an Indenture Supplement substantially in the form of Exhibit A to the Indenture for such Replacement Unit, to be delivered to Lessor and to the Indenture Trustee for execution and, upon such execution, to be 21 filed for recordation in the same manner and within the same time periods as provided for the original Indenture Supplement in Section 16.1, (D) furnish Lessor with an opinion of Lessee's counsel (which may be the General Counsel or Assistant General Counsel of Trinity), (x) to the effect that the Bill of Sale referred to in clause (A) above constitutes an effective instrument for the conveyance of title to the Replacement Unit to Lessor, and (y) describing all filings and recordings and other actions required pursuant to Section 16 with respect to the Replacement Units, (E) furnish (I) to Owner Participant (and its applicable Affiliates) an agreement of Lessee to indemnify Owner Participant (and its applicable Affiliates) against any adverse tax consequences suffered as a result of such replacement that are not otherwise indemnified under the Tax Indemnity Agreement and (II) to Lessor an opinion from independent tax counsel selected by Owner Participant to the effect that Owner Participant will not have any material adverse tax consequences as a result of such replacement or substitution, (F) furnish Lessor with an engineer's certificate (which may be from an employee of the Manager) certifying as to the utility, condition and remaining useful life required under clause (i) of Section 11.2(a), (G) furnish to Lessor and the Indenture Trustee an Officer's Certificate certifying that the Replacement Unit has a fair market value (except to a de minimis extent), residual value, utility and remaining economic useful life and condition at least equal to the Unit being replaced and is free and clear of all Liens (other than Permitted Liens of the type described in clause (ii) with respect to Permitted Subleases, and in clauses (iv) and (vii) of the definition thereof), (H) furnish Lessor with an opinion of independent transportation counsel or in-house counsel for Manager as to the absence of Liens of record with the STB and as to the completion of all necessary STB filings and deposits with the Registrar General of Canada described in Section 16.1 hereof with respect to such Replacement Unit and (I) furnish such other documents and evidence as any Participant, the Policy Provider, Lessor or the Indenture Trustee, or their respective counsel, may reasonably request in order to establish the consummation of the transactions contemplated by this Section 11.4. In addition, as soon as practicable after any such replacement or substitution, cause each applicable Unit to be numbered with the reporting mark shown on the applicable Lease Supplement in accordance with Section 4.2 hereof. For all purposes hereof, (i) Lessee shall be deemed to have complied with the requirements of this Section 11.4(b) as of the date of its delivery to Lessor, the Participants, the Policy Provider and the Indenture Trustee of the documents and instruments referred to in the foregoing clauses (A) through (I), signed by Lessee or its counsel, as applicable, in due form for any required filing or recording, and such filing or recording shall have been made if such documents and instruments have been executed and delivered by Lessor or Indenture Trustee or both of them in a timely manner, (ii) title to the Replacement Unit shall be deemed to have been transferred to Lessor as of such date and (iii) upon such passage of title thereto to Lessor the Replacement Unit shall be deemed part of the property leased hereunder and the Replacement Unit shall be deemed a "Unit" as defined herein. Upon such passage of title, Lessor will transfer to Lessee, "as is" and "where is" and without recourse or warranty (except as to Lessor's Liens), all Lessor's right, title and interest in and to the replaced Unit, and upon such transfer, Lessor will request in writing that the Indenture Trustee execute and deliver to Lessee an appropriate instrument releasing such replaced Unit from the lien of the Indenture. Lessee shall pay all reasonable out-of-pocket costs and expenses (including reasonable legal fees and expenses) incurred by Lessor, Policy Provider or the Indenture Trustee in connection with any replacement pursuant to this Section 11.4. Lessee further agrees that, upon receipt of fully signed counterparts of the Lease Supplement and Indenture Supplement referred to in clauses (B) and, if applicable, (C) of the first sentence of this 22 Section 11.4(b), it will, at its sole cost and expense, cause such documents to be filed or recorded in the manner contemplated by Section 16.1. Section 11.5 Eminent Domain. In the event that during the Lease Term the use of any Unit is requisitioned or taken by any governmental authority under the power of eminent domain or otherwise for a period which does not constitute an Event of Loss, all of Lessee's obligations under the Operative Agreements, including without limitation, Lessee's obligation to pay all installments of Basic Rent, shall continue for the duration of such requisitioning or taking. Any amount referred to in Section 11.4(a) or in Section 12 that is payable to Lessor shall be deposited in the related Non-Shared Payments Account established under the Collateral Agency Agreement. SECTION 12. Insurance. Section 12.1 Insurance. Lessee will at all times after delivery and acceptance of each Unit, at its own expense, keep or cause the Insurance Manager under the Insurance Agreement to keep such Unit insured with insurers of recognized responsibility with a rating of at least A-/7 by A.M. Best Company (or a comparable rating by a nationally or internationally recognized rating group of comparable stature) or by other insurers approved in writing by Lessor, which approval shall not be unreasonably withheld, in amounts and against risks and with deductibles and terms and conditions not less beneficial to the insured thereunder than the insurance, if any, maintained by the Manager with respect to similar equipment which it owns or leases, but in no event shall such coverage be for amounts or against risks less than the Prudent Industry Practice. Without limiting the foregoing, Lessee will in any event: (a) keep each Unit insured against physical damage (which may be accomplished pursuant to a contingent physical damage policy) in an amount not less than the Stipulated Loss Amount attributable thereto as shown on Schedule 4 to the Participation Agreement, subject to an aggregate limit for all Units of not less than $1,500,000 per occurrence, provided, that such coverage may provide for deductible amounts of not more than $50,000 per occurrence (or $100,000, in the event that (i) coverage providing for a $50,000 deductible amount is not then available on commercially reasonable terms or (ii) a deductible amount of $100,000 is then customary in the railcar leasing industry with respect to such coverage and in each case the Lessor shall have received evidence reasonably satisfactory to it of the foregoing (which may include a report from an independent insurance advisor chosen by Lessor and reasonably satisfactory to Lessee); and (b) maintain public liability insurance naming Owner Participant, Lessor, the Trust Company, the Indenture Trustee, the Policy Provider and Loan Participant as additional insureds (but only with respect to liability arising out of or related to the Operative Agreements and the Units) against bodily injury, death or property damage arising out of the use or operation of the Units with general and excess liability limits of not less than $100,000,000 per occurrence or in the aggregate, provided that such coverage may provide for deductible amounts not exceeding the lesser of (w) $10,000,000 or (x) the difference (not less than zero (0)) between (i) the level of the then current deductible maintained by Manager for the Manager's Fleet (or if Manager, its successors and assigns is no longer engaged in the railcar leasing business, the average level of then current deductible amounts maintained by the three largest companies 23 engaged in such business in the United States) and (ii) such amount of additional coverage as may be obtained by Lessee in reduction of the then current deductible maintained by Manager for an additional incremental annual premium payable by Lessee in the aggregate in respect of the entire Equipment of up to $100,000 as adjusted by the Inflation Factor; provided, further, that such policies which are carried on a "claims made" basis shall provide for a retroactive date not more recent than either (y) the Closing Date, or (z) a date seven years prior to the effective date of the policy. (c) It is understood and agreed that the insurance required under this Section 12.1 may be part of a company-wide insurance program of the Insurance Manager or its Affiliates, including risk-retention and self-insurance. Any policy of insurance maintained in accordance with this Section 12.1 and any policy purchased in substitution or replacement for any of such policies shall provide that if any such insurance lapses or is cancelled or terminated for any reason whatever (other than upon normal policy expiration), Lessor, the Indenture Trustee, Loan Participant, the Policy Provider and Owner Participant shall receive 30 days' prior written notice of such lapse, cancellation or termination. (d) If Lessee or the Insurance Manager shall maintain any liability coverages for the benefit of Lessee in excess of the coverages required hereunder (whether or not such excess coverage complies with the requirements under this Section 12), Lessee will cause all such coverages to name Owner Participant, Lessor, the Trust Company, the Indenture Trustee and Loan Participant as additional insureds (but only with respect to liability arising out of or related to the Operative Agreements or the Units), provided, however, that the requirements of this Section 12 shall not otherwise apply to such coverages. Section 12.2 Physical Damage Insurance. (a) The insurance maintained pursuant to Section 12.1(a) shall provide that (i) so long as no Significant Default shall have occurred and be continuing the proceeds up to $100,000 for any loss or damage to any Unit shall be paid to Lessee for the purpose of repairing or restoring such Unit that has been damaged, (ii) the proceeds in excess of $100,000 for any loss or damage to any Unit shall be paid to the Indenture Trustee, so long as the Equipment Notes remain outstanding, and thereafter to Lessor, in each case under a standard loss payable clause, and (iii) Lessee will be entitled, at its own expense, to make all proofs of loss and/or take all other steps necessary to collect the proceeds of such insurance. (b) To the extent that the risk of loss with respect to the applicable Units shall be borne by Persons (other than the Lessee) in possession or control of such Unit and such other Person shall be obligated to pay a settlement amount to Lessee in the amount of such loss in respect of such Unit, the Lessee may, in lieu of maintaining the physical damage insurance required by Section 12.1(a), self-insure with respect to any Units for such amounts and against such risks as shall be based upon reasonable practices then in effect in the railcar leasing and insurance industries. (c) The entire proceeds of any property insurance or third party payments for damages to any Unit received by Lessor or the Indenture Trustee under Section 12.2(a)(ii) shall be held by such party until, with respect to such Unit, the repairs referred to in clause (i) below are made as specified therein or payment of the Stipulated Loss Amount is made, and such entire 24 proceeds will be paid, so long as no Significant Default shall have occurred and be continuing, either: (i) to Lessee promptly following receipt by the Indenture Trustee or Lessor, as the case may be, of a written application signed by Lessee for payment to Lessee for repairing or restoring the Units which have been damaged so long as (1) Lessee shall have complied with the applicable provisions of this Lease, and (2) Lessee shall have certified that any damage to such Units shall have been fully repaired or restored; or (ii) if this Lease is terminated with respect to such Unit because of an Event of Loss and Lessee has paid the Stipulated Loss Amount and all other amounts due as a result thereof, such proceeds shall be promptly paid over to, or retained by, Lessee. Section 12.3 Public Liability Insurance. (a) The public liability insurance referred to in paragraph 12.1(b) shall (i) provide that in as much as such policies cover more than one insured, all terms, conditions, insuring agreements and endorsements, with the exception of limits of liability, deductibles or retentions and liability for premiums, commissions, assessments or calls (which shall be solely a liability of Lessee), shall operate in the same manner as if there were a separate policy or policies covering each insured, (ii) waive any rights of subrogation of the insurers against Owner Participant, Lessor, the Trust Company, the Indenture Trustee, the Policy Provider and Loan Participant (iii) provide that neither Owner Participant, Lessor, the Trust Company, the Policy Provider, the Indenture Trustee nor Loan Participant shall have any responsibility for any insurance premiums, whether for coverage before or after cancellation or termination of any such policies as to Lessee and (iv) be primary without contribution from any similar insurance maintained by Owner Participant, Lessor, the Trust Company, the Indenture Trustee, the Policy Provider or Loan Participant. (b) Lessee shall use its reasonable efforts to obtain public liability insurance policies which stipulate that coverage thereunder will not be invalidated (as to Owner Participant, Loan Participant, Lessor, as Lessor of the Units and in its individual capacity, and the Indenture Trustee) by any act or neglect of Lessee, or any breach or violation by Lessee of any warranties, declarations or conditions contained in such policies, but shall be under no obligation to obtain such policies containing such stipulations if they are not available to Lessee at commercially reasonable rates in the markets in which Lessee has then placed its insurance program. (c) In the event any public liability insurance policy or coverage thereunder which are required to be maintained under Section 12.1(b) shall cease to be available to Lessee in the commercial insurance market on commercially reasonable terms (or Lessee shall receive notice that such policy or coverage will cease to be available), Lessee shall give Lessor prompt written notice thereof and Lessor shall not unreasonably withhold its agreement to waive such requirement. Lessee shall make written request for any such waiver in writing, accompanied by written reports prepared, at Lessee's option, either by (i) one independent insurance advisor chosen by Lessee and Lessor or (ii) three independent insurance advisors, one chosen by Lessor, one chosen by Lessee and one chosen by the other two advisors (one of which may be the regular insurance broker or brokers of Lessee). The fees and expenses of all such advisors shall be paid by Lessee. The written reports required hereunder shall unanimously (x) state that such 25 insurance (or the required coverage thereunder) is not reasonably available to Lessee at commercially reasonable premiums in the commercial insurance markets within which Lessee or the Manager normally purchases its insurance from insurers, acceptable to Lessee, with "A.M. Best's" rating of A- or better for railcars of similar type and capacity and (y) explain in detail the basis for such conclusions. At any time after the granting of such waiver, but not more often than twice a year, Lessor may make a written request for a supplemental report (in form reasonably acceptable to Lessor) from such insurance advisor(s) updating the prior report and reaffirming the conclusions set forth therein. Lessee shall provide any such required supplemental report within 60 days after receipt of the written request therefor. Any such waiver shall be effective for only as long as such insurance is not reasonably available to Lessee in the commercial markets in which Lessee normally purchases its insurance at commercially reasonable rates (it being understood that the failure of Lessee to furnish timely any such supplemental report shall be conclusive evidence that such condition no longer exists) and any such waiver may specify an outside expiration date, but such date shall not be earlier than one year after the date of such waiver. If such supplemental report shows that such coverage is available or Lessee otherwise learns that such coverage is again available, Lessee shall within 90 days of such report or of receiving such knowledge obtain such insurance coverage. Regardless of whether such a supplemental report has been requested, Lessee shall give prompt written notice to Lessor if it learns that any previously unavailable coverage with respect to which a waiver has been granted is again available. During any period with respect to which such waiver has been granted and remains in effect under this Section 12.3(c), Lessee shall obtain public liability insurance as set forth in Section 12.1(b) from such carriers, in such amounts and with coverage limits and deductibles as may be reasonable in its judgment under the circumstances, but in any event (i) no less than prudent industry standards and (ii) in an amount that may be purchased for a premium equal to 200% of Lessee's cost (on a fleet-wide basis) of public liability insurance premiums for the coverage on a fleet-wide basis required by Section 12.1(b) for the final year immediately preceding the fiscal year in which such waiver first was granted. Section 12.4 Certificate of Insurance. (a) Lessee shall, prior to the Closing Date and when the renewal certificate referred to below is sent (but in any event not less than annually), furnish (or, in the case of (ii) below, use reasonable efforts to furnish) Lessor, the Indenture Trustee, Owner Participant, the Policy Provider and the Loan Participant with a certificate signed by the insurer or an independent insurance broker (i) showing the insurance then maintained by Lessee pursuant to Section 12.1, (ii) stating that, except as noted in such certificate, such insurance complies with the requirements hereof (including, without limitation the deductible level described in Section 12.1(b)) and as set forth in Exhibits B-1 and B-2 to the Participation Agreement, and (iii) to the extent that any provision that Lessee is required to use reasonable efforts to obtain is not contained in such insurance, such certificate shall so state and shall confirm that, in such broker's opinion, such provision is not reasonably obtainable. Lessor and the Policy Provider shall each be entitled at its expense to review copies of all applicable insurance policies. With respect to any renewal policy or policies, certificates or binders evidencing such renewal shall be furnished as soon as practicable, but in no event later than 30 days after the earlier of the date such renewal is effected or the expiration date of the original policy or policies. Simultaneously, with the furnishing of such certificate, Lessee will provide appropriate evidence, reasonably satisfactory to Lessor, the Policy Provider and the Indenture Trustee, that all premiums due on such insurance have been paid. 26 (b) Lessee agrees to use reasonable efforts to cause each of its insurers to agree that, with respect to any policy of insurance maintained pursuant to Section 12.1, such insurer will provide not less than 30 days' prior written notice to Lessor, the Indenture Trustee, the Policy Provider, Loan Participant and Owner Participant of any non-renewal or material adverse change with respect to such policy. For purposes of this Section 12.4(b), "material adverse change" shall mean a material adverse change in policy limits, exclusions or deductibles or any material adverse change in policy coverage inconsistent with the requirements of Section 12.1(b). If any of Lessee's insurers delivers such notice of non-renewal, Owner Participant and Policy Provider may attempt to obtain and provide satisfactory insurance and Lessee shall reimburse Owner Participant and Policy Provider for reasonable expenses incurred (i) during the period 10 days prior to expiration of existing insurance policies, for all Owner Participant's expenses excluding broker fees and commissions and insurance premiums, and (ii) on and after the expiration of existing insurance policies, for all Owner Participant's expenses including broker fees and commissions and insurance premiums. Section 12.5 Additional Insurance. In the event that Lessee shall fail to maintain insurance as herein provided in Section 12.1 or, if applicable, Section 12.3, Lessor or Policy Provider may at its option, upon prior written notice to Lessee, provide such insurance and, in such event, Lessee shall, upon demand from time to time reimburse Lessor for the cost thereof together with interest from the date of payment thereof at the Late Rate, on the amount of the cost to Lessor of such insurance which Lessee shall have failed to maintain. If after Lessor has provided such insurance, Lessee then obtains the coverage provided for in Section 12.1 which was replaced by the insurance provided by Lessor, and Lessee provides Lessor with evidence of such coverage reasonably satisfactory to Lessor, Lessor shall cancel the insurance it has provided pursuant to the first sentence of this Section 12.5. In such event, Lessee shall reimburse Lessor for all costs to Lessor of cancellation, including without limitation any short rate penalty, together with interest from the date of Lessor's payment thereof at the Late Rate. In addition, at any time Lessor (either directly or in the name of Owner Participant) may at its own expense carry insurance with respect to its interest in the Units, provided that such insurance does not interfere with Lessee's ability to insure the Units as required by this Section 12 or adversely affect Lessee's insurance or the cost thereof, it being understood that all salvage rights to each Unit shall remain with Lessee's insurers at all times. Any insurance payments received from policies maintained by Lessor pursuant to the previous sentence shall be retained by Lessor without reducing or otherwise affecting Lessee's obligations hereunder, other than with respect to Unit(s) with respect to which such payments have been made. Section 12.6 Post-Lease Term Insurance. Lessee agrees that upon the expiration or earlier termination of the Lease Term, Lessee will, with respect to the public liability insurance otherwise required to be carried under this Section 12, either: (A) purchase a seven year extended reporting period for Owner Participant, Lessor and Owner Trustee, or (B) obtain the written agreement of the Manager in form and substance satisfactory to Owner Participant to carry or cause to be carried for such seven year period public liability insurance which satisfies the requirements of this Section 12 and which names Owner Participant, Lessor, the Collateral Agent and Owner Trustee as additional insureds. 27 SECTION 13. Reports; Inspection. Section 13.1 Duty of Lessee to Furnish. On or before April 30, 2005 (or July 31, 2005 with respect to clause (c) below), and on or before each April 30 (or each March 31, June 30, September 30 and December 31, with respect to clause (c) below) thereafter, Lessee will furnish (or cause the Manager under the Management Agreement to furnish) to Lessor, Owner Participant, Loan Participant, the Indenture Trustee, Policy Provider and the Rating Agency an accurate statement, as of the preceding December 31 (or, as of the end of the preceding calendar quarter with respect to clause (c) below), (a) showing the amount, description and reporting marks of the Units then leased hereunder, the amount, description and reporting marks of all Units that may have suffered an Event of Loss during the 12 months ending on such December 31 (or since the Closing Date, in the case of the first such statement), and such other information regarding the condition or repair of the Units as Lessor, Collateral Agent or Policy Provider may reasonably request, (b) stating that, in the case of all Units repainted during the period covered by such statement, the markings required by Section 4.2 hereof shall have been preserved or replaced, (c) showing the percentage of use in the United States and in each of Canada and Mexico based on the total mileage traveled by the Units and the Other Units for the prior calendar quarter as reported to the Manager by railroads (provided, that Lessee shall cooperate with Owner Participant and Lessor and shall provide such additional information on such matters as Owner Participant or Lessor may reasonably request to enable Owner Participant and Lessor to pursue or fulfill their respective tax audit and tax litigation rights and obligations) and (d) stating that Lessee is not aware of any condition of any Unit which would cause such Unit not to comply in any material respect with the rules and regulations of the FRA and the interchange rules of the Field Manual of the AAR as they apply to the maintenance and operation of the Units in interchange and any other requirements hereunder. Lessee will provide Lessor and Policy Provider with prompt notice, but in any event within 30 days of (i) any legal proceeding relating to any Unit or Pledged Unit, alleging that Lessee is liable for an amount in excess of $5,000,000 or that Lessor, the Owner Participant, the Indenture Trustee or the Policy Provider is alleged to be liable for an amount in excess of $100,000, (ii) actual knowledge of or receipt of written notice alleging that any Unit or Pledged Unit (or group of Units or Pledged Units) violates any environmental law where the aggregate cost of placing such Unit or Pledged Unit or group of Units or Pledged Units into compliance is likely to exceed $100,000 or (iii) actual knowledge of or receipt of written notice of any incident involving any Unit or Pledged Unit alleging personal injury or property damage (including damage to the environment) including costs of remediation, in excess of $1,000,000. Section 13.2 Inspection. (a) Each of the Lessor (and as assignee of certain of Lessor's rights hereunder, the Control Party) and the Owner Participant, together with the agents, representatives, accountants and legal and other advisors of each of the foregoing (collectively, the "Inspection Representatives"), shall have the right to (i) conduct a field examination of the Units and the Pledged Units (each such inspection, a "Unit Inspection"), (ii) (x) inspect all documents (the "Related Documents"), including, without limitation, all leases, insurance policies, warranties or other agreements, relating to the Units, the Pledged Units and the other Collateral (each such inspection, a "Related Document Inspection") and (y) inspect each of the Lessee's and the Manager's books, records and databases (which shall include reasonable access to Lessee's and the Manager's computers and computer records to the extent necessary to evaluate compliance with the Operative Agreements) (collectively, the "Books and Records") 28 with respect to the Units, the Pledged Units and the other Collateral and the Related Documents (including without limitation data supporting all reporting requirements under the Operative Agreements) (each such inspection, a "Book and Records Inspection") and (iii) discuss (x) the affairs, finances and accounts of the Lessee (with respect to itself) and the Manager (with respect to itself and the Lessee) and (y) the Units, the Pledged Units and the other Collateral, the Related Documents and the Books and Records, in each case with the principal executive officer and the principal financial officer of each of the Lessee and the Manager, as applicable (the foregoing clauses (x) and (y) a "Company Inspection") (the Unit Inspections, the Related Documents Inspections, the Books and Records Inspections and the Company Inspections described in clauses (i), (ii) and (iii), collectively, the "Inspections"). (b) All Inspections shall be conducted upon reasonable request and notice to Lessee (with respect to itself) and the Manager (with respect to itself and the Lessee) and shall (a) be conducted during normal business hours, (b) be subject to Lessee's and the Manager's customary security procedures, if any, and (c) not unreasonably disrupt Lessee's or the Manager's business. (c) Each of the Lessor (and, as assignee of certain of Lessor's rights hereunder, the Control Party) and the Owner Participant (together with their respective Inspection Representatives) shall have the right to conduct (independent of any inspection rights of any other party) (i) (x) one Unit Inspection per calendar year, and in the case of each of the Policy Provider and the Owner Participant, one additional Related Documents Inspection, Books and Records Inspection and Company Inspection per calendar year for the calendar years ending December 31, 2005 and December 31, 2006, in each case, at the sole cost and expense of the Lessor, Control Party or Owner Participant, respectively (as applicable), and (y) one Related Documents Inspection, one Books and Records Inspection and one Company Inspection per calendar year at the sole cost and expense of Lessor, the Control Party or Owner Participant, respectively (as applicable) (including the reasonable legal and accounting fees, costs and expenses incurred by the Lessor, Control Party or the Owner Participant, as applicable, and their respective Inspection Representatives, as applicable) (each such Inspection described in clauses (x) and (y), an "Ordinary Inspection" and collectively, "Ordinary Inspections"); provided, that, notwithstanding the foregoing, Lessee shall pay for or reimburse the Control Party (which amounts shall constitute Supplemental Rent hereunder) for inspection costs incurred by or on behalf of the Control Party pursuant to this paragraph (c). (d) If in connection with or as a result of any Ordinary Inspection, Lessor, the Control Party or the Owner Participant, as applicable, determines, in its reasonable discretion, that an Inspection Issue (as defined below) has occurred, then Lessor, the Control Party or the Owner Participant, as applicable, shall have the right, to (i) collect from Lessee the costs and expenses of such Ordinary Inspection and (ii) conduct any type and number of additional Inspections from time to time (each, an "Additional Inspection" and collectively, "Additional Inspections") to confirm satisfactory resolution, in the reasonable business judgment of the Lessor, Control Party or the Owner Participant, as applicable, of any such Inspection Issues identified in such Ordinary Inspection or Interim Inspection, or in any Additional Inspection in connection therewith. All such Additional Inspections shall be at the sole cost and expense of Lessee (including the reasonable legal and accounting fees, costs and expenses incurred by Lessor, the Control Party or Owner Participant, as applicable, and their respective Inspection 29 Representatives). For the purposes of this Section 13.2, "Inspection Issue" means (x) any material misstatement or omission of fact in or with respect to the Units, the Pledged Units, the Related Documents or the Company Inspections or (y) a determination, in its reasonable business judgment, by Lessor, the Control Party or the Owner Participant, as applicable, that the Related Documents or Books and Records are incomplete or inaccurate in any material respect. Without prejudice to the right to conduct Inspections, Lessor, the Control Party and the Owner Participant shall confer with a view toward coordinating their conduct with respect to the Inspections in order to minimize the costs thereof and business disruption attendant thereto. Notwithstanding any of the foregoing, during the occurrence and continuance of a Lease Event of Default, (i) there shall be no limit on the type and number of Inspections that can be undertaken by Lessor, the Control Party or the Owner Participant, as applicable, and their respective Inspection Representatives and (ii) all costs and expenses of any Inspection shall be at the sole cost and expense of the Lessee (including the reasonable legal and accounting fees, costs and expenses incurred by the Control Party and the Owner Participant, together with their respective Inspection Representatives). SECTION 14. Lease Events of Default. The following events shall constitute Lease Events of Default hereunder (whether any such event shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body) and each such Lease Event of Default shall be deemed to exist and continue so long as, but only as long as, it shall not have been remedied: (a) Lessee shall fail to (i) make or (ii) be deemed by virtue of the last sentence of Section 3.5 hereof to have made any payment of Basic Rent, Early Purchase Price, any other purchase price to be paid by Lessee for any Units pursuant to this Lease or the Participation Agreement, Stipulated Loss Amount or Termination Amount (x) in the case of any such payment that is required to be made on the Basic Term Expiration Date or on any date within 30 days before the Basic Term Expiration Date, when due, and (y) in the case of any other such payment, within 10 Business Days after the same shall have become due; provided, however, that so long as any Equipment Notes remain outstanding, failure to make (or be deemed to have made) any portion of Basic Rent on any Rent Payment Date shall not be a Lease Event of Default so long as the amounts applied under Section 3.4, clause (4), of the Collateral Agency Agreement are sufficient to make the distributions required under such clause (4) with respect to the obligations owed under this Lease; provided, further, that in the event that the Special Equity Buy-Out has been consummated, failure to make any payment of Basic Rent, Early Purchase Price, any other purchase price to be paid by Lessee for any Units pursuant to this Lease or the Participation Agreement, Stipulated Loss Amount or Termination Amount (to the extent such amount constitutes an Accumulated Equity Deficiency Amount to be applied under Section 3.4, clause 9 of the Collateral Agency Agreement) shall, after receipt by Lessee of written notice of such failure from Lessor or Owner Participant, be a Lease Event of Default; or 30 (b) Lessee shall fail to (i) make or (ii) be deemed by virtue of payments made by the Collateral Agent to have made any payment of Supplemental Rent, including indemnity or tax indemnity payments, but not including Stipulated Loss Amount, Termination Amount, Early Purchase Price, or any other purchase price to be paid by Lessee for any Units pursuant to this Lease or the Participation Agreement (x) in the case of any such payment that is required to be on the Basic Term Expiration Date or on any date within 30 days before the Basic Term Expiration Date, when due, and (y) in the case of any other such payment, after the same shall have become due and such failure shall continue unremedied for 30 days after receipt by Lessee of written notice of such failure from Lessor, Policy Provider, Owner Participant or the Indenture Trustee; provided, however, that so long as any Equipment Notes remain outstanding, failure to make (or be deemed to have made) payment of any of the amounts referred to in or to be applied pursuant to clauses (5) through (15) of Section 3.4 of the Collateral Agency Agreement shall not be a Lease Event of Default; or (c) Lessee shall fail to maintain in effect the insurance required by Section 12 or Section 6.4 of the Collateral Agency Agreement and such failure shall not have been waived as provided for therein; or (d) Lessee shall use or permit the use of the Units or the Pledged Units or any portion thereof in a way which is not permitted by this Lease (with respect to the Units) or the Collateral Agency Agreement (with respect to the Pledged Units), provided that such unauthorized use shall not constitute a Lease Event of Default for a period of 45 days after Lessee's obtaining actual knowledge thereof so long as (i) such unauthorized use is not the result of any willful action of Lessee and (ii) such unauthorized use is capable of being cured and Lessee diligently pursues such cure throughout such 45-day period; or Lessee shall make or permit any unauthorized assignment or transfer of this Lease in violation of Section 18.2; or (e) TILC (or any successor thereto in its capacity as Administrator or Servicer, as applicable) shall have defaulted in any material respect in the performance of any of its obligations under the Administrative Services Agreement or the Servicing Agreement or a default shall occur under Section 6(a) of the Account Administration Agreement, and, in each case, Lessee shall have failed to exercise its rights thereunder in respect of such default for a period of 30 days after receipt by Lessee of written notice from Lessor, Owner Participant, Policy Provider or the Indenture Trustee, demanding that such action be taken; or (f) Any representation or warranty made by Lessee in any Lessee Agreement or any representation or warranty made by TILC in any Operative Agreement to which any such Person is a party, in each case, other than the Tax Indemnity Agreement, is untrue or incorrect in any material respect as of the date of making thereof and such untruth or incorrectness shall continue to be material and unremedied for a period of 30 days after receipt of notice from Lessor, Owner Participant, Indenture Trustee or the Policy Provider; provided that, if such untruth or incorrectness is capable of being remedied, no such untruth or incorrectness shall constitute a Lease Event of Default hereunder for a period of 120 days after receipt of notice from Lessor, Owner Participant, the Indenture Trustee or the Policy Provider so long as Lessee, or TILC, as the case may be, is diligently proceeding to remedy such untruth or incorrectness and shall in fact remedy such untruth or incorrectness within such period; provided that such untrue 31 or incorrect representation or warranty shall be deemed to be remediable or remedied only after all adverse consequences thereof if any, can be and have been remedied as applicable; or (g) Lessee or the General Partner shall (i) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect, or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or (ii) consent to any such relief or to the appointment of or taking possession by any such official in any voluntary case or other proceeding commenced against it, or (iii) admit in writing its inability to pay its debts generally as they come due, or (iv) make a general assignment for the benefit of creditors, or (v) take any corporate or partnership action to authorize any of the foregoing; or (h) An involuntary case or other proceeding shall be commenced against Lessee or the General Partner seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect, or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or (i) Lessee shall fail to observe or perform any other of the covenants or agreements to be observed or performed by Lessee under any Lessee Agreement or any certificate and such failure shall continue unremedied for 30 days after notice from Lessor, Owner Participant, Policy Provider or the Indenture Trustee to Lessee, specifying the failure and demanding the same to be remedied; provided that, if such failure is capable of being remedied, and the remedy requires an action other than, or in addition to, the payment of money, no such failure (other than one relating to the payment of such money) shall constitute a Lease Event of Default hereunder for a period of 150 days after receipt of such notice so long as Lessee is diligently proceeding to remedy such failure and shall in fact remedy such failure within such period; or (j) A Manager Default shall have occurred and be continuing under the Management Agreement, and Lessee shall have failed to exercise its rights under the Management Agreement in respect of such Manager Default for a period of 30 days after receipt by Lessee of written notice from Lessor, Owner Participant or the Indenture Trustee demanding that such action be taken; or (k) An Insurance Manager Default shall have occurred and be continuing under the Insurance Agreement, and Lessee shall have failed to exercise its rights under the Insurance Agreement in respect of such Insurance Manager Default for a period of 30 days after receipt by Lessee of written notice from Lessor, Owner Participant or the Indenture Trustee demanding that such action be taken; or (l) The Lessee shall have defaulted in any material respect in the performance of any of its covenants and agreements contained in Section 2.8(b) of the Collateral Agency Agreement and such default shall continue unremedied for a period of 30 days; or 32 (m) An amount equal to the Additional Liquidity Reserve Amount shall not have been deposited into the Liquidity Reserve Account either (i) pursuant to Section 3.4 of Collateral Agency Agreement (without withdrawal from the Cash Trapping Account) or (ii) as a result of a direct capital contribution by TILC or an Affiliate thereof (other than the Lessee) within ninety (90) days after the occurrence of an Additional Liquidity Reserve Trigger. Notwithstanding anything to the contrary contained in this Lease, any failure of Lessee to perform or observe any covenant or agreement herein shall not constitute a Lease Event of Default if such failure is caused solely by reason of an event which constitutes an "Event of Loss" so long as Lessee is continuing to comply with the applicable terms of Section 11. SECTION 15. Remedies. Section 15.1 Remedies. Upon the occurrence of any Lease Event of Default and at any time thereafter so long as the same shall be continuing, Lessor may, at its option, declare this Lease to be in default by a written notice to Lessee (except that this Lease shall, without any action on the part of Lessor, be automatically deemed to have been declared in default upon the occurrence of a Lease Event of Default described in Section 14(g) or (h)); and at any time thereafter, unless Lessee shall have remedied all outstanding Lease Events of Default prior to the commencement of the exercise by Lessor of any of its remedies hereunder, Lessor may do one or more of the following as Lessor in its sole discretion shall elect, to the extent permitted by, and subject to compliance with any mandatory requirements of, applicable law then in effect: (a) proceed by appropriate court action or actions, either at law or in equity, to enforce performance by Lessee of the applicable covenants of this Lease or to recover damages for the breach thereof, (b) by notice in writing to Lessee, Lessor may demand that Lessee, and Lessee shall, upon written demand of Lessor and at Lessee's expense (but subject to the rights of any Sublessee which has been granted the right of quiet enjoyment of the Unit by Lessee pursuant to a Sublease, so long as no event of default by the Sublessee shall have occurred and be continuing under the relevant Sublease), (i) forthwith return all or any part of the Units so demanded to Lessor or its order in the manner and condition required by, and otherwise in accordance with all of the provisions of, Section 15.5; or Lessor with or without notice or judicial process may by its agents enter upon the premises of Lessee or other premises where any of the Units may be located and take possession of and remove all or any of the Units , and Lessor may use and employ in connection with such removal any services, aids, equipment, trackage and other facilities of Lessee as is reasonably required to remove such Units and thenceforth hold, possess and enjoy the same free from any right of Lessee, or its successor or assigns, to use such Units for any purpose whatever and (ii) with respect to any Unit which is then subject to a Sublease, assign all of Lessee's right, title and interest in such Sublease to Lessor (to the extent such Sublease has not been previously assigned to Lessor); (c) sell any Unit and/or assign any Sublease at public or private sale in such manner as Lessor may determine, free and clear of any rights of Lessee (but subject to the rights of any Sublessee which has been granted the right of quiet enjoyment of the Unit by Lessee 33 pursuant to a Sublease, so long as no event of default by the Sublessee shall have occurred and be continuing under the relevant Sublease) and without any duty to account to Lessee or any Sublessee with respect to such sale or for the proceeds thereof (except to the extent required by paragraph (f) below if Lessor elects to exercise its rights under said paragraph), in which event Lessee's obligation to pay Basic Rent with respect to such Unit hereunder due for any periods subsequent to the date of such sale shall terminate (except to the extent that Basic Rent is to be included in computations under paragraph (e) or (f) below if Lessor elects to exercise its rights under either of said paragraphs); (d) (i) deliver notice under Section 5.2 and exercise all rights of the "lessor" under the Subleases, including without limitation the right to direct the applicable Sublessees to make rental payments to such account or accounts as Lessor may specify, and (ii) hold, keep idle or lease to others any Unit not then subject to a Sublease as Lessor in its sole discretion may determine, free and clear of any rights of Lessee and without any duty to account to Lessee or any Sublessee with respect to such action or inaction or for any proceeds with respect thereto, except that Lessee's obligation to pay Basic Rent with respect to such Unit due for any periods subsequent to the date upon which Lessee shall have been deprived of possession and use of such Unit pursuant to this Section 15 shall be reduced by the net proceeds, if any, received by Lessor from leasing such Unit to any Person other than Lessee; (e) whether or not Lessor shall have exercised, or shall thereafter at any time exercise, any of its rights under paragraph (a), (b), (c) or (d) above or (g) below with respect to any Unit, Lessor, by written notice to Lessee specifying a payment date (which date shall be a Determination Date for the purposes of computing Stipulated Loss Amount) which shall be not less than 10 days after the date of such notice, may demand that Lessee pay to Lessor, and Lessee shall pay to Lessor, on the payment date specified in such notice, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent for such Unit due after the payment date specified in such notice), all Rent, other than Stipulated Loss Amount and Termination Amount or amounts calculated by reference thereto, due and payable, or accrued, in respect of such Unit as of the payment date specified in such notice (exclusive of any Basic Rent due on such date) plus whichever of the following amounts Lessor, in its sole discretion, shall specify in such notice: (i) an amount with respect to each such Unit which represents the excess of the present value, as of such payment date, of all rentals for such Unit which would otherwise have accrued hereunder from such payment date for the remainder of the Basic Term or any Renewal Term then in effect over the then present value of the then Fair Market Rental Value of such Unit (taking into account its actual condition) for such period discounted from the end of such Term to such payment date, such present value to be computed in each case using a per annum discount rate equal to the Debt Rate, compounded monthly from the respective dates upon which rentals would have been payable hereunder had this Lease not been terminated; or (ii) an amount equal to the excess, if any, of the Stipulated Loss Amount for such Unit computed as of the payment date specified in such notice over the Fair Market Sales Value of such Unit (taking into account its actual condition) as of the payment date specified in such notice; or (iii) if Lessor shall not have sold such Unit pursuant to the exercise of its rights under paragraph (c) above with respect to such Unit, an amount equal to the Stipulated Loss Amount for such Unit computed as of the payment date specified in such notice as of the payment date specified in such notice; and upon payment by Lessee pursuant to clause (iii) of this Section 15.1(e) of such Stipulated Loss Amount, any Late Payment Premium and of all other amounts (other than Basic 34 Rent due on such date) payable by Lessee under this Lease and under the other Operative Agreements, including without limitation, all Policy Provider Amounts and Policy Provider Reimbursement Costs in respect of such Unit, Lessor shall transfer "as is" and "where is" and without recourse or warranty all right, title and interest of Lessor in and to such Unit to Lessee or as it may direct, and Lessor shall execute and deliver such documents evidencing such transfer as Lessee shall reasonably request; (f) if Lessor shall have sold any Unit pursuant to paragraph (c) above, Lessor, in lieu of exercising its rights under paragraph (e) above with respect to such Unit may, if it shall so elect, demand that Lessee pay to Lessor, and Lessee shall pay to Lessor, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent for such Unit due subsequent to the Rent Payment Date next preceding such sale), any accrued and unpaid Rent for such Unit as of the date of such sale (Basic Rent for this purpose accruing at a per diem rate equal to the monthly amount due on the next following Rent Payment Date divided by 30) (exclusive of any Basic Rent due on such date), plus the amount, if any, by which the Stipulated Loss Amount of such Unit computed as of the Rent Payment Date next preceding the date of such sale or, if such sale occurs on a Rent Payment Date, then computed as of such Rent Payment Date, plus the amount of any Late Payment Premium, exceeds the net proceeds of such sale (taking into account for this purpose all costs and expenses, including legal fees and expenses, incurred by Lessor in connection with such sale or otherwise exercising remedies hereunder) plus interest on such excess from the date of such sale to the date of payment at the Late Rate; and (g) (i) Lessor may terminate this Lease with respect to all of the Units, (ii) Lessor may terminate the leasing of any or all Units under any Sublease (subject to the provisions of any applicable Sublease and subject to Section 8 of the Participation Agreement) and/or (iii) Lessor may exercise any other right or remedy that may be available to it under applicable law. In addition, Lessee shall be liable, except as otherwise provided above, for any and all unpaid Rent due hereunder before or during the exercise of any of the foregoing remedies (including, without limitation, Late Payment Interest, but exclusive of any Basic Rent due on such date), and for legal fees and other costs and expenses incurred by Lessor, Indenture Trustee and Policy Provider by reason of the occurrence of any Lease Event of Default or the exercise of Lessor's remedies with respect thereto, including without limitation the repayment in full of any costs and expenses necessary to be expended in repairing any Unit in order to cause it to be in compliance with all maintenance and regulatory standards imposed by this Lease. In the event Lessor terminates this Lease pursuant to any provision of this Section 15.1, and the Stipulated Loss Amount is not payable, the amounts otherwise payable by Lessee hereunder shall be increased by any positive amount (as a payment for accrued but unpaid Basic Rent) of the Basic Rent Adjustment set forth on Schedule 4-A of the Participation Agreement opposite the relevant Rent Payment Date and Lessor shall pay to Lessee an amount equal to the absolute value of any negative amount (as a rebate of prepaid Basic Rent) of the Basic Rent Adjustment set forth on Schedule 4-A of the Participation Agreement opposite the relevant Rent Payment Date; provided, however, that to the extent that such payment or refund does not precisely reflect the difference between Basic Rent allocated and Basic Rent paid as of the date 35 Basic Rent ceases to accrue, the amounts due hereunder shall be further adjusted to ensure that the aggregate amount of Basic Rent paid equals the aggregate amount of Basic Rent allocated as of the date Basic Rent ceases to accrue. In addition, after the occurrence and during the continuation of a Lease Event of Default, Lessee will pay or reimburse Lessor and its assignees (including the Indenture Trustee, the Pass Through Trustee and the Policy Provider) for all of their respective costs and expenses (including reasonable costs and expenses of counsel and other professionals) incurred in connection with (i) the enforcement, defense or preservation of any rights in respect of this Lease and the other Operative Agreements, including, without limitation, any insolvency proceeding of Lessee or any of its Affiliates, and (ii) the negotiation of any restructuring or "work-out", whether or not consummated, of any obligations under, or transactions contemplated by, this Lease and the other Operative Agreements. Section 15.2 Cumulative Remedies. The remedies in this Lease provided in favor of Lessor shall not be deemed exclusive, but shall be cumulative and shall be in addition to all other remedies in its favor existing at law or in equity. Lessee hereby waives any mandatory requirements of law, now or hereafter in effect, which might limit or modify any of the remedies herein provided, to the extent that such waiver is permitted by law. Lessee hereby waives any and all existing or future claims of any right to assert any offset or counterclaim against the Rent payments due hereunder, and agrees to make the rent payments regardless of any offset or counterclaim or claim which may be asserted by Lessee on its behalf in connection with the lease of the Units. Lessee further agrees that Lessee's obligations to pay all Rent (including, without limitation, all Basic Rent and Supplemental Rent) and its obligations to maintain the Units pursuant to Section 8 hereof and to maintain the insurance pursuant to Section 12 hereof shall constitute monetary obligations of Lessee for all purposes of Section 365 of the Bankruptcy Code. To the extent permitted by applicable law, Lessee hereby waives any rights now or hereafter conferred by statute or otherwise that may require Lessor to sell, lease or otherwise use the Units in mitigation of Lessor's damages as set forth in Section 15.1 or that may otherwise limit or modify any of Lessor's rights and remedies provided in this Section 15. Section 15.3 No Waiver. No delay or omission to exercise any right, power or remedy accruing to Lessor upon any breach or default by Lessee under this Lease shall impair any such right, power or remedy of Lessor, nor shall any such delay or omission be construed as a waiver of any breach or default, or of any similar breach or default hereafter occurring; nor shall any waiver of a single breach or default be deemed a waiver of any subsequent breach or default. Section 15.4 Notice of Lease Default. Lessee agrees to furnish to Lessor, Policy Provider, Owner Participant and the Indenture Trustee, promptly upon any officer acquiring actual knowledge of any condition which constituted or constitutes a Lease Default under this Lease, written notice specifying such condition and the nature and status thereof. Section 15.5 Lessee's Duty to Return Equipment Upon Default. If Lessor or any assignee of Lessor shall terminate this Lease with respect to any Units pursuant to this 36 Section 15 and shall have provided to Lessee the written demand specified in Section 15.1(b) with respect to such Units, Lessee shall forthwith deliver possession of the Units not then subject to a Sublease to Lessor (except where Lessor has received all amounts payable by Lessee pursuant to any notice provided by Lessor under Section 15.1(e)(iii)). For the purpose of delivering possession of any Unit not then subject to a Sublease to Lessor as above required, Lessee shall at its own cost, expense and risk (except as hereinafter stated): (a) forthwith place such Units upon such storage tracks of Lessee or any of its Affiliates or, at the expense of Lessee, on any other storage tracks, as Lessor may designate or, in the absence of such designation, as Lessee may select; (b) permit Lessor to store such Units on such tracks without charge for insurance, rent or storage until such Units have been sold, leased or otherwise disposed of by Lessor and during such period of storage Lessee shall continue to maintain all insurance required by Section 12.1 hereof; and (c) transport the Units to any place on any lines of railroad or to any connection carrier for shipment, all as Lessor may direct in writing. All such Units not then subject to a Sublease returned shall be in the condition required by Section 6.2 hereof. All amounts earned in respect of the Units after the date of termination of this Lease pursuant to this Section 15, but not exceeding amounts actually received therefor, shall be paid to Lessor or, so long as the Indenture shall not have been discharged pursuant to its terms, the Indenture Trustee, and, if received by Lessee, shall be promptly turned over to Lessor or the Indenture Trustee as aforesaid. In the event any Unit not then subject to a Sublease is not assembled, delivered and stored as hereinabove provided within 15 days after the termination of the leasing of such Unit pursuant to Section 15, Lessee shall, in addition, pay to Lessor or the Indenture Trustee as aforesaid as liquidated damages and not as a penalty, for each day thereafter an amount equal to the amount, if any, by which the daily equivalent of the average Basic Rent for the term in effect immediately prior to the expiration of the Lease for such Unit exceeds the amount, if any, received by Lessor or the Indenture Trustee as aforesaid (either directly or from Lessee) for such day for such Unit pursuant to the preceding sentence. Section 15.6 Specific Performance; Lessor Appointed Lessee's Agent. The assembling, delivery, storage and transporting of the Units not then subject to a Sublease as provided in Section 15.5 are of the essence of this Lease, and upon application to any court of equity having jurisdiction in the premises, Lessor shall be entitled to a decree against Lessee requiring specific performance of the covenants of Lessee so to assemble, deliver, store and transport the Units not then subject to a Sublease. Without in any way limiting the obligation of Lessee under the provisions of Section 15.5, Lessee hereby irrevocably appoints Lessor as the agent and attorney of Lessee, with full power and authority, at any time while Lessee is obligated to deliver possession of any Units not than subject to a Sublease to Lessor pursuant to this Section 15, to demand and take possession of such Unit in the name and on behalf of Lessee from whosoever shall be at the time in possession of such Unit. 37 SECTION 16. Filings; Further Assurances. Section 16.1 Filings. This Lease or a counterpart or copy hereof or evidence hereof may be filed or recorded in any public office in the United States as may be necessary or appropriate to protect the interest of Lessor, Owner Participant or the Indenture Trustee herein or in the Units. On or prior to the Closing Date Lessee will (i) cause a memorandum of each of this Lease, the Lease Supplements dated the Closing Date, the TRLT II Bill of Sale, the Bill of Sale, the TRLT II Assignment, the Assignment, the Collateral Agency Agreement, the Indenture and the Indenture Supplements dated the Closing Date (x) to be duly filed and recorded with the STB in accordance with 49 U.S.C. Section 11301 and (y) to be deposited with the Registrar General of Canada pursuant to Section 105 of the Canada Transportation Act (and all necessary actions shall have been taken for publication of such deposit in the Canada Gazette in accordance with said Section 105), (ii) cause such registrations to be filed under the appropriate provincial property security acts in Canada as reasonably requested by Lessor to the extent necessary to protect the interest of Lessor, Owner Participant or the Indenture Trustee in this Lease or in the Units, (iii) cause precautionary UCC-1 financing statements to be filed in appropriate jurisdictions as reasonably requested by Lessor naming Lessor as "lessor" and Lessee as "lessee" of the Equipment and (iv) will furnish Lessor, the Indenture Trustee and Owner Participant proof thereof. Notwithstanding the foregoing, in no event shall Lessee or any of its Affiliates be required to take any action to perfect any security interest which any Person may have in any Sublease, other than the filing of a UCC-1 Financing Statement against the Partnership in the Partnership's jurisdiction of formation and/or other similar filings with the STB, the Registrar General of Canada and any applicable Canadian provinces covering all Subleases generally and delivery of original copies of the applicable Subleases in the manner set forth in the Collateral Agency Agreement. Section 16.2 Further Assurances. Lessee will duly execute and deliver to Lessor such further documents and assurances and take such further action as Lessor may from time to time reasonably request or as may be required by applicable law or regulation in order to effectively carry out the intent and propose of this Lease and to establish and protect the rights and remedies created or intended to be created in favor of Lessor, the Participants, the Policy Provider and the Indenture Trustee hereunder, including, without limitation, the execution and delivery of supplements or amendments hereto, in recordable form, subjecting to this Lease any Replacement Unit and the recording or filing of counterparts hereof or thereof or Uniform Commercial Code financing statements in accordance with the laws of such jurisdiction as Lessor may from time to time deem advisable; provided, that in no event shall Lessee or any of its Affiliates be required to take any action to perfect, any security interest which any Person may have in any Sublease, other than the filing of a UCC-1 Financing Statement against the Partnership in the Partnership's jurisdiction of formation and/or other similar filings with the STB, the Registrar General of Canada and any applicable Canadian provinces covering all Subleases generally and delivery of original copies of the applicable Subleases in the manner set forth in the Collateral Agency Agreement. Section 16.3 Other Filings. If, at any time after the Closing Date and during the Lease Term, Mexico, or one or more states in Mexico, establishes a state or other system for filing and perfecting the ownership and/or security interests of entities such as Lessor and/or the Indenture Trustee, at the time that Lessee or the Manager takes such action with respect to other 38 equipment similar to the Units (whether owned or leased by Lessee) and also upon the request of Lessor, any Participant, or the Indenture Trustee, Lessee shall cause any and all of the Operative Agreements to be recorded with or under such system and shall cause all other filings and recordings and all such other action required under such system to be effected and taken, in order to perfect and protect the respective right, title and interests of Lessor, Owner Participant, Loan Participant and the Indenture Trustee; provided, that in no event shall Lessee or any of its Affiliates be required to take any action to perfect any security interest which any Person may have in any Sublease. Section 16.4 Expenses. Lessee will pay all costs, charges and expenses (including reasonable attorneys fees) incident to any such filing, refiling, recording and rerecording or depositing and re-depositing of any such instruments or incident to the taking of such action. SECTION 17. Lessor's Right to Perform. If Lessee fails to make any payment required to be made by it hereunder or fails to perform or comply with any of its other agreements contained herein, Lessor may itself make such payment or perform or comply with such agreement, after giving not less than five Business Days' prior notice thereof to Lessee (except in the event that an Indenture Default resulting from a Lease Default or a Lease Event of Default shall have occurred and be continuing, in which event Lessor may effect such payment, performance or compliance to the extent necessary to cure such Indenture Default with notice given concurrently with such payment, performance or compliance), but shall not be obligated hereunder to do so, and the amount of such payment and of the reasonable expenses of Lessor incurred in connection with such payment or the performance of or compliance with such agreement, as the case may be, together with interest thereon at the Late Rate from such date of payment, to the extent permitted by applicable law, shad be deemed to be Supplemental Rent, payable by Lessee to Lessor on demand. SECTION 18. Assignment. Section 18.1 Assignment by Lessor. Lessee and Lessor hereby confirm and acknowledge that concurrently with the execution and delivery of this Lease, Lessor has executed and delivered to the Indenture Trustee the Indenture, which, among other things, assigns as collateral security and grants a security interest in favor of the Indenture Trustee in, to and under all right, title and interest of Lessor in and to this Lease and certain of the Rent payable hereunder (excluding Excepted Property), all Equipment and all Subleases, all as more explicitly set forth in the Indenture. Lessee acknowledges the Indenture Trustee's rights under the Indenture including without limitation, the right of the Indenture Trustee to receive from the Lessee copies of all notices, certificates, reports, filings, opinions of counsel and other documents and all information which Lessee is permitted or required to give or furnish to Lessor pursuant to this Lease. Lessor agrees that it shall not otherwise assign or convey its right, title and interest in and to this Lease or any Unit, nor amend, modify or waive any provision of this Lease, in each case, except as expressly permitted by and subject to the provisions of the Participation Agreement, the Trust Agreement and the Indenture. 39 Section 18.2 Assignment by Lessee. Except in the case of any requisition for use by any governmental authority or any agency or instrumentality thereof referred to in Section 11.1, Lessee will not, except as expressly permitted in the Operative Agreements, without the prior written consent of Lessor and the Indenture Trustee, assign any of its rights hereunder. Section 18.3 Sublessee's or Others Performance and Rights. Any obligation imposed on Lessee in this Lease shall require only that Lessee perform or cause to be performed such obligation, even if stated herein as a direct obligation, and the performance of any such obligation by the Manager under the Management Agreement, the Insurance Manager under the Insurance Agreement, the Administrator under the Administrative Services Agreement or any Sublessee under a Sublease then in effect and permitted by the terms of this Lease shall constitute performance by Lessee and discharge such obligation by Lessee. Except as otherwise expressly provided herein, any right granted to Lessee in this Lease shall grant Lessee the right to (a) exercise such right or permit such right to be exercised by the Manager or the Insurance Manager or (b) in Lessee's capacity as sublessor pursuant to any Permitted Sublease permit any Sublessee to exercise substantially equivalent rights under any such sublease as are granted to Lessee under this Lease; provided, however, that Lessee's right to terminate this Lease pursuant to Section 10 and Lessee's purchase and renewal options set forth in Section 22 may be exercised only by Lessee; provided, further, that nothing in this Section 18.3 shall or shall be deemed to (i) create any privity of contract between any such Sublessee, on the one hand, and any of Lessor, Owner Participant or any subsequent transferee or Affiliate of any such Person, on the other hand, (ii) create any duty or other liability of any nature whatsoever on the part of any of Lessor, Owner Participant or any subsequent transferee or Affiliate of any such Person, to any such Sublessee or any Affiliate thereof or (iii) modify or waive any term or provision of Section 8.3 hereof, which Section 8.3 shall control if any conflict arises between any of the provisions thereof and this Section 18.3, or (iv) shall relieve Lessee of any liability or obligation hereunder. The inclusion of specific references to obligations or rights of any such Sublessee in certain provisions of this Lease shall not in any way prevent or diminish the application of the provisions of the two sentences immediately preceding with respect to obligations or rights in respect of which specific reference to any such Sublessee has not been made in this Lease. SECTION 19. Net Lease, Etc. (a) This Lease is a net lease and Lessee's obligation to pay all Rent payable hereunder shall be absolute, unconditional and irrevocable and shall not be affected by any circumstance of any character including, without limitation, (i) any set-off, abatement, counterclaim, suspension, recoupment, reduction, rescission, defense or other right that Lessee may have against Lessor, Owner Participant, the Indenture Trustee or any holder of an Equipment Note or Pass Through Certificate, any vendor or manufacturer of any Unit, or any other Person for any reason whatsoever, (ii) any defect in or failure of title, merchantability, condition, design, compliance with specifications, operation or fitness for use of all or any part of any Unit, (iii) any damage to, or removal, abandonment, requisition, taking, condemnation, loss, theft or destruction of all or any part of any Unit or any interference, interruption, restriction, curtailment or cessation in the use or possession of any Unit by Lessee or any other Person for any reason whatsoever or of whatever duration, (iv) any insolvency, bankruptcy, reorganization or similar proceeding by or against Lessee, Lessor, Owner Participant, the Indenture Trustee, Loan Participant, any holder of an Equipment Note or Pass Through Certificate or any other 40 Person (and no payment of any Rent hereunder shall be considered paid or applied to the extent that, at any time, all or any portion of such payment or application is rescinded by application of law or judicial authority, or must otherwise be returned or refunded for any reason), (v) the invalidity, illegality or unenforceability of this Lease, any other Operative Agreement, or any other instrument referred to herein or therein or any other infirmity herein or therein or any lack of right, power or authority of Lessee, Lessor, Owner Participant, the Indenture Trustee, any holder of an Equipment Note or Pass Through Certificate or any other Person to enter into this Lease or any other Operative Agreement or to perform the obligations hereunder or thereunder or consummate the transactions contemplated hereby or thereby or any doctrine of force majeure, impossibility, frustration or failure of consideration, (vi) the breach or failure of any warranty or representation made in this Lease or any other Operative Agreement by Lessee, Lessor, Owner Participant, Loan Participant, the Indenture Trustee, any holder of an Equipment Note or Pass Through Certificate or any other Person, (vii) the requisitioning, seizure or other taking of title to or use of such Unit by any government or governmental authority or otherwise, whether or not by reason of any act or omission of Lessor, Lessee or the Indenture Trustee, or any other deprivation or limitation of use of such Unit in any respect or for any length of time, whether or not resulting from accident and whether or not without fault on the part of Lessee or (viii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing. To the extent permitted by applicable law, Lessee hereby waives any and all rights which it may now have or which at any time hereafter may be conferred upon it, by statute or otherwise, to terminate, cancel, quit or surrender this Lease with respect to any Unit, except in accordance with the express terms hereof. If for any reason whatsoever this Lease shall be terminated in whole or in part by operation of law or otherwise, except as specifically provided herein, Lessee nonetheless agrees, to the maximum extent permitted by law, to pay to Lessor or to the Indenture Trustee, as the case may be, an amount equal to each installment of Basic Rent and all Supplemental Rent due and owing, at the time such payment would have become due and payable in accordance with the terms hereof had this Lease not been terminated in whole or in part. Each payment of Rent made by Lessee hereunder shall be final and Lessee shall not seek or have any right to recover all or any part of such payment from Lessor or any Person for any reason whatsoever. Nothing contained herein shall be construed to waive any claim which Lessee might have under any of the Operative Agreements or otherwise or to limit the right of Lessee to make any claim it might have against Lessor or any other Person or to pursue such claim in such manner as Lessee shall deem appropriate. SECTION 20. Notices. Unless otherwise expressly specified or permitted by the terms hereof, all communications and notices provided for herein shall be in writing or by facsimile capable of creating a written record, and any such notice shall become effective (i) upon personal delivery thereof, including, without limitation, by reputable overnight courier or (ii) in the case of notice by facsimile, upon confirmation of receipt thereof, provided such transmission is promptly further confirmed in writing by the method set forth in clause (i) addressed to the following Person at its respective address set forth below or at such other address as such Person may from time to time designate by written notice to the other Persons listed below: If to Lessor: TRLIV 2004-1A Railcar Statutory Trust c/o U.S. Bank Trust National Association 41 225 Asylum Street, 23rd Floor Hartford, Connecticut 06103 Attention: Corporate Trust Department Re: Trinity 2004-1A Facsimile No.: (617) 603-6667 Confirmation No. (617) 603-6565 With copies to Owner Participant. If to Owner Participant: The Fifth Third Leasing Company 38 Fountain Square Plaza Cincinnati, OH 45263 Attention: Sr. Risk Manager Facsimile No.: (513) 534-6706 Confirmation No.: (513) 534-6770 If to the Indenture Trustee: Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, Delaware 19890-0001 Attention: Corporate Trust Administration Re: TRLIV 2004-1 Fax No.: (302) 636-4141 Confirmation No.: (302) 636-6000 If to Lessee: Trinity Rail Leasing IV L.P. 2525 Stemmons Freeway Dallas, TX 75207 Attention: Vice President Leasing Operations Re: TRLIV 2004-1A Fax No.: (214) 589-8271 Confirmation No.: (214) 631-4420 If to the Policy Provider: Ambac Assurance Corporation One State Street Plaza, 15th Floor New York, NY 10004 Attention: Structured Finance Department-ABS Fax No.: (212) 208-3509 Confirmation No.: (212) 208-3186 If to the Rating Agencies: Moody's Investors Service, Inc. 99 Church Street - 4th Floor New York, New York 10041 Attention: ABS Monitoring Department Fax No.: (212) 553-4119 Confirmation No.: (212) 298-7075 42 Standard & Poor's Ratings Group 55 Water Street, 40th Floor New York, New York Attention: Stephen F. Rooney - Structured Finance Ratings Fax No.: (212) 438-2646 Confirmation No.: (212) 438-2591 SECTION 21. Concerning the Indenture Trustee. Section 21.1 Limitation of the Indenture Trustee's Liabilities. Notwithstanding any provision to the contrary contained herein or in any of the Operative Agreements, the Indenture Trustee's obligation to take or refrain from taking any actions, or to use its discretion (including, but not limited to, the giving or withholding of consent or approval and the exercise of any rights or remedies under such Operative Agreements), and any liability therefor, shall, in addition to any other limitations provided herein or in the other Operative Agreements, be limited by the provisions of the Indenture, including, but not limited to, Article VI thereof. Section 21.2 Right, Title and Interest of the Indenture Trustee Under Lease. It is understood and agreed that the right, title and interest of the Indenture Trustee in, to and under this Lease and the Rent due and to become due hereunder shall by the express terms granting and conveying the same be subject to the interest of Lessee in and to the Units as created pursuant to and governed by the terms of this Lease. SECTION 22. Purchase Options; Renewal Option. Section 22.1 Early Purchase Option. In addition to the option granted Lessee pursuant to Section 6.9 of the Participation Agreement and provided that Lessee shall have duly given the notice required by the next succeeding sentence, Lessee shall have the right and, upon the giving of such notice, the obligation to purchase all but not less than all of the Units leased hereunder on the Early Purchase Date for such Units at a price equal to the Early Purchase Price of such Units plus the other amounts specified below. Lessee shall give Lessor written notice not less than 360 days but not more than 720 days prior to the Early Purchase Date of its election to exercise the purchase option provided for in this Section 22.1, which notice shall be irrevocable. Payment of the Early Purchase Price, together with (w) all unpaid Basic Rent due and payable prior to such Early Purchase Date, (x) any Late Payment Interest with respect any Rent not paid when due (including, for the avoidance of doubt, Rent corresponding to the principal amount of the Equipment Notes), and (y) any other Supplemental Rent due and owing by Lessee under the Operative Agreements, including without limitation, all Policy Provider Amounts then due and owing (so that, after receipt and application of all such payments, but without withdrawal from any CAA Account, (a) Owner Participant shall be entitled under the terms of the Collateral Agency Agreement to receive, and does receive, taking into account all payments of Basic Rent in respect of the Units, the sum of the Accumulated Equity Deficiency Amount and Late Payment Interest related thereto and any other amounts then due to Owner Participant and (b) the Policy Provider shall be entitled under the terms of the Collateral Agency Agreement to receive, and does receive, all then unpaid Policy Provider Amounts and, without duplication, all then unpaid Policy Provider Reimbursement Costs, in each case, as defined in this Lease and as defined in the Other Lease described in clause (i) of the definition thereof, shall 43 be made on the Early Purchase Date at the place of payment specified in Section 3.5 hereof in immediately available funds against delivery of a bill of sale transferring and assigning to Lessee all right, title and interest of Lessor in and to such Units on an "as-is" "where-is" basis and containing a warranty as to the absence of Lessor's Liens. Lessor shall not be required to make any other representation or warranty as to the condition of such Units or any other matters, and may specifically disclaim any such representations or warranties. The costs of preparing the bill of sale and all other documentation relating to any purchase by Lessee pursuant to this Section 22.1 and the costs of all necessary filings relating to such purchase and transfer and sales taxes will be borne by Lessee. In the event of any such purchase and receipt by Lessor of all of the amounts provided in this Section 22.1, the obligation of Lessee to pay Basic Rent hereunder in respect of the applicable Units shall cease and the Lease Team shall terminate with respect thereto. If Lessee elects to exercise the purchase option provided for in this Section 22.1, Lessee shall, as the purchase price therefor, in the sole discretion of Lessee, either (i) pay the Early Purchase Price, together with all other amounts due and owing by Lessee under the Operative Agreements, as specified in the paragraph above or (ii) pay the difference between the amount specified in clause (i) and the outstanding principal amount of the Equipment Notes as of the Early Purchase Date and assume on a full recourse basis all of the Owner Trust's obligations under the Indenture and its obligations under the Policy Provider Documents to which the Owner Trust is a party as provided in Section 3.6 of the Indenture to the extent such obligations become due after the date of exercise of such purchase option; provided, that, following such assumption, the purchased Units shall remain subject to the Lien of a separate indenture similar to the Indenture pursuant to Section 3.6 of the Indenture. Lessee will make the payments required by foregoing clause (i) or assume the indebtedness evidenced by the Equipment Notes as provided in foregoing clause (ii) on the Early Purchase Date in immediately available funds against delivery of a bill of sale transferring and assigning to Lessee all right, title and interest of Lessor in and to the Units on an "as-is" "where-is" basis and containing a warranty as to the absence of Lessor's Liens. If Lessee shall fail to fulfill its obligations under this second paragraph of Section 22.1, all of Lessee's obligations under this Lease and the Operative Agreements, including, without limitation, Lessee's obligation to pay installments of Rent, shall continue and Lessee shall be obligated to pay all costs and expenses, including legal fees and expenses, incurred by Lessor, Owner Participant, Policy Provider and Indenture Trustee as a result of the notice given by Lessee pursuant to this Section. If Lessee exercises its Early Purchase Option and the Basic Rent Adjustment is negative and Lessee pays all other amounts due in relation to such exercise, then Lessee shall pay an amount equal to the Early Purchase Price less the absolute value of the amount of such Basic Rent Adjustment listed on Schedule 6 to the Participation Agreement in respect of the purchased Units (as a rebate of Basic Rent and not as a reduction in the applicable Early Purchase Price). If Lessee exercises the Early Purchase Option and the Basic Rent Adjustment is positive, Lessee shall pay an amount equal to the Early Purchase Price plus the Basic Rent Adjustment in respect of such purchased Units (as a payment of additional Basic Rent). Notwithstanding the foregoing provisions of this Section 22.1 to the contrary, Lessee may purchase or cause an Affiliate of Lessee to purchase the Beneficial Interest in lieu of Lessee purchasing the Units pursuant to this Section 22.1 for a purchase price equal to the 44 Beneficial Interest Purchase Price and may keep this Lease (and the Equipment Notes) in place; provided, that Lessee shall remain liable under this Lease to pay Basic Rent and all other payments hereunder in full, provided, further, that such purchase shall be made in all respects in accordance with Section 6.9 of the Participation Agreement. Section 22.2 Election to Retain or Return Equipment at End of Basic or Renewal Term. Not less than 360 days and not more than 720 days prior to the end of the Basic Term or the Renewal Term, Lessee shall give Lessor notice of its decision to return or retain the Units (it being understood that at the end of the Basic Term or the Renewal Term Lessee must return all of such Units or retain all of such Units at the end of the Basic Term or the Renewal Term). If Lessee elects to retain Units, Lessee shall comply with Section 22.3 and/or 22.4 hereof, as it may elect in accordance with the provisions thereof including the notice requirements stated therein. If Lessee fails to give the 360 days' notice required by this Section 22.2, or a subsequent notice required by Section 22.3 or 22.4, Lessee shall be deemed to have irrevocably elected to return all of the Units at the end of the Basic Term or the Renewal Term, as the case may be, in accordance with Section 6. Section 22.3 Purchase Option. Provided that Lessee shall have duly given the notice required by Section 22.2 and by the next succeeding sentence of this Section 22.3, Lessee shall have the right and, upon the giving of such notice under this Section 22.3, the obligation to purchase all of the Units at a price equal to the greater of (i) Fair Market Sales Value of such Units and (ii) $17,019,360, at the expiration of the Basic Term, or, if a Renewal Term is then in effect, at the end of such Renewal Term at a price equal to the Fair Market Sales Value of such Units, plus, in each case, all other amounts due and owing by Lessee under the Operative Agreements, including, without limitation, Late Payment Interest and any unpaid Rent (so that, after receipt and application of all such payments, but so long as the Policy remains in effect without withdrawal from any Reserve Account (or the Special Reserves Account or Transition Expense Account, as such terms are defined in the Collateral Agency Agreement), Owner Participant shall be entitled under the terms of the Collateral Agency Agreement to receive, and does receive, taking into account all Basic Rent payments in respect of the Units, the sum of the Accumulated Equity Deficiency Amount and Late Payment Interest related thereto and any other amounts then due to Owner Participant) and all then unpaid Policy Provider Amounts and, without duplication, all then unpaid Policy Provider Reimbursement Costs, in each case, as defined in this Lease and as defined in the Other Lease described in clause (i) of the definition thereof. Lessee shall give Lessor written notice not less than 360 days and not more than 720 days prior to the end of the Basic Term or the Renewal Term, as the case may be, of its election to exercise the purchase option provided for in this Section 22.3, which notice shall be irrevocable. Payment of the purchase price, together with all other amounts due and owing by Lessee under the Operative Agreements (including, without limitation, all then unpaid Policy Provider Amounts and, without duplication, all then unpaid Policy Provider Reimbursement Costs, in each case, as defined in this Lease and as defined in the Other Lease described in clause (i) of the definition thereof shall be made at the place of payment specified in Section 3.5 hereof in immediately available funds against delivery of a bill of sale transferring and assigning to Lessee all right, title and interest of Lessor in and to such Units on an "as-is" "where-is" basis and containing a warranty as to the absence of Lessor's Liens. Lessor shall not be required to make any other representation or warranty as to the condition of such Units or any other matters, and may specifically disclaim any such representations or warranties. 45 Section 22.4 Renewal Option. Provided no Lease Event of Default shall have occurred and be continuing and Lessee shall have duly given the notice required by Section 22.2 and Lessee has not exercised its option to purchase the Units pursuant to Section 22.3, Lessee shall have the right and, upon the giving of a notice under this Section 22.4 as below provided, the obligation to lease pursuant to this Lease all (but not less than all) of the Units at the expiration of the Basic Term. Lessee may exercise this renewal option by giving Lessor written notice not less than 360 days and not more than 720 days prior to the end of the Basic Term that Lessee elects to renew this Lease with respect to the Units then leased hereunder. Such renewal shall be for a renewal term of two years. The Basic Rent for each Unit during the Renewal Term (the "Renewal Rent") shall be the greater of (a) $709,140.00, payable monthly in arrears and (b) the Fair Market Rental Value determined as of the commencement of the Renewal Term. The Renewal Term shall commence immediately upon the expiration of the Basic Term. Section 22.5 Rent Appraisal, Outside Renewal Date. Promptly following Lessee's irrevocable written notice pursuant to Section 22.2 of its election to retain Units at the end of the Basic Term or the Renewal Term (and, in any event, if it is anticipated that there will be any Extended Units at the end of the Basic Term), Lessor and Lessee shall determine (a) if Lessee shall have exercised the purchase option under Section 22.3, the Fair Market Sales Value of the applicable Units as of the end of the then existing Basic Term or Renewal Term, as applicable, in each case assuming such Units are at least in the condition required by this Lease, and (b) if Lessee shall have exercised its renewal option pursuant to Section 22.4, the Fair Market Rental Value of the applicable Units as of the end of the Basic Term assuming such Units are at least in the condition required by this Lease. Section 22.6 Stipulated Loss Amount and Termination Amount During Renewal Term. All of the provisions of this Lease, other than Section 10, shall be applicable during any Renewal Term for such Units, except as specified in the next sentence. During the Renewal Term, the Stipulated Loss Amount and Termination Amount of any Unit shall be determined on the basis of the Fair Market Sales Value of such Unit as of the first day of the Renewal Term, reduced in equal monthly increments to the Fair Market Sales Value of such Unit as of the last day of the Renewal Term; provided that in no event during any Renewal Term shall the Stipulated Loss Amount and Termination Amount of any Unit be less than 20% of the Equipment Cost of such Unit. SECTION 23. Limitation of Lessor's Liability. It is expressly agreed and understood that all representations, warranties and undertakings of Lessor hereunder (except as expressly provided herein) shall be binding upon Lessor only in its capacity as Owner Trustee under the Trust Agreement and in no case shall the Trust Company be personally liable for or on account of any statements, representations, warranties, covenants or obligations stated to be those of Lessor hereunder, except that the Trust Company shall be personally liable for its gross negligence or willful misconduct and for its breach of its covenants, representations and warranties contained herein to the extent covenanted or made in its individual capacity. 46 SECTION 24. Investment of Security Funds. Any moneys received by Lessor or the Indenture Trustee pursuant to Section 12.2 which are required to be paid to Lessee after completion of repairs to be made pursuant to Section 12.2 or pursuant to Section 11.4(a) or 11.5, as the case may be, shall be paid directly to the appropriate Non-Shared Payments Account established under the Collateral Agency Agreement. SECTION 25. Miscellaneous. Section 25.1 Governing Law; Severability. THIS LEASE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). Whenever possible, each provision of this Lease shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Lease shall be prohibited by or invalid under the laws of any jurisdiction, such provision, as to such jurisdiction, shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Lease in any other jurisdiction. Section 25.2 Execution in Counterparts. This Lease may be executed in any number of counterparts, each executed counterpart constituting an original and in each case such counterparts shall constitute but one and the same instrument; provided, however, that to the extent that this Lease constitutes chattel paper (as such term is defined in the Uniform Commercial Code) no security interest in this Lease may be created through the transfer or possession of any counterpart hereof other than the counterpart bearing the receipt therefor executed by the Indenture Trustee on the signature page hereof, which counterpart shall constitute the only "original" hereof for purposes of the Uniform Commercial Code. Section 25.3 Headings and Table of Contents; Section References. The headings of the sections of this Lease and the Table of Contents are inserted for purposes of convenience only and shall not be construed to affect the meaning or construction of any of the provisions hereof. All references herein to numbered sections, unless otherwise indicated, are to sections of this Lease. Section 25.4 Successors and Assigns. This Lease shall be binding upon and shall inure to the benefit of, and shall be enforceable by, the parties hereto and their respective permitted successors and permitted assigns. Section 25.5 True Lease. It is the intent of the parties to this Lease that it will be a true lease and not a "conditional sale", that Lessor shall at all times be considered to be the owner of each Unit which is the subject of this Lease for the purposes of all federal, state, city and local taxes, that this Lease conveys to Lessee no right, title or interest in any Unit except as lessee and that the Lease will be a finance lease under the provisions of Article 2A of the New York Uniform Commercial Code. Nothing contained in this Section 25.5 shall be construed to 47 limit Lessee's use or operation of any Unit or constitute a representation, warranty or covenant by Lessee as to tax consequences. The parties hereto hereby agree that Lessee's obligation to make payments of the type described in the definition of "Excepted Property" is a separate and independent obligation from its obligation to make other Rent payments, and that Lessee's obligation to make payments of the type described in the definition of "Excepted Property" may be independently enforced and may be assigned, pledged or otherwise transferred separately from Lessee's obligations to make other Rent payments. The obligation to make such payments has been included herein for the convenience of the parties. Section 25.6 Amendments and Waivers. Subject to and in accordance with the terms of the Indenture, no term, covenant, agreement or condition of this Lease may be terminated, amended or compliance therewith waived (either generally or in a particular instance, retroactively or prospectively) except by an instrument or instruments in writing executed by each party hereto. Section 25.7 Survival. All warranties, representations, indemnities, payment obligations (including without limitation, the obligations of the Lessee to pay Basic Rent and Supplemental Rent), covenants and agreements made by either party hereto, herein or in any certificate or other instrument delivered by such party or on the behalf of any such party under this Lease, shall be considered to have been relied upon by the other party hereto and shall survive the consummation of the transactions contemplated hereby on the Closing Date regardless of any investigation made by either such party or on behalf of either such party, and to the extent having accrued and not been paid, having been required to be performed and not having been performed or relating to or otherwise arising in connection with the transactions contemplated by the Operative Agreements during the Lease Term, shall survive the expiration or other termination of this Lease or any other Operative Agreement. Section 25.8 Business Days. If any payment is to be made hereunder or any action is to be taken hereunder on any date that is not a Business Day, such payment or action otherwise required to be made or taken on such date shall be made or taken on the immediately succeeding Business Day with the same force and effect as if made or taken on such scheduled date and as to any payment (provided any such payment is made on such succeeding Business Day) no interest shall accrue on the amount of such payment from and after such scheduled date to the time of such payment on such next succeeding Business Day. Section 25.9 Directly or Indirectly; Performance by Managers. Where any provision in this Lease refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person. In this regard, it is understood and agreed that Lessee has entered into the Management Agreement with the Manager, the Insurance Agreement with the Insurance Manager and the Administrative Services Agreement with the Administrator, under which agreements certain rights and obligations of Lessee hereunder will be exercised and performed by such Persons on behalf of Lessee. Lessee agrees to instruct the Manager, the Insurance Manager and the Administrator to take such actions as shall be necessary or appropriate under 48 such agreements so that Lessee shall be in compliance in all material respects with its obligations hereunder and under the other Operative Agreements. Section 25.10 Incorporation by Reference. The payment obligations set forth in Sections 7.1 and 7.2 of the Participation Agreement are hereby incorporated by reference. Section 25.11 No Partnership Created. The parties hereto do not intend to create, and nothing herein shall be construed as creating, a partnership or joint venture for federal income tax purposes. Each party hereto agrees (i) that it does not have, or intend to form, a joint profit motive with any other party hereto or any other person with respect to any Unit, Existing Equipment Sublease or Permitted Sublease, (ii) not to hold itself out to the public as a partner with any other party hereto, (iii) not to share any profits (including rent or any other payments to which it is entitled) or losses with respect to its interest in any Unit, Existing Equipment Sublease or Permitted Sublease, and (iv) that unless (x) otherwise required by the Internal Revenue Service or like governmental authority with jurisdiction over income tax matters (the "Required Position") or (y) such party receives an opinion of its independent tax counsel that there is no "reasonable basis" (within the meaning of Treasury Regulation Section 1.6662-3(b)(3)) to claim that no partnership exists (and such party delivers notice of the receipt of such opinion or notice of the Required Position to the other parties hereto within ten (10) Business Days after its receipt of such opinion or notice of the Required Position), it will not file any partnership or other joint income tax return with respect to items of income, loss, deduction, or credit attributable to its interest in any Unit, Existing Equipment Sublease or Permitted Sublease. 49 IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease to be duly executed and delivered on the day and year first above written. Lessor: TRLIV 2004-1A RAILCAR STATUTORY TRUST By: U.S. Bank Trust National Association, not in its individual capacity, but solely as Owner Trustee By: /s/ Earl W. Dennison ------------------------------ Name: EARL W. DENNISON Title: VICE PRESIDENT Lessee: TRINITY RAIL LEASING IV L.P. By TILX GP IV, LLC, its General Partner By: /s/ Eric Marchetto ------------------------------ Name: ERIC MARCHETTO Title: VICE PRESIDENT Signature Page to Equipment Lease Agreement Receipt of this original counterpart of the foregoing Lease is hereby acknowledged on the _____ day of August, 2004. WILMINGTON TRUST COMPANY, as Indenture Trustee By: /s/ W. Chris Sponenberg ------------------------------ Name: W. CHRIS SPONENBERG Title: VICE PRESIDENT Signature Page to Equipment Lease Agreement EXHIBIT A LEASE SUPPLEMENT NO._____ (TRLIV 2004-1A) This Lease Supplement No._____, dated as of __________, between TRLIV 2004-1A Railcar Statutory Trust by U.S. Bank Trust National Association, not in its individual capacity but solely as Owner Trustee under the Trust Agreement ("Lessor"), and Trinity Rail Leasing IV L.P., a Texas limited partnership ("Lessee"); Witnesseth: Lessor and Lessee have heretofore entered into that certain Equipment Lease Agreement (TRLIV 2004-1A) dated as of August 19, 2004 (the "Lease"). The terms used herein are used with the meanings assigned to such terms in the Lease. The Lease provides for the execution and delivery of one or more Lease Supplements substantially in the form hereof for, among other things, the purpose of particularly describing all or a portion of the Units to be leased to Lessee under the Lease. Now, therefore, in consideration of the premises and other good and sufficient consideration, and pursuant to Section 2 of the Lease, Lessor and Lessee hereby agree as follows: 1. Lessor hereby delivers and leases to Lessee, and Lessee hereby accepts and leases from Lessor, under the Lease as herein supplemented, the Units described in Schedule 1 hereto. 2. All of the terms and provisions of the Lease are hereby incorporated by reference in this Lease Supplement to the same extent as if fully set forth herein. 3. To the extent that this Lease Supplement constitutes chattel paper (as such term is defined in the Uniform Commercial Code) no security interest in this Lease Supplement may be created through the transfer or possession of any counterpart hereof other than the counterpart bearing the receipt therefor executed by the Indenture Trustee on the signature page hereof, which counterpart shall constitute the only "original" hereof for purposes of the Uniform Commercial Code. 4. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). 5. This Lease Supplement may be executed in any number of counterparts, each executed counterpart constituting an original but all together constituting one and the same instrument. IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement to be duly executed as of the day and year first above written and to be delivered as of the date first above written. Lessor: TRLIV 2004-1A RAILCAR STATUTORY TRUST By: U.S. Bank Trust National Association, not in its individual capacity, but solely as Owner Trustee By:_______________________________ Name:_____________________________ Title:____________________________ Lessee: TRINITY RAIL LEASING IV L.P. By TILX GP IV, LLC, its General Partner By:_______________________________ Name:_____________________________ Title:____________________________ (1)Receipt of this original counterpart of the foregoing Lease Supplement is hereby acknowledged on this _____ day of __________, 20__. WILMINGTON TRUST COMPANY, as Indenture Trustee By:_______________________________ Name:_____________________________ Title:____________________________ - ---------------------- (1) This language contained in the original counterpart only. 2 EX-10.1.1 3 d19332exv10w1w1.txt PARTICIPATION AGREEMENT EXHIBIT 10.1.1 EXECUTION COPY PARTICIPATION AGREEMENT (TRLIV 2004-1A) Dated as of August 19, 2004 among TRINITY RAIL LEASING IV L.P., as Lessee, TRINITY RAIL LEASING TRUST II, TRINITY INDUSTRIES LEASING COMPANY, as Manager, TRINITY INDUSTRIES, INC., TRLIV 2004-1A RAILCAR STATUTORY TRUST, U.S. BANK TRUST NATIONAL ASSOCIATION, as Owner Trustee, THE FIFTH THIRD LEASING COMPANY, as Owner Participant AMBAC ASSURANCE CORPORATION, as Policy Provider and WILMINGTON TRUST COMPANY, as Indenture Trustee and Pass Through Trustee Tank Cars and Freight Cars Table of Contents

i Table of Contents (continued)

ii Table of Contents (continued)

iii EXHIBITS AND SCHEDULES Exhibit A-1 -- Form of Certificate of Insurance Broker Confirming Insurance Coverage (Primary Liability) Exhibit A-2 -- Form of Certificate of Insurance Broker Confirming Insurance Coverage (Excess Liability) Exhibit B-1 -- Insurance Requirements as to Public Liability Insurance Exhibit B-2 -- Insurance Requirements as to Physical Damage Insurance Exhibit C -- Form of Transfer Agreement Exhibit D -- Form of Notice of Assignment of Sublease Exhibit E-1 -- Form of Winston & Strawn LLP Opinion Exhibit E-2 -- Form of Trinity Rail Leasing IV L.P. and Trinity Industries Leasing Company Opinion Exhibit E-3 -- Form of Shipman and Goodwin LLP Opinion Exhibit E-4 -- Form of Simpson Thacher & Bartlett LLP Opinion Exhibit E-5 -- Form of Owner Participant in-house counsel Opinion Exhibit E-6 -- Form of Morris, James, Hitchens & Williams LLP Opinion, as special counsel for the Indenture Trustee, Collateral Agent and Pass Through Trustee Exhibit E-7 -- Form of Alvord & Alvord Opinion Exhibit E-8 -- Form of Blake Cassels Opinion Exhibit E-9 -- Form of Policy Provider in-house counsel Opinion Exhibit E-10 -- Form of Haynes & Boone, LLP Opinion Exhibit F -- Form of Officer's Solvency Certificate Exhibit G -- Tax Shelter Registration Form Schedule 1-A -- Description of Equipment, Designation of Basic Groups, Designation of Functional Groups and Equipment Cost Schedule 1-B Description of Pledged Equipment Schedule 1-C -- List of Existing Subleases Schedule 1-D List of Existing Pledged Equipment Leases Schedule 2 -- Commitment Percentage and Payment Information for Participants Schedule 3-A -- Schedule of Basic Rent Payments Schedule 3-B -- Basic Rent Allocation Schedule Schedule 4-A -- Schedule of Stipulated Loss Value and Termination Value Schedule 4-B -- Termination Amount Schedule Schedule 5 -- Terms of Equipment Note Schedule 6 -- Purchase Information Schedule 7-A -- List of Units Subject to a Purchase Option Schedule 7-B -- List of Units Subject to a Purchase Option Not for Fair Market Value Schedule 8 -- Permitted Liens Schedule 9 -- List of Subleases and Pledged Equipment Leases Not in Conformity with Permitted Sublease Definition iv PARTICIPATION AGREEMENT (TRLIV 2004-1A) This PARTICIPATION AGREEMENT (TRLIV 2004-1A), dated as of August 19, 2004 (this "Agreement"), is by and among (i) Trinity Rail Leasing IV L.P., a Texas limited partnership (together with its permitted successors and assigns, the "Lessee" or the "Partnership"), (ii) Trinity Rail Leasing Trust II, a Delaware statutory trust ("TLRTII"), (iii) Trinity Industries Leasing Company, a Delaware corporation ("TILC"), (iv) Trinity Industries, Inc., a Delaware corporation ("Trinity"), (v) TRLIV 2004-1A Railcar Statutory Trust, a Connecticut statutory trust (the "Trust"), (vi) U.S. Bank Trust National Association, ("Trust Company"), not in its individual capacity except as expressly provided herein but solely as trustee (together with its permitted successors and assigns, the "Owner Trustee") under the Trust Agreement (such term and other defined terms used herein shall have the meanings assigned thereto in Section 1 below), (vi) The Fifth Third Leasing Company, an Ohio corporation (together with its permitted successors and assigns, the "Owner Participant"), (vii) Ambac Assurance Corporation, a Wisconsin stock insurance corporation, and (viii) Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity except as expressly provided herein but solely as pass through trustee under the Pass Through Trust Agreement (in such capacity, together with its permitted successors and assigns, the "Pass Through Trustee" or the "Loan Participant"), and as trustee under the Indenture (in such capacity, together with its permitted successors and assigns, the "Indenture Trustee"). The Owner Participant and the Loan Participant are sometimes hereinafter referred to collectively as the "Participants." WITNESSETH: WHEREAS, on or prior to the date hereof, the Owner Participant and the Trust Company have entered into the Trust Agreement pursuant to which the Owner Trustee has agreed, among other things, to hold the Trust Estate for the benefit of the Owner Participant thereunder on the terms specified in the Trust Agreement, subject, however, to the Lien created under the Indenture and, subject to the terms and conditions hereof, (i) to purchase from the Lessee on the Closing Date the Equipment described in Schedule 1-A hereto and (ii) to acquire Equipment from time to time in connection with the substitution or replacement of Units described in Schedule 1-A hereto in accordance with the Lease and, in each case, to lease such Equipment to the Lessee concurrently with such purchase or acquisition; WHEREAS, on or prior to the date hereof and pursuant to the Pass Through Trust Agreement, a trust intended to constitute a grantor trust for U.S. federal, state, and local income tax purposes was created to facilitate the financing contemplated hereby; WHEREAS, on the Closing Date, the Trust and the Indenture Trustee will enter into the Indenture, pursuant to which the Trust will agree, among other things, to borrow from the Loan Participant an amount not to exceed the lesser of $60,387,016.34 and 80% of the Total Equipment Cost in connection with the financing of the Total Equipment Cost and to issue to the Loan Participant the Equipment Note as evidence of such loan; WHEREAS, TRLTII, an indirect wholly-owned subsidiary of TILC, will on the Closing Date, pursuant to the Transfer and Assignment Agreement (i) sell to the Lessee all of TRLTII's right, title and interest in and to the Equipment described on Schedule 1-A hereto and (ii) assign and transfer to the Lessee all of TRLTII's right, title and interest in and to any Existing Equipment Subleases; WHEREAS TRLTII will, on the Closing Date, pursuant to the Pledged Equipment Transfer and Assignment Agreement (i) sell to the Partnership all of TRLTII's right, title and interest in and to the Pledged Equipment and (ii) assign and transfer to the Partnership all of TRLTII's right, title and interest in and to any Existing Pledged Equipment Leases; WHEREAS, pursuant to the terms of the Trust Agreement, the Owner Participant has authorized and directed the Owner Trustee to, on behalf of the Trust, and the Trust will, among other things (and subject to the terms and conditions of the Operative Agreements), (i) purchase the Equipment described in Schedule 1-A hereto from the Lessee and accept delivery from the Lessee of the Bill of Sale evidencing the purchase and transfer of title of each Unit to the Trust, (ii) acquire Equipment from time to time in connection with the substitution or replacement of Units in accordance with the Lease, (iii) own the Equipment described in Schedule 1-A hereto as provided in the Operative Agreements, (iv) accept pursuant to the Assignment the assignment and transfer from the Lessee of all Lessee's right, title and interest in and to the Existing Equipment Subleases and (v) execute and deliver the Lease, pursuant to which, subject to the terms and conditions set forth therein, the Trust agrees to lease to the Lessee, and the Lessee agrees to lease from the Trust, each Unit to be delivered on the Closing Date, such lease to be evidenced by the execution and delivery of the Lease Supplement covering such Units; WHEREAS, concurrently with the execution and delivery of this Agreement, the Lessee, TILC, the Trust, the Owner Trustee, the Indenture Trustee, the Collateral Agent and the other parties thereto have entered into the Collateral Agency Agreement, pursuant to which the Lessee will agree, among other things, to grant to the Collateral Agent for the security and the benefit of the Owner Trust and the other Beneficiaries (as defined therein) a security interest in the Collateral (including the Subleases and Pledged Equipment Leases) to secure the performance by the Lessee of its obligations under the Partnership Documents and Operative Agreements (including the Lease) to which the Lessee is a party; WHEREAS, pursuant to the terms of the Trust Agreement, the Owner Participant has authorized and directed the Owner Trustee to, on behalf of the Trust, and the Trust will, among other things (and subject to the terms and conditions of the Operative Agreements), grant to the Indenture Trustee under the Indenture for the security and the benefit of the holder of the Equipment Note a security interest in the Indenture Estate; WHEREAS, concurrently with the execution and delivery of this Agreement, Lessee, TILC and the Owner Participant (or an Affiliate of the Owner Participant) will enter into the Tax Indemnity Agreement; WHEREAS, the proceeds from the sale of the Equipment Note to the Loan Participant will be applied, together with the equity contribution made by the Owner Participant in an amount not less than 20% of the Total Equipment Cost pursuant to this Agreement and the Trust Agreement, to effect the purchase of the Equipment described on Schedule 1-A hereto by the Trust from the Lessee as contemplated hereby; 2 WHEREAS, on or prior to the Closing Date, the Partners made capital contributions to the Lessee in accordance with the Partnership Agreement and on the Closing Date all of the proceeds of such capital contributions will be applied (i) to effect the purchase of the Pledged Equipment by the Lessee from TRLTII as contemplated hereby and (ii) to fund certain reserve accounts of the Lessee as contemplated hereby and by the Collateral Agency Agreement; WHEREAS, concurrently with the execution and delivery of this Agreement, the Lessee and TILC have entered into the Management Agreement, pursuant to which TILC will provide management services with respect to the Equipment, the Pledged Equipment, the Subleases and the Pledged Equipment Leases; WHEREAS, concurrently with the execution and delivery of this Agreement, the Lessee and TILC have entered into the Insurance Agreement, pursuant to which TILC will provide services to the Lessee in connection with obtaining, managing and maintaining insurance with respect to the Equipment and the Pledged Equipment required under the Operative Agreements; and WHEREAS, concurrently with the execution and delivery of this Agreement, the Lessee, the General Partner, the Limited Partner and TILC have entered into the Administrative Services Agreement, pursuant to which TILC will provide certain administrative services with respect to the Partnership, the General Partner and the Limited Partner. NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, receipt of which is acknowledged, the parties hereto agree as follows: SECTION 1. DEFINITIONS; INTERPRETATION OF THIS AGREEMENT. Unless otherwise defined herein or unless the context shall otherwise require, capitalized terms used in this Agreement shall have the meanings assigned to such terms in Appendix A to the Equipment Lease Agreement (TRLIV 2004-1A), dated as of August 19, 2004, between the Trust and the Lessee. Unless otherwise indicated, all references herein to Sections, Schedules and Exhibits refer to Sections, Schedules and Exhibits of this Agreement. SECTION 2. SALE AND PURCHASE; PARTICIPATION IN EQUIPMENT COST; CLOSING; TRANSACTION COSTS. Section 2.1 Sale and Purchase of Equipment. Subject to the terms and conditions hereof and on the basis of the representations and warranties set forth herein, the Lessee agrees to sell to the Trust, and the Trust agrees to purchase from the Lessee, on the Closing Date and immediately following consummation of the transactions described in the third and fourth recital clauses above, the Equipment described in Schedule 1-A, and, in connection therewith, the Trust agrees to pay to the Lessee the cost for each Unit as specified in Schedule 1-A. On the Closing Date, the Lessee shall deliver each Unit described on Schedule 1-A to the Trust, and the Trust shall accept such delivery. 3 Section 2.2 Participation in Equipment Cost. (a) Equity Participation. On the Closing Date, subject to the terms and conditions hereof and on the basis of the representations and warranties set forth herein, the Owner Participant agrees to participate in the payment of the Total Equipment Cost for the Units delivered on the Closing Date by making an equity investment in the beneficial ownership of such Units in the amount equal to the product of the Total Equipment Cost for such Units delivered on the Closing Date and the percentage (not less than 20%) set forth opposite the Owner Participant's name in Schedule 2 (the "Owner Participant's Commitment"). The aggregate amount of the Owner Participant's Commitment plus the aggregate amount of Transaction Costs payable by the Owner Participant shall not exceed the sum of (x) the Owner Participant's Commitment and (y) 2.60% of the Total Equipment Cost. The Owner Participant's Commitment shall be paid to the Indenture Trustee to be held (but not as part of the Indenture Estate) and applied on behalf of the Owner Trustee toward payment of the Total Equipment Cost as provided in Section 2.3. (b) Debt Participation. On the Closing Date, subject to the terms and conditions hereof and on the basis of the representations and warranties set forth herein, the Loan Participant agrees to participate in the payment of the Total Equipment Cost for the Units delivered on the Closing Date by making a secured loan, not from its own funds but solely from the Consideration (as defined in the Pass Through Trust Agreement) received by it from the sale of the Pass Through Trust Certificates, to be evidenced by the Equipment Note, to the Trust, in the amount equal to the product of the Total Equipment Cost for the Units delivered on the Closing Date and the percentage (not in excess of 80%) set forth opposite the Loan Participant's name in Schedule 2 (the "Loan Participant's Commitment"). The Equipment Note shall bear interest at the Debt Rate. Section 2.3 Closing Date; Procedure for Participation. (a) Notice of Closing Date. Not later than three Business Days prior to the Closing Date (or such lesser notice as may be agreed upon by the Lessee, the Owner Participant and the Loan Participant), the Lessee shall give the Owner Participant, the Indenture Trustee, the Trust, the Owner Trustee, the Policy Provider and the Loan Participant a notice (a "Notice of Delivery") by facsimile or other form of telecommunication or telephone (to be promptly confirmed in writing) of the Closing Date, which Notice of Delivery shall specify in reasonable detail the number and type of Units to be delivered on such date, the Total Equipment Cost of such Units, and the respective amounts of the Owner Participant's Commitment and the Loan Participant's Commitment required to be paid with respect to the Units. Prior to 11:00 a.m., Chicago time, on the Closing Date, subject to the satisfaction (or waiver) of the respective conditions specified in Section 4, the Owner Participant shall make the amount of the Owner Participant's Commitment required to be paid on the Closing Date available to the Indenture Trustee, and immediately prior to the delivery and acceptance of the Units as specified in Section 2.3(b), the Loan Participant shall make the amount of the Loan Participant's Commitment for the Total Equipment Cost required to be paid on the Closing Date available to the Indenture Trustee, in either case, by transferring or delivering such amounts, in funds immediately available on the Closing Date, to the Indenture Trustee, either directly to, or for deposit in, the Indenture Trustee's account at Wilmington Trust Company, ABA No. 031100092, Attn: Rob Perkins, Account 4 067435-000. The making available by the Owner Participant of the amount of the Owner Participant's Commitment for the Total Equipment Cost shall be deemed a waiver of the Notice of Delivery by the Owner Participant and the Trust. The making available by the Loan Participant of the amount of the Loan Participant's Commitment for the Total Equipment Cost shall be deemed a waiver of the Notice of Delivery by the Loan Participant and the Indenture Trustee. (b) Closing. The closing of the transactions contemplated hereby (the "Closing") shall take place on or before 2:00 p.m., Chicago time, on the Closing Date at the Chicago offices of Winston & Strawn LLP, or at such other place or time as the parties hereto shall agree. Upon receipt by the Indenture Trustee on the Closing Date of the full amount of the Owner Participant's Commitment and the Loan Participant's Commitment in respect of the Units delivered on the Closing Date, TILC shall cause TRLTII pursuant to the Transfer and Assignment Agreement to deliver the Units described on Schedule 1-A hereto to the Lessee by delivery of the TRLTII Bill of Sale and shall make an assignment of the Existing Equipment Subleases to the Lessee by delivery of the TRLTII Assignment, and immediately thereafter, (i) the Indenture Trustee, on behalf of the Trust, shall, subject to the conditions set forth in Sections 4.1, 4.2 and 4.3 having been fulfilled to the satisfaction of the applicable Participants or waived by the applicable Participants, pay to the Lessee from the funds then held by it, in immediately available funds, an amount equal to the Total Equipment Cost for the Units delivered on the Closing Date, (ii) the Lessee shall pay to TRLTII pursuant to the Transfer and Assignment Agreement an amount equal to the Total Equipment Cost for the Units delivered on the Closing Date, (iii) the Lessee shall deliver the Units described on Schedule 1-A hereto to the Trust by delivery of the Bill of Sale, (iv) the Trust shall, pursuant to the Lease, lease and deliver the Units listed on Schedule 1-A hereto to the Lessee, and the Lessee, pursuant to the Lease, shall accept delivery of the Units described on Schedule 1-A hereto under the Lease, and such lease, delivery and acceptance of such Units under the Lease shall be conclusively evidenced by the execution and delivery by the Lessee and the Trust of the Lease Supplement covering the Equipment so delivered as described in Schedule 1-A and (v) the Trust shall execute (and the Indenture Trustee shall authenticate) and deliver the Equipment Note relating to such Lease Supplement to the Loan Participant. Concurrently with the transactions described immediately above, TRLTII shall pursuant to the Pledged Equipment Transfer and Assignment Agreement sell the Pledged Units described on Schedule 1-B hereto to the Lessee by delivery of the Pledged Equipment Bill of Sale and shall make an assignment of the Existing Pledged Equipment Leases to the Lessee by delivery of the TRLTII Pledged Equipment Assignment. Each of the Lessee, the Owner Participant, the Trust, the Owner Trustee, TILC, the Loan Participant and the Indenture Trustee hereby agrees to take all actions required to be taken by it in connection with the Closing as contemplated by this Section 2.3(b). Section 2.4 Owner Participant's Instructions to the Owner Trustee; Satisfaction of Conditions. (a) The Owner Participant agrees that the making available to the Indenture Trustee of the amount of the Owner Participant's Commitment for the Units delivered on the Closing Date in accordance with the terms of this Section 2 shall constitute, without further act, authorization and direction by the Owner Participant to the Owner Trustee, subject, on the Closing Date, to the conditions set forth in Sections 4.1 and 4.3 having been fulfilled to the 5 satisfaction of the Owner Participant or waived by the Owner Participant, to take the actions specified in Section 2.04 of the Trust Agreement with respect to the Units on the Closing Date. (b) The Owner Participant agrees that the authorization by the Owner Participant or its counsel to the Indenture Trustee to release to the Lessee the Owner Participant's Commitment with respect to the Units delivered on the Closing Date shall constitute, without further act, notice and confirmation that all conditions to closing set forth in Sections 4.1 and 4.3 were either met to the satisfaction of the Owner Participant or, if not so met, were waived by the Owner Participant. (c) The Loan Participant agrees that the authorization by the Loan Participant or its counsel to the Indenture Trustee to release to the Lessee the Loan Participant's Commitment with respect to the Units delivered on the Closing Date shall constitute, without further act, notice and confirmation that all conditions to closing set forth in Sections 4.1 and 4.2 were either met to the satisfaction of the Loan Participant or, if not so met, were waived by the Loan Participant. Section 2.5 Expenses. (a) If the Owner Participant shall have made its investment provided for in Section 2.2 and the transactions contemplated by this Agreement are consummated, either the Owner Participant will promptly pay, or the Trust will promptly pay, with funds the Owner Participant hereby agrees to pay (which, together with the Owner Participant's Commitment, shall not exceed the amount set forth in the second sentence of Section 2.2(a)) to the Trust, the following (collectively referred to as the "Transaction Costs") if evidenced by an invoice delivered to the Owner Participant within four (4) months after the Closing Date and approved by the Lessee and the Owner Participant (such approval not to be unreasonably withheld or delayed): (i) the cost of reproducing, printing and filing the Operative Agreements, the Equipment Note, the Pass Through Documents and all amendments and supplements to the foregoing, including all costs and fees in connection with the initial filing and recording of the Lease, the Indenture and any other document required to be filed or recorded pursuant to the provisions hereof or of any other Operative Agreement and the fees and expenses of the Rating Agency in connection with the rating of the Pass Through Certificates; (ii) the reasonable out-of-pocket expenses of the Owner Participant and the reasonable fees and expenses of Simpson Thacher & Bartlett LLP, special counsel for the Owner Participant, plus disbursements, for their services rendered in connection with the negotiation, execution and delivery of this Agreement and the other Operative Agreements; (iii) the initial fees and reasonable out-of-pocket expenses of the Collateral Agent and the reasonable fees and expenses of Morris, James, Hitchens & Williams LLP, special counsel for the Collateral Agent, for their services rendered in connection with the negotiation, execution and delivery of the Operative Agreements; (iv) the reasonable out-of-pocket expenses of the Policy Provider and the reasonable fees and expenses of Jones Day, special counsel for the Policy Provider, for their 6 services rendered in connection with the negotiation, execution and delivery of this Agreement and the other Operative Agreements (which amounts shall be paid by or on behalf of the Lessee on the Closing Date); (v) the reasonable fees and expenses of Winston & Strawn LLP, special counsel for TILC, the Lessee, TRLTII and Trinity, for their services rendered in connection with the preparation of documentation, negotiation, execution and delivery of this Agreement and the other Operative Agreements; (vi) the reasonable fees and expenses of Mayer, Brown, Rowe & Maw LLP, special counsel for the Initial Purchasers, for their services rendered in connection with the preparation of documentation, negotiation, execution and delivery of the Pass Through Documents, this Agreement and the other Operative Agreements; (vii) the reasonable fees and expenses of (x) Alvord & Alvord, special STB counsel and (y) Blake, Cassels & Graydon LLP, special Canadian rail counsel; (viii) the reasonable fees and expenses of Shipman & Goodwin, LLP, special counsel for the Owner Trustee, for their services rendered in connection with the negotiation, execution and delivery of this Agreement and the other Operative Agreements; (ix) the reasonable fees and expenses of Morris, James, Hitchens & Williams LLP, special counsel for the Indenture Trustee and the Pass Through Trustee, for their services rendered in connection with the negotiation, execution and delivery of the Pass Through Documents, this Agreement and the other Operative Agreements; (x) the reasonable fees and expenses of Deloitte & Touche LLP for their services rendered in connection with delivering the letter referred to in Section 4.1(aa); (xi) the reasonable fees and expenses payable to the Arrangers for their services rendered as advisor to the Lessee; (xii) the initial fees and reasonable out-of-pocket expenses of the Owner Trustee and the Trust; (xiii) the initial fees and reasonable out-of-pocket expenses of the Indenture Trustee; (xiv) the initial fees and reasonable out-of-pocket expenses of the Pass Through Trustee; (xv) the reasonable fees of RailSolutions, Inc. (which fees shall in no event exceed $8,000 in the aggregate in respect of the amounts payable hereunder), plus disbursements, for their services rendered in connection with delivering the Appraisal required by Section 4.3(a) and for other consulting services (which amounts, to the extent they are obligations of the Policy Provider, shall be paid by or on behalf of the Lessee on the Closing Date); 7 (xvi) the reasonable fees of S&P and Moody's for their services rendered in connection with the negotiation, execution and delivery of this Agreement and the other Operative Agreements; (xvii) the costs incurred in connection with any adjustment pursuant to Section 2.6(a); (xviii) all costs and fees in connection with the qualification of the Pass Through Certificates under federal or state securities laws or Blue Sky laws in accordance with the provisions of the Certificate Purchase Agreement; (xix) the reasonable fees and expenses of the advisor to the Owner Participant; and (xx) the reasonable fees and expenses of Locke Liddell & Sapp LLP, special Texas counsel to the Owner Participant. Except as expressly provided above, Transaction Costs shall not include internal costs and expenses such as salaries and overhead of whatsoever kind or nature of, or costs incurred by, parties to this Agreement pursuant to arrangements with third parties for services (other than those expressly referred to above). (b) Upon the consummation of the transactions contemplated by this Agreement, the Lessee agrees to be responsible for, and will pay when due as Supplemental Rent: (i) the reasonable expenses (including reasonable legal fees and expenses) of the Trust, the Owner Trustee, the Indenture Trustee, the Participants and the Policy Provider incurred subsequent to the delivery of the Equipment on the Closing Date, in connection with any supplements, amendments, modifications, alterations, waivers or consents (whether or not consummated) of any of the Operative Agreements which are either (1) requested by the Lessee or (2) required by any applicable law or regulation (other than laws or regulations solely relating to the business of the Lessor, the Indenture Trustee, the Trust Company, the Pass Through Trustee, the Initial Purchasers, the Collateral Agent or any Participant) or (3) entered into in connection with, or as a result of, a Lease Default or (4) required pursuant to the terms of the Operative Agreements (including such reasonable expenses incurred in connection with any adjustment pursuant to Section 2.6), (ii) the ongoing fees of the Owner Trustee under the Trust Agreement, (iii) the ongoing fees of the Indenture Trustee under the Operative Agreements, (iv) the ongoing fees of the Collateral Agent under the Collateral Agency Agreement, (v) the ongoing fees of the Pass Through Trustee under the Pass Through Trust Agreement and (vi) the ongoing fees of each Rating Agency; provided that following the occurrence of the "Closing Date" under the Other Participation Agreements, the fees referred to in clauses (iv) and (v) immediately above shall be allocated between the transactions contemplated hereby and the transactions contemplated by the Other Participation Agreements on a pro rata basis based on the aggregate commitments of the Participants hereunder as compared with the aggregate commitments of the participants under the Other Participation Agreements. Notwithstanding the foregoing provisions of this Section 2.5, the Lessee shall have no liability for (i) any costs or expenses relating to any voluntary transfer of the Owner 8 Participant's interest in the Equipment pursuant to Section 6.1 other than during the continuance of a Lease Event of Default and no such costs or expenses shall constitute Transaction Costs, (ii) any costs or expenses relating to any voluntary transfer of any Loan Participant's interest in the Equipment Note (other than any such transfer to the Policy Provider in accordance with the Policy Provider Insurance and Indemnity Agreement) and (iii) any costs or expenses relating to any voluntary transfer of any Certificateholder's interest in the Pass Through Certificates (other than any such transfer to the Policy Provider in accordance with the Policy Provider Insurance and Indemnity Agreement), and in each case no such costs or expenses shall constitute Transaction Costs. (c) To the extent Transaction Costs exceed 2.6% of the Total Equipment Cost, Lessee shall pay such excess Transaction Costs. For purposes of Section 2.5, the Transaction Costs described in Sections 2.5(a)(ii), (a)(iv), (a)(vii), (a)(x), (a)(xv), (a)(xix) and (a)(xx) shall be paid first before other Transaction Costs, and such other Transaction Costs shall not be paid or reimbursed by Lessor to the extent total Transaction Costs exceed 2.6% of the Total Equipment Cost less $186,000 until September 30, 2004. Section 2.6 Calculation of Adjustments to Basic Rent, Stipulated Loss Value and Termination Value; Confirmation and Verification. (a) Calculation of Adjustments. In the event that (A) the Closing Date is other than August 19, 2004, (B) the actual interest rate on the Equipment Note is different from the Debt Rate or the amortization of the Equipment Note is different from that set forth on Schedule 5, (C) a refinancing contemplated by Section 10.2 occurs, (D) the actual aggregate Equipment Cost or composition of the Units is different from that set forth on Schedule 1-A, (E) the actual aggregate amount of Transaction Costs paid pursuant to Section 2.5(a) is other than an amount equal to 2.6% of the Total Equipment Cost, or (F) there is any proposed or actual change in the Code or in the regulations promulgated thereunder or other administrative pronouncement, which change is enacted or effective after the execution of this Agreement and prior to the Closing Date (provided that the Owner Participant or the Lessee, as the case may be, shall have provided notice to the other prior to the Closing Date), and which change alters or eliminates any tax assumption used in calculating Basic Rent, Stipulated Loss Values, Stipulated Loss Amounts, Termination Values, Termination Amounts or Early Purchase Price, then, in each such case, the Owner Participant shall recalculate the payments or amounts, as the case may be, of Basic Rent, Stipulated Loss Values, Stipulated Loss Amounts, Termination Values, Termination Amounts and Early Purchase Price (i) first, to preserve the Net Economic Return that the Owner Participant would have realized had such event not occurred, and (ii) second, to minimize to the greatest extent possible, consistent with the foregoing clause (i), the present value (discounted monthly at an interest rate per annum equal to the Debt Rate) of the sum of the payments of Basic Rent to the Early Purchase Date and the Early Purchase Price; provided, however, that in no event shall the Early Purchase Price be less than the expected fair market value of the Equipment on the Early Purchase Date and the Basic Term Expiration Date, respectively, as determined by the Appraisal. Any such recalculation performed due to the occurrence of any one or more of the events described in clause (A), (B), (D), (E) or (F) above shall be made prior to the Closing Date. In performing any such recalculation and in determining the Owner Participant's Net Economic Return, the Owner Participant shall utilize the same methods and assumptions originally used in making the computations of Basic Rent, Stipulated Loss Values, 9 Stipulated Loss Amounts, Termination Values, Termination Amounts and Early Purchase Price initially set forth in Schedules 3-A, 3-B, 4-A, 4-B and 6 (other than those assumptions changed as a result of any of the events described in clauses (A) through (F) of the preceding sentence necessitating such recalculation; it being agreed that such recalculation shall reflect solely any changes of assumptions or facts resulting directly from the event or events necessitating such recalculation). Such adjustments shall comply (to the extent the original structure complied) with Section 467 of the Code and the requirements of Revenue Procedure 2001-28, calculated, except in the case of a refinancing pursuant to Section 10.2, without taking into account any change after the Closing Date in or to Section 467 of the Code (and any regulations thereunder). (b) Confirmation and Verification. Upon completion of any recalculation described in Section 2.6(a), a duly authorized officer of the Owner Participant shall provide a certificate to the Lessee either (x) stating that the amounts of Basic Rent, Stipulated Loss Values, Stipulated Loss Amounts, Termination Values, Termination Amounts and Early Purchase Price as are then set forth in Schedules 3-A, 3-B, 4-A, 4-B and 6 do not require change, or (y) setting forth such adjustments to the amounts of Basic Rent, Stipulated Loss Values, Stipulated Loss Amounts, Termination Values, Termination Amounts or Early Purchase Price as have been calculated by the Owner Participant in accordance with Section 2.6(a). Such certificate shall describe in reasonable detail the basis for any such adjustments, and any such adjustment and corresponding adjustments to the Stipulated Loss Values, Termination Values and Early Purchase Price will be computed on a basis consistent with that used by the Owner Participant in the original calculation of Basic Rent. Any such adjustment shall be deemed approved upon notice of such approval by the Lessee to the Owner Participant or on the thirty-first (31st) day following delivery of such certificate by the Owner Participant to the Lessee unless the Lessee, prior to such day, requests verification pursuant to the following sentence, and shall become effective, in the case of adjustments made pursuant to clause (A), (B), (D), (E) or (F) of the first sentence of Section 2.6(a), as of the earlier of (i) the first Rent Payment Date and (ii) the date the Lessee approves or has been deemed to have approved such adjustment, and, in the case of an adjustment made pursuant to clause (C) of the first sentence of Section 2.6(a), as of the date of the refinancing. If the Lessee shall so request, the recalculation of any such adjustments described in this Section 2.6 shall be verified by a nationally recognized firm of independent accountants selected by the Owner Participant and reasonably acceptable to the Lessee, and any such recalculation of such adjustment as so verified shall be binding on the Lessee and the Owner Participant. Such accounting firm shall be requested to make its determination within 30 days. The Owner Participant shall provide to a representative of such accounting firm, subject to a confidentiality agreement reasonably satisfactory to the Owner Participant, such information as it may reasonably require, as is necessary to determine whether the computation is accurate and in conformity with the provisions of this Agreement, provided that in no event shall the Owner Participant or its affiliates have any obligation to provide the Lessee with any such information; and provided, further, that the Owner Participant or its affiliates shall have no obligation to disclose to the Lessee, such accounting firm or any other Person, or to permit the Lessee, such accounting firm or any other Person, to examine any federal, state or local income tax returns of the Owner Participant or its affiliates, or books or accounting records related thereto, for any taxable year. Subject to the immediately following sentence, the costs of such verification shall be borne by the Lessee. If such accounting firm's verification shall result in a decrease in the net present value (expressed as a percentage of Total Equipment Cost, discounted monthly at a rate per annum equal to the Debt Rate) of the sum of the Basic Rent to the Early Purchase Date and 10 the Early Purchase Price, calculated as of the Closing Date, as compared to the net present value of the sum of the Basic Rent to the Early Purchase Date and the Early Purchase Price, proposed by the Owner Participant, by more than the greater of (i) ten basis points and (ii) 5% of the proposed adjustment, then the Owner Participant agrees to reimburse the Lessee for any amounts paid for such verification. Any revised adjustment resulting from such verification shall become effective on the next Rent Payment Date after such verification has been concluded (except that, in the case of an adjustment pursuant to clause (C) of the first sentence of Section 2.6(c), such adjustment shall be effective as of the date of the refinancing). (c) Compliance. Notwithstanding the foregoing, any adjustment made to the payments of Basic Rent, Stipulated Loss Amounts, Termination Amounts or Early Purchase Price, pursuant to the foregoing, shall comply with the following requirements: (i) each installment of Basic Rent, as so adjusted, under any circumstances and in any event, will be in an amount at least sufficient for the Trust to pay in full as of the due date of such installment an amount equal to the sum of (x) any payment of principal of and interest on the Equipment Note required to be paid on the due date of such installment of Basic Rent in accordance with the Scheduled Amortization and (y) an amount equal to the Policy Provider Base Premium Amount required to be paid on the due date of such installment of Basic Rent, and (ii) Stipulated Loss Amount, Termination Amount and Early Purchase Price, as so adjusted, under any circumstances and in any event, will be an amount which, together with any other amounts required to be paid by the Lessee under the Lease in connection with an Event of Loss or a termination of the Lease, as the case may be, will be at least sufficient to pay in full, as of the date of payment thereof, the aggregate unpaid principal of and all unpaid interest on the Equipment Note in accordance with the Scheduled Amortization accrued to the date on which Stipulated Loss Amount, Termination Amount or Early Purchase Price, as the case may be, is paid in accordance with the terms of the Lease. (d) Invoices. All invoices in respect of Transaction Costs to the extent not delivered on the Closing Date shall be directed to the Owner Participant at the address set forth in Section 10.4, with a copy to the Lessee. Section 2.7 Postponement of Closing Date. (a) If for any reason whatsoever the Closing is not consummated on the Closing Date provided for pursuant to Section 2.3 (the "Scheduled Closing Date"), the Closing shall be deemed postponed to the next Business Day or to such other Business Day on or prior to August 31, 2004 as the Lessee shall specify by facsimile or telephonic (confirmed in writing) notice to the Owner Participant, the Indenture Trustee, the Trust, the Owner Trustee, the Pass Through Trustee, the Policy Provider and the Initial Purchasers, in which case the Participants will keep their funds available, provided that the notice of postponement shall be received by each party no later than 4:30 p.m., Chicago time, on the originally scheduled Closing Date, and the term "Closing Date" as used in this Agreement shall mean the postponed "Closing Date." (b) If the closing fails to occur on the Scheduled Closing Date, the Indenture Trustee shall promptly return to each Participant that makes funds available to it in accordance with this Section 2 such funds, together with interest or income earned thereon. 11 (c) If the Closing fails to occur on the Scheduled Closing Date and funds are not returned to each Participant that made funds available by the Indenture Trustee as provided by Section 2.7(b) above, the Indenture Trustee shall, if so instructed by the Lessee in the facsimile or telephonic (confirmed in writing) notice from the Lessee (which notice shall specify the Specified Investments to be purchased), use reasonable best efforts to invest, at the risk of the Lessee (except as provided below with respect to the Indenture Trustee's gross negligence or willful misconduct), the funds received by the Indenture Trustee from the Participants in Specified Investments in accordance with the Lessee's instructions. Any such Specified Investments purchased by the Indenture Trustee upon instructions from the Lessee shall be held in trust by the Indenture Trustee (but not as part of the Indenture Estate under the Indenture) for the benefit of the Participants that provided such funds. In order to obtain funds for the payment of the Equipment Cost for the Units on the Closing Date or to return funds to the Participants pursuant to Section 2.7(b), the Indenture Trustee is authorized to sell any Specified Investments purchased as aforesaid. The Indenture Trustee shall not be liable for failure to invest such funds or for any losses incurred on such investments except for losses resulting from its own willful misconduct or gross negligence. (d) If the Closing fails to occur on the Scheduled Closing Date, unless the Indenture Trustee returns all funds to the Participants by 2:00 p.m., Chicago time, on the Scheduled Closing Date, the Lessee shall reimburse each Participant that has made funds available pursuant to this Section 2 for the loss of the use of its funds an amount equal to the excess, if any, of (x) interest on such funds at the Debt Rate for the period from and including the Scheduled Closing Date to but excluding the actual Closing Date or, if earlier, the day on which such Participant's funds are returned if such return is made by 2:00 p.m., Chicago time (or to but excluding the next following Business Day if such return is not made by such time); provided that with respect to the Owner Participant such period shall in any case be at least one day, unless the Owner Participant shall have received, prior to 12:00 noon (Chicago time) on the Business Day preceding the Scheduled Closing Date, a notice of postponement of the Scheduled Closing Date pursuant to Section 2.7(a), over (y) any amount paid to such Participant in respect of interest or income earned by the Indenture Trustee on such funds pursuant to Section 2.7(c) above. (e) If the Closing fails to occur on the Scheduled Closing Date, the Lessee shall, on the Closing Date or on the date funds are required to be returned to the Participants pursuant to Section 2.7(b) above, reimburse the Indenture Trustee, for the benefit of the Participants that provided funds which are invested by the Indenture Trustee pursuant to this Section 2.7 for any losses incurred on such investments (except with respect to any Participant, if the Closing failed to occur as a result of default by such Participant, or with respect to the Owner Participant, as a result of default of the Owner Trustee (acting pursuant to instructions from the Owner Participant)). All income and profits on the investment of such funds shall be for the respective accounts of such Participants, and the Indenture Trustee shall not be liable for failure to invest such funds or for any losses incurred on such investments, except for its willful misconduct or gross negligence. (f) Notwithstanding the provisions of Section 2.7(a), the Participants shall not be under any obligation to make their respective commitments available beyond 2:00 p.m. (Chicago time) on August 31, 2004. 12 SECTION 3. REPRESENTATIONS AND WARRANTIES. Section 3.1 Representations and Warranties of the Trust Company. Trust Company, in its individual capacity (except with respect to clauses (c), (k) and (m) (to the extent applicable to Trust Company in its capacity as Owner Trustee) below) and as Owner Trustee with respect to clauses (c), (f) and (k) (to the extent applicable to Trust Company in its capacity as Owner Trustee) below, represents and warrants to each of the Owner Participant, the Indenture Trustee, the Pass Through Trustee, TILC, TRLTII, Trinity, the Lessee and the Policy Provider, notwithstanding the provisions of Section 10.13 or any similar provision in any other Operative Agreement, that, as of the date hereof and as of the Closing Date: (a) Trust Company (i) is a national banking association duly organized, validly existing and in good standing under the laws of the United States of America, (ii) has the full corporate power, authority and legal right under the laws of the State of Connecticut pertaining to its banking, trust and fiduciary powers to carry on its business as now conducted and execute, deliver and perform its obligations hereunder and under the Trust Agreement, (iii) assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant, the Trust is a Connecticut statutory trust duly organized and validly existing under the laws of the State of Connecticut and (iv) assuming due authorization, execution and delivery of the Trust Agreement by the Owner Participant, has full power and authority, as Owner Trustee and/or, to the extent expressly provided herein or therein, in its individual capacity, to execute, deliver and perform its obligations under each of the Owner Trustee Agreements; (b) (i) Trust Company has duly authorized, executed and delivered the Trust Agreement, (ii) assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant, Trust Company in its trustee capacity and, to the extent expressly provided therein, in its individual capacity, has, or on or prior to the Closing Date will have, duly authorized, executed and delivered each of the other Owner Trustee Agreements and, as of the Closing Date, the Equipment Note, the Lease Supplement and the Indenture Supplement to be delivered on the Closing Date and (iii) the Trust Agreement constitutes a legal, valid and binding obligation of Trust Company enforceable against it in accordance with the terms thereof except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity; (c) assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant, each of the Owner Trustee Agreements (other than the Trust Agreement) to which it is a party constitutes, or when entered into will constitute, a legal, valid and binding obligation of the Owner Trustee, enforceable against it in accordance with the terms thereof, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity; (d) neither the execution and delivery by Trust Company or Owner Trustee, as the case may be, of the Owner Trustee Agreements or the Equipment Note to be delivered on the Closing Date, nor the consummation by Trust Company or Owner Trustee, as the case may be, of any of the transactions contemplated hereby or thereby, nor the compliance by Trust Company or Owner Trustee, as the case may be, with any of the terms and provisions hereof and thereof, 13 (i) requires or will require any approval of its stockholders, or approval or consent of any trustees or holders of any indebtedness or obligations of it in its individual capacity, or (ii) violates or will violate its articles of association or bylaws, or contravenes or will contravene any provision of, or constitutes or will constitute a default under, or results or will result in any breach of, any indenture, mortgage, chattel mortgage, deed of trust, conditional sale contract, bank loan or credit agreement, license or other agreement or instrument to which Trust Company is a party or by which it or any of its properties may be bound or affected, or contravenes or will contravene any law, governmental rule or regulation of the United States of America or the State of Connecticut governing the banking, trust or fiduciary powers of Trust Company, or any judgment or order applicable to or binding on it, or results in or will result in the creation or imposition of any Lien upon the Trust Estate (other than a Permitted Lien of the type described in clause (v) of the definition thereof); (e) there are no Taxes payable by Trust Company or the Owner Trustee, imposed by the State of Connecticut or any political subdivision thereof in connection with the execution and delivery by Trust Company of the Trust Agreement, and, as Trust Company or Owner Trustee, as the case may be, of this Agreement, the other Owner Trustee Agreements (other than the Trust Agreement) or the Equipment Note to be delivered on the Closing Date solely because Trust Company is a national banking association with an office for trust administration in Connecticut and performs certain of its duties as Owner Trustee in the State of Connecticut; and there are no Taxes payable by Trust Company or the Owner Trustee, as the case may be, imposed by the State of Connecticut or any political subdivision thereof in connection with the acquisition of its interest in the Equipment (other than franchise or other taxes based on or measured by any fees or compensation received by Trust Company or the Owner Trustee for services rendered in connection with the transactions contemplated hereby) solely because Trust Company is a national banking association with an office for trust administration in Connecticut and performs certain of its duties as Owner Trustee in the State of Connecticut; (f) there are no pending or, to its knowledge, threatened actions or proceedings against Trust Company or the Owner Trustee, before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would be reasonably expected to materially adversely affect the ability of Trust Company or the Owner Trustee, as the case may be, to perform its obligations under the Trust Agreement, the other Owner Trustee Agreements or the Equipment Note to be delivered on the Closing Date; (g) the "location" of the Trust Company for purposes of Article 9 of the Uniform Commercial Code is in Delaware, and Trust Company agrees to give the Owner Participant, the Indenture Trustee and the Lessee written notice within 30 days following any relocation of said chief executive office or said place from its present location; (h) no consent, approval, order or authorization of, giving of notice to, or registration with, or taking of any other action in respect of, any Connecticut state or local governmental authority or agency or any United States federal governmental authority or agency regulating the banking or trust powers of Trust Company is required for the execution and delivery of, or the carrying out by, Trust Company or the Owner Trustee, as the case may be, of any of the transactions contemplated hereby or by the Trust Agreement or of any of the 14 transactions contemplated by any of the other Owner Trustee Agreements, other than any such consent, approval, order, authorization, registration, notice or action as has been duly obtained, given or taken; (i) on the Closing Date, the Trust's right, title and interest in and to the Equipment delivered on the Closing Date shall be free and clear of any Lessor's Lien attributable to Trust Company; (j) proceeds received by the Owner Trustee from the Owner Participant pursuant to the Trust Agreement will be administered by it in accordance with Article III of the Trust Agreement; (k) the Trust shall receive from the Lessee such title as was conveyed to it by the Lessee, subject to the rights of the Trust and the Lessee under the Lease and the Lien created pursuant to the Indenture and the Indenture Supplement in respect of the Equipment delivered on the Closing Date, and there will be no Lessor's Liens attributable to the Trust on the Equipment or any interest therein or on the Trust Estate; (l) to its knowledge, no Indenture Default (not attributable to a Lease Default) has occurred and is continuing; (m) the Owner Trustee is not engaged in the business of extending credit for the purposes of purchasing or carrying margin stock, and no proceeds of the Equipment Note or the Owner Participant's Commitment as contemplated by this Agreement and the other Operative Agreements will be used by the Owner Trustee for a purpose which violates, or would be inconsistent with, Section 7 of the Securities Exchange Act of 1934, as amended, or Regulations T, U and X of the Federal Reserve System. Terms for which meanings are provided in Regulations T, U and X of the Federal Reserve System or any regulations substituted therefor, as from time to time in effect, are used in this Section 3.1 (m) with such meanings; and (n) the Trust is not an "investment company" or an "affiliated person" of an "investment company" within the meaning of the Investment Company Act of 1940, as amended. Section 3.2 Representations and Warranties of the Lessee. The Lessee represents and warrants to the Trust, the Owner Trustee, the Indenture Trustee, the Participants, and the Policy Provider as of the date hereof and as of the Closing Date: (a) as to organization, powers and partnership organizational documents: (i) the Lessee is a limited partnership duly organized, validly existing, and in good standing under the laws of the State of Texas, is duly licensed or qualified and in good standing in each jurisdiction in which the failure to so qualify would reasonably be expected to have a material adverse effect on its ability to carry on its business as now conducted and as contemplated by the Operative Agreements to be conducted or to enter into and perform its obligations under the Lessee Agreements, each Partnership Document to which the Lessee is or will be a party and each Pass Through Document to which the Lessee is or will be a party, is a special purpose limited partnership organized to enter into the transactions contemplated by this Agreement, the other Operative Agreements to which it is a party and the Pass Through 15 Documents to which it is a party, has the limited partnership power and authority to acquire from TRLTII and sell to the Trust the Equipment described on Schedule 1-A hereto, to acquire from TRLTII and pledge to the Collateral Agent the Pledged Equipment, to acquire from TRLTII and sell to the Trust the Existing Equipment Subleases and to acquire from TRLTII and pledge to the Collateral Agent the Existing Pledged Equipment Leases, in each case as contemplated by this Agreement, and to carry on its business as now conducted and as contemplated by the Operative Agreements to be conducted, has the requisite limited partnership power and authority to execute, deliver and perform its obligations under the Lessee Agreements, each Partnership Document to which the Lessee is or will be a party and each Pass Through Document to which the Lessee is or will be a party, and has conducted no business or operations prior to the date hereof (other than those associated with its organization and capitalization or as contemplated by the Operative Agreements), (ii) the General Partner is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware and has the power and authority to execute, deliver and perform its obligations under the Partnership Agreement and each other organizational document of the Partnership to which the General Partner is a party, (iii) the Limited Partner is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware and has the power and authority to execute, deliver and perform its obligations under the Partnership Agreement and each other organizational document of the Partnership to which the Limited Partner is a party, (iv) the General Partner and the Limited Partner are the only partners of the Partnership and TILC is the sole member of the General Partner and the Limited Partner; (v) the execution, delivery and performance by each Partner of the Partnership Agreement and each other organizational document of the Partnership to which such Partner is a party (A) have been duly authorized by all requisite limited liability company or member action of such Partner and (B) did not and do not (x) violate (i) any provision of law, statute, rule or regulation, or of the certificate of formation or limited liability company agreement or other constitutive documents of such Partner, (ii) any order of any governmental authority or (iii) any provision of any indenture, agreement or other instrument to which such Partner is a party or by which it or any of its property is or may be bound, (y) conflict with, result in a breach of or constitute (alone or with notice, or lapse of time or both) a default under any such indenture, agreement or other instrument or (z) result in the creation or imposition of any Lien upon any property or assets of such Partner, (vi) each of the Partnership Agreement and each other organizational document of the Partnership has been duly executed and delivered by each party thereto and constitutes a legal, valid and binding obligation of each such party enforceable against such party in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity; 16 (b) each of the Lessee Agreements and each Pass Through Document to which the Lessee is a party have been duly authorized by all necessary limited partnership action of the Lessee and, if required, limited liability company action of each Partner, this Agreement has been duly executed and delivered (and in the case of the other Lessee Agreements, such other Lessee Agreements will on the Closing Date have been duly executed and delivered) by the General Partner in its capacity as the general partner of the Lessee, and constitutes (and in the case of the other Lessee Agreements, such other Lessee Agreements will on the Closing Date constitute) the legal, valid and binding obligations of the Lessee (assuming the due authorization, execution and delivery by each other party thereto), enforceable against the Lessee in accordance with their respective terms except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity; (c) the execution, delivery and performance by the Lessee of each Lessee Agreement and each Pass Through Document to which Lessee is a party and compliance by the Lessee with all of the provisions thereof do not and will not contravene any law or regulation, or any order, judgment, decree, determination or award of any court or governmental authority or agency applicable to or binding on the Lessee or any of its properties, or contravene the provisions of, or constitute a default by the Lessee under, or result in the creation of any Lien (except for Permitted Liens of the type described in clause (i), (ii) or (v) of the definition thereof) upon the property of the Lessee under its organizational documents or any indenture, mortgage, contract or other agreement or instrument to which the Lessee is a party or by which the Lessee or any of its properties may be bound or affected; (d) there are no proceedings pending or, to the knowledge of the Lessee, threatened against the Lessee or any Partner in any court or before any governmental authority or arbitration board or tribunal and neither the Lessee nor any Partner is subject to any order of any court or governmental authority or arbitration board or tribunal; (e) the unaudited balance sheet of the Lessee as at the Closing Date fairly presents, in conformity with generally accepted accounting principles applied on a pro forma basis, the pro forma financial position of the Lessee as of such date; (f) no consent, approval or authorization of, or filing, registration or qualification with, or the giving of notice to, any trustee or any holder of indebtedness of the Lessee or any governmental authority on the part of the Lessee is required in the United States, Canada or Mexico (subject to the proviso set forth below) in connection with the execution and delivery by the Lessee of the Lessee Agreements or the Pass Through Documents to which the Lessee is a party or in order for the Lessee to perform its obligations thereunder in accordance with the terms thereof, other than: (i) notices required to be filed with the STB and the Registrar General of Canada as described in Section 3.2(g), which notices shall have been filed on the Closing Date, (ii) as may be required under existing laws, ordinances, governmental rules and regulations to be obtained, given, accomplished or renewed at any time after the Closing Date in connection with the operation and maintenance of the Equipment, the Pledged Equipment, the Subleases and the Pledged Equipment Leases in accordance with the Operative Agreements that are routine in nature and are not normally applied for prior to the time they are required, and which the Lessee has no reason to believe will not be timely obtained, (iii) as may be required 17 under the Operative Agreements in connection with any refinancing of the Equipment Notes, (iv) as may be required under the Operative Agreements in consequence of any transfer of the Beneficial Interest or any transfer of ownership of the Equipment or the Pledged Equipment and (v) filing and recording to perfect the Liens under the Indenture and the Collateral Agency Agreement as required thereunder; provided, that the parties hereto agree that Lessee shall not be required to make any such filings or recordings in Mexico; (g) the Lease, the Lease Supplement, the Indenture and the Indenture Supplement (each in respect of the Units delivered on the Closing Date), the Collateral Agency Agreement (or a memorandum with respect to any or all of such documents), the TRLTII Bill of Sale, the Bill of Sale, the Pledged Equipment Bill of Sale, the TRLTII Pledged Equipment Assignment, the TRLTII Assignment and the Assignment will on or before the Closing Date be duly filed with the STB pursuant to 49 U.S.C. Section 11301 and deposited with the Registrar General of Canada pursuant to Section 105 of the Canada Transportation Act, and appropriate Personal Property Security Act filings will be filed on or before the Closing Date in the provinces of Canada where any Sublessee which is organized under the laws of Canada or any province thereof has its chief executive office, and such filing with the STB pursuant to 49 U.S.C. Section 11301, such deposit with the Registrar General of Canada and such other filings will under the laws of the United States and Canada perfect the Owner Trust's, the Indenture Trustee's and the Collateral Agent's rights in such Operative Agreements, the Units described on Schedule 1-A hereto, the Pledged Units, the Subleases and the Pledged Equipment Leases and no other filing, recording or deposit with, or giving of notice to any other U.S. federal, state or local government or Canadian national or provincial government or agency thereof, or any other action, is necessary in order to protect the rights of the Owner Trust, the Indenture Trustee and the Collateral Agent in such Operative Agreements or in such Units, Pledged Units, Subleases and Pledged Equipment Leases in the United States, any state thereof or the District of Columbia or Canada or any province thereof; (h) the Equipment described on Schedule 1-A hereto is covered by the insurance required by Section 12 of the Lease and the Pledged Equipment is covered by the insurance required by Section 6.4 of the Collateral Agency Agreement, and all premiums due prior to the Closing Date in respect of such insurance shall have been paid in full and such insurance is in full force and effect; (i) no Lease Default or Manager Default has occurred and is continuing and, to the knowledge of the Lessee, no Event of Loss, Pledged Unit Event of Loss or event that, with the giving of notice, the passage of time or both, would constitute an Event of Loss or a Pledged Unit Event of Loss, has occurred; (j) none of the Lessee, any Partner or the Pass Through Trustee is an "investment company" or an "affiliated person" of an "investment company" within the meaning of the Investment Company Act of 1940, as amended; (k) the acquisition and holding by the Owner Participant of the Beneficial Interest and the consummation of the transactions contemplated under this Agreement and each other Operative Agreement and Pass Through Document will not constitute or result in a prohibited transaction within the meaning of Section 4975(c) of the Code or Section 406 of 18 ERISA and will not involve any transaction in connection with which a tax or a penalty could be imposed pursuant to Section 502(i) or ERISA or Section 4975 of the Code. The representation made by the Lessee in the preceding clause is made in reliance upon and subject to the accuracy of the representation of the Owner Participant in Section 3.5(h) and the accuracy of the representation of the Initial Purchasers set forth in Section 4(e) of the Certificate Purchase Agreement; (l) on the Closing Date, (i) the Lessee has, and shall pursuant to the Bill of Sale relating to the Equipment described on Schedule 1-A hereto convey to the Trust, all legal and beneficial title to such Equipment free and clear of all Liens except as set forth on Schedule 9 (other than Permitted Liens of the type described in clauses (ii) (with respect to the Existing Equipment Subleases), (iii), (iv) and (v) of the definition thereof, and such conveyance will not be void or voidable under any applicable law; (ii) TRLTII has, and shall pursuant to the Pledged Equipment Bill of Sale relating to the Pledged Equipment convey to the Partnership, all legal and beneficial title to such Pledged Equipment free and clear of all Liens except as set forth on Schedule 8 (other than Permitted Liens of the type described in clauses (ii) (with respect to Existing Pledged Equipment Leases), (iii), (iv) and (v) of the definition thereof), and such conveyance will not be void or voidable under any applicable law; and (iii) the Lessee has, and the Assignment to be delivered on the Closing Date shall assign to the Trust, all legal and beneficial title to the Existing Equipment Subleases and the Lessee has all legal and beneficial title to the Existing Pledged Equipment Leases, free and clear of all Liens except as set forth on Schedule 8 (other than in each case Permitted Liens of the type described in clauses (ii), (iii), (iv) and (v) of the definition thereof), and the Assignment will not be void or voidable under any applicable law; (m) the written information provided by the Lessee or on behalf of the Lessee in the offering circular dated August 10, 2004 (the "Offering Circular") does not contain any untrue statement of a material fact and does not omit a material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading; the assumptions and related financial information relating to the proposed business and operations of the Lessee and the Equipment and Pledged Equipment which are contained in the Offering Circular have been prepared in good faith based upon information that the Lessee deems fair and reasonable, and there are no statements or conclusions therein which are based on or include information known to the Lessee to be misleading in any material respect or which fail to take into account material information known to the Lessee regarding the matters stated therein; certain information contained in the Offering Circular (e.g. statistical information relating to renewal and remarketing of railcars, potential increases in absolute or nominal railcar lease rates, anticipated utilization, and maintenance costs) is based on the historical experience of TILC; and subject to the foregoing, there can be no assurance that past experience will be indicative of future performance with respect to these or other operating and marketing factors set forth in the Offering Circular; (n) the Lessee and the Partners are not engaged in the business of extending credit for the purposes of purchasing or carrying margin stock, and no proceeds of the Equipment Note or the Owner Participant's Commitment as contemplated by this Agreement and the other Operative Agreements will be used by the Lessee or any Partner for a purpose which violates, or would be inconsistent with, Section 7 of the Securities Exchange Act of 1934, as amended, or 19 Regulations T, U and X of the Federal Reserve System; terms for which meanings are provided in Regulations T, U and X of the Federal Reserve System or any regulations substituted therefor, as from time to time in effect, are used in this Section 3.2(n) with such meanings; (o) the Lessee is not in violation of any term of any of its organizational documents or in violation or breach of or in default under any other agreement, contract or instrument to which it is a party or by which it or any of its property may be bound; (p) the Lessee is in compliance with all laws, ordinances, governmental rules, regulations, orders, judgments, decrees, determinations and awards to which it is subject and the Lessee has obtained all required licenses, permits, franchises and other governmental authorizations material to the conduct of its business; (q) on the Closing Date, all sales, use or transfer taxes, if any, due and payable upon the purchase of the Equipment described on Schedule 1-A hereto by the Lessee from TRLTII and by the Trust from the Lessee and upon the lease thereof by the Trust to the Lessee and, if applicable, upon the assignment of the Existing Equipment Subleases from TRLTII to the Lessee and by the Lessee to the Trust and upon the purchase of the Pledged Equipment by the Lessee from TRLTII and, if applicable, upon the assignment of the Existing Pledged Equipment Leases from TRLTII to the Lessee will have been paid or such transactions will then be exempt from any such taxes, and the Lessee will cause any required forms or reports in connection with such taxes to be filed in accordance with applicable laws and regulations; (r) no broker's or finder's or placement fee or commission will be payable with respect to the transactions contemplated by the Operative Agreements as a result of any action by the Lessee, except for the fees of the Arrangers, which shall be included in Transaction Costs as provided in this Agreement, and the Lessee agrees that it will hold the Participants, the Policy Provider, the Indenture Trustee, the Pass Through Trustee, the Trust and the Owner Trustee harmless from any claim, demand or liability for broker's or finder's or placement fees or commission alleged to have been incurred as a result of any action by the Lessee in connection with this transaction; (s) (i) each Unit delivered on the Closing Date, taken as a whole, and each major component thereof complies in all material respects with all applicable laws and regulations, all requirements of the manufacturer for maintaining in full force and effect any applicable warranties and the requirements, if any, of any applicable insurance policies, conforms with the specifications for such Unit contained in the Appraisal referred to in Section 4.3(a) hereof (to the extent a copy of such Appraisal or a relevant excerpt therefrom has been delivered to the Lessee) and is substantially complete such that it is ready and available to operate in commercial service and otherwise perform the function for which it was designed; and the railcar identification marks shown on Schedule 1-A are the marks presently used on the Units of Equipment set forth on Schedule 1-A and (ii) each Pledged Unit, taken as a whole, and each major component thereof, complies in all material respects with all applicable laws and regulations, all requirements of the manufacturer for maintaining in full force and effect any applicable warranties, and the requirements, if any, of any applicable insurance policies, conforms with the specifications for such Pledged Unit contained in the Appraisal referred to in Section 4.3(a) hereof (to the extent a copy of such Appraisal or a relevant excerpt therefrom has 20 been delivered to the Lessee) and is substantially complete such that it is ready and available to operate in commercial service and otherwise perform the function for which it was designed; and the railcar identification marks shown on Schedule 1-B are the marks presently used on the Pledged Units; (t) neither the Lessee nor any Partner is subject to regulation as a "holding company," an "affiliate" of a "holding company," or a "subsidiary company" of a "holding company," within the meaning of the Public Utility Holding Company Act of 1935, as amended; (u) all of the Units delivered on the Closing Date are subject to sublease by Sublessees under the Existing Equipment Subleases and all of the Pledged Units delivered on the Closing Date are subject to lease by Pledged Equipment Lessees under the Existing Pledged Equipment Leases, and each such Sublease and Pledged Equipment Lease contains rental and other terms which are no different, taken as a whole, from those for similar railcars in the TILC Fleet; (v) each item or Unit of Equipment described on Schedule 1-A constitutes Eligible Equipment and each item or Unit of Pledged Equipment described on Schedule 1-B constitutes Eligible Pledged Equipment; (w) (i) each of the Subleases and each of the Pledged Equipment Leases is freely assignable from TRLTII to the Lessee, from the Lessee to the Owner Trust and from the Owner Trust to any other Person (including, without limitation, any transferee in connection with the Indenture Trustee's or Owner Trustee's exercise of rights or remedies under the Lease or the Collateral Agency Agreement, as applicable) or, if any Sublease or Pledged Equipment Lease is not freely assignable, then consents to such assignments that are satisfactory to each of the Participants and the Policy Provider have been obtained prior to the Closing Date, (ii) no assignment described in this Section 3.2 (w)(x) is void or voidable or (y) will result in a claim for damages or reduction in rental or other payments, in each case pursuant to the terms and conditions of any such Sublease or Pledged Equipment Lease and (iii) no consent, approval or filing is required under the Subleases in connection with the execution and delivery of the Operative Agreements; (x) [Reserved]. (y) (i) none of the Units or the Pledged Units are subject to a purchase option under the terms of the applicable Sublease or Pledged Equipment Lease except for the Units and Pledged Units listed on Schedule 7-A attached hereto; (ii) each such purchase option is for fair market value (at the time of such purchase); (z) after giving effect to the transfers contemplated under the Operative Agreements and the Partnership Documents, (i) the Subleases and Pledged Equipment Leases in effect on the Closing Date and each of the riders or schedules with respect thereto are not subject to and do not cover railcars financed in, any financing or securitization transaction other than the transactions contemplated by the Operative Agreements and the Partnership Documents, (ii) except as set forth on Schedule 9 attached hereto, the Subleases and Pledged Equipment Leases in effect on the Closing Date conform in all respects with the terms and conditions described in 21 the definitions of Permitted Sublease (other than clause (vi) thereof) and Permitted Pledged Equipment Lease (other than clause (v) thereof), respectively, and (iii) except as set forth on Schedule 9 attached hereto, none of the Subleases or Pledged Equipment Leases are in default (by reason of the lessee or lessor thereunder); (aa) assuming the accuracy of the representations and warranties of the Initial Purchaser contained in the Certificate Purchase Agreement and its compliance with the agreements set forth therein, it is not necessary, in connection with the issuance and sale of the Pass Through Certificates to the Initial Purchaser and the offer, resale and delivery of the Pass Through Certificates by the Initial Purchaser in the manner contemplated by the Certificate Purchase Agreement and the Offering Circular (as defined in the Certificate Purchase Agreement), to register the Pass Through Certificates under the Securities Act or to qualify the Indentures under the Trust Indenture Act; (bb) the Lessee is solvent and will not be rendered insolvent by the transactions contemplated by the Operative Agreements and, after giving effect to such transactions, the Lessee will not be left with an unreasonably small amount of capital with which to engage in its business, and the Lessee does not intend to incur, nor believes that it has incurred, debts beyond its ability to pay as they mature; and (cc) all written information provided by the Lessee or any Affiliate of the Lessee to the Appraiser with respect to the Units, the Pledged Units, the Subleases and the Pledged Equipment Leases (as described or listed on Schedules 1-A, 1-B, 1-C, and 1-D, respectively) is true to correct in all material respects. All written information provided by the Lessee or any Affiliate of Lessee to Deloitte & Touche LLP with respect to the Subleases and the Pledged Equipment Leases (as described or listed on Schedules 1-C and 1-D, respectively) is true and correct in all material respects and accurately reflects the terms of the Subleases and the Pledged Equipment Leases. To the extent the written information referred to in this clause (cc) was provided to the Appraiser, Deloitte & Touche LLP and the Arranger, in each case for their use in connection with their services on the date hereof rendered as contemplated hereby, such entities had been provided with the same written information (or relevant portions thereof). Section 3.3 Representations and Warranties of the Indenture Trustee. The Indenture Trustee represents and warrants to the Owner Participant, the Trust, the Owner Trustee, the Pass Through Trustee, the Policy Provider, TILC, TRLTII, Trinity and the Lessee that, as of the date hereof and as of the Closing Date: (a) the Indenture Trustee is a Delaware banking corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has the full corporate power, authority and legal right under the laws of the State of Delaware pertaining to its banking, trust and fiduciary powers to execute, deliver and perform its obligations under each of the Indenture Trustee Agreements; (b) the execution, delivery and performance by the Indenture Trustee of each of the Indenture Trustee Agreements have been duly authorized by the Indenture Trustee and will not violate any applicable federal or Delaware law governing its banking or trust powers or 22 its charter documents or bylaws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it or any of its properties may be bound or affected; (c) this Agreement has been duly executed and delivered and constitutes, and each of the other Indenture Trustee Agreements, when executed and delivered, will constitute (assuming the due authorization, execution and delivery by each other party thereto) the legal, valid and binding obligation of the Indenture Trustee, enforceable against the Indenture Trustee in accordance with its terms except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity; (d) there are no proceedings pending or, to the knowledge of the Indenture Trustee, threatened, and to the knowledge of the Indenture Trustee there is no existing basis for any such proceedings, against or affecting the Indenture Trustee in or before any court or before any governmental authority or arbitration board or tribunal which, individually or in the aggregate, if adversely determined, might impair the ability of the Indenture Trustee to perform its obligations under the Indenture Trustee Agreements; (e) no authorization or approval or other action by, and no notice to or filing with, any stockholder, trustee or holder of indebtedness or any federal or Delaware state governmental authority or regulatory body governing the Indenture Trustee in its trust capacity, is required for the due execution, delivery and performance by the Indenture Trustee of the Indenture Trustee Agreements, except as have been previously obtained, given or taken; (f) the Indenture Trustee is not in default under any of the Indenture Trustee Agreements; and (g) neither the Indenture Trustee, nor any Person authorized to act on behalf of the Indenture Trustee, has directly or indirectly offered any interest in the Trust Estate or the Equipment Note or any security similar to either thereof related to this transaction for sale to, or solicited offers to buy any of the same from, or otherwise approached or negotiated with respect to any of the same with, any Person other than the Pass Through Trustee and the Initial Purchasers. Section 3.4 Representations, Warranties and Covenants Regarding Beneficial Interest, Equipment Note and Pass Through Certificates. (a) Owner Trustee and Trust Company. Each of the Owner Trustee and the Trust Company represents and warrants to the Lessee, the Indenture Trustee, the Pass Through Trustee, the Policy Provider, TILC, TRLTII, Trinity and the Owner Participant that, as of the date hereof and as of the Closing Date, except as expressly provided in the Operative Agreements, neither the Owner Trustee, nor the Trust Company nor any Person authorized or employed by the Owner Trustee or the Trust Company as agent or otherwise has directly or indirectly offered or sold any interest in the Beneficial Interest, the Equipment Note, the Pass Through Certificates or any part thereof, or in any similar security or lease, the offering of which for the purposes of the Securities Act would be deemed to be part of the same offering as the offering of the Beneficial Interest, the Equipment Note, the Pass Through Certificates or any part 23 thereof or solicited any offer to acquire any of the same in violation of the registration requirements of Section 5 of the Securities Act. (b) Lessee. The Lessee represents and warrants to the Trust, the Owner Trustee, the Indenture Trustee, the Policy Provider, the Owner Participant and the Pass Through Trustee that, as of the date hereof and as of the Closing Date, neither the Lessee nor any Person authorized or employed by the Lessee as agent or otherwise has directly or indirectly offered or sold any interest in the Beneficial Interest, the Equipment Note, the Pass Through Certificates or any part thereof, the offering of which for the purposes of the Securities Act would be deemed to be part of the same offering as the offering of the Beneficial Interest, the Equipment Note, the Pass Through Certificates or any part thereof or solicited any offer to acquire any of the same in violation of the registration requirements of Section 5 of the Securities Act. (c) TRLTII. TRLTII represents and warrants to the Trust, the Owner Trustee, the Indenture Trustee, the Policy Provider, the Owner Participant and the Pass Through Trustee that, as of the date hereof and as of the Closing Date, neither TRLTII nor any Person authorized or employed by TRLTII as agent or otherwise has directly or indirectly offered or sold any interest in the Beneficial Interest, the Equipment Note, the Pass Through Certificates or any part thereof, the offering of which for the purposes of the Securities Act would be deemed to be part of the same offering as the offering of the Beneficial Interest, the Equipment Note, the Pass Through Certificates or any part thereof or solicited any offer to acquire any of the same in violation of the registration requirements of Section 5 of the Securities Act. (d) TILC. TILC represents and warrants to the Trust, the Owner Trustee, the Indenture Trustee, the Policy Provider, the Owner Participant and the Pass Through Trustee that, as of the date hereof and as of the Closing Date, neither TILC nor any Person authorized or employed by TILC as agent or otherwise has directly or indirectly offered or sold any interest in the Beneficial Interest, the Equipment Note, the Pass Through Certificates or any part thereof, the offering of which for the purposes of the Securities Act would be deemed to be part of the same offering as the offering of the Beneficial Interest, the Equipment Note, the Pass Through Certificates or any part thereof or solicited any offer to acquire any of the same in violation of the registration requirements of Section 5 of the Securities Act. (e) Owner Participant. The Owner Participant represents and warrants to the Trust, the Owner Trustee, the Indenture Trustee, the Policy Provider, TILC, TRLTII, Trinity, the Lessee and the Pass Through Trustee that, as of the date hereof and as of the Closing Date, neither the Owner Participant nor any Person authorized or employed by the Owner Participant as agent or otherwise has directly or indirectly offered or sold any interest in the Beneficial Interest, the Equipment Note, the Pass Through Certificates or any part thereof, or in any similar security or lease, the offering of which for the purposes of the Securities Act would be deemed to be part of the same offering as the offering of the Beneficial Interest, the Equipment Note, the Pass Through Certificates or any part thereof or solicited any offer to acquire any of the same in violation of the registration requirements of Section 5 of the Securities Act. (f) Pass Through Trustee. The Pass Through Trustee represents and warrants to the Trust, the Owner Trustee, the Indenture Trustee, the Policy Provider, TILC, TRLTII, Trinity, the Lessee and the Owner Participant that, as of the date hereof and as of the Closing 24 Date, neither the Pass Through Trustee nor any Person authorized or employed by the Pass Through Trustee as agent or otherwise has directly or indirectly offered or sold any interest in the Beneficial Interest, the Equipment Note, the Pass Through Certificates or any part thereof, the offering of which for the purposes of the Securities Act would be deemed to be part of the same offering as the offering of the Beneficial Interest, the Equipment Note, the Pass Through Certificates or any part thereof or solicited any offer to acquire any of the same in violation of the registration requirements of Section 5 of the Securities Act. (g) Trinity. Trinity represents and warrants to the Trust, the Owner Trustee, the Indenture Trustee, the Policy Provider, TILC, TRLTII, the Lessee and the Owner Participant that, as of the date hereof and as of the Closing Date, neither Trinity nor any Person authorized or employed by Trinity as agent or otherwise has directly or indirectly offered or sold any interest in the Beneficial Interest, the Equipment Note, the Pass Through Certificates or any part thereof, the offering of which for the purposes of the Securities Act would be deemed to be part of the same offering as the offering of the Beneficial Interest, the Equipment Note, the Pass Through Certificates or any part thereof or solicited any offer to acquire any of the same in violation of the registration requirements of Section 5 of the Securities Act. (h) Future Actions. Each of the Owner Trustee, the Trust Company, the Owner Participant, the Lessee, TILC, TRLTII, Trinity, the Indenture Trustee and the Pass Through Trustee agrees, as to its own actions only, severally but not jointly, that neither the Owner Trustee, the Trust Company, the Owner Participant, the Lessee, TILC, TRLTII, the Indenture Trustee nor the Pass Through Trustee nor anyone acting on behalf of the Owner Trustee, the Trust Company, the Owner Participant, the Lessee, TILC, TRLTII, the Indenture Trustee or the Pass Through Trustee will offer the Beneficial Interest, the Equipment Note, the Pass Through Certificates or any part thereof or any similar interest for issue or sale to any prospective purchaser, or solicit any offer to acquire any of the Beneficial Interest, the Equipment Note, the Pass Through Certificates or any part thereof so as to cause Section 5 of the Securities Act to apply to the issuance and sale of the Beneficial Interest, the Equipment Note, the Pass Through Certificates or any part thereof. Section 3.5 Representations and Warranties of the Owner Participant. The Owner Participant represents and warrants to the Trust, the Owner Trustee, the Indenture Trustee, the Pass Through Trustee, the Policy Provider, TILC, TRLTII, Trinity and the Lessee that, as of the date hereof: (a) the Owner Participant is an Ohio corporation duly formed, validly existing and in good standing under the laws of the State of Ohio and has full corporate power and authority to carry on its business as now conducted; (b) the Owner Participant has the requisite corporate power and authority to execute, deliver and perform its obligations under the Owner Participant Agreements, and the execution, delivery and performance by it thereof do not and will not contravene any law or regulation, or any order of any court or governmental authority or agency applicable to or binding on the Owner Participant or any of its properties, or contravene the provisions of, or constitute a default under or breach of, or result in the creation or imposition of any Lien (other than the Lien granted to the Indenture Trustee under and pursuant to the Indenture) upon the 25 Equipment, Subleases or any other portion of the Trust Estate under, its certificate of incorporation, bylaws or any indenture, mortgage, contract or other agreement or instrument to which the Owner Participant is a party or by which it or any of its properties may be bound or affected; (c) the Owner Participant Agreements have been duly authorized by all necessary actions on the part of the Owner Participant, do not require any approval not already obtained of the partners of the Owner Participant or any approval or consent not already obtained of any trustee or holders of indebtedness or obligations of the Owner Participant, have been, or on or before the Closing Date will be, duly executed and delivered by the Owner Participant and (assuming the due authorization, execution and delivery by each other party thereto) constitute, or will constitute, the legal, valid and binding obligations of the Owner Participant, enforceable against the Owner Participant in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity; (d) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery or performance by the Owner Participant of the Trust Agreement, the Tax Indemnity Agreement or this Agreement; (e) the Trust Estate is free and clear of any Lessor's Lien attributable to the Owner Participant; (f) there are no pending or, to the Owner Participant's knowledge, threatened actions or proceedings against the Owner Participant before any court or administrative agency that would reasonably be expected to materially adversely affect the Owner Participant's ability to perform its obligations under the Trust Agreement, the Tax Indemnity Agreement or any other Operative Agreement to which the Owner Participant is a party; (g) as of the Closing Date, the Owner Participant is purchasing the Beneficial Interest to be acquired by it for its own account with no present intention of distributing such Beneficial Interest or any part thereof in any manner which would violate the Securities Act, but without prejudice, however, to the right of the Owner Participant at all times to sell or otherwise dispose of all or any part of such Beneficial Interest in compliance with the Securities Act and any state securities or "blue sky" laws; provided, however, that subject to the provisions of Section 6.1, the disposition of the Beneficial Interest shall at all times be within the Owner Participant's control. The Owner Participant acknowledges that its Beneficial Interest has not been registered under the Securities Act, and that neither the Owner Participant, the Owner Trustee, Trust Company, the Lessee, TRLTII nor TILC contemplates filing, or is legally required to file, any such registration statement; notwithstanding the foregoing, the Owner Participant makes no representation that the Beneficial Interest is a "security" within the meaning of such term under the Securities Act; (h) with respect to the source of the amount to be invested by the Owner Participant to acquire the Beneficial Interest and to pay any Transaction Costs as required under 26 this Agreement, no part of such amount constitutes assets of any employee benefit plan subject to Title I of ERISA or Section 4975 of the Code; and (i) except for fees payable to the advisor to the Owner Participant, no broker's or finder's or placement fee or commission will be payable with respect to the transactions contemplated by the Operative Agreements as a result of any action by the Owner Participant, and the Owner Participant agrees that it will hold TILC, TRLTII, the Lessee, the Indenture Trustee, the Loan Participant and the Owner Trustee harmless from any claim, demand or liability for broker's or finder's or placement fees or commission alleged to have been incurred as a result of any action by the Owner Participant in connection with this transaction. Section 3.6 Representations and Warranties of TILC. TILC represents and warrants to each of the Trust, the Owner Trustee, the Indenture Trustee, the Policy Provider and the Participants, as of the date hereof and as of the Closing Date (which representations, to the extent the same relate to the Equipment, the Subleases, the Pledged Equipment Leases or the assignment and conveyance of the Equipment or Subleases to the Trust, are made by TILC in its capacity as "Manager" for and on behalf of TRLTII, the transferor thereof): (a) TILC is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, is duly licensed or qualified and in good standing in each jurisdiction in which the failure to so qualify would reasonably be expected to have a material adverse effect on its ability to carry on its business as now conducted or as contemplated to be conducted or to execute, deliver and perform its obligations under the TILC Agreements and the Partnership Documents to which it is or will be a party, has the power and authority to carry on its business as now conducted and as contemplated to be conducted, and has the requisite power and authority to execute, deliver and perform its obligations under the TILC Agreements and the Partnership Documents to which it is or will be a party; (b) the TILC Agreements have been duly authorized by all necessary corporate action, executed and delivered by TILC, and (assuming the due authorization, execution and delivery by each other party thereto) constitute the legal, valid and binding obligations of TILC, enforceable against TILC in accordance with their respective terms except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity; (c) the execution, delivery and performance by TILC of each TILC Agreement and compliance by TILC with all of the provisions thereof do not and will not contravene or, in the case of clause (iii), constitute (alone or with notice, or lapse of time or both) a default under or result in any breach of, or result in the creation or imposition of any Lien upon any property of TILC pursuant to, (i) any law or regulation, or any order, judgment, decree, determination or award of any court or governmental authority or agency applicable to or binding on TILC or any of its properties, or (ii) the provisions of its certificate of incorporation or bylaws or (iii) any indenture, mortgage, contract or other agreement or instrument to which TILC is a party or by which TILC or any of its properties may be bound or affected except, with respect to clause (iii), where such contravention, default or breach would not reasonably be expected to materially adversely affect TILC's ability to perform its obligations under the TILC 27 Agreements or any Sublease or Pledged Equipment Leases to which TILC is a party or materially adversely affect its financial condition or business; (d) there are no proceedings pending or, to the knowledge of TILC, threatened against TILC in any court or before any governmental authority or arbitration board or tribunal that, if adversely determined, would reasonably be expected to materially adversely affect TILC's ability to perform its obligations under the TILC Agreements or Subleases or Pledged Equipment Leases to which TILC is a party or materially adversely affect its financial condition or business; (e) TILC is not in violation of (x) any term of any charter instrument or bylaw or (y) in violation or breach of or in default under any other agreement or instrument to which it is a party or by which it or any of its property may be bound except in the case of clause (y) where such violation, breach or default would not reasonably be expected to materially adversely affect TILC's ability to perform its obligations under the TILC Agreements or materially adversely affect its financial condition or business. TILC is in compliance with all laws, ordinances, governmental rules, regulations, orders, judgments, decrees, determinations and awards to which it is subject, the failure to comply with which would reasonably be expected to have a material and adverse effect on its operations or condition, financial or otherwise, or would impair the ability of TILC to perform its obligations under the TILC Agreements, and has obtained all required licenses, permits, franchises and other governmental authorizations material to the conduct of its business; (f) no consent, approval or authorization of, or filing, registration or qualification with, or the giving of notice to, any trustee or any holder of indebtedness of TILC or any governmental authority on the part of TILC is required in the United States in connection with the execution and delivery by TILC of the TILC Agreements or any Sublease or Pledged Equipment Lease to which TILC is a party, or is required to be obtained in order for TILC to perform its obligations thereunder in accordance with the terms thereof, other than (i) as may be required under existing laws, ordinances, governmental rules and regulations to be obtained, given, accomplished or renewed at any time after the Closing Date in connection with the performance of its obligations under the TILC Agreements and which are routine in nature and are not normally applied for prior to the time they are required, and which TILC has no reason to believe will not be timely obtained or (ii) as may be required under the Operative Agreements in consequence of any transfer of ownership of the Equipment or the Pledged Equipment occurring after the Closing Date; (g) to the best knowledge of TILC, no casualty event or other event that may constitute an Event of Loss under the Lease or a Pledged Unit Event of Loss under the Collateral Agency Agreement has occurred as of the date of this Agreement with respect to any Unit or Pledged Unit delivered on the Closing Date; (h) (i) TRLTII has, and the TRLTII Bill of Sale to be delivered on the Closing Date shall convey to the Lessee, all legal and beneficial title to the Units which are being delivered on the Closing Date, free and clear of all Liens (other than Permitted Liens of the type described in clause (ii) below with respect to the Existing Equipment Subleases, and in clauses (iii), (iv), (v) and (viii) of the definition thereof), and such conveyance will not be void or voidable under any applicable law; (ii) TRLTII has, and the TRLTII Assignment to be delivered 28 on the Closing Date shall assign to the Lessee, all legal and beneficial title to the Existing Equipment Subleases, free and clear of all Liens (other than Permitted Liens of the type described in clauses (ii), (iii), (iv), (v) and (viii) of the definition thereof), and such assignment will not be void or voidable under any applicable law; (iii) all of the Units being delivered on the Closing Date other than an immaterial amount shall be subject to sublease by the Sublessees under the Existing Equipment Subleases on rental and other terms which are no different, taken as a whole, from those for similar railcars in the rest of the TILC Fleet (iv) TRLTII shall have, and the TILC Pledged Equipment Bill of Sale to be delivered on the Closing Date shall convey to the Lessee, all legal and beneficial title to the Pledged Units which are being delivered on the Closing Date, free and clear of all Liens (other than Permitted Liens of the type described in clauses (ii), (iii), (iv) and (v) of the definition thereof), and such conveyance will not be void or voidable under any applicable law; (v) TRLTII shall have, and the TRLTII Pledged Equipment Assignment to be delivered on the Closing Date shall assign to the Lessee, all legal and beneficial title to the Existing Pledged Equipment Leases, free and clear of all Liens (other than Permitted Liens of the type described in clauses (ii), (iii), (iv) and (v) of the definition thereof), and such assignment will not be void or voidable under any applicable law; and (vi) all of the Pledged Units shall be subject to lease by the Pledged Equipment Lessees under the Existing Pledged Equipment Leases on rental and other terms which are no different, taken as a whole, from those for similar railcars in the rest of the TILC Fleet; (i) (a) all sales, use or transfer taxes, if any, due and payable upon the sale of the Equipment and assignment of Existing Equipment Subleases by TRLTII to the Lessee on the Closing Date will have been paid or such transactions will then be exempt from any such taxes and TILC will cause any required forms or reports in connection with such taxes to be filed in accordance with applicable laws and regulations; and (b) all sales, use or transfer taxes, if any, due and payable upon the sale of the Pledged Equipment and assignment of Existing Pledged Equipment Leases by TRLTII to the Lessee will have been paid or such transactions will then be exempt from any such taxes and TRLTII will cause any required forms or reports in connection with such taxes to be filed in accordance with applicable laws and regulations; (j) all Units delivered on the Closing Date and all Pledged Units are substantially similar in terms of objectively identifiable characteristics that are relevant for purposes of the services to be performed by TILC under the Management Agreement to the equipment in the TILC Fleet; (k) in selecting the Units to be sold on the Closing Date to the Lessee pursuant to the TRLTII Bill of Sale and in selecting the Pledged Units to be sold to the Lessee pursuant to the TRLTII Pledged Equipment Bill of Sale, TRLTII has not discriminated against the Lessee in a negative fashion when such Units and Pledged Units are compared with the other equipment in the TILC Fleet; (l) the written information provided by TILC or TRLTII or on behalf of TRLTII in the Offering Circular does not contain any untrue statement of a material fact and does not omit a material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading; the assumptions and related financial information relating to the proposed business and operations of TILC and the Equipment which are contained in the Offering Circular have been prepared in good faith based 29 upon information that TILC deems fair and reasonable, and there are no statements or conclusions therein which are based on or include information known to TILC to be misleading in any material respect or which fail to take into account material information known to TILC regarding the matters stated therein; certain information contained in the Offering Circular (e.g. statistical information relating to renewal and remarketing of railcars, potential increases in absolute or nominal railcar lease rates, anticipated utilization, and maintenance costs) is based on the historical experience of TILC; subject to the foregoing, there can be no assurance that past experience will be indicative of future performance with respect to these or other operating and marketing factors set forth in the Offering Circular; (m) Neither TILC nor TRLTII is in default under any Existing Equipment Subleases or Existing Pledged Equipment Leases (as applicable), and, to the best of TILC's and TRLTII's knowledge (as applicable), there are (i) no defaults by any Sublessee or Pledged Equipment Lessee thereunder existing as of the date hereof under the Existing Equipment Subleases or Existing Pledged Equipment Leases, except such defaults that are not payment defaults, except to a de minimus extent (but giving effect to any applicable grace periods) and are not material, (ii) no claims or liabilities arising as a result of the operation or use of any Unit described on Schedule 1-A hereto prior to the date hereof as to which the Lessor, as owner of the Units delivered on the Closing Date, would be liable and (iii) no claims or liabilities arising as a result of the operation or use of any Pledged Unit prior to the date hereof as to which the Lessee, as owner of the Pledged Units, would be liable (in each case, except for the ongoing maintenance obligations of the "lessor" provided for under full-service Subleases); (n) (i) the balance sheet of TILC as of March 31, 2004 and June 30, 2004, and the related statements of operations, stockholders' equity and cash flows for the periods then ended, and (ii) the balance sheet of TILC as of December 31, 2003 and the related statements of income and cash flows of TILC for the twelve month period ended on December 31, 2003, have been prepared in accordance with generally accepted accounting principles (except as may be stated in the notes thereto and except, with respect to interim financial statements, for yearend audit adjustments), consistently applied, and fairly set forth, in all material respects, the financial condition of TILC as of such dates and the results of their operations and cash flows for such periods; (o) Neither TILC nor TRLTII is engaged in the business of extending credit for the purposes of purchasing or carrying margin stock, and no proceeds of the Equipment Note or the Owner Participant's Commitment as contemplated by this Agreement and the other Operative Agreements will be used by TILC or TRLTII for a purpose which violates, or would be inconsistent with, Section 7 of the Securities Exchange Act of 1934, as amended, or Regulations T, U and X of the Federal Reserve System; terms for which meanings are provided in Regulations T, U and X of the Federal Reserve System or any regulations substituted therefor, as from time to time in effect, are used in this Section 3.6(q) with such meanings; (p) no Lease Default, Manager Default or event that, with the giving of notice, the passage of time or both, would constitute a Manager Default has occurred and is continuing; 30 (q) since December 31, 2003, there has not occurred a material adverse change in the business, assets or condition (financial or otherwise) or results of operations of TILC and its consolidated subsidiaries, taken as a whole; (r) (i) none of the Units or the Pledged Units are subject to a purchase option under the terms of the applicable Sublease or Pledged Equipment Lease except for the Units and Pledged Units listed on Schedule 7-A attached hereto; (ii) each such purchase option is for fair market value (at the time of such purchase); (s) assuming the accuracy of the representations and warranties of the Initial Purchaser contained in the Certificate Purchase Agreement and its compliance with the agreements set forth therein, it is not necessary, in connection with the issuance and sale of the Pass Through Certificates to the Initial Purchaser and the offer, resale and delivery of the Pass Through Certificates by the Initial Purchaser in the manner contemplated by the Certificate Purchase Agreement and the Offering Circular (as defined in the Certificate Purchase Agreement), to register the Pass Through Certificates under the Securities Act or to qualify the Indentures under the Trust Indenture Act; (t) based on TILC's review of mileage/usage records with respect to the Affected PPSA Units (as defined in Section 6.13), the Affected PPSA Units when used in Canada have been used predominantly on the rails of Canadian National Railway Company and/or Canadian Pacific Railway Company; and (u) all written information provided by TILC or any Affiliate of TILC to the Appraiser with respect to the Units, the Pledged Units, the Subleases and the Pledged Equipment Leases (as described or listed on Schedules 1-A, 1-B, 1-C, and 1-D, respectively) is true to correct in all material respects. All written information provided by TILC or any Affiliate of TILC to Deloitte & Touche LLP with respect to the Subleases and the Pledged Equipment Leases (as described or listed on Schedules 1-C and 1-D, respectively) is true and correct in all material respects and accurately reflects the terms of the Subleases and the Pledged Equipment Leases. To the extent the written information referred to in this clause (v) was provided to the Appraiser, Deloitte & Touche LLP and the Arranger, in each case for their use in connection with their services on the date hereof rendered as contemplated hereby, such entities had been provided with the same written information (or relevant portions thereof). Section 3.7 Representations and Warranties of TRLTII. TRLTII represents and warrants to the Indenture Trustee, the Trust, the Owner Trustee and the Participants, as of the date hereof: (a) TRLTII is a statutory trust duly organized, validly existing, and in good standing under the laws of the State of Delaware, is duly licensed or qualified and in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on its ability to carry on its business as now conducted or to execute, deliver and perform its obligations under the Partnership Documents to which it is or will be a party, has the power and authority to carry on its business as now conducted, and has the requisite power and authority to execute, deliver and perform its obligations under the TRLTII Agreements; 31 (b) the TRLTII Agreements have been duly authorized by all necessary corporate action, executed and delivered by TRLTII, and (assuming the due authorization, execution and delivery by each other party thereto) constitute the legal, valid and binding obligations of TRLTII, enforceable against TRLTII in accordance with their respective terms except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity; (c) the execution, delivery and performance by TRLTII of each TRLTII Agreement and compliance by TRLTII with all of the provisions thereof do not and will not contravene (i) any law or regulation, or any order of any court or governmental authority or agency applicable to or binding on TRLTII or any of its properties, or (ii) the provisions of, or constitute a default by TRLTII under, its certificate of trust or trust agreement or (iii) any indenture, mortgage, contract or other agreement or instrument to which TRLTII is a party or by which TRLTII or any of its properties may be bound or affected; (d) there are no proceedings pending or, to the knowledge of TRLTII, threatened against TRLTII in any court or before any governmental authority or arbitration board or tribunal; (e) TRLTII is not in violation of any term of any (x) charter instrument or operating agreement or (y) any other agreement or instrument to which it is a party or by which it may be bound except in the case of clause (y) where such violation would not materially adversely affect TRLTII's ability to perform its obligations under the TRLTII Agreements or materially adversely affect its financial condition or business. TRLTII is in compliance with all laws, ordinances, governmental rules and regulations to which it is subject, the failure to comply with which would have a material and adverse effect on its operations or condition, financial or otherwise, or would impair the ability of TRLTII to perform its obligations under the TRLTII Agreements, and has obtained all licenses, permits, franchises and other governmental authorizations material to the conduct of its business; and (f) no consent, approval or authorization of, or filing, registration or qualification with, or the giving of notice to, any trustee or any holder of indebtedness of TRLTII or any governmental authority on the part of TRLTII is required (x) in connection with the execution and delivery by TRLTII of the TRLTII Agreements, or (y) to be obtained in order for TRLTII to perform its obligations thereunder in accordance with the terms thereof, other than in the case of clause (y) those which are routine in nature and are not normally applied for prior to the time they are required, and which TRLTII has no reason to believe will not be timely obtained; and (g) TRLTII is solvent and will not be rendered insolvent by the transactions contemplated by the Operative Agreements and, after giving effect to such transactions, TRLTII will not be left with an unreasonably small amount of capital with which to engage in its business, and TRLTII does not intend to incur, nor believes that it has incurred, debts beyond its ability to pay as they mature. Section 3.8 Representations and Warranties of the Pass Through Trustee. The Pass Through Trustee represents and warrants to the Trust, the Owner Trustee, the Indenture Trustee, 32 the Policy Provider, the Owner Participant, TILC, TRLTII, Trinity and the Lessee that, as of the date hereof: (a) the Pass Through Trustee is a Delaware banking corporation duly organized and validly existing in good standing under the laws of the State of Delaware and has the full corporate power, authority and legal right under the laws of the State of Delaware pertaining to its banking, trust and fiduciary powers to execute, deliver and perform its obligations under the Pass Through Trustee Agreements and the Pass Through Documents to which it is a party; (b) this Agreement has been, and on the Closing Date, each of the other Pass Through Trustee Agreements will have been, duly authorized, executed and delivered by the Pass Through Trustee; this Agreement constitutes, and on the Closing Date, each of the other Pass Through Trustee Agreements will constitute, the legal, valid and binding obligations of the Pass Through Trustee, enforceable against the Pass Through Trustee in accordance with their respective terms except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity; (c) the execution, delivery and performance by the Pass Through Trustee of each of the Pass Through Trustee Agreements, the purchase by the Pass Through Trustee of the Equipment Note pursuant to this Agreement, and the issuance of the Pass Through Certificates pursuant to the Pass Through Trust Agreement, do not contravene any law, rule or regulation of any federal or Delaware governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers or any judgment or order applicable to or binding on the Pass Through Trustee and do not contravene or result in any breach of, or constitute a default under, or in the case of clause (ii) below, result in the creation or imposition of any Lien upon the Pass Through Trust Estate, (i) the Pass Through Trustee's charter documents or bylaws or (ii) any agreement or instrument to which the Pass Through Trustee is a party or by which it or any of its properties may be bound or affected; (d) neither the execution and delivery by the Pass Through Trustee of each of the Pass Through Trustee Agreements nor the consummation by the Pass Through Trustee of any of the transactions contemplated thereby, requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action with respect to, any federal or Delaware governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers; (e) there are no pending or, to its knowledge, threatened actions or proceedings against the Pass Through Trustee before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of the Pass Through Trustee to perform its obligations under any of the Pass Through Trustee Agreements; (f) the Pass Through Trustee is not in default under any Pass Through Trustee Agreement; 33 (g) the Pass Through Trustee does not directly or indirectly control, and is not directly or indirectly controlled by or under common control with, the Owner Participant, the Owner Trustee, the Initial Purchasers, TILC, TRLTII or the Lessee; (h) the Pass Through Trustee is purchasing the Equipment Note for the purposes contemplated by the Operative Agreements and the Pass Through Documents and not with a view to the transfer or distribution of any Equipment Note to any other Person, except as contemplated by the Operative Agreements and the Pass Through Documents; and (i) except for the issue and sale of the Pass Through Certificates contemplated hereby and by the other Pass Through Trustee Agreements, the Pass Through Trustee has not directly or indirectly offered any Equipment Note or Pass Through Certificate or any interest in or to the Trust Estate, the Trust Agreement or any similar interest for sale to, or solicited any offer to acquire any of the same from, anyone other than the Owner Trustee and the Owner Participant, and the Pass Through Trustee has not authorized anyone to act on its behalf to offer directly or indirectly any Equipment Note, any Pass Through Certificate or any interest in and to the Trust Estate, the Trust Agreement or any similar interest related to this transaction for sale to, or to solicit any offer to acquire any of the same from, any Person other than the Owner Trustee and the Owner Participant. Section 3.9 Representations and Warranties of Trinity. Trinity represents and warrants to the Owner Participant, Trust, the Owner Trustee, the Indenture Trustee, the Pass Through Trustee and the Policy Provider that, as of the date hereof: (a) Trinity is a corporation duly formed, validly existing and in good standing under the laws of the State of Delaware and has full corporate power and authority to carry on its business as now conducted; (b) Trinity has the requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement, and the execution, delivery and performance by it thereof do not and will not contravene any law or regulation, or any order of any court or governmental authority or agency applicable to or binding on Trinity or any of its properties, or contravene the provisions of, or constitute a default under or breach of, or result in the creation or imposition of any Lien (other than the Lien granted to the Indenture Trustee under and pursuant to the Indenture) upon the Equipment, Pledged Equipment, Subleases, Pledged Equipment Leases or any other portion of the Trust Estate or Collateral under, its Certificate of Incorporation, bylaws or any indenture, mortgage, contract or other agreement or instrument to which Trinity is a party or by which it or any of its properties may be bound or affected; (c) this Agreement has been duly authorized by all necessary actions on the part of Trinity, does not require any approval not already obtained by Trinity or any approval or consent not already obtained of any trustee or holders of indebtedness or obligations of Trinity, has been, or on or before the Closing Date will be, duly executed and delivered by Trinity and (assuming the due authorization, execution and delivery by each other party thereto) constitutes, or will constitute, the legal, valid and binding obligations of Trinity, enforceable against Trinity in accordance with their respective terms, except as enforceability may be limited by bankruptcy, 34 insolvency, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity; (d) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery or performance by Trinity of this Agreement; (e) there are no pending or, to Trinity's knowledge, threatened actions or proceedings against Trinity before any court or administrative agency that would reasonably be expected to materially adversely affect Trinity's ability to perform its obligations under this Agreement; (f) since December 31, 2003, there has not occurred a material adverse change in the business, assets, condition (financial or otherwise) or results of operations of Trinity and its consolidated subsidiaries, taken as a whole; and (g) (i) the balance sheet of Trinity as of March 31, 2004 and June 30, 2004, and the related statements of operations, stockholders' equity and cash flows for the periods then ended, and (ii) the balance sheet of Trinity as of December 31, 2003 and the related statements of income and cash flows of Trinity for the twelve month period ended on December 31, 2003, have been prepared in accordance with generally accepted accounting principles (except as may be stated in the notes thereto and except, with respect to interim financial statements, for yearend audit adjustments), consistently applied, and fairly set forth, in all material respects, the financial condition of Trinity as of such dates and the results of their operations and cash flows for such periods. Section 3.10 Representations and Warranties of the Policy Provider. The Policy Provider represents and warrants to the Lessee, TILC, TRLTII, Trinity, the Owner Participant, Trust, the Owner Trustee, the Indenture Trustee and the Pass Through Trustee that, as of the date hereof: (a) Organization and Licensing. The Policy Provider is a stock insurance corporation duly organized, validly existing and in good standing under the laws of the State of Wisconsin; (b) Corporate Power. The Policy Provider has the corporate power and authority to execute and deliver this Agreement and to perform all of its obligations hereunder; (c) Authorization; Approvals. All proceedings legally required for the execution, delivery and performance of this Agreement have been taken and all licenses, orders, consents or other authorizations or approvals of the Policy Provider's board of directors or stockholders or any governmental boards or bodies legally required for the enforceability of this Agreement have been obtained or are not material to the enforceability of this Agreement; (d) Enforceability. This Agreement constitutes, a legal, valid and binding obligation of the Policy Provider, enforceable in accordance with its terms, subject to (x) insolvency, liquidation, rehabilitation, reorganization, moratorium, receivership and other similar laws affecting creditors' rights generally and by general principles of equity and 35 (y) principles of public policy limiting the right to enforce the indemnification provisions contained therein and herein, insofar as such provisions relate to indemnification for liabilities arising under federal securities laws. (e) No Conflict. The execution by the Policy Provider of this Agreement will not, and the satisfaction of the terms hereof and thereof will not, conflict with or result in a breach of any of the terms, conditions or provisions of the certificate of incorporation or bylaws of the Policy Provider, or any restriction contained in any contract, agreement or instrument to which the Policy Provider is a party or by which it is bound, or constitute a default under any of the foregoing that would materially and adversely affect its ability to perform its obligations under this Agreement. Section 3.11 Opinion Acknowledgment. Each of the parties hereto, with respect to such party, expressly consents to the rendering by its counsel of the opinion referred to in Section 4.1 (e) and acknowledges that such opinion shall be deemed to be rendered at the request and upon the instructions of such party. SECTION 4. CLOSING CONDITIONS. Section 4.1 Conditions Precedent to Investment by Each Participant. The obligation of each Participant to make the investment specified with respect to such Participant in Section 2 on the Closing Date shall be subject to the satisfaction or waiver of the following conditions precedent (except that the obligations of any Person shall not be subject to such Person's own performance or compliance): (a) Execution of Operative Agreements. On or before the Closing Date, this Agreement, the Trust Agreement, the Lease, the Lease Supplement in respect of the Units delivered on the Closing Date, the Indenture, the Indenture Supplement in respect of the Units delivered on the Closing Date, the Equipment Note, the Pass Through Documents, the Management Agreement, the Insurance Agreement, the Transfer and Assignment Agreement, the Pledged Equipment Transfer and Assignment Agreement, the Pledged Equipment Bill of Sale, the TRLTII Pledged Equipment Assignment, the TRLTII Bill of Sale, the TRLTII Assignment, the Bill of Sale, the Assignment, the Collateral Agency Agreement, and the Administrative Services Agreement shall each be satisfactory in form and substance to such Participant, shall have been duly executed and delivered by the parties thereto (except that the execution and delivery of the documents referred to above (other than this Agreement) by a party hereto or thereto shall not be a condition precedent to such party's obligations hereunder), shall each be in full force and effect, and executed counterparts of each shall have been delivered to such Participant or its counsel on or before the Closing Date; and no event shall have occurred and be continuing that constitutes a Lease Default, a Manager Default, an Indenture Default or to the knowledge of any party hereto, an Event of Loss. (b) Recordation and Filing. On or before the Closing Date (except as expressly stated below), the Lessee shall have caused the Lease, the Lease Supplement, the Indenture and the Indenture Supplement (each in respect of Units delivered on the Closing Date), the Collateral Agency Agreement in respect of the Pledged Units delivered on the Closing Date, the Pledged Equipment Bill of Sale, the TRLTII Pledged Equipment Assignment, the TRLTII 36 Bill of Sale, the Bill of Sale, the TRLTII Assignment and the Assignment to be duly filed, recorded and deposited in memorandum form with the STB in conformity with 49 U.S.C. Section 11301 and with the Registrar General of Canada pursuant to Section 105 of the Canada Transportation Act, and all necessary actions shall have been taken to cause publication of notice of such deposit in The Canada Gazette in accordance with said Section 105 and all appropriate Uniform Commercial Code financing statements and Personal Property Security Act filings in respect of the interests of the Owner Trustee, Collateral Agent and Indenture Trustee under the Operative Agreements to be delivered on the Closing Date and to be filed where necessary or reasonably advisable within 10 days after the Closing Date, and the Lessee shall furnish the Indenture Trustee, the Policy Provider, the Owner Trustee, the Collateral Agent and each Participant proof thereof. Without limiting the representations and warranties set forth in any Operative Agreement, by such recording or filing of the Lease (or a financing statement or similar notice thereof), the Owner Trustee and the Lessee are not acknowledging or implying that the Lease constitutes a "security agreement" or creates a "security interest" within the meaning of the Uniform Commercial Code in any applicable jurisdiction. (c) Representations and Warranties of the Lessee. On the Closing Date, the representations and warranties of the Lessee contained in Section 3.2 and Section 3.4(b) hereof shall be true and correct as of the Closing Date as though then made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties were true and correct on and as of such earlier date), and each of the Trust, the Owner Trustee, the Indenture Trustee, the Policy Provider and the Participants shall have received an Officer's Certificate to such effect dated such date from the General Partner of the Lessee certifying to the foregoing matters, and the Lessee shall have performed and complied with all agreements and conditions herein contained which are required to be performed or complied with by the Lessee on or before said date. (d) Representations and Warranties of the Owner Trustee. On the Closing Date, the representations and warranties of the Trust Company and the Owner Trustee contained in Section 3.1 and Section 3.4(a) shall be true and correct as of the Closing Date as though then made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties were true and correct on and as of such earlier date), and each of the Lessee, the Indenture Trustee, the Policy Provider, TILC, TRLTII and the Participants shall have received an Officer's Certificate to such effect dated such date from the Trust Company (in respect of the Trust Company) and the Owner Trustee (in respect of the Owner Trustee), and the Trust Company and the Owner Trustee shall have performed and complied with all agreements and conditions herein contained which are required to be performed or complied with by the Trust Company and the Owner Trustee, respectively, on or before said date. (e) Opinions of Counsel. On the Closing Date, the Owner Trustee, the Indenture Trustee, the Policy Provider and each Participant shall have received the favorable written opinion of each of (i) Winston & Strawn LLP, special counsel for the Lessee, TILC, Trinity, and TRLTII, (A) substantially in the form of Exhibit E-1 and (B) regarding certain other matters, (ii) counsel for the Lessee, TILC, TRLTII and Trinity (which counsel shall be the Vice President of Legal Affairs of Trinity), substantially in the form of Exhibit E-2, (iii) Shipman & Goodwin LLP, counsel to the Owner Trustee, substantially in the form of Exhibit E-3, (iv) 37 Simpson, Thacher & Bartlett LLP, special counsel to the Owner Participant, substantially in the form of Exhibit E-4, (v) counsel of the Owner Participant (which counsel shall be the Associate Counsel and Assistant Secretary of the Owner Participant), substantially in the form of Exhibit E-5, (vi) Morris, James, Hitchens & Williams LLP, special counsel to the Indenture Trustee, Collateral Agent and Pass Through Trustee substantially in the form of Exhibit E-6, (vii) Alvord & Alvord, special STB counsel, substantially in the form of Exhibit E-7, (viii) Blake, Cassels & Graydon LLP, special Canadian counsel, substantially in the form of Exhibit E-8, (ix) counsel for the Policy Provider (which counsel shall be the Assistant General Counsel of the Policy Provider), substantially in the form of Exhibit E-9 and (x) Haynes & Boone, LLP, special counsel for the Lessee, substantially in the form of Exhibit E-10. (f) Title. On the Closing Date, after giving effect to the transactions contemplated hereby, (i) the Trust shall have all legal and beneficial title to each Unit to be delivered on the Closing Date, free and clear of all Liens (other than the interests of Sublessees under Existing Equipment Subleases and other than Permitted Liens of the type described in clauses (iii), (iv) and (v) of the definition thereof) and (ii) the Trust shall have received all right, title and interest of the Lessee in and to the Existing Equipment Subleases, free and clear of all Liens (other than Permitted Liens of the type described in clauses (ii), (iii), (iv) and (v) of the definition thereof). In addition, (i) the Lessee shall have all legal and beneficial title to each Pledged Unit to be delivered on the Closing Date, free and clear of all Liens (other than Permitted Liens of the type described in clauses (ii), (iii), (iv) and (v) of the definition thereof), (ii) the Lessee shall have received all right, title and interest of TRLTII in and to the Existing Pledged Equipment Leases, free and clear of all Liens (other than Permitted Liens of the type described in clauses (ii), (iii), (iv) and (v) of the definition thereof) and (iii) each Pledged Equipment Lessee under an Existing Pledged Equipment Lease shall have been notified of the assignment thereof to the Lessee. (g) Bills of Sale; Assignments. On the Closing Date, each of the following documents shall each have been duly executed and delivered: (i) the TRLTII Bill of Sale and the Bill of Sale, in each case in form and substance reasonably satisfactory to the Lessee, the Owner Trustee, the Indenture Trustee, the Policy Provider and the Pass Through Trustee, dated such date and covering the Units to be delivered on such date, (ii) the TRLTII Assignment and the Assignment, in each case in form and substance reasonably satisfactory to the Lessee, the Owner Trustee, the Indenture Trustee, the Policy Provider and the Pass Through Trustee, dated such date covering the Existing Equipment Subleases, (iii) the TRLTII Pledged Equipment Bill of Sale in form and substance reasonably satisfactory to the Lessee, the Owner Trustee, the Indenture Trustee, the Policy Provider and the Pass Through Trustee, dated such date and covering the Pledged Units to be delivered on such date, and (iv) the TRLTII Pledged Equipment Assignment in form and substance reasonably satisfactory to the Lessee, the Owner Trustee, the Indenture Trustee, the Policy Provider and the Pass Through Trustee, dated such date covering the Existing Pledged Equipment Leases. (h) Insurance Certificates. On or before the Closing Date, the Indenture Trustee, the Policy Provider and each Participant shall have received (x) each certificate relating to insurance that is required pursuant to Section 12 of the Lease and Section 6.4 of the Collateral Agency Agreement and (y) certificates from a nationally recognized insurance broker substantially in the forms attached hereto as Exhibits A-1 and A-2 with respect to the public 38 liability insurance required by Section 12.1 (b) of the Lease and Section 6.4 of the Collateral Agency Agreement. (i) Corporate, Partnership, Limited Liability Company and Other Organizational Documents. Each of the Participants shall have received such documents and evidence with respect to TILC, TRLTII, Trinity, the Lessee, the General Partner, the Limited Partner, the Owner Participant, the Pass Through Trustee, the Owner Trustee and the Indenture Trustee as the Participants may reasonably request in order to establish the consummation of the transactions contemplated by this Agreement including corporate charters and by-laws and other organizational documents, certificates of incumbency and evidence of the taking of all corporate, limited partnership and other proceedings in connection herewith or therewith and compliance with the conditions herein or therein. (j) No Threatened Proceeding. No action or proceeding shall have been instituted nor shall governmental action be threatened before any court or governmental agency, nor shall any order, judgment or decree have been issued or proposed to be issued by any court or governmental agency at the time of the Closing Date, to set aside, restrain, enjoin or prevent the completion and consummation of this Agreement, the Operative Agreements and the Pass Through Documents or the transactions contemplated hereby or thereby. (k) Representations and Warranties of the Owner Participant. On the Closing Date, the representations and warranties of the Owner Participant contained in Section 3.4(e) and Section 3.5 hereof shall be true and correct as of the Closing Date as though then made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties were true and correct on and as of such earlier date), and each of the Lessee, TILC, TRLTII, the Indenture Trustee, the Policy Provider and the Pass Through Trustee shall have received an Officer's Certificate to such effect dated such date from the Owner Participant, and the Owner Participant shall have performed and complied with all agreements and conditions herein contained which are required to be performed or complied with by the Owner Participant on or before said date. (l) Notice of Delivery. The Indenture Trustee, the Policy Provider and the Participants shall have received the Notice of Delivery described in Section 2.3(a). (m) Representations and Warranties of the Indenture Trustee. On the Closing Date, the representations and warranties of the Indenture Trustee contained in Section 3.3 hereof shall be true and correct as of the Closing Date as though then made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties were true and correct on and as of such earlier date), and each of the Lessee, TILC, TRLTII, the Trust, the Owner Trustee and the Participants shall have received an Officer's Certificate to such effect dated such date from the Indenture Trustee, and the Indenture Trustee shall have performed and complied with all agreements and conditions herein contained which are required to be performed or complied with by the Indenture Trustee on or before said date. (n) No Illegality. No change shall have occurred after the execution and delivery of this Agreement in applicable law or regulations thereunder or interpretations thereof 39 by regulatory authorities that, in the opinion of any Participant, the Policy Provider or their respective counsel, would make it illegal for such Participant or the Policy Provider, as the case may be, to enter into any transaction contemplated by the Operative Agreements or the Pass Through Documents. (o) Participants' Investments. (i) The Owner Participant shall have made available the Owner Participant's Commitment in the amount specified in, and otherwise in accordance with, Sections 2.2(a) and 2.3 and (ii) the Loan Participant shall have made available the Loan Participant's Commitment in the amount specified in, and otherwise in accordance with, Sections 2.2(b) and 2.3. (p) Consents. All approvals and consents of any trustees or holders of any indebtedness or obligations of the Lessee, TILC and TRLTII, if any, required to have been obtained in connection with the transactions contemplated by this Agreement, the other Operative Agreements and the Pass Through Documents shall have been duly obtained and be in full force and effect. (q) Governmental Actions. All actions, if any, required to have been taken on or prior to the Closing Date in connection with the transactions contemplated by this Agreement, the other Operative Agreements and the Pass Through Documents on the Closing Date shall have been taken by any governmental or political agency, subdivision or instrumentality of the United States, Canada and Mexico, and all orders, permits, waivers, exemptions, authorizations and approvals of such entities required to be in effect on the Closing Date in connection with the transactions contemplated by this Agreement and the other Operative Agreements on the Closing Date shall have been issued, and all such orders, permits, waivers, exemptions, authorizations and approvals shall be in full force and effect, on the Closing Date; provided, that the parties hereto agree that Lessee shall not be required to make any filings in Mexico with respect to the perfection of security interests in Mexico. (r) Financial Model. The Participants shall have received the financial model, including, without limitation, the projected cash flows and cash flow coverages satisfactory in form and substance to the Owner Participant. (s) Appointment of Representative. The Owner Trustee shall have authorized its representative, who shall be an individual designated by the Lessee and acceptable to the Owner Trustee, to accept the Units being delivered on the Closing Date from the Lessee and to deliver such Units to the Lessee. The Lessee shall have authorized its representative (who shall be the same individual designated by the Lessee under this Section 4.1(s)) to accept delivery of such Units from the Owner Trustee as Lessor pursuant to the Lease. (t) Solvency of the Lessee; Liquidity Reserve Account. The Lessee shall have furnished to the Participants and the Policy Provider an Officer's Solvency Certificate (substantially in the form attached hereto as Exhibit F) as to the solvency of the Lessee as of the Closing Date stating, among other things, that on the Closing Date (i) the Collection Account has a balance of $1,637,986 and (ii) the Liquidity Reserve Account has a balance of $4,163,243. 40 (u) Schedule of Subleases, Pledged Equipment Leases, Units and Pledged Units. The Participants, the Policy Provider and the Collateral Agent shall have received a schedule, certified by the Lessee and TRLTII, listing each Existing Equipment Sublease, the Sublessee under each thereof and the Units covered thereby. The Participants, the Policy Provider and the Collateral Agent shall have also received a schedule, certified by the Lessee and TRLTII, listing each Existing Pledged Equipment Lease, the Pledged Equipment Lessee under each thereof and the Pledged Units covered thereby. (v) [Reserved]. (w) Representations and Warranties of TILC. On the Closing Date, the representations and warranties of TILC contained in Section 3.4(d) and Section 3.6 hereof shall be true and correct as of the Closing Date as though then made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties were true and correct on and as of such earlier date), and each of the Trust, the Owner Trustee, the Indenture Trustee and the Participants shall have received an Officer's Certificate to such effect dated such date from TILC, and TILC shall have performed and complied with all agreements and conditions herein contained which are required to be performed or complied with by TILC on or before said date. (x) Representations and Warranties of TRLTII. On the Closing Date, the representations and warranties of TRLTII contained in Section 3.4(c) and Section 3.7 hereof shall be true and correct as of the Closing Date as though then made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties were true and correct on and as of such earlier date), and each of the Trust, the Owner Trustee, the Indenture Trustee and the Participants shall have received an Officer's Certificate to such effect dated such date from TRLTII, and TRLTII shall have performed and complied with all agreements and conditions herein contained which are required to be performed or complied with by TRLTII on or before said date. (y) Representations and Warranties of the Pass Through Trustee. On the Closing Date, the representations and warranties of the Pass Through Trustee contained in Sections 3.4(f) and Section 3.8 hereof shall be true and correct as of the Closing Date as though then made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties were true and correct on and as of such earlier date), and each of the Lessee, TILC, TRLTII, the Indenture Trustee, the Trust, the Owner Trustee and the Participants shall have received an Officer's Certificate to such effect dated such date from the Pass Through Trustee, and the Pass Through Trustee shall have performed and complied with all agreements and conditions herein contained which are required to be performed or complied with by the Pass Through Trustee on or before said date. (z) Representations and Warranties of Trinity. On the Closing Date, the representations and warranties of Trinity contained in Sections 3.4(g) and Section 3.9 hereof shall be true and correct as of the Closing Date as though then made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties were true and correct on and as of such earlier 41 date), and each of the Lessee, TILC, TRLTII, the Indenture Trustee, the Trust, the Owner Trustee and the Participants shall have received an Officer's Certificate to such effect dated such date from Trinity, and Trinity shall have performed and complied with all agreements and conditions herein contained which are required to be performed or complied with by Trinity on or before said date. (aa) Representations and Warranties of the Policy Provider. On the Closing Date, the representations and warranties of the Policy Provider contained in Sections 3.4(h) and Section 3.10 hereof shall be true and correct as of the Closing Date as though then made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties were true and correct on and as of such earlier date), and each of the Lessee, TILC, TRLTII, the Indenture Trustee, the Trust, the Owner Trustee and the Participants shall have received an Officer's Certificate to such effect dated such date from the Policy Provider, and the Policy Provider shall have performed and complied with all agreements and conditions herein contained which are required to be performed or complied with by the Policy Provider on or before said date. (bb) Taxes. All material Taxes have been paid in connection with the execution and delivery of this Agreement. (cc) Accountant's Letter. The Participants shall have received an accountant's letter from Deloitte & Touche LLP in form and substance reasonably satisfactory to each of them. (dd) Certificate Rating. On the Closing Date, the Certificates shall be rated "AAA" by Standard & Poor's, a division of The McGraw-Hill Companies, Inc., and "Aaa" by Moody's Investors Service. (ee) Sublessee and Pledged Equipment Lessee Consents. The Lessee shall have obtained the consent to assignment from Sublessees under Existing Equipment Subleases and Pledged Equipment Lessees under Existing Pledged Equipment Leases, such consents to be in form and substance reasonably satisfactory to the Participants and the Policy Provider if not in the form attached hereto as Exhibit D, with respect to a percentage, acceptable to each Participant and the Policy Provider, of Existing Equipment Subleases relating to the Equipment and Existing Pledged Equipment Leases relating to the Pledged Equipment. (ff) Execution and Delivery of Other Agreements. The documents related to the Marks Company, the 2004-1A SUBI Certificate related to the Marks Company, the Other Participation Agreements and the Other Trust Agreements shall have been executed and delivered by the respective parties thereto. (gg) Delivery of Collection Procedures. TILC shall have provided a copy of its current collections procedures to the Policy Provider. Section 4.2 Additional Conditions Precedent to Investment by the Loan Participant. The obligation of the Loan Participant to fund the Loan Participant's Commitment and purchase and pay for the Equipment Note to be purchased by it pursuant to Sections 2.2(b) and 2.3 on the 42 Closing Date shall be subject to the satisfaction or waiver of the following additional conditions precedent: (a) Equipment Note. The Equipment Note to be delivered on the Closing Date shall have been duly authorized, executed and delivered to the Loan Participant by a duly authorized officer of the Owner Trustee and duly authenticated by the Indenture Trustee. (b) Sale of Pass Through Certificates. The Pass Through Certificates shall have been sold to the Initial Purchasers pursuant to the Certificate Purchase Agreement. (c) Appraisal. The Pass Through Trustee, the Policy Provider and each Initial Purchaser shall have received the verification of value, useful life and estimated residual value prepared by the Appraiser in connection with the Appraisal. Section 4.3 Additional Conditions Precedent to Investment by the Owner Participant. The obligation of the Owner Participant to provide the funds specified with respect to it in Sections 2.2(a) and 2.3 on the Closing Date with respect to any Unit to be delivered on the Closing Date shall be subject to the satisfaction or waiver of the following additional conditions precedent: (a) Appraisal. On or before the Closing Date, the Owner Participant shall have received an opinion (the "Appraisal") of RailSolutions, Inc. (the "Appraiser"), satisfactory in form and substance to the Owner Participant (with a separate summary or other evidence of such Appraisal as it relates to fair market value and useful life being provided to the Rating Agency) provided that the Lessee makes no representation as to the fair market value, useful life, fair market rental value or estimated residual value of the Equipment, and the Lessee shall not be responsible for, or incur any liabilities as a result of, the contents of such Appraisal or report to which it relates or, except to the extent provided in the Tax Indemnity Agreement and except as to the written information provided by the Lessee or TILC to the Appraiser as set forth in Section 3.2(dd) or 3.6(v). (b) Opinion with Respect to Certain Tax Aspects. On the Closing Date, the Owner Participant shall have received the opinion of Simpson Thacher & Bartlett LLP, addressed to the Owner Participant, in form and substance satisfactory to the Owner Participant, containing such counsel's favorable opinion with respect to such tax matters as the Owner Participant may reasonably request. (c) Absence of Change in Tax Laws. No Change in Tax Law shall have occurred which would cause an adverse change to the tax assumptions used to calculate Basic Rent, Stipulated Loss Values, Stipulated Loss Amounts, Termination Values, Termination Amounts and Early Purchase Price, unless the adjustment referred to in Section 2.6(a) is made to the Owner Participant's satisfaction. (d) Tax Indemnity Agreement. On or before the Closing Date, the Tax Indemnity Agreement shall be satisfactory in form and substance to the Owner Participant, shall have been duly executed and delivered by the Lessee and Trinity, assuming due authorization, execution and delivery by the Owner Participant or one of its Affiliates, shall be in full force and effect. 43 (e) Tax Shelter Registration. Each party hereto and their respective counsel shall have received (i) a copy of Form 8264 ("Application for Registration of a Tax Shelter) filed with the Internal Revenue Service on a protective basis; (ii) a copy of the Internal Revenue Service registration notice containing the registration number which the Internal Revenue Service issued in connection with such filing; (iii) a written statement in compliance with Code Section 6111 and Temporary Treasury Regulation section 301.6111-1T Q/A53; and (iv) a copy of any letters sent to the California Franchise Tax Board (together with any attachments) in compliance with California Revenue and Taxation Code section 18628, each attached hereto on Exhibit G. (f) Equity Rating. On the Closing Date, the equity portion of Rent shall be rated at least BBB by S&P. Section 4.4 Conditions Precedent to the Obligation of TRLTII and the Lessee. The obligation of TRLTII with respect to the sale of the Units and the Pledged Units to the Lessee on the Closing Date, the obligation of the Lessee with respect to the sale of such Units to the Owner Trustee and the obligation of the Lessee to accept such Units under the Lease as of the Closing Date is subject to the satisfaction or waiver of the following conditions precedent: (a) Corporate Documents. On or before the Closing Date, the Lessee shall have received such documents and evidence with respect to the Participants, the Owner Trustee, the Pass Through Trustee and the Indenture Trustee as the Lessee may reasonably request in order to establish the authorization of the consummation of, or otherwise relating to the ability to consummate, the transactions contemplated by this Agreement and the other Operative Agreements, the taking of all corporate and other proceedings in connection therewith and compliance with the conditions herein or therein set forth. (b) Operative Agreements. On or before the Closing Date, the Operative Agreements shall have been duly authorized, executed and delivered by the respective party or parties thereto (other than the Lessee, TILC and TRLTII), and an executed counterpart of each thereof shall have been delivered to the Lessee or its special counsel. (c) Representations and Warranties. On the Closing Date, the representations and warranties of each of the Owner Trustee, the Indenture Trustee and the Participants contained in Section 3 hereof shall be true and correct in all material respects as of the Closing Date as though made on and as of such date, and the Lessee shall have received an Officer's Certificate to such effect dated such date from each of the Owner Trustee as described in Section 4.1(d), the Owner Participant as described in Section 4.1(k), the Indenture Trustee as described in Section 4.1 (m) and the Pass Through Trustee as described in Section 4.1(y). (d) Opinions of Counsel. On the Closing Date, the Lessee shall have received the opinions of counsel referred to in Section 4.1(e) (other than that set forth in clauses (i) and (ii) therein), addressed to the Lessee. (e) No Threatened Proceeding. No action or proceeding shall have been instituted nor shall governmental action be threatened before any court or governmental agency, nor shall any order, judgment or decree have been issued or proposed to be issued by any court 44 or governmental agency at the time of the Closing Date, to set aside, restrain, enjoin or prevent the completion and consummation of this Agreement or the transactions contemplated hereby. (f) No Illegality. No change shall have occurred after the execution and delivery of this Agreement in applicable law or regulations thereunder or interpretations thereof by regulatory authorities that, in the opinion of the Lessee or its counsel, would make it illegal for the Lessee to enter into any transaction contemplated by the Operative Agreements. (g) Participants' Investments. (i) The Owner Participant shall have made available the Owner Participant's Commitment in the amount specified in, and otherwise in accordance with, Sections 2.2(a) and 2.3 and (ii) the Loan Participant shall have made available the Loan Participant's Commitment in the amount specified in, and otherwise in accordance with, Sections 2.2(b) and 2.3. (h) Absence of Change in Tax Laws. No Change in Tax Law shall have occurred which would cause an increase in the net present value (expressed as a percentage of Total Equipment Cost) of the Basic Rent (discounted monthly at a rate per annum equal to the Debt Rate) to exceed 100 basis points. (i) No Adverse Accounting Treatment. The Lessee shall not have been advised by its independent accountants that the Lessee or its affiliates will not be afforded "off-balance sheet" accounting treatment with respect to the Lease and the transactions contemplated by the Operative Agreements; provided, that the Lessee shall not have deliberately caused the loss of "off-balance sheet" accounting treatment to provoke non-satisfaction of such condition precedent pursuant to this Section 4.4(i). SECTION 5. FINANCIAL AND OTHER REPORTS OF THE LESSEE, TILC AND TRINITY. Each of the Lessee, TILC and Trinity agrees during the Lease Term and (if longer, in the event that the Lessee has assumed all of the rights and obligations of the Lessor under the Indenture in respect of the Equipment Notes) so long as any Equipment Note remains outstanding, that it will furnish or cause to be furnished directly to the Policy Provider, the Rating Agency and each Participant the following: (a) as soon as available and in any event within 60 days after the end of each of the first three quarters of each fiscal year, a balance sheet of the Lessee, TILC and Trinity as at the end of such quarter, together with the related consolidated statements of income and cash flows of the Lessee, TILC and Trinity for the period beginning on the first day of such fiscal year and ending on the last day of such quarter, setting forth in each case (except for the balance sheet) in comparative form the figures for the corresponding periods of the previous fiscal year, all in reasonable detail and prepared in accordance with generally accepted accounting principles; (b) as soon as available and in any event within 120 days after the last day of each fiscal year, a copy of the Lessee's, TILC's and Trinity's audited annual report covering the operations of the Lessee, TILC and Trinity, respectively, including a balance sheet and related statements of income and retained earnings and statement of cash flows of the Lessee, TILC and 45 Trinity, respectively, for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with generally accepted accounting principles applied on a consistent basis, which statements will have been certified by a firm of independent public accountants of recognized national standing selected by the Lessee, TILC and Trinity, respectively; (c) within the time period prescribed in paragraph (a) above, a certificate, signed by the Treasurer or principal financial officer of the General Partner, (i) to the effect that such officer is not aware (without any obligation of due inquiry), as of the date of such certificate, of any Lease Default, and if a Lease Default shall exist, specifying such Lease Default, the nature and status thereof and what action Lessee is taking or plans to take with respect thereto and (ii) setting forth the Historical Coverage Ratio and the Projected Coverage Ratio as of the last Business Day of the immediately preceding calendar quarter; (d) within the time period prescribed in paragraph (b) above, a certificate, signed by the Treasurer or principal financial officer of the General Partner, (i) to the effect that such officer has reviewed the Operative Agreements and activities and records of the Lessee during the immediately preceding fiscal year and that, after due inquiry, such officer is not aware, as of the date of such certificate, of any Lease Default, and if a Lease Default shall exist, specifying such Lease Default, the nature and status thereof and what action Lessee is taking or plans to take with respect thereto, (ii) setting for the Historical Coverage Ratio and the Projected Coverage Ratio as of the last Business Day of the preceding fiscal year, and (iii) setting forth in summary terms the Lessee's compliance with Section 8.3 of the Lease as to new Subleases entered into by the Lessee, and sub-subleases entered into by any Sublessee, during such fiscal year, including without limitation as to whether such new Subleases are subject and subordinate to the terms of the Lease; (e) promptly after obtaining knowledge thereof, notice of any pending or threatened action, suit or proceeding against or affecting the Lessee or any property of the Lessee which action, suit or proceeding could reasonably be expected to have a material adverse effect on the Lessee or on the interests of the Lessor, Owner Trustee, Indenture Trustee, Pass Through Trustee or any Participant under the Operative Agreements or the Pass Through Documents; (f) within the time periods presented in Section 7 of the Management Agreement, each of the reports referred to therein delivered by the Manager to the Lessee; and (g) promptly after request therefor, such additional information with respect to the financial condition or business of the Lessee as the Owner Participant, the Indenture Trustee or the Policy Provider may from time to time reasonably request. SECTION 6. CERTAIN COVENANTS OF THE PARTICIPANTS, THE TRUSTEES AND THE LESSEE. Section 6.1 Restrictions on Transfer of Beneficial Interest. The Owner Participant agrees that it shall not, directly or indirectly, sell, convey, assign, pledge, mortgage or otherwise transfer all or any part of the Beneficial Interest (collectively, for purposes of this Section 6.1, a "transfer") prior to the expiration or earlier termination of the Lease Term without the Lessee's 46 and, so long as any Equipment Notes are outstanding, the Indenture Trustee's prior written consent; provided that no such consent shall be required if the following conditions are satisfied (it being understood that the Indenture Trustee's consent shall not be required for any waiver of the conditions set forth in clauses (b) or (k) below): (a) the Person to whom such transfer is to be made (a "Transferee") is not bankrupt or insolvent and, so long as no Lease Event of Default is continuing, is (i) an institutional or corporate investor with tangible net worth or, in the case of a bank or lending institution, combined capital and surplus at the time of such transfer, of at least $75,000,000, determined in accordance with generally accepted accounting principles, as of the date of such transfer, or (ii) an Affiliate of an institutional or corporate investor that satisfies the requirements set forth in clause (i) above if such investor guarantees pursuant to a guaranty in form and substance reasonably satisfactory to the Lessee the obligations of the Owner Participant under the Operative Agreements assumed by such Affiliate as required herein or (iii) an Affiliate of the Owner Participant; provided that in the event of a transfer pursuant to clause (iii) which does not qualify under clauses (i) or (ii), the Owner Participant shall remain liable for all of its obligations under this Agreement and the other Operative Agreements; (b) neither the Transferee nor any of its Affiliates shall compete (directly or indirectly) (other than as a passive investor or loan participant in the financing of equipment or facilities used in railcar leasing) with the Lessee or TILC (unless such non-competition requirement has been waived in writing by the Lessee and TILC) in any respect material to the full service railcar leasing business of the Lessee or TILC; provided that this clause (b) shall not apply (i) to any Transferee that is an Affiliate of the Owner Participant or (ii) in the event that a Lease Event of Default shall have occurred and be continuing; (c) each of the Indenture Trustee, the Owner Trustee, the Lessee and the Policy Provider shall have received 10 days prior written notice of such transfer specifying the name and address of any proposed Transferee and such additional information as shall be reasonably necessary to determine whether the proposed transfer satisfies the requirements of this Section 6.1; (d) such Transferee enters into an agreement (i) in the form attached hereto as Exhibit C or (ii) otherwise in form and substance reasonably satisfactory to each of the Lessee (so long as no Lease Event of Default is continuing) and the Owner Trustee and not reasonably objected to by the Indenture Trustee whereby such Transferee confirms that it shall be deemed a party to this Agreement and each other Operative Agreement to which the transferring Owner Participant is a party, and agrees to be bound by all the terms of, and to undertake all of the obligations and liabilities of the transferring Owner Participant contained in, this Agreement and such other Operative Agreements and in which the Transferee shall make representations and warranties comparable to those of the Owner Participant contained herein and therein; (e) an opinion of counsel of the Transferee (which counsel shall be reasonably acceptable to the Lessee (so long as no Lease Event of Default is continuing), the Indenture Trustee and the Policy Provider), confirming (i) the existence, corporate power and authority of, and due authorization, execution and delivery of all relevant documentation by, the Transferee, (ii) that each agreement referred to in Section 6.1(d) above is the legal, valid, and binding 47 obligation of the Transferee, enforceable against the Transferee in accordance with its terms (subject to customary qualifications as to bankruptcy and equitable principles) and (iii) compliance of the transfer with applicable requirements of federal securities laws and securities laws of the Transferee's domicile, shall be provided, prior to such transfer, to each of the Lessee (so long as no Lease Event of Default is continuing) and the Indenture Trustee, which opinion shall be in form and substance reasonably satisfactory to the Lessee (so long as no Lease Event of Default is continuing) and the Indenture Trustee; (f) except as specifically consented to in writing by each of the Lessee, the Owner Trustee, the Pass Through Trustee, the Indenture Trustee and the Policy Provider, the terms of the Operative Agreements shall not be altered; (g) after giving effect to such transfer, the Beneficial Interest shall be held by not more than two Persons in the aggregate, except if such transfer occurs after the occurrence and during the continuance of a Lease Event of Default; (h) all reasonable expenses of the parties hereto (including, without limitation, reasonable legal fees and expenses of special counsel) incurred in connection with each transfer of such Beneficial Interest shall be paid by the transferring or transferee Owner Participant, except if such transfer occurs after the occurrence and during the continuance of a Lease Event of Default, provided that the Lessee shall not be obligated to pay such expenses to the extent that after giving effect to such transfer, the Beneficial Interest is held by more than two Persons; (i) such transfer either (i) does not involve the use of any funds which constitute assets of an employee benefit plan subject to Title I of ERISA or Section 4975 of the Code or (ii) if clause (i) is not applicable, will not constitute a non-exempt prohibited transaction under Section 406(a)(1)(A) through (D) of ERISA or Section 4975(c)(1)(A) through (D) of the Code; (j) as a result of and following such transfer, no Indenture Default attributable to the Owner Participant or the Owner Trustee shall have occurred and be continuing; (k) unless a Lease Event of Default shall have occurred and is continuing, the transfer does not involve the sale of the stock of any Owner Participant, the sole asset of which is all or a portion of the Beneficial Interest, to, or the merger of any such Owner Participant with or into, any Person which is a competitor of the Lessee or TILC as described in Section 6.1(b), provided that the Lessee may waive this requirement in writing; (l) the Transferee (i) is a U.S. Person, provided that the Transferee is not a partnership, other flow through entity, or a disregarded entity, unless such Transferee is owned solely by one or more U.S. Persons or (ii) is engaged in a United States trade or business for purposes of Subtitle A, Chapter 1, Subchapter N of the Code and its acquisition of such Beneficial Interest is effectively connected with such trade or business; and (m) the Owner Participant shall deliver to the Lessee an Officer's Certificate certifying as to compliance with the transfer requirements specified in clauses (a), (g), (i), (j) and (l) above. 48 Upon any such transfer (i) except as the context otherwise requires, such Transferee shall be deemed the "Owner Participant" for all purposes, and shall enjoy the rights and privileges and perform the obligations of the Owner Participant to the extent of the interest transferred hereunder and under each other Operative Agreement to which the Owner Participant is a party, and, except as the context otherwise requires, each reference in this Agreement and each other Operative Agreement to the "Owner Participant" shall thereafter be deemed to include such Transferee for all purposes to the extent of the interest transferred, and (ii) the transferor, except to the extent provided in Section 6.1(1) hereof and except in the case of a transfer to a Transferee described in the proviso to Section 6.1(a)(iii) hereof, shall be released from all obligations hereunder and under each other Operative Agreement to which such transferor is a party or by which such transferor is bound solely to the extent such obligations are expressly assumed by a Transferee; and provided, further, that in no event shall any such transfer or assignment waive or release the transferor from any liability on account of any breach existing prior to such transfer of any of its representations, warranties, covenants or obligations set forth herein or in any of the other Operative Agreements or for any fraudulent or willful misconduct. No Transferee shall be entitled to reimbursement by the Lessee under Section 7.1 or 7.2 or by TILC under Section 7.3 for any amount that would exceed the amount that would have been payable by the Lessee or TILC, as applicable, to the original Owner Participant, as a result of the Transferee engaging in a business or activity not generally conducted by other institutional or corporate investors in lease transactions. The Owner Participant hereby acknowledges and agrees (and each Transferee by virtue of any transfer shall be deemed to have acknowledged and agreed) to the terms of the Collateral Agency Agreement. Each Transferee agrees to provide to the Lessee as soon as practicable after the transfer of the Beneficial Interest to such Transferee a copy of the agreement and opinion delivered in connection with such transfer in accordance with the terms of Sections 6.1(d) and (e) if at the time of such transfer there shall have existed a Lease Event of Default. The Lessee agrees to provide notice to the Rating Agency of any proposed transfer by an Owner Participant no later than ten (10) days after Lessee's receipt of notice of such proposed transfer from an Owner Participant. Section 6.2 Lessor's Liens Attributable to the Owner Participant. The Owner Participant hereby unconditionally agrees with and for the benefit of each of the other parties to this Agreement that the Owner Participant shall not directly or indirectly create, incur, assume or suffer to exist any Lessor's Lien attributable to the Owner Participant on or against all or any portion of the Trust Estate, the Indenture Estate or the Equipment or Subleases, and the Owner Participant agrees that it shall, at its own cost and expense, take such action as may be necessary to duly discharge and satisfy in full any such Lessor's Lien; provided that the Owner Participant may contest any such Lessor's Lien in good faith by appropriate proceedings so long as such proceedings do not involve any material danger of the sale, forfeiture or loss of any portion of the Trust Estate, the Indenture Estate, the Equipment or the Subleases or any interest therein or interference with the use, operation, or possession of the Equipment or any portion thereof by the Lessee under the Lease or the rights of the Indenture Trustee under the Indenture. Section 6.3 Lessor's Liens Attributable to Trust Company. Trust Company hereby unconditionally agrees with and for the benefit of each of the other parties to this Agreement that it shall not directly or indirectly create, incur, assume or suffer to exist any Lessor's Lien attributable to it on or against all or any portion of the Trust Estate or the Equipment, the Trust 49 Company agrees that it shall, at its own cost and expense, take such action as may be necessary to duly discharge and satisfy in full any such Lessor's Lien; provided that the Trust Company may contest any such Lessor's Lien in good faith by appropriate proceedings so long as such proceedings do not involve any material danger of the sale, forfeiture or loss of any portion of the Trust Estate or the Equipment or any interest therein or interference with the use, operation, or possession of the Equipment or Pledged Equipment or any portion thereof by the Lessee under the Lease or the right of the Indenture Trustee under the Indenture. Section 6.4 Liens Created by the Indenture Trustee and the Loan Participant. (a) The Indenture Trustee, in its individual capacity, covenants and agrees with each of the Lessee, the Owner Trustee, the Owner Participant, the Loan Participant and the Policy Provider that it shall not cause or permit to exist any Lien on or against all or any portion of the Equipment, the Pledged Equipment, the Trust Estate or the Indenture Estate arising as a result of (i) claims against the Indenture Trustee in its individual capacity not related to its interest in the Equipment, the Pledged Equipment and the Trust Estate, or to the administration of the Indenture Estate pursuant to the Indenture, (ii) acts of the Indenture Trustee in its individual capacity not contemplated by, or failure of the Indenture Trustee to take any action it is expressly required to perform by, any of the Operative Agreements, (iii) claims against the Indenture Trustee attributable to the actions of the Indenture Trustee in its individual capacity relating to Taxes or expenses that are not indemnified against by the Lessee pursuant to Section 7 or (iv) claims against the Indenture Trustee arising out of the transfer by the Indenture Trustee of all or any portion of its interest in the Equipment, the Pledged Equipment, the Indenture Estate or the Operative Agreements, other than a transfer permitted by the Operative Agreements and with respect to which the Indenture Trustee will, at its own cost and expense (and without any right of reimbursement from any other party hereto), promptly take such action as may be necessary duly to discharge any such Lien. (b) The Loan Participant covenants and agrees with each of the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee that the Loan Participant shall not cause or permit to exist any Lien on or against all or any portion of the Equipment, the Pledged Equipment, the Trust Estate or the Indenture Estate arising as a result of (i) claims against the Loan Participant not related to its interest in the Equipment, the Pledged Equipment and the Trust Estate, (ii) acts of the Loan Participant not contemplated by, or failure of the Loan Participant to take any action it is expressly required to perform by, any of the Operative Agreements, (iii) claims against the Loan Participant relating to Taxes or expenses that are not indemnified against by the Lessee pursuant to Section 7, or (iv) claims against the Loan Participant arising out of the transfer by the Loan Participant of all or any portion of its interest in the Equipment, the Pledged Equipment, the Indenture Estate or the Operative Agreements, other than a transfer permitted by the Operative Agreements and with respect to which the Loan Participant will, at its own cost and expense (and without any right of reimbursement from the Lessee), promptly take such action as may be necessary duly to discharge any such Lien. Section 6.5 Covenants of Owner Trustee, Owner Participant and Indenture Trustee. Each of the Owner Participant and Trust Company, in its individual and trust capacities, hereby agrees, as to its own actions only and severally and not jointly, with (a) the Loan Participant and the Indenture Trustee (so long as the Equipment Notes remain outstanding), not to amend, 50 supplement, or otherwise modify any provision of the Trust Agreement in such a manner as to adversely affect the rights of the Loan Participant or the Indenture Trustee without the prior written consent of such party and (b) with the Lessee, not to terminate or revoke the Trust Agreement or the trust created by the Trust Agreement prior to the payment in full and discharge of the Equipment Notes and all other indebtedness secured by the Indenture and the final discharge thereof. Each of the Trust Company and the Indenture Trustee agrees, for the benefit of the Lessee and the Owner Participant, to comply with the provisions of the Indenture and not to amend, supplement, or otherwise modify any provision of the Indenture except in the manner provided in Article IX thereof. Notwithstanding anything to the contrary contained herein or in any of the other Operative Agreements, the Indenture Trustee's obligation to take or refrain from taking any actions, or to use its discretion (including, but not limited to, the giving or withholding of consent or approval and the exercise of any rights or remedies under such Operative Agreement), and any liability therefor, shall, in addition to any other limitations provided herein or in any of the other Operative Agreements, be limited by the provisions of the Indenture. Section 6.6 Information. At any time when TILC or Trinity is not subject to Section 13 or 15(d) of the Exchange Act, TILC and Trinity will promptly furnish or cause to be furnished to the Initial Purchaser and, upon request of holders and prospective purchasers of the Pass Through Certificates, to such holders and purchasers, copies of the information required to be delivered to holders and prospective purchasers of the Pass Through Certificates pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision thereto) in order to permit compliance with Rule 144A in connection with resales by such holders of the Pass Through Certificates. Section 6.7 Certain Representations, Warranties and Covenants. The Lessee hereby confirms, for the benefit of each other party hereto, its representations, warranties and covenants in Article 6 of the Collateral Agency Agreement, which are hereby incorporated in this Agreement by this reference as fully as if set forth herein in their entirety. Section 6.8 Covenants of the Manager. The Manager hereby confirms, for the benefit of each other party hereto, the covenants in Article 7 of the Management Agreement, which are hereby incorporated in this Agreement by this reference as fully as if set forth herein in their entirety. Section 6.9 Lessee's Purchase in Certain Circumstances. (a) If (A) the Owner Participant or any Affiliate thereof is or acquires, is acquired by, merges or otherwise consolidates with any company or Affiliate thereof who would not be an eligible "Transferee" by reason of Section 6.1(b) (and, in the case of an Affiliate, such entity continues to be an Affiliate of the Owner Participant after such acquisition, merger or consolidation), or (B) the Lessee shall have requested a waiver pursuant to Section 12.3(c) of the Lease and the Lessor and the Owner Participant shall have refused to grant such waiver or shall have granted such waiver but shall have refused to further waive the requirement that amounts be deposited in the Special Insurance Reserves Account pursuant to the Collateral Agency Agreement in connection with the granting of the initial waiver or any such waiver shall have expired without being renewed or extended, or (C) the Lessee shall have elected to purchase, or 51 arrange a purchase of, the Beneficial Interest pursuant to Section 22.1 of the Lease, the Lessee may elect either to: (i) keep the Lease and the Equipment Notes in place and require that the Owner Participant, and the Owner Participant agrees to, transfer its Beneficial Interest in accordance with the terms of Section 6.1 (other than provisions of Sections 6.1(a), (b), (h), (i), (l) and (m)) to the Lessee or such other transferee as the Lessee may designate (such transfer to occur on a Determination Date which is designated by the Lessee by written notice to the Owner Participant not less than 60 days prior to such Determination Date) at a purchase price (the "Beneficial Interest Purchase Price") equal to (1) the Equity Portion of Termination Amount as of the date of such transfer, plus (2) in the case of clause (B) above, the excess, if any, of the Fair Market Sales Value of the Equipment calculated as of such date over the Termination Value as of such date, plus (3) the Equity Portion of Basic Rent accrued and unpaid therefor as of the date of such transfer (exclusive of any Basic Rent payable on such date), plus (4) without duplication or limitation of any amount under clauses (1) to (3) above, the sum of the Accumulated Equity Deficiency Amount and Late Payment Interest related thereto, plus (5) without duplication or limitation of any amount under clauses (1) to (4) above, that portion of Supplemental Rent due and unpaid on such date that is payable to the Owner Participant; provided, however, that, without regard to such Owner Participant's obligations under the Operative Agreements relating to the period prior to such transfer, any transfer of the Beneficial Interest pursuant to this Section 6.9 shall be without additional representations or warranties of or other liabilities or obligations on such Owner Participant other than those expressly set forth in the Owner Participant Agreements; provided, further, that in case such Owner Participant holds less than 100% of the Beneficial Interest (after excluding any Beneficial Interests held by the Lessee, TILC or any Affiliate of either thereof), the purchase price for such Owner Participant's Beneficial Interest shall be equal to (x) (i) the sum of the amounts calculated under clauses (1), (2), (3) and (4) above multiplied by (ii) a fraction equal to the portion such Owner Participant's Beneficial Interest bears to 100% of the Beneficial Interests, plus (y) without duplication or limitation of any amount under clause (x) above, that portion of Supplemental Rent due and unpaid on such date that is payable to such Owner Participant; or (ii) on a Determination Date which is designated by the Lessee by written notice to the Owner Trustee and the Indenture Trustee not less than 60 days prior to such Determination Date, purchase all of the Equipment for a purchase price equal to (I) the aggregate Termination Amounts for all Units calculated as of such Determination Date, plus (II) in the case of clause (B) of the lead paragraph of this Section 6.9(a), the excess, if any, of the Fair Market Sales Value of the Equipment calculated as of such date over the Termination Value as of such Determination Date, plus (III) without duplication or limitation, all other amounts due and owing by the Lessee under the Operative Agreements with respect to the Equipment, including, without limitation, all accrued and unpaid Basic Rent therefor as of such Determination Date (exclusive of any Basic Rent payable on such date), Make-Whole Amount then payable on the Equipment Notes pursuant to Section 2.10(c) of the Indenture with respect to the Equipment and Late Payment Premium, if any, due and owing under the Operative Agreements with respect to the Equipment so that, after receipt and application of all such payments, (i) the Owner Participant shall be entitled under the terms of the Collateral Agency Agreement to receive, and does receive, in respect of all such Units, the sum of the Accumulated Equity Deficiency Amount (without duplication of any amount provided under clauses (I) - (III) above) and Late Payment 52 Interest related thereto and any other amounts of Supplemental Rent due and unpaid on such Determination Date that are payable to the Owner Participant and (ii) all principal of and interest and Premium, if any, on the Equipment Notes shall have been paid. (b) If the Lessee elects to exercise the option to purchase the Equipment (as opposed to such Owner Participant's Beneficial Interest) as provided in Section 6.9(a), the Lessee shall, as the purchase price therefor, pay the purchase price as specified in Section 6.9(a)(ii) with respect to the Equipment, together with all other amounts due and owing by the Lessee under the Operative Agreements, and, without duplication, all Policy Provider Amounts and Policy Provider Reimbursement Costs due and owing to the Policy Provider. (c) In connection with any purchase of the Equipment under this Section 6.9, the Lessee will make the payments required by Section 6.9(a)(ii) and 6.9(b) in immediately available funds against delivery of a bill of sale transferring and assigning to the Lessee all right, title and interest of the Lessor in and to the Equipment on an "as-is" "where-is" basis and containing a warranty with respect to the absence of any Lessor's Lien. In such event, the costs of preparing the bill of sale or other transfer documents and all other documentation relating to such purchase and the costs of any necessary filings related thereto will be borne by the Lessee. If the Lessee shall fail to fulfill its obligations under Sections 6.9(b) and (c), all of the Lessee's obligations under the Lease and the Operative Agreements, including, without limitation, the Lessee's obligation to pay installments of Rent, with respect to the Equipment shall continue. Section 6.10 Owner Participant as Affiliate of Lessee. If at any time the original or any successor Owner Participant shall be an Affiliate of the Lessee or TILC, such Owner Participant and the Lessee agree that, notwithstanding Section 9.5(b) of the Indenture (but without limiting the rights of the Indenture Trustee or the Control Party under the Indenture, including, without limitation, the rights of the Indenture Trustee to exercise and enforce the rights of the Owner Trust as set forth in the Indenture), such Owner Participant will not vote its Beneficial Interest in any respect if there is another Owner Participant not affiliated with the Lessee, and, if there is no such Owner Participant not affiliated with the Lessee, such Owner Participant will not vote its Beneficial Interest to modify, amend or supplement any provision of the Lease or this Agreement or give, or permit the Owner Trustee to give, any consent, waiver, authorization or approval thereunder if any such action could reasonably be expected to adversely affect the Indenture Trustee, any holder of an Equipment Note or the Policy Provider unless such action shall have been consented to by the Indenture Trustee. Section 6.11 Records; U.S. Income Tax Information. Each of the Lessee and TILC covenants that it will maintain or cause to be maintained and retain factual records (to the extent such records are maintained by the Lessee and TILC respectively, any sublessee, or any trustee for or Affiliate of any thereof, in the ordinary course of their respective businesses) to enable the Owner Participant to prepare required United States federal, state and local tax returns. Upon request of the Owner Participant, the Lessee and TILC, respectively, shall deliver such records to the Owner Participant at the expense of the Lessee. In addition, as soon as practicable, the Lessee and TILC, respectively, shall provide or cause to be provided (at the expense of the Lessee) to the Owner Participant such information (in form and substance reasonable satisfactory 53 to the Owner Participant) as the Owner Participant may reasonably request from and as shall be reasonably available to the Lessee and TILC, respectively, to enable the Owner Participant to fulfill its tax return filing obligations, to respond to requests for information, to verify information in connection with any income tax audit and to participate effectively in any tax contest. Such information may include, without limitation, information as to the location of and use of the Equipment from time to time (to the extent such information is available on the basis of the records regularly maintained by the Lessee and TILC, respectively, any sublessee, or any trustee for or Affiliate of any thereof, in the ordinary course of their respective businesses). Section 6.12 Mexico Filings. (a) In the event that the Owner Participant or Policy Provider determines, in the exercise of its reasonable judgment, that, by reason of any action, suit, claim, proceeding, entry of any judgment or similar remedy, or the assertion of any Lien or other encumbrance, against any Unit, the Trust, the Owner Trustee or the Owner Participant, it is prudent to cause the granting of a security interest and pledge under Mexican law and any appropriate perfection, filing or analogous actions in respect thereof, then (a) the Lessee shall engage legal counsel qualified under the laws of Mexico to (x) prepare appropriate documentation and instruments (including a pledge and security agreement) for purposes of evidencing a grant by the Owner Trust in favor of the Indenture Trustee of a security interest in and pledge of in all of its Units then subject to Subleases with Mexican Sublessees, causing the perfection (or analogous filings and other actions) with respect to such grant of a security interest and pledge, causing the registration in Mexico with the Mexican Railroad Registry or other comparable governmental authority or registry (as deemed appropriate by such Mexican counsel) of the Owner Trustee's ownership in such Units then subject to Subleases with Mexican Sublessees and of such security interest and pledge, and any assignments of any of the foregoing, (y) deliver to the Owner Trustee, Indenture Trustee and Policy Provider an opinion of counsel with respect to the matters described in this Section 6.12, and (z) prepare such other documentation and instruments, and cause any other filings or registrations, as may be deemed advisable by such Mexican counsel or counsel for the Owner Trustee, Indenture Trustee or Policy Provider for purposes of protecting the interests of the Owner Trustee, the Indenture Trustee and the Policy Provider in such Units and (b) the Owner Trustee and the Indenture Trustee shall cooperate with the Lessee and the Policy Provider in connection with the preparation of the documentation and instruments described in clause (a) and all filings, registrations and other related actions and shall execute, and deliver such documentation and instruments, together with any additional documentation or instruments deemed necessary or appropriate by Mexican counsel for purposes of evidencing, recording, registering or perfecting the interests purported to be covered thereby, all at the sole cost and expense of the Lessee, the documents referred to in clauses (a) and (b) above to be in form and substance reasonably satisfactory to the Owner Participant and the Policy Provider (it being understood that the Lessee, or the Manager pursuant to agreement with the Lessee (provided that such amounts paid by the Manager shall not constitute amounts in respect of Reimbursable Services or Operating Expenses or other amounts to which the Manager shall be entitled to reimbursement pursuant to the Operative Agreements), shall pay all such costs and expenses, including without limitation the cost and expense of Mexican counsel, the cost and expense of separate legal counsel for the Owner Trustee, for the Indenture Trustee and for the Policy Provider in connection with the preparation, review, negotiation, filing and registration of, and other actions contemplated hereby with respect to, such documentation and instruments and the cost and expense of translating any such documentation or instruments into Spanish or English, as applicable, out of its own funds 54 and not from any CAA Account, unless the Policy Provider and the Owner Participant in their respective sole discretion otherwise agrees (in which case such costs and expenses shall be deemed to constitute Reimbursable Services or Operating Expenses, as the case may be, and shall be paid from amounts on deposit in the Collection Account pursuant to Section 3.4 of the Collateral Agency Agreement)). (b) In the event that the Owner Participant or Policy Provider determines, in the exercise of its reasonable judgment, that, by reason of any action, suit, claim, proceeding, entry of any judgment or similar remedy, or the assertion of any Lien or other encumbrance, against any Pledged Unit or the Lessee, it is prudent to cause the granting of a security interest and pledge under Mexican law and any appropriate perfection, filing or analogous actions in respect thereof, then (a) the Lessee shall engage legal counsel qualified under the laws of Mexico to (x) prepare appropriate documentation and instruments (including a pledge and security agreement) for purposes of evidencing a grant by the Lessee in favor of the Collateral Agent of a security interest in and pledge of in all of its Pledged Units then subject to Subleases with Mexican Sublessees, causing the perfection (or analogous filings and other actions) with respect to such grant of a security interest and pledge, causing the registration in Mexico with the Mexican Railroad Registry or other comparable governmental authority or registry (as deemed appropriate by such Mexican counsel) of the Lessee's ownership in such Pledged Units then subject to Subleases with Mexican Sublessees and of such security interest and pledge, and any assignments of any of the foregoing, (y) deliver to the Owner Trustee, Indenture Trustee and Policy Provider an opinion of counsel with respect to the matters described in this Section 6.12(b), and (z) prepare such other documentation and instruments, and cause any other filings or registrations, as may be deemed advisable by such Mexican counsel or counsel for the Owner Trustee, Indenture Trustee or Policy Provider for purposes of protecting the interests of the Owner Trustee, the Indenture Trustee and the Policy Provider in such Pledged Units and (b) the Owner Trustee and the Indenture Trustee shall cooperate with the Lessee and the Policy Provider in connection with the preparation of the documentation and instruments described in clause (a) and all filings, registrations and other related actions and shall execute, and deliver such documentation and instruments, together with any additional documentation or instruments deemed necessary or appropriate by Mexican counsel for purposes of evidencing, recording, registering or perfecting the interests purported to be covered thereby, all at the sole cost and expense of the Lessee, the documents referred to in clauses (a) and (b) above to be in form and substance reasonably satisfactory to the Owner Participant and the Policy Provider (it being understood that the Lessee, or the Manager pursuant to agreement with the Lessee (provided that such amounts paid by the Manager shall not constitute amounts in respect of Reimbursable Services or Operating Expenses or other amounts to which the Manager shall be entitled to reimbursement pursuant to the Operative Agreements), shall pay all such costs and expenses, including without limitation the cost and expense of Mexican counsel, the cost and expense of separate legal counsel for the Owner Trustee, for the Indenture Trustee and for the Policy Provider in connection with the preparation, review, negotiation, filing and registration of, and other actions contemplated hereby with respect to, such documentation and instruments and the cost and expense of translating any such documentation or instruments into Spanish or English, as applicable, out of its own funds and not from any CAA Account, unless the Policy Provider and the Owner Participant in their respective sole discretion otherwise agrees (in which case such costs and expenses shall be deemed to constitute Reimbursable Services or Operating Expenses, 55 as the case may be, and shall be paid from amounts on deposit in the Collection Account pursuant to Section 3.4 of the Collateral Agency Agreement)). Section 6.13 Certain Releases. (a) TILC agrees to cause the Lessee under the Lease to use its best efforts (i) in the case of each Acknowledgment Party (as defined below), to obtain an Acknowledgment, and (ii) in the case of each Release Party (as defined below), to obtain a Release (as defined below) and cause to be filed a related PPSA Release Filing (as defined below), in each case with respect to the applicable Affected PPSA Units leased by the Lessee under the Lease or pledged by the Lessee under the Collateral Agency Agreement, as applicable. In the event such Acknowledgments or Releases, as applicable, have not been obtained for an Affected PPSA Unit and such Affected PPSA Unit becomes subject to any claim, action or proceeding asserting a priority interest in such Affected PPSA Unit as a result of the outstanding filing in favor of the Release Party or Acknowledgment Party, as applicable (which claim, action or proceeding is not discharged or dismissed within 90 days), then TILC agrees not later than the fifth Business Day following the conclusion of such 90 day period to transfer to the Lessee, as a capital contribution in respect of TILC's indirect 100% equity interest in the Lessee, an additional Pledged Unit (each an "Additional Pledged Unit") for each such Affected PPSA Unit subject to such claim, action or proceeding. Such Additional Pledged Unit shall be of the same car type and of the same or newer model year (or otherwise approved by the Required Beneficiaries, which approval in each case shall not be unreasonably withheld) as the relevant Affected PPSA Unit, and free and clear of all Liens (other than Permitted Liens of the type described in clauses (ii), (iv) and (v) of the definition thereof) and have a fair market value (except to a de minimis extent), utility and remaining economic useful life at least equal to the relevant Affected PPSA Unit (assuming such Unit was in the condition required to be maintained by the terms of the related Lease). Upon such transfer to the Lessee each Additional Pledged Unit shall automatically, without further action required, become subject to the Security Interests of the Collateral Agency Agreement as provided therein, unless and until released therefrom in accordance with the relevant provisions of the Collateral Agency Agreement. (b) In the event that the applicable Sublease related to any Affected PPSA Unit is terminated or expires, TILC as Manager shall not, and shall not permit the Lessee to, renew any Sublease with respect to an Affected PPSA Unit with, or remarket under a new sublease any Affected PPSA Unit to, Nova (as defined below) or Marsulex (as defined below). As used in this subsection, "Acknowledgment" means a written letter, acknowledgment, agreement or similar instrument, executed by an Acknowledgement Party (as defined below) in favor of TILC and any further assignees of TILC (including assignees of such assignees) to the effect that any filing under the Applicable PPSA (as defined below) in favor of such Acknowledgement Party against Nova (as defined below) or Marsulex (as defined below) does not and will not perfect a "security interest" (as such term is defined in the Applicable PPSA) in any Affected PPSA Units (as defined below); "Acknowledgment Party" means any of UTLX International Division of Union Tank Car, Procor Limited, Key Equipment Finance Canada Ltd., GE Capital Railcar Services 56 Canada Company, Computershare Trust Company of Canada, Xerox Canada Ltd., GE Capital Vehicle and Equipment Leasing Inc. and Associates Capital Limited; "Affected PPSA Units" means Units leased under a Lease, the applicable Sublessee of which is Nova Chemicals Corporation ("Nova") or Marsulex Inc. ("Marsulex"), and as to which there exists in favor of an Acknowledgment Party or a Release Party (as defined below), as applicable, a filing made under the Personal Property Security Act (Alberta) or the Personal Property Security Act (Ontario) (as the case may be, the "Applicable PPSA") against Nova or Marsulex, which filing perfects or could perfect a "security interest" (as such term is defined in the Applicable PPSA) in any of such Units and which filing has been recorded prior to the filing against such Sublessee with respect to such Units made in favor of TILC (and TILC's further identified assignees with respect to such filing) and TILC or the Lessee shall not have obtained the items described in Section 6.13(a)(i) or (ii) as applicable; "PPSA Release Filings" means financing change statements filed under the Applicable PPSA by or on behalf of a Release Party having a prior filing against Nova or Marsulex as described immediately above, the effect of the filing of such financing change statements is to discharge or exclude from the coverage under such prior filing the Units as to which Nova or Marsulex is a Sublessee; "Release" means a written agreement or similar instrument, executed by a Release Party in favor of TILC and any further assignees of TILC (including assignees of such assignees) to the effect that such Release Party is irrevocably releasing and disclaiming any interest it or any of its assignees may have or purport to have in the Affected PPSA Units purported to be covered by the PPSA filing in the Release Party's favor; and "Release Party" means any of The Toronto-Dominion Bank, Pembina Pipeline Corporation and First Treasury Financial Inc. Section 6.14 Waiver, Amendment or Modification of Operative Agreements. None of the Lessee, TRLTII, TILC, the Trust, the Owner Trustee, the Pass Through Trustee or the Indenture Trustee shall, without the prior written consent of the Policy Provider, grant, consent or agree to any waiver of rights under, or amendment or other modification of, any of the Operative Agreements to which any of them is a party to the extent that such Operative Agreement or any other Operative Agreements requires the consent of the Policy Provider (in its capacity as Policy Provider or Control Party) to any such waiver, amendment or modification and any such waiver, amendment or modification that is entered into in contravention of this Section 6.14 shall be null and void and of no force or effect. SECTION 7. LESSEE'S INDEMNITIES. Section 7.1 General Tax Indemnity. (a) Tax Indemnitee Defined. For purposes of this Section 7.1, "Tax Indemnitee" means the Pass Through Trustee, both in its individual capacity and as trustee, the Owner Participant, its Affiliates, the Owner Trustee, the Trust Company, the Indenture Trustee, both in its individual capacity and as trustee, the Policy Provider (the "Policy Tax Indemnitee"), 57 each of their successors or assigns permitted under the terms of the Operative Agreements, any officer, director, employee or agent of any of the foregoing, the Trust Estate and the Indenture Estate; "Equity Tax Indemnitee" means the Owner Participant, its Affiliates, the Owner Trustee, the Trust Company, and each of their respective successors, assigns, officers, directors, employees and agents and the Trust Estate; "Lender Tax Indemnitee" means each Tax Indemnitee that is not an Equity Tax Indemnitee (for the avoidance of doubt, the Policy Tax Indemnitee is also a Lender Tax Indemnitee). (b) Taxes Indemnified. Except as provided in Section 7.1(c) below, the Lessee agrees that all payments of Rent pursuant to the Lease and all other payments made by the Lessee to or for the benefit of any Tax Indemnitee in connection with the transactions contemplated by the Operative Agreements shall be free of all withholdings or deductions of any nature whatsoever (and at the time that any payment is made upon which any withholding or deduction is required, the Lessee shall pay an additional amount such that the net amount actually received will, after such withholding or deduction and on an After-Tax Basis, equal the full amount of the payment then due) and shall be free of expense to each Tax Indemnitee for collection or other charges. The Lessee shall defend, indemnify and save harmless each Tax Indemnitee from and against, and as between the Lessee and each Tax Indemnitee, the Lessee hereby assumes liability with respect to, on an After-Tax Basis all fees (including, without limitation, documentation, recording, filing, license and registration fees), taxes (including, without limitation, those in the nature of net or gross income, gross receipts, franchise, sales, use, value added, ad valorem, rent, turnover, transfer, excise, doing business, real, personal and intangible property and stamp taxes), assessments, levies, imposts, duties, charges or withholdings of any nature whatsoever, together with any and all penalties, additions to tax, fines or interest thereon and any liabilities, losses, expenses or costs related thereto (collectively, "Taxes"), which at any time may be levied, assessed or imposed by the United States federal, any state or local authority or any foreign governmental authority (or political subdivision thereof) upon, with respect to, or against any of the Tax Indemnitees, any item of Equipment, Pledged Equipment, any Sublease, the Lease, any portion of the Collateral, any Operative Agreement, or any interest in, portion of, or user of, any of the foregoing, upon, arising from or relating to: (i) any item of the Equipment or the Pledged Equipment, any Sublease or any portion of the Collateral (including any Account), (ii) the construction, manufacture, financing, acquisition, purchase, delivery, ownership, acceptance, rejection, possession, improvement, use, operation, leasing, subleasing, condition, maintenance, repair, refinancing, registration, sale, return, replacement, storage, insuring, activity conducted on, substitution of, abandonment, alteration, modification, imposition of a Lien on, or other application or disposition of any item of the Equipment or the Pledged Equipment or any portion thereof or interest therein, (iii) the rental payments, receipts or earnings arising from any item of the Equipment or the Pledged Equipment or payable pursuant to the Operative Agreements, or (iv) the Operative Agreements, the Partnership Documents, the Pass Through Documents, the Equipment Note or any Sublease or any Pledged Equipment Lease, and any payment made or accrued or obligation incurred pursuant thereto or otherwise with respect 58 to or in connection with the transactions contemplated thereby or the issuance acquisition, transfer or refinancing of the Equipment Notes. (c) Taxes Excluded. The indemnity provided in Section 7.1 (b) shall not include: (i) as to any Equity Tax Indemnitee, any Income Tax imposed by the United States federal government (but not excluding any Income Tax required to make a payment on an After-Tax Basis); (ii) as to any Equity Tax Indemnitee, any Income Tax imposed by any state, local or foreign government or taxing authority or subdivision thereof (but not excluding an Income Tax required to make a payment on an After-Tax Basis); provided, however, that this exclusion shall not apply to the extent such Taxes relate directly or indirectly to (I) the use, location of any item of the Equipment or the activities of the Lessee in the taxing jurisdiction, (II) the presence or organization of the Lessee in the taxing jurisdiction, (III) any payment by or on behalf of the Lessee being made from the taxing jurisdiction, or (IV) the execution or delivery of any Operative Agreement by the Lessee in the taxing jurisdiction; provided, further, however, that the preceding proviso shall not apply to any Taxes that are solely attributable to the fact that the Owner Trust, the Owner Trustee (other than in its individual capacity) or the Owner Participant or any Related Party thereto has its legal domicile or a principal place of business in the taxing jurisdiction (determined without regard to the transactions contemplated by the Operative Agreements or any similar lease transaction between the Owner Participant and the Lessee or an Affiliate of the Lessee); (iii) as to any Equity Tax Indemnitee, any Tax that is imposed as a result of the voluntary sale, transfer or other disposition, or any involuntary sale, transfer or other disposition resulting from a bankruptcy or similar proceeding for relief of debtors in which such Equity Tax Indemnitee is a debtor, by the Lessor or the Owner Participant of any of its rights with respect to any item of Equipment or the Owner Participant's interest in the Trust Estate unless such sale, transfer or other disposition is during the continuance of a Lease Event of Default or is otherwise pursuant to the Lessor's exercise of its rights under the Operative Agreements or is as a result of (x) any substitution, replacement, improvement, modification or addition to the Equipment or any portion thereof by the Lessee, a Sublessee, or a Related Party to the Lessee or Sublessee, (y) a requirement of the Lessee in the Operative Agreements or under applicable law, or (z) a purchase of the Equipment or any Unit thereof pursuant to the Lease or the other Operative Agreements; (iv) as to any Equity Tax Indemnitee, any Taxes to the extent they exceed the Taxes that would have been imposed if such Equity Tax Indemnitee were a U.S. Person; (v) Taxes imposed on a Lender Tax Indemnitee, excluding the Policy Tax Indemnitee, with respect to any period after the payment in full of the Equipment Notes; provided that the exclusion set forth in this clause (v) shall not apply to Taxes to the extent such Taxes (I) relate directly or indirectly to events occurring or matters arising prior to or simultaneously with the date on which all of the principal of, interest on and all other amounts 59 payable in respect of the Equipment Notes have been paid in full or (II) result from a Lease Event of Default that has occurred and is continuing; (vi) Taxes imposed on the Policy Tax Indemnitee with respect to any period after the payment in full of all Equipment Notes, all Policy Provider Amounts and Policy Provider Reimbursement Costs; provided that the exclusion set forth in this clause (vi) shall not apply to Taxes to the extent such Taxes (I) relate directly or indirectly to events occurring or matters arising prior or simultaneously with the date on which all of the principal of, interest on and other amounts payable in respect of the Equipment Notes, all Policy Provider Amounts and all Policy Provider Reimbursement Costs have been paid in full or (II) result from a Lease Event of Default that has occurred and is continuing; (vii) as to any Tax Indemnitee, Taxes to the extent caused by any misrepresentation or breach of warranty or covenant by such Tax Indemnitee or a Related Party of such Tax Indemnitee under any of the Operative Agreements (except to the extent such misrepresentations or breach is attributable to any act or omissions of the Lessee or any sublessee, transferee or assignee of the Lessee) or by the gross negligence or willful misconduct of such Tax Indemnitee or such Related Party; (viii) as to any Lender Tax Indemnitee, Taxes that become payable as a result of a voluntary sale, assignment, transfer or other disposition, or any involuntary sale, transfer or other disposition resulting from a bankruptcy or similar proceeding for relief of debtors in which such Lender Tax Indemnitee is a debtor, by such Lender Tax Indemnitee of all or any portion of its interest in the Equipment or any part thereof, the Equipment Notes, the Trust Estate, the Indenture Estate or any of the Operative Agreements or rights created thereunder; provided, however, that is this clause (viii) shall not apply in the case of any sale assignment, transfer or other disposition (whether voluntary of involuntary) which occurs as a result of or while a Lease Event of Default has occurred and is continuing or which occurs as a result of (v) the exercise of remedies for a Lease Event of Default, (w) any substitution, replacement, improvement, modification or addition to the Equipment or any portion thereof by a Lessee, Sublessee or a Related Party to the Lessee or Sublessee, (x) a requirement in the Operative Agreements or under applicable law, (y) a purchase of the Equipment or any Unit thereof pursuant to the Lease or the other Operative Agreements or (z) any assignment to the Policy Provider pursuant to the Policy Provider Documents; (ix) as to any Lender Tax Indemnitee, Taxes imposed as the result of such Lender Tax Indemnitee not being a U.S. Person; (x) as to any Lender Tax Indemnitee, Income Taxes or transfer taxes relating to any payments of principal of, interest on or Make Whole Amount or other amounts in respect thereof, if any, on the Equipment Notes or the Pass Through Certificates paid to such Tax Indemnitee provided, that this clause (x) should not be interpreted to prevent any payment from being made on an After-Tax Basis, and provided further that this clause (x) shall not apply to Taxes attributable to (I) the use or location of any item of Equipment or the activities of the Lessee in the taxing jurisdiction, (II) the presence or organization of the Lessee in the taxing jurisdiction or (III) the execution or delivery of any Operative Agreement in the taxing jurisdiction; provided, further, however, the preceding provision shall not apply to any 60 jurisdiction where such Lender Tax Indemnitee or any Related Party of such Lender Tax Indemnitee has its legal domicile or a place of business (determined without regard to the transitions contemplated by the Operative Agreements); (xi) Taxes to the extent directly resulting from or that would not have been imposed but for (x) in the case of Taxes imposed on or with respect to any Equity Tax Indemnitee, the existence of any Lessor Liens with respect to such Equity Tax Indemnitee, or (y) in the case of Taxes imposed on or with respect to any Lender Tax Indemnitee, the existence of any Liens attributable to the Indenture Trustee that are unrelated to the transactions contemplated by the Operative Agreements or Liens attributable to the Pass Through Trustee that are unrelated to the transactions contemplated by the Operative Agreements; (xii) Taxes imposed on a Tax Indemnitee to the extent that such Taxes would not have been imposed upon such Tax Indemnitee but for any failure of such Tax Indemnitee or a Related Party of such Tax Indemnitee to comply with (x) any certification, information, documentation, reporting or other similar requirements concerning the nationality, residence, identity or connection with the jurisdiction imposing such Taxes, if such compliance is required under the laws or regulations of such jurisdiction to obtain or establish relief or exemption from or reduction in such Taxes and the Tax Indemnitee or such Related Party was eligible to comply with such requirement or (y) any other certification, information, documentation, reporting or other similar requirements under the Tax laws or regulations of the jurisdiction imposing such Taxes that would establish entitlement to otherwise applicable relief or exemption from such Taxes and the Tax Indemnitee or such Related Party was eligible to comply with such requirement; provided, however, that the exclusion set forth in this clause (xii) shall not apply (I) if such failure to comply was due to a failure of the Lessee to provide such Tax Indemnitee reasonable assistance on request in complying with such requirement, (II) if in the good faith judgment of such Tax Indemnitee there is a risk of adverse consequence to such Tax Indemnitee or any Affiliate from such compliance against which such Tax Indemnitee is not satisfactorily indemnified, or (III) in the case of any Tax Indemnitee, unless Lessee shall have given such Tax Indemnitee prior timely written notice of such requirements; (xiii) as to the Equity Tax Indemnitee, Taxes that are imposed with respect to any period after both of the following shall have occurred: (x) the termination of the Lease Term pursuant to Section 6, 10, 11 or 22 of the Lease (unless the Equipment is thereafter required to be returned, in which case, after such return) and (y) the payment by the Lessee of all amounts due and owing by it to the Equity Tax Indemnitee under the Lease and other Operative Agreements; provided, however, that the exclusion set forth in this clause (xiii) shall not apply (I) to Taxes to the extent such Taxes relate to events occurring or matters arising prior to or simultaneously with such return or termination and (II) so long as a Lease Event of Default has occurred and is continuing; (xiv) as to any Lender Tax Indemnitee, Taxes in the nature of an intangible or similar tax upon or with respect to the value of the interest of such Lender Tax Indemnitee in the Indenture Estate, in any Equipment Note or Pass Through Certificate imposed as a result of such Lender Tax Indemnitee or any Affiliate of such Lender Tax Indemnitee being organized in, or conducting activities unrelated to the contemplated transactions in, the jurisdiction imposing such Taxes, provided however, that this exclusion shall not apply to the 61 incremental amount of such taxes that arise from such Lender Tax Indemnitee's participation in the transactions contemplated herein; (xv) Taxes imposed on the Owner Trustee, the Pass Through Trustee or the Indenture Trustee that are on, based on or measured by any trustee fees for services rendered by such Tax Indemnitee; (xvi) Except as set forth in Section 7.2, Taxes imposed on any Tax Indemnitee, or any other person who, together with such Tax Indemnitee, is treated as one employer for employee benefit plan purposes, as a result of, or in connection with, any "prohibited transaction," within the meaning of the provisions of the Code or regulations thereunder or as set forth in Section 406 of ERISA or the regulations implementing ERISA or Section 4975 of the Code or the regulations thereunder; (xvii) Taxes for so long as (x) such Taxes are being contested in accordance with the provisions of Section 7.1 (e) hereof, (y) the Lessee is in compliance with its obligations under Section 7.1(e), and (z) the payment of such Taxes is not required pursuant to Section 7.1(e); provided, however, that with respect to a Lender Tax Indemnitee this clause (xvii) shall only apply so long as the non-payment of the contested Tax does not result in any Lender Tax Indemnitee failing to receive all required payments when due under the Equipment Notes; (xviii) as to any Equity Tax Indemnitee, Taxes as to which such Tax Indemnitee is indemnified pursuant to the Tax Indemnity Agreement; (xix) any Taxes imposed on or with respect to any Certificateholder; (xx) Taxes imposed on a Tax Indemnitee as a result of the authorization or giving of any future amendments, supplements, waivers or consents by such Tax Indemnitee with respect to any Operative Agreement other than (w) in connection with the exercise of remedies pursuant to Section 15 of the Lease or while a Lease Event of Default has occurred and is continuing, (x) such as have been proposed by the Lessee or consented to by the Lessee in writing, (y) those that are required by applicable law or pursuant to the terms of the Operative Agreements, or (z) those that may be necessary or appropriate to, and are in conformity with, any amendment, supplement, waiver or consent proposed by the Lessee or consented to by the Lessee in writing; (xxi) Taxes imposed under Section 6707 or Section 6708 of the Code or with respect to provisions of state or local law similar to Sections 6707 and 6708 of the Code; provided, however, that this clause (xxi) shall not apply to any Taxes imposed under Section 6707(a) to the extent such Taxes arise (x) as a result of the Lessee or any Sublessee providing the Designated Organizer, (within the meaning of Temporary Treasury Regulation Section 301.6111-1T, Q/A 38 and 39) any false or misleading information or (y) as a result of the Lessee failing to provide the Designated Organizer or Tax Indemnitee with any item of information that is required under Section 6111 or Section 6112 of the Code or the regulations promulgated thereunder, which the Lessee possesses, that is requested by the Designated Organizer or Tax Indemnitee from the Lessee; and 62 (xxii) other than as addressed in clause (xxi) of this Section 7.1(c), interest, penalties and additions to tax that would not have been imposed but for the failure of a Tax Indemnitee to file any required document timely and properly, except to the extent that such failure is the direct result of Lessee's breach of its obligations under Section 7.1(g) or of a Lease Event of Default. For purposes of this section 7.1(c), any reference to the Lessee shall include the Lessee and any Related Party of the Lessee. Furthermore, the activities described in Section 7.1(m) shall not constitute an event described in any of the exclusions of this Section 7.1(c). (d) Payments to Tax Indemnitee. The Lessee agrees to pay, on demand, any and all Taxes indemnified under this Section 7.1 ("Indemnified Taxes"), and to keep at all times all and every part of each Unit and Pledged Equipment free and clear of all Indemnified Taxes which might in any way affect the interest of any Tax Indemnitee in or result in a Lien upon any such Unit or Pledged Equipment; provided, however, that the Lessee shall be under no obligation to pay any Tax so long as either the Tax Indemnitee or the Lessee is contesting such Tax in good faith, in a manner consistent with this Section 7.1, and by appropriate legal proceedings. Subject to Section 7.1(e), if any Indemnified Taxes shall have been charged or levied against any Tax Indemnitee directly and paid by such Tax Indemnitee after such Tax Indemnitee shall have given written notice thereof to the Lessee and the same shall have remained unpaid for a period of ten Business Days thereafter, the Lessee shall reimburse such Tax Indemnitee payment. (e) Contests. If a written claim is made by any taxing authority against a Tax Indemnitee for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim"), then such Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder except to the extent that it effectively precludes the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee 63 is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee 64 in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax 65 Claim, less any reasonable costs and expenses of the Tax Indemnitee prior to such payment in respect of such Tax Claim. (f) Payments to Lessee. With respect to any payment or indemnity hereunder, such payment or indemnity shall have included an amount payable to the Tax Indemnitee sufficient to hold such Tax Indemnitee harmless on an After-Tax Basis from all Taxes required to be paid by such Tax Indemnitee with respect to such payment or indemnity under the laws of any federal, state or local government or taxing authority in or of the United States, or under the laws of any taxing authority or governmental subdivision in or of a foreign country; provided that, if both (w) any Tax Indemnitee determines in it sole discretion that is has recognized either (1) a credit or refund of any Indemnified Tax, or (2) a reduction in Taxes that are not Indemnified Taxes, in either case as a result of the Lessee's indemnity or payment under this Section 7.1; and (x) such credit, refund or reduction was not taken into account in computing such payment or indemnity by the Lessee ("Tax Savings"), then such Tax Indemnitee shall pay to the Lessee an amount equal to the excess of: (y) such Tax Savings, over (z) the sum of (I) any tax benefit realized by the Lessee as a result of this payment by such Tax Indemnitee, plus (II) any Taxes imposed on such Tax Indemnitee by reason of its receipt or accrual of the Lessee's indemnity or payment; provided further that, (i) if at the time such payment shall be due to the Lessee, a Lease Event of Default shall have occurred and be continuing, such amount shall not be payable until such Lease Event of Default shall have been cured, and (ii) the amount that such Tax Indemnitee shall be required to pay to the Lessee shall not exceed the amounts that the Lessee has theretofore paid such Tax Indemnitee under this Section 7.1 with respect to such indemnity relating to the same Tax Claim, less the amount of all prior payments made to the Lessee in respect of such indemnity or a substantially identical indemnity under this section 7.1(f). If it is subsequently determined that the Tax Indemnitee was not entitled to such tax benefit for which payment was made to the Lessee hereunder, the amount of such tax benefit that is required to be repaid or recaptured will be treated as Taxes for which the Lessee must indemnify the Tax Indemnitee pursuant to this Section 7.1 without regard to paragraph (c) hereof. For purposes of this Section 7.1, in determining the order in which the consolidated (for federal income tax purposes) group to which such Tax Indemnitee belongs utilizes withholding or other foreign taxes as a credit against such group's United States income taxes, such Tax Indemnitee (and such group) shall be deemed to utilize (i) first, all foreign taxes other than those described in clauses (ii) and (iii) below; provided, however, that such other foreign taxes that are carried back to the taxable year for which a determination is being made pursuant to such clause (i) shall be deemed utilized after the foreign taxes described in clause (ii) below, (ii) then, on a pari passu basis, the foreign taxes indemnified hereunder together with all other foreign taxes (including fees, taxes and other charges hereunder) with respect to which such Tax Indemnitee (or any member of such group) is entitled to obtain indemnification pursuant to an indemnification provision contained in any lease, loan agreement, financing document or participation agreement (including, without limitation, this Agreement) pursuant to which there is an agreement that foreign taxes shall be, or shall be deemed to be, utilized on a basis no less favorable to the indemnitor than those contemplated in this paragraph, and (iii) third, foreign taxes attributable to transactions entered into by such Tax Indemnitee (or any member of such group) that did not provide for foreign taxes to be utilized or deemed utilized on at least a pari passu basis. 66 (g) Reports. In the event any reports, returns or statements ("Tax Reports") are required to be filed with respect to Indemnified Taxes, or otherwise materially impact a Tax Indemnitee in respect of a Tax, the Lessee will notify the Tax Indemnitee in writing of such requirement not later than 30 days prior to the date such Tax Reports are required to be filed (determined without regard to extensions), and will either prepare and timely file such Tax Reports (in the manner required by applicable law or regulation and in the case of Tax Reports which are required to be filed on the basis of individual Units, such reports shall be prepared and filed in such manner as to show, if required, the interest of each Tax Indemnitee in such Units) and send a copy thereof to the Tax Indemnitee or, if so directed by the Tax Indemnitee or if it shall not be permitted to file the same, it will notify each Tax Indemnitee of such reporting requirements, prepare such reports in such manner as shall be satisfactory to each Tax Indemnitee and deliver the same to each Tax Indemnitee within a reasonable period prior, and in no event later than 20 Business Days prior to, to the date the same is to be filed. The Lessee shall provide, at its expense, such information as the Owner Participant, the Lessor or other Tax Indemnitee may reasonably require and request from the Lessee to enable the appropriate Tax Indemnitees to fulfill their respective tax filing, tax audit, tax litigation and other tax related obligations. (h) Survival. In the event that, during the continuance of this Agreement, any Indemnified Tax accrues, becomes payable or is levied or assessed (or is attributable to the period of time during which the Lease is in existence or prior to the return of Equipment in accordance with the provisions of the Lease) which the Lessee is or will be obligated to pay or reimburse, pursuant to this Section 7.1, such liability shall continue, notwithstanding the expiration or termination of the Lease, until all such Taxes are paid or reimbursed by the Lessee. (i) Affiliated Group. For purposes of applying this Section 7.1 with respect to any Tax, the term "Owner Participant" shall include each member of the affiliated group of corporations with which the Owner Participant (and its successors and assigns) files consolidated or combined tax returns relating to such Imposition. The term "Lender" shall include any combined, consolidated or affiliated group (and any member thereof) of which such Person is or shall become a member if combined, unitary or consolidated returns are or shall be filed for such affiliated group for United States federal, state or local tax purposes. (j) [Reserved]. (k) Income Tax. For purposes of this Section 7.1, the term "Income Tax" means any Tax based on or measured by or with respect to gross income (in lieu of net income) or net income (including without limitation, capital gains taxes, personal holding company taxes, minimum taxes and tax preferences) or gross receipts (in lieu of net receipts) or net receipts and Taxes that are capital, net worth, conduct of business, franchise or excess profits taxes and interest, additions to tax, penalties, or other charges in respect thereof (provided, however, that Taxes that are, or are in the nature of, sales, use, rental, excise, ad valorem, stamp, transfer, license, value added, or property (whether tangible or intangible) taxes shall not constitute an Income Tax). (l) Certain Withholding. If the Indenture Trustee or Pass Through Trustee fails to withhold any Tax required to be withheld with respect to any payment to a Lender Tax 67 Indemnitee or any claim is otherwise asserted by a taxing authority against the Equity Tax Indemnitee for or on account of any amount required to be withheld from any payment to a Lender Tax Indemnitee or Certificateholder, then the Lessee will indemnify such Equity Tax Indemnitee (without regard to any exclusions in Section 7.1(c) hereof) on an After-Tax Basis against any Taxes required to be withheld and any interest, penalties, and additions to tax with respect thereto, along with other costs (including attorneys' fees) incurred in connection with such claim. The Indenture Trustee or the Pass Through Trustee, as the case may be, in its individual capacity (and without recourse to the Indenture Estate, the Trust Estate or the Lessee) shall indemnify the Lessee on an After-Tax Basis for any payment the Lessee shall have made pursuant to the preceding sentence. (m) Trust Tax Ownership Structure. The Owner Participant hereby agrees that by December 31, 2005, it shall take all reasonable actions permitted under applicable law (including, but not limited to creating new entities) to restructure and hold its beneficial interest in the Trust through a limited partnership that is disregarded for federal income tax purposes in order to minimize Texas franchise taxes, if any, imposed on it or any other Equity Tax Indemnitee as a result of the transactions contemplated herein and for which any indemnity for such taxes under this Section 7.1 would be owed. The Owner Participant further agrees to the extent a change in Texas law eliminates the ability to reduce Texas franchise taxes through a limited partnership structure, the Owner Participant shall take such reasonable steps to mitigate the Texas franchise taxes as the result of the change in law, so long as the Owner Participant determines in its sole discretion that such steps will not have a material adverse effect on the Owner Participant or any of its Affiliates. The Lessee shall reimburse the Owner Participant for (x) the costs of any actions taken pursuant to, or to accomplish the intention of, this Section 7.1(m), including any taxes attributable to such actions, and (y) any and all Texas taxes that relate directly or indirectly to the transactions contemplated by the Operative Agreements, Pass Through Documents or Partnership Documents, in each case on an After-Tax Basis and without regard to the exclusions in Section 7.1(c) hereof, provided, however that for the avoidance of doubt, nothwithstanding any provision herein, the Lessee shall not be required to indemnify the Owner Participant or any of its Affiliates for any such taxes that would have been imposed on the Owner Participant or any of its Affiliates without regard to the transactions contemplated by the Operative Agreements, Pass Through Documents or Partnership Documents. Notwithstanding any other provision hereto or under any other Operative Agreement, the other parties to this Agreement hereby agree and consent to the Owner Participant taking the actions specified in the first and second sentences of this Section 7.1(m). Section 7.2 General Indemnification. (a) Claims Defined. For the purposes of Sections 7.2 and 7.3, "Claims" shall mean any and all costs, expenses, liabilities, obligations, losses, damages, penalties, actions or suits or claims of whatsoever kind or nature (whether or not on the basis of negligence, strict or absolute liability or liability in tort) (including, without limitation, Claims and Taxes arising out of, or in connection with ERISA, Section 4975 of the Code or provisions under any federal, state or local authority or any foreign governmental authority (or political subdivision thereof) that contains one or more provisions that are similar to Section 406 of ERISA or Section 4975 of the Code ("Similar Laws")) that may be imposed on, incurred by, suffered by, or asserted against an Indemnified Person, any Unit or any Pledged Unit or other Collateral and, except as otherwise 68 expressly provided in Section 7.2 and 7.3, shall include, but not be limited to, all reasonable out-of-pocket costs, disbursements and expenses (including legal fees and expenses) paid or incurred by an Indemnified Person in connection therewith or related thereto. (b) Indemnified Person Defined. For the purposes of Sections 7.2 and 7.3, "Indemnified Person" means the Owner Participant, the Owner Trustee, Trust Company, the Indenture Trustee, both in its individual capacity and as trustee, the Pass Through Trustee, the Policy Provider, each of the Affiliates and each of the respective directors, officers, employees, successors and permitted assigns, agents and servants of the foregoing, the Trust Estate and the Indenture Estate (the respective directors, officers, employees, successors and permitted assigns, agents and servants of the Owner Participant, the Owner Trustee, Trust Company, the Indenture Trustee, the Pass Through Trustee, the Policy Provider and each of their Affiliates, as applicable, together with the Owner Participant, the Owner Trustee, Trust Company, the Indenture Trustee, the Pass Through Trustee and each of their Affiliates, as the case may be, being referred to herein collectively as the "Related Indemnitee Group" of the Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass Through Trustee and the Trust Company, respectively). (c) Claims Indemnified. Whether or not any Unit is accepted under the Lease, or the Closing occurs, and subject to the exclusions stated in Section 7.2(d) below, Lessee agrees to indemnify, protect, defend and hold harmless each Indemnified Person on an After-Tax Basis against Claims directly or indirectly resulting from or arising out of or alleged to result from or arise out of (whether or not such Indemnified Person shall be indemnified as to such Claim by any other Person but subject to Section 7.2(g)): (i) this Agreement or any other Operative Agreement or any Partnership Document or any of the transactions contemplated hereby or thereby or any Unit or Pledged Unit or other Collateral or the acquisition, ownership, lease, operation, possession, modification, improvement, abandonment, use, non-use, maintenance, lease, sublease, substitution, control, repair, storage, alteration, transfer or other application or disposition, return, overhaul, testing, servicing, replacement or registration of any Unit or Pledged Unit (including, without limitation, injury, death or property damage of passengers, shippers or others, environmental control, noise and pollution regulations, or the presence, discharge, treatment, storage, handling, generation, disposal, spillage, release, escape of or exposure of any Person or thing to (directly or indirectly) Hazardous Substances or damage to the environment (including, without limitation, costs of investigations or assessments, clean-up costs, response costs, remediation costs, removal costs, restoration costs, monitoring costs, costs of corrective actions and natural resource damages)) whether or not in compliance with the terms of the Lease or the Collateral Agency Agreement, as applicable, or any of the commodities, items or materials from time to time contained in any Unit or Pledged Unit, whether or not in compliance with the terms of the Lease or the Collateral Agency Agreement, as applicable, or the inadequacy of any Unit or Pledged Unit or deficiency or defect in any Unit or Pledged Unit or any other circumstances in connection with any Unit or Pledged Unit or the performance of any Unit or Pledged Unit or any risks relating thereto; (ii) the construction, manufacture, financing, refinancing, design, purchase, acceptance, rejection, delivery, non-delivery or condition of any Unit or any Pledged 69 Unit (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement); (iii) any act or omission (whether negligent or otherwise) or any breach of or failure to perform or observe, or any other non-compliance with, any covenant, condition or agreement to be performed by, or other obligation of, the Lessee or any Affiliate of the Lessee under any of the Operative Agreements or Partnership Documents, or the falsity of any representation, warranty or certification of the Lessee or any Affiliate of the Lessee in any of the Operative Agreements or Partnership Documents to which it is a party or in any document or certificate delivered by the Lessee or any Affiliate of the Lessee in connection therewith other than representations and warranties in the Tax Indemnity Agreement; (iv) the offer, sale or delivery of any Equipment Notes or Pass Through Certificates or any interest in the Trust Estate or in connection with a refinancing in accordance with the terms hereof; and (v) any violation of any law, rule, regulation or order by the Lessee or any Affiliate of Lessee or any Sublessee or any Pledged Equipment Lessee or any of their respective directors, officers, employees, agents or servants. (d) Claims Excluded. The following are excluded from the Lessee's agreement to indemnify under this Section 7.2: (i) Claims with respect to any Unit to the extent attributable to acts or events occurring after (and not attributable to events that have occurred or conditions existing prior to) (A) in the case of the consummation by the Lessee of a purchase option under Section 22.1 or 22.3 of the Lease or the occurrence of an Event of Loss with respect to such Unit under Section 11 of the Lease, the later to occur of (x) the payment of all amounts due from the Lessee in connection with any such event and (y) the release of the Lien of the Indenture on such Unit or (B) in all other cases, the last to occur of (x) with respect to such Unit, the earlier to occur of the termination of the Lease or the expiration of the Lease Term, (y) with respect to each Unit, the return of such Unit to the Lessor in accordance with the terms of the Lease (it being understood that, so long as any Unit is in storage as provided in Section 6.1 of the Lease, the date of return thereof for the purpose of this clause (i) shall be the last day of the Storage Period) and (z) the release of the Lien of the Indenture on such Unit; (ii) Claims which are Taxes or any loss of tax benefits or increases in tax liability (provided that this clause (ii) shall not preclude a Claim from being paid on an After-Tax Basis), but not excluding Taxes or any loss of tax benefits or increases in tax liability with respect to any Indemnified Person, or any other person who, together with such Indemnified Person, is treated as one employer for employee benefit plan purposes, as a result of, or in connection with, any "prohibited transaction" within the meaning of the provisions of the Code or regulations thereunder or as set forth in Section 406 of ERISA or the regulations implementing ERISA, Section 4975 of the Code or the regulations thereunder or applicable Similar Laws or the regulations thereunder; 70 (iii) with respect to any particular Indemnified Person, Claims resulting from the gross negligence or willful misconduct of such Indemnified Person or a Related Party of such Indemnified Person (other than gross negligence or willful misconduct imputed as a matter of law to such Indemnified Person solely by reason of its interest in the Equipment), or any breach of any covenant, or falsity of any representation or warranty of such Indemnified Person or such Related Party; (iv) Claims to the extent attributable to any transfer by the Lessor of the Equipment or any portion thereof or any transfer by the Owner Participant of all or any portion of its interest in the Trust Estate other than (x) any such transfer in connection with a Lease Event of Default or the exercise of remedies in connection therewith and (y) any such transfer to the Lessee or its designee in connection with a purchase or a voluntary termination as contemplated by the Lease or Section 6.9 or (z) any such transfer made pursuant to Section 7.1(m); (v) with respect to any particular Indemnified Person that is the Owner Participant or the Owner Trustee in the case of clause (a) below or that is the Loan Participant in the case of clause (b) below, unless such transfer is required by the terms of the Operative Agreements or occurs during the continuance of a Lease Event of Default, Claims relating to any offer, sale, assignment, transfer or other disposition (voluntary or involuntary) (a) in the case of the Owner Participant, of any of its interest in the Beneficial Interest (other than pursuant to Section 6.9 or Section 7.1(m)) or (b) with respect to the Loan Participant, of all or any portion of the Loan Participant's interest in the Equipment Notes or the collateral therefor; (vi) with respect to any particular Indemnified Person, Claims resulting from the imposition of any Lessor's Lien (or other liens not expressly permitted) attributable to such Indemnified Person or a Related Party of such Indemnified Person; (vii) with respect to any particular Indemnified Person, Claims to the extent the risk thereof has been expressly assumed by such Indemnified Person in connection with the exercise by such Indemnified Person of any inspection rights under the Operative Documents; (viii) Claims relating to any amount that constitutes or (in the case of subclause (D)) is attributable to: (A) principal of, or interest or premium on the Equipment Notes or securities issued by the Pass Through Trusts (except to the extent such amounts are otherwise indemnified pursuant to Section 7.2(c)(iv)); (B) Transaction Costs (without limiting Lessee's obligations under Sections 2.5(c) and 2.5(e)); (C) ordinary and usual operating or overhead expenses of the applicable Indemnified Person; (D) Indenture Events of Default not attributable to a Lease Event of Default or a Manager Default; and (E) failure by Owner Trustee, Indenture Trustee or Pass Through Trustee, respectively, to distribute any amounts held by it in accordance with the Operative Agreements; and (ix) Claims relating to the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any of the Operative Agreements which are not (1) requested by the Lessee or (2) required by any applicable law or regulation (other than laws or regulations solely relating to the business of the Lessor, the 71 Indenture Trustee, the Trust Company, the Pass Through Trustee, the Initial Purchasers, the Collateral Agent, the Policy Provider or any Participant) or (3) entered into in connection with, or as a result of, a Lease Default or (4) required pursuant to the terms of the Operative Agreements (including such reasonable expenses incurred in connection with any adjustment pursuant to Section 2.6). (e) Insured Claims. In the case of any Claim indemnified by the Lessee hereunder which is covered by a policy of insurance maintained by the Lessee pursuant to Section 12 of the Lease or otherwise, each Indemnified Person agrees to provide reasonable cooperation to the applicable insurers in the exercise of their rights to investigate, defend, settle or compromise such Claim as may be required to retain the benefits of such insurance with respect to such Claim. (f) Claims Procedure. An Indemnified Person shall, after obtaining knowledge thereof, promptly notify the Lessee of any Claim as to which indemnification is sought; provided, however, that the failure to give such notice shall not release the Lessee from any of its obligations under this Section 7.2, except (but only if neither the Lessee nor TILC shall have actual knowledge of such Claim) to the extent that failure to give notice of any action, suit or proceeding against such Indemnified Person shall have a material adverse effect on Lessee's ability to defend such Claim or recover proceeds under any insurance policies maintained by the Lessee or to the extent Lessee's indemnification obligations are increased as a demonstrable result of such failure. The Lessee shall, after obtaining knowledge thereof, promptly notify each Indemnified Person of any indemnified Claim affecting such Indemnified Person. Subject to the provisions of the following paragraph, the Lessee shall at its sole cost and expense be entitled to control, and shall assume full responsibility for, the defense of such claim or liability; provided that the Lessee shall confirm to such Indemnified Person Lessee's obligations to indemnify hereunder for such Claim, shall keep the Indemnified Person which is the subject of such proceeding fully apprised of the status of such proceeding and shall provide such Indemnified Person with all information with respect to such proceeding as such Indemnified Person shall reasonably request. To the extent that a Claim is made against Lessee pursuant to this Section 7.2 at a time when an identical claim for indemnification arising from substantially similar facts and circumstances is being asserted against TILC or TRLTII pursuant to this Section 7, if Lessee is entitled to control the defense of such Claim pursuant to this Section 7.2 and at the same time TILC or TRLTII, as the case may be, is entitled to control the defense of such claim or liability pursuant to this Section 7, Lessee's indemnification obligations under this Section 7.2 shall not be reduced as a result of the inability of Lessee to control the defense of such Claim where such inability to control the defense of such Claim is caused by the exercise by TILC or TRLTII, as applicable, of such Person's right to control the defense of such indemnified claim as provided by this Section 7. Notwithstanding any of the foregoing to the contrary, the Lessee shall not be entitled to control and assume responsibility for the defense of any Claim if (1) a Lease Default shall have occurred and be continuing, (2) such proceeding will involve any material danger of the sale, forfeiture or loss of, or the creation of any Lien (other than any Lien permitted under the Operative Agreements or a Lien that is adequately bonded to the satisfaction of such Indemnified Person) on, any Unit, Pledged Unit, Sublease, Pledged Equipment Lease or Applicable Sublease Payment or Applicable Railcar Payment (each as defined in the Management Agreement), (3) in 72 the good faith opinion of such Indemnified Person, there exists an actual or potential conflict of interest such that it is advisable for such Indemnified Person to retain control of such proceeding, (4) such Claim involves the possibility of criminal sanctions or liability to such Indemnified Person, (5) an Equity Insufficiency Circumstance shall exist or (6) such proceeding involves Claims not fully indemnified by the Lessee. In the circumstances described in clauses (1) - (6), the Indemnified Person shall be entitled to control and assume responsibility for the defense of such claim or liability at the expense of the Lessee. In addition, any Indemnified Person may participate in any reasonable manner that is not likely to materially interfere with such control in any proceeding controlled by the Lessee pursuant to this Section 7.2, at its own expense, in respect of any such proceeding as to which the Lessee shall have acknowledged in writing its obligation to indemnify the Indemnified Person pursuant to this Section 7.2, and at the expense of the Lessee in respect of any such proceeding as to which the Lessee shall not have so acknowledged its obligation to the Indemnified Person pursuant to this Section 7.2. The Lessee may in any event participate in all such proceedings at its own cost; provided that if Lessee is not entitled to control the defense of such Claim in accordance with this Section 7.2(f), any participation of the Lessee in such proceeding shall be in a reasonable manner that is not likely to materially interfere with the control of the Indemnified Person in such proceeding. Nothing contained in this Section 7.2(f) shall be deemed to require an Indemnified Person to contest any Claim or to assume responsibility for or control of any judicial proceeding with respect thereto. No Indemnified Person shall enter into any settlement or other compromise with respect to any Claim without the prior written consent of the Lessee unless the Indemnified Person waives its rights to indemnification hereunder; provided that an Indemnified Person shall be permitted to enter into such a settlement or compromise without the consent of the Lessee and without waiving its indemnification rights hereunder if (x) such Indemnified Person has given the Lessee reasonable prior notice of its intention to settle or compromise such Claim (the reasonableness of its prior notice to take into account, among other items, any applicable deadlines in any proceedings relating to such Claim), (y) the Lessee has not acknowledged its indemnity obligations with respect to such Claim and (z) there is a significant risk that an adverse judgment will be entered into against such Indemnified Person with respect to such Claim. In the event that in the course of the investigation or defense of a Claim, the Lessee shall in good faith reasonably determine that it is not liable for indemnification with respect thereto under this Section 7.2, it may give notice to the applicable Indemnified Person of such fact; and, in such case, any acknowledgment theretofore made by the Lessee of liability with respect to such Claim under this Section 7.2 shall be deemed revoked and the Lessee may thereupon cease to defend such Claim; provided that (i) the Lessee shall have given the Indemnified Person reasonable prior notice of its intention to renounce such acknowledgment, (ii) the Lessee's conduct regarding the defense of such Claim or any decision to withdraw from such defense shall not prejudice or have prejudiced the Indemnified Person's ability to contest such Claim (taking into account, among other things, the timing of the Lessee's withdrawal and the theory or theories upon which Lessee shall have based its defense), and (iii) the Lessee shall have given such Indemnified Person all materials, documents and records relating to its defense of such Claim as such Indemnified Person shall have reasonably requested in connection with the assumption by such Indemnified Person of the defense of such Claim at the cost and expense of the Lessee. In the event that the Lessee shall cease to defend any Claim pursuant to the preceding sentence, the Lessee shall indemnify each Indemnified Person, without regard to any exclusion that might otherwise apply hereunder, to the extent that the actions of the Lessee in defending 73 such Claim or the manner or time of the Lessee's election to withdraw from the defense of such Claim shall have caused such Indemnified Person to incur any loss, cost, liability, expense or other Claim that such Indemnified Person would not have incurred had the Lessee not ceased to defend such Claim in such manner or such time. (g) Subrogation. If a Claim indemnified by the Lessee under this Section 7.2 is paid in full by the Lessee and/or an insurer under a policy of insurance maintained by the Lessee, the Lessee and/or such insurer, as the case may be, shall be subrogated to the extent of such payment to the rights and remedies of the Indemnified Person (other than under insurance policies maintained by such Indemnified Person) on whose behalf such Claim was paid with respect to the transaction or event giving rise to such Claim. Should an Indemnified Person receive any refund, in whole or in part, with respect to any Claim paid by the Lessee hereunder, it shall promptly pay over the amount refunded (but not in excess of the amount the Lessee or any of its insurers has paid) to the Lessee; provided, however, so long as a Lease Event of Default shall have occurred and be continuing, such amount may be held by the Collateral Agent as security for the Lessee's obligations under the Lease and the other Operative Agreements; provided, further, only with respect to the Owner Participant and its Related Indemnitee Group, so long as an event referred to in clause (5) of Section 7.2(f) hereof shall have occurred and be continuing, such amount may be held by the Owner Trustee as security for the Lessee's obligations with respect to the Equity Insufficiency Circumstance. Section 7.3 Indemnification by TILC. (a) Claims Indemnified. Whether or not any Unit is accepted under the Lease, or the Closing occurs, and subject to the exclusions stated in Section 7.3(b) below, TILC agrees to indemnify, protect, defend and hold harmless each Indemnified Person on an After-Tax Basis against Claims directly or indirectly resulting from or arising out of or alleged to result from or arise out of (whether or not such Indemnified Person shall be indemnified as to such Claim by any other Person but subject to Section 7.3(d)): (i) any breach of or any inaccuracy in any representation, warranty or certification made by TILC in this Agreement or any of the other Operative Agreements or in any document or certificate delivered by TILC pursuant hereto or thereto; (ii) any breach of or failure by TILC to perform any covenant or obligation of TILC set out in or contemplated by this Agreement or any of the other Operative Agreements; and (iii) any violation of any law, rule, regulation or order by TILC or its directors, officers, employees, agents or servants. (b) Claims Excluded. The following are excluded from TILC's agreement to indemnify under this Section 7.3: (i) Claims attributable to acts or events occurring after the termination of the Lease or the expiration of the Lease Term; and 74 (ii) Claims which are Taxes or any loss of tax benefits or increases in tax liability (provided that this clause (ii) shall not preclude a Claim from being paid on an After-Tax Basis); (c) Claims Procedure. An Indemnified Person shall, after obtaining knowledge thereof, promptly notify TILC of any Claim as to which indemnification is sought; provided, however, that the failure to give such notice shall not release TILC from any of its obligations under this Section 7.3, except (but only if neither the Lessee nor TILC shall have actual knowledge of such Claim) to the extent that failure to give notice of any action, suit or proceeding against such Indemnified Person shall have a material adverse effect on TILC's ability to defend such Claim or recover proceeds under any insurance policies maintained by TILC or to the extent TILC's indemnification obligations are increased as a demonstrable result of such failure. TILC shall, after obtaining knowledge thereof, promptly notify each Indemnified Person of any indemnified Claim affecting such Indemnified Person. Subject to the provisions of the following paragraph, TILC shall at its sole cost and expense be entitled to control, and shall assume full responsibility for, the defense of such claim or liability; provided that TILC shall confirm to such Indemnified Person TILC's obligations to indemnify hereunder for such Claim, shall keep the Indemnified Person which is the subject of such proceeding fully apprised of the status of such proceeding and shall provide such Indemnified Person with all information with respect to such proceeding as such Indemnified Person shall reasonably request. To the extent that a Claim is made against TILC pursuant to this Section 7.3 at a time when an identical claim for indemnification arising from substantially similar facts and circumstances is being asserted against Lessee or TRLTII pursuant to this Section 7, if TILC is entitled to control the defense of such Claim pursuant to this Section 7.3 and at the same time Lessee or TRLTII, as the case may be, is entitled to control the defense of such claim or liability pursuant to this Section 7, TILC's indemnification obligations under this Section 7.3 shall not be reduced as a result of the inability of TILC to control the defense of such Claim where such inability to control the defense of such Claim is caused by the exercise by Lessee or TRLTII, as applicable, of such Person's right to control the defense of such indemnified claim as provided by this Section 7. Notwithstanding any of the foregoing to the contrary, TILC shall not be entitled to control and assume responsibility for the defense of any Claim if (1) a Lease Event of Default shall have occurred and be continuing, (2) such proceeding will involve any material danger of the sale, forfeiture or loss of, or the creation of any Lien (other than any Lien permitted under the Operative Agreements or a Lien which is adequately bonded to the satisfaction of such Indemnified Person) on, any Unit or Pledged Unit, (3) in the good faith opinion of such Indemnified Person, there exists an actual or potential conflict of interest such that it is advisable for such Indemnified Person to retain control of such proceeding, (4) such Claim involves the possibility of criminal sanctions or liability to such Indemnified Person or (5) an Equity Insufficiency Circumstance shall exist. In the circumstances described in clauses (1) - (5), the Indemnified Person shall be entitled to control and assume responsibility for the defense of such claim or liability at the expense of TILC. In addition, any Indemnified Person may participate in any reasonable manner that is not likely to materially interfere with such control in any proceeding controlled by TILC pursuant to this Section 7.3, at its own expense, in respect of any such proceeding as to which TILC shall have acknowledged in writing its obligation to indemnify the Indemnified Person pursuant to this Section 7.3, and at the expense of TILC in respect of any such proceeding as to which TILC shall not have so acknowledged its obligation 75 to the Indemnified Person pursuant to this Section 7.3. TILC may in any event participate in all such proceedings at its own cost; provided that if TILC is not entitled to control the defense of such Claim in accordance with this Section 7.3(c), any participation of the TILC in such proceeding shall be in a reasonable manner that is not likely to materially interfere with the control of the Indemnified Person in such proceeding. Nothing contained in this Section 7.3(c) shall be deemed to require an Indemnified Person to contest any Claim or to assume responsibility for or control of any judicial proceeding with respect thereto. No Indemnified Person shall enter into any settlement or other compromise with respect to any Claim without the prior written consent of TILC unless the Indemnified Person waives its rights to indemnification hereunder; provided that an Indemnified Person shall be permitted to enter into such a settlement or compromise without the consent of TILC and without waiving its indemnification rights hereunder if (x) such Indemnified Person has given TILC reasonable prior notice of its intention to settle or compromise such Claim (the reasonableness of its prior notice to take into account, among other items, any applicable deadlines in any proceedings relating to such Claim), (y) TILC has not acknowledged its indemnity obligations with respect to such Claim and (z) there is a significant risk that an adverse judgment will be entered into against such Indemnified Person with respect to such Claim. In the event that in the course of the investigation or defense of a Claim, TILC shall in good faith reasonably determine that it is not liable for indemnification with respect thereto under this Section 7.2, it may give notice to the applicable Indemnified Person of such fact; and, in such case, any acknowledgment theretofore made by TILC of liability with respect to such Claim under this Section 7.2 shall be deemed revoked and TILC may thereupon cease to defend such Claim; provided that (i) TILC shall have given the Indemnified Person reasonable prior notice of its intention to renounce such acknowledgment, (ii) TILC's conduct regarding the defense of such Claim or any decision to withdraw from such defense shall not prejudice or have prejudiced the Indemnified Person's ability to contest such Claim (taking into account, among other things, the timing of TILC's withdrawal and the theory or theories upon which TILC shall have based its defense), and (iii) TILC shall have given such Indemnified Person all materials, documents and records relating to its defense of such Claim as such Indemnified Person shall have reasonably requested in connection with the assumption by such Indemnified Person of the defense of such Claim at the cost and expense of TILC. In the event that TILC shall cease to defend any Claim pursuant to the preceding sentence, TILC shall indemnify each Indemnified Person, without regard to any exclusion that might otherwise apply hereunder, to the extent that the actions of TILC in defending such Claim or the manner or time of TILC's election to withdraw from the defense of such Claim shall have caused such Indemnified Person to incur any loss, cost, liability, expense or other Claim that such Indemnified Person would not have incurred had TILC not ceased to defend such Claim in such manner or such time. (d) Subrogation. If a Claim indemnified by TILC under this Section 7.3 is paid in full by TILC and/or an insurer under a policy of insurance maintained by TILC, TILC and/or such insurer, as the case may be, shall be subrogated to the extent of such payment to the rights and remedies of the Indemnified Person (other than under insurance policies maintained by such Indemnified Person) on whose behalf such Claim was paid with respect to the transaction or event giving rise to such Claim. Should an Indemnified Person receive any refund, in whole or in part, with respect to any Claim paid by TILC hereunder, it shall promptly pay over the amount refunded (but not in excess of the amount TILC or any of its insurers has 76 paid) to TILC; provided, however, so long as a Lease Event of Default shall have occurred and be continuing, such amount may be held by the Collateral Agent as security for TILC's obligations under the Lease and the other Operative Agreements; provided, further, only with respect to the Owner Participant and its Related Indemnitee Group, so long as an event referred to in clause (5) of Section 7.3(c) hereof shall have occurred and be continuing, such amount may be held by the Owner Trustee as security for the Lessee's obligations with respect to the Equity Insufficiency Circumstance. Section 7.4 Special Indemnification Regarding Exercise of Setoff by Customers. TILC hereby agrees, for the benefit of the Owner Participant, the Policy Provider, the holders of the Equipment Notes, the Trust Estate and the Indenture Estate, that it will, within 45 days after the date on which it has knowledge that any Customer shall have reduced any payments made by such Customer under any Sublease or Pledged Equipment Lease as a result of or in connection with any setoff exercised by such Customer (regardless of whether such Customer actually has any contractual, statutory or other right to exercise such setoff) with respect to amounts owed or presumed owed to such Customer pursuant to railcar subleases or leases not constituting Subleases or Pledged Equipment Leases, and provided that the applicable Customer shall not have made payments aggregating the full amount payable by such Customer under the applicable Sublease or Pledged Equipment Lease prior to the end of such 30-day period, deposit into the Collection Account an amount, in immediately available funds, equal to the amount of such reduction. SECTION 8. LESSEE'S RIGHT OF QUIET ENJOYMENT. Each party to this Agreement acknowledges notice of, and consents in all respects to, the terms of the Lease, and expressly, severally and as to its own actions only, agrees that it shall not take or cause to be taken any action contrary to the Lessee's rights under the Lease, including, without limitation, the right to possession, use and quiet enjoyment (i) by the Lessee of the Equipment, so long as no Lease Event of Default has occurred and is continuing, or (ii) to the extent required under the applicable Sublease or Pledged Equipment Lease or under any applicable consent referred to in Section 4.1(cc) by any Sublessee of the Equipment or by any Pledged Equipment Lessee of the Pledged Equipment. SECTION 9. SUCCESSOR INDENTURE TRUSTEE. In the event that the Indenture Trustee gives notice of its resignation pursuant to Section 8.2 of the Indenture, the Owner Trustee shall promptly appoint a successor Indenture Trustee reasonably acceptable to the Lessee. SECTION 10. MISCELLANEOUS. Section 10.1 Consents. Each Participant covenants and agrees (subject, in the case of the Loan Participant, to all of the terms and provisions of the Indenture) that it shall not unreasonably withhold its consent to any consent requested by the Lessee, TILC, TRLTII, the Owner Trustee, the Pass Through Trustee or the Indenture Trustee, as the case may be, under the 77 terms of the Operative Agreements that by its terms is not to be unreasonably withheld by the Owner Trustee or the Indenture Trustee. Section 10.2 Refinancing. So long as no Lease Event of Default has occurred and is continuing, the Lessee shall have the right, on no more than two occasions, in its sole discretion, at any time following the fifth anniversary of the Closing Date, to request the Owner Participant and the Trust to effect an optional prepayment of all, but not less than all, of the Equipment Notes pursuant to Section 2.10(d) of the Indenture as part of a refunding or refinancing operation, provided that the Lessee shall obtain the prior written consent of the Owner Participant to be granted in the sole discretion of the Owner Participant acting in good faith if such refinancing imposes any increased risk or liability on or otherwise adversely affects the Owner Participant; provided further, that the Owner Participant shall not withhold such consent if in its sole judgment (i) any increased risk or liability is both remote and not material, (ii) the Lessee and Trinity are at the time at least as creditworthy as on the Closing Date and (iii) the Lessee provides an indemnity, in form and substance satisfactory to the Owner Participant, for such increased risk or liability, which indemnity is guaranteed by Trinity pursuant to a Guaranty substantially in the form of Section 11 of this Agreement. As soon as practicable after receipt of such request, the Owner Participant and the Lessee shall cooperate in good faith to effectuate such refinancing or refunding and shall enter into an agreement, in form and substance satisfactory to the parties thereto, as to the terms of such refunding or refinancing as follows: (a) the Lessee, the Owner Participant, the Indenture Trustee, the Owner Trustee, and any other appropriate parties will enter into a financing or loan agreement (which may involve an underwriting agreement in connection with a public offering or a securities purchase agreement in connection with a Rule 144A offering), in form and substance reasonably satisfactory to the parties thereto, providing for (i) the issuance and sale by the Trust or such other party as may be appropriate on the date specified in such agreement (for the purposes of this Section 10.2, the "Refunding Date") of debt securities in an aggregate principal amount (in the lawful currency of the United States) equal to the principal amount of the Equipment Notes outstanding on the Refunding Date, having the same maturity date as said Equipment Notes and having a weighted average life which is not less than or greater than (in either case, by more than six months) the Remaining Weighted Average Life of said Equipment Notes, (ii) the application of the proceeds of the sale of such debt securities to the prepayment of all such Equipment Notes on the Refunding Date, and (iii) payment by Lessee to the Person or Persons entitled thereto of all other amounts, in respect of accrued interest, any Make Whole Amount or other premium, if any, payable on such Refunding Date; (b) the Lessee and the Trust will amend the Lease in a manner such that (i) if the Refunding Date is not a Rent Payment Date and the accrued and unpaid interest on the Equipment Notes is not otherwise paid pursuant to Section 10.2(a), the Lessee shall on the Refunding Date prepay that portion of the next succeeding installment of Basic Rent as shall equal the aggregate interest accrued on the Equipment Notes outstanding to the Refunding Date, (ii) Basic Rent payable in respect of the period from and after the Refunding Date shall be recalculated to preserve the Net Economic Return which the Owner Participant would have realized had such refunding not occurred, provided that the net present value of Basic Rent shall be minimized to the extent consistent therewith, and (iii) amounts payable in respect of Stipulated Loss Value, Stipulated Loss Amount, Early Purchase Price, Termination Value and 78 Termination Amount from and after the Refunding Date shall be appropriately recalculated to preserve the Net Economic Return which the Owner Participant would have realized had such refunding not occurred (it being agreed that any recalculations pursuant to subclauses (ii) and (iii) of this clause (b) shall be performed in accordance with the requirements of Section 2.6 hereof); (c) the Trust will enter into an agreement to provide for the securing thereunder of the debt securities issued by the Trust pursuant to clause (a) of this Section 10.2 in like manner as the Equipment Notes and/or will enter into such amendments and supplements to the Indenture as may be necessary to effect such refunding or refinancing; provided that, no such agreement or amendment shall provide for any increase in the security for the new debt securities; and provided further that, notwithstanding the foregoing (but subject to the provisions of clauses (a) and (b) and the lead in paragraph of this Section 10.2 above), the Lessee reserves the right to set the economic terms and other terms not customarily negotiated between an owner participant and a lender of the refunding or refinancing transaction to be so offered except to the extent adversely affecting cash flow, coverage ratios and reserve accounts, to the extent that they are passed through to the Lessee in, or define rights or obligations of the Lessee under, the Operative Agreements; (d) (i) in the case of a refunding or refinancing involving a public offering of debt securities, neither the Trust nor the Owner Participant shall be an "issuer" for securities law purposes or an "obligor" within the meaning of the Trust Indenture Act of 1939, as amended, the offering materials (including any registration statement) for the refunding or refinancing transaction shall be reasonably satisfactory to the Owner Participant and (ii) the Lessee shall provide satisfactory indemnity to the Owner Trustee and Owner Participant with respect to the refunding or refinancing; (e) unless otherwise agreed by each of the Owner Participant and the Policy Provider, the Lessee shall pay to the Trust as Supplemental Rent an amount, on an After-Tax Basis, equal to any Make-Whole Amount, Late Payment Premium, if any, payable in respect of Equipment Notes outstanding on the Refunding Date pursuant to the Indenture, all interest which is accrued and unpaid in respect of late payments of Basic Rent or any part thereof, all Policy Provider Amounts due and owing to the Policy Provider on the Refunding Date (after giving effect to the transactions contemplated to occur on the Refunding Date) and all reasonable fees, costs, expenses of such refunding or refinancing and of the parties hereto incurred in connection with such refunding or refinancing (including all reasonable out-of-pocket legal fees and expenses and the reasonable fees of any financial advisors); (f) the Lessee shall give the Indenture Trustee, the Policy Provider, the Pass Through Trustee and the Owner Participant not less than 25 days prior written notice of the Refunding Date; (g) the Owner Participant, the Owner Trustee, the Pass Through Trustee and the Indenture Trustee shall have received (i) such opinions of counsel as they may reasonably request concerning compliance with the Securities Act of 1933, as amended, and any other applicable law relating to the sale of securities and (ii) such other opinions of counsel and such certificates and other documents, each in form and substance reasonably satisfactory to them, as 79 they may reasonably request in connection with compliance with the terms and conditions of this Section 10.2 (including with respect to the Owner Participant a satisfactory tax opinion to the effect that there are no material adverse tax consequences as a result of the refinancing); and (h) such refinancing shall not violate any requirement of law, and all necessary authorizations, approvals and consents shall have been obtained and shall be in full force and effect. The Lessee shall pay to or reimburse the Participants, the Owner Trustee and the Indenture Trustee for (A) all costs and expenses (including reasonable attorneys' and accountants' fees) paid or incurred by them in connection with such refunding or refinancing and (B) a refunding fee payable to each Owner Participant on a pro rata basis upon the occurrence of the second refunding or refinancing equal to the product of $1,000 multiplied by a fraction, the numerator of which is the total Equipment Cost of the Units on the date of such refinancing and the denominator of which is $1,000,000. Section 10.3 Amendments and Waivers. No term, covenant, agreement or condition of this Agreement may be terminated, amended or compliance therewith waived (either generally or in a particular instance, retroactively or prospectively) except by an instrument or instruments in writing executed by the Lessee, TILC, TRLTII, Trinity, the Policy Provider (so long as it is the Control Party) and each party against which enforcement of the termination, amendment or waiver is sought. Section 10.4 Notices. Unless otherwise expressly specified or permitted by the terms hereof all communications and notices provided for herein shall be in writing or by facsimile, and any such notice shall become effective (i) upon personal delivery thereof, including, without limitation, by reputable overnight courier, or (ii) in the case of notice by facsimile, upon confirmation of receipt thereof, provided such transmission is promptly further confirmed by any of the methods set forth in clause (i) above, in each case addressed to each party hereto at its address set forth below or, in the case of any such party hereto, at such other address as such party may from time to time designate by written notice to the other parties hereto: If to the Lessee: Trinity Rail Leasing IV L.P. 2525 Stemmons Freeway Dallas, TX 75207 Attention: Vice President Leasing Operations Re: (TRLIV 2004-1A) Fax No.: (214) 589-8271 Confirmation No: (214) 631-4420 If to TILC: Trinity Industries Leasing Company 2525 Stemmons Freeway Dallas, TX 75207 Attention: Vice President Leasing Operations 80 Re: (TRLIV 2004-1A) Fax No.: (214) 589-8271 Confirmation No.: (214) 631-4420 If to the Owner Trustee: U.S. Bank Trust National Association 225 Asylum Street, 23rd Floor Hartford, CT 06103 Attn: Corporate Trust Department Re: Trinity 2004-1A Facsimile No.: (860) 241-6889 Confirmation No.: (860) 241-6822 with a copy to: the Owner Participant at the address set forth below If to the Owner Participant: The Fifth Third Leasing Company 38 Fountain Square Plaza Cincinnati, OH 45263 Attention: Sr. Risk Manager Facsimile No.: (513) 534-6706 Confirmation No.: (513) 534-6770 If to the Indenture Trustee: Wilmington Trust Company 1100 North Market Street Rodney Square North Wilmington, Delaware 19890-0001 Attention: Corporate Trust Administration Facsimile No.: 302-636-4141 Confirmation No.: 302-636-6000 If to the Pass Through Trustee: Wilmington Trust Company 1100 North Market Street Rodney Square North Wilmington, Delaware 19890-0001 Attention: Corporate Trust Administration Facsimile No.: 302-636-4141 Confirmation No.: 302-636-6000 81 If to the Rating Agency: Standard & Poor's Ratings Group 55 Water Street, 40th Floor New York, New York 10041 Attention: Stephen F. Rooney, Structured Finance Ratings Facsimile No.: 212-438-2646 Confirmation No.: 212-438-2591 Moody's Investors Service, Inc. 99 Church Street - 4th Floor New York, New York 10007 Attention: ABS Monitoring Department Facsimile No.: 212-553-4119 Confirmation No.: 212-298-7075 If to the Policy Provider: Ambac Assurance Corporation One State Street Plaza, 15th Floor New York, NY 10004 Attention: Structured Finance Department-ABS Re: TRLIV 2004-1 Facsimile: (212) 208-3509 Conf. No.: (212) 208-3186 Section 10.5 Survival. All warranties, representations, indemnities and covenants made by any party hereto, herein or in any certificate or other instrument delivered by any such party or on the behalf of any such party under this Agreement, shall be considered to have been relied upon by each other party hereto and shall survive the consummation of the transactions contemplated hereby on the Closing Date regardless of any investigation made by any such party or on behalf of any such party. Section 10.6 No Guarantee of Residual Value or Debt. Nothing contained herein or in the Lease, the Indenture, the Trust Agreement or the Tax Indemnity Agreement or in any certificate or other statement delivered by the Lessee in connection with the transactions contemplated hereby shall be deemed to be (i) a guarantee by the Lessee or TILC to the Owner Trustee, the Owner Participant, the Indenture Trustee, the Pass Through Trustee or the Loan Participant that the Equipment will have any residual value or useful life, or (ii) a guarantee by the Indenture Trustee, the Owner Trustee, the Owner Participant, the Lessee or TILC (A) of payment of the principal of, premium, if any, or interest on the Equipment Notes or (B) against losses due to the financial inability to pay of an obligor with respect to a Sublease or Pledged Equipment Sublease. Section 10.7 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of, and shall be enforceable by, the parties hereto and their respective 82 successors and assigns as permitted by and in accordance with the terms hereof including each successive holder of the Beneficial Interest permitted under Section 6.1 hereof and each successive holder of any Equipment Note permitted under the Indenture issued and delivered pursuant to this Agreement or the Indenture. The parties hereto agree that the Collateral Agent shall be a third party beneficiary of this Agreement. Except as expressly provided herein or in the other Operative Agreements, no party hereto may assign their interests herein without the consent of the parties hereto. Section 10.8 Business Day. Notwithstanding anything herein or in any other Operative Agreement to the contrary, if the date on which any payment is to be made pursuant to this Agreement or any other Operative Agreement is not a Business Day, the payment otherwise payable on such date shall be payable on the next succeeding Business Day with the same force and effect as if made on such succeeding Business Day and (provided such payment is made on such succeeding Business Day) no interest shall accrue on the amount of such payment from and after such scheduled date to the time of such payment on such next succeeding Business Day. Section 10.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). Section 10.10 Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. Section 10.11 Counterparts. This Agreement may be executed in any number of counterparts, each executed counterpart constituting an original but all together only one Agreement. Section 10.12 Headings and Table of Contents. The headings of the Sections of this Agreement and the Table of Contents are inserted for purposes of convenience only and shall not be construed to affect the meaning or construction of any of the provisions hereof. Section 10.13 Limitations of Liability; Extent of Interest. (a) Liabilities of Participants. Neither the Indenture Trustee, the Owner Trustee nor any Participant shall have any obligation or duty to the Lessee, to TILC, to any other Participant or to others with respect to the transactions contemplated hereby, except those obligations or duties of such Participant expressly set forth in this Agreement and the other Operative Agreements, and neither the Indenture Trustee nor any Participant shall be liable for performance by any other party hereto of such other party's obligations or duties hereunder. Without limitation of the generality of the foregoing, under no circumstances whatsoever shall the Indenture Trustee or any Participant be liable to the Lessee or TILC for any action or inaction on the part of the Owner Trustee in connection with the transactions contemplated herein, 83 whether or not such action or inaction is caused by willful misconduct or gross negligence of the Owner Trustee, unless such action or inaction is at the direction of the Indenture Trustee or any Participant, as the case may be, and such action or inaction is expressly prohibited hereby. (b) No Recourse to the Owner Trustee. It is expressly understood and agreed by and between Trust Company, the Owner Trustee, the Lessee, the Owner Participant, the Indenture Trustee, the Pass Through Trustee, and the Loan Participant, and their respective successors and permitted assigns that, subject to the proviso contained in this Section 10.13(b), all representations, warranties and undertakings of the Owner Trustee hereunder shall be binding upon the Owner Trustee only in its capacity as Owner Trustee under the Trust Agreement, and (except as expressly provided herein) Trust Company shall not be liable for any breach thereof, except for its gross negligence or willful misconduct, or for breach of its covenants, representations and warranties contained herein, except to the extent covenanted or made in its individual capacity; provided, however, that nothing in this Section 10.13 (b) shall be construed to limit in scope or substance those representations and warranties of Trust Company made expressly in its individual capacity set forth herein. The term "Owner Trustee" as used in this Agreement shall include any successor trustee under the Trust Agreement, or the Owner Participant if the trust created thereby is revoked. (c) Extent of Interest of Holders of Equipment Notes. No holder of an Equipment Note shall have any further interest in, or other right with respect to, the mortgage and security interests created by the Indenture when and if the principal of and interest on all Equipment Notes held by such holder and all other sums payable to such holder hereunder, under the Indenture and under such Equipment Notes shall have been paid in full. Each holder of the Equipment Notes by its acceptance of an Equipment Note, agrees that it will look solely to the income and proceeds from the Indenture Estate to the extent available for distribution to such holder as provided in Article III of the Indenture and that neither TILC, the Lessee, the Owner Participant, the Indenture Trustee nor the Owner Trustee shall be personally liable to any holder of the Equipment Notes for any amounts payable under the Equipment Notes, the Indenture or hereunder, except as expressly provided in the Operative Agreements. (d) Loan Participant's Source of Funds. It is expressly understood and agreed by and between the Owner Trustee, the Lessee, the Owner Participant, the Indenture Trustee, the Pass Through Trustee and the Loan Participant, and their respective successors and permitted assigns that, subject to the proviso contained in this Section 10.13(d), the undertakings of the Loan Participant hereunder are limited to the application of the proceeds of the sale of the Pass Through Certificates to the purchase by the Pass Through Trustee of the Equipment Notes; provided, however, that nothing in this Section 10.13(d) shall be construed to limit in scope or substance those representations and warranties of the Loan Participant made expressly in its individual capacity set forth herein. Section 10.14 Maintenance of Non-Recourse Debt. The parties hereto agree that if the Trust becomes a debtor subject to the reorganization provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq. (the "Bankruptcy Code") or any successor provision, the parties hereto will make an election under 1111(b)(1)(A)(i) of the Bankruptcy Code. If (a) the Trust becomes a debtor subject to the reorganization provisions of the Bankruptcy Code or any successor provision, (b) pursuant to such reorganization provisions the Trust is required, by reason of the 84 Trust being held to have recourse liability to the Pass Through Trustee or the Indenture Trustee, directly or indirectly, to make payment on account of any amount payable under the Equipment Notes or any of the other Operative Agreements and (c) the Indenture Trustee and/or the Pass Through Trustee actually receives any Excess Amount (as hereinafter defined) which reflects any payment by the Trust on account of (b) above, then the Indenture Trustee and/or the Pass Through Trustee, as the case may be, shall promptly refund to the Trust such Excess Amount. For purposes of this Section 10.14, "Excess Amount" means the amount by which such payment exceeds the amount which would have been received by the Indenture Trustee or the Pass Through Trustee if the Trust had not become subject to the recourse liability referred to in (b) above. Section 10.15 Ownership of and Rights in Units and Pledged Units. The sale of the Units described on Schedule 1-A hereto and the Existing Equipment Subleases, the Pledged Units and the Existing Pledged Equipment Leases by TRLTII contemplated hereby is intended for all purposes to be a true sale of all of TRLTII's right, title and interest in and to such Units, the Existing Equipment Subleases, the Pledged Units and the Existing Pledged Equipment Leases to the Lessee, which shall be the legal owner thereof upon such sale. Upon consummation of the sale and leaseback transactions contemplated hereby, the Lessee's interest in such Units is intended to be that of a lessee only. It is intended that for federal and state income tax purposes the Owner Participant will be the owner of such Units. The rights of the Indenture Trustee in and to such Units pursuant to the Indenture is intended to be that of a secured party holding a security interest, subject to the Lease and the rights of the Lessee thereunder. No holder of an Equipment Note is intended to have any right, title or interest in or to such Units except as a beneficiary of the Lien granted by the Owner Trustee to the Indenture Trustee pursuant to the Indenture in trust for the equal and ratable benefit of the holders from time to time of the Equipment Notes. Section 10.16 No Petition. Each party hereto agrees that, prior to the date which is one year and one day after payment in full of all outstanding Equipment Notes and all obligations of the Lessee under the Operative Agreements and release of all Collateral held under the Collateral Agency Agreement (i) no party hereto shall authorize the Lessee, the Owner Trust or the Marks Company to commence a voluntary winding-up or other voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to the Lessee, the Owner Trust or the Marks Company or their debts under any bankruptcy, insolvency or other similar law now or hereafter in effect in any jurisdiction or seeking the appointment of an administrator, a trustee, receiver, liquidator, custodian or other similar official of the Lessee, the Owner Trust or the Marks Company or any substantial part of its property or to 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 the Lessee, the Owner Trust or the Marks Company, or to make a general assignment for the benefit of any party hereto or any other creditor of the Lessee, the Owner Trust or the Marks Company, and (ii) none of the parties hereto shall commence or join with any other Person in commencing any proceeding against the Lessee, the Owner Trust or the Marks Company under any bankruptcy, reorganization, liquidation or insolvency law or statute now or hereafter in effect in any jurisdiction. Each of the parties hereto agrees that, prior to the date which is one year and one day after the payment in full of all outstanding Equipment Notes and all obligations of the Lessee under the Operative Agreements and release of all Collateral held under the Collateral Agency Agreement, it will not institute against, or join any other 85 Person in instituting against, Lessee, the Owner Trust or the Marks Company an action in bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or similar proceeding under the laws of the United States or any state of the United States. Section 10.17 Consent To Jurisdiction. Each of the parties hereto hereby irrevocably and unconditionally: (i) submits for itself and its property in any legal action or proceeding relating to this Agreement or any other Operative Agreement or for recognition and enforcement of any judgment in respect hereof or thereof, to the nonexclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York, and the appellate courts from any thereof; (ii) consents that any such action or proceeding may be brought in such courts, and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (iii) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form and mail), postage prepaid, to each party hereto at its address set forth in Section 10.4 hereof, or at such other address of which the other parties shall have been notified pursuant thereto; and (iv) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction. Section 10.18 WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH THIS AGREEMENT. Section 10.19 No Partnership Created. The parties hereto do not intend to create, and nothing herein shall be construed as creating, a partnership or joint venture for federal income tax purposes. Each party hereto agrees (i) that it does not have, or intend to form, a joint profit motive with any other party hereto or any other person with respect to any Unit, Existing Equipment Sublease or Permitted Sublease, (ii) not to hold itself out to the public as a partner with any other party hereto, (iii) not to share any profits (including rent or any other payments to which it is entitled) or losses with respect to its interest in any Unit, Existing Equipment Sublease or Permitted Sublease, and (iv) that unless (x) otherwise required by the Internal Revenue Service or like governmental authority with jurisdiction over income tax matters (the "Required Position") or (y) such party receives an opinion of its independent tax counsel that there is no "reasonable basis" (within the meaning of Treasury Regulation Section 1.6662-3(b)(3)) to claim that no partnership exists, and such party delivers notice of the receipt of such opinion or notice of the Required Position to the other parties hereto within ten (10) Business Days of its receipt of such opinion or notice of the Required Position, it will not file any 86 partnership or other joint income tax return with respect to items of income, loss, deduction, or credit attributable to its interest in any Unit, Existing Equipment Sublease or Permitted Sublease. Section 10.20 Amendments to Operative Agreements That Are Not Lessee Agreements. The Owner Trustee, the Indenture Trustee and the Participants shall not terminate the Operative Agreements to which the Lessee is not or will not be a party, or amend, supplement, waive or modify in any manner such Operative Agreements to which the Lessee is not or will not be a party, except (i) in accordance with such Operative Agreements in effect on the date hereof (as amended, modified or supplemented from time to time in accordance with the terms hereof and of such Operative Agreements), or (ii) in a manner that is not adverse to the Lessee or to any of its rights or interests under any of the Operative Agreements, unless the prior written consent of the Lessee is obtained. Without limiting the generality of the foregoing, each of the Owner Participant and the Owner Trustee, the Pass Through Trustee and the Indenture Trustee (as applicable) agrees that, in any event, it will not amend Section 2.10 or Article IX of the Indenture or Article IX of the Trust Agreement without the prior written consent of the Lessee. Section 10.21 Acknowledgment of Confidentiality Provisions in Subleases. Each party to this Agreement acknowledges notice of any confidentiality provisions contained in the Subleases and Pledged Equipment Leases and agrees to be bound by such confidentiality provisions as they relate to the identity of any sub-sublessees or sublessees under such Subleases and Pledged Equipment Leases, respectively. SECTION 11. LIMITED GUARANTY. Section 11.1 Limited Guaranty. Trinity hereby irrevocably and unconditionally guarantees for the benefit of each of the Owner Participant, the Owner Trustee, Trust Company, the Indenture Trustee, the Pass Through Trustee and the Policy Provider (each, together with their respective permitted successors and assigns, a "Guaranty Party") the full and punctual payment of all amounts payable by the Lessee under Sections 7.1 and 7.2 of this Agreement and all amounts payable by TILC under Section 7.4 of this Agreement (all such obligations being hereinafter referred to as the "Guaranteed Obligations"). Upon failure by the Lessee to pay punctually or perform any Guaranteed Obligation, Trinity shall forthwith on demand pay the amount not so paid or perform the obligation not so performed in the manner specified in the Operative Agreements. All payments by Trinity under this guaranty shall be made on the same basis as payments by the Lessee under the Operative Agreements. This guaranty shall constitute a guaranty of punctual payment and not of collection, and Trinity specifically agrees that it shall not be necessary, and that Trinity shall not be entitled to require, before or as a condition of enforcing the liability of Trinity under this Section 11 or requiring payment or performance of the Guaranteed Obligations by Trinity hereunder, or at any time thereafter, that any Person: (a) file suit or proceed to obtain or assert a claim for personal judgment against Lessee or any other Person that may be liable for any Guaranteed Obligation; (b) make any other effort to obtain payment or performance of any Guaranteed Obligation from Lessee or any other Person that may be liable for such Guaranteed Obligation; (c) foreclose against or seek to realize upon any security now or hereafter existing for such Guaranteed Obligation; (d) exercise or assert any other right or remedy to which such Person is or be entitled in connection with any Guaranteed Obligation or any security or other guaranty therefor or (e) assert or file any claim against the assets of Lessee or any other Person liable for any Guaranteed Obligation. 87 Section 11.2 Guaranty Unconditional. The obligations of Trinity hereunder shall be continuing and irrevocable, unconditional, absolute, primary and original and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by any circumstance or condition, including, without limitation, the occurrence of any one or more of the following events: (a) any abatement, setoff, defense, reduction, recoupment, counterclaim, extension, renewal, settlement, compromise, waiver or release in respect of any obligation of the Lessee under the Operative Agreements, by operation of law or otherwise; (b) any modification or amendment of or supplement to the Operative Agreements; (c) any change in the corporate existence, structure or ownership of the Lessee, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Lessee or its assets or any resulting release or discharge of any obligation of the Lessee contained in the Operative Agreements; (d) any other act or omission to act or delay of any kind by the Lessee, the Owner Participant, the Owner Trustee, Trust Company, the Indenture Trustee, the Pass Through Trustee, the Policy Provider or any Person or any other circumstance whatsoever which might, but for the provisions of this paragraph, constitute a legal or equitable discharge of or defense to Trinity's obligations hereunder; (e) any invalidity, unenforceability, impossibility or illegality of performance of any Operative Agreement or any document related thereto or any of the Guaranteed Obligations under the Operative Agreements or any provision thereof, the absence of any action to enforce the same or waiver or consent with respect to any provision thereof; (f) any change in the time, manner or place of performance or payment of, or in any other term of, all or any of the amounts payable under any Operative Agreement or any other modification, supplement or amendment or waiver of or any consent to any departure from the terms and conditions thereof; (g) any taking, exchange, release or non-perfection of any collateral, any furnishing or acceptance of any additional security or any exchange, surrender, substitution or release of any security or any taking, release, amendment or waiver of, consent to, or departure from any other guaranty for, all or any of the Guaranteed Obligations; (h) the waiver by any Guaranty Party or any other Person of the performance or observance by Lessee of any Guaranteed Obligation or of any default in the performance or observance thereof (except to the extent that the payment or performance of any Guaranteed Obligation is waived in writing by the relevant Guaranty Party) or any extension by any Guaranty Party of the time for payment or performance and discharge by Lessee of any Guaranteed Obligation or any extension or renewal of any Guaranteed Obligation; (i) the recovery of any judgment against any Person or any action to enforce the same; 88 (j) any failure or delay in the enforcement of the obligations of any Person under any Operative Agreement (or any other agreement) or any provision thereof; (k) any setoff, counterclaim, deduction,, defense, abatement, suspension, deferment, diminution, recoupment, limitation or termination available with respect to any Guaranteed Obligation, and, to the extent permitted by Law, irrespective of any other circumstances that might otherwise limit recourse by or against Trinity or any other Person; (l) the obtaining, the amendment or the release of the primary or secondary obligation of any other Person, in addition to Trinity, with respect to any Guaranteed Obligation; (m) any compromise, alteration, amendment, modification, extension, renewal, release or other change, or waiver, consent or other action, or delay or omission or failure to act, in respect of any of the terms, covenants or conditions of any Operative Agreement (except to the extent that the payment or performance of any Guaranteed Obligation is waived in writing by the relevant Guaranty Party), or any other agreement or any related document referred to therein, or any assignment or transfer of any thereof; (n) to the maximum extent permitted by Law, any other circumstance that might otherwise constitute a legal or equitable defense or discharge of a guarantor or surety with respect to any Guaranteed Obligation (other than the defense of payment or performance in full by Lessee or Trinity with respect to any Guaranteed Obligation); (o) any matter of application of collateral, or proceeds thereof, to all or any of the Guaranteed Obligations or any matter of sale or other disposition of any collateral for all or any of the Guaranteed Obligations or any of the assets of Lessee or Trinity or any furnishing or acceptance of additional collateral or the release of any existing security; (p) any regulatory change or other governmental action (whether or not adverse); the partial payment or performance of the Guaranteed Obligations (whether as a result of the exercise of any right, remedy, power or privilege or otherwise) shall be accepted or received; or any default, failure or delay, whether as a result of actual or alleged force majeure, commercial impracticality or otherwise, in the performance of the Guaranteed Obligations, or by any other act or circumstance (including, without limitation, any defect in the title to the 2004-1A SUBI Certificate) which may or might in any manner or to any. extent vary the risk of Trinity, or which would otherwise operate as a discharge of Trinity as a matter of law. Should any money due or owing under this guaranty not be recoverable from Trinity due to any of the matters specified in Sections 11.2 (a) through (p) above, then, in any such case, such money shall nevertheless be recoverable from Trinity as though Trinity were principal debtor in respect thereof and not merely a guarantor and shall be paid by Trinity forthwith. 89 Section 11.3 Discharge Only Upon Payment and Performance in Full; Reinstatement in Certain Circumstances. Trinity's obligations hereunder are absolute and unconditional and shall remain in full force and effect until all the Guaranteed Obligations have been irrevocably paid and performed in full. If at any time any Guaranteed Obligation payable by the Lessee or any payment by Trinity hereunder is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Lessee or Trinity, or upon or as a result of the appointment of a receiver, intervenor, or conservator of, or trustee or similar officer for, the Lessee or Trinity or any substantial part of its property, all as though such payment had not been made and any statute of limitations in favor of Trinity against any Guaranty Party relating to any such amount to be restored or returned shall be tolled, or deemed to have been tolled, to the extent permitted by law, during the period from the date such payment was made to such Guaranty Party until the date such Guaranty Party so restores or returns such amount or otherwise, Trinity's obligations hereunder with respect to such payment shall be reinstated at such time as though such payment had been due but not made at such time. The obligations under this Section 11 are continuing and all liabilities to which they apply or may apply under the terms hereof shall be conclusively presumed to have been created in reliance hereon. No failure or delay on the part of any Guaranty Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power of privilege. The rights, powers and remedies herein expressly provided are cumulative and not exclusive of any rights, powers and remedies which any Guaranty Party would otherwise have. No notice or demand on Trinity in any case shall entitle Trinity to any other further notice or demand in similar or other circumstances or constitute a waiver of the rights of any Guaranty Party to any other or further action in any circumstances without notice or demand. Section 11.4 Waiver by Trinity. Trinity irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against the Lessee or any other Person. Section 11.5 Subrogation. The obligations under this Section 11 are the primary obligations of Trinity. Until the Guaranteed Obligations hereunder have been indefeasibly paid and performed in full, Trinity irrevocably waives any and all rights to which it may be entitled, by operation of law or otherwise, upon making any payment hereunder to be subrogated to the rights of the payee against the Lessee with respect to such payment or otherwise to be reimbursed, indemnified or exonerated by or for the account of the Lessee, in respect thereof. Section 11.6 Payments. All payments to be made by Trinity under this Section 11 to a Guaranty Party shall be paid as provided for in the relevant Operative Agreement or, if applicable, to such Guaranty Party at the address and to the account specified in the notice demanding payment be made by Trinity by wire transfer on the date due at or before 11:00 a.m. (Chicago time) in immediately available funds to the party to which such payment is to be made, if such party has provided Trinity with instructions for such wire transfer. Section 11.7 Withholding Taxes. All payments by Trinity hereunder shall be made free and clear of, and without deduction or withholding for or on account of, any Taxes, unless such 90 deduction or withholding is required by Law. If Trinity shall be required by Law to make any such deduction or withholding, then Trinity shall make such deduction or withholding and pay such additional amounts as may be necessary in order that the net amount received by the applicable Guaranty Party, after reduction by such deduction or withholding (including any such Taxes as a result of additional Taxes payable with respect to the receipt or accrual of amounts payable pursuant to this sentence), shall be equal to the full amount that such Guaranty Party would have received, after deduction or withholding of Taxes, had Lessee discharged its obligations (including its tax gross-up obligations). Any amounts deducted or withheld by Trinity for or on account of Taxes shall be paid over to the government or taxing authority imposing such Taxes in accordance with applicable Law, and Trinity shall provide the applicable Guaranty Party as soon as practicable with such tax receipts or other official documentation with respect to the payment of such Taxes as may be available. Each Guaranty Party shall honor all reasonable requests from Trinity to file, or to provide Trinity with, such forms, statements, certificates or other documentation as shall enable such Guaranty Party or Trinity to claim a reduced rate of tax or exemption from tax with respect to any Taxes required to be borne by Trinity pursuant to this Section 11.7; provided that such Guaranty Party is legally entitled to complete, execute and file or provide such documentation and in such Guaranty Party's judgment such completion, execution or filing or provision would not have a material adverse effect on such Guaranty Party. * * * 91 IN WITNESS WHEREOF, the parties hereto have caused this Participation Agreement to be executed and delivered, all as of the date first above written. Lessee: TRINITY RAIL LEASING IV L.P. By: TILX GP IV, LLC, its General Partner By: /s/ Eric Marchetto ------------------------------ Name: Eric Marchetto Title: Vice President TILC: TRINITY INDUSTRIES LEASING COMPANY By: /s/ Eric Marchetto ------------------------------------ Name: Eric Marchetto Title: Vice President TRLTII: TRINITY RAIL LEASING TRUST II By: TRINITY INDUSTRIES LEASING COMPANY, its Manager By: /s/ Eric Marchetto ------------------------------ Name: Eric Marchetto Title: Vice President Trinity: TRINITY INDUSTRIES, INC. By: /s/ S.Theis Rice ------------------------------------ Name: S. THEIS RICE Title: VICE PRESIDENT LEGAL AFFAIRS Signature Page to Participation Agreement (TRLIV 2004-1A ) Trust: TRLIV 2004-1A RAILCAR STATUTORY TRUST By: U.S. Bank Trust National Association, not in its individual capacity except as expressly provided herein but solely as Owner Trustee By: /s/ Earl W. Dennison ------------------------------------ Name: EARL W. DENNISON Title: VICE PRESIDENT Trust Company: U.S. BANK TRUST NATIONAL ASSOCIATION By: /s/ Earl Dennison ------------------------------------ Name: Earl Dennison Title: Vice President Signature Page to Participation Agreement (TRLIV 2004-1A ) Owner Participant: THE FIFTH THIRD LEASING COMPANY By: /s/ Malcolm J. Ferguson ------------------------------------ Name: Malcolm J. Ferguson Title: Vice President Signature Page to PA (TRLIV 2004-1A ) Indenture Trustee: WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein but solely as Indenture Trustee By: /s/ W. Chris Sponenberg ------------------------------------ Name: W. Chris Sponenberg Title: Vice President Pass Through Trustee: WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein but solely as Pass Through Trustee By: /s/ W. Chris Sponenberg ----------------------------------- Name: W. Chris Sponenberg Title: Vice President Signature Page to Participation Agreement (TRLIV 2004-1A ) Policy Provider: AMBAC ASSURANCE CORPORATION By: /s/ David B. Nemschoff ------------------------------------ Name: David B. Nemschoff Title: Managing Director Signature Page to Participation Agreement (TRLIV 2004-1A ) EX-10.17.4 4 d19332exv10w17w4.txt AMENDMENT NO. 4 TO THE WAREHOUSE LOAN AGREEMENT EXHIBIT 10.17.4 [EXECUTION COPY] AMENDMENT NO. 4 TO WAREHOUSE LOAN AGREEMENT AND RELATED DOCUMENTS AMENDMENT NO. 4 TO WAREHOUSE LOAN AGREEMENT AND RELATED DOCUMENTS, dated as of October 22, 2003 (this "Amendment"), is entered into by and among TRINITY INDUSTRIES LEASING COMPANY, a Delaware corporation (the "Manager"), TRINITY RAIL LEASING TRUST II, a Delaware statutory trust (the "Borrower"), each Lender party to the Agreement referenced below, and CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH, as Agent for the Lenders (in such capacity, the "Agent"). Capitalized terms used but not defined herein have the meaning set forth in the Agreement referred to below. RECITALS: WHEREAS, (i) the Manager, the Borrower, the Lenders and the Agent are parties to that certain Warehouse Loan Agreement dated as of June 27, 2002 (as heretofore amended, the "Agreement"), and (ii) the Manager and Borrower are parties to that certain Operation, Maintenance, Servicing and Remarketing Agreement, dated as of June 27, 2002 (as heretofore amended, the "Management Agreement"); and WHEREAS, the parties hereto desire to amend the Agreement and the Management Agreement as hereinafter set forth. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: I. AMENDMENTS TO WAREHOUSE LOAN AGREEMENT: 1. The following definition is hereby added to Section 1.01 of the Agreement in the appropriate alphabetical sequence: "'Industry' means any industry listed in column I of Schedule A hereto." "'Industry Concentration Percentage' means, with respect to an Industry Group, the percentages listed in columns II, III and IV of Schedule A hereto that correspond to the Industry of such Industry Group." "'Industry Group' means all Lessees whose primary business is in a particular Industry (as certified by the Borrower and the Manager in each Borrowing Base Certificate)." "'LRTA Multiplier' means, for each Calculation Date designated on Schedule B hereto, the number designated as the "LRTA Multiplier" for each such Calculation Date." "'Specialty Railcar' means a Railcar with a non-standard design and specification which is produced in a limited production run and whose application is limited to a small number of end-users." 2. The definition of "Borrowing Base Certificate" contained in Section 1.01 of the Agreement is hereby amended by (i) deleting the parenthetical "(or of the Manager on behalf of the Borrower)" and replacing it with the words "and the Manager" and (ii) inserting the phrase "and such other information required thereby" at the end of such definition. 3. The definition of "Termination Date" contained in Section 1.01 of the Agreement is hereby amended by deleting the date "June 27, 2025" occurring therein and by inserting in its place the date "August 27, 2028". 4. The definition of "Eligible Railcar" contained in Section 1.01 of the Agreement is hereby amended by (i) deleting the word "and" at the end of clause (iii) thereof, (ii) deleting the period at the end of clause (iv) thereof and inserting in its place "; and", and (iii) inserting the following clause (v) at the end of such definition: (v) other than a Railcar that is leased to a Lessee organized under the laws of, or having its principal place of business in, Mexico or a subdivision thereof. 5. The definition of "Excluded Assets Amount" contained in Section 1.01 of the Agreement is hereby amended by deleting clause (vii) thereof and inserting in its place the word "[RESERVED]". 6. The definition of "Excluded Assets Amount" contained in Section 1.01 of the Agreement is hereby further amended by inserting the following clauses (ix), (x), (xi), (xii), (xiii) and (xiv) after clause (viii) thereof and by re-numbering the remaining clauses: "(ix) the amount by which (x) the product of the Advance Rate times the Aggregate FMV of all (A) 70-ton boxcars and (B) steel coal cars exceeds (y) 3% of the product of the Advance Rate times the Aggregate FMV of all Eligible Railcars; plus (x) the amount by which (x) the product of the Advance Rate times the Aggregate FMV of all Specialty Railcars exceeds (y) 5% of the product of the Advance Rate times the Aggregate FMV of all Eligible Railcars; plus (xi) the amount by which (x) the product of the Advance Rate times the Aggregate FMV of all covered hopper cars with a gross rail load of 263,000 lbs. or less exceeds (y) 10% of the product of the Advance Rate times the Aggregate FMV of all Eligible Railcars; plus (xii) the amount by which (x) the Aggregate FMV of all Railcars that are leased to all Lessees in any Industry Group exceeds (y) an amount equal to the product of the Industry Concentration Percentage set forth in column II of Schedule A hereto for such Industry Group times the Commitment Amount (provided that, to the extent that a positive amount is calculated for an Industry Group in this clause (xii) and/or clause (xiii) below and/or clause (xiv) below, then the highest of such amounts shall be deemed an "Excluded Amount" and the other amounts (if any) shall be disregarded); plus (xiii) the amount by which (x) the Aggregate FMV of all tanker Railcars that are leased to all Lessees in any Industry Group exceeds (y) an amount equal to the product of the Industry Concentration Percentage, if any, set forth in column III of Schedule A hereto for such Industry -2- Group times the Commitment Amount (provided that, to the extent that a positive amount is calculated for an Industry Group in this clause (xiii) and/or clause (xii) above and/or clause (xiv) below, then the highest of such amounts shall be deemed an "Excluded Amount" and the other amounts (if any) shall be disregarded); plus (xiv) the amount by which (x) the Aggregate FMV of all freight Railcars that are leased to all Lessees in any Industry Group exceeds (y) an amount equal to the product of the Industry Concentration Percentage, if any, set forth in column IV of Schedule A hereto for such Industry Group times the Commitment Amount (provided that, to the extent that a positive amount is calculated for an Industry Group in this clause (xiv) and/or clause (xii) above and/or clause (xiii) above, then the highest of such amounts shall be deemed an "Excluded Amount" and the other amounts (if any) shall be disregarded); plus" 7. The definition of "Funding Package" contained in Section 1.01 of the Agreement is hereby amended by inserting the words ", and the Industry of such Lessee" at the end of clause (iv)(C) thereof. 8. The definition of "Liquidity Reserve Target Amount" contained in Section 1.01 of the Agreement is hereby amended by deleting the word "six" occurring therein and by inserting in its place the word "the LRTA Multiplier then in effect". 9. Section 2.07(c)(i) clause seventh of the Agreement is hereby amended by inserting the parenthetical "(as determined for the November 15, 2003 Settlement Date)" immediately after the occurrence of the words "Liquidity Reserve Target Amount". 10. Section 2.07(c)(i) of the Agreement is hereby amended by (i) inserting the following clause "eleventh" immediately after clause "tenth" therein and (ii) re-numbering the remaining clauses sequentially: eleventh, 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 (but after giving effect to deposits made on the same date pursuant to clause seventh of this Section 2.07(c)(i)); 11. Section 2.07 of the Agreement is hereby amended by inserting the following clause (d) immediately after clause (c) thereof: (d) Release of Amounts from Liquidity Reserve Account. On any Settlement Date during the Availability Period, if there exists in the Liquidity Reserve Account any amount in excess of the Liquidity Reserve Target Amount (after giving effect to all other payments to be made on such Settlement Date and as calculated on the Calculation Date immediately preceding such Settlement Date), and upon written certification by the Manager and Borrower that no Default or Manager Default has occurred and is continuing, the Agent shall be deemed to have released such excess amount from the Liquidity Reserve Account and such excess amount shall be applied by the Depositary in accordance with Section 2.07(c). -3- 12. Section 2.08(d)(ii) of the Agreement is hereby amended by deleting the reference to "clause (c)(i)" and inserting in its place "clause (d)(i)". 13. Section 2.08(d)(v) of the Agreement is hereby amended by deleting each of the references to "Section 2.08(c)" and inserting in each place "Section 2.08(d)". 14. Section 2.13 of the Agreement is hereby amended in its entirety to read as follows: "SECTION 2.13 ADJUSTMENTS TO ADVANCE RATE AND BORROWING BASE. The percentage included in the definition of "Advance Rate" may be changed in accordance with the parameters set forth in such definition by agreement of all of the Lenders and, in the case of any increase in such percentage, subject to confirmation by each of Moody's and S&P that such increase will not cause either of such rating agencies to reduce or withdraw its rating of the Notes. The Agent shall give the Borrower, the Lenders, Moody's and S&P prior notice of any change in such percentage. Any change in any such percentage shall take effect on the next succeeding Settlement Date." 15. Article II of the Agreement is hereby amended by inserting the following Section 2.14 at the end thereof: "SECTION 2.14 INTEREST RATE RISK MANAGEMENT. The Borrower will (i) at six month intervals beginning in June 2004, consult with the Agent, Moody's and S&P concerning an appropriate interest rate risk management strategy for the Borrower, and (ii) within 10 Business Days following the last day of the Availability Period (if the Availability Period is not extended), consult with the Agent, the Required Lenders, Moody's and S&P as to whether an interest rate hedge, cap or similar rate risk protection agreement is necessary, and if such consultation results in the conclusion that a rate protection agreement is necessary, the Borrower will as soon as reasonably feasible, using funds available under clause fifth of Section 2.07(c)(ii), procure an interest rate cap or other interest rate risk hedging agreement providing rate protection for a term or period consistent with the anticipated principal amortization and otherwise in form and substance reasonably satisfactory to the Borrower, the Agent, the Required Lenders, Moody's and S&P." 16. Article VI of the Agreement is hereby amended by inserting the following Section 6.17 at the end thereof: "SECTION 6.17 COLLATERAL DEFICIENCY. If any Collateral Deficiency exists on the November 15, 2003 Settlement Date after giving effect to the payments made on such Settlement Date pursuant to Section 2.07(c), the Borrower shall, on such November 15, 2003 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." -4- 17. Article VI of the Agreement is hereby amended by inserting the following Section 6.18 at the end thereof: "SECTION 6.18 LIQUIDITY RESERVE ACCOUNT FUNDING. The Borrower shall, on or prior to the November 15, 2003 Settlement Date, deposit or cause to be deposited in the Collection Account an amount sufficient for the balance of the Liquidity Reserve Account as calculated on the Calculation Date immediately preceding such Settlement Date to equal the Liquidity Reserve Target Amount designated for such Calculation Date." 18. Section 9.01(b) of the Agreement is hereby amended by deleting the reference to "clause (x)" therein and inserting in its place "clause (xvi)". 19. Section 9.01(d)(i) of the Agreement is hereby amended by inserting "6.17, 6.18" immediately following the occurrence of "6.16" therein. 20. Section 9.01(f)(i) of the Agreement is hereby deleted in its entirely and the word "[RESERVED]" is substituted therefor. 21. Exhibit A-6 of the Agreement is hereby amended in its entirety to read as Exhibit A-6 hereto. 22. The Agreement is hereby amended by inserting a "Schedule A" and a "Schedule B" thereto identical to Schedules A and B hereto, and by making appropriate revisions to the Table of Contents reflecting such insertions. II. AMENDMENT TO OPERATION, MAINTENANCE, SERVICING AND REMARKETING AGREEMENT 1. The following definition is hereby added to Article I of the Management Agreement in the appropriate alphabetical sequence: "Back-up Manager" shall have the meaning set forth in Section 8.06. 2. The definition of "Reimbursable Amount" contained in Article 1 of the Management Agreement is amended by deleting the reference to "Section 5.02" and inserting in its place "Section 5.01". 3. Section 8.02 of the Management Agreement is hereby amended by inserting the following clause (j) immediately after clause (i) therein and by re-lettering the remaining clauses: "(j) Trinity or the Manager (i) 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 respect of the 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 -5- credit arrangement) of more than $10,000,000, (ii) 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 (iii) 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; or" 4. Article VIII of the Management Agreement is hereby amended by inserting the following "Section 8.06" immediately after "Section 8.05" therein: Section 8.06. Back-up Manager. In the event that the senior unsecured and uncredit enhanced long term debt rating of Trinity shall be downgraded below "Ba2" by Moody's or below "BB" by S&P, the Company and the Manager shall, as soon as reasonably practicable, and in any event within 6 months of such downgrade, appoint a back-up Manager (the "Back-up Manager") which is reasonably acceptable to all of the Lenders, the Agent, Moody's and S&P, which Back-up Manager shall otherwise meet the criteria applicable to a Successor Manager set forth in Section 8.04. Any Back-up Manager shall execute and deliver to the Company and to the Manager an instrument accepting such appointment on terms and conditions approved by Moody's and the Agent, including customary confidentiality provisions in favor of the Manager and the Company. Upon the occurrence of a Manager Event of Default and the termination of the management term as provided in Section 8.03(a), the Back-up Manager shall be the Successor Manager and shall become vested with all the rights, powers, duties and trusts of the predecessor Manager hereunder with the like effect as if originally named the Manager herein. WAIVER: 1. Waiver. Each of the Lenders and the Agent hereby agree to waive, solely for the period from the date on which this Amendment becomes effective through November 15, 2003, the condition required by Section 4.02(d) of the Agreement. MISCELLANEOUS: 1. Effectiveness. This Amendment becomes effective on the date on which the Agent has received (i) executed signature pages of each party to this Amendment (including each Lender), and (ii) a bring down letter of Winston & Strawn LLP, in form satisfactory to the Agent, dated the date hereof, with respect to the "true sale" opinion of Winston & Strawn LLP which was previously delivered in connection with the Agreement. 2. Representations and Warranties. The Manager and the Borrower each represent and warrant that its respective representations and warranties contained in Article V of the Agreement and Article X of the Management Agreement, as applicable, are true and correct on -6- and as of the date of this Amendment as though made on and as of such date, except to the extent that such representations and warranties expressly relate to an earlier date. 3. Effect of Amendment. All provisions of the Agreement and the Management Agreement, as expressly amended and modified by this Amendment, shall remain in full force and effect. After this Amendment becomes effective, all references in the Agreement or the Management Agreement (or in any other Transaction Document) to the Agreement or the Management Agreement, as applicable, shall be deemed to be references to the Agreement or the Management Agreement as amended hereby. 4. Counterparts. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument. 5. Governing Law. This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York. 6. Section Headings. The various headings of this Amendment are included for convenience only and shall not affect the meaning or interpretation of this Amendment, the Agreement, the Management Agreement or any provision hereof or thereof. [SIGNATURE PAGES FOLLOW] -7- IN WITNESS WHEREOF, the parties have executed this Amendment on the date first written above. TRINITY INDUSTRIES LEASING COMPANY By: /s/ Eric Marchetto ---------------------------------- Name: Title: TRINITY RAIL LEASING TRUST II By: /s/ Eric Marchetto ---------------------------------- Name: Title: CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH as Agent and as a Committed Lender By: __________________________________ Name: Title: By: __________________________________ Name: Title: IN WITNESS WHEREOF, the parties have executed this Amendment on the date first written above. 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: /s/ Mark Golombeck ----------------------------------- Name: Mark Golombeck Title: Vice President By: /s/ Alberto Zonca ----------------------------------- Name: ALBERTO ZONCA Title: VICE PRESIDENT GRAMERCY CAPITAL CORPORATION, as a Conduit Lender By: /s/ Mark Lengel ----------------------------------- Name: MARK LENGEL Title: DIRECTOR By: /s/ Joseph Soave ----------------------------------- Name: Joseph Soave Title: Vice President GREENWICH FUNDING CORPORATION, as a Conduit Lender By: /s/ Mark Lengel ----------------------------------- Name: MARK LENGEL Title: DIRECTOR By: /s/ Joseph Soave ----------------------------------- Name: Joseph Soave Title: Vice President ALPINE SECURITIZATION CORP., as a Conduit Lender By: /s/ Mark Lengel ----------------------------------- Name: MARK LENGEL Title: DIRECTOR By: /s/ Joseph Soave ----------------------------------- Name: Joseph Soave Title: Vice President DRESDNER BANK AG, NEW YORK BRANCH, as a Committed Lender By: /s/ Timothy C. Madigan ----------------------------------- Name: Timothy C. Madigan Title: Director By: /s/ David Taylor ----------------------------------- Name: David Taylor Title: Associate BEETHOVEN FUNDING CORPORATION, as a Conduit Lender By:___________________________________ Name: Title: DRESDNER BANK AG, NEW YORK BRANCH, as a Committed Lender By:___________________________________ Name: Title: By:___________________________________ Name: Title: BEETHOVEN FUNDING CORPORATION, as a Conduit Lender By: /s/ Kevin P. Burns ----------------------------------- Name: Kevin P. Burns Title: Vice President Schedule A Industry Concentration Chart

* At any time when the aggregate outstanding principal amount of the Loans (including any Loans to be made on the date of calculation) is less than 50% of the Committed Amount, the percentages marked with an asterisk (*) shall be deemed to be 20%. Schedule B LRTA Multiplier

EX-10.17.5 5 d19332exv10w17w5.txt AMENDMENT NO. 5 TO THE WAREHOUSE LOAN AGREEMENT EXHIBIT 10.17.5 AMENDMENT NO. 5 TO WAREHOUSE LOAN AGREEMENT AND RELATED DOCUMENTS AMENDMENT NO. 5 TO WAREHOUSE LOAN AGREEMENT AND RELATED DOCUMENTS, dated as of November 12, 2003 (this "Amendment"), is entered into by and among TRINITY INDUSTRIES LEASING COMPANY, a Delaware corporation (the "Manager"), TRINITY RAIL LEASING TRUST II, a Delaware statutory trust (the "Borrower"), the LENDERS party hereto, and CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH, as Agent for the Lenders (in such capacity, the "Agent"). Capitalized terms used but not defined herein have the meaning set forth in the Agreement referred to below. RECITALS: WHEREAS, (i) the Manager, the Borrower, the Lenders and the Agent are parties to that certain Warehouse Loan Agreement dated as of June 27, 2002 (as heretofore amended, the "Agreement"), (ii) the Manager and Borrower are parties to that certain Operation, Maintenance, Servicing and Remarketing Agreement, dated as of June 27, 2002 (as heretofore amended, the "Management Agreement"), (iii) the Agent and the Borrower are parties to that certain Security Agreement, dated as of June 27, 2002 (the Security Agreement"), (iv) the Agent, the Manager, the Borrower and Wilmington Trust Company ("WTC"), as Depository, are parties to that certain Depository Agreement, dated as of July 15, 2002 (as heretofore amended, the "Depository Agreement") and (v) the Agent, the Borrower and the Depository are parties to that certain Deposit Account Control Agreement, dated as of July 15, 2002 (the "Control Agreement"); and WHEREAS, the parties hereto desire to amend the Agreement, the Management Agreement, the Security Agreement, the Depository Agreement and the Control Agreement as hereinafter set forth. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: I. AMENDMENTS TO WAREHOUSE LOAN AGREEMENT: 1. The following definitions are hereby added to Section 1.01 of the Agreement in the appropriate alphabetical sequence: "`Customer Collections Account Administration Agreement' means the Customer Collections Account Administration Agreement, dated as of November 12, 2003, among the Manager, the Borrower, the Agent, Trinity Rail Leasing III, L.P., a Texas limited partnership, the TRL-III Transaction Investors identified on the signature pages thereto, WTC, as the Transaction Debt Representative (as defined therein), as the TRL-III Indenture Trustee (as defined therein), as the TRL-III Collateral Agent (as defined therein), as a beneficiary thereunder and as the Account Collateral Agent (as defined therein)." "'Customer Payments Accounts' means the Customer Payments Account referred to and defined in the Customer Collections Account Administration Agreement." 2. The definition of "Collateral Documents" contained in Section 1.01 of the Agreement is hereby amended by inserting the words "Customer Collections Account Administration Agreement," immediately after the words "the Depositary Agreement," contained therein. 3. Section 6.13(a) of the Agreement is hereby amended by replacing the third and fourth sentences contained therein with the following sentence: 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 Customer Payments Account. II. AMENDMENT TO OPERATION, MAINTENANCE, SERVICING AND REMARKETING AGREEMENT 1. Section 6.01 of the Management Agreement is hereby amended by replacing the phrase "deposited directly in the Collection Account maintained under the Depository Agreement" with the phrase "deposited directly in the Customer Payments Account". 2. Section 6.02(a) of the Management Agreement is hereby amended by replacing the words "Collection Account" contained in the third sentence thereof with the words "Customer Payments Account". III. AMENDMENT TO SECURITY AGREEMENT 1. Section 3.06 of the Security Agreement is hereby amended by inserting ", the Customer Payments Account" immediately after the words "Collateral Accounts" located therein. 2. Section 4.10 of the Security Agreement is hereby amended by inserting ", the Customer Payments Account" immediately after the words "Collateral Accounts" located therein. IV. AMENDMENT TO DEPOSITORY AGREEMENT 1. Clause (i) of Section 2.01 of the Depository Agreement is hereby amended by replacing the words "Collection Account" contained therein with the words "Customer Payments Account". V. AMENDMENT TO CONTROL AGREEMENT 1. The Control Agreement is hereby amended by deleting the last row of the grid contained at the end of the first paragraph thereof (it being understood that the "Lock Box Account" is hereby no longer considered to be an "Account" under the Control Agreement). -2- VI. COVENANTS 1. The Manager hereby agrees to allocate all Cash Flow from the Customer Payments Account to the Collections Account on a daily basis, and shall provide written notice thereof (which notice may be made by facsimile or electronic mail) to the Agent [on a daily basis], in each case in accordance with the Customer Collections Account Administration Agreement. 2. The Manager and the Borrower hereby agree that if, within 45 days of the effectiveness of this Amendment, the Required Lenders have not delivered Notices of Consent in form substantially similar to Exhibit A hereto to the Agent then the Borrower will establish a new lock box account for the deposit of Cash Flow and will instruct each Lessee and each other party obligated to the Borrower to make payments of Cash Flow to such lock box account. In addition, the definition of "Customer Payments Account" will be revised to mean the new lock box account and the Loan Documents will otherwise be amended to reflect the establishment of the new account and the requirement that Cash Flow is to be deposited therein. VII. MISCELLANEOUS: 1. Effectiveness. This Amendment becomes effective on the date on which the Agent has received executed signature pages of the Manager, the Borrower, the Depository and the Required Lenders. 2. Representations and Warranties. The Manager and the Borrower each represent and warrant that its respective representations and warranties contained in the Agreement and the other Loan Documents, as applicable, are true and correct on and as of the date of this Amendment as though made on and as of such date, except to the extent that such representations and warranties expressly relate to an earlier date. 3. Effect of Amendment. All provisions of the Agreement, the Management Agreement, the Security Agreement, the Depository Agreement and the Control Agreement as expressly amended and modified by this Amendment, shall remain in full force and effect. After this Amendment becomes effective, all references in the Agreement, the Management Agreement, the Security Agreement, the Depository Agreement or the Control Agreement (or in any other Transaction Document) to the Agreement, the Management Agreement, the Security Agreement, the Depository Agreement or the Control Agreement, as applicable, shall be deemed to be references to the Agreement, the Management Agreement, the Security Agreement, the Depository Agreement or the Control Agreement as amended hereby. 4. Counterparts. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment by facsimile shall be effective as delivery of a manually executed counterpart of this Amendment. 5. Governing Law. This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York. -3- 6. Section Headings. The various headings of this Amendment are included for convenience only and shall not affect the meaning or interpretation of this Amendment, the Agreement, the Management Agreement, the Security Agreement, the Depository Agreement, the Control Agreement or any provision hereof or thereof. [SIGNATURE PAGES FOLLOW] -4- IN WITNESS WHEREOF, the parties have executed this Amendment on the date first written above. 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: 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: DRESDNER BANK AG, NEW YORK BRANCH, as a Committed Lender By: _________________________________ Name: Title: By: _________________________________ Name: Title: BEETHOVEN FUNDING CORPORATION, as a Conduit Lender By: _________________________________ Name: Title: COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK B.A., "RABOBANK INTERNATIONAL", NEW YORK BRANCH, as a Committed Lender By: _________________________________ Name: Title: By: _________________________________ Name: Title: NIEUW AMSTERDAM RECEIVABLES CORPORATION, as a Conduit Lender By: _________________________________ Name: Title: Exhibit A Notice of Consent Credit Suisse First Boston, New York Branch, as Agent Eleven Madison Avenue New York, New York 10010 Ladies and Gentlemen: Reference is made to (i) the Warehouse Loan Agreement dated as of June 27, 2002 among Trinity Industries Leasing Company ("TILC"), Trinity Rail Leasing Trust II ("Trinity Rail"), the lending institutions party thereto from time to time (the "Lenders") and Credit Suisse First Boston, New York Branch, as Agent (the "Agent") (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Loan Agreement") and (ii) Amendment No. 5 to the Loan Agreement, dated as of November 12, 2003 ("Amendment No. 5"), among TILC, Trinity Rail, the Lenders and the Agent. Terms defined in the Loan Agreement and not otherwise defined herein have, as used herein, the respective meanings provided for therein. This letter shall act as notice from [Name of Lender] in connection with Section 2 of Article VI of Amendment No. 5 that it is not requesting that a new lock box account be established for the deposit of Cash Flow and that [Name of Lender] confirms its consent to the establishment of the Customer Payments Account and to the deposit of all Cash Flow therein in accordance with the Loan Documents. [Name of Lender] By: ________________________ Name: Title: EX-10.17.6 6 d19332exv10w17w6.txt AMENDMENT NO. 6 TO THE WAREHOUSE LOAN AGREEMENT EXHIBIT 10.17.6 AMENDMENT NO. 6 TO WAREHOUSE LOAN AGREEMENT AND RELATED DOCUMENTS AMENDMENT NO. 6 TO WAREHOUSE LOAN AGREEMENT AND RELATED DOCUMENTS, dated as of January [__], 2004 (this "Amendment"), is entered into by and among TRINITY INDUSTRIES LEASING COMPANY, a Delaware corporation (the "Manager"), TRINITY RAIL LEASING TRUST II, a Delaware statutory trust (the "Borrower"), the LENDERS party hereto, CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH, as Agent for the Lenders (in such capacity, the "Agent") and Wilmington Trust Company, as Depository (the "Depository"). Capitalized terms used but not defined herein have the meaning set forth in the Agreement referred to below. RECITALS: WHEREAS, (i) the Manager, the Borrower, the Lenders and the Agent are parties to that certain Warehouse Loan Agreement dated as of June 27, 2002 (as heretofore amended, the "Agreement"), (ii) the Manager and Borrower are parties to that certain Operation, Maintenance, Servicing and Remarketing Agreement, dated as of June 27, 2002 (as heretofore amended, the "Management Agreement"), (iii) the Agent and the Borrower are parties to that certain Security Agreement, dated as of June 27, 2002 (as heretofore amended, the Security Agreement") and (iv) the Agent, the Manager, the Borrower and the Depository, are parties to that certain Depository Agreement, dated as of July 15, 2002 (as heretofore amended, the "Depository Agreement"); and WHEREAS, the parties hereto desire to amend the Agreement, the Management Agreement, the Security Agreement and the Depository Agreement as hereinafter set forth. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: I. AMENDMENTS TO WAREHOUSE LOAN AGREEMENT: 1. Section 1.01 of the Agreement is hereby amended by inserting the following definition in the appropriate alphabetical sequence: "Customer Collections Account Administration Agreement Severance" has the meaning set forth in Section 6.13(f). 2. The definition of "Permitted Liens" contained in Section 1.01 of the Agreement is hereby amended by deleting the words "by the Borrower to the Agent" contained in clause (i) thereof. 3. Section 2.07(b)(iii) of the Agreement is hereby amended by replacing the words "clause (x)" occurring immediately prior to the words "of the definition of "Excluded Assets Amount"" contained therein with the words "clause (xvi)". 4. Section 6.13(a) of the Agreement is hereby amended by replacing the third and fourth sentences contained therein with the following sentence: 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). 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 Customer Payments Account (or, after the occurrence of the Customer Collections Account Administration Agreement Severance (or otherwise at the direction of the Agent (as directed by the Required Lenders)), the Collection Account). 5. Section 6.13 of the Agreement is hereby amended by inserting the following "clause (e)" and "clause (f)" at the end thereof: (e) The Manager hereby agrees to allocate all Cash Flow from the Customer Payments Account to the Collections Account on a daily basis, and shall provide written notice thereof (which notice may be made by facsimile or electronic mail) to the Agent on a daily basis, in each case in accordance with the Customer Collections Account Administration Agreement. (f) Within [3] Business Days after receiving direction from the Required Lenders, each of the Agent and the Borrower shall take all actions necessary to sever itself (and each shall sever itself within such period) as a "Beneficiary" under the Customer Collections Account Administration Agreement (the "Customer Collections Account Administration Agreement Severance") in accordance with Section 11(c) thereof. 6. Section 6.14 of the Agreement is hereby amended by (x) converting the provisions of such Section to be "clause (a)" thereof and by inserting the following "clause (b)" immediately thereafter: (b) The Borrower, the Manager and the Agent agree that upon the occurrence and continuance of an Event of Default, a Manager Default, a Manager Event of Default or any event set forth in clauses (i) through (viii) of Section 6(a) of the Customer Collections Account Administration Agreement, the Agent shall, at the direction of the Required Lenders, take all actions necessary to appoint a successor to the Manager in its duties thereunder in accordance with Section 6(a) thereof. II. AMENDMENT TO OPERATION, MAINTENANCE, SERVICING AND REMARKETING AGREEMENT 1. Section 6.01 of the Management Agreement is hereby amended by inserting the parenthetical "(or, after the occurrence of the Customer Collections Account Administration Agreement Severance (or otherwise at the direction of the Agent (as directed by the Required -2- Lenders)), the Collection Account)" immediately after the phrase "deposited directly in the Customer Payments Account" contained therein. 2. Section 6.02(a) of the Management Agreement is hereby amended by inserting the parenthetical "(or, after the occurrence of the Customer Collections Account Administration Agreement Severance (or otherwise at the direction of the Agent (as directed by the Required Lenders)), the Collection Account)" immediately after the words "Customer Payments Account" contained in the third sentence thereof. III. AMENDMENT TO SECURITY AGREEMENT 1. Section 3.02 of the Security Agreement is hereby amended by (x) inserting the words "and the Customer Collections Account Administration Agreement" immediately after the words "Depository Agreement" contained in the third sentence thereof and (y) inserting the words "the Customer Payments Account" immediately after the words "Collateral Accounts" contained in the third sentence thereof. 2. Clause (a)(ii)(A) of Section 6.02 of the Security Agreement is hereby amended by inserting the words "the Customer Payments Account" immediately after the words "Collateral Accounts" contained therein. IV. AMENDMENT TO DEPOSITORY AGREEMENT 1. Clause (i) of Section 2.01 of the Depository Agreement is hereby amended by inserting the parenthetical "(or, after the occurrence of the Customer Collections Account Administration Agreement Severance (or otherwise at the direction of the Agent (as directed by the Required Lenders)), the Collection Account)" immediately after the words "Customer Payments Account" contained therein. V. MISCELLANEOUS: 1. Effectiveness. This Amendment becomes effective on the date on which the Agent has received executed signature pages of the Manager, the Borrower, the Depository and the Required Lenders. 2. Representations and Warranties. The Manager and the Borrower each represent and warrant that its respective representations and warranties contained in the Agreement and the other Loan Documents, as applicable, are true and correct on and as of the date of this Amendment as though made on and as of such date, except to the extent that such representations and warranties expressly relate to an earlier date. 3. Effect of Amendment. All provisions of the Agreement, the Management Agreement, the Security Agreement and the Depository Agreement as expressly amended and modified by this Amendment, shall remain in full force and effect. After this Amendment becomes effective, all references in the Agreement, the Management Agreement, the Security Agreement or the Depository Agreement (or in any other Transaction Document) to the Agreement, the Management Agreement, the Security Agreement or the Depository Agreement, as applicable, -3- shall be deemed to be references to the Agreement, the Management Agreement, the Security Agreement or the Depository Agreement as amended hereby. 4. Counterparts. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment by facsimile shall be effective as delivery of a manually executed counterpart of this Amendment. 5. Governing Law. This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York. 6. Direction to Depository. The Lenders party hereto and the Agent hereby direct the Depository to execute and deliver this Amendment. 7. Section Headings. The various headings of this Amendment are included for convenience only and shall not affect the meaning or interpretation of this Amendment or any provision hereof. [SIGNATURE PAGES FOLLOW] -4- IN WITNESS WHEREOF, the parties have executed this Amendment on the date first written above. 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: 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: DRESDNER BANK AG, NEW YORK BRANCH, as a Committed Lender By: ---------------------------------------- Name: Title: By: ---------------------------------------- Name: Title: BEETHOVEN FUNDING CORPORATION, as a Conduit Lender By: ---------------------------------------- Name: Title: COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK B.A., "RABOBANK INTERNATIONAL", NEW YORK BRANCH, as a Committed Lender By: ---------------------------------------- Name: Title: By: ---------------------------------------- Name: Title: NIEUW AMSTERDAM RECEIVABLES CORPORATION, as a Conduit Lender By: ---------------------------------------- Name: Title: WILMINGTON TRUST COMPANY, in its capacity as Depository By: ---------------------------------------- Name: Title: EX-10.17.7 7 d19332exv10w17w7.txt AMENDMENT NO. 7 TO THE WAREHOUSE LOAN AGREEMENT EXHIBIT 10.17.7 [Execution Copy] AMENDMENT NO. 7 TO WAREHOUSE LOAN AGREEMENT AND RELATED DOCUMENTS AMENDMENT NO. 7 TO WAREHOUSE LOAN AGREEMENT AND RELATED DOCUMENTS, dated as of August 26, 2004 (this "Amendment"), is entered into by and among TRINITY INDUSTRIES LEASING COMPANY, a Delaware corporation (the "Manager"), TRINITY RAIL LEASING TRUST II, a Delaware statutory trust (the "Borrower"), the LENDERS party hereto, and CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH, as Agent for the Lenders (in such capacity, the "Agent). Capitalized terms used but not defined herein have the meaning set forth in the Agreement referred to below. RECITALS; WHEREAS, (i) the Manager, the Borrower, the Lenders and the Agent are parties to that certain Warehouse Loan Agreement dated as of June 27, 2002 (as heretofore amended, the "Agreement"), and (ii) the Manager and Borrower are parties to that certain Operation, Maintenance, Servicing and Remarketing Agreement, dated as of June 27, 2002 (as heretofore amended, the "Management Agreement"); and WHEREAS, the parties hereto desire to amend the Agreement and the Management Agreement as hereinafter set forth. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: I. AMENDMENT TO WAREHOUSE LOAN AGREEMENT: 1. The definition of "Revolving Termination Date" contained in Section 1.01 of the Agreement is hereby amended by deleting the date "August 27, 2004" occurring therein and by inserting "August 26, 2005" in place thereof. II. AMENDMENT TO OPERATION, MAINTENANCE, SERVICING AND REMARKETING AGREEMENT 1. Section 8.02 of the Management Agreement is hereby amended by deleting clause (i) thereof and by inserting the following clause (i) in place thereof: "(i) if the long term Dollar-denominated rating of Trinity (x) by Moody's, falls below Moody's "Senior Implied" "B2" category, or (y) by S&P, falls below S&P's "Corporate Credit" "B" category, or Trinity shall cease to be rated by S&P or Moody's (other than in circumstances where S&P and/or Moody's shall no longer provide ratings and Trinity shall have obtained an equivalent rating from an internationally recognized rating agency)." 2. Section 8.06 of the Management Agreement is hereby amended by deleting the first sentence occurring therein and by inserting the following sentence in place thereof: "In the event that the long term Dollar-denominated rating of Trinity (x) by Moody's, falls below Moody's "Senior Implied" "Ba2" category, or (y) by S&P, falls below S&P's "Corporate Credit" "BB" category, or Trinity shall cease to be rated by S&P or Moody's (other than in circumstances where S&P and/or Moody's shall no longer provide ratings and Trinity shall have obtained an equivalent rating from an internationally recognized rating agency), the Company and the Manager shall, as soon as reasonably practicable, and in any event within 6 months of such downgrade, appoint a back-up Manager (the "Back-up Manager") which is reasonably acceptable to all of the Lenders, the Agent, Moody's and S&P, which Back-up Manager shall otherwise meet the criteria applicable to a Successor Manager set forth in Section 8.04." MISCELLANEOUS: 1. Effectiveness. This Amendment becomes effective on the date on which the Agent has received signature pages duly executed by each party to this Amendment (including the Required Lenders). 2. Representations and Warranties. The Manager and the Borrower each represent and warrant that its respective representations and warranties contained in Article V of the Agreement and Article X of the Management Agreement, as applicable, are true and correct on and as of the date of this Amendment as though made on and as of such date, except to the extent that such representations and warranties expressly relate to an earlier date. 3. Effect of Amendment. All provisions of the Agreement and the Management Agreement, as expressly amended and modified by this Amendment, shall remain in full force and effect. After this Amendment becomes effective, all references in the Agreement or the Management Agreement (or in any other Transaction Document) to the Agreement or the Management Agreement, as applicable, shall be deemed to be references to the Agreement or the Management Agreement as amended hereby. 4. Counterparts. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment by facsimile shall be effective as delivery of a manually executed counterpart of this Amendment. 5. Governing Law. This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York. 6. Section Headings. The various headings of this Amendment are included for convenience only and shall not affect the meaning or interpretation of this Amendment, the Agreement, the Management Agreement or any provision hereof or thereof. [SIGNATURE PAGES FOLLOW] -2- IN WITNESS WHEREOF, the parties have executed this Amendment on the date first written above. TRINITY INDUSTRIES LEASING COMPANY By:/s/Eric Marchetto --------------------------------- Name: ERIC MARCHETTO Title: VICE PRESIDENT TRINITY RAIL LEASING TRUST II By:/s/Eric Marchetto --------------------------------- Name: ERIC MARCHETTO Title: VICE PRESIDENT CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH as Agent and as a Committed Lender By:_________________________________ Name: Title: By:_________________________________ Name: Title: IN WITNESS WHEREOF, the parties have executed this Amendment on the date first written above. 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:/s/Mark Golombeck --------------------------------- Name: Mark Golombeck Title: Director By:/s/Hans Bald --------------------------------- Name: Hans Bald Title: Managing Director GRAMERCY CAPITAL CORPORATION, as a Conduit Lender By:/s/Mark Lengel --------------------------------- Name: MARK LENGEL Title: DIRECTOR By:/s/Josh Borg --------------------------------- Name: JOSH BORG Title: VICE PRESIDENT GREENWICH FUNDING CORPORATION, as a Conduit Lender By:/s/Mark Lengel --------------------------------- Name: MARK LENGEL Title: DIRECTOR By:/s/Josh Borg --------------------------------- Name: JOSH BORG Title: VICE PRESIDENT ALPINE SECURITIZATION CORP, as a Conduit Lender By:/s/Mark Lengel --------------------------------- Name: MARK LENGEL Title: DIRECTOR By:/s/Josh Borg --------------------------------- Name: JOSH BORG Title: VICE PRESIDENT DRESDNER BANK AG, NEW YORK BRANCH, as,a Committed Lender By:/s/Timothy C. Madigan --------------------------------- Name: Timothy C. Madigan Title: Director By:/s/Roman Mazo --------------------------------- Name: Roman Mazo Title: VP BEETHOVEN FUNDING CORPORATION, as a Conduit Lender By:________________________________ Name: Title: DRESDNER BANK AG, NEW YORK BRANCH, as a Committed Lender By:________________________________ Name: Title: By:________________________________ Name: Title: BEETHOVEN FUNDING CORPORATION, as a Conduit Lender By:/s/Matthew Dorr --------------------------------- Name: Matthew Dorr Title: Vice President COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK B.A., "RABOBANK INTERNATIONAL", NEW YORK BRANCH, as a Committed Lender By:/s/James Han --------------------------------- Name: James Han Title: Vice President By:/s/ Brett Delfino --------------------------------- Name: Brett Delfino Title: Executive Director NIEUW AMSTERDAM RECEIVABLES CORPORATION, as a Conduit Lender By:________________________________ Name: Title: COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK B.A., "RABOBANK INTERNATIONAL", NEW YORK BRANCH, as a Committed Lender By:________________________________ Name: Title: By:________________________________ Name: Title: NIEUW AMSTERDAM RECEIVABLES CORPORATION,as a Conduit Lender By:/s/Matthew Dorr --------------------------------- Name: Matthew Dorr Title: Vice President EX-12 8 d19332exv12.txt COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12 TRINITY INDUSTRIES, INC. AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (IN MILLIONS)

FOOTNOTE: (a) Earnings were inadequate to cover fixed charges for the nine months ended September 30, 2004 and 2003. The deficiencies for those periods were $9.3 million and $13.2 million, respectively. EX-31.1 9 d19332exv31w1.htm CERTIFICATION OF CHIEF EXECUTIVE OFFICER exv31w1

Exhibit 31.1

CERTIFICATION

I, Timothy R. Wallace, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Trinity Industries, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made know to us by others within those entities, particularly during the period in which this report is being prepared;

b) (Paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986)

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusion about the effectiveness of the disclosure controls and procedures, as of and the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: November 3, 2004

/s/ Timothy R. Wallace

Timothy R. Wallace
Chairman, President and Chief Executive Officer

EX-31.2 10 d19332exv31w2.htm CERTIFICATION OF CHIEF FINANCIAL OFFICER exv31w2

Exhibit 31.2

CERTIFICATION

I, Jim S. Ivy, certify that:

Date: November 3, 2004

s/ Jim S. Ivy

Jim S. Ivy
Senior Vice President and Chief Financial Officer

EX-32.1 11 d19332exv32w1.htm CERTIFICATION PURSUANT TO SECTION 906 exv32w1

Exhibit 32.1

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 September 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Timothy R. Wallace, Chairman, 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
Chairman, President and Chief Executive Officer
November 3, 2004

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities Exchange Commission or its staff upon request.

EX-32.2 12 d19332exv32w2.htm CERTIFICATION PURSUANT TO SECTION 906 exv32w2

Exhibit 32.2

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 ended September 30, 2004 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:

/s/ Jim S. Ivy

Jim S. Ivy
Senior Vice President and Chief Financial Officer
November 3, 2004

A signed original of this written statement required by Section 906 has been provided to the Company and will retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

-----END PRIVACY-ENHANCED MESSAGE-----

•		market conditions and demand for our products;

•		the cyclical nature of both the railcar and barge industries;

•		variations in weather in areas where construction products are sold and used;

•		the timing of introduction of new products;

•		the timing of customer orders;

•		price changes;

•		changes in mix of products sold;

•		the extent of utilization of manufacturing capacity;

•		availability and costs of component parts, supplies, and raw materials;

•		competition and other competitive factors;

•		changing technologies;

•		steel prices;

•		surcharges added to fixed pricing agreements for raw materials;

•		interest rates and capital costs;

•		long-term funding of our leasing warehouse facility;

•		taxes;

•		the stability of the governments and political and business conditions in certain foreign countries, particularly Mexico and Romania;

•		changes in import and export quotas and regulations;

•		business conditions in emerging economies;

•		results of litigation; and

•		legal, regulatory, and environmental issues.

	(1)		Trinity filed a current Report on Form 8-K dated August 5, 2004, reporting, under Item 9 and 12, operating results for the second quarter of 2004, and attaching a news release dated August 4, 2004 and a script of the conference call dated May 6, 2004.

	(1)		Trinity filed a current Report on Form 8-K dated August 5, 2004, reporting, under item 5 and 7 a Statement of computation of Ratio of Earnings to Fixed Charges and Selected Historical Consolidated Financial Data, each reflecting updated financial information for the six month period ending June 30, 2004.

	(2)		Trinity filed a current Report on Form 8-K dated October 14, 2004, reporting, under Item 8.01 the elimination of the position of Chief Executive Officer of Trinity Rail Group, LLC.

1.		I have reviewed this quarterly report on Form 10-Q of Trinity Industries, Inc.;

2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.		Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

	a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made know to us by others within those entities, particularly during the period in which this report is being prepared;

	b)		(Paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986)

	c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusion about the effectiveness of the disclosure controls and procedures, as of and the end of the period covered by this report based on such evaluation; and

	d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

(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.