Equipment Lease Agreement

EXHIBIT 10.52

Equipment Lease Agreement
(KCSR 2007-1)

dated as of September 27, 2007

between

KCSR 2007-1 Statutory Trust, acting through
U.S. Bank Trust National Association,
not in its individual capacity, but solely as Owner Trustee,
Lessor

and

The Kansas City Southern Railway Company,
Lessee

30 SD70ACe Locomotives
30 GE ES44AC Locomotives

     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, as Indenture Trustee under a Trust Indenture and Security Agreement (KCSR 2007-1), dated as of September 27, 2007 between said Indenture Trustee, as secured party, and Lessor, as debtor. Information concerning such security interest may be obtained from Indenture Trustee at its address set forth in Section 20 of this Lease. This Lease Agreement has been executed in several counterparts, but only that counterpart shall be deemed the original counterpart for chattel paper purposes that contains the receipt therefor executed by Wilmington Trust Company, as Indenture Trustee, on the signature page thereof. See Section 26.2 for information concerning the rights of the original holder and the holders of the various counterparts hereof.

     Memorandum of Equipment Lease Agreement (KCSR 2007-1) filed with the Surface Transportation Board pursuant to 49 U.S.C. § 11301 on September 26, 2007 at 1:00 p.m., Recordation Number 27172, and deposited in the Office of the Registrar General of Canada pursuant to Section 105 of the Canada Transportation Act on September 26, 2007 at 3:05 p.m.

Table of Contents

Section		Heading		Page

Section 1. Definitions			1
Section 2. Acceptance and Leasing of Equipment			1
Section 3. Term and Rent			1
Section 3.1. Lease Term			1
Section 3.2. Interim Rent and Basic Rent			2
Section 3.3. Supplemental Rent			4
Section 3.4. Adjustment of Rent			4
Section 3.5. Manner of Payments			4
Section 4. Ownership and Marking of Equipment			5
Section 4.1. Retention of Title			5
Section 4.2. Duty to Number and Mark Equipment			5
Section 4.3. Prohibition against Certain Designations			5
Section 5. Disclaimer of Warranties; Right of Quiet Enjoyment			6
Section 5.1. Disclaimer of Warranties			6
Section 5.2. Quiet Enjoyment			6
Section 6. Return of Equipment; Storage			7
Section 6.1. General			7
Section 6.2. Condition of Equipment			7
Section 6.3. Storage			8
Section 6.4. Termination of Lease			9
Section 7. Liens			9
Section 8. Maintenance; Operation; Sublease			9
Section 8.1. Maintenance			9
Section 8.2. Operation			9
Section 8.3. Sublease			10
Section 9. Modifications			10
Section 9.1. Required Modifications			10
Section 9.2. Optional Modifications			11
Section 9.3. Removal of Proprietary and Communications Equipment			11
Section 9.4. Retention of Equipment by Lessor			11

Section		Heading	Page
Section 10. Voluntary Termination			12
Section 10.1. Right of Termination			12
Section 10.2. Sale of Equipment			13
Section 10.3. Retention of Equipment by Lessor			13
Section 10.4. Termination of Lease			14
Section 11. Loss, Destruction, Requisition, Etc.			14
Section 11.1. Event of Loss			14
Section 11.2. Replacement or Payment upon Event of Loss			15
Section 11.3. Rent Termination			16
Section 11.4. Disposition of Equipment; Replacement of Unit			16
Section 11.5. Eminent Domain			17
Section 12. Insurance			17
Section 12.1. Property Damage and Public Liability Insurance			17
Section 12.2. Proceeds of Insurance			19
Section 12.3. Additional Insurance			19
Section 13. Reports; Inspection			19
Section 13.1. Duty of Lessee to Furnish			19
Section 13.2. Lessor’s Inspection Rights			19
Section 14. Events of Default			20
Section 15. Remedies			21
Section 15.1. Remedies			21
Section 15.2. Cumulative Remedies			24
Section 15.3. No Waiver			24
Section 15.4. Lessee’s Duty to Return Equipment Upon Default			24
Section 15.5. Specific Performance; Lessor Appointed Lessee’s Agent			25
Section 16. Filings; Further Assurances			25
Section 16.1. Filings			25
Section 16.2. Further Assurances			25
Section 16.3. Expenses			25
Section 17. Lessor’s Right to Perform			25
Section 18. Assignment			26
Section 18.1. Assignment by Lessor			26
Section 18.2. Assignment by Lessee			26
Section 18.3. Sublessee’s Performance and Rights			26

Section		Heading	Page
Section 19. Net Lease, etc.			27
Section 20. Notices			27
Section 21. Concerning Indenture Trustee			29
Section 21.1. Limitation of Indenture Trustee’s Liabilities			29
Section 21.2. Right, Title and Interest of Indenture Trustee under Lease			29
Section 22. Termination Upon Purchase by Lessee; Options to Renew			29
Section 22.1. Termination upon Purchase by Lessee			29
Section 22.2. Renewal Options			30
Section 22.3. [Reserved]			30
Section 22.4. Determination of Fair Market Rental Value			30
Section 22.5. Stipulated Loss Value During Renewal Term			31
Section 23. Lessee’s Options to Purchase Equipment; Purchase of Beneficial Interest			31
Section 24. Limitation of Lessor’s Liability			33
Section 25. Filing in Mexico			33
Section 26. Miscellaneous			33
Section 26.1. Governing Law; Severability			33
Section 26.2. Execution in Counterparts			33
Section 26.3. Headings and Table of Contents; Section References			34
Section 26.4. Successors and Assigns			34
Section 26.5. True Lease			34
Section 26.6. Amendments and Waivers			34
Section 26.7. Survival			34
Section 26.8. Business Days			34
Section 26.9. Directly or Indirectly			34
Section 26.10. Incorporation by Reference			35
Section 26.11. Entitlement to §1168 Benefits			35
Section 26.12. Waiver of Jury Trial			35

Attachments to Equipment Lease Agreement:

Exhibit A		-		Form of Lease Supplement
Appendix A		-		Definitions

Equipment Lease Agreement
(KCSR 2007-1)

     This Equipment Lease Agreement (KCSR 2007-1), dated as of September 27, 2007 (this "Lease”), between the KCSR 2007-1 Statutory Trust, a Connecticut statutory trust (“Lessor”), acting through U.S. Bank Trust National Association, a national banking association, not in its individual capacity except as expressly stated herein, but solely as trustee created under the Trust Agreement (as hereinafter defined) (in its individual capacity "Trust Company” and as Owner Trustee, together with its permitted successors and assigns, called the “Owner Trustee”), and The Kansas City Southern Railway Company, a Missouri corporation (“Lessee”),

Witnesseth:

Section 1. Definitions.

     Unless the context otherwise requires, all capitalized terms used herein without definition shall have the respective meanings set forth in Appendix A hereto for all purposes of this Lease.

Section 2. Acceptance and Leasing of Equipment.

     Lessor hereby agrees (subject to satisfaction or waiver of the conditions applicable to each Delivery Date set forth in Article IV of the Participation Agreement), simultaneously with the delivery of each Unit of Equipment from the Seller to Lessor to accept delivery of such Unit of Equipment from Seller, as evidenced by the execution and delivery by an authorized representative of Lessor of a Certificate of Acceptance with respect to such Unit and thereafter to lease such Unit to Lessee hereunder. Lessee further agrees (subject to satisfaction or waiver of the conditions applicable to each Delivery Date for such Unit set forth in Article IV of the Participation Agreement) to execute and deliver a Lease Supplement covering such Unit. Lessor hereby authorizes one or more employees or agents of Lessee, designated by Lessee, to act on behalf of Lessor as its authorized representative or representatives to accept delivery of the Equipment and to execute and deliver such Certificate of Acceptance, all in accordance with Sections 2.1(a) and 2.3(b) of the Participation Agreement. Lessee hereby agrees that such acceptance of delivery by such authorized representative or representatives on behalf of Lessor 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 interim term of this Lease (the “Interim Term”) shall commence for each Unit on the Delivery Date for such Unit and shall terminate at 11:59 P.M. (New York City time) on the date set forth as Item C to Schedule 3 of the Participation Agreement (the “Interim Term Expiration Date”) for such Unit. The basic term of this Lease (the “Basic Term”) for each Unit shall commence on the day (the “Basic Term Commencement

Date”) immediately following the Interim Term Expiration Date for such Unit and, subject to earlier termination pursuant to Sections 10, 11, 15, 22.1 and 23, shall expire at 11:59 P.M. (New York City time) on the date set forth as Item D to Schedule 3 of the Participation Agreement (the “Basic Term Expiration Date”) for such Unit. Subject and pursuant to Section 22.2, Lessee may elect one or more Renewal Terms with respect to any Unit.

     Section 3.2. Interim Rent and Basic Rent. (a) Lessee and Lessor hereby agree that no Rent (other than Supplemental Rent, if any) shall be payable to Lessor during the Interim Term. Lessee hereby agrees to pay Lessor Basic Rent for each Unit throughout the Basic Term applicable thereto on the first Rent Payment Date and in consecutive semi-annual installments thereafter payable on each Rent Payment Date. Each such payment of Basic Rent shall be in an amount equal to the product of the Equipment Cost for such Unit multiplied by the Basic Rent percentage for such Unit set forth opposite such Rent Payment Date on Schedule 2 to the applicable Lease Supplement for such Type of Equipment (as such Schedule 2 shall be adjusted pursuant to Section 2.6 of the Participation Agreement for the applicable Type of Equipment). Basic Rent shall be payable on the Rent Payment Dates as set forth in Schedule 2 to the applicable Lease Supplement for the applicable Type of Equipment. Basic Rent shall be allocated and accrued for use of the Units as specified in Schedule 5 to the applicable Lease Supplement for the applicable Type of Equipment (“Allocated Rent"). For the avoidance of doubt, and notwithstanding anything to the contrary herein, the parties agree that irrespective of Lessee’s payment obligation on each Rent Payment Date, Lessee’s liability on account of the use of each Unit shall be allocated to each Lease Period in the amount of Allocated Rent set forth in Schedule 5 to the applicable Lease Supplement for the applicable Type of Equipment. Basic Rent allocated to any Lease Period shall be further allocated ratably to each day within such Lease Period. Basic Rent shall be allocated to each calendar year in the Lease Term based upon the assumption that each calendar year in the Lease Term is 360 days, consisting of four 90-day quarters and twelve 30-day months.

     (b) It is the intention of Lessor and Lessee that: (i) for purposes of Section 467 of the Code the Allocated Rent derived by multiplying Equipment Cost by the percentage set forth for each Lease Period on Schedule 5 to the applicable Lease Supplement under the caption “Allocated Rent” constitutes a specific allocation of “fixed rent” within the meaning of Treasury Regulation Section 1.467-1(c)(2)(ii) with the effect that each of Lessor and Lessee shall accrue rental income and rental expense, respectively, in the amount equal to Equipment Cost multiplied by the percentage as set forth for each Lease Period under the column with the heading “Allocated Rent” on Schedule 5 to the applicable Lease Supplement.

     (c) Lessor and Lessee agree that a prepaid or deferred rent balance may exist at certain times during the Basic Term. It is the intention of Lessor and Lessee that any such prepaid or deferred rent balance shall (A) in the case of a prepaid rent balance, give rise to a loan from Lessee to Lessor in the amount of any positive loan balance (the “Lessor Loan Balance”) computed by multiplying the percentage set forth in Schedule 6 to the applicable Lease Supplement under the caption “Loan Balance” by the Equipment Cost, and in the case of a deferred rent balance, shall give rise to a loan from Lessor to Lessee in the amount of any negative loan balance (the “Lessee Loan Balance”) computed by multiplying the percentage set forth in Schedule 6 to the applicable Lease Supplement under the caption “Loan Balance” by the

Equipment Cost and (B) such loan shall provide for “adequate stated interest” within the meaning of Treasury Regulation Section 1.467-2(b)(ii). If there shall be an outstanding Lessor Loan Balance, Lessor shall deduct interest expense and Lessee shall include interest income, in each case, in an amount equal to the product of Equipment Cost multiplied by the percentage set forth under the caption “Interest Amount” for the applicable period identified on Schedule 6 to the applicable Lease Supplement. If there shall be an outstanding Lessee Loan Balance, Lessee shall deduct interest expense and Lessor shall include interest income, in each case, in an amount equal to the product of Equipment Cost multiplied by the percentage set forth under the caption “Interest Amount” for the applicable period identified on Schedule 6 to the applicable Lease Supplement.

     (d) The obligations of Lessor to Lessee under this Section 3.2 (including Lessor’s obligation with respect to any loan from Lessee as represented by any Lessor Loan Balance) (i) are subject and subordinate to the obligations of Lessor under the Indenture and of Lessee to Lessor under any other Operative Agreement, (ii) are payable exclusively from amounts distributable under clause “second” of Section 3.01 of the Indenture or clause “fourth” of Section 3.03 of the Indenture, (iii) shall be suspended at any time a Specified Default or an Event of Default is continuing (unless all amounts payable to the Loan Participants under Section 3.03 of the Indenture shall have been satisfied in full and Lessee has paid Lessor all amounts due to Lessor and Owner Participant under the Operative Agreements), and (iv) shall not be enforceable by Lessee other than by written demand unless all amounts payable to the Loan Participants under Section 3.03 of the Indenture shall have been satisfied in full and Lessee has paid Lessor all amounts due to Lessor and Owner Participant under the Operative Agreements. Lessee acknowledges, consents and agrees to the subordination and other terms set forth in the previous sentence.

     The EBO Fixed Purchase Price, each Stipulated Loss Value and each Termination Value, as of any Determination Date, reflects the subtraction of any Lessor Loan Balance and accrued interest thereon and the addition of any Lessee Loan Balance, accrued interest thereon and accrued Basic Rent; and the payment thereof, or any amount calculated by reference thereto, by Lessee as and when due hereunder in connection with a termination of this Lease with respect to any Unit pursuant to Sections 10, 11, 15 or 22.1 shall effect a repayment, by offset, of the Lessor Loan Balance or a repayment of the Lessee Loan Balance, as the case may be.

     (e) In the event that 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 2 to the applicable Lease Supplement (and such increase is deemed to be 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)), the amount of Allocated Rent 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 Allocated Rent for such Lease Period and the denominator of which is the aggregate amount of Allocated Rent for all Lease Periods. The adjusted Allocated Rent shall constitute Allocated Rent for all purposes of this Lease.

     (f) Anything contained herein or in the Participation Agreement to the contrary notwithstanding, each installment of Basic Rent (both before and after any adjustment pursuant to Section 2.6 of the Participation Agreement) shall be, under any circumstances and in any event, in an amount at least sufficient for Lessor to pay in full as of the due date of such installment, any payment of principal of and interest on the Equipment Notes required to be paid by Lessor pursuant to the Indenture on such due date.

     Section 3.3. Supplemental Rent. Lessee also agrees to pay to Lessor, or to whomsoever shall be entitled thereto, any and all Supplemental Rent, promptly as the same shall become due and owing, or where no due date is specified, promptly after demand by the Person entitled thereto, and in the event of any failure on the part of Lessee to pay any Supplemental Rent, Lessor shall have all rights, powers and remedies provided for herein or by law or equity or otherwise as in the case of nonpayment of Basic Rent. Without limiting the generality of the foregoing, Lessee will pay, as Supplemental Rent, (i) on demand, to the extent permitted by applicable law, an amount equal to interest at the applicable Late Rate 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 demanded, as the case may be, for the period from such due date or demand until the same shall be paid, (ii) an amount equal to any Positive Make-Whole Amount due under Section 2.10(a) or Section 2.10(c) of the Indenture, (iii) in the case of the termination of this Lease with respect to any Unit pursuant to Section 10, on the applicable Termination Date, an amount equal to the Positive Make-Whole Amount, if any, with respect to the principal amount of each Equipment Note to be prepaid as a result of such termination and any Positive Make-Whole Amount due on the Equipment Notes upon their acceleration pursuant to Section 4.02 of the Indenture by reason of a Lease Event of Default, (iv) in the case of a termination of this Lease with respect to any Unit pursuant to Section 22.1, on the date such Unit is purchased, an amount equal to the Positive Make-Whole Amount, if any, with respect to any Equipment Note to be prepaid on such date, (v) in the case of any refunding or refinancing pursuant to Section 11.2 of the Participation Agreement or any prepayment pursuant to Section 2.10(d) of the Indenture, on the date specified in the agreement referred to in Section 11.2(a) of the Participation Agreement or Section 2.10(d) of the Indenture, as applicable, an amount equal to the Positive Make-Whole Amount, if any, with respect to the principal amount of each Equipment Note outstanding on the Refunding Date, (vi) on demand, any payments required under the Tax Indemnity Agreement or Article VII of the Participation Agreement and (vii) all amounts payable by Lessor under Section 7.02 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 Basic Rent, Stipulated Loss Value and Termination Value percentages 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 Goodwin Square, 225 Asylum Street, 23rd Floor, Hartford, Connecticut 06103, Attention:

Corporate Trust- Administration (KCSR 2007-1). All Rent shall be paid by Lessee in funds consisting of lawful currency of the United States of America, which shall be immediately available to the recipient not later than 12:00 noon (New York City time) on the date of such payment, provided that so long as the Indenture shall not have been discharged pursuant to the terms thereof, Lessor hereby directs, and Lessee agrees, that all Rent (excluding Excepted Property) payable to Lessor and assigned to Indenture Trustee shall be paid directly to Indenture Trustee at the times and in funds of the type specified in this Section 3.5 at the office of Indenture Trustee at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration, or at such other location in the United States of America as Indenture Trustee may otherwise direct.

Section 4. Ownership and Marking of Equipment.

     Section 4.1. Retention of Title. Lessor shall and hereby does retain full legal title to and ownership of the Equipment notwithstanding the delivery of the Equipment to Lessee hereunder.

     Section 4.2. Duty to Number and Mark Equipment. On or before the applicable Delivery Date with respect to each Unit, Lessee shall cause each Unit to be numbered with the reporting mark shown on the Lease Supplement for such Unit dated such Delivery Date and, within 30 days of such Delivery Date and at all times thereafter, shall cause each Unit to be 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:

“Subject to a Security Agreement recorded
with the Surface Transportation Board”
or
“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 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. Lessee will not change the reporting mark of any Unit except in accordance with a statement of new reporting marks to be substituted therefor, which statement shall be delivered to Lessor by Lessee and a supplement to this Lease and the Indenture with respect to such new reporting marks shall be filed or recorded by Lessee in all public offices where this Lease and the Indenture shall have been filed or recorded, in each case promptly after a Responsible Officer of Lessee obtains actual knowledge of such change.

     Section 4.3. Prohibition against Certain Designations. Except as above provided, Lessee will not allow the name of any Person to be placed on any Unit as a designation that

might reasonably be interpreted as a claim of ownership; provided, however, that subject to the delivery of the statement specified in the last sentence of Section 4.2, Lessee may cause the Equipment to be lettered with the names or initials or other insignia customarily used by Lessee or any permitted sublessees or any of their respective Affiliates on railroad equipment used by it of the same or a similar type.

Section 5. Disclaimer of Warranties; Right of Quiet Enjoyment.

     Section 5.1. Disclaimer of Warranties. Without waiving any claim Lessee may have against any seller, supplier or manufacturer, Lessee acknowledges and agrees that, (i) each Unit is of a size, design, capacity and manufacture selected by and acceptable to Lessee, (ii) Lessee is satisfied that each Unit is suitable for its purposes, (iii) neither Lessor, Trust Company nor Owner Participant is a manufacturer of property of such kind, (iv) each Unit is leased hereunder subject to all applicable laws and governmental regulations now in effect or hereinafter adopted, and (v) Lessor leases and Lessee takes each Unit “as-is”, “where-is” and “with all faults”, and Lessee acknowledges that neither Lessor, Trust Company nor Owner Participant makes nor shall be deemed to have made, and each expressly disclaims, any and all rights, claims, warranties or representations either express or implied, as to the value, condition, fitness for any particular purpose, design, operation, merchantability thereof or as to the title of the equipment, 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, except that Trust Company represents and warrants that on each Delivery Date, Lessor shall have received whatever title to the Equipment delivered on such Delivery Date as was conveyed to Lessor by the Seller and each Unit will be free of Lessor’s Liens attributable to Trust Company. During the Lease Term so long as no Event of Default shall have occurred and be continuing, 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 the Equipment against the manufacturers or any prior owner thereof.

     Section 5.2. Quiet Enjoyment. Each party to this Lease acknowledges notice of, and consents in all respects to, the terms of this Lease, and expressly, severally and as to its own actions only, agrees that, notwithstanding any other provision of any of the Operative Agreements, so long as no Lease Event of Default has occurred and is continuing, it shall not take or cause to be taken any action inconsistent with Lessee’s rights under this Lease or otherwise through its own actions in any way to interfere with or interrupt the quiet enjoyment of the use, operation and possession of any Unit by Lessee or any sublessee (it being understood that no sublessee shall have any third party beneficiary rights under this Lease or any other Operative Agreement), assignee or transferee under any sublease, assignment or transfer then in effect and permitted by the terms of this Lease.

Section 6. Return of Equipment; Storage.

     Section 6.1. General. (a) On the expiration of the Lease Term with respect to any Unit which has not been purchased by Lessee, Lessee will, at its own cost and expense, deliver possession of such Unit to Lessor at not more than three interchange points on the tracks of Lessee in the U.S., f.o.b. such interchange point, as Lessor may reasonably designate to Lessee in writing at least 90 days before the end of the Lease Term or, in the absence of such designation, as Lessee may select or, if Lessor has requested storage pursuant to Section 6.3, to the location determined in accordance with Section 6.3. To the extent that any maintenance logs are kept by Lessee in its ordinary course of business with respect to any Unit returned pursuant to this Section 6.1 and such maintenance logs are customarily made available to the purchaser of equipment of a type similar to such Unit, such maintenance logs shall be provided to Lessor or its designee upon the return of such Unit. Upon expiration of the Lease Term with respect to such Unit, compliance with the terms hereof (including without limitation the return conditions) and tender of such Unit at the location determined in accordance with this Section 6.1(a), this Lease and the obligation to pay Basic Rent and all other Rent for such Unit accruing subsequent to such expiration (except for Supplemental Rent obligations with respect to such Unit surviving pursuant to the Participation Agreement or the Tax Indemnity Agreement or which have otherwise accrued but not been paid as of the date of the expiration of the Lease Term) shall terminate.

     (b) In the event any Unit is not returned as hereinabove provided at the expiration of the Lease Term with respect to such Unit, Lessee may retain custody and control of such Unit so long as Lessee is attempting to remedy any condition delaying such return, and in any case the covenants of Lessee (other than with respect to Basic Rent) under this Lease (including those pertaining to indemnities, Liens, maintenance and insurance) shall continue with respect to such Unit until such return of such Unit and, regardless of whether such delay shall be attributable to Lessee or any permitted sublessee, Lessee shall pay holdover rent to Lessor for the first 30 days in an amount equal to the daily equivalent of rent during the preceding term, and thereafter in an amount equal to 120% of the daily equivalent of the greater of (i) the arithmetic average of the Basic Rent during the Basic Term for such Unit (or, if the failure to return occurs after a Renewal Term, the arithmetic average of the Basic Rent paid during the Renewal Term for such Unit) and (ii) the Fair Market Rental Value for such Unit. The provision for payment pursuant to the immediately preceding sentence shall not be in abrogation of Lessor’s right under Section 6.1 (a) to have such Unit returned to it hereunder.

     Section 6.2. Condition of Equipment. Each Unit when returned to Lessor pursuant to Section 6.1(a) shall (i) be capable of performing the functions for which it was designed, at its originally rated horsepower without material degradation, with all mechanical and electrical components in good working order, ordinary wear and tear excepted, (ii) have no broken glass or material corrosion, (iii) have installed all required operational software (with paid-in-full site licenses) necessary for the operation of the Unit in compliance with the return provisions of this Lease, (iv) otherwise be in the condition required by Sections 8.1 and 9.3 and (v) be free and clear of all Liens except Lessor’s Liens and Permitted Liens, provided that Lessee agrees to promptly discharge any such Permitted Lien upon return of the Unit with Lessor’s sole remedy for any breach of this clause (v) being damages at law or specific performance at equity. Except

as expressly provided in this Section 6.2, there will be no further requirements imposed upon Lessee with respect to the condition of any Unit upon its return in accordance with the provisions of Section 6.1 hereof and this Section 6.2.

     Section 6.3. Storage. Upon the expiration of the Lease Term with respect to each Unit, upon written request of Lessor received at least 90 days prior to the end of the Lease Term with respect to such Unit, Lessee shall permit Lessor to store each such Unit, free of charge, except as provided below, at such location on the tracks of Lessee used by Lessee for the storage of surplus rolling stock or locomotives or rolling stock or locomotives available for sale as shall be reasonably designated by Lessor (taking into account, among other things, Lessee’s storage capacity, security and access) in its request for storage pursuant to this Section 6.3 for a period (the “Storage Period”) beginning on the expiration of the Lease Term and ending not more than 60 days after the later of the expiration of the Lease Term with respect to Units of such Type of Equipment or the date on which 50% of all Units to be returned at the expiration of the Lease Term have been returned; provided that with respect to any Unit returned after the expiration of the Lease Term for such Unit, the Storage Period for such Unit shall begin on the date of return of such Unit and end 60 days thereafter. Any storage facilities provided by Lessee pursuant to this Section 6.3 shall, in all cases, be at the cost to Lessor of insurance and Lessee’s out-of-pocket costs in connection with providing any services not contemplated hereby to be provided during the Storage Period and at the risk of Lessor, including but not limited to any deterioration of any Unit caused by moisture or any weather-related cost to the extent such cost arises during such period of storage and not as a result of Lessee’s violation of its obligations under this Lease (except, with respect to any injury to, or death of, any person exercising, either on behalf of Lessor or any prospective purchaser or user, the inspection rights granted pursuant to this Section 6.3, Lessee’s gross negligence or willful misconduct). With respect to the Units stored pursuant hereto, Lessee will carry and maintain with respect to stored Units, during the Storage Period, under Lessee’s insurance policies, property damage insurance and public liability insurance with respect to third party personal and property damage as Lessee then maintains in respect of equipment owned or leased by it similar in type to the Equipment; provided that (i) Lessor pays all incremental costs associated with such insurance coverage, (ii) such insurance coverage does not negatively impact upon Lessee’s loss insurance rating and (iii) any coverage provided is above Lessee’s deductibles or self-insurance retention amounts. 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 (which notice shall specify the transportation of no less than all of the Units of any or each Type of Equipment), Lessee will, during the Storage Period, transport such Units, at Lessee’s cost and expense, to a destination or interchange point, f.o.b., such destination or interchange point, on Lessee’s lines in the U.S. reasonably specified by Lessor, whereupon Lessee shall have no further liability or obligation with respect to such Units. During the Storage Period, Lessee will permit Lessor or any person designated by it, including the authorized representative or representatives of any prospective purchaser or user of such Unit, to inspect the same; provided, however, that such inspection shall not interfere with the normal conduct of Lessee’s business and such person shall be insured to the reasonable satisfaction of Lessee with respect to any risks incurred in connection with any such inspections and 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 granted pursuant hereto. Lessee shall not

be required to store the Equipment after the Storage Period. If Lessee stores any Unit after the Storage Period, such storage shall be at the sole expense and risk of Lessor.

     Section 6.4. Termination of Lease. Upon the later of (i) expiration of the Lease Term with respect to such Unit and payment of all sums due from Lessee hereunder and under the Operative Agreements, (ii) tender of such Unit at the location determined in accordance with Section 6.1(a) or, as applicable, the tender of such Unit for storage in accordance with Section 6.3, and (iii) compliance by such Unit with Section 6.2, except for the provisions hereof that expressly survive the termination of this Lease, this Lease and the obligation to pay Rent for such Unit accruing subsequent to the expiration of the Lease Term with respect to such Unit shall terminate.

Section 7. Liens.

     Lessee will not directly or indirectly create, incur, assume or suffer to exist any Lien on or with respect to any Units or Lessee’s leasehold interest therein under this Lease or on the Trust Estate, except Permitted Liens, and Lessee shall promptly, at its own expense, take such action as may be necessary to duly discharge (by bonding or otherwise) any such Lien not excepted above if the same shall arise at any time.

Section 8. Maintenance; Operation; Sublease.

     Section 8.1. Maintenance. Lessee, at its own cost and expense, shall service, maintain, repair and keep each Unit (i) in good repair and operating condition, ordinary wear and tear excepted, (ii) in accordance with (a) prudent Class I railroad industry maintenance practices in existence from time to time and (b) manufacturer’s recommendations to the extent required to maintain such manufacturer’s warranties in effect with respect to such Unit, (iii) in a manner consistent with service, maintenance, overhaul and repair practices used by Lessee in respect of equipment owned or leased by Lessee similar in type to such Unit and without discrimination between owned and leased equipment, (iv) in compliance, in all material respects, with all applicable laws and regulations, including any applicable United States EPA Regulations and any applicable AAR Mechanical Standards and Federal Railroad Administration regulations as applicable to continued use by Lessee; provided, however, that Lessee may, in good faith and by appropriate proceedings diligently conducted, contest the validity or application of any such law, regulation, requirement or rule in any reasonable manner which does not materially adversely affect the rights or interests of Lessor and Indenture Trustee in the Equipment or hereunder or otherwise expose Lessor, Indenture Trustee or any Participant to criminal sanctions or release Lessee from the obligation to return the Equipment in compliance with the provisions of Section 6.2.

     Section 8.2. Operation. Lessee shall be entitled to the possession of the Equipment and to the use of the Equipment by it or any Affiliate in the general operation of Lessee’s or any such Affiliate’s freight rail business upon lines of railroad owned or operated by it or any such Affiliate, upon lines of railroad over which Lessee or any such Affiliate has trackage or other operating rights or over which railroad equipment of Lessee or any such Affiliate is regularly operated pursuant to contract and on railroad lines of other railroads (including in connection

with barge-related rail transportation) in the United States, Canada and Mexico, in the usual interchange of traffic or in through or run-through service and shall be entitled to permit the use of the Equipment upon lines of railroad of connecting and other carriers in the usual interchange of traffic or pursuant to through or run-through agreements; provided Lessee shall use the Equipment only for the purpose and in the manner for which it was designed and intended and in compliance, in all material respects, with all laws, regulations and guidelines of any governmental body, the Association of American Railroads, the Federal Railroad Administration and the Surface Transportation Board and their successors and assigns. Nothing in this Section 8.2 shall be deemed to constitute permission by Lessor to any Person that acquires possession of any Unit to take any action inconsistent with the terms and provisions of this Lease and any of the other Operative Agreements. The rights of any person that acquires possession of any Unit pursuant to this Section 8.2 shall be subject and subordinate to the rights of Lessor hereunder.

     Section 8.3. Sublease. So long as no Specified Default or Event of Default shall have occurred and be continuing, Lessee shall have the right, without the prior written consent of Lessor, to sublease any Unit to or permit its use by a user incorporated under the federal laws or the laws of any state of the United States, organized under the federal laws or the laws of any province of Canada or organized under the federal laws or the laws of any state of Mexico, for use by such sublessee or user upon lines of railroad owned or operated by Lessee, any Affiliate of Lessee, such sublessee or user or by a railroad company or companies incorporated under the federal laws or laws of any state of the United States, organized under the federal laws or the laws of any province in Canada or organized under the federal laws or the laws of any state of Mexico, over which Lessee, such Affiliate of Lessee, such sublessee or user or such railroad company or companies has trackage or other operating rights, and upon lines of railroad of connecting and other carriers in the usual interchange of traffic or pursuant to through or run-through service agreements; provided such sublessee shall not, at the time of such sublease, be insolvent or subject to insolvency or bankruptcy proceedings. Each sublease shall be subject and subordinate to this Lease (including the duration of the sublease term, which term may not expire after the expiration of the Basic Term or any Renewal Term then in effect) and no such sublease shall contain a purchase option. Lessee shall give Lessor and Indenture Trustee reasonably contemporaneous notice upon entering into a sublease for a period in excess of one year. No sublease shall in any way discharge or diminish any of Lessee’s obligations hereunder, and Lessee shall remain primarily liable hereunder for the performance of all the terms, conditions and provisions of this Lease and the other Lessee Agreements to the same extent as if such sublease had not been entered into. 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.

Section 9. Modifications.

     Section 9.1. Required Modifications. In the event the Association of American Railroads, the United States Department of Transportation, or any other United States, Canadian or Mexican federal, state or local governmental authority having jurisdiction over the operation, safety or use of any Unit requires that such Unit be altered, replaced or modified (a “Required

Modification”), Lessee agrees to make such Required Modification at its own expense; provided, however, that Lessee may, in good faith and by appropriate proceedings diligently conducted, contest the validity or applicatio