Document:

exv10w51

 

EXHIBIT 10.51

 

Participation Agreement

(KCSR 2007-1)

dated as of September 27, 2007

among

The Kansas City Southern Railway Company,

as Lessee

KCSR 2007-1 Statutory Trust, acting through

U.S. Bank Trust National Association,

not in its individual capacity, but solely as Owner Trustee,

U.S. Bank Trust National Association,

only in its individual capacity as expressly provided herein,

GS Leasing (KCSR 2007-1) LLC,

as Owner Participant

Wilmington Trust Company,

as Indenture Trustee

and

KfW,

as Loan Participant

30 SD70ACe Locomotives

30 GE ES44AC Locomotives

 

 

 

Table of Contents

	 	 	 	 	 	 	 
	Section	 	Heading	 	Page
	Article I

	 	Definitions; Interpretation of This Agreement
	 	 	2	 
	 
	 	 	 	 	 	 
	     Section 1.1.

	 	Definitions
	 	 	2	 
	     Section 1.2.

	 	Directly or Indirectly
	 	 	2	 
	 
	 	 	 	 	 	 
	Article II

	 	Sale and Purchase; Participation in the Equipment Cost; Delivery
Dates; Transaction Costs; Adjustments
	 	 	3	 
	 
	 	 	 	 	 	 
	     Section 2.1.

	 	Sale and Purchase
	 	 	3	 
	     Section 2.2.

	 	Participation in Equipment Cost
	 	 	3	 
	     Section 2.3.

	 	Delivery Date; Procedure for Participation
	 	 	4	 
	     Section 2.4.

	 	Owner Participant’s Instructions to Owner Trustee; Satisfaction of
Conditions
	 	 	5	 
	     Section 2.5.

	 	Expenses
	 	 	5	 
	     Section 2.6.

	 	Calculation of Adjustments to Basic Rent, Stipulated Loss Value,
Termination Value and Fixed Purchase Price; Confirmation and Verification
	 	 	8	 
	     Section 2.7.

	 	Optional Postponement of Closing Date
	 	 	10	 
	 
	 	 	 	 	 	 
	Article III

	 	Representations and Warranties
	 	 	12	 
	 
	 	 	 	 	 	 
	     Section 3.1.

	 	Representations and Warranties of Trust Company and Owner Trustee
	 	 	12	 
	     Section 3.2.

	 	Representations and Warranties of Lessee
	 	 	14	 
	     Section 3.3.

	 	Representations and Warranties of Indenture Trustee
	 	 	16	 
	     Section 3.4.

	 	Representations, Warranties and Covenants Regarding Beneficial
Interest
	 	 	17	 
	     Section 3.5.

	 	Representations and Warranties of Loan Participant
	 	 	18	 
	     Section 3.6.

	 	Representations and Warranties of Owner Participant
	 	 	18	 
	     Section 3.7.

	 	Opinion Acknowledgment
	 	 	20	 
	 
	 	 	 	 	 	 
	Article IV

	 	Conditions Precedent
	 	 	20	 
	 
	 	 	 	 	 	 
	     Section 4.1.

	 	Conditions Precedent to First Delivery Date; Conditions Precedent
of Each Participant and Indenture Trustee to each Delivery Date
	 	 	20	 
	     Section 4.2.

	 	Additional Conditions Precedent to the Obligations of Loan
Participant
	 	 	25	 
	     Section 4.3.

	 	Additional Conditions Precedent to the Obligations of Owner
Participant
	 	 	25	 
	     Section 4.4.

	 	Conditions Precedent to the Obligation of Lessee
	 	 	26	 

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	Section	 	Heading	 	Page
	Article V

	 	Financial and Other Reports of Lessee
	 	 	27	 
	 
	 	 	 	 	 	 
	Article VI

	 	Certain Covenants of the Participants, Trustees and Lessee
	 	 	28	 
	 
	 	 	 	 	 	 
	     Section 6.1.

	 	Restrictions on Transfer of Beneficial Interest
	 	 	28	 
	     Section 6.2.

	 	Lessor’s Liens Attributable to Owner Participant
	 	 	30	 
	     Section 6.3.

	 	Lessor’s Liens Attributable to Trust Company
	 	 	31	 
	     Section 6.4.

	 	Liens Created by Indenture Trustee and Loan Participant
	 	 	31	 
	     Section 6.5.

	 	Covenants of Owner Trustee, Trust Company, Owner Participant and
Indenture Trustee
	 	 	32	 
	     Section 6.6.

	 	Amendments to Operative Agreements
	 	 	33	 
	     Section 6.7.

	 	Section 1168
	 	 	33	 
	     Section 6.8.

	 	Merger Covenant
	 	 	33	 
	     Section 6.9.

	 	Additional Filings
	 	 	34	 
	     Section 6.10.

	 	Owner Participant an Affiliate of Lessee
	 	 	34	 
	     Section 6.11.

	 	Taxes
	 	 	34	 
	     Section 6.12.

	 	Negative Make-Whole Amount
	 	 	34	 
	     Section 6.13.

	 	Transfers by KfW
	 	 	35	 
	 
	 	 	 	 	 	 
	Article VII

	 	Lessee’s Indemnities
	 	 	35	 
	 
	 	 	 	 	 	 
	     Section 7.1.

	 	General Tax Indemnity
	 	 	35	 
	     Section 7.2.

	 	General Indemnification and Waiver of Certain Claims
	 	 	43	 
	 
	 	 	 	 	 	 
	Article VIII

	 	Lessee’s Right of Quiet Enjoyment
	 	 	48	 
	 
	 	 	 	 	 	 
	Article IX

	 	[Reserved]
	 	 	48	 
	 
	 	 	 	 	 	 
	Article X

	 	Successor Indenture Trustee
	 	 	48	 
	 
	 	 	 	 	 	 
	Article XI

	 	Miscellaneous
	 	 	49	 
	 
	 	 	 	 	 	 
	     Section 11.1.

	 	Consents
	 	 	49	 
	     Section 11.2.

	 	Refinancing
	 	 	49	 
	     Section 11.3

	 	Amendments and Waivers
	 	 	51	 
	     Section 11.4.

	 	Notices
	 	 	51	 
	     Section 11.5.

	 	Survival
	 	 	53	 
	     Section 11.6.

	 	No Guarantee of Debt
	 	 	53	 
	     Section 11.7.

	 	Successors and Assigns
	 	 	53	 
	     Section 11.8.

	 	Business Day
	 	 	53	 
	     Section 11.9.

	 	Governing Law
	 	 	54	 
	     Section 11.10.

	 	Severability
	 	 	54	 
	     Section 11.11.

	 	Counterparts
	 	 	54	 
	     Section 11.12.

	 	Headings and Table of Contents
	 	 	54	 
	     Section 11.13.

	 	Limitations of Liability
	 	 	54	 

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	Section	 	Heading	 	Page
	     Section 11.14.

	 	Reproduction of Documents
	 	 	55	 
	     Section 11.15.

	 	Tax Disclosure
	 	 	55	 
	     Section 11.16.

	 	Bankruptcy of Trust or Trust Estate
	 	 	55	 
	     Section 11.17.

	 	Jurisdiction, Court Proceedings
	 	 	56	 

	 
	Attachments To Participation Agreement:

	 

	Schedule 1A — Description of Equipment; Equipment Cost (First Delivery Date)

	Schedule 1B — Description of Equipment; Equipment Cost (Second Delivery Date)

	Schedule 2   — [Reserved]

	Schedule 3   — Pricing Assumptions and indicative schedules

	Exhibit A     — Certificate of Acceptance

	Exhibit B     — Bill of Sale

	Exhibit C     — Assignment of Warranties

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Participation Agreement

(KCSR 2007-1)

          This Participation Agreement (KCSR 2007-1), dated as of September 27, 2007 (this
“Agreement” or this “Participation Agreement”), among (i) The Kansas City Southern Railway
Company, a Missouri corporation (herein, together with its successors and permitted assigns,
called the “Lessee”), (ii) KCSR 2007-1 Statutory Trust, a Connecticut statutory trust (the
“Trust”), acting through U.S. Bank Trust National Association, a national banking
association, not in its individual capacity, but solely as trustee of the Trust created under the
Trust Agreement (as hereinafter defined) (in its capacity as Owner Trustee, together with its
successors and permitted assigns, called the “Owner Trustee”), (iii) U.S. Bank Trust National
Association, a national banking association, only in its individual capacity as expressly
provided herein (herein, together with its successors and permitted assigns, called “Trust Company”
), (iv) GS Leasing (KCSR 2007-1) LLC, a Delaware limited liability company (herein,
together with its successors and permitted assigns, called the “Owner Participant”),
(v) Wilmington Trust Company, a Delaware banking corporation, not in its individual
capacity except as expressly provided herein, but as trustee under the Indenture (as hereinafter
defined) (herein in such capacity, together with its successors and permitted assigns, called the
“Indenture Trustee”), and (vi) KfW, a public law corporation organized under the laws of
the Federal Republic of Germany (“KfW”; together with its successors and permitted assigns, the
“Loan Participant”).

Witnesseth:

          Whereas, concurrently with the execution and delivery of this Agreement, Owner
Participant and Trust Company have entered into the Trust Agreement (KCSR 2007-1) pursuant to which
Owner Trustee agrees, among other things, to hold the Trust Estate for the benefit of Owner
Participant thereunder on the terms specified in the Trust Agreement, subject, however, to the lien
created under the Indenture and, on each Delivery Date, subject to the terms and conditions hereof,
to purchase the applicable Equipment from the Seller and concurrently therewith lease such
Equipment to Lessee;

          Whereas, concurrently with the execution and delivery of this Agreement, the Trust
has entered into the Indenture with Indenture Trustee pursuant to which the Trust agrees, among
other things, for the benefit of the holder or holders of the Equipment Notes, (i) to issue to Loan
Participant on each Delivery Date Equipment Notes as evidence of the loan made by Loan Participant
on such Delivery Date in connection with the financing of the Equipment Cost of the Units of
Equipment to be delivered on such Delivery Date and (ii) on each Delivery Date, to execute and
deliver an Indenture Supplement granting to Indenture Trustee a security interest in all of the
Units of Equipment delivered on such Delivery Date (and it is the intention of the parties hereto
that Indenture Trustee have, for the benefit of the holders of the Equipment Notes, such a security
interest in all of the Units of Equipment delivered on such Delivery Date);

          Whereas, pursuant to the terms of the Trust Agreement, Owner Trustee, on behalf of
the Trust, is authorized and directed by Owner Participant (i) on each Delivery Date, to accept

 

 

delivery of each Bill of Sale evidencing the purchase and transfer of title of each applicable
Unit of Equipment to the Trust; and (ii) on the Closing Date, to execute and deliver the Lease
relating to the Equipment pursuant to which, subject to the terms and conditions set forth therein,
the Trust agrees to lease to Lessee, and Lessee agrees to lease from the Trust, on such date, each
Unit of Equipment to be delivered on or prior to each Delivery Date, such lease and delivery to be
evidenced by the execution and delivery of a Lease Supplement covering such Units subject to the
condition subsequent that the Seller shall receive the purchase price for the applicable Equipment
on such Delivery Date and (iii) on each Delivery Date, to execute and deliver an Assignment of
Warranties covering the Equipment delivered by the Seller on such Delivery Date whereby the Seller
assigns to the Trust, subject however, to the lien created under the Indenture, the Seller’s rights
and interest under the purchase agreement between the Seller and the manufacturers of such
Equipment;

          Whereas, concurrently with the execution and delivery of this Agreement, Lessee and
Owner Participant have entered into the Tax Indemnity Agreement relating to the Equipment;

          Whereas, the proceeds from the sale of the Equipment Notes to Loan Participant on
each Delivery Date will be applied, together with the equity contribution made by Owner Participant
pursuant to this Agreement on such Delivery Date, to effect the purchase of the Units of Equipment
to be delivered on such Delivery Date;

          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:

Article I

Definitions; Interpretation of This Agreement

     Section 1.1. Definitions. The capitalized terms used in this Agreement (including the
foregoing recitals) and not otherwise defined herein shall have the respective meanings specified
in Appendix A to the Lease, unless the context hereof shall otherwise require. All references to
Sections, Schedules and Exhibits herein are to Sections, Schedules and Exhibits of this Agreement
unless otherwise indicated.

     Section 1.2. Directly or Indirectly. Where any provision in this Agreement 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.

-2-

 

Article II

Sale and Purchase; Participation in the Equipment Cost;

Delivery Dates; Transaction Costs; Adjustments

     Section 2.1. Sale and Purchase. (a) Subject to the terms and conditions hereof and on the
basis of the representations and warranties set forth herein, on each Delivery Date, the Trust
agrees to purchase the Units of Type A Equipment, Type B Equipment or Type C Equipment, as
applicable, to be delivered on such Delivery Date as described in Schedules 1A and 1B from the
Seller and Lessee agrees to accept delivery of such Unit under the Lease, such lease, delivery and
acceptance of the Units under the Lease to be conclusively evidenced by the execution and delivery
by Lessee of a Certificate of Acceptance covering such Unit in the form attached hereto as
Exhibit A (a “Certificate of Acceptance”) and dated the date of such delivery and acceptance,
subject to the condition subsequent that the Seller shall receive the purchase price for such Unit
as herein provided.

     (b) Settlement of Purchase Price. Subject to the terms and conditions hereof and on the basis
of the representations and warranties set forth herein, on the applicable date specified in the
applicable Delivery Date Notice delivered by Lessee pursuant to Section 2.3 (each a “Delivery Date”
and collectively, the “Delivery Dates”), the Trust will pay to the Seller a purchase price equal to
the Equipment Cost with respect to each Unit delivered by the Seller on such Delivery Date and
accepted under the Lease; provided, however, that the Trust shall not be obligated to pay the
purchase price for any Unit that shall suffer an Event of Loss on or prior to such Delivery Date,
and provided further, that the date of the first delivery of Units under the Lease (the “First
Delivery Date”) shall occur on or after the date hereof and on or prior to September 28, 2007 and
the date of the second delivery of the Units under the Lease (the “Second Delivery Date”) shall
occur on or prior to November 30, 2007.

     Section 2.2. Participation in Equipment Cost.

     (a) Equity Participation. Subject to the terms and conditions hereof and on the basis of the
representations and warranties set forth herein, Owner Participant agrees to participate on each
Delivery Date in the payment of the Equipment Cost for the Units delivered on such Delivery Date by
making an equity investment in the beneficial ownership of the Trust in an amount equal to the sum
of the products of the Equipment Cost for the Units of each Type delivered on such Delivery Date
and the percentage set forth opposite Owner Participant’s name on Schedule 9 to the applicable
Lease Supplement for such Type (the “Owner Participant’s Commitment”). The aggregate amount of
Owner Participant’s Commitment required to be made as above provided in the payment of the
Equipment Cost on the two Delivery Dates shall not exceed $34,800,000 (which amount includes
Transaction Costs). In no event shall the Equipment Cost for any Unit exceed the fair market value
of such Unit as set forth in the Appraisal referred to in Section 4.3(a) hereof. Owner
Participant’s Commitment to be paid by Owner Participant on each Delivery Date shall be paid to
Owner Trustee at an account with Owner Trustee to be held and applied by Owner Trustee as provided
in Section 2.3.

-3-

 

     (b) Debt Participation. Subject to the terms and conditions hereof and on the basis of the
representations and warranties set forth herein, Loan Participant agrees to participate on each
Delivery Date in the payment of the Equipment Cost for the Units delivered on such Delivery Date by
making a secured loan, to be evidenced by an Equipment Note of each Series, to Owner Trustee in an
amount equal to the sum of the product of the Equipment Cost for the Units of each Type delivered
on such Delivery Date and the percentage set forth opposite Loan Participant’s name on Schedule 9
to the applicable Lease Supplement for such Type (the “Loan Participant’s Commitment”). The
aggregate amount of Loan Participant’s Commitment required to be made as above provided in the
payment of the Equipment Cost on the two Delivery Dates shall not exceed the amount set forth
opposite Loan Participant’s name on Schedule 2 hereto (the “Total Loan Participant Commitment”).

     Section 2.3. Delivery Date; Procedure for Participation. (a) Delivery Date Notice. Not later
than 1:00 P.M., New York City time, on the third Business Day preceding each Delivery Date, Lessee
shall give Owner Participant, Indenture Trustee, Owner Trustee and Loan Participant notice (a
“Delivery Date Notice”) by facsimile or other form of telecommunication or telephone (to be
promptly confirmed in writing) of such Delivery Date, which Delivery Date Notice shall specify in
reasonable detail the number and type of Units to be delivered and accepted under the Lease for
which settlement of the purchase price will be made on such date, the aggregate Equipment Cost of
such Units, and the respective amounts of Owner Participant’s Commitment and Loan Participant’s
Commitment required to be paid with respect to such Units. Prior to 11:00 A.M., New York City
time, on each Delivery Date, Owner Participant shall make the amount of Owner Participant’s
Commitment and Loan Participant shall make the amount of its Loan Participant’s Commitment required
to be paid on such Delivery Date available to Owner Trustee, by transferring or delivering such
amounts, in funds immediately available, to Owner Trustee, at U.S. Bank Trust National Association,
Goodwin Square, 225 Asylum Street, 23rd Floor, Hartford, Connecticut 06103, Facsimile No.: (860)
241-6897, Telephone No.: (860) 241-6820, ABA #091000022, Account Number: 173103321050, Credit To:
OBI Corporate Trust, HTFD, Account Name: KCSR 2007-1 Trust. The making available by Owner
Participant of the amount of its Commitment for the Equipment Cost shall be deemed a waiver of the
Delivery Date Notice by Owner Participant and Owner Trustee and the making available by Loan
Participant of the amount of its Commitment for the Equipment Cost shall be deemed a waiver of the
Delivery Date Notice by Loan Participant and Indenture Trustee (with respect to Loan Participant).

     (b) Delivery. The settlement with respect to the payment of the purchase price of the
applicable Units on the applicable Delivery Date (each a “Delivery”) shall take place at 11:00
A.M., New York City time on each Delivery Date at the offices of Chapman and Cutler LLP, 111 West
Monroe Street, Chicago, Illinois 60603, or at such other place or time as the parties hereto shall
agree. Upon receipt by Owner Trustee on each Delivery Date of the full amount of Owner
Participant’s Commitment and Loan Participant’s Commitment in respect of the Units for which
settlement will be made on such Delivery Date, and subject to the conditions set forth in Section 4
to be fulfilled on such Delivery Date having been fulfilled to the satisfaction of Owner
Participant and Loan Participant or waived by Owner Participant or Loan Participant, as the case
may be, the Trust shall, pay to, or to the order of, the Seller, from the funds then held by it, in
immediately available funds, an amount equal to the Equipment Cost for such Units purchased

-4-

 

from the Seller. Each of Owner Participant, Owner Trustee, Loan Participant, Indenture Trustee, and
Lessee shall take all actions required to be taken by it in connection therewith and pursuant to
this Section 2.3(b).

     Section 2.4. Owner Participant’s Instructions to Owner Trustee; Satisfaction of Conditions.
(a) Owner Participant agrees that the making available to Owner Trustee of the amount of its
Commitment for the Units delivered on or prior to each Delivery Date in accordance with the terms
of this Article II shall constitute, without further act, authorization and direction by Owner
Participant to Owner Trustee, subject, on such Delivery Date, to the conditions set forth in
Sections 4.1 and 4.3 to be fulfilled on such Delivery Date having been fulfilled on such Delivery
Date to the satisfaction of Owner Participant or waived by Owner Participant, to take the
applicable actions specified in Section 3.01 of the Trust Agreement with respect to the Units on
such Delivery Date.

     (b) Owner Participant agrees, in the case of any Replacement Unit substituted pursuant to
Section 11.4 of the Lease, that Owner Trustee is authorized and directed to take the actions
specified in Section 11.4 of the Lease with respect to such Replacement Unit upon due compliance
with the terms and conditions set forth in such Section 11.4 of the Lease with respect to such
Replacement Unit.

     (c) Owner Participant agrees that the authorization by Owner Participant or its counsel to
Owner Trustee to release to the Seller, the Owner Participant’s Commitment with respect to the
Units delivered on each Delivery Date shall constitute, without further act, notice and
confirmation that all conditions set forth in Sections 4.1 and 4.3 to be fulfilled on such Delivery
Date were either met to the satisfaction of Owner Participant or, if not so met, were in any event
waived by it with respect to such Units.

     Section 2.5. Expenses. (a) If Owner Participant shall have made its investment provided for
in Section 2.2(a) and the transactions contemplated by this Agreement are consummated, either Owner
Participant will promptly pay (or reimburse Lessee, if Lessee shall have previously made such
payment), or Owner Trustee will promptly pay (or reimburse Lessee, if Lessee shall have previously
made such payment), with funds Owner Participant hereby agrees to pay to Owner Trustee for such
purpose, the following (the “Transaction Costs”):

     (i) the cost of reproducing and printing the Operative Agreements, the Equipment Notes,
if any, including all costs and fees in connection with the initial filing and recording of
appropriate evidence 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;

     (ii) the reasonable fees and expenses of Davis Polk & Wardwell, special counsel to
Owner Participant and OP Guarantor, for their services rendered in connection
with the negotiation, execution and delivery of this Participation Agreement and the
Operative Agreements related hereto;

-5-

 

     (iii) the reasonable fees and expenses of Vedder, Price, Kaufman & Kammholz, P.C.,
special counsel to Loan Participant, for their services rendered in connection with the
negotiation, execution and delivery of this Participation Agreement and the Operative
Agreements related hereto;

     (iv) the reasonable fees and expenses of Morris James LLP, special counsel to Indenture
Trustee (up to the amount separately agreed to by Indenture Trustee and Lessee), for their
services rendered in connection with the negotiation, execution and delivery of this
Participation Agreement and the Operative Agreements related hereto;

     (v) the reasonable fees and expenses of Chapman and Cutler LLP, special counsel to
Lessee, for their services rendered in connection with the negotiation, execution and
delivery of this Participation Agreement and the Operative Agreements related hereto;

     (vi) the reasonable fees and expenses of Shipman & Goodwin LLP, special counsel to
Owner Trustee (up to the amount separately agreed to by Owner Trustee and Lessee), for their
services rendered in connection with the negotiation, execution and delivery of this
Participation Agreement and the Operative Agreements related hereto;

     (vii) the initial fees and expenses of Owner Trustee;

     (viii) the initial fees and expenses of Indenture Trustee;

     (ix) the fees of an equipment appraiser, for their services rendered in connection with
delivering the Appraisal required by Section 4.3(a);

     (x) the fees of JPMorgan Capital Corporation;

     (xi) the reasonable fees and expenses of Alvord and Alvord, special STB counsel, for
their services rendered in connection with the consummation of the transactions contemplated
by the Operative Agreements;

     (xii) the reasonable fees and expenses of McCarthy Tétrault LLP, special Canadian
counsel, for their services rendered in connection with the consummation of the transactions
contemplated by the Operative Agreements;

     (xiii) the reasonable out-of-pocket expenses of Goldman Sachs & Co. and Cornerstone
Financial Advisors L.P. (with respect to Cornerstone Financial Advisors L.P., up to the
amount separately agreed to by Cornerstone Financial Advisors L.P. and Lessee);

     (xiv) the reasonable fees and expenses of Lessee’s independent accountants, in
connection with the transactions contemplated by the Operative Agreements; and

-6-

 

     (xv) the up-front fee of the Loan Participant (in the amount separately agreed to by
Loan Participant and Lessee), in connection with the transactions contemplated by the
Operative Agreements;

provided, however, that if such Transaction Costs exceed the amount of Transaction Costs used in
calculating Basic Rent and other amounts pursuant to Section 2.6(a) hereof on each Delivery Date,
Lessee shall pay such excess; provided further, however, that, in such event, Owner Participant
shall designate which Transaction Costs shall be payable by Lessee.

     Notwithstanding the foregoing, Transaction Costs shall not include internal costs and expenses
such as salaries and overhead of whatsoever kind or nature nor costs incurred by parties to this
Participation Agreement pursuant to arrangements with third parties for services (other than those
expressly referred to above), such as computer time procurement, financial analysis and consulting,
advisory services, and costs of a similar nature.

     (b) Upon the consummation of the transactions contemplated by this Agreement, Lessee agrees to
pay when due: (i) the reasonable expenses of Owner Trustee, Indenture Trustee and the Participants
incurred subsequent to the delivery of the Equipment, including reasonable fees and expenses of
their counsel, in connection with any waivers, supplements, amendments, modifications or
alterations which are (A) requested by Lessee in connection with any of the Operative Agreements or
(B) necessary or required to comply with applicable law or to effectuate the purpose or intent of
any Operative Agreement (excluding costs incurred in connection with any adjustment pursuant to
Section 2.6, except as expressly provided in Section 2.6(b)); (ii) the reasonable ongoing fees and
expenses of Owner Trustee under the Trust Agreement, including fees and expenses incurred in
connection with the enforcement of obligations of Lessee under the Operative Agreements; and
(iii) the reasonable ongoing fees and expenses of Indenture Trustee under the Operative Agreements,
including fees and expenses incurred in connection with the enforcement of obligations of Lessee
under the Operative Agreements.

     (c) Notwithstanding the foregoing provisions of this Section 2.5, except as specifically
provided in Section 7.2, Lessee shall have no liability for any costs or expenses relating to any
voluntary transfer of Owner Participant’s interest in the Equipment including any transfer prior to
any Delivery Date of Owner Participant’s obligation to fund its participation pursuant to
Article II (other than during the continuance of an Event of Default or in connection with the
exercise of remedies as provided in Section 15 of the Lease, Lessee’s exercise of any purchase
option pursuant to Section 23 of the Lease, Lessee’s exercise of its termination rights pursuant to
Section 10 of the Lease or the transfer to Lessee of any Unit which has been the subject of an
Event of Loss pursuant to Section 11 of the Lease) and no such costs or expenses shall constitute
Transaction Costs and Lessee will not have any obligation with respect to the costs and expenses
resulting from any voluntary transfer of any equity interest by any transferee of Owner
Participant, whenever occurring (other than during the continuance of an Event of Default or in
connection with the exercise of remedies as provided in Section 15 of the Lease, Lessee’s
exercise of any purchase option pursuant to Section 23 of the Lease, Lessee’s exercise of its
termination rights pursuant to Section 10 of the Lease or the transfer to Lessee of any Unit which
has been the subject of an Event of Loss pursuant to Section 11 of the Lease).

-7-

 

     Section 2.6. Calculation of Adjustments to Basic Rent, Stipulated Loss Value, Termination
Value and Fixed Purchase Price; Confirmation and Verification.

     (a) Schedules. Basic Rent, Stipulated Loss Values, Termination Values and EBO Fixed Purchase
Price, amortization schedules for the Equipment Notes, and Pricing Assumptions for the first
Delivery Date are set forth on Schedule 3 hereto, and such schedules shall operate as indicative
schedules for each Delivery Date (the “Indicative Schedules”). Basic Rent, Stipulated Loss Values,
Termination Values, EBO Fixed Purchase Price and amortization schedules for the Equipment Notes for
each subsequent Delivery Date will be adjusted as provided below. On each Delivery Date, (i) Lessee
and Owner Trustee shall enter into a Lease Supplement which shall include as exhibits thereto
schedules in the forms of Schedule 3 hereto which include the actual Basic Rent, Rent Payment
Dates, Stipulated Loss Values, Termination Values, Allocated Rent, Lessee and Lessor Loan Balances,
EBO Fixed Purchase Price, EBO Fixed Purchase Price Date, and amortization schedules for the
Equipment Notes in each case in respect of the Units to be delivered on such Delivery Date, and
shall attach a list of the Units to be financed on such date and (ii) the Trust shall enter into an
Indenture Supplement which shall attach a list of the Units to be financed on such date.

     (b) Calculation of Adjustments. In the event that (A) any Pricing Assumption relating to
the Units to be purchased on any Delivery Date is determined to be inaccurate with respect to such
Delivery Date, or (B) prior to any Delivery Date (1) there shall have occurred a Change in Tax Law
and (2)(x) after having been advised in writing by Owner Participant of such Change in Tax Law and
the proposed adjustment to the payments of Basic Rent resulting therefrom, Lessee shall have waived
its right under Section 4.4 of this Agreement to decline to proceed with the transaction or (y) the
Owner Participant has been advised in writing by Lessee of such Change in Tax Law and the proposed
adjustment to the payments of Basic Rent resulting therefrom, or (C) a refinancing or refunding as
contemplated by Section 11.2 occurs or (D) any amount is paid by Lessee to Owner Participant
pursuant to Section 5.5(i) or 5.5(iii) of the Tax Indemnity Agreement, or (E) Lessee elects to make
payments to Owner Participant pursuant to Section 5.5(ii) of the Tax Indemnity Agreement, then, in
each case, Owner Participant shall recalculate the payments or amounts, as the case may be, of
Basic Rent, Stipulated Loss Values, Termination Values and EBO Fixed Purchase Price (except that in
the case of events described in clause (D) or (E) above, Owner Participant shall recalculate the
Stipulated Loss Values, Termination Values and EBO Fixed Purchase Price only):

     (i) to preserve the Net Economic Return that Owner Participant would have realized had
there been no change in the Pricing Assumptions or had such Change in Tax Law not occurred
or had such refunding or refinancing not occurred or had such amount not been paid by Lessee
under Section 5.5(i) or 5.5(iii) of the Tax Indemnity Agreement
or had Lessee not elected to make such payment under Section 5.5(ii) of the Tax Indemnity
Agreement or had a reoptimization of the debt not occurred, and

     (ii) to minimize to the greatest extent possible, consistent with the foregoing
clause (i), the sum of the present value of the payments of Basic Rent through and including
the EBO Fixed Purchase Price Date, and the EBO Fixed Purchase Price (all

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present values for purposes of the foregoing being computed using the relevant Debt Rate, semiannually
compounded, and discounting to the date hereof).

In performing any such recalculation and in determining Owner Participant’s Net Economic Return,
Owner Participant shall utilize the same methods, tax constraints and assumptions originally used
to calculate the payments of Basic Rent, Stipulated Loss Values, Termination Values and EBO Fixed
Purchase Price with respect to the Basic Term (other than those assumptions changed as a result of
any of the events described in clauses (A) through (E) 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 Regulations and the requirements of Sections 4.02(5), 4.07(1) and (2) and 4.08(1)
of Revenue Procedure 2001-29, as amended ((and such that the Lease could not be treated as a
“disqualified leaseback” or “long term agreement” within the meaning of Section 467 of the Code),
and in the case of any refinancing governed by Section 11.2, shall comply with Treasury Regulation
Sections 1.467-1(f)(6)(i) and 1.861-10(T)(b)(9) or any successor thereto) whether the term of the
Lease is deemed to commence with respect to any Unit on the Delivery Date therefor and end on the
Basic Term Expiration Date or is deemed to commence on the date of the refinancing and end on the
Basic Term Expiration Date.

     (c) Confirmation and Verification. Upon completion of any recalculation described above in
this Section 2.6, a duly authorized officer of Owner Participant shall provide a certificate to
Lessee either (x) stating that the payments of Basic Rent, Stipulated Loss Values, Termination
Values and EBO Fixed Purchase Price with respect to the Basic Term as are then set forth in the
Lease do not require change, or (y) setting forth such adjustments to the payments of Basic Rent,
Stipulated Loss Values, Termination Values or EBO Fixed Purchase Price with respect to the Basic
Term as have been calculated by Owner Participant in accordance with Section 2.6(b) above. Such
certificate shall describe in reasonable detail the basis for any such adjustments. If 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 Owner Participant
and reasonably acceptable to Lessee and any such recalculation of such adjustment as so verified
shall be binding on Lessee and Owner Participant. Such accounting firm shall be requested to make
its determination within 30 days. Owner Participant shall provide to a representative of such
accounting firm, on a confidential basis, such information as it may reasonably require (but
excluding any books, records or tax returns), including the original assumptions used by Owner
Participant and the methods used by Owner Participant in the original calculation of, and any
recalculation of, Basic Rent, Stipulated Loss Values, Termination Values and EBO Fixed Purchase
Price and such other information as is necessary to determine whether the computation is accurate
and in conformity with the
provisions of this Agreement. The reasonable costs of such verification shall be borne by Lessee,
unless as a result of such verification process (1) the payments of Basic Rent certified by Owner
Participant pursuant to this Section 2.6(c) are adjusted and such adjustment causes the sum of the
present value of the payments of Basic Rent through and including the EBO Fixed Purchase Price Date
and the present value of the EBO Fixed Purchase Price (all present values for purposes of the
foregoing being computed using the relevant Debt Rate, semiannually

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compounded, and discounting to
the Closing Date) to decline by 10 basis points or more from the sum of the present value of the
payments of Basic Rent through and including the EBO Fixed Purchase Price Date and the present
value of the EBO Fixed Purchase Price (all present values for purposes of the foregoing being
computed using the relevant Debt Rate, semiannually compounded, and discounting to the Closing
Date) certified by Owner Participant pursuant to this Section 2.6(c), or (2) any payment of
Stipulated Loss Value, Termination Value or EBO Fixed Purchase Price is adjusted and such
adjustment causes such Stipulated Loss Value, Termination Value or EBO Fixed Purchase Price to
decline by 10 basis points or more from such Stipulated Loss Value, Termination Value or EBO Fixed
Purchase Price certified by Owner Participant pursuant to this Section 2.6(c), in which case Owner
Participant shall be responsible for the reasonable costs of such verification.

     (d) Notwithstanding the foregoing, any adjustment made to the payments of Basic Rent or to
Stipulated Loss Values or Termination Values or EBO Fixed Purchase Price with respect to the Basic
Term, 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 Owner Trustee 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 on the due date of
such installment of Basic Rent and (ii) Stipulated Loss Value and Termination Value, 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 Lessee under the Lease in connection with a deemed Event of
Loss pursuant to Section 9.1 of the Lease or any other 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 the Equipment Notes, Positive Make-Whole Amount, if any, and all
unpaid interest on the Equipment Notes, accrued to the date on which Stipulated Loss Value or
Termination Value, as the case may be, is paid in accordance with the terms of the Lease.

     (e) Invoices. All invoices in respect of Transaction Costs shall be directed to Owner
Participant at the address set forth in Section 11.4, with a copy to Lessee.

     Section 2.7. Optional Postponement of Closing Date. (a) Each scheduled Delivery Date (each
originally scheduled Delivery Date being referred to herein as a “Scheduled Delivery Date” for
purposes of this Section 2.7) may be postponed from time to time for any reason (but to a date no
later than November 30, 2007) if Lessee gives Owner Participant, Indenture Trustee, Loan
Participant and Owner Trustee telex, telegraphic, facsimile or telephonic (confirmed in writing)
notice of such postponement and notice of the date to which such Scheduled Delivery Date has been
postponed, such notice of postponement to be received by each party no later than 5:00 P.M., New
York City time, on the Business Day immediately before the originally Scheduled Delivery Date or
subsequent scheduled Delivery Date, and in the event of such postponement, the term “Delivery Date”
as used in this Agreement shall mean the date to which the Scheduled Delivery Date has been
postponed.

     (b) In the event any Participant funds its Commitment in accordance with Section 2.3 hereof
and there occurs any postponement of any Delivery Date pursuant to this Section 2.7, or if on an
originally Scheduled Delivery Date or subsequent scheduled Delivery Date not postponed

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as above
provided any Unit is not delivered or, if delivered, is not accepted by Owner Trustee’s
representative for any reason: (i) Lessee will reimburse each Participant that has funded its
Commitment to the Owner Trustee on the Scheduled Delivery Date in accordance with Section 2.3
hereof for the loss of the use of its funds with respect to each such Unit occasioned by such
postponement or failure to deliver or accept (unless such failure to accept is caused by a default
by such Participant hereunder) by paying to such Participant on demand interest on the amount of
its Commitment funded in accordance with Section 2.3 hereof at an interest rate equal to the Debt
Rate for the period from and including the Scheduled Delivery Date to but excluding the earlier of
the date upon which such funds are returned prior to 1:00 P.M. (New York City time) or the actual
date of delivery; provided that Lessee shall in any event pay to each Participant at least one (1)
day’s interest at such rate on the amount of such funds, unless such Participant shall have
received, prior to 12:00 P.M. (New York City time) on the Business Day preceding the Scheduled
Delivery Date, a notice of postponement of the Scheduled Delivery Date pursuant to Section 2.7(a),
and (ii) Owner Trustee will return on the earlier of the second Business Day following the
Scheduled Delivery Date or November 30, 2007, or earlier, if so instructed by Lessee, any funds
which it shall have received from Owner Participant and/or Loan Participant as its Commitment for
such Units, absent joint instruction from Lessee and Owner Participant to retain such funds until
the specified date of postponement established under Section 2.7(a).

     (c) Owner Trustee agrees that, in the event it has received telephonic notice (to be confirmed
promptly in writing) from Lessee on any Scheduled Delivery Date for any Unit or Units that such
Unit or Units have not been tendered for delivery, or, if so tendered, have not been accepted by
the representative of Owner Trustee, it will if instructed in the aforementioned notice from Lessee
(which notice shall specify the Securities to be purchased) use reasonable best efforts to invest,
at the risk of Lessee (except as provided below with respect to Owner Trustee’s gross negligence or
willful misconduct), the funds received by it from Owner Participant and Loan Participant with
respect to such Unit or Units in Permitted Investments in accordance with Lessee’s instructions.
Any such Permitted Investments purchased by Owner Trustee upon instructions from Lessee shall be
held in trust by Owner Trustee for the benefit of the Participant whose funds are invested in
Permitted Investments upon instructions from Lessee and any net profits on the investment of such
funds (including interest), if any, shall be for the account of and shall on the applicable
Delivery Date, or on the date such funds are returned to Owner Participant and/or Loan Participant,
be paid over to, the Lessee. Lessee shall pay to Owner Trustee on the applicable Delivery Date (if
such Unit or Units are delivered and accepted pursuant hereto) the amount of any net loss on the
investment of such funds invested at the instruction of Lessee. If the funds furnished by Owner
Participant and/or Loan Participant with respect to such Unit or Units are required to be returned
to Owner Participant and/or Loan Participant, Lessee shall, on the date on which such funds are so
required to be returned,
reimburse Owner Trustee, for the benefit of Owner Participant and/or Loan Participant, for any net
losses incurred on such investments. Owner Trustee shall not be liable for failure to invest such
funds or for any losses incurred on such investments except for its own willful misconduct or gross
negligence. In order to obtain funds for the payment of the Equipment Cost for such Unit or Units
or to return funds furnished by Owner Participant and/or Loan Participant to Owner Trustee for the
benefit of Owner Participant and/or Loan Participant with respect to such Unit or Units, Owner
Trustee is authorized to sell any Permitted Investments purchased as

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aforesaid with the funds
received by it from Owner Participant and/or Loan Participant in connection with such Unit or
Units.

     (d) Notwithstanding the provisions of Section 2.7(a), no Participant shall be under any
obligation to make its Commitment available beyond 5:00 P.M. (New York City time) on November 30,
2007.

Article III

Representations and Warranties

     Section 3.1. Representations and Warranties of Trust Company and Owner Trustee. Each of Trust
Company and Owner Trustee represents and warrants to Owner Participant, Indenture Trustee, Loan
Participant and Lessee, notwithstanding the provisions of Section 11.13 or any similar provision in
any other Operative Agreement, that, as of the date hereof and as of the Closing Date and each
Delivery Date (unless any such representation is specifically made as of one date):

     (a) Trust Company is a national banking association duly organized and validly existing in
good standing under the laws of the United States and has full corporate power and authority to
carry on its business as now conducted and to enter into and perform its obligations hereunder and
under the Trust Agreement and (assuming due authorization, execution and delivery of the Trust
Agreement by Owner Participant) has full power and authority, as Owner Trustee and/or, to the
extent expressly provided herein or therein to enter into and perform its obligations under each of
the Owner Trustee Agreements;

     (b) Owner Trustee and, to the extent expressly provided therein, Trust Company, has duly
authorized, executed and delivered the Trust Agreement and (assuming the due authorization,
execution and delivery of the Trust Agreement by Owner Participant) has duly authorized, executed
and delivered, or in the case of each Lease Supplement and each Indenture Supplement will on the
applicable Delivery Date execute and deliver, each of the other Owner Trustee Agreements (other
than the Equipment Notes) and, as of each Delivery Date, the Equipment Notes to be delivered on
such Delivery Date; and the Trust Agreement constitutes a legal, valid and binding obligation of
Trust Company, enforceable against Trust Company or Owner Trustee, as the case may be, in
accordance with its terms except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors generally and by
general equity principles;

     (c) assuming the due authorization, execution and delivery of the Trust Agreement by 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
Trust Company or Owner Trustee, as the case may be, enforceable against Trust Company or Owner
Trustee, as the case may be, in accordance with its terms except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general equity principles;

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     (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 Notes to be delivered on each Delivery 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, (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, or (ii) violates or will violate its Articles of Association or by-laws, 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, or results or will result in the creation of any Lien
(other than as permitted under the Lease) upon its property under, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sale contract, bank loan or credit agreement, license or other
agreement or instrument to which it is a party or by which it is bound, or contravenes or will
contravene any law, governmental rule or regulation of the United States governing the banking or
trust powers of Owner Trustee, or any judgment or order applicable to or binding on it;

     (e) there are no pending or threatened actions or proceedings against Trust Company or Owner
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 Trust Company or Owner
Trustee, as the case may be, to perform its obligations under the Trust Agreement, the other Owner
Trustee Agreements or the Equipment Notes to be delivered on each Delivery Date;

     (f) its “location” as such term is used in Section 9-307 of the Uniform Commercial Code is
located in Delaware and the place where its records concerning the Equipment and all its interest
in, to and under all documents relating to the Trust Estate, is located at Goodwin Square, 225
Asylum Street, 23rd Floor, Hartford, Connecticut 06103, and Trust Company agrees to give Owner
Participant, Indenture Trustee and Lessee written notice of any relocation of said location or said
place from its present location within 60 days of the date thereof;

     (g) no consent, approval, order or authorization of, giving of notice to, or registration
with, or taking of any other action in respect of, any 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 Owner Trustee, as the case may be, of any of the transactions
contemplated hereby or by the Trust Agreement or of any of the 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, it being understood that
no representation is being made herein with respect to the ICC
Termination Act or any other such laws, governmental rules or regulations specific to the
Equipment;

     (h) on each Delivery Date, Owner Trustee’s right, title and interest in and to the Equipment
delivered on such Delivery Date shall be free of any Lessor’s Liens attributable to Trust Company;

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     (i) on each Delivery Date, the proceeds received by Owner Trustee from Owner Participant on
such Delivery Date pursuant to the Trust Agreement will be administered by it in accordance with
Article IV of the Trust Agreement;

     (j) on each Delivery Date, the Trust shall receive from the Seller such title to the Units of
Equipment delivered on such Delivery Date as was conveyed to it by the Seller, subject to the
rights of Owner Trustee and Lessee under the Lease and the security interest created pursuant to
the Indenture and each Indenture Supplement dated such Delivery Date; and

     (k) the Trust is a Connecticut Statutory Trust in good standing created pursuant to the
Connecticut Statutory Trust Act, chapter 615 of the General Statutes of Connecticut and the Trust
Agreement.

     Section 3.2. Representations and Warranties of Lessee. Lessee represents and warrants to
Owner Trustee, Trust Company, Indenture Trustee, Loan Participant and Owner Participant that, as of
the date hereof and as of the Closing Date and each Delivery Date (unless any such representation
is specifically made as of one date):

     (a) Lessee is a corporation duly organized, validly existing, and in good standing under the
laws of the State of Missouri, is a Class I railroad as defined in 49 CFR Part 12011-1, 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 enter into and perform its obligations under
the Lessee Agreements, has the corporate 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 Lessee Agreements;

     (b) the Lessee Agreements have been duly authorized by all necessary corporate action (no
shareholder approval being required), executed and delivered (or in the case of any Lease
Supplement will on the applicable Delivery Date have been duly executed and delivered) by Lessee,
and constitute (or in the case of any Lease Supplement will on the applicable Delivery Date
constitute) the legal, valid and binding obligation of Lessee, enforceable against Lessee in
accordance with its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency and similar laws and by general principles of equity;

     (c) the execution, delivery and performance by Lessee of each Lessee Agreement and compliance
by Lessee with all of the provisions 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 Lessee or
any of its properties, or contravene the provisions of, or constitute a default
by Lessee under, or result in the creation of any Lien (except for Permitted Liens) upon the
property of Lessee under its Certificate of Incorporation or by-laws or any material indenture,
mortgage, contract or other agreement or instrument to which Lessee is a party or by which Lessee
or any of its property is bound or affected;

     (d) except for those matters discussed in the financial statements provided to the
Participants under Section 3.2(e), there are no proceedings pending or, to the knowledge of Lessee,
threatened against Lessee in any court or before any governmental authority or

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arbitration board or
tribunal which individually or in the aggregate would materially and adversely affect the financial
condition of Lessee or impair the ability of Lessee to perform its obligations under the Lessee
Agreements or which questions the validity of any Lessee Agreement or any action taken or to be
taken pursuant thereto;

     (e) the audited consolidated balance sheet and consolidated statements of income and retained
earnings and cash flows of KCS for the fiscal year ended December 31, 2006, fairly present, in
conformity with generally accepted accounting principles, the consolidated financial position of
KCS as of such date and the results of its operations for the period then ended. The unaudited
consolidated balance sheet and consolidated statements of income and retained earnings and cash
flows of KCS for the six months ended June 30, 2007, fairly present, in conformity with generally
accepted accounting principles, the consolidated financial position of KCS as of such date and the
results of its operations for the period then ended, subject to normal year-end adjustments;

     (f) neither the nature of Lessee nor its businesses or properties, nor any relationship
between Lessee and any other Person, nor any circumstances in connection with the execution and
delivery by Lessee of the Lessee Agreements, is such as to require a consent, approval or
authorization of, or filing, registration or qualification with, or the giving of notice to, any
governmental authority on the part of Lessee in connection with the execution and delivery by
Lessee of the Lessee Agreements, other than notices required to be filed with the STB, which
notices shall have been filed on or prior to each Delivery Date and except as contemplated by
Section 3.2(g) hereof;

     (g) all filings and other actions necessary to protect the rights of Trust under the Lease,
and to perfect the security interest of Indenture Trustee under the Indenture in the Indenture
Estate as against creditors of and purchasers from the Trust, will have been made on or prior to
each Delivery Date and the Indenture will on each Delivery Date create a valid and perfected lien
and security interest in the Indenture Estate, subject to any Lessor’s Liens and Permitted Liens;

     (h) on each Delivery Date, the Equipment is covered by the insurance required by Section 12 of
the Lease and all premiums due prior to such Delivery Date in respect of such insurance shall have
been paid in full;

     (i) Lessee has timely filed all United States Federal income tax returns and all other
material tax returns which (to its knowledge) are required to be filed by it and has paid all taxes
due pursuant to such returns or pursuant to any assessment made against Lessee or any of its assets
(other than assessments, the payment of which is being contested in good faith by Lessee)
and no tax liens have been filed and no claims are being asserted with respect to any such taxes,
fees or other charges which could reasonably be expected to have a materially adverse effect on its
ability to perform its obligations under the Lessee Agreements;

     (j) the (i) “location” (as such term is used in Section 9-307 of the Uniform Commercial Code)
of Lessee is the State of Missouri, and the place where its records concerning the Equipment and
all of its interests in, to and under all documents relating to the Equipment are and will be kept,
is located at Kansas City, Missouri, and (ii) The Kansas City Southern Railway

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Company is its true
legal name as registered in the jurisdiction of its organization, its federal employer
identification number is 44-6000758 and its organizational identification number designated by its
jurisdiction of organization is R00000513;

     (k) no Lease Default has occurred and is continuing and no Event of Loss has occurred;

     (l) Lessee is not an “investment company” or an “affiliated person” of an “investment company”
within the meaning of the Investment Company Act of 1940;

     (m) the acquisition by Owner Participant of the Beneficial Interest for its own account will
not constitute a prohibited transaction within the meaning of Section 4975(c)(1)(A) through (D) of
the Code. The representation made by Lessee in the preceding clause is made in reliance upon and
subject to the accuracy of the representation of Owner Participant in Section 3.6(h) of this
Agreement;

     (n) on each Delivery Date, after giving effect to the transactions contemplated hereby, Owner
Trustee shall have good and marketable title to the Units being delivered on or such Delivery Date,
in each case free and clear of all claims, Liens and encumbrances of any nature, except Permitted
Liens of the type described in clauses (iii), (iv) or (v) of the definition thereof; and

     (o) each Unit has been manufactured to meet the Design Specifications.

     Section 3.3. Representations and Warranties of Indenture Trustee. Indenture Trustee
represents and warrants to Owner Participant, Owner Trustee, Trust Company, Loan Participant and
Lessee that, as of the date hereof and as of the Closing Date and each Delivery Date (unless any
such representation is specifically made as of one date):

     (a) Indenture Trustee is a banking corporation duly organized and 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 and the laws of the United States pertaining to
its banking, trust and fiduciary powers to execute, deliver and carry out the terms of each of the
Indenture Trustee Agreements;

     (b) the execution, delivery and performance by Indenture Trustee of each of the Indenture
Trustee Agreements have been duly authorized by Indenture Trustee and will not violate its
Certificate of Incorporation or by-laws or the provisions of any indenture, mortgage,
contract or other agreement to which it is a party or by which it is bound or any laws, rules or
regulations of the United States or the State of Delaware (or any governmental subdivision of
either thereof) pertaining to its banking, trust or fiduciary powers;

     (c) each Indenture Trustee Agreement, when executed and delivered, will constitute its legal,
valid and binding obligation enforceable against it in accordance with its terms;

     (d) there are no proceedings pending or, to the knowledge of Indenture Trustee, threatened,
and to the knowledge of Indenture Trustee there is no existing basis for any such

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proceedings,
against or affecting 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 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
governmental authority or regulatory body of the United States or the State of Delaware, in each
case pertaining to the banking, trust or fiduciary powers of Indenture Trustee, is required for the
due execution, delivery and performance by Indenture Trustee of the Indenture Trustee Agreements,
except as have been previously obtained, given or taken;

     (f) Indenture Trustee is not in default under any of the Indenture Trustee Agreements;

     (g) neither Indenture Trustee, nor any Person authorized to act on behalf of Indenture
Trustee, has directly or indirectly offered any interest in the Trust Estate or the Equipment Notes
or any other Operative Agreement or any security similar to either thereof 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 Loan Participant; and

     (h) there are no Taxes which may be imposed on or asserted against the Indenture Estate or any
part thereof or any interest therein, Trust Company, Owner Trustee or Owner Participant by any
state or local government or taxing authority in connection with the execution, delivery or
performance by Indenture Trustee of the Indenture Trustee Agreements or the authentication of the
Equipment Notes.

     Section 3.4. Representations, Warranties and Covenants Regarding Beneficial Interest. (a) The
Trust represents and warrants to Lessee, Indenture Trustee, Loan Participant and Owner Participant
that, as of the date hereof and as of the Closing Date and each Delivery Date, neither the Trust
nor any Person authorized or employed by the Trust as agent or otherwise in connection with the
placement of the Beneficial Interest or any similar interest has offered any of the Beneficial
Interest or any similar interest or any of the Equipment Notes or any similar interest for sale to,
or solicited offers to buy any thereof from, or otherwise approached or negotiated with respect
thereto with, any prospective purchaser.

     (b) Lessee represents and warrants to Owner Trustee, Indenture Trustee, Loan Participant and
Owner Participant that, as of the date hereof and as of the Closing Date, it has not
offered any of the Beneficial Interest for sale to, or solicited offers to buy any thereof from,
any Person other than Owner Participant and not more than 35 other prospective institutional
investors.

     (c) Both the Trust and Lessee agree severally but not jointly that neither the Trust nor
Lessee nor anyone acting on behalf of the Trust or Lessee will offer the Beneficial Interest 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 or any part thereof so as to bring the issuance and
sale of the Beneficial Interest or any part thereof within the provisions of Section 5 of the
Securities Act of 1933, as amended.

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     (d) Lessee represents that Lessee has not retained or employed any broker, finder or financial
advisor (other than JPMorgan Capital Corporation) to act on its behalf in connection with the
transactions contemplated hereby and it has not authorized any broker, finder or financial advisor
retained or employed by any other Person to so act.

     Section 3.5. Representations and Warranties of Loan Participant. Loan Participant represents
and warrants to Owner Trustee, Indenture Trustee, Owner Participant and Lessee that, as of the date
hereof and as of the Closing Date and each Delivery Date (and the purchase of an Equipment Note by
Loan Participant on any Delivery Date shall constitute a reaffirmation by Loan Participant of each
of these representations and warranties as of such date):

     (a) Loan Participant is duly organized and validly existing under the laws of its jurisdiction
of organization, and has the full power, authority and legal right under the laws of its
jurisdiction of organization to execute, deliver and perform the terms of this Agreement;

     (b) the execution and delivery by Loan Participant of this Agreement and its performance
hereunder and under the Equipment Notes have been duly authorized by all necessary corporate
action. It has duly and validly executed and delivered this Agreement.

     (c) assuming the due authorization, execution and delivery by the other parties hereto, this
Agreement constitutes, and its obligations under the Equipment Notes will constitute, its legal,
valid, and binding obligations enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency and similar laws and by general
principles of equity.

     (d) Loan Participant is acquiring the Equipment Notes to be issued to it on each Delivery Date
for the purpose of investment and not with a view to the distribution thereof, and that, except as
permitted or contemplated by the terms of the Operative Agreements (including, without limitation,
KfW’s rights under Section 6.13 hereof), Loan Participant has no present intention of selling,
negotiating or otherwise disposing of such Equipment Notes; it being understood, however, that the
disposition of Loan Participant’s property shall at all times be and remain within its control; and

     (e) Loan Participant is acquiring the Equipment Notes with funds that do not constitute plan
assets, and the term “plan assets” shall have the meaning specified in Department of Labor
Regulation §2510.3-101.

     Section 3.6. Representations and Warranties of Owner Participant. Owner Participant
represents and warrants to Owner Trustee, Trust Company, Indenture Trustee, Loan Participant and
Lessee that, as of the date hereof and as of the Closing Date and each Delivery Date (unless any
such representation is specifically made as of one date):

     (a) Owner Participant is a limited liability company duly organized, validly existing and in
good standing under the laws of State of Delaware and has the power and authority to carry on its
business as now conducted;

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     (b) Owner Participant has the limited liability company power and authority to enter into the
Owner Participant Agreements and to perform its obligations thereunder, and such execution,
delivery and performance do not and will not contravene any law or any order of any court or
governmental authority or agency applicable to or binding on Owner Participant, or contravene the
provisions of, or constitute a default under, or result in the creation of any Lien (other than the
leasehold interest of Lessee under the Lease and the security interest of Indenture Trustee under
the Indenture) upon the Equipment under, its organization documents or any material indenture,
mortgage, contract or other agreement or instrument to which Owner Participant is a party or by
which it or any of its property or the Equipment may be bound or affected;

     (c) the Owner Participant Agreements have been duly authorized by all necessary action on the
part of Owner Participant, do not require any approval not already obtained of the members of Owner
Participant or any approval or consent not already obtained of any trustee or holders of
indebtedness or obligations of Owner Participant, have been duly executed and delivered by Owner
Participant and (assuming the due authorization, execution and delivery by each other party
thereto) constitute the legal, valid and binding obligations of Owner Participant, enforceable
against Owner Participant in accordance with their respective terms except as enforceability may be
limited by applicable bankruptcy, insolvency and similar laws 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 Owner Participant of the Trust Agreement, the Tax Indemnity Agreement and this
Agreement, it being understood that no representation or warranty is being made herein with respect
to the ICC Termination Act or any other laws, governmental rules or regulations specific to the
Equipment;

     (e) the Trust Estate is free of any Lessor’s Liens attributable to Owner Participant;

     (f) there are no pending or, to the knowledge of Owner Participant, threatened actions or
proceedings before any court or administrative agency which would materially adversely
affect Owner Participant’s financial condition or its ability to perform its obligations under the
Trust Agreement, the Tax Indemnity Agreement, this Agreement or any other Owner Participant
Agreement;

     (g) as of each Delivery Date, Owner Participant is purchasing the Beneficial Interest to be
acquired by it on such Delivery Date for its account with no present intention of distributing such
Beneficial Interest or any part thereof in any manner which would violate the Securities Act of
1933, as amended, but without prejudice, however, to the right of Owner Participant at all times to
sell or otherwise dispose of all or any part of such Beneficial Interest under a registration
statement under the Securities Act of 1933, as amended, or under an exemption from such
registration available under such Act. Owner Participant acknowledges that its Beneficial Interest
has not been registered under the Securities Act of 1933, as amended, and that neither Owner
Trustee nor Lessee contemplates filing, or is legally required to file, any such registration
statement;

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     (h) with respect to the sources of the amount to be advanced by Owner Participant pursuant to
Section 2.2(a), no part of such amounts constitutes assets of any employee benefit plan (other than
a government plan exempt from the coverage of ERISA); and

     (i) OP Guarantor has a tangible net worth, as determined in accordance with generally accepted
accounting principles, of not less than $75,000,000.

     Section 3.7. Opinion Acknowledgment. Each of the parties hereto, with respect to such party,
expressly consents to the rendering by its counsel of the opinions referred to in Section 4.1(a)(2)
and Section 4.1(b)(7) and acknowledges that such opinions shall be deemed to be rendered at the
request and upon the instructions of such party, each of whom has consulted with and has been
advised by its counsel as to the consequences of such request, instructions and consent.

Article IV

Conditions Precedent

     Section 4.1. Conditions Precedent to Closing Date; Conditions Precedent of Each Participant
and Indenture Trustee to each Delivery Date.

     (a) Closing Conditions. The obligation of any Person to participate in the transactions
contemplated hereby on the Closing Date shall be subject to the following conditions precedent:

     (1) Execution of Operative Agreements. This Agreement, the Trust Agreement, the Lease,
the OP Guaranty, the Indenture, shall each be satisfactory in form and substance to the
parties thereto, shall have been duly executed and delivered by the parties thereto (except
that the execution and delivery of this Agreement and the other documents referred to above
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 each such party or its counsel;
and no event shall have occurred and be continuing that constitutes a Lease Default or an
Indenture Default.

     (2) Opinions of Counsel. Owner Trustee, Indenture Trustee, Loan Participant, Owner
Participant and Lessee shall have received the favorable written opinion of each of
(A) internal counsel to Lessee and special counsel to Lessee, (B) counsel to Owner Trustee,
(C) special counsel to Owner Participant and OP Guarantor and (D) counsel to Indenture
Trustee, each in form and scope satisfactory to each such party; provided that receipt by a
party hereto of a favorable written opinion from counsel to such party shall not be a
condition precedent to such party’s obligations hereunder; provided further that, such
opinions shall be dated the date of the agreements set forth in Section 4.1(a)(1) hereof.

     (3) Tax Indemnity Agreement. The Tax Indemnity Agreement shall be satisfactory in form
and substance to Owner Participant and Lessee, shall have been duly

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executed and delivered
by Lessee and Owner Participant, and shall be in full force and effect.

     (4) Corporate Documents. Each of the parties shall have received such documents and
evidence with respect to Lessee, Owner Participant, Owner Trustee, the Trust and Indenture
Trustee as such party may reasonably request in order to establish the authority for the
consummation of 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 and the incumbency of all
officers signing any of the Operative Agreements.

     (5) Representations and Warranties. The representations and warranties of each of the
parties hereto shall be true and correct in all material respects on the Closing Date.

     (b) Delivery Date Conditions. The obligation of each Participant, the Owner Trustee and
Indenture Trustee to participate in the transactions contemplated hereby on each Delivery Date
shall be subject to the following conditions precedent (except that paragraph (16) shall not be a
condition precedent to Owner Participant’s obligations hereunder and paragraph (17), as it relates
to Loan Participant, shall not be a condition precedent to Loan Participant’s obligations):

     (1) Execution of Operative Agreements. On or before each Delivery Date, each of the
documents referred to in Section 4.1(a)(1) and Section 4.1(a)(3) shall be in full force and
effect and the Equipment Notes to be issued on such Delivery Date, an Assignment of
Warranties in respect of the Units to be purchased by the Trust from the Seller on such
Delivery Date, the Lease Supplement, the Indenture Supplement, in each case with respect to
the Units for which settlement will be made on such Delivery Date shall each be satisfactory
in form and substance to such Participant and Indenture Trustee, shall have been duly
executed and delivered by the parties thereto (except that
the execution and delivery of the documents referred to above by a party 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
and Indenture Trustee or its counsel on or before such Delivery Date; and no event shall
have occurred and be continuing that constitutes a Lease Default or an Indenture Default.

     (2) Recordation and Filing. On or before each Delivery Date, Lessee will cause the
Lease, the Lease Supplement with respect to the Units for which settlement will be made on
such Delivery Date, the Indenture, the Indenture Supplement with respect to the Units for
which settlement will be made on such Delivery Date, or appropriate evidence thereof, to be
duly filed, recorded and deposited (A) with the Surface Transportation Board in conformity
with 49 U.S.C. § 11301, (B) with the Registrar General of Canada pursuant to Section 105 of
the Canada Transportation Act and (C) in such other places within the United States, Canada
or Mexico as Owner Trustee, Indenture Trustee and any Participant may reasonably request for
the protection of the Trust’s title to the Equipment and interest in the Lease, or the
security interest of

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Indenture Trustee in the Equipment and the Lease, and will furnish
Indenture Trustee, Owner Trustee and each Participant proof thereof.

     (3) Officer’s Certificate of Lessee. On each Delivery Date, Owner Trustee, Indenture
Trustee, Loan Participant and Owner Participant shall have received an Officer’s Certificate
dated such date from Lessee, to the effect that the representations and warranties of Lessee
contained in Section 3.2 and Section 3.4(b) are true and correct in all material respects on
such Delivery Date with the same effect as though made on and as of said 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 that Lessee has performed and complied with all agreements and conditions herein
contained which are required to be performed or complied with by Lessee on or before said
date.

     (4) Officer’s Certificates of Trust Company and Owner Trustee. On each Delivery Date,
Lessee, Indenture Trustee, Loan Participant and Owner Participant shall have received an
Officer’s Certificate dated such date from each of Trust Company and Owner Trustee, to the
effect that the representations and warranties of each of Trust Company and Owner Trustee
contained in Section 3.1 and of Owner Trustee contained in Section 3.4(a) are true and
correct in all material respects on such Delivery Date with the same effect as though made
on and as of said 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 that Owner Trustee has performed and complied
with all agreements and conditions herein contained which are required to be performed or
complied with by Owner Trustee on or before said date.

     (5) Officer’s Certificate of Indenture Trustee. On each Delivery Date, Lessee, Owner
Trustee, Loan Participant and Owner Participant shall have received an Officer’s Certificate
dated such date from Indenture Trustee, to the effect that the representations
and warranties of Indenture Trustee contained in Section 3.3 are true and correct in all
material respects on such Delivery Date with the same effect as though made on and as of
said 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 that Indenture Trustee has performed and complied with all
agreements and conditions herein contained which are required to be performed or complied
with by Indenture Trustee on or before said date.

     (6) Officer’s Certificate of Owner Participant. On each Delivery Date, Lessee, Owner
Trustee, Indenture Trustee, and Loan Participant shall have received an Officer’s
Certificate dated such date from Owner Participant, to the effect that the representations
and warranties of Owner Participant contained in Section 3.6 are true and correct in all
material respects on such Delivery Date with the same effect as though made on and as of
said 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 that Owner Participant has performed

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and complied with all
agreements and conditions herein contained which are required to be performed or complied
with by Owner Participant on or before said date.

     (7) Opinions of Counsel. On each Delivery Date, Owner Trustee, Indenture Trustee, Loan
Participant and Owner Participant shall have received the favorable written opinion of each
of (A) internal counsel to Lessee and special counsel to Lessee, (B) counsel to Owner
Trustee, (C) special counsel to Owner Participant and OP Guarantor and (D) counsel to
Indenture Trustee, each in form and scope satisfactory to each Participant, (E) Alvord and
Alvord, special STB counsel, and (F) McCarthy Tétrault LLP, special Canadian counsel;
provided that receipt by a party hereto of a favorable written opinion from counsel to such
party shall not be a condition precedent to such party’s obligations hereunder.

     (8) Title. On each Delivery Date, after giving effect to the transactions contemplated
hereby and by the other Operative Agreements, Owner Trustee shall have good and marketable
title to each Unit to be purchased on such Delivery Date, free and clear of all Liens,
except Permitted Liens of the type described in clause (iii), (iv) and (v) of the definition
thereof.

     (9) Bills of Sale. On each Delivery Date, the Seller shall have delivered to Owner
Trustee (with copies to Indenture Trustee, Loan Participant and Owner Participant) a Bill of
Sale in the form attached hereto as Exhibit B with respect to the applicable Units being
purchased on such Delivery Date, such Bill of Sale dated the Delivery Date for such Units,
transferring to Owner Trustee good and marketable title to such Units and warranting to
Owner Trustee that at the time of delivery of each such Unit, the Seller had legal title
thereto and good and lawful right to sell the same, and title thereto was free of all
claims, liens and encumbrances of any nature, except Permitted Liens of the type described
in clause (iii), (iv) and (v) of the definition thereof.

     (10) Certificates of Acceptance. On each Delivery Date, Lessee shall have delivered to
Owner Trustee (with copies to Indenture Trustee, Loan Participant and Owner Participant) a
Certificate of Acceptance with respect to each Unit being purchased on such Delivery Date,
such Certificate of Acceptance executed on and dated the Delivery Date for such Unit.

     (11) Insurance Certificate. On or before each Delivery Date, Indenture Trustee, Loan
Participant, Owner Trustee and Owner Participant shall have received a certificate from a
nationally recognized insurance broker confirming that Lessee has the insurance that is
required pursuant to Section 12 of the Lease.

     (12) Corporate Documents. Each of the Participants shall have received such documents
and evidence with respect to Lessee, Owner Participant, OP Guarantor, Owner Trustee and
Indenture Trustee as the Participants may reasonably request in order to establish the
authority for the consummation of the transactions contemplated by this Agreement and the
other Operative Agreements, the taking of all corporate and other

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proceedings in connection
therewith and compliance with the conditions herein or therein set forth and the incumbency
of all officers signing any of the Operative Agreements.

     (13) No Threatened Proceedings. 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 any Delivery Date, to set aside, restrain, enjoin or
prevent the completion and consummation of this Agreement or any of the other Operative
Agreements or the transactions contemplated hereby or thereby.

     (14) Delivery Date Notice. Prior to each Delivery Date, Indenture Trustee and the
Participants shall have received the written notice of such Delivery Date required pursuant
to Section 2.3(a).

     (15) No Illegality. No change shall have occurred after the date of the execution and
delivery of this Agreement in applicable law or regulations thereunder or interpretations
thereof by regulatory authorities that, in the opinion of such Participant or its counsel,
would make it illegal for such Participant to enter into any transaction contemplated by the
Operative Agreements.

     (16) Owner Participant’s Commitment. Owner Participant shall have made available its
Commitment with respect to the Units delivered on the applicable Delivery Date in accordance
with Sections 2.2(a) and 2.3.

     (17) Loan Participant’s Commitment. Loan Participant shall have made available its
Commitment with respect to the Units delivered on the applicable Delivery Date in accordance
with Sections 2.2(b) and 2.3.

     (18) Consents. All approvals and consents of any trustees or holders of any
indebtedness or obligations of Lessee which are required in connection with the
transactions contemplated by this Agreement and the other Operative Agreements shall have
been duly obtained and be in full force and effect.

     (19) Governmental Actions. All actions, if any, required to have been taken on or
prior to each Delivery Date in connection with the transactions contemplated by this
Agreement and the other Operative Agreements on such Delivery Date shall have been taken by
any governmental or political agency, subdivision or instrumentality of the United States
and all orders, permits, waivers, exemptions, authorizations and approvals of such entities
required to be in effect on such Delivery Date in connection with such transactions
contemplated by this Agreement and the other Operative Agreements on such Delivery Date
shall have been issued, and all such orders, permits, waivers, exemptions, authorizations
and approvals shall be in full force and effect, on such Delivery Date.

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     (20) Representations and Warranties. The representations and warranties of each of the
parties hereto shall be true and correct in all material respects on such Delivery Date.

     Section 4.2. Additional Conditions Precedent to the Obligations of Loan Participant. The
obligation of Loan Participant to advance funds for the Equipment Notes to be purchased by it
pursuant to Section 2.2(b) on each Delivery Date shall be subject to the additional conditions
that:

     (a) Equipment Notes. The Equipment Notes to be delivered on such Delivery Date shall
have been duly authorized, executed and delivered to Loan Participant by a duly authorized
officer of Owner Trustee and duly authenticated by Indenture Trustee.

     (b) Debt Appraisal Letter. On or before such Delivery Date, Loan Participant shall
have received a letter from the equipment appraiser setting forth the appraiser’s opinion as
to the fair market value of the applicable Units and that such fair market value is not less
than the Equipment Cost for such Units.

     (c) Original Counterparts of Lease and Lease Supplement. The “original” counterpart of
the Lease and each applicable Lease Supplement shall have been delivered to Indenture
Trustee.

     (d) Security Interest. On such Delivery Date, after giving effect to the transactions
contemplated hereby and by the other Operative Agreements, Indenture Trustee shall have a
perfected security interest in the applicable Equipment, the Lease and the other property
constituting the Indenture Estate, free of all Liens, except Permitted Liens.

     (e) Opinion. On such Delivery Date, Loan Participant shall have received the opinion
of Vedder, Price, Kaufman & Kammholz, P.C., addressed to Loan Participant, in form and
substance satisfactory to Loan Participant.

     Section 4.3. Additional Conditions Precedent to the Obligations of Owner Participant. The
obligation of Owner Participant to provide the funds specified with respect to it in Section 2.2(a)
on each Delivery Date with respect to any Unit to be purchased on such Delivery Date shall be
subject to the following additional conditions:

     (a) Appraisal. On or before such Delivery Date, Owner Participant shall have received
an opinion (the “Appraisal”) of an equipment appraiser reasonably satisfactory in form and
substance to Owner Participant.

     (b) Opinion with Respect to Certain Tax Aspects. On or before such Delivery Date,
Owner Participant shall have received the opinion of Davis Polk & Wardwell, addressed to
Owner Participant, in form and substance satisfactory to Owner Participant, containing such
counsel’s favorable opinion with respect to the Federal income tax aspects of the
transaction contemplated hereby.

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     (c) No Tax Law Change. No Change in Tax Law shall have occurred nor shall a judicial
opinion on a tax issue have been rendered on or prior to such Delivery Date which change, if
enacted, adopted or made effective, or such judicial opinion, would, in the reasonable
opinion of Owner Participant, render it disadvantageous or inadvisable for Owner Participant
to enter into the transactions contemplated by the Operative Agreements unless Lessee shall
indemnify Owner Participant to Owner Participant’s reasonable satisfaction for such Change
in Tax Law or, if such change can be compensated for by an adjustment to Basic Rent, unless
Lessee agrees to an adjustment to Basic Rent in accordance with the principles of
Section 2.6 of this Agreement to preserve Owner Participant’s Net Economic Return.

     Section 4.4. Conditions Precedent to the Obligation of Lessee. The obligation of Lessee to
participate in the transactions contemplated hereby on each Delivery Date shall be subject to the
following conditions precedent:

     (a) Corporate Documents. On or before such Delivery Date, Lessee shall have received
such documents and evidence with respect to Owner Participant, OP Guarantor, Owner Trustee
and Indenture Trustee as Lessee may reasonably request in order to establish the
consummation of the transactions contemplated by this Agreement, 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 such Delivery Date, each of the documents
referred to in Section 4.1(b)(1) shall be in full force and effect.

     (c) Representations and Warranties True. On such Delivery Date, the representations
and warranties of Owner Trustee, Indenture Trustee, Loan Participant and Owner Participant
contained in Section 3 hereof and OP Guarantor contained in the OP Guaranty shall be true
and correct in all material respects as of such Delivery Date as
though made on and as of such date, and Lessee shall have received an Officer’s Certificate
dated such date from each of Owner Trustee as described in Section 4.1(b)(4), Owner
Participant as described in Section 4.1(b)(6) and Indenture Trustee as described in
Section 4.1(b)(5), addressed to Lessee and certifying as to the foregoing matters insofar as
they relate to Owner Trustee, Owner Participant and Indenture Trustee, as the case may be.

     (d) Opinions of Counsel. On such Delivery Date, Lessee shall have received the
opinions of counsel for Owner Trustee and Indenture Trustee referred to in
Section 4.1(b)(7), addressed to Lessee.

     (e) No Threatened Proceedings. 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 such Delivery Date, to set aside, restrain, enjoin or
prevent the completion and consummation of this Agreement or the transactions contemplated
hereby.

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     (f) No Tax Law Change. Lessee shall not be obligated to carry out the transactions
contemplated on such Delivery Date if a Change in Tax Law shall have occurred after the date
of execution hereof and on or prior to such Delivery Date which would, in the reasonable
opinion of Lessee, result in an adjustment pursuant to Section 2.6 which would increase by
more than 50 basis points the present value (discounted at an interest rate per annum equal
to the Debt Rate) of all payments of Basic Rent payable for the Units to be delivered on
such Delivery Date.

Article V

Financial and Other Reports of Lessee

     Lessee agrees that it will furnish directly to each Participant the following:

     (a) unless included in a Form 10-Q delivered or deemed delivered under clause (c)
below, as soon as available and in any event within 60 days after the end of each quarterly
period, except the last, of each fiscal year, consolidated balance sheets of KCS, and its
consolidated Subsidiaries as at the end of such period, together with the related
consolidated statements of income and cash flows of KCS and its consolidated Subsidiaries
for the period beginning on the first day of such fiscal year and ending on the last day of
such quarterly period, setting forth in each case (except for the consolidated 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 and certified by any Vice President, the Treasurer, the Chief Financial Officer
or any Assistant Treasurer of KCS;

     (b) unless included in a Form 10-K delivered or deemed delivered under clause (c)
below, as soon as available and in any event within 120 days after the last day of each
fiscal year, a copy of KCS’s annual audited report covering the operations of KCS and its
consolidated Subsidiaries, including consolidated balance sheets, and related consolidated
statements of income and retained earnings and consolidated statement of cash flows of KCS
and its consolidated Subsidiaries 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 KCS;

     (c) as soon as available, one copy of each Annual Report on Form 10-K (or any successor
form), Quarterly Report on Form 10-Q (or any successor form) and Form 8-K filed by KCS with
the SEC or any successor agency, provided that, as long as KCS is subject to informational
requirements of the Securities Exchange Act of 1934 and in accordance therewith files
reports and other information with the SEC, each Participant shall be deemed to have been
furnished the foregoing reports and forms at the time such Participant may electronically
access such reports and forms by means of the SEC’s homepage on the internet or at KCS’s
homepage on the internet, provided, further, in the event that KCS shall cease to be subject
to such informational requirements, Lessee will

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provide each Participant with 90 days’
advance written notice and thereafter Lessee shall directly furnish such reports and forms
to each Participant; and

     (d) as soon as available and in any event within 120 days after the last day of each
fiscal year, a certificate signed by any Vice President, the Treasurer, the Chief Financial
Officer or any Assistant Treasurer of Lessee stating that he/she has reviewed the activities
of Lessee during such year and that Lessee during such year has kept, observed, performed
and fulfilled each and every covenant, obligation and condition contained herein and in the
Lease, or if a Lease Event of Default shall exist or if an event has occurred and is
continuing which, with the giving of notice or the passage of time or both, would constitute
a Lease Event of Default, specifying such Lease Event of Default and all such events and the
nature and status thereof.

If at any time Lessee shall become subject to the public reporting requirements of the SEC or
Lessee shall cease to be a consolidated subsidiary of KCS, then the reporting requirements of
paragraphs (a) through (c) above shall apply directly to Lessee.

Article VI

Certain Covenants of the Participants, Trustees and Lessee

     Section 6.1. Restrictions on Transfer of Beneficial Interest. Owner Participant agrees that
it shall not sell, convey, assign, pledge, mortgage or otherwise transfer any of its Beneficial
Interest, except to Lessee in accordance with Section 23(c) of the Lease (to which transfer
Indenture Trustee hereby consents), unless:

     (a) the Person to whom such transfer is to be made (a “Transferee”) is (i) a Person
that is an institutional investor organized as a corporation, limited liability company,
partnership or other legal entity under the laws of the United States or any state or
territory thereof or the District of Columbia with tangible net worth or, in the case of a
bank or lending institution, combined capital or surplus at the time of such transfer of at
least US $75,000,000, all of the foregoing determined in accordance with generally accepted
accounting principles or (ii) any United States subsidiary or United States affiliate of any
such institutional or corporate investor if such investor guarantees the obligations so
assumed by such subsidiary or affiliate pursuant to an instrument or instruments reasonably
satisfactory to Lessee, Owner Trustee and Indenture Trustee or (iii) any United States
subsidiary or United States affiliate of the transferring Owner Participant if the
transferring Owner Participant remains liable for all obligations of Owner Participant under
each of the Operative Agreements or OP Guarantor guarantees the obligations of Transferee;

     (b) neither the Transferee nor any of its Affiliates shall be (i) directly involved in
the transportation business (it being understood that operating lessors and passive equity
and debt investors (including lessors) in railroad rolling stock and facilities are not
directly involved in the transportation business), (ii) a competitor of Lessee in Lessee’s
primary business, (iii) at the time of the proposed transfer, a substantial investor in
Lessee

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or any Affiliate of Lessee which merger, acquisition or other takeover shall
not have been approved by the Board of Directors of Lessee or such Affiliate or
otherwise be perceived by Lessee or such Affiliate to be hostile to the management
of Lessee or such Affiliate, (iv) an adverse plaintiff or defendant in any
then-existing litigation or any then-existing third-party arbitration involving
Lessee or an Affiliate of Lessee, or (v) the potential plaintiff in any litigation
which has been threatened, in writing, against Lessee or an Affiliate of Lessee;
provided that if a Specified Default or an Event of Default shall have occurred and
be continuing, the requirements set forth in this subsection (b) above shall not
apply to such transfer;

     (c) Indenture Trustee, Lessee and Owner Trustee shall have received 30 days’ (10 days
in the case of a transfer to an Affiliate) prior written notice of such transfer specifying
the name and address of any proposed Transferee and such additional information as shall be
necessary to determine whether the proposed transfer satisfies the requirements of this
Section 6.1 and Section 8.01 of the Trust Agreement;

     (d) such Transferee enters into an agreement or agreements in form and substance
reasonably satisfactory to Lessee, Owner Trustee and 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 Owner Participant contained herein and therein;

     (e) such transfer complies in all respects with and does not violate any applicable
law, including any applicable Federal securities law and the securities law of any
applicable state;

     (f) an opinion of counsel of the Transferee (which counsel shall be either Davis Polk &
Wardwell, internal counsel to the Transferee or another counsel reasonably acceptable to
Lessee and Indenture Trustee), confirming (i) the existence, power and authority of, and due
authorization, execution and delivery of all relevant documentation by, the Transferee (with
appropriate reliance on certificates of corporate officers or public officials as to matters
of fact), (ii) that each agreement referred to in subparagraph (d) above is the legal,
valid, binding and enforceable obligation of the Transferee subject to the customary
exceptions, (iii) compliance of the transfer with the registration provisions of applicable
laws and regulations including Federal securities laws and securities laws of the
Transferee’s domicile and other jurisdictions reasonably identified by Lessee as potentially
applicable to the
transfer, and (iv) other matters as Lessee or Indenture Trustee may reasonably request,
shall be provided, prior to such transfer, to Lessee, Indenture Trustee and Owner Trustee,
which opinion shall be in form and substance reasonably satisfactory to each of them;

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     (g) except as specifically consented to in writing by Lessee and Indenture Trustee, the
terms of the Operative Agreements shall not be altered;

     (h) all fees, expenses and charges of the parties hereto (including without limitation,
legal fees and expenses of special counsel incurred in connection with each transfer of such
Beneficial Interest shall be paid by Owner Participant;

     (i) such transfer (i) does not involve the use of an amount which constitutes assets of
an employee benefit plan (other than a government plan exempt from the coverage of ERISA) or
(ii) will not constitute a prohibited transaction;

     (j) after giving effect to such transfer, the Beneficial Interest shall be held by not
more than three (3) Owner Participants at the same time; and

     (k) as a result of such transfer, no Indenture Default attributable to Owner
Participant or Owner Trustee shall have occurred and be continuing.

     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 Owner Participant to the extent of the interest transferred hereunder
and under each other Operative Agreement to which 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 as provided in Section
6.1(h) 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 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 immediately prior to such transfer of any of its representations,
warranties, covenants or obligations set forth in the Operative Agreements or for any fraudulent or
willful misconduct. Any transfer or assignment of the Beneficial Interest in violation of this
Section 6.1 shall be void and of no effect.

     Section 6.2. Lessor’s Liens Attributable to Owner Participant. Owner Participant hereby
unconditionally agrees with and for the benefit of the other parties to this Agreement that Owner
Participant will not directly or indirectly create, incur, assume or suffer to exist any Lessor’s
Liens on or against any part of the Trust Estate or the Equipment arising out of any act or
omission of or claim against Owner Participant, and Owner Participant agrees that it will, 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 (by bonding or otherwise, so long as Lessee’s
operation and use of the Equipment is not impaired); provided that 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 the Equipment or any interest
therein and do not interfere with the use, operation, or possession of the Equipment by Lessee
under the Lease or the rights of Indenture Trustee under the Indenture and the other Operative
Agreements or the rights of Loan Participant under the Operative Agreements. Owner Participant
hereby

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indemnifies and holds harmless Lessee, Indenture Trustee, Indenture Estate, Owner Trustee
and Loan Participant from and against any loss, cost or expense (including reasonable legal fees
and expenses but excluding consequential damages) which may be suffered or incurred by any of them
as the result of the failure of Owner Participant to discharge and satisfy any such Lessor’s Lien.

     Section 6.3. Lessor’s Liens Attributable to Trust Company. Trust Company, hereby
unconditionally agrees with and for the benefit of the other parties to this Agreement that Trust
Company will not directly or indirectly create, incur, assume or suffer to exist any Lessor’s Liens
on or against any part of the Trust Estate or the Equipment arising out of any act or omission of
or claim against Trust Company, and Trust Company agrees that it will, at its own cost and expense,
take such action as may be necessary to duly discharge and satisfy in full (i) any such Lessor’s
Lien attributable to Trust Company (by bonding or otherwise, so long as Lessee’s operation and use
of the Equipment is not impaired) and (ii) any other liens or encumbrances attributable to Trust
Company on any part of the Trust Estate or the Indenture Estate which result from claims against
Trust Company not related to the ownership of the Equipment, the administration of the Trust Estate
or the Indenture Estate or the transactions contemplated by the Operative Agreements; provided that
Trust Company or Owner Trustee 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 the Equipment or any interest therein and do not interfere with the use,
operation, or possession of the Equipment by Lessee under the Lease or the rights of Indenture Trustee under the
Indenture and the other Operative Agreements or the rights of Loan Participant under the Operative
Agreements. Trust Company hereby indemnifies and holds harmless Lessee, Indenture Trustee, the
Indenture Estate, Owner Participant, Seller and Loan Participant from and against any loss, cost or
expense (including reasonable legal fees and expenses but excluding consequential damages) which
may be suffered or incurred by any of them as the result of the failure of Trust Company to
discharge and satisfy any Lessor’s Lien attributable to Trust Company.

     Section 6.4. Liens Created by Indenture Trustee and Loan Participant. (a) Indenture Trustee
covenants and agrees with Lessee, Owner Trustee, Owner Participant and Loan Participant that it
shall not cause or permit to exist any Lien on the Equipment or all or any portion of the Trust
Estate or the Indenture Estate arising as a result of (i) claims against Indenture Trustee not
related to its interest in the Equipment and the Trust Estate, or to the administration of the
Indenture Estate pursuant to the Indenture, (ii) acts of Indenture Trustee not contemplated by, or
failure of Indenture Trustee to take any action it is expressly required to perform by, the
Operative Agreements, (iii) claims against Indenture Trustee relating to Taxes or expenses that are
not indemnified against by Lessee pursuant to Section 7 attributable to the actions of Indenture
Trustee, or (iv) claims against Indenture Trustee
arising out of the transfer by Indenture Trustee of all or any portion of its interest in the
Equipment, the Indenture Estate or the Operative Agreements, other than a transfer permitted by the
Operative Agreements and that 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; provided that Indenture Trustee may contest any such 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 the Equipment or any interest therein and do not interfere with the
use,

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operation, or possession of the Equipment by Lessee under the Lease, the rights of the Trust
under the Operative Agreements or the rights of Loan Participant under the Operative Agreements.
Indenture Trustee further agrees to indemnify and hold harmless each of the other parties hereto
from and against any loss, out-of-pocket cost and expenses (including reasonable legal fees and
expenses) incurred, in each case, as a result of the imposition or enforcement of any such Lien.

     (b) Loan Participant covenants and agrees with Lessee, Owner Trustee, Owner Participant and
Indenture Trustee that it shall not cause or permit to exist any Lien on the Equipment or all or
any portion of the Trust Estate or the Indenture Estate arising as a result of (i) claims against
Loan Participant not related to its interest in the Equipment and the Trust Estate, (ii) acts of
Loan Participant not contemplated by, or failure of Loan Participant to take any action it is
expressly required to perform under, the Operative Agreements, (iii) claims against Loan
Participant relating to Taxes or expenses that are not indemnified against by Lessee pursuant to
Article VII or (iv) claims against Loan Participant arising out of the transfer by Loan Participant
of all or any portion of its interest in the Equipment, the Indenture Estate or the Operative
Agreements, other than a transfer permitted by the Operative Agreements and that Loan Participant
will, at its own cost and expense (and without any right of reimbursement from Lessee), promptly
take such action as may be necessary duly to discharge any such Lien; provided that Loan
Participant may contest any such 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 the Equipment or
any interest therein and do not interfere with the use, operation, or possession of the Equipment
by Lessee under the Lease or the rights of the Trust or Indenture Trustee under the Operative
Agreements. Loan Participant further agrees to indemnify and hold harmless each of the other
parties hereto from and against any loss, out-of-pocket cost and expenses (including reasonable
legal fees and expenses) incurred, in each case, as a result of the imposition or enforcement of
any such Lien.

     Section 6.5. Covenants of Owner Trustee, Trust Company, Owner Participant and Indenture
Trustee. Owner Participant, and Owner Trustee and Trust Company, hereby agree, severally and not
jointly, with Lessee, Loan Participant and Indenture Trustee (i) to comply with all of the terms of
the Trust Agreement applicable to it in its respective capacity, (ii) not to amend, supplement, or
otherwise modify any provision of the Trust Agreement in such a manner as to adversely affect the
rights of any such party without the prior written consent of such party and (iii) not to terminate
or revoke the Trust Agreement or the trust created by the Trust Agreement and such trust shall not
be subject to revocation or termination by Owner Participant 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 pursuant to Section 10.01
thereof or prior to the expiration or early termination of the Lease and the payment in full and
discharge of the Equipment Notes and all other indebtedness secured by the Indenture and the final
discharge thereof pursuant to Section 10.01 thereof. Each of Owner Trustee and Indenture Trustee
agrees, for the benefit of Lessee and Owner Participant, to comply with the provisions of the
Indenture and not to amend, supplement, or otherwise modify any provision of the Indenture in such
a manner as to adversely affect the rights of any such party without the prior written consent of
such party. Notwithstanding any provision herein or in any of the Operative Agreements to the
contrary, Indenture Trustee’s obligation to take or refrain from taking any actions, or to use its

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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.

     Section 6.6. Amendments to Operative Agreements. The Trustees and Participants will not
terminate the Operative Agreements to which Lessee is not or will not be a party, except in
accordance with the 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 the other Operative
Agreements), or amend, supplement, waive or modify such Operative Agreements in any manner that
increases the obligations or liabilities, or decreases the rights, of Lessee under the Operative
Agreements, without, in each such case, the prior written consent of Lessee. Owner Participant and
the Trustees (as applicable) agree that, in any event, they will not amend Section 2.01, 2.02, or
2.05 (in the case of each of such Sections 2.01, 2.02 and 2.05 in a manner that would increase the
amount of principal, interest or Make-Whole Amount that is payable on any date) or 2.10 or Article
IX of the Indenture or Article IX of the Trust Agreement without the prior written consent of
Lessee.

     Section 6.7. Section 1168. Lessee shall at all times remain a “railroad”, as such term is
defined in Section 101 (44) of the U.S. Bankruptcy Code, such that Lessee’s obligations under the
Lease shall be subject to the provisions of Section 1168 of the U.S. Bankruptcy Code. Lessee shall
not take any action which would cause Section 1168 to cease to be applicable to this transaction
or, in connection with any bankruptcy proceedings involving Lessee or any of its Affiliates, take a
position in the United State Bankruptcy Court that is inconsistent with the rights of Lessor under
such Section 1168.

     Section 6.8. Merger Covenant. Lessee shall not consolidate with or merge into any other
Person or convey, transfer or lease substantially all of its assets as an entirety to any Person
unless (i) the Person formed by such consolidation or into which Lessee is merged or the Person
which acquires by conveyance, transfer or lease substantially all of the assets of Lessee as an
entirety shall execute and deliver to Owner Trustee, Owner Participant, Loan Participant and
Indenture Trustee an agreement containing the assumption by such successor corporation of the due
and punctual performance and observance of each covenant and condition of this Agreement and each
of the other Lessee Agreements to be performed or observed by Lessee, (ii) immediately after giving
effect to such transaction, no Lease Event of Default shall have occurred solely as a result of
such consolidation or merger or such
conveyance, transfer or lease and (iii) Lessor shall be entitled to the benefits of Section 1168 of
the Bankruptcy Code to the same extent as immediately prior to such merger, consolidation or
transfer. Upon such consolidation or merger, or any conveyance, transfer or lease of substantially
all of the assets of Lessee as an entirety in accordance with this Section 6.8, the successor
corporation formed by such consolidation or into which Lessee is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise
every right and power of, Lessee under this Agreement and the other Operative Agreements with the
same effect as if such successor corporation had been named as Lessee herein. If Lessee shall have
consolidated with or merged into any other Person or conveyed, transferred or leased substantially
all of its assets, such assets to include Lessee’s leasehold interest in the Lease, the Person
owning such leasehold

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interest after such event shall deliver to Owner Participant, Loan
Participant and Indenture Trustee, an opinion of counsel (which counsel may be such Person’s
in-house counsel) confirming that the assumption agreement pursuant to which such Person assumed
the obligations of Lessee shall have been duly authorized, executed and delivered by such Person
and that such agreement is the legal, valid and binding obligation of such Person, enforceable
against such Person in accordance with its terms.

     Section 6.9. Additional Filings. In the event that during the Lease Term (i) a central filing
system becomes available in Mexico for the filing or recording of security interests or ownership
rights in railroad rolling stock and (ii) Lessee elects as a business practice to conduct such
filings or recordings with respect to equipment owned or leased by Lessee that is used in a manner
similar to the Units, then Lessee will take, or cause to be taken, at Lessee’s cost and expense,
such action with respect to the filing or recording of the Lease, the Indenture or any supplements
thereto and any other instruments as may be necessary or reasonably required to maintain, so long
as the Indenture or the Lease is in effect and such central filing system remains available, the
benefit of such filing or recording in Mexico for the protection of the security interest created
by the Indenture and any security interest that may be claimed to have been created by the Lease
and the ownership interest of Owner Trustee in each Unit to the extent such protection is available
pursuant to such filing or recording in Mexico.

     Section 6.10. Owner Participant an Affiliate of Lessee. If at any time the original or any
successor Owner Participant shall be an Affiliate of Lessee, such Owner Participant and Lessee
agree that, notwithstanding any provision of the Indenture to the contrary, they will not modify,
amend or supplement any provision of the Lease or this Agreement or give, or permit Owner Trustee
to give, any consent, waiver, authorization or approval thereunder if any such action would
adversely affect in a material manner Indenture Trustee or any holder of an Equipment Note unless
such action shall have been consented to by a Majority In Interest.

     Section 6.11. Taxes. Lessee shall pay and discharge all Taxes imposed upon Lessee or upon its
income, profits or properties prior to the date on which penalties attach thereto except for those
Taxes which are being contested in good faith through appropriate proceedings and for which
adequate reserves are being maintained.

     Section 6.12. Negative Make-Whole Amount. Loan Participant hereby agrees, and the other
parties hereby acknowledge, that in the event of any prepayment of the Equipment Notes pursuant to
Section 2.10 of the Indenture, any acceleration of the Equipment Notes pursuant to Section 4.02
(other than as a result of a Lease Event of Default) of the Indenture or any purchase of the
Equipment Notes pursuant to Section 4.04(b) of the Indenture, if the calculation of the Make-Whole
Amount results in Negative Make-Whole Amount, then such Negative Make-Whole Amount shall be due on
the date of such prepayment as provided for in Section 2.10 of the Indenture, the date of payment
under Section 4.02 of the Indenture in the case of such acceleration or the date of such purchase
as provided in Section 4.04(b) of the Indenture, as the case may be, and such Negative Make-Whole
Amount shall be paid in U.S. dollars on such date by the holders of the Equipment Notes (each such
holder to pay its ratable portion of such Negative Make-Whole Amount in accordance with its
percentage of the Equipment Notes then being prepaid or purchased) directly to the Lessee free of
the Lien of the Indenture.

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     Section 6.13. Transfer by KfW. Notwithstanding anything the contrary contained in the
Operative Agreements, in addition to any other right or privilege granted to KfW herein or in the
other Operative Agreements, the parties hereto agree that:

     (a) KfW may transfer all of its rights and obligations under the Operative Agreements to a
Subsidiary in a single transaction with effect from January 1, 2008 or any later date, and the
parties hereto shall be deemed to have consented to such transfer at the time thereof. KfW or such
Subsidiary will inform the parties hereto of the date on which the transfer of KfW’s rights and
obligations to such Subsidiary occurs. In connection therewith the following shall apply:

     (i) Deductions, Increased Costs and Withholding. If, by reason of circumstances
already existing at the time of such assignment or transfer, Lessee or Owner Trustee would
be obliged to make a payment to such Subsidiary of Make-Whole Amount, a payment under
Section 7.02 of the Indenture or an indemnity payment under Section 7.1(j) hereof, such
party need pay such Subsidiary no more than such an amount as it would have been obliged to
pay KfW if the transfer had not occurred; and

     (ii) Costs. KfW will pay any reasonable costs incurred by it or its Subsidiary or any
other party hereto in connection with any such transfer.

     (b) For the purposes of the preceding clause (a), “Subsidiary” means a company which within
the meaning of section 15 ff. German Stock Corporation Act (Aktiengesetz) is directly or indirectly
(i) majority owned (im Mehrheitsbesitz) by KfW or (ii) controlled (abhängig) by KfW.

     (c) KfW may otherwise assign, charge or otherwise deal with all or part of its claims and
rights under this Agreement as and to the extent otherwise provided in the Operative Agreements.

     (d) In connection with any transfer under the preceding clause (a) or any assignment under
clause (c), KfW may disclose confidential information as provided herein.

Article VII

Lessee’s Indemnities

     Section 7.1. General Tax Indemnity.

     (a) Tax Indemnitee Defined. For purposes of this Section 7.1, “Tax Indemnitee” means Owner
Participant, its Affiliates, Owner Trustee, Trust Company, the Trust, the Trust Estate, Indenture
Trustee, Loan Participant, and each of their respective successors or assigns permitted under the
terms of the Operative Agreements and, with respect to any taxes, shall also include any affiliated
or combined group of which such Tax Indemnitee is, or may become, a member if consolidated or
combined returns are filed for such group for purposes of such taxes.

     (b) Taxes Indemnified. Subject to the exclusions stated in subsection (c) below, Lessee
agrees to indemnify and hold harmless each Tax Indemnitee on an After-Tax Basis against all

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fees,
taxes, levies, assessments, charges or withholdings of any nature, together with any penalties,
fines or interest thereon or additions thereto (“Taxes”) imposed upon any Tax Indemnitee, Lessee or
all or any part of the Equipment by any federal, state or local government, political subdivision,
or taxing authority in the United States, by any government or taxing authority of or in a foreign
country or by any international authority, upon, with respect to or in connection with:

     (i) the Equipment or any part of any of the Equipment or interest therein;

     (ii) the acquisition, financing, use or operation with respect to the Equipment or any
part of any of the Equipment or interest therein;

     (iii) payments of Rent or the receipts, income or earnings arising therefrom;

     (iv) any or all of the Operative Agreements or any payments made with respect to the
Equipment Notes; or otherwise with respect to the transactions contemplated by or resulting
from the Operative Agreements, including any payments thereunder and the exercise of rights
and remedies thereunder; or

     (v) in the case of Owner Participant and Owner Trustee, any withholding tax and
penalties and interest thereon imposed in respect of Equipment Notes held by a Loan
Participant who is not a U.S. Person (as defined in Section 7701(a)(30) of the Code).

     (c) Taxes Excluded. The indemnity provided for in paragraph (b) above shall not extend to any
of the following:

     (i) Taxes which are based upon, measured by or in respect to gross or net income or
gross or net receipts (including all Taxes which are in lieu of a gross or net income tax or
gross or net receipts tax); Taxes on items of preference or any minimum tax; value added
taxes; business and occupation taxes; franchise taxes; commercial activity taxes, business
activity taxes and other similar taxes imposed on the privilege of doing business; or Taxes
based upon Owner Participant’s or Lessor’s capital stock or net worth; provided that there
shall not be excluded under this subparagraph (i) any (x) sales (including gross receipts
Taxes in the nature of a sales Tax), use, property, value added, license, rental, ad valorem
or Taxes in the nature thereof and (y) any Taxes imposed by any government or taxing
authority of or in a foreign country if, and to the extent, such Taxes are imposed as a
result of (A) the operation, presence or registration in such jurisdiction of any Unit or
part thereof, (B) the presence in such jurisdiction of a permanent establishment or fixed
place of business of any Lessee Person, (C) the residence, nationality or place of
management and control of any Lessee Person, (D) the payment by any Lessee Person of any
amount due under the Operative Agreements which is treated as paid from such jurisdiction or
(E) any combination of factors (A)-(D) (for the avoidance of doubt, Taxes imposed on the
Loan Participant by withholding or deduction that are otherwise excluded under this clause
(i) shall be indemnified solely to the extent provided in Section 7.1(j)).

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     (ii) Taxes imposed with respect to any period after the earliest of (x) the return of
possession of the Equipment to Owner Participant or the placement of the Equipment in
storage at the request of Owner Participant, in either case pursuant to Section 6 of the
Lease and only so long as no Lease Event of Default shall have occurred and be continuing,
(y) the termination of the Lease Term pursuant to Section 22.1 of the Lease, or (z) the
discharge in full of Lessee’s obligation to pay the Termination Value or the Stipulated Loss
Value and all other amounts due, if any, under Section 10 or 11.2 of the Lease, as the case
may be, with respect to the Equipment; provided that the exclusion set forth in this clause
(ii) shall not apply to Taxes to the extent such Taxes relate to events occurring or matters
arising prior to or simultaneously with such time (including Taxes on or with respect to any
payment to a Tax Indemnitee due after the termination or expiration of the Lease if such
payment relates to events occurring or matters arising prior to or simultaneously with such
time);

     (iii) Taxes of a Tax Indemnitee which arise out of or are caused by any breach by such
Tax Indemnitee of any of its representations, warranties or covenants in any of the
Operative Agreements, or the gross negligence or willful misconduct of such Tax Indemnitee;

     (iv) Taxes which become payable as a result of a sale, assignment, transfer or other
disposition (whether voluntary or involuntary) by a Tax Indemnitee of all or any portion of
its interest in the Equipment or any part thereof, the Trust Estate or any of the Operative
Agreements or rights created thereunder other than a disposition attributable to (v) a Lease
Event of Default (but only while a Lease Event of Default
has occurred and is continuing), (w) an Event of Loss, (x) the exercise by Lessee of the
termination right pursuant to Section 10 of the Lease, (y) the exercise by Lessee of the
purchase rights pursuant to Section 23 of the Lease and (z) the replacement, substitution,
subleasing or interchange of any Unit by any Lessee Person;

     (v) Taxes imposed with respect to any fees received by Indenture Trustee or Owner
Trustee for services rendered in its capacity as trustee;

     (vi) Taxes which have been included in the Equipment Cost;

     (vii) Taxes for which Lessee is obligated to indemnify Owner Participant under the Tax
Indemnity Agreement;

     (viii) Taxes which result from Owner Trustee’s engaging on behalf of the Trust Estate
acting upon the instruction of Owner Participant in transactions other than those permitted
or contemplated by the Operative Agreements unless attributable to the exercise of default
remedies pursuant to Article V of the Trust Agreement;

     (ix) Taxes imposed pursuant to Sections 6707, 6707A or 6708 of the Code;

     (x) Taxes imposed against a particular Indemnified Person resulting from any prohibited
transaction, within the meaning of Section 4975(c)(1) of the Code, occurring

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with respect to
the purchase or holding of Equipment Notes or circumstances when such Indemnified Person or
any Person in such Indemnified Person’s Related Indemnitee Group caused such purchase or
holding and knew it would constitute such a prohibited transaction;

     (xi) Taxes imposed on a Tax Indemnitee to the extent resulting from a failure of such
Tax Indemnitee to provide any certificate, documentation, or other evidence requested by
Lessee in a timely manner and required under applicable law as a condition to the allowance
of a reduction in such Tax, but only if such Tax Indemnitee was legally eligible to provide
such certificate, document or other evidence (based on a good faith judgment of such Tax
Indemnitee that it is legally entitled and eligible to do so) without unindemnified adverse
consequences (other than certain de minimis costs);

     (xii) Taxes imposed on a Tax Indemnitee to the extent consisting of interest,
penalties, fines or additions to Tax in connection with the filing of, or failure to file,
any tax return, the payment of, or failure to pay any Tax, unless resulting (x) from the
failure by Lessee to perform its obligations under Section 7.1(i) hereof or (y) because
information provided by Lessee to Lessor pursuant to Section 7.1(i) hereof is incorrect or
incomplete;

     (xiii) Taxes imposed against a transferee of a Tax Indemnitee to the extent of the
excess of such Taxes over the amount of such Taxes which would have been imposed had there
not been a transfer by such original Tax Indemnitee of the interest
of such Tax Indemnitee in the Equipment, the Equipment Notes or the Trust Estate; provided,
however, that in the case of a transfer by the Owner Participant, this clause (xiii) shall
not apply to a transfer to a U.S. Person (as defined below) (x) which is an Affiliate of the
Owner Participant, or (y) in connection with the sale of all or substantially all of the
Owner Participant’s lease portfolio; for purposes of this clause (xiii), a U.S. Person shall
mean a corporation, partnership or other entity created or organized in, or under the laws
of, the United States; provided, further, however, that this clause (xiii) shall not apply
to the Original Loan Participant or any transferee of the Original Loan Participant as
contemplated in Section 6.13 (it being understood that any transferee limitations on such
transfers are set forth in Sections 6.13 and 7.1(j) hereof); and

     (xiv) Taxes imposed by reason of the failure of the Owner Trust to be subject to the
provisions of the Code regarding grantor trusts.

     (d) All Tax Obligations in This Section, Etc. It is intended that all of Lessee’s obligations
with respect to Taxes are set forth in this Section 7.1, Section 7.2 (as provided in Section
7.2(d)(ii)) and in the Tax Indemnity Agreement, but if Lessee shall be required under any other
provision of the Operative Agreements to pay any other tax, the parties hereto agree that Section
7.1(e), (f), (h) and (j) shall apply to such taxes.

     (e) Reverse Indemnity. If any Tax Indemnitee shall realize a tax benefit as a result of any
Taxes paid or indemnified against by Lessee under this Section 7.1 (whether by way of deduction,
credit, allocation or apportionment or otherwise, except to the extent taken into

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account in
determining Lessee’s obligations under Section 7.1(b)), such Tax Indemnitee shall pay to Lessee an
amount equal to the amount of such tax benefit, increased by the Tax Indemnitee’s additional saved
taxes attributable to the payment being made to Lessee hereunder (a “reverse gross-up”), provided
that (i) the Tax Indemnitee shall not be obligated to make a payment to Lessee pursuant to this
subsection (e) as long as a Lease Event of Default shall have occurred and be continuing or (ii) to
the extent the amount of such payment by the Tax Indemnitee to Lessee would exceed the amount of
all prior payments by Lessee to the Tax Indemnitee pursuant to paragraph (b) less the amount of all
prior payments by the Tax Indemnitee of tax benefits pursuant to this paragraph (e), such excess
shall not be paid but shall instead be carried forward and shall reduce Lessee’s obligations to
make subsequent payments under paragraph (b) to the Tax Indemnitee. The foregoing proviso shall
not apply to any reverse gross-up. The Tax Indemnitee shall in good faith use diligence in filing
its tax returns and in dealing with taxing authorities to seek and claim any such tax benefit and
to minimize the Taxes indemnifiable by Lessee under paragraph (b). Any subsequent loss or
disallowance of such reduction in Taxes realized by the Tax Indemnitee shall be treated as Taxes
subject to Lessee’s indemnity obligation pursuant to this Section 7.1.

     (f) Refund. Upon receipt by a Tax Indemnitee of a refund or credit of all or part of any
Taxes paid or indemnified against by Lessee, such Tax Indemnitee shall pay to Lessee an amount
equal to the amount of such refund plus any interest received by or credited to such Tax Indemnitee
with respect to such refund increased or decreased, as the case may be, by the Tax Indemnitee’s net
additional or saved taxes attributable to the receipt of such amounts
from the taxing authority and the payment being made to Lessee hereunder. The Tax Indemnitee shall
in good faith use diligence in filing its Tax returns and in dealing with taxing authorities to
seek and claim any such refund and to minimize the Taxes indemnifiable by Lessee pursuant to
paragraph (b).

     (g) Procedures. Any amount payable to a Tax Indemnitee pursuant to paragraph (b) shall be
paid within 30 days after receipt of a written demand therefor from such Tax Indemnitee accompanied
by a written statement describing in reasonable detail the basis for such indemnity and the
computation of the amount so payable, provided that such amount need not be paid prior to the later
of (i) the date which is 3 days prior to the date on which such Taxes are required to be paid or
(ii) in the case of amounts which are being contested pursuant to paragraph (h) hereof, the time
such contest (including all appeals) is finally resolved. Any amount payable to Lessee pursuant to
paragraph (e) or (f) shall be paid within 30 days after the Tax Indemnitee realizes a tax benefit
giving rise to a payment under paragraph (e) or receives a refund giving rise to a payment under
paragraph (f), as the case may be, and shall be accompanied by a written statement by the Tax
Indemnitee setting forth in reasonable detail the basis for computing the amount of such payment.
Within 15 days following Lessee’s receipt of any computation from the Tax Indemnitee, Lessee may
request that an accounting firm selected by Lessee and reasonably acceptable to the Tax Indemnitee
determine whether such computations of the Tax Indemnitee are correct. Such accounting firm shall
be requested to make the determination contemplated by this paragraph (g) within 30 days of its
selection. In the event such accounting firm shall determine that such computations are incorrect,
then such firm shall determine what it believes to be the correct computations. The Tax Indemnitee
shall cooperate with such accounting firm and supply it with all information necessary to permit it
to accomplish such

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determination, provided that such accounting firm shall have entered into a
confidentiality agreement reasonably satisfactory to such Tax Indemnitee. The computations of such
accounting firm shall be final, binding and conclusive upon the parties and Lessee shall have no
right to inspect the books, records or tax returns of the Tax Indemnitee to verify such computation
or for any other purpose. All fees and expenses of the accounting firm payable under this Section
7.1(g) shall be borne by Lessee, provided, however, that such fees and expenses shall be borne by
the Tax Indemnitee if the amount determined by such firm is (1) in the case of any amount payable
by Lessee, less than the amount determined by the Tax Indemnitee by 5% of the amount determined by
such firm, and (2) in the case of any amount payable by the Tax Indemnitee, more than the amount
determined by the Tax Indemnitee by 5% of the amount determined by such firm.

     (h) Contest. If a written claim is made against a Tax Indemnitee for Taxes with respect to
which Lessee may be liable for indemnity hereunder, the Tax Indemnitee shall promptly give Lessee
notice in writing of such claim after its receipt and shall furnish Lessee with copies of the claim
and all other writings received from the taxing authority relating to the claim; provided, however,
that failure to notify Lessee shall not relieve Lessee of any obligation to indemnify the Tax
Indemnitee hereunder unless such failure shall effectively preclude Lessee’s ability to initiate or
continue the contest of such claim. The Tax Indemnitee shall not pay such claim prior to 30 days
after providing Lessee with such written notice, unless required to do so by law or unless deferral
of payment would cause adverse
consequences to the Tax Indemnitee. The Tax Indemnitee shall in good faith, with due diligence and
at Lessee’s expense, if requested in writing by Lessee, contest (including pursuing all appeals) in
the name of the Tax Indemnitee (or, if requested by Lessee and permissible as a matter of law, in
the name of Lessee), or shall at Lessee’s option permit Lessee to contest in either the name of
Lessee or with the Tax Indemnitee’s consent, which consent shall not be unreasonably withheld, in
the name of the Tax Indemnitee, the validity, applicability or amount of such Taxes by,

     (i) resisting payment thereof if practical;

     (ii) not paying the same except under protest if protest is necessary and proper;

     (iii) if the payment be made, using reasonable efforts to obtain a refund thereof in
appropriate administrative and judicial proceedings; or

     (iv) taking such other reasonable action as is reasonably requested by Lessee from time
to time.

     Notwithstanding the foregoing provisions of this paragraph (h), the Tax Indemnitee shall not
be required to contest, or permit Lessee to contest, a claim unless (A) Lessee shall have agreed in
writing to pay on an After-Tax Basis to the Tax Indemnitee on demand all reasonable out-of-pocket
costs and expenses which the Tax Indemnitee may incur in connection with contesting such claim, (B)
no Specified Default or Lease Event of Default shall have occurred and be continuing, (C) such
contest will not result in any material danger of the sale, forfeiture or loss of any of the Units
unless Lessee shall have provided security reasonably acceptable to the

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Tax Indemnitee, and there
is no risk of imposition of any criminal penalties as a result of such Tax Claim, (D) if such
contest involves payment of such Tax, Lessee will either lend to the Tax Indemnitee on an
interest-free basis (without reduction for any Tax savings that the Tax Indemnitee may realize as a
result of the payment of such Tax), which loan will be repaid in full by the Tax Indemnitee upon
the conclusion of the contest or pay such Tax Indemnitee the amount payable by Lessee pursuant to
Section 7.1(a) above with respect to such Tax, and (E) upon request of a Tax Indemnitee, Lessee
furnishes such Tax Indemnitee with an opinion of Lessee’s counsel that there is a reasonable basis
for the position to be asserted in such contest and in the case of an appeal, that there is a
substantial likelihood that the adverse decision will be reversed or substantially modified on
appeal. If a Tax Indemnitee is obligated to contest a claim under this paragraph (h), such Tax
Indemnitee shall not compromise or settle such claim without the express written permission of
Lessee. If it does so in the absence of such permission, Lessee’s obligation to indemnify with
respect to such claim shall terminate. If a Tax Indemnitee is obligated to contest a claim under
this paragraph (h), such Tax Indemnitee may at any time decline to take further action with respect
to the contest of such claim if such Tax Indemnitee shall first waive in writing its right to any
indemnity payment by Lessee in respect of such claim (other than the expenses of such contest).

     (i) Reports. In case any report, return or statement is required to be filed with respect to
Taxes for which Lessee has an indemnity obligation under this Section 7.1, Lessee shall at Lessee’s
expense timely file the same (except for any such report, return or statement (x) which the
relevant Tax Indemnitee has notified Lessee in writing that such Tax Indemnitee intends to file or
(y) which Lessee is not permitted to file, in which event Lessee shall timely (but in no event
later than 30 days prior to the due date for such report, return or statement) provide at Lessee’s
expense such Tax Indemnitee with such information reasonably available to Lessee as is reasonably
necessary for preparing such report, return or statement), provided that such Tax Indemnitee shall
have furnished Lessee with such information, not within the control of Lessee, as is in such Tax
Indemnitee’s control and is reasonably available to such Tax Indemnitee and reasonably necessary to
file such report, return or statement. Lessee shall either file such report, return or statement
so as to show the ownership of the Equipment by the Trust or, where Lessee is not permitted to so
file, shall notify the Tax Indemnitee of such requirement and prepare and deliver such report,
return or statement to the Tax Indemnitee within a reasonable time prior to the time such report,
return or statement is to be filed.

     (j) Withholding. The following provisions shall apply solely with respect to the Loan
Participants.

     (i) Lessee covenants and agrees to pay or cause to be paid all Taxes which are in the
nature of withholding Taxes imposed as a result of a Change in Tax Law on or with respect to
the payment of principal or interest under the Equipment Notes or of any other sums payable
to Loan Participants by Lessee or Owner Trustee under the Operative Agreements, including
all additional amounts and penalties payable in respect of any delay or failure of Lessee to
pay any such Taxes; provided, however, neither Lessee nor Owner Trustee shall have any
liability for any such German Taxes in respect of KfW payable by withholding or otherwise.
Lessee shall not be required to pay or discharge any such withholding Taxes so long as it
shall in good faith and by appropriate

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administrative or legal proceedings contest the
validity thereof in a reasonable manner which will not affect or endanger the right, title
or interest of Owner Trustee or the security interest of Indenture Trustee in the Indenture
Estate, and Lessee shall reimburse Owner Trustee and Loan Participants for any damages or
expenses resulting from such failure to pay or discharge. If any such withholding Taxes are
deducted or withheld from any such payments, Lessee hereby agrees to promptly remit to the
applicable Loan Participant the equivalent of the amounts so deducted or withheld such that
the applicable Loan Participant receives a net sum equal to the sum which it would have
received had no such deduction or withholding been made, and Lessee shall pay all such
withholding Taxes and deliver to the applicable Loan Participant proof of payment of all
such withholding Taxes within 30 days of the due date for such payment; provided, however,
Lessee shall be released from its obligations under this Section 7.1(j): (A) with respect to
U.S. withholding Taxes resulting from the failure of such Loan Participant to provide at
Lessee’s request a properly completed form W-8BEN or W-8ECI or such other information or
certificates permitted under applicable law that would exempt or reduce such withholding and
(B) with respect to withholding Taxes imposed against a transferee
of a Loan Participant to the extent of the excess of such withholding Taxes over the amount
of such withholding Taxes which would have been imposed had there not been a transfer by
such original Loan Participant, provided, however, that this clause (B) shall not apply in
the event an Event of Default shall have occurred and is continuing. Notwithstanding any
provision to the contrary in the Operative Agreements, neither Owner Participant, Trust
Company nor Owner Trustee shall have any liability with respect to any such withholding
Taxes and Lessee will indemnify Owner Trustee, Trust Company and Owner Participant for any
such withholding Taxes to the extent provided in Sections 7.1(b) and (c).

     (ii) (A) If circumstances arise which have resulted or would result in any Taxes
imposed by withholding or deduction indemnified under Section 7.1(j)(i) (“Withholding
Taxes”) being imposed with respect to payments to a Loan Participant; then, without in any
way limiting, reducing or otherwise qualifying the rights of such Loan Participant under
Section 7.1(j)(i), such Loan Participant shall promptly upon becoming aware of the same
provide written notice to the Lessee (including in such notice a good faith estimate of the
amount of any such Withholding Taxes) (“Withholding Notice”). The Loan Participant and
Lessee shall consult in good faith and shall each use its reasonable good faith efforts to
avoid or mitigate the amount of any such Withholding Taxes, including, without limitation,
by reaching a mutually acceptable agreement to a transfer by the Loan Participant of its
Equipment Notes and its rights hereunder and under the other Operative Agreements to another
existing branch, office or subsidiary of the Loan Participant, or a sale, for an amount
equal to the Purchase Price (as defined in clause (B) below), of such participation and
rights to a third party reasonably acceptable to Lessee which is not affected by the
circumstances having the results described above or which would be subject to a lesser
amount of Withholding Taxes than the Loan Participant (any such solution, a “Mutually
Acceptable Arrangement”).

     (B) Each Loan Participant agrees that if Lessee and such Loan Participant do not reach
a Mutually Acceptable Arrangement within thirty (30) days of Lessee’s receipt

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of a
Withholding Notice, Lessee may elect by providing written notice to the Loan Participants
within sixty (60) days of Lessee’s receipt of its Withholding Notice to refinance the
Equipment Notes pursuant to Section 11.2 hereof (except that payment of any Make-Whole shall
be limited to an amount not in excess of 3% of the then current outstanding principal amount
of the Equipment Notes) or to require the affected Loan Participant to use its reasonable
good faith efforts to sell its Equipment Note to a third party willing to purchase the Loan
Participant’s Equipment Note for a purchase price (the “Purchase Price”) equal to the sum of
the principal amount of such Loan Participant’s interest in the Equipment Note plus accrued
interest thereon, if any, that would be payable to such Loan Participant if the Equipment
Notes were prepaid on the date of such purchase, plus a payment by Lessee of an amount equal
to any Make-Whole otherwise due if the Equipment Notes were so prepaid, provided, however,
that such payment shall not be in excess of 3% of the then current outstanding principal
amount of the Equipment Notes. The affected Loan Participant may give written notice to
Lessee within thirty (30) days of its receipt of Lessee’s
notice of its intent to refinance the Equipment Notes or require the affected Loan
Participant to use its reasonable best efforts to sell the affected Equipment Note that it
waives its right to indemnification for Withholding Taxes with respect to such Change in Tax
Law, in which event such affected Loan Participant shall not be entitled to indemnification
in respect thereof and this Section 7.1(j)(ii) shall no longer apply with respect to such
Withholding Taxes.

     Section 7.2. General Indemnification and Waiver of Certain Claims.

     (a) Claims Defined. For the purposes of this Section 7.2, “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) which may be imposed on, incurred by, suffered by, or asserted
against an Indemnified Person, as defined herein, or any Unit and, except as otherwise expressly
provided in this Section 7.2, 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 this Section 7.2, “Indemnified Person”
means Owner Participant, Owner Trustee, Trust Company, the Trust, Indenture Trustee, Loan
Participant, and each of their respective directors, officers, employees, shareholders, constituent
investors or partners, Affiliates, successors and permitted assigns, agents and servants, the Trust
Estate and the Indenture Estate (the respective directors, officers, employees, shareholders,
constituent investors or partners, Affiliates, successors and permitted assigns, agents and
servants of Owner Participant, Trust Company and Indenture Trustee, as applicable, together with
Owner Participant, Owner Trustee and Indenture Trustee, as the case may be, being referred to
herein collectively as the “Related Indemnitee Group” of Owner Participant, Owner Trustee and
Indenture Trustee, but not Trust Company respectively), provided that as a condition of any
obligations of Lessee to pay any indemnity or perform any action under this Section 7.2 with
respect to any persons who are not signatories hereto, such persons at the written request of
Lessee shall expressly agree in writing to be bound by all the terms of this Section 7.2. In the
event that any Indemnified Person fails, after notice to such Indemnified

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Person referring to this
sentence, to comply with any duty or obligation under Section 7.2(e) and (f), such Indemnified
Person shall not be entitled to indemnity under this Section 7.2 to the extent such failure to
comply has a material adverse effect on Lessee’s ability to defend any such Claim.

     (c) Claims Indemnified. Whether or not any Unit is accepted under the Lease, or a closing
occurs with respect thereto, and subject to the exclusions stated in subsection (d) below, Lessee
agrees to indemnify, protect, defend and hold harmless each Indemnified Person on an After-Tax
Basis against Claims resulting from or arising out of or related to (whether or not such
Indemnified Person shall be indemnified as to such Claim by any other Person):

     (i) this Agreement or any other Operative Agreement or any of the transactions
contemplated hereby and thereby or resulting herefrom or therefrom and the enforcement
thereof and hereof;

     (ii) the ownership, lease, operation, possession, modification, use, non-use,
maintenance, sublease, financing, substitution, control, repair, storage, alteration,
violation of law with respect to any Unit (including applicable securities laws, ERISA and
environmental law), transfer or other disposition of any Unit, return, overhaul, testing or
registration of any Unit (including, without limitation, injury, death or property damage of
passengers, shippers or others, and environmental control, noise and pollution regulations)
whether or not in compliance with the terms of the Lease;

     (iii) the manufacture, design, purchase, acceptance, rejection, delivery, nondelivery
or condition of any Unit (including, without limitation, latent and other defects, whether
or not discoverable, and any claim for patent, trademark or copyright infringement);

     (iv) any breach of or failure to perform or observe, or any other noncompliance with,
any covenant, condition or agreement to be performed by, or other obligation of, Lessee
under any of the Operative Agreements, or the falsity when made of any representation or
warranty of Lessee in any of the Operative Agreements or in any document or certificate
delivered in connection therewith other than representations and warranties in the Tax
Indemnity Agreement; and

     (v) the offer, sale or delivery of any Equipment Notes or any interest in the Trust
Estate.

     (d) Lessee’s Claims Excluded. The following are excluded from the 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 (A) in the case of the exercise by Lessee of a purchase option with respect
to such Unit under Section 23 of the Lease, the exercise by Lessee of an early termination
option with respect to such Unit under Section 10 of the Lease or the occurrence of an Event
of Loss with respect to such Unit under Section 11 of the Lease, the last to occur of

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(w) if
an Event of Default exists, the elimination of such Event of Default and the payment of all
amounts due under the Operative Agreements, (x) the payment of all amounts due from 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, with respect to such Unit the last to occur of (w) if an
Event of Default exists, the elimination of such Event of Default and the payment of all
amounts due under the Operative Agreements, (x) the earlier to occur of the termination of
the Lease or the expiration of the Lease Term, (y) the return of such Unit to Lessor in
accordance with the terms of the Lease (it being understood that the date of the placement
of such Unit in storage as provided in Section 6 of the Lease constitutes the
date of return of such Unit under the Lease) and (z) the release of the lien of the
Indenture on such Unit;

     (ii) with respect to any particular Indemnified Person, Claims which are Taxes or
Losses, whether or not Lessee is required to indemnify therefor under Section 7.1 hereof or
the Tax Indemnity Agreement, except, subject to subparagraph (xiii) below, Taxes arising by
reason of ERISA and not related to such Indemnified Person’s making or holding its
investment as contemplated by the Operative Agreements or in accordance with the
instructions of Lessee (it being hereby agreed that except as expressly provided in the
Operative Agreements (including the foregoing sentence), Lessee’s entire obligation with
respect to Taxes and Losses being fully set out in such Section 7.1 or the Tax Indemnity
Agreement);

     (iii) with respect to any particular Indemnified Person, Claims to the extent
attributable to the gross negligence or willful misconduct of (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 to the breach of any contractual obligation by, or the
falsity or inaccuracy of any representation or warranty of such Indemnified Person or any of
such Indemnified Person’s Related Indemnitee Group;

     (iv) with respect to any particular Indemnified Person, Claims to the extent
attributable to any breach by such Indemnified Person of the warranty of quiet enjoyment set
forth in Article VIII or any transfer (other than pursuant to Section 10, 11, 15 or 23 of
the Lease or pursuant to the Indenture) by such Indemnified Person of any interest in the
Trust Estate;

     (v) with respect to any particular Indemnified Person, any Claim to the extent
attributable to the offer, sale or disposition (voluntary or involuntary) by or on behalf of
such Indemnified Person of any Equipment Note or any interest in the Trust Estate or the
Trust Agreement, or any similar security, other than a transfer by such Indemnified Person
of its interests in any Unit pursuant to Section 10, 11 or 23 of the Lease or otherwise
attributable to a Lease Event of Default that has occurred and is continuing;

     (vi) any Claim by Owner Trustee or Owner Participant and the Related Indemnitee Group
of such Indemnified Person to the extent attributable to a failure on the part of Owner
Trustee to distribute in accordance with the Trust Agreement any amounts received and
distributable by it thereunder;

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     (vii) any Claim (other than to the extent any such Claim is brought against Owner
Participant or Owner Trustee and the Related Indemnitee Group of such Indemnified Person) to
the extent attributable to a failure on the part of Indenture Trustee to distribute in
accordance with the Indenture any amounts received and distributable by it thereunder;

     (viii) any Claim to the extent attributable to the authorization or giving or
unreasonable withholding by such Indemnified Person of any future amendments, supplements,
modifications, alterations, waivers or consents with respect to any of this Agreement and
the other Operative Agreements, other than such as have been requested by or consented to by
Lessee or necessary or required to comply with applicable laws or to effectuate the purpose
or intent of any Operative Agreement or as are expressly required by any Operative
Agreements;

     (ix) any Claim to the extent attributable to an Indenture Default that does not also
constitute a Lease Default;

     (x) any Claim which relates to a cost, fee or expense payable by a Person other than
Lessee pursuant to this Agreement, the Lease or any other Operative Agreement;

     (xi) any Claim of Owner Participant or Owner Trustee to the extent that such Claim
would not have arisen but for the appointment of a successor or an additional Owner Trustee
without the consent of Lessee unless such successor or additional Owner Trustee had been
appointed in connection with the exercise of remedies pursuant to Section 15 of the Lease
following the occurrence and continuance of a Lease Event of Default;

     (xii) any Claim which is an ordinary and usual operating or overhead expense of such
Indemnified Person other than such expenses attributable to the occurrence of an Event of
Default; or

     (xiii) with respect to a particular Indemnified Person and such Indemnified Person’s
Related Indemnitee Group, Claims resulting from any prohibited transaction, within the
meaning of Section 4975(c)(I) of the Code, occurring with respect to the purchase or holding
of Equipment Notes under circumstances when such Indemnified Person caused such purchase or
holding and knew it would constitute such a prohibited transaction.

     (e) Insured Claims. In the case of any Claim indemnified by Lessee hereunder which is covered
by a policy of insurance maintained by Lessee pursuant to Section 12 of the Lease or otherwise,
each Indemnified Person agrees to provide reasonable cooperation, at the expense and risk of
Lessee, to the insurers in the exercise of their rights to investigate, defend or compromise such
Claim as may be required to retain the benefits of such insurance with respect to such Claim.

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     (f) Claims Procedure. An Indemnified Person shall promptly notify Lessee of any Claim as to
which indemnification is sought; provided, however, that, notwithstanding the last sentence of
Section 7.2(b), the failure to give such notice shall not release Lessee from any of its
obligations under this Article VII, except to the extent that such failure to give notice shall
have a material adverse effect on Lessee’s ability to defend such claim. Subject to the rights of
insurers under policies of insurance maintained by Lessee, Lessee shall have
the right in each case at Lessee’s sole expense to investigate, and the right in its sole
discretion to defend or compromise, any Claim for which indemnification is sought under this
Section 7.2 and the Indemnified Person shall cooperate with all reasonable requests of Lessee in
connection therewith; provided that no right to defend or compromise such Claim shall exist on the
part of Lessee with respect to any Indemnified Person if (1) a Lease Event of Default shall have
occurred and be continuing or (2) such Claim would entail a significant risk to such Indemnified
Person of any criminal liability or, unless indemnified against by Lessee, any civil liability or
penalty; provided, further, that no right to compromise or settle such Claim shall exist unless
Lessee agrees in writing to pay the amount of such settlement or compromise. In any case in which
any action, suit or proceeding is brought against any Indemnified Person in connection with any
Claim, Lessee may and, upon such Indemnified Person’s request, will at Lessee’s expense resist and
defend such action, suit or proceeding, or cause the same to be resisted or defended by counsel
selected by Lessee and reasonably acceptable to such Indemnified Person and, in the event of any
failure by Lessee to do so, Lessee shall pay all costs and expenses (including, without limitation,
reasonable attorneys’ fees and expenses) incurred by such Indemnified Person in connection with
such action, suit or proceeding. Where Lessee or the insurers under a policy of insurance
maintained by Lessee undertake the defense of an Indemnified Person with respect to a Claim, no
additional legal fees or expenses of such Indemnified Person in connection with the defense of such
Claim shall be indemnified hereunder unless such fees or expenses were incurred at the request of
Lessee or such insurers; provided, however, that if in the written opinion of counsel to such
Indemnified Person an actual or potential material conflict exists where it is advisable for such
Indemnified Person to be represented by separate counsel, the reasonable fees and expenses of any
such separate counsel shall be paid by Lessee. Subject to the requirements of any policy of
insurance, an Indemnified Person may participate at its own expense in any judicial proceeding
controlled by Lessee pursuant to the preceding provisions; provided that such party’s participation
does not, in the opinion of the independent counsel appointed by Lessee or its insurers to conduct
such proceedings, interfere with such control; and such participation shall not constitute a waiver
of the indemnification provided in this Section 7.2(f). 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.

     (g) Subrogation. If a Claim indemnified by Lessee under this Section 7.2 is paid by Lessee
and/or an insurer under a policy of insurance maintained by Lessee, 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. So long as no Lease Event of Default shall have occurred and be continuing, should an
Indemnified Person receive any refund, in whole or in part, with respect to any Claim paid by
Lessee hereunder, it shall promptly pay over the amount refunded (but not

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in excess of the amount
Lessee or any of its insurers has paid in respect of such Claim paid or payable by such Indemnified
Person on account of such refund) to Lessee.

     (h) Waiver of Certain Claims. Lessee hereby waives and releases any Claim now or hereafter
existing against any Indemnified Person arising out of death or personal injury to personnel of
Lessee, loss or damage to property of Lessee, or the loss of use of any property of Lessee, which
may result from or arise out of the condition, use or operation of the Equipment during the Lease
Term, including without limitation any latent or patent defect whether or not discoverable.

     (i) Conflicting Provisions. The general indemnification provisions of this Section 7.2 are
not intended to waive or supersede any specific provisions of, or any rights or remedies of Lessee
under, the Lease, this Agreement or any other Operative Agreement to the extent such provisions
apply to any Claim. The general indemnification provisions of this Section 7.2 do not constitute a
guaranty by Lessee that the principal of, interest on or any amounts payable with respect to the
Equipment Notes will be paid.

Article VIII

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, so long
as no Lease Event of Default has occurred and is continuing, it shall not take or cause to be taken
any action contrary to Lessee’s rights under the Lease, including, without limitation, the right to
possession, use and quiet enjoyment by Lessee or any permitted sublessee.

Article IX

[Reserved]

Article X

Successor Indenture Trustee

     (a) In the event that Indenture Trustee gives notice of its resignation pursuant to Section
8.02(a) of the Trust Indenture, Owner Trustee shall promptly appoint a successor Indenture Trustee
reasonably acceptable to Lessee and to Loan Participant.

     (b) In the event that any of Owner Trustee, Loan Participant or Lessee obtains actual
knowledge of the existence of any of the grounds for removal of Indenture Trustee set forth in
Section 8.02(a) of the Indenture, Owner Trustee, Loan Participant or Lessee, as the case may be,
shall promptly notify the others by telephone, confirmed in writing and Owner Trustee shall
promptly thereafter remove Indenture Trustee and appoint a successor Indenture Trustee reasonably
acceptable to Lessee and to Loan Participant.

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Article XI

Miscellaneous

     Section 11.1. Consents. Each Participant covenants and agrees that it shall not unreasonably
withhold its consent to any consent requested of Owner Trustee or Indenture Trustee, as the case
may be, under the terms of the Operative Agreements that by its terms is not to be unreasonably
withheld by Owner Trustee or Indenture Trustee.

     Section 11.2. Refinancing.

     (a) Generally. Provided no Specified Default or Event of Default shall have occurred and be
continuing, Lessee shall have the right at any time during the Lease Term to request Owner
Participant and Owner Trustee to effect an optional prepayment of all of the Equipment Notes
pursuant to Section 2.10(d) of the Indenture as part of a refunding or refinancing operation.
Promptly on receipt of such request, Owner Participant will conclude an agreement with Lessee as to
the terms of such refunding or refinancing operation, and upon such agreement:

     (i) Lessee, Owner Participant, Indenture Trustee, 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) which shall be without recourse
or warranty as to Owner Participant providing for (x) the issuance and sale by Owner Trustee
or such other party as may be appropriate to such institution or institutions on the date
specified in such agreement (for the purposes of this Section 11.2, 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, and (y) 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 (z) payment by Lessee to
the Person or Persons entitled thereto on behalf of Owner Trustee as Supplemental Rent of
all other amounts in respect of accrued interest, and any Positive Make-Whole Amount with
respect to any Equipment Note payable on such Refunding Date;

     (ii) Lessee and Owner Trustee will amend the Lease such that (w) if the Refunding Date
is not a Rent Payment Date, 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, (x) Basic Rent payable in respect of
the period from and after the Refunding Date shall be recalculated to preserve the Net
Economic Return which 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 (y) the EBO Fixed Purchase Price and amounts payable in respect of
Stipulated Loss Value and Termination Value from and after the Refunding Date shall be
appropriately recalculated to preserve the Net Economic Return which Owner Participant would
have realized had such refunding not occurred (it being agreed that
any recalculations pursuant to subclauses (x)

-49-

 

and (y) of this clause (ii) shall be performed
in accordance with the requirements of Section 2.6 hereof);

     (iii) Owner Participant will cause Owner Trustee to enter into an agreement to provide
for the securing thereunder of the debt Securities issued by Owner Trustee pursuant to
clause (a) of this Section 11.2 in like manner as the Equipment Notes and/or will enter into
such amendments and supplements to the Indenture which shall be without recourse or warranty
as to Owner Participant as may be necessary to effect such refunding or refinancing;
provided that, notwithstanding the foregoing, 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; provided, further, that no
such amendment or supplement will increase the obligations or impair the rights of Owner
Participant or Owner Trustee under the Operative Agreements without the consent of Owner
Participant;

     (iv) in the case of a refunding or refinancing involving a public offering of debt
Securities, the offering materials (including any registration statement) for the refunding
or refinancing transaction shall be acceptable to Owner Participant to the extent of any
description or statement contained therein describing Owner Participant or Owner Trustee or
the terms of the transaction among Owner Participant, Owner Trustee and Lessee; and

     (v) unless otherwise agreed by Owner Participant, Lessee shall pay to Owner Trustee as
Supplemental Rent an amount equal to the Positive Make-Whole Amount, if any, payable in
respect of Equipment Notes outstanding on the Refunding Date, and all reasonable fees,
costs, expenses of such refunding or refinancing and in the case of Owner Participant, an
administrative fee of $10,000.00 on each Refunding Date other than the first Refunding Date;
provided, however, that (u) any such refinancing shall not adversely affect the rights or
increase the obligations or risks of Owner Participant under the Operative Agreements; (v)
such refinancing shall not create or increase Owner Participant’s risk of any adverse tax
consequences (including any adverse tax consequences under Section 467 or Section 861 of the
Code or the Regulations) unless such risks are indemnified by Lessee in a manner
satisfactory to Owner Participant; (w) Lessee may only enter into a refunding or refinancing
operation under this Section 11.2(a) on no more than two occasions; (x) Lessee shall pay to
or reimburse the Participants, Owner Trustee and Indenture Trustee for all costs and
expenses (including reasonable attorneys’ and advisors’ fees) paid or incurred by them in
connection with such refinancing; (y) no refinancing shall cause Owner Participant to
account for the transaction contemplated hereby as other than a “leveraged lease” under the
Financial Accounting Standards Board (“FASB”) Statement No. 13, as amended (including any
amendment effected by means of the adoption by FASB of a new statement in lieu of FASB
Statement No. 13); and (z) such refinancing shall not (A) create replacement Equipment Notes
with a maturity longer than the Equipment Notes being replaced, (B) create replacement
Equipment Notes with an average life more than three (3) months longer than the average life
of the Equipment Notes, (C) require any additional investment by Owner Participant or
(D) increase the amount of premium payable in

-50-

 

connection with a prepayment of the Equipment
Notes. In addition to the foregoing, in the case of any refunding or refinancing of the
Equipment Notes pursuant to this Section 11, the party purchasing the Equipment Notes shall
represent either that (i) no part of its purchase consists of assets of any “employee
benefit plan” (as defined in Section 3(3) of ERISA) or any other entity subject to Section
4975 of the Code other than a “governmental plan” or “church plan” (as defined in Section
3(32) of ERISA) organized in a jurisdiction not having prohibition on transactions with such
governmental plan or church plan substantially similar to those contained in Section 406 of
ERISA or Section 4975 of the Code, (ii) the purchase of such Equipment Notes does not
constitute a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of
the Code, or (iii) the source of funds for its purchase is an “insurance company general
account” within the meaning of proposed Department of Labor Prohibited Transaction Exemption
(“PTE”) 95-60 (issued July 12, 1995) and it has identified that there is no employee benefit
plan, treating as a single employee benefit plan, all employee benefit plans maintained by
the same employer or affiliates thereof or employee organization, with respect to which the
amount of the reserves for all contracts held by or on behalf of such employee benefit plan
exceed 10% of the total liabilities of such general account. Accordingly, Owner Participant
agrees to cooperate in good faith with Lessee in effecting any such refunding or refinancing
and, in connection therewith, at the request of Lessee made at least 30 days prior to any
proposed Refunding Date, (A) to cooperate with the reasonable requests of any advisor
selected by Lessee after consultation with Owner Participant to obtain commitments from
financial institutions to lend to Owner Trustee funds sufficient to permit Owner Trustee to
prepay, in whole, the outstanding Equipment Notes in accordance with their terms in
connection with any such refunding or refinancing and (B) to make the adjustments
contemplated by this Section 11.2 in connection with any such refunding or refinancing.

     (b) Other Prepayments, Redemptions, Etc. No prepayment or redemption and cancellation by
Owner Trustee or Owner Participant of any Equipment Note (other than pursuant to the Indenture and
this Section 11.2) shall be made without the prior written consent of Lessee.

     Section 11.3 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 each party hereto.

     Section 11.4. Notices. Unless otherwise expressly specified or permitted by the terms hereof,
all communications and notices provided for herein shall be in writing or by a telecommunications
device capable of creating a written record (including electronic mail), and any such notice shall
become effective (a) upon personal delivery thereof, including, without limitation, by overnight
mail and courier service, (b) in the case of notice by United States mail, certified or registered,
postage prepaid, return receipt requested, upon receipt thereof, or (c) in the case of notice by
such a telecommunications device, upon transmission
thereof, provided such transmission is promptly confirmed by either of the methods set forth in
clauses (a) or (b) above, in each case addressed to each party hereto at its address set forth
below or, in the case of

-51-

 

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 Lessee:
	 	Address of Lessee for Mail Delivery:
	 

	 	 	 	The Kansas City Southern Railway Company
	 

	 	 	 	P.O. Box 219335

Kansas City, Missouri 64121-9335
	 

	 	 	 	Attention: Senior Vice President — Finance & Treasurer
	 

	 	 	 	Facsimile No.: (816) 983-1198
	 

	 	 	 	Telephone No.: (816) 983-1802
	 
	 	 	 	 
	 

	 	 	 	Address of Lessee for Courier and Similar Delivery:
	 

	 	 	 	The Kansas City Southern Railway Company
	 

	 	 	 	427 West 12th Street
	 

	 	 	 	Kansas City, Missouri 64105
	 

	 	 	 	Attention: Senior Vice President — Finance & Treasurer
	 

	 	 	 	Facsimile No.: (816) 983-1198
	 

	 	 	 	Telephone No.: (816) 983-1802
	 
	 	 	 	 
	 

	 	With a copy to:
	 	The Kansas City Southern Railway Company
	 

	 	 	 	427 West 12th Street
	 

	 	 	 	Kansas City, Missouri 64105
	 

	 	 	 	Attention: Senior Vice President & General Counsel
	 

	 	 	 	Facsimile No.: (816) 983-1227
	 

	 	 	 	Telephone No.: (816) 983-1303
	 
	 	 	 	 
	 

	 	If to Owner Trustee:
	 	U.S. Bank Trust National Association
	 

	 	 	 	Goodwin Square
	 

	 	 	 	225 Asylum Street, 23rd Floor
	 

	 	 	 	Hartford, Connecticut 06103
	 

	 	 	 	Attention: Corporate Trust Department (KCSR 2007-1)
	 

	 	 	 	Facsimile No.: (860) 241-6897
	 

	 	 	 	Telephone No.: (860) 241-6820
	 
	 	 	 	 
	 

	 	with a copy to:
	 	Owner Participant at the address set forth below
	 
	 	 	 	 
	 

	 	If to Owner Participant:
	 	GS Leasing (KCSR 2007-1) LLC
	 

	 	 	 	c/o The Goldman Sachs Group Inc.
	 

	 	 	 	85 Broad Street
	 

	 	 	 	New York, New York 10004
	 

	 	 	 	Attention: Robert D. Emer
	 

	 	 	 	Facsimile: 212-256-4853
	 

	 	 	 	Telephone No.: 212-902-0047
	 
	 	 	 	 

	 	 	 	 	 	 	 
	 

	 	 	 	With a copy to:
	 	Archon Group L.P.
	 

	 	 	 	 	 	6011 Connection Drive
	 

	 	 	 	 	 	Irving, Texas 75039
	 

	 	 	 	 	 	Attention: Matthew Lawler

-52-

 

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	If to Loan Participant: at the addresses set forth in Exhibit C to the Indenture
	 
	 	 	 	 	 	 
	 	 	If to Indenture Trustee:	 	Wilmington Trust Company
	 

	 	 	 	 	 	Rodney Square North
	 

	 	 	 	 	 	1100 North Market Street
	 

	 	 	 	 	 	Wilmington, Delaware 19890-0001
	 

	 	 	 	 	 	Attention: Corporate Trust Administration (KCSR 2007-1)
	 

	 	 	 	 	 	Facsimile No.: (302) 636-4140
	 

	 	 	 	 	 	Telephone No.: (302) 636-6000

     Section 11.5. 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 date hereof and on the Closing Date and each Delivery Date regardless of any
investigation made by any such party or on behalf of any such party.

     Section 11.6. No Guarantee of Debt. Nothing contained herein or in the Lease, the Trust
Indenture, the Trust Agreement or the Tax Indemnity Agreement or in any certificate or other
statement delivered by Lessee in connection with the transactions contemplated hereby shall be
deemed to be (a) a guarantee by Lessee to Owner Trustee, Owner Participant, Indenture Trustee or
Loan Participant that the Equipment will have any residual value or useful life, or (b) a guarantee
by Indenture Trustee or Lessee of payment of the principal or Make-Whole Amount, if any, with
respect to any Equipment Note, or interest on the Equipment Notes.

     Section 11.7. 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 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 Section 23(c) of the Lease and
each successive holder of any Equipment Note issued and delivered pursuant to this Agreement or the
Indenture. 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 11.8. 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 scheduled date 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.

-53-

 

     Section 11.9. Governing Law. This Agreement shall be in all respects governed by and
construed in accordance with the laws of the State of New York including all matters of
construction, validity and performance; provided, however, that the parties hereto shall be
entitled to all rights conferred by any applicable federal statute, rule or regulation.

     Section 11.10. 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 11.11. Counterparts. This Agreement may be executed in any number of counterparts,
each executed counterpart constituting an original but all together only one Agreement.

     Section 11.12. 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 11.13. Limitations of Liability.

          (a) Liabilities of the Participants. Neither Indenture Trustee, Trust Company, Owner Trustee
nor any Participant shall have any obligation or duty to Lessee, to any other Participant or to
others with respect to the transactions contemplated hereby, except those obligations or duties of
such party expressly set forth in this Agreement and the other Operative Agreements, and neither
Indenture Trustee, Trust Company, Owner 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 Indenture
Trustee or any Participant be liable to Lessee for any action or inaction on the part of Owner
Trustee in connection with the transactions contemplated herein, whether or not such action or
inaction is caused by willful misconduct or gross negligence of Owner Trustee unless such action or
inaction is at the direction of Indenture Trustee or any Participant, as the case may be, and such
direction is expressly permitted hereby.

          (b) No Recourse to Owner Trustee. It is expressly understood and agreed by and between Owner
Trustee, Lessee, Owner Participant, Indenture Trustee, and Loan Participant, and their respective
successors and permitted assigns that all representations, warranties and undertakings of Owner
Trustee hereunder shall be binding upon Owner Trustee only in its capacity as Owner Trustee under
the Trust Agreement and (except as expressly provided
herein) such parties shall look solely to the Trust Estate and not to Trust Company for any breach
thereof, except that Trust Company shall be personally liable for its gross negligence or willful
misconduct or for its breach of its covenants, representations and warranties contained herein to
the extent covenanted or made in its individual capacity and nothing in this Section 11.13(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”

-54-

 

as used in
this Agreement shall include any successor trustee under the Trust Agreement, or Owner Participant
if the trust created thereby is revoked.

     Section 11.14. Reproduction of Documents. This Agreement and all documents relating thereto,
including, without limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by the parties hereto on the Closing Date (except the Equipment
Notes), and (c) financial statements, certificates and other information previously or hereafter
furnished pursuant hereto, may be reproduced by the parties hereto by any photographic,
photostatic, microfilm, microcard, miniature photographic, electronic or other similar process and
the parties hereto may destroy any original document so reproduced. The parties agree to accept
delivery of all of the foregoing documents in electronic format in lieu of original closing
transcripts. The parties further agree and stipulate that, to the extent permitted by applicable
law, any such reproduction, in electronic format or otherwise, shall be admissible in evidence as
the original itself in any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in
evidence. This Section 11.14 shall not prohibit the parties hereto or any holder of Equipment
Notes from contesting any such reproduction to the same extent that it could contest the original,
or from introducing evidence to demonstrate the inaccuracy of any such reproduction.

     Section 11.15. Tax Disclosure. Notwithstanding anything herein to the contrary, each party
hereto (and each employee, representative or other agent of such person) may disclose to any and
all persons, without limitation of any kind, the tax treatment and tax structure of the
transactions described in this Agreement, and all materials of any kind (including opinions or
other tax analyses) that are provided to the person related to such tax treatment and tax
structure. The preceding sentence is intended to cause the transaction contemplated hereby to be
treated as not having been offered under conditions of confidentiality for purposes of U.S.
Treasury Regulation §1.6011-4(b)(3) and shall be construed in a manner consistent with such
purpose.

     Section 11.16. Bankruptcy of Trust or Trust Estate. If (i) all or any part of the Trust
Estate becomes the property of a debtor, or the Trust becomes a debtor, subject to the
reorganization provisions of Title 11 of the United States Code, as amended from time to time, (ii)
pursuant to such reorganization provisions Owner Participant is required, by reason of Owner
Participant being held to have recourse liability to the debtor or the trustee of the debtor
directly or indirectly, to make payment on account of any amount payable as principal of or
interest on any Equipment Note, and (iii) Indenture Trustee or Loan Participant actually receives
any Excess Amount as defined below, which reflects any payment by Owner Participant on account of
clause (ii) above, Indenture Trustee or Loan Participant, as the case
may be, shall promptly refund to Owner Participant such Excess Amount. For purposes of this
Section 11.16, “Excess Amount” means the amount by which such payment exceeds the amount which
would have been received by Indenture Trustee or Loan Participant if Owner Participant has not
become subject to the recourse liability referred to in clause (ii) above. This Section 11.16
shall not be applicable to the extent Owner Participant is Lessee or an Affiliate of Lessee.

-55-

 

     Section 11.17. Jurisdiction, Court Proceedings. Any suit, action or proceeding against any
party to this Agreement or any other Operative Agreement arising out of or relating to this
Agreement, any other Operative Agreement or any transaction contemplated hereby or thereby may be
brought in any Federal or state court located in New York, New York, and each such party hereby
submits to the nonexclusive jurisdiction of such courts for the purpose of any such suit, action or
proceeding. To the extent that service of process by mail is permitted by applicable law, each
such party irrevocably consents to the service of process in any such suit, action or proceeding in
such courts by the mailing of such process by registered or certified mail, postage prepaid, at its
address for notices provided for in Section 11.4. Each such party irrevocably agrees not to assert
any objection which it may ever have to the laying of venue of any such suit, action or proceeding
in any Federal or state court located in New York, New York, and any claim that any such suit,
action or proceeding brought in any such court has been brought in an inconvenient forum.

-56-

 

     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:	 	The Kansas City Southern Railway Company
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	Name: Paul J. Weyandt	 	 
	 

	 	 	 	Title: Senior Vice President-Finance and
Treasurer	 	 
	 
	 	 	 	 	 	 
	Owner Trustee:	 	KCSR 2007-1 Statutory Trust, acting through U.S. Bank Trust
National Association, not in its individual capacity, but solely as Owner
Trustee

	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	Trust Company:	 	U.S. Bank Trust National Association, in its individual capacity, only
as expressly provided herein
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	Owner Participant:	 	GS Leasing (KCSR 2007-1) LLC
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 

 

 

	 	 	 	 	 	 	 
	Indenture Trustee:	 	Wilmington Trust Company
	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 	 	 	 	 
	Loan Participant:

	 	KfW	 	 	 	 
	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 

Schedule A

(to Assignment of Warranties (KCSR 2007-1))exv10w52

 

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	 

- i -

 

	 	 	 	 	 
	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	 

- ii -

 

	 	 	 	 	 
	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

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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

- 2 -

 

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.

- 3 -

 

     (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:

- 4 -

 

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

- 5 -

 

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.

- 6 -

 

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

- 7 -

 

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

- 8 -

 

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

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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

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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 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 relieve Lessee of the obligation to return the Equipment
in compliance with the provisions of Section 6.2. Subject to Section 9.3, title to any Required
Modification shall immediately vest in Lessor. Notwithstanding anything herein to the contrary, if
Lessee determines in good faith that any Required Modification to a Unit would be economically
impractical, it shall provide written notice of such determination to Lessor and the parties hereto
shall 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 the provisions of Sections 11.2, 11.3 and 11.4 with respect to rent,
termination and disposition shall apply with respect to such Unit unless Lessor, within 15 Business
Days of such notice, elects to retain such Unit pursuant to Section 9.4.

     Section 9.2. Optional Modifications. Lessee at any time may modify, alter or improve any Unit
(a “Modification”); provided that no Modification shall diminish in more than a de minimis respect
the current fair market value, estimated residual value, utility, or remaining useful life of such
Unit below the current fair market value, estimated residual value, utility, or remaining useful
life thereof immediately prior to such Modification, assuming such Unit was then in the condition
required to be maintained by the terms of this Lease. Title to any Non-Severable Modifications
shall be immediately vested in Lessor. Title to any Severable Modifications shall remain with
Lessee. If Lessee shall at its cost cause such Severable Modifications to be made to any Unit and
such Severable Modifications are reasonably necessary for the economic operation of any such Unit,
Lessor shall have the right, prior to the return of such Unit to Lessor hereunder, to purchase such
Severable Modifications (other than Severable Modifications consisting of proprietary or
communications equipment) at their then Fair Market Sales Value (taking into account their actual
condition). If Lessor does not elect to purchase such Severable Modifications, Lessee may remove,
and shall remove if requested by Lessor, such Severable Modifications at Lessee’s cost and expense.

     Section 9.3. Removal of Proprietary and Communications Equipment. Notwithstanding anything to
the contrary contained herein, Lessee shall at all times own and be entitled to remove at Lessee’s
cost and expense, any Severable Modification consisting of proprietary or communications equipment
from any Unit prior to the return of such Unit; provided that if Lessee removes such Severable
Modification that is (i) a Required Modification and (ii) such equipment is not customarily
provided by the user, Lessee shall replace such proprietary or communications equipment with
non-proprietary equipment of comparable utility.

     Section 9.4. Retention of Equipment by Lessor. Notwithstanding the provisions of the last
sentence of Section 9.1, Lessor may irrevocably elect by written notice to Lessee, no later than 15
Business Days after receipt of Lessee’s notice of determination of economic impracticality pursuant
to Section 9.1, not to declare an Event of Loss as provided in Section 9.1, whereupon Lessee shall
not be liable for the Stipulated Loss Value for the affected Unit but shall (i) deliver the
affected Units to Lessor in the same manner and in the same condition as if delivery were made
pursuant to Section 6 (except that Lessee shall not be required to correct the

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conditions which
gave rise to the notice of economic impracticality), treating the applicable date for payment
specified in Section 11.2(ii) as the termination date of the Lease Term with respect to the
affected Units, and (ii) pay to Lessor, or to the Persons entitled thereto, all Basic Rent and
Supplemental Rent due and owing on such termination date and unpaid; provided, at such time that
the aggregate number of Units that have suffered an Event of Loss exceeds 6, Lessee shall pay with
respect to each additional Unit that suffers an Event of Loss, in addition to the amounts required
to be paid under this paragraph (ii), a Positive Make-Whole Amount with respect to the prepayment
of the Equipment Notes on account of such Event of Loss. If Lessor elects to retain the affected
Units as provided in this Section 9.4, then Lessor shall pay, or cause to be paid, to Indenture
Trustee in funds of the type and in an amount equal to the outstanding principal amount of the
Equipment Notes issued in respect of such affected Units and all accrued interest to the date of
prepayment of such Equipment Note on such termination date plus any Positive Make-Whole Amount in
respect of the principal amount of the Equipment Notes to be prepaid in accordance with Section
2.10(b) of the Indenture. In addition, Lessor shall pay to Lessee any Lessor Loan Balance as of
such termination date and accrued interest thereon; provided that in no event shall the Lessor be
obligated to pay any such amount due to Lessee unless all amounts due and payable by the Lessee
hereunder and under the other Operative Agreements to the Lessor shall have been paid in full. If
Lessor shall fail to perform any of its obligations pursuant to this Section 9.4 on the scheduled
termination date for any affected Unit, the parties hereto shall treat such Unit as if an Event of
Loss had occurred as of the date of Lessee’s written notice with respect to such Unit pursuant to
Section 9.1 and the provisions of Sections 11.2, 11.3 and 11.4 with respect to rent, termination
and disposition shall apply with respect to such Unit and Lessor shall thereafter no longer be
entitled to exercise its election to retain such affected Units.

Section 10. Voluntary Termination.

     Section 10.1. Right of Termination. So long as no Specified Default or Event of Default shall
have occurred and be
continuing, Lessee shall have the right, at its option at any time or from time to time on or after
the fifth anniversary of the applicable Delivery Date, to terminate this Lease with respect to, at
the sole discretion of Lessee, either all or a Minimum Number of Units of Equipment of any or each
Type of Equipment (the “Terminated Units”), if Lessee determines in good faith (as evidenced by a
certificate executed by the Chief Financial Officer of Lessee), that such Units have become
obsolete or surplus to Lessee’s requirements, by delivering at least 90 days’ prior notice to
Lessor and Indenture Trustee specifying a proposed date of termination for such Units (the
"Termination Date”), which date shall be a Determination Date, any such termination to be effective
on the Termination Date. Except as expressly provided 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 Lessor shall not have given Lessee a notice of election to retain the
Terminated Units in accordance with Section 10.3, Lessee may withdraw the termination notice
referred to above not later than ten (10) Business Days before the scheduled Termination Date,
whereupon this Lease shall continue in full force and effect; provided that Lessee shall pay all
reasonable costs of Lessor, Indenture Trustee, Loan Participant and Owner Participant incurred in
connection with any proposed or withdrawn termination; provided further that Lessee may not
withdraw a termination notice hereunder more than twice.

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     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 exclusive agent for Lessor and at
Lessee’s sole cost and expense, shall use reasonable efforts to obtain bids from Persons other than
Lessee or Affiliates thereof for the cash purchase of the Terminated Units, and Lessee shall
promptly, and in any event at least five Business Days prior to the proposed date of sale, certify
to Lessor in writing the amount and terms of each such bid, the proposed date of such sale and the
name and address of the party submitting such bid. Unless Lessor shall have elected to retain the
Terminated Units in accordance with Section 10.3, on the Termination Date: (i) Lessee shall,
subject to 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, deliver the Terminated Units to the bidder, if any, which shall have submitted
the highest all cash bid prior to such date (or to such other bidder as Lessee and Lessor shall
agree), in the same manner and condition as if delivery were made to Lessor pursuant to Section 6
and (ii) Lessor shall, without recourse or warranty (except as to the absence of any Lessor’s Lien)
simultaneously therewith sell the Terminated Units to such bidder. The total selling price
realized at such sale shall be paid to Lessor for distribution pursuant to Section 3.02 of the
Indenture and, in addition and anything to the contrary notwithstanding, on the Termination Date,
Lessee shall pay to Lessor, or to the Persons entitled thereto, (A) all unpaid Basic Rent with
respect to such Terminated Units due and payable prior to the Termination Date, (B) the excess, if
any, of (1) the Termination Value for the Terminated Units computed as of the Termination Date,
over (2) the net cash sales proceeds (after deduction of applicable transaction expenses and sales
or transfer taxes, if any, due or to become due as a consequence of such sale) of the Terminated
Units, (C) an amount equal to the Positive Make-Whole Amount, if any, in respect of the principal
amount of the Equipment Notes to be prepaid in accordance with Section 2.10(a) of the Indenture and
(D) any other Supplemental Rent due and payable as of such Termination Date. If no sale shall have
occurred, this Lease shall continue in full force and effect with respect to such Units; provided
that if such sale shall not have occurred solely because of Lessee’s failure to pay
the amounts required to be paid pursuant to the immediately preceding sentence, Lessee shall have
no further right to terminate this Lease with respect to such Units, and such failure to pay such
amounts shall be deemed a withdrawal of the termination notice referred to in Section 10.1. If
Lessor elects not to exercise its right to retain the Terminated Units as provided in Section 10.3,
Lessee, in acting as agent for Lessor, shall have no liability to Lessor for failure to obtain the
best price, shall act in its sole discretion and shall be under no duty to solicit bids publicly or
in any particular market. Lessee’s sole interest in acting as agent shall be to sell the Units at
a price that reduces or eliminates Lessee’s obligation to pay the amount provided in this
Section 10.2. On the Termination Date, upon receipt by Lessor of the amounts owing to Lessor
pursuant to the third sentence of this Section 10.2, Lessor shall pay, or cause to be paid, to
Indenture Trustee in immediately available funds an amount equal to the outstanding principal
amount of the Equipment Notes issued in respect of such Terminated Units, all accrued interest to
the date of prepayment of such Equipment Notes and the Positive Make-Whole Amount, if any, in
respect of such Equipment Notes on such Termination Date.

     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, no later than 30 days
after receipt of Lessee’s notice of termination, not to sell the Terminated Units on the

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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, treating the
Termination Date as the termination date of the Lease Term with respect to the Terminated Units,
and (ii) pay to Lessor, or to the Persons entitled thereto, all Basic Rent and Supplemental Rent
due and owing on the Termination Date and unpaid including an amount equal to any Positive
Make-Whole Amount in respect of the principal amount of the Equipment Notes to be prepaid in
accordance with Section 2.10(a) of the Indenture. If Lessor elects not to sell the Terminated
Units as provided in this Section 10.3, then Lessor shall pay, or cause to be paid, to Indenture
Trustee in immediately available funds an amount equal to the outstanding principal amount of the
Equipment Notes issued in respect of such Terminated Units and all accrued interest to the date of
prepayment of such Equipment Note on such Termination Date. In addition, Lessor shall pay to
Lessee any Lessor Loan Balance as of such Termination Date and accrued interest thereon; provided
that in no event shall the Lessor be obligated to pay any such amount due to Lessee unless all
amounts due and payable by the Lessee hereunder and under the other Operative Agreements to the
Lessor shall have been paid in full. If Lessor shall fail to perform any of its obligations
pursuant to 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 thereafter no longer
be entitled to exercise its election to retain such Terminated Units and Lessee may at its option
at any time thereafter submit a new termination notice pursuant to Section 10.1 with respect to
such Terminated Units specifying a proposed Termination Date occurring not earlier than five days
from the date of such notice.

     Section 10.4. Termination of Lease. In the event of any such sale and receipt by Lessor and
Indenture Trustee of all of the amounts provided herein, and upon compliance by Lessee with the
other provisions of this Section 10, the Lease Term for the Terminated Units shall end and the
obligation to pay Basic Rent and all other Rent for such Terminated Units (except for
(i) Supplemental Rent obligations
with respect to such Terminated Units 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 and (ii) the provisions hereof that expressly survive any termination
of this Lease) shall terminate.

Section 11. Loss, Destruction, Requisition, Etc.

     Section 11.1. Event of Loss. In the event that any Unit (i) shall suffer destruction, damage,
contamination or wear which, in Lessee’s good faith opinion, makes repair uneconomic or renders
such Unit unfit for commercial use, (ii) shall suffer theft or disappearance, (iii) shall be
permanently returned to the manufacturer pursuant to any warranty or patent indemnity provisions,
(iv) shall have title thereto taken or appropriated by any governmental authority under the power
of eminent domain or otherwise, (v) shall be taken or requisitioned for use by any governmental
authority (other than the United States government or any agency or instrumentality thereof) under
the power of eminent domain or otherwise and such taking or requisition is continuing in excess of
180 days or, if earlier, on the last day of the Basic Term or any Renewal Term then in effect, or
(vi) shall be taken or requisitioned for use by the United States government or any agency or
instrumentality thereof and such taking or requisition is continuing on the last day of the 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

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Section 11.2, shall promptly and fully inform
Lessor and Indenture Trustee of such Event of Loss.

     Section 11.2. Replacement or Payment upon Event of Loss. Upon the occurrence of an Event of
Loss or the deemed occurrence of an Event of Loss pursuant to Section 9.1 with respect to any Unit,
Lessee shall within 60 days after a Responsible Officer of Lessee shall have actual knowledge of
such occurrence or deemed occurrence give Lessor and Indenture Trustee notice of such occurrence or
deemed occurrence of such Event of Loss and of its election to perform one of the following options
(it being agreed that if Lessee shall not have given notice of such election within such 60 days
after such actual knowledge of such occurrence or deemed occurrence, Lessee shall be deemed to have
elected to perform the option set forth in the following paragraph (ii)):

               (i) So long as no Specified Default or Event of Default shall have occurred and be
continuing, as promptly as practicable, and in any event on or before the Business Day next
preceding the 175th day next following the date on which a Responsible Officer of Lessee
shall have actual knowledge of the occurrence or deemed occurrence of such Event of Loss,
Lessee shall comply with Section 11.4(b) and shall convey or cause to be conveyed to Lessor
a Replacement Unit to be leased to Lessee hereunder, such Replacement Unit to be free and
clear of all Liens (other than Permitted Liens) and to have a current fair market value,
estimated residual value, utility, and remaining useful life at least equal to the Unit so
replaced (assuming such Unit was in the condition required to be maintained by the terms of
this Lease); provided that, if Lessee shall not perform its obligation to effect such
replacement under this paragraph (i) during the
period of time provided herein, then Lessee shall pay on a Determination Date selected by
Lessee that is within 180 days after a Responsible Officer of Lessee shall have actual
knowledge of the occurrence or deemed occurrence of such Event of Loss to Lessor, or in the
case of Supplemental Rent, to the Person entitled thereto, the amounts specified in
paragraph (ii) below; or

               (ii) on or before a Determination Date selected by Lessee that is within 180 days after
a Responsible Officer of Lessee shall have actual knowledge of the occurrence or deemed
occurrence of such Event of Loss, Lessee shall pay or cause to be paid on the applicable
Determination Date 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 Value of each such Unit determined as of such Determination Date, (B) all
unpaid Basic Rent with respect to each such Unit due prior to such Determination Date, and
(C) without duplication, all Supplemental Rent due and payable as of such Determination
Date, it being understood that until such Stipulated Loss Value is paid, there shall be no
abatement or reduction of Basic Rent; provided, at such time that the aggregate number of
Units that have suffered an Event of Loss exceeds 6, Lessee shall pay with respect to each
additional Unit that suffers an Event of Loss, in addition to the amounts required to be
paid under this paragraph (ii), a Positive Make-Whole Amount with respect to the prepayment
of the Equipment Notes on account of such Event of Loss.

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     Section 11.3. Rent Termination. Upon the replacement of any Unit or Units in accordance with
Section 11 or upon the payment of all sums required to be paid pursuant to Section 11.2(ii) hereof
in respect of any Unit or Units for which Lessee has elected to pay or deemed to have elected to
pay pursuant to the proviso to Section 11.2(i) the amounts specified in paragraph 11.2(ii), the
Lease Term with respect to such Unit or Units and the obligation to pay Rent for such Unit or Units
(except for (i) Supplemental Rent obligations with respect to such Unit or Units 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 and (ii) the provisions hereof
that expressly survive any termination of this Lease) shall terminate; provided that Lessee shall
be obligated to pay all Rent in respect of such Unit or Units which has accrued up to and including
the date of payment of Stipulated Loss Value pursuant to Section 11.2.

     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 against Lessor’s Liens, and
shall execute and deliver to Lessee or its designee 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, Lessee or its designee shall be entitled to any amounts arising
from such disposition, plus any awards, insurance (other than insurance maintained by Lessor or
Owner Participant for its own account in accordance with Section 12.3) or other proceeds and
damages (including any Association of American Railroads interline settlement
paid upon an Event of Loss) received by Lessee, Lessor or Indenture Trustee by reason of such Event
of Loss after having paid the Stipulated Loss Value attributable thereto.

     (b) At the time of or prior to any replacement of any Unit, Lessee, at its own expense, will
(A) furnish Lessor with a full warranty bill of sale and an assignment of warranties with respect
to the Replacement Unit, (B) cause a Lease Supplement substantially in the form of Exhibit A
hereto, subjecting such Replacement Unit to this Lease, duly executed by Lessee, to be delivered to
Lessor for execution and, upon such execution, to be filed for recordation in the same manner as
provided for in the original Lease Supplement in Section 16.1, (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 Indenture
Trustee for execution and, upon such execution, to be filed for recordation in the same manner as
provided for the original Indenture Supplement in Section 16.1, (D) furnish Lessor with an opinion
of Lessee’s counsel (which may be Lessee’s internal counsel), to the effect that (w) Lessor (and
Indenture Trustee, as assignee of Lessor) shall be entitled to the benefits of Section 1168 of the
Bankruptcy Code in respect of such Replacement Unit to the same extent that Lessor (and Indenture
Trustee, as assignee of Lessor) was entitled to such benefits in respect of the Unit being
replaced, (x) 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, (y) good and marketable title to the
Replacement Unit has been delivered to Lessor, free and clear of all Liens (other than Permitted
Liens), and (z) all filings, recordings and other action necessary or appropriate to perfect and
protect Lessor’s and Indenture Trustee’s respective interests in the Replacement Unit have been
accomplished, and

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(E) furnish Lessor with a certificate of a qualified engineer (who may be the
system chief mechanical officer of Lessee) certifying that the Replacement Unit has a fair market
value, utility and remaining useful life at least equal to the Unit so replaced (assuming such Unit
was in the condition required to be maintained by the terms of this Lease). For all purposes
hereof, upon 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” of Equipment as defined
herein. Upon such passage of title, Lessor will transfer to Lessee, 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 Indenture Trustee execute and deliver
to Lessee an appropriate instrument releasing such replaced Unit from the lien of the Indenture.

     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, Lessee’s obligation to pay all
installments of Basic Rent shall continue for the duration of such requisitioning or taking.
Lessee shall be entitled to receive and retain for its own account all sums payable for any such
period by such governmental authority as compensation for requisition or taking of possession. Any
amount referred to in this Section 11.5 which is payable to Lessee shall not be paid to Lessee, or
if it has been previously paid directly to Lessee, shall not be retained by Lessee, if at the time
of such payment a Specified Default or an Event of Default shall have occurred and be continuing,
but shall be paid to and held by Lessor as security for the obligations of Lessee under this Lease,
and upon the earlier of (i) 200 days after Lessor shall have received such amount provided Lessor
has not
proceeded to exercise remedies under Section 15 and (ii) such time as there shall not be continuing
any Specified Default or Event of Default, such amount shall be paid to Lessee.

Section 12. Insurance.

     Section 12.1. Property Damage and Public Liability Insurance.

        (a) Coverages. Lessee will, at all times prior to the return of the Units to Lessor, at its
own expense, cause to be carried and maintained (i) all risk property insurance in respect of the
Units in an amount not less than Stipulated Loss Value for such Units and (ii) public liability
insurance against loss or damage for personal injury, death or property damage suffered upon, in or
about any premises occupied by Lessee or occurring as a result of the use, maintenance or operation
of the Units in an amount not less than $200,000,000, and otherwise against such risks, with such
insurance companies and with such terms (including co-insurance, deductibles, limits of liability
and loss payment provisions) as are customary under Lessee’s risk management program and in keeping
with risks assumed by Class I railroads generally; provided, however, that Lessee may self insure
with respect to any or all of the above risks if customary under such risk management program and
in keeping with risks assumed by Class I railroads generally; provided that in no event shall such
self-insurance or policy deductibles exceed $10,000,000 per occurrence in the case of property
insurance and $15,000,000 per deductible in the case of public liability insurance.
Notwithstanding the foregoing, all insurance coverages (including, without limitation,
self-insurance) with respect to the Units required under this Lease shall be comparable to, and no
less favorable than, insurance coverages applicable to equipment owned

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or leased by Lessee which is
comparable to the Units. Lessee shall, at its own expense, be entitled to make all proofs of loss
and take all other steps necessary to collect the proceeds of such insurance.

        If any insurance required by this Lease shall not be available to Lessee at renewal on a
commercially reasonable basis on substantially the same terms and conditions as then carried by
Lessee and the obtaining of such insurance is, in Lessee’s reasonable judgment, commercially
impracticable (taking into account both terms and premiums), Lessee shall obtain a written report
of an independent insurance advisor of recognized national standing, chosen by Lessee and
reasonably acceptable to Lessor confirming in reasonable detail that such insurance, in respect of
amount or scope of coverage, is not so available on a commercially reasonable basis from insurers
of recognized standing who provide insurance to the railroad industry. During any period with
respect to which any insurance is not so available, Lessee shall nevertheless maintain such
insurance to the extent, with respect to amount and scope of coverage, that is available on a
commercially reasonable basis from insurers of recognized standing who provide insurance to the
railroad industry. If any insurance which was previously discontinued because of its commercial
unavailability later becomes available on a commercially reasonable basis, Lessee shall reinstate
such insurance.

        (b) Certificate of Insurance. Lessee shall, on or prior to the Delivery Date for any Unit,
furnish Lessor and Indenture Trustee with a certificate signed by the insurer or an independent
insurance broker showing the insurance then maintained, if any, with respect to the Units
delivered on the Delivery Date. Lessor or Indenture Trustee may, but not more than once in any
twelve-month period, request from Lessee and Lessee shall promptly thereafter furnish to Lessor and
Indenture Trustee, an Officer’s Certificate or, at Lessee’s option, such a certificate signed by an
independent insurance broker, setting forth all insurance maintained by Lessee pursuant to
Section 12.1(a) above and describing such policies, if any, including the amounts of coverage, any
deductible amounts and the names of the insurance providers. Such public liability insurance and
all risk property insurance shall name Owner Participant, Loan Participant, Lessor, Trust Company
and Indenture Trustee (each, an “Insured Party”) as an additional insured with respect to such
public liability insurance then maintained as their respective interests may appear. Lessee agrees
that such insurer or such broker will provide written notice to each Insured Party at least 30 days
prior to the cancellation or lapse of any insurance required to be maintained by Lessee in
accordance with Section 12.1(a) above. Any insurance maintained pursuant to this Section 12 shall
(i) provide insurer’s waiver of its right of subrogation with respect to public liability insurance
and all risk property insurance, set-off or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability against any additional insured except for
claims as shall arise from the willful misconduct or gross negligence of such additional insured,
(ii) to the extent commercially available, provide that such all risk property insurance as to the
interest of Lessor, Owner Participant, Loan Participant, Trust Company and Indenture Trustee shall
not be invalidated by any action or inaction of Lessee or any other Person (other than such
claimant), regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by Lessee or any other Person (other than such claimant), and
(iii) provide that all such insurance is primary without right of contribution from any other
insurance which might otherwise be maintained by Lessor, Indenture Trustee, Trust Company or Owner
Participant and shall expressly provide a severability of

- 18 -

 

interest clause. Any insurance
maintained by Lessor or Owner Participant shall not be considered co-insurance with any insurance
maintained by Lessee.

     Section 12.2. Proceeds of Insurance. The entire proceeds of any property insurance or
third-party payments for damages or an Event of Loss with respect to any Unit (including any
Association of American Railroads interline settlements) received by Lessor or Indenture Trustee
shall be promptly paid over to, and retained by, Lessee; provided, however, any such amount which
is payable to Lessee shall not be paid to Lessee, or if it has been previously paid directly to
Lessee, shall not be retained by Lessee, if at the time of such payment a Specified Default or an
Event of Default shall have occurred and be continuing, but shall be paid to and held by Lessor as
security for the obligations of Lessee under this Lease.

     Section 12.3. Additional Insurance. At any time Lessor (either directly or in the name of
Owner Participant), Indenture Trustee or 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 and all
primary subrogation rights shall remain with Lessee’s insurers at all times. Any insurance
payments received from policies maintained by Lessor, Indenture Trustee or Owner Participant
pursuant to the previous sentence
shall be retained by Lessor, Indenture Trustee or Owner Participant, as the case may be, without
reducing or otherwise affecting Lessee’s obligations hereunder.

Section 13. Reports; Inspection.

     Section 13.1. Duty of Lessee to Furnish. On or before June 30, 2008, and on or before each
June 30 thereafter, Lessee will furnish to Lessor, Owner Participant, Loan Participant and
Indenture Trustee (i) an accurate statement, as of the preceding December 31, showing the reporting
marks of the Units then leased hereunder, identifying each Unit that may have suffered an Event of
Loss during the 12 months ending on such December 31 (or since the First Delivery Date, in the case
of the first such statement) and (ii) such other information regarding the condition or repair of
the Equipment as Lessor or Owner Participant may reasonably request.

     Section 13.2. Lessor’s Inspection Rights. Lessor, Owner Participant, Loan Participant and
Indenture Trustee each shall have the right, but not the obligation, at their respective sole cost
and expense (unless, in the case of any such expense, a Specified Default or an Event of Default
shall have occurred and be continuing) and risk (including, without limitation, the risk of
personal injury or death), by their respective authorized representatives, to the extent within
Lessee’s control: on not more than one occasion in any 12-month period with respect to each Type of
Equipment (unless a Specified Default or an Event of Default shall have occurred and be continuing)
or during the last 12 months of the Lease Term, to inspect the Equipment and Lessee’s records with
respect thereto, 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, either on behalf of Lessor, Owner Participant, Indenture Trustee, Loan Participant or
any prospective user, the rights of inspection granted under this Section 13.2 except as may result
or arise from Lessee’s gross negligence or willful

- 19 -

 

misconduct. No inspection pursuant to this
Section 13.2 shall interfere with the use, operation or maintenance of the Equipment or the normal
conduct of Lessee’s business, and Lessee shall not be required to undertake or incur any additional
liabilities in connection therewith.

Section 14. Events of Default.

     The following events shall constitute 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 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 make any payment of (i) Basic Rent within 5 Business Days
after the same shall have become due or (ii) EBO Fixed Purchase Price, Stipulated Loss Value
or Termination Value after the same shall have become due and such failure shall continue
unremedied for a period of 5 Business Days after receipt by Lessee of written notice of such
failure from Lessor, Owner Participant, Loan Participant or Indenture Trustee; or

               (b) Lessee shall fail to make any payment of any other Supplemental Rent, including
indemnity or tax indemnity payments, after the same shall have become due and such failure
shall continue unremedied for a period of 30 days after receipt by Lessee of written notice
of such failure from Lessor, Owner Participant, Loan Participant or Indenture Trustee
(provided that notice of non-payment of any Excepted Payment may only be given by Owner
Participant); or

               (c) Lessee shall (i) make or permit any unauthorized assignment or transfer of this
Lease in violation of Section 18.2 and such unauthorized assignment or transfer shall
continue unremedied for 30 days, (ii) permit any Unit to be operated in service when
insurance required by Section 12.1, if any, with respect to such Unit shall not be in
effect, or (iii) breach its covenant set forth in Section 6.7 of the Participation
Agreement;

               (d) any representation or warranty made by Lessee in this Lease or in the Participation
Agreement is untrue or incorrect in any material respect as of the date of issuance or
making thereof and such untruth or incorrectness shall continue to be material and
unremedied for a period of 30 days after receipt by Lessee of written notice thereof from
Lessor, Owner Participant, Loan Participant or Indenture Trustee; provided that, if such
untruth or incorrectness is capable of being remedied (but only in a manner other than by
payment of money), no such untruth or incorrectness shall constitute an Event of Default
hereunder for a period of 180 days after receipt of such notice so long as Lessee is
diligently proceeding to remedy such untruth or incorrectness; or

               (e) Lessee 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

- 20 -

 

any substantial
part of its property, or (ii) consent to any such relief or to the appointment of or taking
possession by any such official in any voluntary case or other proceeding commenced against
it, or (iii) admit in writing its inability to pay its debts generally as they come due, or
(iv) make a general assignment for the benefit of creditors, or (v) take any corporate
action to authorize any of the foregoing; or

     (f) an involuntary case or other proceeding shall be commenced against Lessee 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 90 days; or

     (g) other than as set forth in clauses (a), (b), or (c), Lessee shall fail to observe
or perform any other of the covenants or agreements to be observed or performed by Lessee
hereunder or under the Participation Agreement and such failure shall continue unremedied
for 30 days after notice from Lessor, Owner Participant or Indenture Trustee to Lessee,
specifying the failure and demanding the same to be remedied; provided that, if such failure
is capable of being remedied (but only in a manner other than solely by
payment of money), no such failure shall constitute an Event of Default hereunder for a
period of 180 days after receipt of such notice so long as Lessee is diligently proceeding
to remedy such failure;

provided that, 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 an Event of
Default if such failure is caused solely by reason of an event referred to in the definition of
“Event of Loss” so long as Lessee is continuing to comply with the applicable terms of Section 11.
Lessor (or, for so long as rent payments are being made directly to it, Indenture Trustee) shall
notify Lessee promptly upon Lessee’s failure to make any payment of Basic Rent, after the same
shall have become due; provided that the giving of such notice by Lessor or Indenture Trustee, as
applicable, shall not be a condition to the start of the 5 Business Days period referred to in
paragraph (a) of this Section 14 and the failure or delay in giving such notice shall not affect
the occurrence of an Event of Default under such Section 14(a) and Lessee agrees Lessor and
Indenture Trustee shall incur no liability nor be in breach hereunder for failure or delay in
giving such notice.

Section 15. Remedies.

     Section 15.1. Remedies. Upon the occurrence of any 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 (provided that upon the occurrence of an Event of
Default under Section 14(e) or 14(f), this Lease shall automatically be in default without the need
for any declaration by Lessor and any giving of notice); and at any time thereafter, 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:

-21-

 

     (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, cancel this Lease, whereupon all right of Lessee to
the possession and use of the Equipment shall absolutely cease and terminate, but Lessee
shall remain liable as hereinafter provided; and thereupon, Lessor may demand that Lessee,
and Lessee shall, upon written demand of Lessor and at Lessee’s expense forthwith return all
of the Equipment to Lessor or its order in the manner and condition required by, and
otherwise in accordance with all of the provisions of Section 6, except Section 6.1(b) and
those provisions relating to periods of notice; or Lessor may by its agents enter upon the
premises of Lessee or other premises where any of the Equipment may be located and take
possession of and remove all or any of the 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;

     (c) sell any Unit at public or private sale, as Lessor may determine, free and clear of
any rights of Lessee and without any duty to account to Lessee 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 case such sale shall
be conducted at arm’s length and on a commercially reasonable basis), in which event
Lessee’s obligation to pay Basic Rent and Supplemental Rent (other than any Supplemental
Rent owed with respect to Lessee’s indemnification obligations under Section 7.1 or 7.2 of
the Participation Agreement, except for claims in respect of such Unit attributable to acts
or events occurring after the delivery of such Unit to the purchaser thereof) with respect
to such Unit hereunder due for any periods subsequent to the date of such sale shall
terminate;

     (d) hold, keep idle or lease to others any Unit as Lessor in its sole discretion may
determine, free and clear of any rights of Lessee and without any duty to account to Lessee
with respect to such action or inaction or for any proceeds with respect thereto, except
that Lessee’s obligation to pay Basic Rent and Supplemental Rent (other than any
Supplemental Rent owed with respect to Lessee’s indemnification obligations under
Section 7.1 or 7.2 of the Participation Agreement, except for claims in respect of such Unit
attributable to acts or events occurring after the return of such Unit to Lessor in
accordance with the terms hereof) 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 and prior to the Determination Date specified in paragraph (e)
or (g) below 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) or (c) above with respect to any Unit,
Lessor, by written notice to Lessee specifying a payment date (which date shall be a
Determination Date for the purposes of computing Stipulated Loss Value) which shall be not
earlier than 30 days after the date of such notice, may demand that Lessee pay to

-22-

 

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 on or after the Determination Date), (x) any unpaid Basic Rent due prior to the
Determination Date so specified, plus (y) whichever of the amounts referred to in
subparagraphs (i) and (ii) below as Lessor, in its sole discretion, shall specify in such
notice, plus (iii) all other Supplemental Rent due as of the date of payment, including
interest, to the extent permitted by applicable law, at the Late Rate on such amounts from
the date due (and in the case of the amount referred to in subparagraphs (i) and (ii) below,
such Determination Date) to the date of actual payment:

     (i) an amount with respect to each Unit which represents the excess of the
present value, at the time 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 computed by discounting from the end of such Term to such
payment date rentals which Lessor reasonably estimates to be obtainable for the use
of such Unit during such period, such present value to
be computed in each case on a basis of a rate per annum equal to the Debt Rate,
compounded semiannually from the respective dates upon which rentals should have
been payable hereunder had this Lease not been terminated; or

     (ii) an amount equal to the excess, if any, of the Stipulated Loss Value 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;

     (f) so long as any Unit has not been sold pursuant to paragraph (c) above, by notice to
Lessee, require Lessee to pay to Lessor on demand on any Determination Date, and Lessee
hereby agrees that it will so pay Lessor, as liquidated damages for loss of a bargain and
not as a penalty (in lieu of Basic Rent due on or after such Determination Date) (i) any
unpaid Basic Rent due prior to the Determination Date so specified, plus (ii) an amount
equal to the Stipulated Loss Value for such Unit computed as of such Determination Date,
plus (iii) all other Supplemental Rent due as of the date of payment, including interest, to
the extent permitted by applicable law, at the Late Rate on such amounts from the date due
(and in the case of the amount referred to in clause (ii), such Determination Date) to the
date of actual payment; and upon such payment of liquidated damages, Lessor shall transfer,
or cause to be transferred, to Lessee, at Lessee’s cost and expense, on an “as-is, where-is”
basis and without recourse or warranty (except as to the absence of Lessor’s Liens), the
rights and interests of Lessor in and to the Equipment and the Lease, and Lessor and Owner
Participant, at Lessee’s cost and expense, shall execute and deliver such documents
evidencing such transfer and take such further action as may be required to effect such
transfer; and

     (g) 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

-23-

 

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 Basic Rent due on
or after the date of such sale) (i) any unpaid Basic Rent due prior to the date of such
sale, plus (ii) the amount, if any, by which the Stipulated Loss Value of such Unit computed
as of the Determination Date immediately preceding the date of such sale or, if such sale
occurs on a Determination Date, then computed as of such Determination Date, exceeds the net
proceeds of such sale, plus (iii) all other Supplemental Rent due as of the date of payment,
including interest, to the extent permitted by applicable law, at the Late Rate on such
amounts from the date due (and in the case of the amount referred to in clause (ii), such
Determination Date) to the date of actual payment.

     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, and for
legal fees and other costs and expenses incurred by reason of the occurrence of any 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.

     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.

     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. Lessee’s Duty to Return Equipment Upon Default. If Lessor or any assignee of
Lessor shall terminate this Lease pursuant to this Section 15 and shall have provided to Lessee the
written demand specified in Section 15.1(b), Lessee shall forthwith deliver possession of such
Units to Lessor. For the purpose of delivering possession of any Unit to Lessor as above required,
Lessee shall at its own cost, expense and risk:

     (i) forthwith place such Equipment upon such storage tracks of Lessee or, at the
expense of Lessee, on any other storage tracks, as Lessee may select;

     (ii) permit Lessor to store such Equipment on such tracks without charge for insurance,
rent or storage until the earlier of (x) six months after such demand for storage and
(y) the date such Equipment is 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 hereof; and

     (iii) transport the Equipment to any point of interchange on Lessee’s lines in the 48
contiguous United States with a railroad, when directed by Lessor.

-24-

 

All Equipment returned shall be in the condition required by Section 6.2 hereof.

     Section 15.5. Specific Performance; Lessor Appointed Lessee’s Agent. The assembling,
delivery, storage and transporting of the Equipment as provided in Section 15.4 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 Equipment. Without in any way limiting
the obligation of Lessee under the provisions of Section 15.4, 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 to Lessor pursuant to this Section 15, to demand
and take possession of such Unit in the name and on behalf of Lessee from whosoever shall be at the
time in possession of such Unit.

Section 16. Filings; Further Assurances.

     Section 16.1. Filings. On or prior to the Delivery Date for each Unit, Lessee will (i) cause
this Lease, the Lease Supplement dated such Delivery Date, the Indenture and the Indenture
Supplement dated such Delivery Date, or appropriate evidence thereof, to be duly filed and recorded
with the STB in accordance with 49 U.S.C. § 11301, (ii) cause this Lease, the Lease Supplement
dated such Delivery Date, the Indenture and the Indenture Supplement dated such Delivery Date, or
appropriate evidence thereof, to be deposited with the Registrar General of Canada pursuant to
Section 105 of the Canada Transportation Act, and (iii) cause or permit such other filings and
notices to be filed or made as necessary or appropriate to perfect the right, title and interest of
Indenture Trustee in the Indenture Estate and to protect the interests of Owner Participant, and
will furnish Lessor and Indenture Trustee proof thereof.

     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 in order to effectively carry out the intent and purpose of this Lease and to establish and
protect the rights and remedies created in favor of Lessor hereunder, including, without
limitation, if requested by Lessor, 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 in accordance with the laws of such jurisdiction as Lessor may from
time to time deem advisable; provided that this sentence is not intended to impose upon Lessee any
additional liabilities not otherwise contemplated by this Lease.

     Section 16.3. Expenses. Except as provided in Section 2.5 of the Participation Agreement,
Lessee will pay all costs, charges and expenses (including reasonable attorneys’ fees) incident to
any such filing, refiling, recording and rerecording or depositing and redepositing 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 and such failure can be

-25-

 

cured with the
payment of money, Lessor or Indenture Trustee 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 Event of Default resulting solely from an Event of Default
shall have occurred and be continuing, in which event Lessor or Indenture Trustee may effect such
payment, performance or compliance to the extent necessary to cure such Indenture Event of Default
with notice given concurrently with such payment, performance or compliance) in a reasonable
manner, but shall not be obligated hereunder to do so, and the amount of such payment and of the
reasonable expenses of Lessor or Indenture Trustee, as the case may be, 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, to the extent permitted by applicable law, shall be deemed to be Supplemental Rent, payable
by Lessee to Lessor or Indenture Trustee, as the case may be, on demand.

Section 18. Assignment.

     Section 18.1. Assignment by Lessor. Lessee and Lessor hereby confirm that concurrently with
the execution and delivery of this Lease, Lessor has executed and delivered to Indenture Trustee
the Indenture, which assigns as collateral security and grants a security interest to Indenture
Trustee in, to and under this Lease and certain of the Rent payable hereunder, all as more
explicitly set forth in the Granting Clause of the Indenture. Lessor agrees that it shall not
otherwise assign or convey its right, title and interest in and to this Lease, the Equipment or any
Unit, except as expressly permitted by and subject to the provisions of this Lease, the
Participation Agreement, the Trust Agreement and the Indenture.

     Section 18.2. Assignment by Lessee. Except as otherwise provided in Section 8.3 or in the
case of any requisition for use by an agency or instrumentality of the United States government
referred to in Section 11.1, Lessee will not, without the prior written consent of Lessor, assign
any of its rights hereunder, except as provided in Section 6.8 of the Participation Agreement.

     Section 18.3. Sublessee’s 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 any permitted
assignee, sublessee or transferee under an assignment, sublease or transfer agreement 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 exercise such right or permit such
right to be exercised by any such assignee, sublessee or transferee, provided that Lessee’s renewal
option set forth in Section 22.2 may be exercised only by Lessee itself or by any assignee or
transferee of, or successor to, Lessee in a transaction permitted by Section 6.8 of the
Participation Agreement. The inclusion of specific references to obligations or rights of any such
assignee, sublessee or transferee 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 assignee,
sublessee or transferee has not been made in this Lease.

-26-

 

Section 19. Net Lease, etc.

     This Lease is a net lease and Lessee’s obligation to pay all Rent payable hereunder shall be
absolute and unconditional under any and all circumstances of any character including, without
limitation, any abatement of Rent or setoff against Rent; nor, except as otherwise expressly
provided herein, shall this Lease terminate, or the respective obligations of Lessor or Lessee be
otherwise affected, by reason of any defect in, damage to or loss or destruction of, or
requisitioning of, any Unit, by condemnation or otherwise, the prohibition of Lessee’s use of
any Unit, the interference with such use by any Person or the lack of right, power or authority of
Lessor or any other Person to enter into this Lease or any other Operative Agreement, or for any
other cause, whether similar or dissimilar to the foregoing, any present or future law to the
contrary notwithstanding, it being the intention of the parties hereto that the Rent payable by
Lessee hereunder shall continue to be payable in all events unless the obligation to pay the same
shall be terminated in accordance with the terms of this Lease. 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 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. 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 a telecommunications device capable of
creating a written record (including electronic mail), and any such notice shall become effective
(a) upon personal delivery thereof, including, without limitation, by overnight mail and courier
service, (b) in the case of notice by United States mail, certified or registered, postage prepaid,
return receipt requested, upon receipt thereof, or (c) in the case of notice by such a
telecommunications device, upon transmission thereof, provided such transmission is promptly
confirmed in writing by either of the methods set forth in clauses (a) and (b) above, in each case
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:

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	If to Lessor:

	 	KCSR 2007-1 Statutory Trust
	 

	 	c/o U.S. Bank Trust National Association
	 

	 	Goodwin Square
	 

	 	225 Asylum Street, 23rd Floor
	 

	 	Hartford, Connecticut 06103
	 

	 	Attention: Corporate Trust Department (KCSR 2007-1)
	 

	 	Facsimile No.: (860) 241-6897
	 

	 	Telephone No.: (860) 241-6820
	 
	 	 
	With copies to:

	 	GS Leasing (KCSR 2007-1) LLC
	 

	 	c/o The Goldman Sachs Group Inc.
	 

	 	85 Broad Street
	 

	 	New York, New York 10004
	 

	 	Attention: Robert D. Emer
	 

	 	Facsimile: 212-256-4853
	 

	 	Telephone No.: 212-902-0047
	 
	 	 
	With a copy to:

	 	Archon Group L.P.
	 

	 	6011 Connection Drive
	 

	 	Irving, Texas 75039
	 

	 	Attention: Matthew Lawler
	 
	 	 
	If to Indenture Trustee:

	 	Wilmington Trust Company
	 

	 	Rodney Square North
	 

	 	1100 North Market Street
	 

	 	Wilmington, Delaware 19890-0001
	 

	 	Attention: Corporate Trust Administration
	 

	 	Facsimile No.: (302) 636-4140
	 

	 	Telephone No.: (302) 636-6000
	 
	 	 
	If to Lessee:

	 	Address of Lessee for Mail Delivery:
	 

	 	The Kansas City Southern Railway Company
	 

	 	P.O. Box 219335
	 

	 	Kansas City, Missouri 64121-9335
	 

	 	Attention: Senior Vice President — Finance & Treasurer
	 

	 	Facsimile No.: (816) 983-1198
	 

	 	Telephone No.: (816) 983-1802

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	 	Address of Lessee for Courier and Similar Delivery:
	 

	 	The Kansas City Southern Railway Company
	 

	 	427 West 12th Street
	 

	 	Kansas City, Missouri 64105
	 

	 	Attention: Senior Vice President — Finance & Treasurer
	 

	 	Facsimile No.: (816) 983-1198
	 

	 	Telephone No.: (816) 983-1802
	 
	 	 
	 

	 	with a copy to:
	 
	 	 
	 

	 	The Kansas City Southern Railway Company
	 

	 	427 West 12th Street
	 

	 	Kansas City, Missouri 64105
	 

	 	Attention: Senior Vice President & General Counsel
	 

	 	Facsimile No.: (816) 983-1227
	 

	 	Telephone No.: (816) 983-1303

Section 21. Concerning Indenture Trustee.

     Section 21.1. Limitation of Indenture Trustee’s Liabilities. Notwithstanding any provision
herein or in any of the other Operative Agreements to the contrary, 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 Indenture Trustee under Lease. It is understood
and agreed that the right, title and interest of 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 Equipment.

Section 22. Termination Upon Purchase by Lessee; Options to Renew.

     Section 22.1. Termination upon Purchase by Lessee. If Lessee shall have exercised its option
to purchase any Unit pursuant to Section 23 and shall not have elected to purchase Owner
Participant’s Beneficial Interest pursuant to Section 23(c), upon payment by Lessee of the purchase
price with respect to such Unit as provided in Section 23, and upon payment by Lessee of all Rent
then due and payable under this Lease with respect to such Unit, the Lease Term shall end with
respect to such Unit and the obligations of Lessee to pay Rent hereunder with respect to such Unit
(except for (i) Supplemental Rent obligations 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
such payment and (ii) the provisions hereof that expressly survive any termination of this Lease)
shall cease.

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     Section 22.2. Renewal Options. (a) So long as no Specified Default or Event of Default shall
have occurred and be continuing and subject to Section 22.1, Lessee shall have the right, upon not
less than 90 days’ prior irrevocable notice to Lessor prior to the end of the Basic Term for any
Type of Equipment for which a renewal option is being elected hereunder, to renew this Lease with
respect to, at the sole discretion of Lessee, either all of the Units or a Minimum Number of any or
each Type of Equipment, for one Renewal Term of, at Lessee’s discretion, (i) one (1) year,
(ii) two (2) years or (iii) not less than three (3) years and not more than four (4) (the “Fixed
Rate Renewal Term”), commencing on the Renewal Term Commencement Date for such Units. All of the
provisions of this Lease, other than Section 10, shall be applicable during any such Fixed Rate
Renewal Term for such Units, except that the Stipulated Loss Values for such Units shall be
determined in accordance with Section 22.5 hereof, and Basic Rent for such Units shall be payable
in semi-annual installments in arrears and shall be equal to the lesser of Fair Market Rental Value
for such Units and amount set forth in Schedule 8 to the Lease Supplement for such Units of such
Type of Equipment.

     (b) So long as no Specified Default or Event of Default shall have occurred and be continuing,
Lessee shall have the right, upon not less than 180 days’ prior notice (which shall become
irrevocable if not revoked at least 90 days prior to the end of the Basic Term, the Fixed Rate
Renewal Term or the current Fair Market Renewal Term, as the case may be) to Lessor at the end of
the Basic Term, the Fixed Rate Renewal Term or any Fair Market Renewal Term with respect to any
Type of Equipment for which a renewal option is being elected hereunder, as the case may be,
pursuant to this Section, to renew this Lease with respect to, at the sole discretion of Lessee,
either all of the Units or a Minimum Number of any or each Type of Equipment for one or more
successive Renewal Terms of not less than one year each (each a “Fair Market Renewal Term”),
commencing at the end of the Fixed Rate Renewal Term or the end of any Fair Market Renewal Term for
such Type of Equipment, as the case may be; provided that with respect to Units of any Type of
Equipment, the aggregate duration of the Fair Market Renewal Terms for such Units, when added to
the duration of the Interim Term for such Units, the Basic Term, for such Units, the prior Fixed
Rate Renewal Term for such Units and all prior Fair Market Renewal Terms for such Units, shall not
in any event exceed either (i) 80% of the estimated useful life of such Units, or (ii) the point at
which such Units are estimated to have a Fair Market Sales Value of 20% of the original Equipment
Cost of such Units (without giving effect to inflation or deflation since the Delivery Date for
such Units), in each case as determined by appraisal (in accordance with the procedures set forth
in the definition of “Fair Market Sales Value”), completed at a point prior to the end of the Basic
Term, the Fixed Rate Renewal Term or the current Fair Market Renewal Term, as the case may be,
selected by Lessee. Basic Rent for any such Renewal Term shall be equal to the then Fair Market
Rental Value for such Units and shall be payable in semiannual installments in arrears. All other
provisions of this Lease, other than Section 10, shall be applicable during any such Renewal Term
for such Units, except that the Stipulated Loss Values for such Units shall be determined in
accordance with Section 22.5.

     Section 22.3. [Reserved].

     Section 22.4. Determination of Fair Market Rental Value. Lessee may notify Lessor that Lessee
desires a determination of the Fair Market Rental Value of such Units for a Renewal Term commencing
upon the Renewal Term Commencement Date. Lessee’s request for a

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determination of Fair Market Rental Value shall not obligate Lessee to exercise any of the options
provided in Section 22.2.

     Section 22.5. Stipulated Loss Value During Renewal Term. During any Renewal Term, the
Stipulated Loss Value of any Unit shall be determined by amortizing the Fair Market Sales Value of
such Unit as of the first day of such Renewal Term down to the Fair Market Sales Value of such Unit
as of the last day of such Renewal Term at the implicit interest rate imputed when discounting on a
monthly basis the renewal rents and the Fair Market Sales Value as of the
last day of such Renewal Term back to the Fair Market Sales Value as of the first day of such
Renewal Term.

			
	Section 23.	 	Lessee’s Options to Purchase Equipment; Purchase of Beneficial
Interest.

     (a) So long as no Specified Default or Event of Default shall have occurred and be continuing,
Lessee shall have the option:

     (i) upon not less than 180 days’ prior notice (which shall become irrevocable if not
revoked at least 90 days prior to the end of the Basic Term) to Lessor to purchase on the
Basic Term Expiration Date or the Business Day next following the expiration of any Renewal
Term then in effect for any Type of Equipment for which a purchase option is being elected
hereunder, at the sole discretion of Lessee, either all or a Minimum Number of Units of any
or each Type of Equipment at a price equal to the Fair Market Sales Value for such Units;

     (ii) upon not less than 30 days’ prior notice to Lessor to purchase on the EBO Fixed
Purchase Price Date for any Type of Equipment for which a purchase option is being elected
hereunder, at the sole discretion of Lessee, either all of the Units of Equipment or a
Minimum Number of Units of any or each Type of Equipment at a price equal to the EBO Fixed
Purchase Price for such Type of Equipment (as such EBO Fixed Purchase Price may be adjusted
from time to time pursuant to and in accordance with Section 2.6 of the Participation
Agreement); and

     (iii) upon not less than 30 days’ prior notice to Lessor to purchase, at any time, any
Unit of Equipment if Lessee determines and provides to Owner Trustee and Owner Participant a
certificate executed by the Chief Financial Officer of Lessee to the effect that the cost of
any improvements thereto required by Section 8.1(iv) would exceed 15% of the Fair Market
Sales Value of such Unit as of such date, at a price equal to the Termination Value as of
such date for such Unit.

     (b) If Lessee shall have exercised its option to purchase any Unit pursuant to Sections
23(a)(i) or 23(a)(iii) and shall have requested a determination of Fair Market Sales Value at least
180 days prior to the date of such purchase, Owner Trustee and Lessee shall comply in a timely
manner with their respective obligations set forth in the definition of “Fair Market Sales Value.”
If Lessee shall have exercised its option to purchase any Unit hereunder, and so long as Lessee has
not exercised its option to purchase the Beneficial Interest pursuant to Section 23(c) below,

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on the date of such purchase (x) Owner Trustee shall, subject to the payment in full of all amounts
referred to in clauses (y) and (z) below, assign, transfer and convey to Lessee all right, title
and interest of Owner Trustee in and to each Unit being purchased on such date on an “as is, where
is” basis, without recourse or warranty except as to Lessor’s Liens attributable to Owner Trustee
or Owner Participant other than Permitted Liens, (y) Lessee shall pay, by 12:00 noon (New York City
time) on such date by wire transfer in immediately available funds, to Owner Trustee the Fair
Market Sales Value or the EBO Fixed Purchase Price, as the case may be, with
respect to the Units purchased on such date plus any sales, use or other similar taxes imposed on
such purchase or transfer, and (z) Lessee shall pay pursuant to Section 22.1 (i) all Basic Rent due
and payable prior to such date of purchase plus all other Supplemental Rent due and payable as of
such date of purchase, including any Positive Make-Whole Amount with respect to any Equipment Note
due and payable on such date of purchase.

     (c) If Lessee shall have exercised its option pursuant to Section 23(a)(ii) or 23(a)(iii)
above and shall have elected to purchase all but not less than all of the Units, Lessee shall have
the option to purchase the Beneficial Interest from Owner Participant instead of the individual
Units and shall assume all of the rights and obligations of Owner Participant under each of the
Operative Agreements to which Owner Participant is a party (other than any obligations or
liabilities of Owner Participant incurred on or prior to the applicable purchase date, which
obligations and liabilities shall remain the sole responsibility of Owner Participant); provided,
however, Lessee shall not be entitled to exercise such option unless Indenture Trustee and Loan
Participant shall have received an opinion of counsel stating that Indenture Trustee and Loan
Participant shall be entitled to the benefits of Section 1168 of the Bankruptcy Code (or any
successor provision) to the same extent as immediately prior to Lessee’s exercise of this option,
such opinion to be reasonably satisfactory to Indenture Trustee and Loan Participant. On the
applicable purchase date (x) Lessee shall pay any unpaid Basic Rent due and payable prior to such
date of purchase and any other Rent then due and payable and such amounts shall be distributed as
provided in the Indenture and the Trust Agreement and (y) Lessee shall pay to Owner Participant, in
immediately available funds, an amount equal to the excess of the aggregate purchase price of such
Units under Section 23(a)(i) or (iii), as the case may be, over an amount equal to the sum of the
principal of, and any accrued and unpaid interest on, the outstanding Equipment Notes on such date
after taking into account any payments of principal or interest made in respect of the outstanding
Equipment Notes on such date plus any sales, use or other similar taxes imposed on such purchase or
transfer, and upon payment and (in the case of clause (x) above) distribution of the amounts set
forth in clauses (x) and (y) above, Owner Participant will assign, transfer and convey to Lessee,
without recourse or warranty except as to Lessor’s Liens attributable to Owner Trustee or Owner
Participant other than Permitted Liens, all of Owner Participant’s right, title and interest in and
to the Beneficial Interest. If Lessee shall have exercised the option to purchase the Beneficial
Interest from Owner Participant as described above, Owner Participant shall receive on the
applicable purchase date a release in form and substance satisfactory to it, from all liabilities
under the Operative Agreements (other than those liabilities set forth in the parenthetical phrase
of the first sentence of this Section 23(c)).

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Section 24. 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 and in no
case shall 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 Trust
Company shall be personally liable for its gross negligence or
willful misconduct or for its breach of its covenants, representations and warranties
contained herein to the extent covenanted or made in its individual capacity.

Section 25. Filing in Mexico.

     In the event that during the Lease Term (A) a central filing system becomes available in
Mexico for the filing or recording of security interests or ownership rights in railroad rolling
stock, (B) Lessee elects as a business practice to conduct such filings or recordings with respect
to equipment owned or leased by Lessee that is used in a manner similar to the Units and (C) Lessee
has not previously taken such action in accordance with the requirements of Section 16.1 hereof,
then Lessee will take, or cause to be taken, at Lessee’s cost and expense, such action with respect
to the filing or recording of this Lease, the Indenture or any supplements hereto or thereto (or
appropriate evidence thereof) and any financing statements or other instruments as may be necessary
or reasonably required to maintain, so long as the Indenture or this Lease is in effect and such
central filing system remains available, the benefit of such filing or recording in Mexico for the
protection of the security interest created by the Indenture and any security interest that may be
claimed to have been created by this Lease and the ownership interest of Lessor in each Unit to the
extent such protection is available pursuant to such filing or recording in Mexico.

Section 26. Miscellaneous.

     Section 26.1. Governing Law; Severability. This Lease and any extensions, amendments,
modifications, renewals or supplements hereto shall be governed by and construed in accordance with
the internal laws and decisions (as opposed to conflicts of law provisions) of the State of New
York; provided, however, that the parties shall be entitled to all rights conferred by any
applicable Federal statute, rule or regulation. 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 26.2. 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

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executed by Indenture
Trustee on the signature page hereof, which counterpart shall constitute the only “original” hereof
for purposes of the Uniform Commercial Code.

     Section 26.3. 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 26.4. 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 assigns.

     Section 26.5. True Lease. It is the intent of the parties to this Lease that it be, and this
Lease shall be, a single and indivisible true lease of the Equipment for all purposes, including,
without limitation, for Federal income tax purposes. Lessor shall at all times be the owner of
each Unit which is the subject of this Lease for all purposes, this Lease conveying to Lessee no
right, title or interest in any Unit except as lessee. Nothing contained in this Section 26.5
shall be construed to limit Lessee’s use or operation of any Unit or constitute a representation,
warranty or covenant by Lessee as to tax consequences.

     Section 26.6. Amendments and Waivers. No term, covenant, agreement or condition of this Lease
may be terminated, amended or compliance therewith waived (either generally or in a particular
instance, retroactively or prospectively) except by an instrument or instruments in writing
executed by each party hereto; provided, however, that any breach or default, once waived in
writing, unless otherwise specified in such waiver, shall not be deemed continuing for any purpose
of the Operative Agreements.

     Section 26.7. 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 Lease, 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 and on each Delivery Date regardless of any investigation made by any such
party or on behalf of any such party.

     Section 26.8. 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 that 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 26.9. Directly or Indirectly. 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.

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     Section 26.10. Incorporation by Reference. The payment obligations set forth in the Tax
Indemnity Agreement and Sections 7.1 and 7.2 of the Participation Agreement are hereby incorporated
by reference.

     Section 26.11. Entitlement to §1168 Benefits. It is the intent of the parties that Lessor (and
Indenture Trustee as assignee of Lessor under the Indenture) shall be entitled to the benefits of
Section 1168 of the Bankruptcy Code with respect to the right to repossess any Unit and to enforce
any of its other rights or remedies as provided herein, and in any circumstances where more than
one construction of the terms and conditions of this Lease is possible, a construction which would
preserve such benefits shall control over any construction which would not preserve such benefits
or would render them doubtful. To the extent consistent with the provisions of Section 1168 of the
Bankruptcy Code or any analogous section of the Bankruptcy Code or other applicable law, it is
hereby expressly agreed and provided that, notwithstanding any other provision of the Bankruptcy
Code, any right of Lessor to take possession of any Unit and to enforce any of its other rights or
remedies in compliance with the provisions of this Lease shall not be affected by the provisions of
Section 362 or Section 363 of the Bankruptcy Code or any analogous provision of any superseding
statute or any power of a bankruptcy court to enjoin such undertaking or possession.

     Section 26.12. Waiver of Jury Trial. The parties hereto voluntarily and intentionally
waive any rights they may have to a trial by jury in respect of any litigation based hereon, or
arising out of, under, or in connection with this Lease or any other Operative Agreement, or any
course of conduct, course of dealing, statements (whether verbal or written) or actions of any of
the parties hereto and thereto. The parties hereto hereby agree that they will not seek to
consolidate any such litigation with any other litigation in which a jury trial has not or cannot
be waived.

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     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:

KCSR 2007-1 Statutory Trust, acting

        through U.S. Bank Trust National

        Association, not in its individual

        capacity, but solely as Owner Trustee

 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 
	 	Lessee:

The Kansas City Southern Railway Company

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Receipt of the original counterpart

of the foregoing Lease is hereby

acknowledged this ___day of

September, 2007.

Wilmington Trust Company, as Indenture Trustee

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 

 

 

	 	 	 
	State of Connecticut

	 	)
	 

	 	)  ss:
	County of Hartford

	 	) 

     On this ___ day of September, 2007, before me personally appeared                                          to
me personally known, who being by me duly sworn, says that (s)he is a                                          of
U.S. Bank Trust National Association, that said instrument was signed on September ___,
2007, on behalf of said association by authority of its Board of Directors, and (s)he acknowledged
that the execution of the foregoing instrument was the free act and deed of said association.

	 	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 

	 	 	 	Notary Public

(SEAL)

My Commission Expires:                                         

	 	 	 
	State of Missouri

	 	 )
	 

	 	) SS.:
	County of Jackson

	 	 )

     On this ___day of September, 2007, before me personally appeared                                          to me
personally known, who being by me duly sworn, says that (s)he is the                                          of
The Kansas City Southern Railway Company, that said instrument was signed on
September ___, 2007, on behalf of said corporation by authority of its Board of Directors, and
(s)he acknowledged that the execution of the foregoing instrument was the free act and deed of said
corporation.

	 	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 

	 	 	 	Notary Public

(SEAL)

My Commission Expires:

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