Locomotive Lease Agreement 2019-PAPX-IBR-1505FILE/33491.pdf · RECORDATION NO. 33491 FILED October...

LOCOMOTIVE LEASE AGREEMENT Contract Number 2019-09 PAPX-IBR

By and Between Pennsylvania Pullmans Inc and Indiana Business Railroad Company

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This LOCOMOTIVE LEASE AGREEMENT dated as of September 30, 2019 (the "Lease Agreement") is made

by and between PENNSYLVANIA PULLMANS ("Lessor"), a Commonwealth of Pennsylvania Corporation, and

INDIANA BUSINESS RAILROAD, INC. ("Lessee"), an Indiana Corporation.

1) Lease. Subject to the terms and conditions of this Lease, Lessor hereby leases to Lessee and Lessee hereby

leases from Lessor the locomotive(s) (the "Unit(s)") identified in each rider added to .the Lease Agreement (a

"Rider" and together with the Lease Agreement, the "Lease"). Each Rider sets forth the term (the "Term"), rental

rate (the "Rent") and additional provisions of the Lease related to such Units and constitutes a separate lease

incorporating the terms of this Lease Agreement. In the event of any conflict between a Rider and this Lease

Agreement, the Rider shall control.

2) Delivery, Inspection and Acceptance of Units. Subject to delays outside of its control, Lessor expects to

deliver the Unit on the date and at the location (the "Delivery Point") designated in the Rider. Upon delivery by

Lessor at the Delivery Point (such date of delivery being the "Delivery Date"), acceptance of the Units by Lessee

shall be subject to Lessee's determination within five (5) business days of the Delivery Date (the "Inspection

Period") that the Unit is:

a. In compliance with the laws, rules and regulations of:

i. The Federal Railroad Administration ("FRA"),

ii. The Association of American Railroads ("AAR"), including the rules of interchange then in

effect (the "Interchange Rules"),

iii. The Surface Transportation Board,

iv. The U.S. Environmental Protection Agency (the "EPA"), including emission standards,

v. Transport Canada, and

vi. Other applicable authorities having jurisdiction with respect to the Units (collectively,

"Applicable Law") and

b. In proper condition for Lessee's use and free from any defect (together, "Delivery Condition").

If any Unit inspected by Lessee is not in Delivery Condition, Lessee may reject such Unit by notifying Lessor in

writing within the Inspection Period ("Rejection Notice"), and Lessor shall have the option to either promptly repair

or replace any such Unit at Lessor's expense or to exclude such Unit from this Lease. If Lessee:

a. Accepts the Units after inspection or otherwise, or

RECORDATION NO. 33491 FILED October 7, 2019 2:50 PM SURFACE TRANSPORTATION BOARD



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b . (i) does not deliver a timely Rejection Notice to Lessor or (ii) moves a Unit from the Delivery Point,

such Unit will be deemed accepted by Lessee ("Acceptance") as of the Delivery Date and to meet the

Delivery Condition as of the Delivery Date.

Lessee shall be responsible for all costs associated with the transport of each accepted Unit after the Delivery

Date. Promptly upon Acceptance, Lessee shall execute a Certificate of Acceptance (the "Certificate of

Acceptance") in the form of “Exhibit A” to this Lease Agreement.

3) Disclaimer; Limitation of Liability. LESSEE ACKNOWLEDGES THAT LESSOR DID NOT MANUFACTURE THE

UNITS, AND LESSEE ACCEPTS THE UNITS BASED UPON ITS OWN JUDGMENT AND EXPRESSLY DISCLAIMS ANY

RELIANCE ON STATEMENTS, ORAL OR WRITTEN, MADE BY LESSOR OR ITS AGENTS. LESSOR LEASES AND LESSEE

ACCEPTS THE UNITS AS-IS, AND LESSOR MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND RESPECTING

THE UNITS, WHETHER STATUTORY, WRITTEN, ORAL OR IMPLIED, INCLUDING WITHOUT LIMITATION AS TO THE

MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, COMPLIANCE WITH APPLICABLE LAW, DESIGN OR

CONDITION OF, DEFECT IN (WHETHER OR NOT LATENT), OR AS TO THE QUALITY OF WORKMANSHIP IN, THE UNITS,

ALL OF WHICH ARE EXPRESSLY DISCLAIMED. LESSOR SHALL NOT BE LIABLE, AND LESSEE HEREBY WAIVES ANY

CLAIM, IN CONTRACT, TORT OR OTHERWISE, ON ACCOUNT OF ANY MANUFACTURER'S OR OTHER DEFECT,

WHETHER LATENT OR OTHERWISE DISCOVERABLE RESPECTING ANY UNITS, AND LESSOR SHALL IN NO EVENT BE

LIABLE FOR ANY LOSS AND DAMAGE (INCLUDING PUNITIVE, INCIDENTAL OR CONSEQUENTIAL OR SPECIAL

DAMAGE) OR .EXPENSE CAUSED BY, OR ARISING IN CONNECTION WITH, THE UNITS OR THIS LEASE.

4) Term. The term of this Lease for each accepted Unit shall commence on the Delivery Date and shall

continue for the Term set forth in the Rider.

5) Rent. Rent shall commence on the "Commencement Date" specified in the Rider at the rental rate set

forth in the Rider and shall be paid on the first day of each month in advance, prorated for any partial month. Rent

shall continue in effect for each Unit, until such Unit is returned to Lessor in accordance with the terms of this

Lease. All payments of Rent shall be made directly to Lessor at its address for notices hereunder. Lessee’s

obligation to pay all Rent and other sums when due and to otherwise perform its obligations under this Lease is

absolute and unconditional, and shall not be subject to any abatement, reduction, set-off, defense, claim,

counterclaim, interruption, deferment or recoupment. The Rent and other sums payable by Lessee hereunder

shall be paid without notice or demand.

6) Identification Marks. Lessee will keep each Unit marked with the identifying mark and number as set

forth in the Rider, and Lessee will not change such mark or number without the prior written consent of Lessor.



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Lessee will not allow the name of any person or entity or any other mark or logo to be placed upon any Unit

without the prior written consent of Lessor.

7) Use. Lessee will use and operate the Units only in the ordinary conduct of its business by qualified

employees of Lessee and in accordance with all applicable manufacturer's operating instructions for the Units and

each component thereof. In addition, Lessee agrees to use, operate and maintain the Units in compliance with

Applicable Law. Lessee will not use or operate the Units outside of the United States [other than incidental and

temporary use in Canada not to exceed ninety (90) days in any one-year period]. No Unit may be stored except

upon Lessor’s prior written consent and in compliance with Lessor's storage requirements for such Unit. If any

Unit is located in Canada, or, with Lessor's prior written consent, Mexico during the lease term, without limiting

any of Lessee's obligations under the Lease, Lessee will be solely responsible for:

a. Complying with all applicable customs laws;

b. Obtaining and maintaining in full force and effect any and all licenses, permits and authorizations

necessary for use of such Units outside of the United States;

c. Indemnifying Lessor on an after tax basis for all goods and services, harmonized sales, value added,

sales, use, excise, import, export and other similar taxes in any applicable jurisdiction as well as any

customs duties, brokers' fees and any other expenses or liabilities associated with use of such Units

outside of the United States; and

d. Providing Lessor with the documentation required in Section 9.

8) Maintenance; Alteration. Lessee shall cause each Unit to be maintained, serviced and repaired at its sole

cost and expense in order for such Unit to be:

a. In compliance with (i) Applicable Law, (ii) manufacturer's specifications and warranty policies and (iii)

insurance requirements,

b. In the same condition, working order, and repair as the Delivery Date, ordinary wear and tear

excepted, and

c. On a non-discriminatory basis in at least the condition of all other equipment owned, leased or

operated by Lessee or any affiliate.

If any Applicable Law requires the modification or alteration of any Unit, Lessee agrees, at its sole expense, to

make such modification, alteration or repair in compliance. with such Applicable Law; provided, however, that



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Lessee may in good faith contest the validity or application of any such Applicable Law in any reasonable manner

which could not, in Lessor's reasonable opinion, adversely affect Lessor’s rights in such Unit or Lessor's rights

hereunder. Except as provided in the preceding sentence, Lessee will not cause or permit any modification or

alteration to be made to any Unit without Lessor's prior written consent. Title to all alterations, additions, repairs

and replacements shall automatically vest in Lessor.

9) Return. Lessee shall return the Units on the expiration of the Term to the Return Point set forth in the

Rider. Lessee shall return each Unit to Lessor:

a. In the condition in which such Units are Required to be maintained under Section 8,

b. With the Unit and all systems thereon operating as delivered and consistent with their intended

functions, and

c. Meeting such other requirements as set forth in the Rider.

The requirements for condition of the Units as set forth above may be referred to as the "Return Condition." Upon

such return, Lessee shall provide all records and documents related to the last importation status of the Units, if

any, prior to the expiration of the applicable Rider. Lessee shall continue to pay Rent and the Lease shall remain

in full force and effect with respect to each Unit until such Unit is returned to Lessor at the Return Point and in the

Return Condition.

If upon the expiration or earlier termination of this Lease, Lessor demands in writing the return of any Unit to the

Return Point and Lessee fails to deliver such Unit to the Return Point and in the Return Condition within ten (10)

calendar days of receipt of such notice, Rent shall increase at a monthly rental rate equal to two hundred percent

(200%) of the monthly rental rate for such Unit then in effect until such Unit is delivered in the Return Condition

to the Return Point. All other terms and conditions of this Lease shall remain in force. The provisions of this

Section 9 are without prejudice to, and in addition to, any other remedies of Lessor.

If Lessee shall for any reason fail to deliver any Unit to Lessor at the Return Point and in the Return Condition

within ninety (90) days of the expiration of the Term, Lessor shall have the option to declare that such Unit has

suffered a Total Loss (defined below).

At the time of return of a Unit, Lessee shall provide to Lessor the records, or a copy thereof, required to be

maintained with respect to the Units pursuant to Section 12 below.

10) Insurance. During the Term and so long as Lessee has not returned any Unit in accordance with the terms

hereof, Lessee shall maintain:



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a. All-risk, physical loss or damage insurance for each such Unit in a minimum amount equal to the

aggregate Settlement Value (defined below), and

b. Public liability insurance, including, but not limited to, "Broad Form General Liability, Railroad

Liability," in a minimum amount of twelve million US dollars ($12,000,000.00) per occurrence for

personal or bodily injury, wrongful death and property damage, in each case for such risks, with such

endorsements and with such insurance companies as are reasonably satisfactory to Lessor.

All insurance policies shall:

a. Name Lessor as loss payee for the all risk insurance and as additional insured for liability insurance,

and

b. Provide Lessor with thirty (30) days' prior. written notice before coverage lapses, is canceled or

materially changes.

If Lessee fails to obtain insurance, or if said insurance lapses or is canceled, Lessor has the right, but not the

obligation, to purchase the insurance described above and Lessee shall pay the cost thereof. Lessee's insurance

policies shall be primary to any insurance of Lessor, and Lessee shall require its insurers to specifically waive

subrogation, claim and recovery against Lessor's insurance. Any deductibles or self-insured retention amounts

shall be acceptable to Lessor. Lessee shall furnish to Lessor upon execution of this Lease, and thereafter annually

or at Lessor's request, Certificates of Insurance evidencing the aforesaid insurance. Lessee shall provide Lessor a

ce1tified copy of each insurance policy upon written request.

11) ·Casualty Occurrence. During the Term, Lessee hereby assumes all risk of loss, damage, theft, taking,

destruction, confiscation, condemnation or requisition of, or to, each Unit, however caused or occasioned (each,

a "Casualty"). Lessee shall promptly notify Lessor of any Casualty. In event that:

a. Such Casualty results in a total loss or constructive total loss of any Unit,

b. A Casualty arises from a theft, taking, confiscation, condemnation or requisition, or

c. The damage cannot reasonably be expected to be repaired in sixty (60) days from the date of the

Casualty [or if earlier, the end of the Term, in each case the "Outside Repair Date") (any event in

clauses (a), (b) or (c), being a "Total Loss"], then Lessee shall on the first day of the month next

succeeding the Outside Repair Date (or if earlier, the end of the term, in each case the "Settlement

Date") pay a settlement value as specified in the Settlement. Value as specified in the Rider

("Settlement Value") for such Settlement Date, together with any other accrued but unpaid amounts



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due hereunder.

Any Unit which is seized and held by any governmental authority for more than thirty (30) days or which becomes

the subject of a forfeiture proceeding initiated by any governmental authority shall be deemed a Total Loss for

which Lessee shall pay the Settlement Value pursuant to this Section 11.

Upon Lessor's receipt of the Settlement Value and all other amounts then due and payable under the Lease:

a. The Rent for such Unit shall cease, and the Lease for such Unit shall terminate (other than provisions

expressly stated to survive), and

b. Unless prohibited by Applicable Law, Lessor shall convey to Lessee, the insurer, as applicable, or

Lessee's designee, its title and interest to such Unit (taking into such Casualty) on an "as-is, where-is"

basis without recourse or warranty [other than the absence of any Lessor Lien (defined below)].

Lessor has the right, but not the obligation, to replace any Unit which suffers a Total Loss, subject to Acceptance

as set forth in Section 2. In the event that a Casualty shall occur that shall not constitute a Total Loss, then Lessee

shall promptly repair the Unit to meet the requirements of Section 8 and so the Unit will be able to be returned in

accordance with Section 9.

If any Unit that has suffered a Casualty has not been so repaired by the Outside Repair Date, then such Unit on

such Outside Repair Date shall be deemed to be a Total Loss and Settlement Value and all other amounts accrued

but unpaid hereunder shall be immediately due and payable.

12) Recordkeeping and Inspection. Lessee shall maintain and make available to Lessor upon request records

(or copies thereof) pertaining to the operation, maintenance, repair, modification, alteration., location and

inspection of the Units so as to verify compliance with the provisions of this Lease and as customarily maintained

by it in connection with other equipment owned, leased or operated by Lessee or any affiliate and in all cases as

required by Applicable Law or reasonably requested by Lessor (including so as to permit Lessor to comply with

Applicable Law). If Lessee replaces one or more power assemblies on any Unit, Lessee shall promptly notify Lessor

in writing with the following information:

a. Unit number,

b. Date of replacement,

c. Position,

d. Liner serial number removed,



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e. Liner serial number applied, and

f. Shop location and AAR Identification.

Lessor or its agents, at Lessor's expense, shall have the right to inspect the Units at such reasonable times and

places as Lessor may request.

13) Taxes; Other Charges. Lessee shall pay when due (or reimburse to Lessor), and on a net after-tax basis

shall indemnify and defend Lessor and its affiliates from and against any and all fees, taxes, withholdings, licenses,

customs, liabilities and charges of any nature including, without limitation, liens, encumbrances, interest,

penalties, fines and assessments (collectively, "Taxes") which may now or hereafter be imposed or levied by any

foreign, federal, state, provincial or local authority upon this Lease or the Units (including, without limitation,

relating to or arising from the transportation, delivery, installation, leasing, possession, use, operation, storage

and return of such Units during the Term). The term Taxes shall include without limitation any sales, use, rental,

excise, gross receipts, document or stamp or ad valorum tax applicable to the Lease or operation of the Units

during the Term. Upon the expiration or earlier termination of the Lease, Lessee shall pay to Lessor, any taxes·

assessed or to be assessed with respect to the Term but not yet due and payable. Lessee shall have no

responsibility for any Taxes on or· measured by Lessor's net income; provided, however, Lessee shall reimburse

and indemnify Lessor and its affiliates on an after-tax basis for any customs, withholdings or other liabilities

resulting from use of the Units outside of the United States (and make applicable filings in connection therewith)

and for tax benefit reductions resulting from the use of the Units:

a. Predominantly outside the United States,

b. So as to constitute tax-exempt use property under the Internal Revenue Code, or

c. Otherwise in a manner that reduces the tax benefits to which Lessor would be entitled with respect

to the ownership of such Units.

Lessee will pay promptly all Taxes which may be imposed upon Lessee's income and earnings arising from or

connected with this Lease or the Units. In addition, if Lessor is required to make any payments to a railroad or

becomes liable for any railroad charges or costs on account of this Lease or the Units, Lessee agrees to promptly

reimburse Lessor for such payments, charges and costs.

14) Indemnification. Lessee shall indemnify, defend and hold harmless on a net after-tax basis Lessor and its

affiliates and their respective officers, partners, shareholders, directors, attorneys, employees and agents from

and against any and all costs, expenses, losses, taxes, penalties, obligations, claims, damages, actions or other



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liabilities (including but not limited to reasonable counsel fees and expenses, and tort, environmental and strict

liability claims) which Lessor may incur (unless resulting from Lessor's gross negligence or willful misconduct):

a. In any way relating to, arising from or by reason of this Lease or the use, operation, condition,

delivery, storage, or return of any Unit, including arising from any accident, personal injury, death,

property damage or other liability involving any Unit, on or after the Delivery Date until such Unit is

returned to Lessor in Return Condition, or

b. Arising from the storage or movement of any Unit for which Lessee retains risk under Section 9 or any

Rider.

Lessee shall give Lessor prompt written notice of any event or condition in connection with which Lessor may be

entitled to indemnification hereunder.

15) Financial Information. Lessee agrees to furnish to Lessor:

a. Within one-hundred twenty (120) days after the close of each fiscal year, its audited financial

statements (on a consolidated basis if applicable) including its most recent balance sheets, statements

of income, retained earnings and changes in financial position or cash flows for the fiscal year then

ended, each prepared in accordance with United States generally accepted accounting principles

consistently applied ("GAAP"), all of which shall be certified by Lessee's independent auditors (or if

unavailable because such statements have not been historically audited, certified by the President or

Chief Financial Officer), to be complete, correct and in accordance with GAAP, and

b. Promptly from time to time such other information concerning the business, condition and affairs of

Lessee or. any guarantor as Lessor shall reasonably request (including quarterly financial statements).

16) Liens. At its sole expense, Lessee will keep the Units and all parts thereof and accessories and attachments

thereto free and clear of any arid all liens, security interests, charges, claims or other encumbrances ("Liens"),

except for any Liens unrelated to this Lease arising through Lessor ("Lessor Liens"). Lessee will promptly notify

Lessor in writing if it has knowledge of any Lien that shall attach to any Unit and offer the full particulars thereof.

17) Event of Default. Each of the following shall constitute an "Event of Default" under this Lease:

a. Lessee fails to pay any Rent or any other amount payable under this Lease and such non-payment

continues for ten (10) calendar days after the due date thereof;

b. Lessee shall make or permit any unauthorized assignment or transfer of this Lease or of possession of



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the Units, or any part thereof or shall enter into any sublease without the prior written consent of

Lessor;

c. Lessee fails to perform or observe any term, covenant, condition or agreement contained in this Lease

and such failure continues uncured for ten (10) calendar days after written notice thereof from Lessor;

d. Any representation or warranty made by Lessee in this Lease or in any document, certificate or

financial statement provided to Lessor shall be false or misleading at any time in any material respect;

e. Lessee or any guarantor consolidates with or merges into or with any other entity, or purchases or

otherwise acquires all or substantially all of the assets or stock or other ownership interests of any

person or entity or sells, transfers, leases or otherwise disposes of all or substantially all of the assets

of Lessee or guarantor, as applicable, to any person or entity;

f. Lessee ceases doing business as a going concern or transfers all or a substantial part of its assets; or

becomes or is adjudicated insolvent or bankrupt, admits in writing its inability to pay its debts as they

become due, or makes an assignment for the benefit of creditors; or Lessee applies for or consents to

the appointment of any receiver, trustee or similar officer for it or for all or any substantial part or its

property; or such receiver, trustee or similar officer is appointed without the consent of Lessee; or

Lessee institutes any bankruptcy, insolvency, reorganization, moratorium, arrangement,

readjustment of debt, dissolution, liquidation or similar proceeding relating to it under the laws of any

jurisdiction, or any such proceeding is instituted against Lessee and is not dismissed within thirty (30)

calendar days; or any judgment, writ, warrant or attachment or execution or similar process is issued

or levied against a substantial part of Lessee's property and remains unsatisfied for thirty (30) calendar

days (any of the foregoing being a "Bankruptcy Event");

g. Any guarantor of the Lease shall be dissolved, be declared to be in default under such guarantee or a

Bankruptcy Event shall have occurred with respect to such guarantor; or

h. (a) Lessee fails to comply with Section 23 of this Lease Agreement or any other Applicable Law

applicable to and materially affecting the Units or Lessor's rights under the Lease, or (b) any owner of

an equity interest in Lessee or any guarantor, or any subsidiary owned directly or indirectly by Lessee

or .any guarantor, is the target of any Sanctions (as defined in Section 23), or performs or engages in

any act or series of acts that Lessor reasonably believes could constitute a violation of Sanctions,

money laundering or a predicate crime to money laundering under applicable laws, rules, regulations

and orders of any governmental authority, or a violation of the U.S. Foreign Corrupt Practices Act of



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1977, as amended, or any other applicable anti-bribery or anti-corruption laws and regulations.

18) Remedies.

a. Specific Remedies. Upon the occurrence of any Event of Default, Lessor may, with or without notice

to Lessee, exercise any one or more of the following remedies, as Lessor in its sole discretion shall

elect:

i. To proceed by appropriate court action(s) either at law or in equity to enforce Lessee's

performance under this Lease or to recover damages for the breach thereof;

ii. By notice in writing to Lessee terminate the case, whereupon all rights of Lessee to the use of

the Units shall absolutely cease and terminate, but Lessee shall remain liable as herein

provided;

iii. To require Lessee, at Lessee's expense, to return any or all of the Units in accordance with the

return provisions of this Lease, or Lessor or its agent, at its option may in a reasonable manner

enter upon the premises of Lessee or other premises where any of the Units may be and take

possession of all or any of such Units and thenceforth hold, possess and enjoy the same free

from any right of Lessee or any third party deriving any right to the Units through Lessee and

their respective successors or assigns;

iv. To declare immediately due and payable all Rents and other amounts due and to become due

under this Lease and such accounts shall be discounted to present value at the lesser of five

percent (5%) per annum or the rate for three month Treasury Bills as of the date of such

declaration;

v. To sell by public or private sale, release, hold, retain, or otherwise dispose of the Units in any

manner Lessor chooses, free and clear of any claims or rights of Lessee; provided, that, Lessor

shall not be obligated to realize on any Unit; provided, further, in the event of such realization,

Lessor shall apply the net proceeds of any such realization (after deducting all reasonable

costs and expenses of every kind incurred in connection therewith) to the payment in whole

or in part of the Lessee's obligations under this Lease Agreement and each Rider, in such order

and manner as Lessor may elect, with Lessee remaining liable for any deficiency and after the

foregoing application of net proceeds, any remaining balance shall be paid by Lessor to Lessee;

vi. If any Unit is not returned, recover the Settlement Value of such Unit;



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vii. Exercise any other right or remedy then available to Lessor at law or in equity.

If Lessee fails to perform any of its obligations hereunder, Lessor, at Lessee’s expense, and without

waiving any rights it may have against Lessee for such non-performance, may itself render such

performance. If applicable, Lessor shall be entitled to the remedies of a lessor under Section 1168 of

the U.S. Bankruptcy Code.

b. Interest. In the event Lessee shall be in default in the payment of Rent or any other amount due

hereunder, or in connection with, this Lease, Lessee shall pay Lessor as additional rental interest on

such unpaid sum from its due date to the date of payment by Lessee at a rate equal to one and one

half percent (1.5%) compounded monthly or the maximum rate permitted by law, whichever is less.

c. Cumulative Remedies. No remedy referred 'to in this Lease is intended to be exclusive, but each shall

be cumulative and concurrent to the extent permitted by law and shall be in addition to any other

remedy referred to above or otherwise available to Lessor at law or in equity. No failure or delay on

the part of Lessor to exercise any right or remedy hereunder shall operate as a waiver thereof. No

express or implied waiver by Lessor of any default or breach shall constitute a waiver of any other or

subsequent default or breach by Lessee. If Lessee fails to pay or otherwise perform any of its

obligations under this Lease, Lessor may, but shall not be obligated to, pay such amounts or perform

such obligations for the account of Lessee without thereby waiving Lessor’s right to declare an Event

of Default. In any such event, Lessee shall immediately upon demand reimburse Lessor for any such

costs and expenses incurred by Lessor. To the extent permitted by applicable law, Lessee hereby

waives the benefit and advantage of, and covenants not to assess against Lessor, any valuation,

inquisition, stay, appraisement, extension or redemption laws now existing or which may hereafter

exist which, but for this provision, might be applicable to any sale or lease made under the judgment,

order or decree of any court or under the powers of sale and leasing conferred by this Lease

Agreement or otherwise. To the extent permitted by applicable law, Lessee hereby waives any rights

now or hereafter conferred by statute or otherwise which may require Lessor to sell, lease or

otherwise use any Unit in mitigation of Lessor's damages.

d. Costs. In addition to the above and in all cases, Lessee shall be liable for all costs, expenses and

damages incurred by Lessor by reason of the occurrence of any Event of Default or the exercise of

Lessor's remedies with respect thereto, including, but not limited to, all reasonable attorneys' fees

and costs whether or not court proceedings are brought, costs related to the repossession, storage,



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repair and transportation or other disposition of the Units, and all incidental and consequential

damages.

19) Assignment.

a. Assignment by Lessor. Lessor may, without the consent of and without notice to Lessee, assign or sell

its interest in, grant a security interest in, or otherwise transfer in whole or in part this Lease, any Unit

or any of its rights, interests or obligations with respect thereto, including, without limitation, all Rent

and other sums due or to become due to one or more persons or entities. In connection with any

assignment of this Lease by Lessor, Lessee hereby agrees to promptly provide any reasonable

documentation requested by Lessor. Lessee shall not assert against any assignee any claim, defense,

counterclaim or set-off that Lessee may at any time have against Lessor.

b. Assignment by Lessee. Lessee shall not encumber, grant a security interest in, transfer, subcontract,

sublease or assign any Unit or its interests and obligations pursuant to this Lease Agreement (any a

"Restricted Transfer"), nor shall a Restricted Transfer that occurs by operation of law or otherwise of

Lessee's interest in any Unit or this Lease Agreement be effective against Lessor without Lessor's prior

written consent. No Restricted Transfer of Lessee's interest in any Unit or this Lease Agreement shall

relieve Lessee from any of its obligations to Lessor under this Lease Agreement. Notwithstanding any

other rights provided Lessor in this Lease Agreement, Lessee agrees to indemnify Lessor and hold

Lessor harmless from any loss, cost or expense, including attorneys’ fees, incurred as a result of or

with respect to any Restricted Transfer. Without the prior written consent of Lessor, Lessee shall not

part with the possession or control of or suffer or allow to pass out of its possession or control, any of

the Units.

20) Representations and Warranties of Lessee. Lessee represents and warrants to Lessor and agrees that:

a. Lessee is and will be at all times duly organized, validly existing and in good standing under the laws

of the state of its’ incorporation or formation and is duly qualified to do business wherever necessary

to carry on its’ present business and operations and to own its property,

b. This Lease Agreement and each Rider has been and will be duly authorized, executed and delivered

by Lessee and constitute valid, legal and binding agreements, enforceable in accordance with their

terms,

c. The execution and performance of this Lease Agreement and each Rider will not contravene, breach



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or create a default under any legal, organizational or contractual obligation of Lessee or any law, rule,

regulation, judgment or order binding upon Lessee or its property,

d. There are no pending or threatened actions or proceedings before any court or· administrative agency

that could have a material adverse effect on Lessee, nor is Lessee in default under any material loan,

lease or other instrument to which Lessee is a party or by which its property is bound,

e. The financial statements and other information furnished and to be furnished to Lessor are and will

be true and correct,

f. Lessee is fully aware of and agrees to be bound by the Interchange Rules, and Lessee has its own

capabilities and means to keep itself updated with any modification, amendment and supplements

from time to time issued in connection with the Interchange Rules and is in no way relying on Lessor

to obtain such information, and

g. The Units will at all times be used in interchange service for commercial or business purposes.

21) Notices. Any notice shall be in writing and shall be deemed to have been made:

a. on the third business day following deposit in the United States or Canada mail, certified mail, postage

prepaid,

b. on the next business day following deposit with a nationally recognized overnight delivery service, or

c. if sent before 4:00PM Central Time, on the business day sent by facsimile transmission, or if sent after

4:00PM Central Time, on the next business day, in each case when sent to the address or facsimile

number set forth for each party in the appropriate Rider or such other address or number as is

provided in accordance with this Section by either party to the other party.

22) Miscellaneous.

a. Further Assurances. Upon Lessor's request and at its sole expense, Lessee shall promptly execute,

acknowledge and deliver such further documents, and take any and all other action reasonably

requested by Lessor from time to time as is necessary for the purpose of effectuating the intents and

purposes of this Lease, as required by law or to protect the interests of Lessor in the Units and this

Lease, including, without limitation, a Memorandum of Lease to be filed with the STB and UCC-

Financing Statements.

b. Severability. If any term, provision, covenant or restriction of this Lease is held by a court of



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competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions,

covenants and restrictions are intended to apply and shall remain in full force and effect and shall in

no way be affected, impaired or invalidated.

c. Entire Agreement; Amendment. This Lease, the Riders hereto, together with all exhibits and schedules

attached hereto or thereto, contains the entire agreement of the parties regarding the subject matter

hereof and supersedes all other agreements and understandings, oral or written, with respect thereto.

This Lease may not be amended, modified or changed, or ·any provision of this Lease waived, except

by an instrument in writing signed by the parties hereto. No course of dealing between the patties will

be deemed to modify, amend or discharge any pa1t of this Lease or any rights or obligations of any

party.

d. Successors and Assigns. This Lease will bind and inure to the benefit of the respective successors and

permitted assigns of the parties hereto.

e. Counterparts. Each Rider shall constitute a separate lease incorporating the terms of this Lease

Agreement. This Lease Agreement and the related Rider(s) constitute the entire agreement of the

parties with respect to the subject matter hereof and thereof and supersede and replace any prior or

contradictory agreements of Lessor and Lessee. Any counterpart of the Lease Agreement or any Rider

that has attached to it separate signature pages, which altogether contain the signatures of each of

the parties thereto, shall for all purposes be deemed a fully executed instrument. Lessor may in its

sole discretion accept a photocopy, electronically transmitted facsimile or other reproduction of this

Lease Agreement or any Rider hereto containing the signature of the Lessee (an "Electronic Image")

as a binding and effective instrument, whether or not an ink-signed copy is also received by Lessor.

Lessee represents to Lessor that the signature that appears on any such Electronic Image is

intended to authenticate such Electronic Image, and further agrees that such Electronic Image, when

acknowledged in writing by Lessor, shall constitute an original document for the purposes of

establishing the provisions therein and shall be legally admissible under the best evidence rule and

binding on and enforceable against Lessee. If Lessor accepts an Electronic Image as the binding and

effective record thereof, only such Electronic Image acknowledged in writing by Lessor shall be

marked "Original" and to the extent that it constitutes chattel paper, a security interest may only be

created in the Electronic Image that bears Lessor's ink signed acknowledgement and is marked

"Original."



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f. Jurisdiction. Any action by Lessee against Lessor for any default by Lessor under the Lease shall be

commenced within one (1) year after any such cause of action accrues. TO THE EXTENT PERMITTED

BY APPLICABLE LAW, LESSOR AND LESSEE EACH WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY

LITIGATION Arising HEREFROM OR IN RELATION HERETO. This Lease shall be governed by and

interpreted in accordance with the laws of the State of Illinois, without regard to its principles of

conflict of laws.

g. Construction. The language used in this Lease will be deemed to be the language chosen by the parties

hereto to express their mutual intent, and no rule of strict construction will be applied against either

party. Lessee acknowledges that it has been represented by counsel in connection with this Lease or

that it has voluntarily declined to seek representation by counsel. Lessee has not received nor is

Lessee relying on advice concerning tax and legal matters from Lessor or its counsel.

h. Brokers. Each party represents and warrants that it has not employed, authorized or appointed a

broker in connection with the transactions contemplated by this Lease.

i. Survival. The respective representations, warranties, indemnities, covenants, obligations and

agreements of the parties shall survive the expiration or earlier termination of this Lease and any

extensions thereof. Without limiting the foregoing, the indemnities in Section 13 (Taxes; Other

Charges) and Section 14 (Indemnification) shall survive payment or performance of all other

obligations under this Lease.

j. Attorneys' Fees. If any legal action is brought for the enforcement of this Lease or because of an

alleged dispute, breach, default or misrepresentation in connection with any of the provisions of this

Lease, the successful or prevailing party shall be entitled to recover reasonable attorneys' fees and

other costs incurred in such action or proceeding.

23) Compliance with OFAC. Lessee hereby confirms that it is not the target of any trade or economic sanctions

promulgated by the United Nations or the governments of the United States (including any executive order of

any branch or department), the United Kingdom, the European Union, or any other jurisdiction in which Lessee

is located or operates (collectively, "Sanctions"). Lessee shall comply with the requirements of all laws, rules,

regulations and orders of any jurisdiction in which the Lessee is located _or doing business, or which are

otherwise applicable to Lessee, including, without limitation:

a. All· Sanctions,



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EXHIBIT A

To Locomotive Lease Agreement

CERTIFICATE OF ACCEPTANCE

THIS CERTIFICATE OF ACCEPTANCE is executed as of September 30, 2019 in connection with that certain Locomotive Lease Agreement (the "Lease Agreement") dated as of the date first above written, by and between PENNSYLVANIA PULLMANS INC ("Lessor") and INDIANA BUSINESS RAILROAD, INC. ("Lessee").

Capitalized terms used herein without definition have the meanings given to such terms in the Lease Agreement.

Pursuant to this Certificate of Acceptance, Lessee acknowledges and agrees as follows:

1) Rider: This Certificate of Acceptance relates to Rider No. 1 (the "Rider").

2) Unit(s): This Certificate of Acceptance relates to the following Unit(s) more particularly described in

the Rider: PAPX 1505 an EMD Model GP15T Frame Number 817054-6

3) Acceptance: The Unit(s) are in Delivery Condition and Lessee has accepted the Unit(s) for all purposes of the Lease Agreement and the Rider. Acceptance has occurred with respect to the Unit(s).

4) Delivery Date: September 30, 2019

5) Fuel Level: On the Delivery Date, the fuel level of each of the Unit(s) is as follows: __________ gallons.

6) Lease: This Certificate of Acceptance incorporates by reference all of the terms and conditions of the Lease as the same relates to the Unit(s) described herein. This Certificate of Acceptance constitutes an integral part of the Lease. The Lease is in full force and effect and enforceable against Lessee in accordance with its terms. Lessee hereby certifies that (a) the representations and warranties of Lessee contained in the Lease, and in any document delivered pursuant thereto are true and correct on and as of the date hereof with the same effect as though made on the date hereof, and (b) as of the date hereof, there is no Event of Default under the Lease and no event has occurred which, but for the lapse of time or the giving of notice or both, would be such an Event -of Default or default.

For INDIANA BUSINESS RAILROAD, INC.

By: __________________________________

NAME: John A. DiDomizio

TITLE: President



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RIDER NO. 1 of

Locomotive Lease Agreement Contract Number 2019-09 PAPX-IBR

Pursuant to that certain Locomotive Lease Agreement dated as of September 30, 2019 (the “Locomotive Lease Agreement”), by and between PENNSYLVANIA PULLMANS ("Lessor"), a Commonwealth of Pennsylvania Corporation, and INDIANA BUSINESS RAILROAD, INC. ("Lessee"), an Indiana Corporation, this Rider No. 1 dated as of September 30, 2019 (“Rider”) incorporates the terms of the Lease Agreement by this reference and together with the Lease Agreement constitutes the “Lease”. This Rider is supplemental to, and to be construed in conjunction with, the Lease Agreement; provided in the event that this Rider shall directly conflict with the terms and provisions of the Lease Agreement, this Rider shall control.

CONTRACT NO. 2019-09 PAPX-IBR

1. NUMBER OF UNIT(S): One (1)

2. DESCRIPTION OF UNIT(S): GP15T, 1,500 horsepower EMD 4-axle locomotive (individually, a “Unit”).

3. UNIT NUMBER(S): See attached Rider 1, Exhibit A.

4. COMMENCEMENT DATE: Delivery Date

5. TERM: One Hundred twenty (120) months (the “Term”) commencing on the first day of the month following the Delivery Date of the final accepted Unit. Rent will commence for each Unit on the Delivery Date for such Unit. For any Unit delivered on a day other than the first day of the month, Lessee will pay to Lessor a pro-rated daily Rent and any such amounts will be payable on the first day of the following month in arrears.

6. RENT: $105.00 USD per Unit per day (“Rent”).

7. EXPECTED DELIVERY: 4th Quarter 2019

8. DELIVERY POINT: Waycross, GA (“Delivery Point”). Lessee responsible for all transportation costs associated with each accepted Unit after the Delivery Date.

9. RETURN POINT: Ohio Valley Railroad, 1601 Allens Ln, Evansville, IN or at a location of equivalent mileage as determined by Lessor, with all transportation costs for the account of Lessee.

10. SETTLEMENT VALUE: See Exhibit B.

11. SPECIAL ITEMS:

A. Other Maintenance Items.

i. EPA Tier 0 Compliance. In order for Lessor, as the owner of locomotives manufactured on or after January 1, 1973, to comply with existing EPA guidelines Lessor must maintain records of any power assembly replacement. Therefore, if at any time during the Term Lessee replaces one or more power assemblies on any subject Unit Lessee shall promptly notify Lessor in writing with the following information: (a) Unit number; (b) date of replacement; (c) position; (d) liner serial number removed; (e) liner serial number applied; and (f) shop location.

ii. Emissions Related Maintenance. Lessee shall be responsible for the following additional maintenance with respect to the Unit. For any Unit which is (i) an EMD locomotive remanufactured after December 31, 2001 and powered by a 645 series engine and (ii) Tier 0 compliant in accordance with the regulations of the Environmental Protection Agency, Lessee agrees to comply with the maintenance instructions supplied by Lessor for the Unit if applicable.

iii. Air Brake Inspection. When the Unit’s scheduled three (3)-year Air Brake inspection is due, Lessor will provide all parts necessary to complete such inspection and Lessee will perform all work associated.



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iv. Temporary Storage and Start Up Procedures. If Lessee stores or removes any Unit from service for fourteen (14) days or more Lessee agrees to (i) comply with the normal and customary storage and “Return to Service Procedures” as set forth in Exhibit C hereto, and (ii) keep the Unit while stored in a "dead and drained" condition with stacks covered, and with a minimum of thirty (30) days remaining on all FRA inspections. For the avoidance of doubt and in all cases, (iii) if the Unit is shut down for 24 hours or more the engine will need a blow out before starting and all power assembly compression relief valves (test cocks) opened and checked for fluid discharge during engine cranking; and (iv) if the Unit is shut down for 48 hours or more the engine will need to be pre-lubed and a blow out before starting and all power assembly compression relief valves (test cocks) opened and checked for fluid discharge during engine cranking. If the Unit is kept in “Smart Start” mode Lessee shall monitor the operating condition of the Unit on a daily basis.

B. Start Up Costs. Start Up Costs are for the account of the Lessee.

C. Additional Return Provisions. In addition to the provisions contained within Section 9 of the Locomotive Lease Agreement and upon the return of the Unit to Lessor at the expiration or termination of the Lease, Lessee shall, at its sole cost and expense, cause such Unit to meet the following requirements:

i. The Unit’s FRA inspection card must have a minimum of 30 days remaining on all inspections.

ii. The Unit will be self-loaded and must generate a minimum of 1,350 HP and no more than 1,600 HP.

iii. At any time upon request by Lessor, Lessee agrees to furnish a copy of the last spectrographic oil analysis performed with respect to the Units. If this analysis indicates that the engine required attention, Lessee must provide evidence that all required work was done according to the Lessee’s latest specifications, or perform the work required at Lessee’s expense. Lessee at its expense shall provide Lessor upon return with a written spectrographic analysis of samples of crankshaft oil removed from each engine if each Unit performed by a laboratory satisfactory to Lessor. Such oil sampling must occur within the final month of the Term. If such analysis discloses foreign substances in amounts which exceed the standards in effect as of the date of return that are published in the manufacturer’s maintenance instructions or otherwise generally customary for units similar to the Unit for engine shutdown or repair, Lessee will take such remedial action as is required to bring the Unit to normal standards.

iv. Lessee agrees to repair all FRA defects.

v. Lessee agrees to repair all cooling system water leaks and all lube oil leaks.

vi. Lessee agrees to wash excessive oil and grime from the engine room and exterior locomotive body.

vii. All components such as doors, air conditioners, toilets, event recorders, speed recorders, lights, horn, bell, etc. must be in working order.

viii. Corrosion damage is defined as damage where the thickness of the metal is rusted through and Lessee is responsible for repairing any corrosion damage.

ix. Lessee agrees to furnish to Lessor the most recent wheel measurements taken and all maintenance records available.

x. Minimum wheel wear limits: Flange Height 1 5/16”; Flange Thickness 1 7/64”; Rim Thickness 1 1/8”; Tread Wear ¼”.

xi. Any wheel defect requiring repair by Lessee’s standards at the time of turn-back will be corrected by Lessee.

xii. Lessee shall provide Lessor with copies of all available records, logs, etc. relating to the repair and



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maintenance of the Unit upon Lessor’s request.

xiii. Fuel tank(s) shall be returned to Lessor in aggregate with the same amount of fuel as when the Unit was accepted by Lessee at the Delivery Point.

E. Remarking. The Unit shall be delivered to Lessee bearing Lessor’s reporting marks. Should Lessee desire to change the markings then at the expiration or termination of the Term, Lessee shall, at its expense and as directed by Lessor, be responsible for remarking such Unit to Lessor’s reporting marks and reprogramming the AEI Tags of such Unit.

F. Continuation of Term at Expiration. Upon expiration, the Term of the Lease shall continue on a month-to-month basis until terminated by either party upon thirty (30) days’ prior written notification by one to the other and all obligation of the Lessee hereunder shall continue until the Unit is returned to Lessor in accordance with the Lease.

12. END OF LEASE STORAGE: Upon Lessor’s request, Lessee shall permit Lessor to store the Unit on its own tracks free of charge for a period not exceeding ninety (90) days (“Free Storage Period”) after the later of (a) such expiration or (b) the date that Lessee has notified Lessor that the Unit has been returned to the Return Point. In such case, Lessee shall transport the same to any reasonable place on the lines of railroad operated by Lessee or to any connecting carrier for shipment, all as reasonably directed by Lessor. The storage and movement of such Unit shall be at the expense and risk of Lessee (and Lessee agrees to maintain physical damage insurance at the Settlement Value determined as to date of the expiration of the Term) if Lessor has given storage and movement instructions within the Free Storage Period; provided, however, that if Lessor requests Lessee to store any Unit for a period beyond the Free Storage Period, Lessee agrees to provide such additional storage at the expense of Lessor. During any storage period Lessee will permit Lessor or Lessor’s agent, to inspect the same at such times as Lessor shall reasonably request.

13. ADDRESSING OF NOTICES:

If to Lessor: If to Lessee: Pennsylvania Pullmans Inc. Indiana Business Railroad, Inc. Attn: William E. Gray Attn: Contract Administrator: J. B. Lee 5335 Casper Dr POB 926 Charlotte, NC 28214-2375 Union City, TN 38281 [email protected] [email protected] Phone (704) 914-5457 Phone (573) 225-5597

14. ADDRESSING FOR REPAIRS, DAMAGE, OR DESTROYED LOCOMOTIVES:

If to Lessor: If to Lessee: Pennsylvania Pullmans Inc. Indiana Business Railroad, Inc. Attn: William E. Gray Attn: John A. DiDomizio 5335 Casper Dr POB 6333 Charlotte, NC 28214-2375 Evansville, IN 47719 [email protected] [email protected] Phone (704) 914-5457 Phone (812)499-6132

15. COUNTERPARTS: Any counterpart of this Rider, the Lease Agreement or any other Rider that has attached to it separate signature pages, which altogether contain the signatures of each of the parties thereto, shall for all purposes be deemed a fully executed instrument. Lessor may in its sole discretion accept a photocopy, electronically transmitted facsimile or other reproduction of this Rider, the Lease Agreement or any other Rider thereto containing the signature of the Lessee (an “Electronic Image”) as a binding and effective instrument, whether or not an ink-signed copy is also received by Lessor. Lessee represents to Lessor that the signature that



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EXHIBIITS to RIDER NO. 1 of

Locomotive Lease Agreement Contract Number 2019-09 PAPX-IBR

EXHIBIT A

UNIT NUMBER: PAPX 1505 WITH FRAME NUMBER: 817054-6

EXHIBIT B

SETTLEMENT VALUE SCHEDULE

For any Unit that suffers a Casualty Occurrence Lessee shall pay to Lessor a Settlement Value for such Unit in the amount of $460,000 USD.

EXHIBIT C

LOCOMOTIVE TEMPORARY STORAGE PROCEDURES

STORAGE PROCEDURES:

Normal and customary storage items shall include but not be limited to:

1. Drain condensation from fuel tank.

2. Drain retention tank.

3. Drain condensation from entire air system.

4. Drain water from cooling system. Open all drain valves and blow out cooling system with shop air and leave all drain valves open. Remove blanking plates at compressor, low pressure cylinder heads.

5. Clean toilet and fill with 3 gallons of antifreeze.

6. Clean refrigerator or ice chest prior to storing locomotive.

7. Before storing diesel unit, ensure that batteries are fully charged and free of grounds minimum 1225SG.

8. Cover exhaust stack(s) and Turbocharger inlet with rigid material.

9. Close all car-body doors, cab doors and cab windows.

10. Every three (3) months move locomotive a sufficient distance to lubricate journal box and axle bearings. (The movement of units should not be carried out during periods of extended extremely low ambient temperature).

RETURN TO SERVICE PROCEDURES:

Normal and customary return to service procedures shall include but not be limited to:

1. Remove all covers from exhaust stack.

2. Drain condensation from fuel tank.

3. Apply blanking plates on air compressor, low pressure cylinder heads.

4. Close all water drain valves.

5. Fill engine cooling system with corrosion inhibitor treated water (used hot water if it’s possible).

6. Pre-lube diesel engine as per OEM recommendation.

7. Bar engine with cylinder test plugs open.



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8. Check the condition of engine air intake filters to ensure they are functional and that no external plugging has occurred.

9. Re-connect positive and negative battery leads. Close battery switch.

10. Inspect all electrical rotating equipment for visual defects. Ensure that all brushes move freely in brush holder(s).

11. Press and release starting button or switch a couple of times before going into full cranking.

12. After the engine is started, close all other breakers.

13. After engine is running, check for leaks and proper operation of rotating and cab equipment.

14. Wait until the engine has reached normal operating temperature before moving locomotive on its own power or increasing engine speed above notch 4.

15. Check and record horsepower.

16. Check and record cooling fan pick up and drop out temperatures.

17. Check and record radiator water temperature in and out.

18. Perform and record lube oil cooler test

19. Take lube oil sample for analysis.

20. Drain main reservoirs and ensure drain valves are functioning properly.

21. Open main reservoir and brake pipe MU valves at each end, one at a time, to clear all debris.

22. Replace dirt collector and 824 filters.

23. Load unit forward and reverse, against brakes, in notch 1 and 2 and record amperage.

24. Set up unit in dynamic brake full handle and observe engine RPM increase.

25. Fill the FRA blue card with the out of service date.

26. Ensure that all inspections are performed as per FRA regulations.

Locomotive Lease Agreement 2019-PAPX-IBR-1505FILE/33491.pdf · RECORDATION NO. 33491 FILED October...

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