**Exhibit 4.31**
**CONSULTING AGREEMENT**
**BETWEEN**
**KANSAS CITY SOUTHERN**
**AND**
**JOSÉ F. SERRANO INTERNATIONAL BUSINESS, S.A. de C.V.**
 

 

**TABLE OF CONTENTS**           **Page**1. Construction  1 2. Engagement  2 3. Duties  3 4. Term  4 5. Consulting Services Fees and Escrow  4 6. VAT Claim and Put Advisory Fee  5 7. Restrictions on Transfer of Consulting Firm Stock  5 8. Termination  5 9. Non-Disclosure  7 10. Duties Upon Termination; Survival  8 11. Compliance with Laws  8 12. Indemnification  9 13. Notice  10 14. Amendment  11 15. Successors in Interest  11 16. Severability  11 17. Governing Law; Dispute Resolution  11 18. Entire Agreement; Effective Time  14 
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**TABLE OF DEFINITIONS**
*“Acquisition”*shall have the meaning set forth in the Recitals to this Agreement.
*“Acquisition Agreement”*shall have the meaning set forth in the Recitals to this Agreement.
*“Affiliate”*shall mean, with respect to a specified person, (i) any person that directly, orindirectly through one or more intermediaries, controls or is controlled by, or is under commoncontrol with, the specified person, and (ii) any person that is an officer, director, trustee,member or general member of, or serves in a similar capacity with respect to, the specifiedperson, or of which the specified person is an officer, director, trustee, member or generalmember, or with respect to which the specified person serves in a similar capacity. For purposesof this definition, the term “control” when used with respect to a person (including entitiesincorporated or organized in the UMS) means (a) the beneficial ownership of 10% or more of thevoting interests in such person, or (b) the possession, direct or indirect, of the power todirect or cause the direction of the management and policies of such person, whether through theownership of voting securities, by contract or otherwise.
*“Agreement”*shall have the meaning set forth in the preamble of this Agreement.
*“Annual Fee”*shall have the meaning set forth in Section 5(a) of this Agreement.
*“Arbitration Costs”*shall have the meaning set forth in Section 17(e)(ii) of this Agreement.
*“Arbitration Demand”*shall have the meaning set forth in Section 17(d) of thisAgreement.
*“Arbitrators”*shall have the meaning set forth in Section 18(e) of thisAgreement.
*“Board”*shall mean the Board of Directors of Company.
*“Business”*shall have themeaning set forth in the Recitals to this Agreement.
*“Business Day”*shall mean any day that is not a Saturday, a Sunday or other day on which banksare required or authorized by law to be closed in the U.S. or the UMS.
*“Company”*shall have the meaning set forth in the preamble of this Agreement.
*“Company trade secret”*shall have the meaning set forth in Section 9 of this Agreement.
*“Consolidated Fee”*shall have the meaning set forth in Section 5(a) of this Agreement.
*“Consulting Compensation Escrow”*shall have the meaning set forth in Section 5(a) ofthis Agreement.
*“Consulting Compensation Escrow Agent”*shall have the meaning set forth in Section 5(a) ofthis Agreement.
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*“Consulting Compensation Escrow Agreement”*shall have the meaning set forth in Section5(a) of this Agreement.
*“Consulting Firm”*shall have the meaning set forth in the preamble of this Agreement.
*“Consulting Firm Stock”*shall have the meaning set forth in Section 5(c) of thisAgreement.
*“Consulting Services”*shall have the meaning set forth in Section 3(a) ofthis Agreement.
*“disability”*shall have the meaning set forth in Section 8(b) of thisAgreement.
*“Disputes”*shall have the meaning set forth in Section 17(a) of thisAgreement.
*“Dispute Notice”*shall have the meaning set forth in Section 17(c) of thisAgreement.
*“Dollars”*or“*$*” shall have the meaning set forth in Section 1(a)(ix) ofthis Agreement.
*“Effective Time”*shall mean the time of the occurrence of the Closing of the Acquisition Agreement.
*“Exchange Act”*shall have the meaning set forth in Section 5(c) of thisAgreement.
*“for Cause”*shall have the meaning set forth in Section 8(e) ofthis Agreement.
*“GTFM”*shallmean Grupo Transportación Ferroviaria Mexicana, S.A. de C.V., a *sociedad anónima decapital variable*organized under the laws of the UMS.
*“including”*shall have the meaning set forth in Section 1(a)(v) of this Agreement.
*“IRS”*shall mean Internal Revenue Service of the U.S.
*“JSS”*shall have the meaning set forth in the Recitals to this Agreement.
*“Labor Lawsuit”*shall have the meaning set forth in Section 8(e)(viii) of this Agreement.
*“Losses”*shall have the meaning set forth in Section 12 of this Agreement.
*“MM”*shall mean TMM Multimodal S.A. de C.V., a *sociedad anónima de capital variable*organized underthe laws of the UMS.
*“Non-Management Directors”*shall have the meaning set forth in Section 5(b)of this Agreement.
*“Party”*or *“Parties”*shall have the meaning set forth in the preamble of this Agreement.
*“Payment Conditions”*shall have the meaning set forth in Section 5(b) of this Agreement.
*“Payment Date”*shall have the meaning set forth in Section 5(a) of this Agreement.
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*“Payment Date Period”*shall have the meaning set forth in Section 5(b) of thisAgreement.
*“person”*shall have the meaning set forth in Section 1(a)(vi) of thisAgreement.
*“Process Agent”*shall have the meaning set forth in Section 17(g) ofthis Agreement.
*“Records”*shall have the meaning set forth in Section 11(e) ofthis Agreement.
*“Registration Rights Agreement”*shall mean the Registration Rights Agreement, dated as of thedate of this Agreement, among Company, TMM, TMMH, MM and certain stockholders of TMM.
*“shall”*shall have the meaning set forth in Section 1(a)(viii) of this Agreement.
*“Stockholders’ Agreement”*shall mean the Stockholders’ Agreement, dated as of the date of thisAgreement, among Company, Grupo TMM, S.A. and certain subsidiaries and stockholders of GrupoTMM, S.A.
*“Term”*shall have the meaning set forth in Section 4 of this Agreement.
*“TFM”*shall mean TFM, S.A. de C.V., a *sociedad anónima de capital variable*organized under thelaws of the UMS.
*“TMM”*shall mean Grupo TMM S.A., a *sociedad anónima*organized under the laws of the UMS.
*“TMMH”*shall mean TMM Holdings S.A. de C.V., a *sociedad anónima de capital variable*organized under the laws of the UMS and a subsidiary of GTMM.
*“Transfer”*shall have the meaning set forth in Section 7 of this Agreement.
*“UMS”*shall mean the United Mexican States.
“U.S.” shall mean the United States of America.
*“U.S. Laws”*shall have the meaning set forth in Section 11(b) of this Agreement.
*“VAT Claim and Put Advisory Fee”*shall have the meaning set forth in Section 6(a) ofthis Agreement.
*“Volume Weighted Price”*means the average trading price per share of Company CommonStock on the New York Stock Exchange for the twenty (20) consecutive trading daysimmediately preceding the announcement of the Final Resolution of the VAT and Put (excludingfor this purpose the 180 day period for claims and appeals), as reported on Bloomberg (VAPfunction).
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**CONSULTING AGREEMENT**
     THISCONSULTING AGREEMENT (this *“Agreement”),*made andentered into as of this If 15th dayof December, 2004, but to become effective as hereinafter provided, by and between Kansas CitySouthern, a Delaware corporation *(“Company”),*andJosé F. Serrano International Business, S.A.de C.V., a *sociedad anónima de capital variable*organized under the laws of the UMS, organizedunder the laws of the UMS *(“Consulting Firm”)*(individually, a *“Party”*; collectively, the*“Parties”)*. Unless otherwise specified herein, all capitalized terms used and not defined inthis Agreement shall have the meanings ascribed to them in the Acquisition Agreement (definedbelow).
RECITALS
     WHEREAS, Company, along with its Affiliates, owns and operates a North American railnetwork which connects key commercial and industrial markets in the central U.S. with majorindustrial cities in the UMS (the *“Business”*);
     WHEREAS, Company, TMM, MM, TMMH and others have entered into an amendedand restated acquisition agreement dated as of December 15, 2004 (the *“AcquisitionAgreement”*),  pursuant to which, among other things, all of the shares of stock of GTFM ownedby MM are to be acquired by subsidiaries of Company (the*“Acquisition”*), resulting in anincrease in the Company’s interest in and need for support of the operations of the Businessin the UMS;
     WHEREAS,José F. Serrano Segovia (*“JSS”*), as Chairman of the Board of Directors of GTFM,has knowledge and experience regarding Mexican governmental relationships relevant to theBusiness;
     WHEREAS, JSS has established Consulting Firm to provide certain consulting services; and
     WHEREAS, as a condition to its willingness to enter into the Acquisition Agreement,Company desires that Consulting Firm agree to provide to the Company certain consultingservices, and Consulting Firm is willing to make such services available to Company, all onthe terms and conditions set forth herein.
     NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained,it is agreed by and between Company and Consulting Firm as follows:
 1. Construction.  (a) References.
 (i) The Recitals to this Agreement shall be incorporated byreference into, and deemed part of, this Agreement and all references to this Agreementshall include the Recitals.
 

 

 (ii) References to any law, legislative act, rule or regulation shallmean references to such law, legislative act, rule or regulation inchanged or supplemented form or to a newly adopted law, legislative act,rule or regulation replacing a previous law, legislative act, rule orregulation.  (iii) References to a number of days shall mean calendar days,unless expressly indicated otherwise.  (iv) References to an Exhibit, Schedule, Section or Article shallbe to such Exhibit, Schedule, Section or Article of this Agreement, unlessotherwise provided herein.  (v) References to the word *“including”*shall mean “including,without limitation.”  (vi) The word *“person”*includes, where appropriate, firms,associations, companies, partnerships, trusts, corporations and other legalentities, including public bodies, as well as natural persons.  (vii) Words importing the singular import the plural, and viceversa, and words importing one gender import the other gender.  (viii) The word *“shall”*when used in this Agreement or any Schedules hereto is aword of mandate, construed as “must.”  (ix) References to *“Dollars”*and *“$”*in this Agreement shall meanDollars of the U.S.
     (b) Headings. The Article, Section, Schedule and Exhibit headings of, and the Tableof Contents to, this Agreement are for reference and convenience only and shall not beconsidered in the interpretation of this Agreement.
     (c) Definitions. Defined terms used in this Agreement shall have the meaningsspecified in the Table of Definitions set forth immediately prior to the preamble.
     2. Engagement.
     (a) Company hereby agrees to engage Consulting Firm as of the Effective Timeduring the Term to provide the Consulting Services, and Consulting Firm hereby accepts suchengagement and agrees to perform the Consulting Services, upon the terms and conditions ofthis Agreement. Consulting Firm represents and warrants that it has full authority to enter intothis Agreement and that it is not restricted in any manner whatsoever from performing serviceshereunder.
     (b) The relationship hereby created between Company and Consulting Firm shall bethat of an independent contractor and shall not be considered as creating the relationship ofemployer-employee/laborer, partnership, principal-agent, joint venture or association of anyother kind. Consulting Firm acknowledges that there does not exist between one or more of
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Consulting Firm, JSS or any employee or representative of Consulting Firm, on the one side,and one or more of Company or its Affiliates, on the other side, the relationship ofemployer-employee/laborer, partnership, principal-agent or joint venture.
     (c) Notwithstanding any other provision of this Agreement, unless Consulting Firm is orbecomes subject to taxation in the U.S. as a result of actions other than those of Company setforth below, Company agrees that it will not during the Term or thereafter:
 (i) take any action that would subject Consulting Firm or JSS tofederal income taxation in the U.S. of any payments or benefits received byConsulting Firm under this Agreement;  (ii) take any tax position inconsistent with Consulting Firm or JSSbeing an independent contractor or not being subject to federal incometaxation in the U.S. in connection with its performance under this Agreement(unless and until there is a final non-appealable judgment of a court ofcompetent jurisdiction that requires Company to do otherwise); or  (iii) require Consulting Firm to perform any Consulting Servicesthat Consulting Firm’s counsel advises Company would reasonably be expected tosubject Consulting Firm or JSS to taxation in the U.S.
     3. Duties.
     (a) Provision of Consulting Services. Consulting Firm shall provide such consultingservices as may be reasonably requested in writing by the Board of the Company related to themaintenance, fostering and promotion of a positive relationship between the Company and/or itsAffiliates and high-ranking officials of those branches of the Mexican government that have animpact on the Mexican railroad industry or the Business (the *“Consulting Services”).*Consulting Firm shall faithfully perform its duties under this Agreement to the best of its ability,utilizing all of its skills and experience, and shall devote all business time necessary for the performanceof the Consulting Services hereunder. Company acknowledges that Consulting Firm will render theConsulting Services in Mexico and in no event in the U.S.
     (b) Participation of JSS. Consulting Firm represents and warrants that (i) JSS is anofficer of the Consulting Firm, serving as the legal representative, and (ii) JSS personallyis actively engaged in the provision of Consulting Services to Company. Company acknowledgesthat JSS is employed full-time as the Chief Executive Officer of another corporation and mayduring the Term have other or additional business activities or interests, including managingother enterprises and managing his and his family’s investments and business activities.Nothing herein shall be interpreted to require that JSS devote his full time and full attention toproviding the Consulting Services, provided that during the Term (whether or not this Agreement has beenterminated) JSS shall not be employed by or provide any advice or service to any Competitor,as defined in the Stockholders’ Agreement.
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     4. Term. The term of this Agreement shall be for a period of three (3) years,commencing on the first Business Day following the Effective Time and terminating on the thirdanniversary thereof, unless terminated earlier in accordance with Section 8 (the*“Term”*).
     5. Consulting Services Fees and Escrow.
     (a) Subject to the limitations in this Agreement, Company shall pay Consulting Firmduring the Term as consideration for providing the Consulting Services an annual fee of$3,000,000 (three million Dollars) in cash (the *“Annual Fee”),*which Annual Fee shall be paidno later than the last day of the month following the first, second and third anniversary ofthe date of this Agreement (the *“Payment Date”).*At Closing (as defined in the AcquisitionAgreement), Company shall deposit the total amount of the Annual Fee for each of the yearscomprising the three (3) year Term equal to $9,000,000 (nine millionDollars) (the *“Consolidated Fee”)*in an escrow account (the *“Consulting Compensation Escrow”).*TheConsolidated Fee deposited in the Consulting Compensation Escrow shall be held and releasedby an escrow agent (the *“Consulting Compensation Escrow Agent”)*in accordance with the termsand conditions of this Agreement and the escrow agreement in the form attached hereto asExhibit A (the *“Consulting Compensation Escrow Agreement”).*
     (b) Notwithstanding any other provision of this Agreement, the Annual Fee payablewith respect to each successive one-year period within the Term shall not be paid on therespective Payment Date if the members of the Board who are independent directors of theCompany, as defined under the applicable rules of the New York Stock Exchange (the*“Non-Management Directors”),*shall have reasonably determined in good faith prior to theapplicable Payment Date that, during such one-year period (the *“Payment Date Period”),*Consulting Firm or JSS has failed to comply in one or more material respects with the terms ofthis Agreement, which failure was not remedied within ten (10) Business Days after writtennotice from the Non-Management Directors setting forth in reasonable detail the actions whichthe Non-Management Directors believe constitute such failure (collectively, the *“PaymentConditions”).*In the event that the Non-Management Directors determine that Consulting Firmor JSS has not satisfied the Payment Conditions, the Non-Management Directors shall, prior tothe relevant Payment Date, provide written notice to Consulting Firm specifically identifyingthe manner in which the Non-Management Directors believe that Consulting Firm or JSS has failedto satisfy the Payment Conditions during such period and the Annual Fee which would havebeen paid pursuant to Section 5(a) shall be forfeited. In such case, the Company shallprovide written notice to the Consulting Compensation Escrow Agent prior to the relevant Payment Datethat the Payment Conditions have not been satisfied. If the Consulting Compensation EscrowAgent has not received such written notice prior to the relevant Payment Date, the ConsultingCompensation Escrow Agent shall transfer the Annual Fee for such period to Consulting Firmpursuant to Section 5(a). For purposes of this Agreement, the determination of amajority of the Non-Management Directors shall be deemed the determination of the Non-ManagementDirectors.
     (c) As of the date of execution of the Consulting Compensation Escrow Agreement,Consulting Firm shall control all investment decisions of the amounts held in escrow by theConsulting Compensation Escrow Agent. Subject to the Stockholders’ Agreement and in amanner that complies with the Securities Exchange Act of 1934 (the *“Exchange Act”)*and other
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applicable U.S. Laws and regulations, if so instructed by Consulting Firm, theConsulting Compensation Escrow Agent may acquire shares representing the capital stock ofCompany *(“Consulting Firm Stock”).*
     6. VAT Claim and Put Advisory Fee. On the later of (i) the Effective Date and(ii) the Final Resolution of the VAT Claim and Put (as defined in the Acquisition Agreement),Company shall pay to Consulting Firm $9,000,000 (nine million Dollars), which at theCompany’s election upon ten (10) days notice to Consulting Firm may be paid in cash orcommon stock of the Company, valued at the Volume Weighted Price (the *“VAT Claim and PutAdvisory Fee”)*as consideration for Consulting Firm’s services to Company in connection withthe resolution of the VAT Claim and Put advisory services to Company. The Partiesacknowledge that the Final Resolution may occur prior to the Effective Time, which shall notaffect the Company’s obligation to make payment of the VAT Claim and Put Advisory Feepursuant to this Section 6.
     7. Restrictions on Transfer of Consulting Firm Stock. Consulting Firm shall notsell, transfer, assign, pledge or otherwise dispose of (whether with or without considerationand whether voluntarily or involuntarily or by operation of law) *(“Transfer”)*any interestin any shares of Consulting Firm Stock, except in accordance with theterms of the Stockholders’ Agreement.
     8. Termination.
     (a) Expiration. This Agreement shall terminate automatically upon the expirationof the Term, except for the provisions of Section 6, which shall survive such termination.
     (b) Death or Disability of JSS. This Agreement and Consulting Firm’s engagementhereunder shall terminate automatically on the death or disability of JSS. For purposesof this Agreement, *“disability”*shall mean the inability, in the reasonable good faith judgmentof the Board, of JSS personally to be actively engaged in the day-to-day management, businessand operations of Consulting Firm or personally to be actively engaged in the provision ofConsulting Services to Company on account of physical or mental illness or incapacity,which illness or incapacity continues uninterruptedly for a period of six (6) consecutivemonths or continues with interruptions for an aggregate period of six (6) months within any giventwelve (12) month period. In the event that this Agreement is terminated as a result of JSS’s deathor disability, Consulting Firm shall be entitled only to (i) any unpaid Annual Fee due for anyPayment Date that occured prior to such termination, (ii) a pro rata portion of the applicableAnnual Fee for the period from the last Payment Date to the date of death or disability and,(iii) if the Final Resolution of the VAT Claim and Put (excluding for this purpose the onehundred eighty (180) day period for claims and appeals) has occurred, or occurs within six(6) months of the date of death or disability, the VAT Claim and Put Advisory Fee, if notpreviously paid, and such fee shall be payable at the date of the Final Resolution of the VATClaim and Put. The payments required by clause (i) and (ii) of the preceding sentence shall bemade in a lump sum within five (5) business days of the termination.
     (c) Dissolution or Bankruptcy of Consulting Firm. This Agreement and ConsultingFirm’s engagement hereunder shall terminate automatically upon the commencement in any
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court of competent jurisdiction of a proceeding or case seeking (i) Consulting Firm’sreorganization, liquidation, dissolution, arrangement or winding-up, or the composition orreadjustment of its debts, (ii) appointment of a receiver, custodian, trustee, examiner,liquidator or the like of Consulting Firm or of all or any substantial part of its property orassets or (iii) similar relief in respect of Consulting Firm under any law relating tobankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts; orupon an order for relief against Consulting Firm entered in an involuntary case under any lawrelating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment ofdebts. In the event that this Agreement is terminated in accordance with the preceding sentence,Consulting Firm shall be entitled only to (i) any unpaid Annual Fee due for any Payment Datethat occured prior to such termination, and (ii) a pro rata portion of the applicable Annual Feefor the period from the last Payment Date to the date of termination. The payments required byclause (i) and (ii) of the preceding sentence shall be made in a lump sum within five (5)business days of the termination.
     (d) Termination by Consulting Firm. Consulting Firm may terminate this Agreementand its engagement hereunder (i) at any time without reason by the giving of at least thirty(30) days’ advance written notice to Company, and (ii) in the event of any material breach ofthis Agreement by Company, upon Company’s failure to cure the same within ten (10) days ofreceipt of Consulting Firm’s written notice thereof. In the event that this Agreement isterminated by Consulting Firm (x) pursuant to clause (i) of the preceding sentence, ConsultingFirm shall be entitled only to (i) any unpaid Annual Fee due for any Payment Date that occuredprior to such termination, (ii) a pro rata portion of the applicable Annual Fee for the periodfrom the last Payment Date to the date of termination or (y) pursuant to clause (ii) of thepreceding sentence, Consulting Firm shall be entitled only to (i) any unpaid Annual Fees due for anyPayment Date that occurred prior to such termination, (ii) all remaining Annual Fees payableduring the remainder of the Term (assuming the Agreement had not been terminated and thePayment Condition had been met), and (iii) if the Final Resolution of the VAT Claim and Put(excluding for this purpose the one hundred eighty (180) day period for claims and appeals)has occurred, or occurs thereafter, the VAT Claim or Put Advisory Fee, if not previously paid,shall be payable at the date of the Final Resolution of the VAT Claim and Put. The payments requiredby clause (x)(i) and (ii) or (y)(i) and (ii) of the preceding sentence, as the case may be,shall be made in a lump sum within five (5) business days of the termination.
     (e) Termination by Company For Cause. Company may terminate this Agreementand Consulting Firm’s engagement hereunder “*for Cause”*immediately upon notice toConsulting Firm. In the event that this Agreement is terminated by the Company for Cause,Consulting Firm shall be entitled only to (i) any unpaid Annual Fee due for any Payment Datethat occured prior to such termination, (ii) a pro rata portion of the applicable Annual Feefor the period from the last Payment Date to the date of termination. The payments required by clause(i) and (ii) of the preceding sentence shall be made in a lump sum within five (5) businessdays of the termination. For purposes of this Agreement, termination *“for Cause”*shall meantermination based upon any one or more of the following occurring after the Effective Date:
 (i) Any material breach of this Agreement by Consulting Firmwhich is not cured within ten (10) days after Consulting Firm receives from theBoard written notice of the breach which identifies in reasonable detail the
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   actions which are alleged to constitute a material breach of thisAgreement;  (ii) Material dishonesty of Consulting Firm (including that of JSS or one or more of ConsultingFirm’s directors, officers or employees) involving Company or any Affiliate of Company;  (iii) Gross negligence or willful misconduct in the performance of Consulting Firm’s duties asdetermined in good faith by the Non-Management Directors which continues after written noticeto the Consulting Firm from the Non-Management Directors identifying in reasonable detail themanner in which the Non-Management Directors believe that the Consulting Firm’s conductconstitutes gross negligence or willful misconduct;  (iv) Willful failure by Consulting Firm to provide Consulting Services as reasonably requiredfrom time to time by the Board or the Chief Executive Officer of the Company, which continuesafter written notice to the Consulting Firm from the Non-Management Directors identifying inreasonable detail the manner in which the Non-Management Directors believe that theConsulting Firm has not provided such Consulting Services (other than any such failure due toJSS’s disability);  (v) The indictment for, conviction of, or plea of *nolo contendre*to, a felony involving moralturpitude by Consulting Firm (including one or more of Consulting Firm’s directors orofficers);  (vi) Embezzlement or misappropriation by Consulting Firm (including one or more of ConsultingFirm’s directors, officers or employees) involving the Company or its Affiliates;  (vii) The failure of JSS to be an officer and (x) legal representative, or (y) actively engagedin the provision of the Consulting Services to Company (other than as a result of JSS’s deathor disability); or  (viii) The commencement of a lawsuit by or on behalf of one or more ofConsulting Firm or any director, officer or employee of Consulting Firm,including JSS, on the one side, against one or more of Company or any ofits Affiliates, on the other side, claiming, in violation ofSection 2(b), thatthere exists a relationship, other than an independent contractorrelationship, between any director, officer or employee of ConsultingFirm, including JSS, on the one side, and one or more of Company or itsAffiliates, on the other side, including an employer-employee/laborerrelationship, a partnership relationship, a principal-agent relationship, ajoint venture relationship or an association of any other kind (a *“LaborLawsuit”).*
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     (f) Termination by Company Other Than For Cause. Company may terminate thisAgreement and Consulting Firm’s engagement hereunder other than for Cause at any time by writtennotice to Consulting Firm. In the event that this Agreement is terminated by the Company other thanfor Cause, Consulting Firm shall be entitled only to (i) any unpaid Annual Fee due for any PaymentDate that occured prior to such termination, (ii) all remaining Annual Fees payable during theremainder of the Term (assuming the Agreement had not been terminated and the Payment Condition hadbeen met) and, (iii) if the Final Resolution of the VAT Claim and Put (excluding for this purposethe one hundred eighty (180) day period for claims and appeals) has occurred, or occurs thereafter,the VAT Claim or Put Advisory Fee, if not previously paid, shall be paid at the date of the FinalResolution of the VAT Claim and Put. The payments required by clause (i) and (ii) of the precedingsentence shall be made in a lump sum within five (5) business days of the termination.
     9. Non-Disclosure. During the Term and at all times after any termination of thisAgreement, Consulting Firm, its employees (including JSS), officers, directors, Affiliates andagents shall not, either directly or indirectly, use or disclose any Company trade secret,except to the extent necessary for Consulting Firm to perform its duties hereunder. For purposes ofthis Agreement, the term “*Company trade secret”*shall mean any information regarding the businessor activities of Company or any subsidiary or Affiliate, including any formula, pattern,compilation, program, device, method, technique, process, customer list, technical informationor other confidential or proprietary information, that (a) derives independent economic value,actual or potential, from not being generally known to, and not being readily ascertainable by propermeans by, other persons who can obtain economic value from its disclosure or use, and (b) isthe subject of efforts of Company or its subsidiary or Affiliate that are reasonable under thecircumstances to maintain its secrecy. Notwithstanding the foregoing, Consulting Firm shall beentitled to make such disclosures as are required by applicable law or by the requirements ofany governmental or judicial agency or body. In the event of any breach of this Section9 by Consulting Firm, notwithstanding the requirement pursuant to Section 8(f) that Companypay to Consulting Firm all remaining unpaid portions of the Consolidated Fee, Company shall not berequired to pay to Consulting Firm any remaining unpaid portions of the Consolidated Fee andshall be entitled to pursue such other legal and equitable remedies as may be available.
     10. Duties Upon Termination; Survival.
     (a) Duties. Upon termination of this Agreement, whether by Company, ConsultingFirm or automatically, for any or no reason whatsoever, Consulting Firm shall immediatelyreturn to Company all Company trade secrets which exist in tangible form (including those inthe possession of Consulting Firm’s officers, directors or employees).
     (b) Survival.The provisions of Sections 8, 9, 10, 11, 12 and 17 shallsurvive any termination of this Agreement by Company or Consulting Firm.
     11. Compliance with Laws.
     (a) In performing its obligations hereunder, and with regard to any funds, assets, or recordsrelating thereto, Consulting Firm shall, and shall use its commercially reasonable efforts to causeeach of its employees and agents to, comply in all material respects with all applicable
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laws and/or regulations which are applicable to Consulting Firm, the violation of whichwould reasonably be expected to adversely affect the Company.
     (b) Consulting Firm hereby acknowledges that it is the policy of Company to refrainfrom engaging in any act which may violate any federal, state, local or other laws of theU.S., including the Foreign Corrupt Practices Act *(“U.S. Laws”),*or any foreign laws, includingforeign anti-bribery laws, which are applicable to Consulting Firm. Consulting Firm shall,and shall use its best efforts to cause its officers, directors, employees and agents to, complywith this policy.
     (c) In performing its obligations under this Agreement, Consulting Firm shall not,and shall use its best efforts to cause each of its employees and agents not to, directly orindirectly pay, offer, give or promise to pay or give, or authorize the payment or gift ofany, monies or other things of value, to (a) an official, employee or agent of any government, (b)an official, employee or agent of any agency or instrumentality of any government, (c) acandidate for political office in any country, (d) a political party or party official in any country toinfluence any acts or decisions of such political party or party official, or (e) any otherperson, individual or entity at the suggestion, request or direction or for the benefit of any of thepersons described in items (a) through (d) of this Section 11(c), in any such case in materialviolation of any laws and/or regulations applicable to Consulting Firm where it would reasonably beexpected that such violation would constitute a violation by Company or by Consulting Firm asa result of its engagement hereunder.
     (d) Consulting Firm agrees promptly and completely to respond to Company’sreasonable requests for information necessary for Company to determine if any particulartransaction can be conducted in compliance with U.S. Laws which are applicable to one or moreof Consulting Firm, Company or any of Company’s Affiliates. Consulting Firm shall, and shalluse its best efforts to cause each of its employees and agents to, execute all certificationsand provide all information as Company may reasonably request for Company to comply with suchapplicable laws, regulations and orders. Consulting Firm agrees promptly to report to Companyall violations of this Section 11 that Consulting Firm becomes aware of.
     (e) Consulting Firm shall, and shall use commercially reasonable efforts to causeeach of its employees and agents to, maintain and keep in a safe place, for a period of five(5) years from the date of their origination, books, records and accounts in any media whichadequately reflect the recipient, nature and terms of every payment, expenditure or otherdisbursement made directly or indirectly in connection with the sale and/or resale by Companyof the services of Company or its employees (collectively, *“Records”),*and, upon judicial orarbitral order, shall make such Records available at Consulting Firm’s premises forinspection. Consulting Firm shall certify in writing that such Records at the time of such judicial orarbitral order, accurately and completely reflect the recipient, nature and terms of such payments,expenditures or disbursements. Immediately upon judicial or arbitral order, Consulting Firmshall provide to the issuing court or arbitration tribunal such supplementary information andexplanation as is requested by such courts or arbitration tribunals (whether requested ofConsulting Firm or of Company or its Affiliates) to fully understand the material contained inthe Records and trace the application and use of every payment, expenditure or other disbursementmade in connection with the sale of the services of Company or its Affiliates.
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     (f) Consulting Firm represents and warrants that, to the best knowledge of itspresident, as of the date hereof, except as disclosed to Company, none of the officers,employees or agents of Consulting Firm, and none of their respectivespouses, children (including step-children), siblings, parents (including step-parents), parents-in-law (includingstep-parents-in- law), uncles and aunts, is an employee, officer or representative of any government or agencyor instrumentality of any government, or of a political party or is a candidate for politicaloffice. Consulting Firm agrees promptly to notify Company of any change in the status of the officers,employees or agents of Consulting Firm, or their respective family members specified above ofwhich it becomes aware after the date hereof, which would make the representations orwarranties set forth in this paragraph inaccurate.
     (g) Company shall withhold from any payment under this Agreement any amountrequired to be withheld by Company under applicable law.
     12. Indemnification. Consulting Firm shall indemnify and hold Company and each ofits Affiliates, and each of their respective officers, directors, employees, members,stockholders, agents and representatives, harmless from and against all losses, damages, liabilities,claims, demands, obligations, deficiencies, payments, judgments, settlements, costs and expenses ofany nature whatsoever (including the costs and expenses of any and all investigations, actions,suits, proceedings, demands, assessments, judgments, orders, settlements and compromises relatingthereto, and reasonable attorneys’, accountants’, experts’ and other fees and expensesin connection therewith) *(“Losses”)*resulting from, arising out of, or due to, directly orindirectly, the filing of a Labor Lawsuit by or on behalf of Consulting Firm or any director, officer oremployee of Consulting Firm, including JSS. The indemnification set forth in the precedingsentence shall be in addition to any other remedy to which Company may be entitled by law orequity. All indemnification payments of Consulting Firm hereunder shall be in Dollars. Theindemnification obligations of Consulting Firm set forth in this Section 12 shallsurvive the termination or expiration of this Agreement. In addition to any other remedy, Company shallbe entitled, but shall not be obligated, to offset all Losses against any obligations of Companyto Consulting Firm, now or hereafter existing, including payments of the Annual Fee.
     13. Notice. Notices and all other communications to either Party pursuant to thisAgreement shall be in writing and shall be deemed to have been given when personallydelivered, sent via express courier such as UPS or DHL (as high priority) or delivered byfacsimile (but only to the extent that a copy of such facsimile is sent via express couriersuch as UPS or DHL (as high priority) promptly thereafter), addressed as follows, or to such otheraddress as a Party shall designate by notice to the other Party:
     (a) in the case of Company, to:     Kansas City Southern  427 West 12th Street  Kansas City, Missouri 64105  Attention: Senior Vice President and General Counsel
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     With a copy (which shall not constitute notice) to:     Sonnenschein Nath & Rosenthal LLP  4520 Main Street, Suite 1100  Kansas City, MO 64111  Attention: John F. Marvin     and     White & Case, S.C.  Blvd. Manuel Ávila Camacho 24, PH  Colonia Lomas de Chapultepec, 11000  México, D.F., Mexico  Attention: José VicenteCorta Fernández and/or Iker I. Arriola Peñalosa     (b) in the case of Consulting Firm, to:   José F. Serrano International Business, S.A. de C.V.  Avenida de la Cúspide, No. 4755  Kolonia Parques del Pedregal  14010, Mexico, D.F.  Attention: José Francisco Serrano Segovia     With a copy (which shall not constitute notice) to:     Milbank, Tweed, Hadley & McCloy LLP  1 Chase Manhattan Plaza  New York, New York 10005, U.S.A.  Attention: Thomas C. Janson     and     Martínez, Algaba, Estrella, DeHaro y Galván Duque, S.C.  Paseo de los Tamarindos [*]  Colonia Bosques de las Lomas [*]  México, D.F., México  Attention: Carlos Galván Duque
     14. Amendment. No provision of this Agreement may be amended, modified, waivedor discharged unless such amendment, modification, waiver or discharge is agreed to inwriting, signed by Consulting Firm, the Chairman of the Board and a duly authorized member of theBoard. No waiver by either Party at any time of any breach by the other Party of, orcompliance with, any condition or provision of this Agreement to be performed by such other Party shallbe deemed a waiver of similar or dissimilar provisions or conditions at the time or at any prioror subsequent time.
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     15. Successors in Interest. The rights and obligations of Company under thisAgreement shall inure to the benefit of and be binding in each and every respect upon thedirect and indirect successors and assigns of Company, regardless of the manner in which suchsuccessors or assigns shall succeed to the interest of Company hereunder, and this Agreementshall not be terminated by the voluntary or involuntary dissolution of Company or by anymerger or consolidation or acquisition involving Company, or upon any transfer of all orsubstantially all of Company’s assets, or terminated otherwise than in accordance with its terms. In the eventof any such merger or consolidation or transfer of assets, the provisions of this Agreement shallbe binding upon and shall inure to the benefit of the surviving corporation or the corporation orother person to which such assets shall be transferred. Neither this Agreement nor any ofthe payments or benefits hereunder may be pledged, assigned ortransferred by Consulting Firmeither in whole or in part in any manner, without the prior written consent of Company.
     16. Severability. The invalidity or unenforceability of any particular provision ofthis Agreement shall not affect the other provisions hereof, and this Agreement shall be construedin all respects as if such invalid or unenforceable provision were omitted.
     17. Governing Law; Dispute Resolution.
     (a) Resolution of any and all disputes between the Parties arising from or inconnection with this Agreement or any transactions contemplated by this Agreement, whetherbased on contract, tort, common law, equity, statute, regulation, order or otherwise,*(“Disputes”)*including Disputes arising in connection with claims by third persons, shall be exclusivelygoverned by and settled in accordance with the provisions of thisSection 17;provided, that the foregoing shall not preclude equitable or other judicial relief to enforce the provisionshereof or to preserve the status quo pending resolution of Disputes hereunder.
     (b) THIS AGREEMENT, THE LEGAL RELATIONS BETWEEN THE PARTIESAND THE ADJUDICATION AND ENFORCEMENT THEREOF SHALL BE GOVERNEDBY AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THESUBSTANTIVE LAWS OF THE STATE OF DELAWARE, UNITED STATES OF AMERICAAND THE FEDERAL LAWS OF THE UNITED STATES OF AMERICA, WITHOUTREGARD TO APPLICABLE CHOICE OF LAW PROVISIONS THEREOF.
     (c) As to any Dispute which is not resolved in the ordinary course of business, theParties shall first attempt in good faith to promptly resolve any Dispute by negotiationsbetween executives. Either of the Parties may initiate this procedure by delivery of written noticeof the Dispute (the *“Dispute Notice”)*to the other. Not later than 20 days after delivery of theDispute Notice, one executive of one of the Parties with authority to settle the Dispute shall meetwith one executive of the other Party with authority to settle the Dispute at a reasonablyacceptable time and place, and thereafter as such executives shall deem reasonably necessary. Theexecutives shall exchange relevant information and endeavor to resolve the Dispute. Prior toany such meeting, each Party’s executive shall advise the other as to any individuals who willattend such meeting with the executive. All negotiations pursuant to this Section 17(c)shall be confidential and shall be treated as compromise negotiations for purposes of Rule 408 of theFederal Rules of Evidence and similarly under other local or foreign rules of evidence.
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     (d) Each Party hereby agrees to submit all Disputes not resolved pursuant toSection 17(c) to final and binding arbitration in New York, New York, U.S. EitherParty may initiate such arbitration by delivery of a demand therefor (the *“Arbitration Demand”)*to theother Party not sooner than 60 days after the date of delivery of the Dispute Notice but promptlythereafter; provided, that if a Party rejects participation in the procedures provided underSection 17(c), the other Party may initiate arbitration at such earlier time as suchrejection shall become reasonably apparent, and, whenever arbitration is initiated, may seek recovery of anydamages or expenses arising from such rejection, including attorneys’ fees and expenses, andArbitration Costs (as defined below) in connection with arbitration hereunder.
     (e) Three Arbitrators shall be appointed (the *“Arbitrators”),*one of whom shall beappointed by Company, one by Consulting Firm, and the third of whom, who shall act as thechairman of the arbitral tribunal, shall be appointed by the first two Arbitrators within ten(10) Business Days of the first two Arbitrators’ confirmation by the American ArbitrationAssociation. If either Party fails to appoint an Arbitrator within ten (10) Business Days ofa request in writing by the other Party to do so or if the first two Arbitrators cannot agree onthe appointment of the third Arbitrator within ten (10) Business Days of their confirmation by theAmerican Arbitration Association, then such Arbitrator shall be appointed by the AmericanArbitration Association in accordance with its Commercial Arbitration Rules. As soon as thearbitration tribunal has been convened, a hearing date shall be set within fifteen (15) daysthereafter; provided, that the Arbitrators may extend the date of the hearing upon request ofany Party to the extent necessary to insure that such Party is given a reasonable period of timeto prepare for the hearing. Written submittals in the English language shall be presented andexchanged by both Parties five Business Days before the hearing date. At such time the Partiesshall also exchange copies of all documentary evidence upon which they will rely at thearbitration hearing and a list of the witnesses whom they intend to call to testify at thehearing. The Arbitrators shall make their determination as promptly as practicable after conclusion ofthe hearing.
          (i) The arbitration shall be conducted in the English language pursuant tothe Commercial Arbitration Rules of the American Arbitration Association.Notwithstanding the foregoing, (A) each Party shall have the right to audit thebooks and records of the other Party that are reasonably related to the Dispute;(B) each Party shall provide to the other, reasonably in advance of any hearing,copies of all documents which a Party intends to present at such hearing; (C) allhearings shall be conducted on an expedited schedule; and (D) all proceedingsshall be confidential, except that either Party may at its expense make astenographic record thereof.
          (ii) The Arbitrators shall endeavor to complete all hearings not later than 120days after their tribunal has been convened, and shall make a final award aspromptly as practicable thereafter. Such award shall be communicated, in writing, bythe Arbitrators to the Parties, and shall contain specific findings of fact andconclusions of law in accordance with the governing law set forth in Section17(b). Any award of such Arbitrators shall be final and binding upon the Partiesto this Agreement and shall not be attacked by any of the Parties to this Agreementin any court of law and may be enforced in any court having
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jurisdiction, including expressly the courts of the State of New York, U.S.,and the courts of the Federal District of Mexico. The Arbitrators shall apportionall costs and expenses of the arbitration, including the Arbitrators’ fees andexpenses, fees and expenses of experts and fees and expenses of translators*(''Arbitration Costs”)*between the prevailing and non-prevailing Party as theArbitrators shall deem fair and reasonable. In circumstances where (A) a Disputehas been asserted or defended against on grounds that the Arbitrators deemmanifestly unreasonable, or (B) the non-prevailing Party has rejectedparticipation in procedures under Section 17(c), the Arbitrators mayassess all Arbitration Costs against the non-prevailing Party and may include inthe award the prevailing Party’s attorneys’ fees and expenses in connection withany and all proceedings under this Section 17. Notwithstanding theforegoing, in no event may the Arbitrators award multiple or punitive damages.
     (f) Pursuant to an agreement of the Parties or a judicial determination that a Disputeis not subject to final and binding arbitration as set forth inSection 17, each Partyirrevocablyagrees that any legal action or proceeding against it with respect to this Agreement and anytransaction contemplated by this Agreement shall be brought only in the courts of the State ofNew York, or of Federal courts of the U.S. sitting in New York, and by execution and deliveryof this Agreement, each Party irrevocably submits to the venue and jurisdiction of each suchcourt and irrevocably waives any objection or defense such party may have to venue or personaljurisdiction in any such court for the purpose of resolving any claim, dispute, cause ofaction arising out of or related to this Agreement (including any claim that the suit or action hasbeen brought in an inconvenient forum and any right to which it may become entitled on account ofplace of residence or domicile), the alleged breach of this Agreement, the enforcement of theterms of this Agreement and the other terms contemplated hereby. A final judgment in any suit,action or proceeding shall be conclusive and may be enforced in any court where jurisdictionover the Parties may be had or in which the Parties are subject to service of process.
     (g) Each of the Parties irrevocably appoints CT Corporation (the *“Process Agent”),*at111 Eighth Avenue, New York, New York 10011 (212-894-8940), respectively as its agent andtrue and lawful attorney-in-fact in its name, place and stead to accept on behalf of each ofthe Parties and their respective properties and revenues, service of copies of the summons andcomplaint and any other process which may be served in any such suit, action or proceedingbrought in the State of New York, and each of the Parties agrees that failure of the ProcessAgent to give any notice of any such service of process to any of the Parties shall not impair oraffect the validity of such service or the enforcement of any judgment based thereon.
     18. Entire Agreement; Effective Time. This Agreement constitutes theentire agreement among the Parties with respect to the subject matter hereof and terminates andsupersedes all other prior agreements and understandings, both written and oral, between theParties with respect to the terms of Consulting Firm’s engagement or severance arrangements.This Agreement shall become effective at the Effective Time.
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     IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first writtenabove.       **Kansas City Southern**       **BY:** **/s/ Michael R. Haverty**       **Name:** **Michael R. Haverty**  **Title:** **Chairman, President & CEO**       **José F. Serrano International Business, S.A. de C.V.**       **By:** **/s/ José Francisco Serrano Segovia**       **Name:** **José Francisco Serrano Segovia**
Unless otherwise specified herein, all capitalized terms used and not defined in the followingGuaranty (as defined below) shall have the meanings ascribed to them in the above ConsultingAgreement.
JSS hereby, unconditionally and irrevocably, personally guarantees (the *“Guaranty”),*by way of anindependent obligation to Company, the obligation of Consulting Firm pursuant to Section 12 of the Agreement to indemnify and hold Company and each of its Affiliates, and each of theirrespective officers, directors, employees, members, stockholders, agents and representativesharmless from and against all Losses (as such term is defined in Section 12 of theAgreement) resulting from, arising out of, or due to, directly or indirectly, the filing of aLabor Lawsuit by Consulting Firm or any director, officer or employee of Consulting Firm,including JSS *(“Guaranteed Obligation”).*This is a guaranty of payment and not of collection only.If for any reason whatsoever Consulting Firm shall fail or be unable promptly to comply with theGuaranteed Obligation, JSS will promptly upon receipt of notice thereof from Company, pay or causeto be paid in lawful money of the U.S. the unpaid Guaranteed Obligation then due and payable toCompany (in the amounts and to the extent required of Consulting Firm under the Agreement). JSSwaives any and all notice of the creation, renewal, extension or accrual of the GuaranteedObligation and notice of or proof of reliance by Company upon this Guaranty or acceptance of thisGuaranty; the Guaranteed Obligation shall conclusively be deemed to have been created, contractedor incurred, or renewed, extended, amended or waived, in reliance upon this Guaranty; and alldealings between Company and Consulting Firm shall be conclusively presumed to have been had orconsummated in reliance upon this Guaranty. Guarantor agrees that (i) any notice provided in themanner required under the Agreement shall be deemed to constitute notice to JSS for purposeshereof and (ii) any knowledge of Consulting Firm shall be deemed knowledge of JSS for purposeshereof. The liability of the undersigned under this Guaranty shall not be affected or excused by(x) any lack of enforceability against Consulting Firm of the Guaranteed Obligation for any reasonwhatsoever and (y) any other circumstance
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which might otherwise constitute a discharge of a guarantor. JSS waives promptness, diligence andnotices with respect to the Guaranteed Obligation and this Guaranty and any requirement thatCompany exhaust any right or take any action against Consulting Firm. Any term or provision of thisparagraph which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, beineffective to the extent of such invalidity or unenforceability without rendering invalid orunenforceable the remaining terms and provisions of this paragraph or affecting the validity orenforceability of any of the terms or provisions of this paragraph in any other jurisdiction. Ifany provision of this paragraph is so broad as to be unenforceable, the provision shall beinterpreted to be only so broad as is enforceable. This Guaranty is strictly limited to theGuaranteed Obligations.
**AGREED AND ACCEPTED AS OF THE DATE OF THE ABOVE CONSULTING AGREEMENT**     **JOSÉ FRANCISCO SERRANO SEGOVIA**     **/s/ José Francisco Serrano Segovia**   
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