Document:

exv4w1

Exhibit 4.1

CERTIFICATE OF DESIGNATION

OF

PREFERRED STOCK

OF

LIGHTING SCIENCE GROUP CORPORATION

To Be Designated

Series D Non-Convertible Preferred Stock

 

Pursuant to Section 151(g) of the

General Corporation Law of the State of Delaware

 

     The undersigned DOES HEREBY CERTIFY that the following resolution was duly adopted by the
Board of Directors (the “Board of Directors”) of Lighting Science Group Corporation, a
Delaware corporation (the “Corporation”), at a meeting duly convened and held, at which a
quorum was present and acting throughout:

     RESOLVED, that pursuant to the authority conferred on the Board of Directors by the
Corporation’s Certificate of Incorporation, the issuance of a series of preferred stock, par value
$0.001 per share, of the Corporation which shall consist of 79,000,000 shares of preferred stock
be, and the same hereby is, authorized, and each of the Chief Executive Officer and the Chief
Financial Officer of the Corporation be, and he hereby is, authorized and directed to execute and
file with the Secretary of State of the State of Delaware a Certificate of Designation of Preferred
Stock of the Corporation setting forth a copy of this resolution fixing the designations, powers,
preferences and rights of the shares of such series, and the qualifications, limitations or
restrictions thereof (in addition to the designations, powers, preferences and rights, and the
qualifications, limitations or restrictions thereof, set forth in the Certificate of Incorporation
which may be applicable to the Corporation’s preferred stock), as follows:

     1. Number of Shares; Designation. A total of 79,000,000 shares of preferred stock, par value
$0.001 per share, of the Corporation are hereby designated as Series D Non-Convertible Preferred
Stock (the “Series”). Initially, shares of the Series (the “Preferred Shares”) will
be issued: (i) pursuant to the terms of the rights offering (the “Rights Offering”)
contemplated by that certain Convertible Note Agreement (the “Pegasus Convertible Note”),
dated as of August 27, 2009, by and between Pegasus IV and the Corporation; (ii) upon the
conversion of the Pegasus Convertible Note; and (iii) upon the conversion of that certain
Convertible Note Agreement (the “Philips Convertible Note”), dated as of August 27, 2009,
by and between Koninklijke Philips N.V. and the Corporation. Simultaneously with any issuance of
Preferred Shares to any Holder, the Corporation shall issue to such Holder a warrant (each, a
“Warrant”) to purchase shares of Common Stock, par value $0.001 per share, of the
Corporation (the “Common Stock”). Each Warrant shall entitle the Holder to purchase the
same number of shares of Common Stock as Preferred Shares. The Corporation will only issue
Warrants and Preferred Shares in whole Units.

     2. Rank. The Series shall, with respect to rights upon liquidation, dissolution or winding-up
of the affairs of the Corporation, rank:

     (a) Senior and prior to the Common Stock and any additional class or series of stock which may
in the future be issued by the Corporation and is designated in the amendment to the Certificate of
Incorporation or the certificate of designation establishing such additional class or series of
stock as

 

 

ranking junior to the Preferred Shares or which do not state they are Parity Liquidation
Shares (as defined below) or Senior Liquidation Shares (as defined below). Any shares of the
Corporation’s Capital Stock which are junior to the Preferred Shares with respect to rights upon a
Liquidation Event (as defined below) are hereinafter referred to as “Junior Liquidation
Shares.”

     (b) Pari passu with any additional class or series of stock which may in the future be issued
by the Corporation and is designated in the amendment to the Certificate of Incorporation or the
certificate of designation establishing such additional class or series of stock as ranking equal
to the Preferred Shares. Any shares of the Corporation’s Capital Stock which are equal to the
Preferred Shares with respect to rights upon liquidation, dissolution or winding-up of the affairs
of the Corporation are hereinafter referred to as “Parity Liquidation Shares.”

     (c) Junior to the 6% Convertible Preferred Stock of the Corporation, Series B Preferred Stock
of the Corporation, and Series C Preferred Stock of the Corporation.

     (d) Junior to any additional class or series of stock which may in the future be issued by the
Corporation and are designated in the amendment to the Certificate of Incorporation or the
certificate of designation establishing such additional class or series of stock as ranking senior
to the Preferred Shares. Any shares of the Corporation’s Capital Stock that rank senior to the
Preferred Shares with respect to rights upon a Liquidation Event are hereinafter referred to as
“Senior Liquidation Shares.”

     3. Dividends.

     (a) Dividends shall accrue on each Preferred Share at an annual rate of 25.0% (the
“Dividend Rate”) multiplied by the Liquidation Value (as defined below) for each Preferred
Share and no more (the “Annual Dividend”). Dividends on each Preferred Share shall accrue
annually on the anniversary of the original issuance date of such Preferred Share (each, a
“Dividend Payment Date”), commencing on the first Dividend Payment Date immediately
following the applicable issue date of such Preferred Share. The Annual Dividend on each Preferred
Share shall accrue to Liquidation Value, be cumulative, whether or not earned or declared, and
whether or not sufficient funds are legally available in respect thereof, from the applicable issue
date of such Preferred Share and shall compound annually on the next succeeding Dividend Payment
Date.

     (b) Subject to Section 3(c) and the terms of the Warrants, of the Annual Dividend
payable pursuant to Section 3(a), the portion of the Annual Dividend equal to 17%
multiplied by the Liquidation Value (the “Exercise Price Accrual Rate”) shall not be
payable in cash, stock or property, but shall accrue solely for purposes of funding the payment of
the exercise price of all or a portion of the Warrant(s) held by such Holder (the “Exercise
Price Accrual”). The remainder of the Annual Dividend in excess of the Exercise Price Accrual
shall be payable solely by accrual to Liquidation Value (the “LV Accrual”, and the rate of
such remainder, which initially shall be 8%, is referred to herein as the “LV Accrual
Rate”). Notwithstanding this Section 3(b), if within one year of the date that this
Certificate of Designation becomes effective, the Corporation issues shares of a new series of
preferred stock with an annual dividend rate payable in cash, stock or property that is greater
than the LV Accrual Rate, then the Dividend Rate of this Series shall be increased by such
difference, and such increased Dividend Rate shall become effective on the date that such new
shares are issued.

     (c) The Exercise Price Accrual shall not be payable in cash, stock or property but shall be
credited to an account for the benefit the Holder and used solely to fund payment of the exercise
price of

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all or a portion of a Warrant in accordance with the terms of the Warrant. Except for in the
case of the surrender by a Holder of all or a portion of such Holder’s Preferred Shares pursuant to
Section 5, the Exercise Price Accrual credited to the account of a Holder may not be
applied by such Holder to fund payment of all or a portion of the exercise price of the Warrant(s)
held by such Holder until: (i) the eighth anniversary of the date of original issuance (the
“Redemption Date”) or (ii) the Deemed Redemption Date (as defined below). Any Exercise
Price Accrual amounts applied by a Holder to fund payment of the exercise price of the Warrant(s)
pursuant to this Section 3(c) and in accordance with the terms of the Warrants shall be
surrendered by the Holder. Upon the Redemption Date or the Deemed Redemption Date, any Exercise
Price Accrual in excess of the exercise price of the Warrant(s) held by such Holder shall be
surrendered by the Holder.

     (d) For the avoidance of doubt, assuming no surrenders or adjustments whatsoever, the
Liquidation Value, the Annual Dividend, Exercise Price Accrual and cumulative Exercise Price
Accrual with respect to one Preferred Share shall be as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	  Anniversary of the	 	 	 	 	 	 	 	 	 	 	 	 
	    Date of Original	 	 	 	 	 	 	 	 	 	 	 	 
	         Issuance	 	 	 	 	 	 	 	 	 	 	 	 
	 (Dividend Payment	 	 	 	 	 	 	 	 	 	Exercise Price	 	Cumulative Exercise
	     Date) (Year)	 	Liquidation Value	 	Annual Dividend	 	Accrual	 	Price Accrual
	0

	 	$	1.0060	 	 	$	—	 	 	$	—	 	 	$	—	 
	1

	 	$	1.2575	 	 	$	0.2515	 	 	$	0.1710	 	 	$	0.1710	 
	2

	 	$	1.5719	 	 	$	0.3144	 	 	$	0.2138	 	 	$	0.3848	 
	3

	 	$	1.9648	 	 	$	0.3930	 	 	$	0.2672	 	 	$	0.6520	 
	4

	 	$	2.4561	 	 	$	0.4912	 	 	$	0.3340	 	 	$	0.9860	 
	5

	 	$	3.0701	 	 	$	0.6140	 	 	$	0.4175	 	 	$	1.4036	 
	6

	 	$	3.8376	 	 	$	0.7675	 	 	$	0.5219	 	 	$	1.9255	 
	7

	 	$	4.7970	 	 	$	0.9594	 	 	$	0.6524	 	 	$	2.5779	 
	8

	 	$	6.00	 	 	$	1.1992	 	 	$	0.8155	 	 	$	3.3934	 

     4. Liquidation.

     (a) The liquidation value per Preferred Share shall be an amount equal to (i) $1.006 per share
(the “Purchase Price”), subject to adjustment in the event of a stock split or similar
event applicable to the Series, plus (ii) the Annual Dividend on such Preferred Share from the date
of original issuance through the applicable measurement date (the sum of the foregoing clauses (i)
and (ii) being hereinafter referred to as the “Liquidation Value”). The Liquidation Value
per Preferred Share, in case of the voluntary or involuntary liquidation, dissolution or winding-up
of the affairs of the Corporation or a Change of Control (each, a “Liquidation Event”, and
the date of such Liquidation Event being referred to herein as the “Deemed Redemption
Date”), shall be an amount equal to the Liquidation Value as of the Redemption Date, as if such
Holder held the Preferred Share until the Redemption Date; provided, however, the
unearned portion of the Annual Dividend that accelerates as a result of this Section 4(a)
shall not be payable in cash, stock or property but shall accrue solely for purposes of funding the
payment of the exercise price of all or a portion of the Warrant(s) held by such Holder and be
deemed the Exercise Price Accrual for all purposes thereafter.

     (b) Upon the occurrence of any Liquidation Event, the Holders (i) shall not be entitled to
receive the Liquidation Value of the Preferred Shares held by them until the liquidation value of
all Senior Liquidation Shares shall have been paid in full, and (ii) shall be entitled to receive
an amount in

3

 

cash equal to the Liquidation Value, less the Exercise Price Accrual (which amount shall
remain credited to the account of the Holders in accordance with Section 4(c)), of such
shares held by them in preference to and in priority over any distributions upon the Junior
Liquidation Shares. Upon payment in full of the Liquidation Value to which the Holders are
entitled, the Holders will not be entitled to any further participation in any distribution of
assets by the Corporation and the Preferred Shares held by such Holders shall be deemed redeemed.
If the assets of the Corporation are not sufficient to pay in full the Liquidation Value payable to
the Holders and the liquidation value payable to the holders of any Parity Liquidation Shares, the
holders of all such shares shall share ratably in such distribution of assets in accordance with
the amounts that would be payable on the distribution if the amounts to which the Holders and the
holders of Parity Liquidation Shares are entitled were paid in full.

     (c) In the event of any Liquidation Event, the cumulative amount of the Exercise Price Accrual
(including the accelerated portion thereof pursuant to Section 4(a)) for each Preferred
Share shall remain credited to the account of the Holder until used to fund the payment of the
exercise price of all or a portion of the Holder’s Warrant(s) or until the date that such Holder’s
Warrants are no longer exercisable in accordance with the terms of the Warrants.

     (d) The Corporation shall, no later than the Deemed Redemption Date, deliver written notice of
such Liquidation Event to each Holder stating (1) the Redemption Price (defined below) and (2) the
date or dates when and the place or places where the amounts distributable in such circumstances
shall be payable. Any payment required by this Section 4 shall be made not less than 30
days after the date of the Liquidation Event.

     5. Surrender; Conversion. Except as provided in this Section 5, Holders of the
Preferred Shares shall have no right to exchange or convert such shares into any other securities.
In accordance with the terms of the Warrants, a Holder may elect to fund payment of all or a
portion of the exercise price of such Holder’s Warrant(s) being exercised by such Holder by the
surrender of all or a portion of such Holder’s Preferred Share(s) having a Liquidation Value equal
to that portion of the exercise price that such Holder elects to satisfy by the surrender of
Preferred Share(s).

     6. Voting Rights. Unless otherwise provided by law, the Certificate of Incorporation or
Section 7, below, the Holders shall not have the right to vote for the election of directors or on
any other matters presented to the Corporation’s stockholders for action by their written consent
or at any annual or special meeting of stockholders. On any matter on which the Holders are
entitled by law or under the Certificate of Incorporation to vote separately as a class, each such
Holder shall be entitled to one vote for each share held, and such matter shall be determined by a
majority of the Preferred Shares voting on such matter.

     7. Restrictions and Limitations.

     So long as any Preferred Shares remain outstanding, the Corporation shall not, without the
vote or written consent by the Holders of at least a majority of the outstanding Preferred Shares,
voting together as a single class:

	 	(i)	 	alter, modify or amend (whether by merger or otherwise) the terms of the Series
in any way;

4

 

	 	(ii)	 	create (whether by merger or otherwise) any new series or class of Senior
Liquidation Shares or Parity Liquidation Shares;
	 
	 	(iii)	 	increase (whether by merger or otherwise) the authorized number of shares of the Series;
	 
	 	(iv)	 	issue (whether by merger or otherwise) any Senior Liquidation Shares or Parity
Liquidation Shares;
	 
	 	(v)	 	issue (whether by merger or otherwise) any shares of the Series except pursuant
to the terms of the Rights Offering, the Pegasus Convertible Note or the Philips
Convertible Note; or
	 
	 	(vi)	 	enter into any definitive agreement or commitment with respect to any of the foregoing.

     In the event that the Holders of at least a majority of the outstanding Preferred Shares agree
to allow the Corporation to alter or change the rights, preferences or privileges of the Series
pursuant to applicable law, no such change shall be effective to the extent that, by its terms,
such change applies to less than all of the Preferred Shares then outstanding.

     8. Mandatory Redemption.

     (a) Upon the Redemption Date, the Corporation shall, subject to having funds legally available
therefor, redeem all, but not less than all, outstanding Preferred Shares at the Liquidation Value;
(the “Redemption Price”); provided, however, that the Exercise Price
Accrual shall not be payable in cash but shall remain credited to the account of the Holder in
accordance with Section 8(d).

     (b) The Corporation shall, no later than 30 days prior to the Redemption Date, deliver written
notice to each Holder stating (1) the Redemption Price, (2) the place or places at which
certificates representing the Preferred Shares are to be surrendered for payment of the Redemption
Price and (3) any other information that may be required by applicable law. Each Holder shall have
30 days from receipt of such written notice to surrender the Holder’s certificates representing the
Preferred Shares.

     (c) If on the Redemption Date, the assets of the Corporation legally available to redeem the
Preferred Shares shall be insufficient to redeem all outstanding Preferred Shares to be redeemed at
the Redemption Price, then (A) the Corporation shall redeem that number of Preferred Shares that
may be redeemed with the assets of the Corporation legally available therefor pro rata among the
redeeming Holders and (B) any unredeemed Preferred Shares shall be carried forward and shall be
redeemed at such time as funds are legally available therefor. All Preferred Shares that are
subject to redemption under this Section 8 that have not been redeemed due to the
insufficiency of legally available funds therefor shall continue to be outstanding and entitled to
all dividends, if any (which shall be payable at the applicable Dividend Rate), liquidation, voting
and other rights, preferences and privileges of the Preferred Shares, until such shares are
redeemed. For the avoidance of doubt, in such case, the entire Annual Dividend shall be payable as
the LV Accrual, and no portion thereof shall be allocated to the Exercise Price Accrual.

     (d) If any Preferred Shares are redeemed pursuant to this Section 8, the cumulative
amount of the Exercise Price Accrual for each Preferred Share shall remain credited to the account
of the Holder

5

 

until the date that such Holder’s Warrants are no longer exercisable in accordance with the
terms of the Warrants.

     (e) All Preferred Shares that are redeemed by the Corporation and subsequently canceled by the
Board of Directors pursuant to this Section 8, shall be retired and shall not be subject to
reissuance.

     9. Transfer. Preferred Shares may only be offered, sold, transferred or assigned in
compliance with the Securities Act of 1933, as amended, and applicable state securities laws.
Further, Preferred Shares may only be offered, sold, transferred or assigned in conjunction with
the sale, transfer or assignment of whole Units only; provided, however, that any
such sale, transfer of assignment must consist of at least 25,000 Units. Any attempted transfer of
Preferred Shares in violation of this Section 9 shall be null and void ab initio.

     10. Certain Definitions. As used in this Certificate, the following terms shall have the
following respective meanings:

     “Affiliate” of, or a person “Affiliated” with, a specified person, is a person
that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, the person specified.

     “Capital Stock” of any person or entity means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests in the common
stock or preferred stock of such person or entity, including, without limitation, partnership and
membership interests.

     “Change of Control” means (a) the sale, conveyance or disposition of all or
substantially all of the assets of the Corporation (other than pursuant to a joint venture
arrangement or other transaction in which the Corporation, directly or indirectly, receives at
least fifty percent (50%) of the voting equity in another entity or a general partnership); (b) the
effectuation of a transaction or series of related transactions in which more than fifty percent
(50%) of the voting power of the Corporation is disposed of (other than (i) as a direct result of
normal, uncoordinated trading activities in the Common Stock generally or (ii) solely as a result
of the disposition by a stockholder of the Corporation to an Affiliate of such stockholder); (c)
the consolidation, merger or other business combination of the Corporation with or into any other
entity, immediately following which the prior stockholders of the Corporation fail to own, directly
or indirectly, at least fifty percent (50%) of the voting equity of the surviving entity; (d) a
transaction or series of transactions in which any person or “group” (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) acquires more than fifty percent (50%) of the voting
equity of the Corporation (other than the acquisition by a person or “group” that is an Affiliate
of or Affiliated with a person or “group” that immediately prior to such acquisition, beneficially
owned fifty percent (50%) or more of the voting equity of the Corporation); (e) the replacement of
a majority of the Board of Directors with individuals who were not nominated or elected by at least
a majority of the directors at the time of such replacement; or (f) a transaction or series of
transactions that constitutes or results in a “going private transaction” (as defined in Section
13(e) of the Exchange Act and the regulations of the Commission issued thereunder).

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Holder” means any holder of Preferred Shares, all of such holders being the
“Holders.”

6

 

     “Unit” means one Preferred Share and that portion of a Warrant representing the right
to purchase one share of Common Stock.

[signature page follows]

7

 

     IN WITNESS WHEREOF, the Corporation has caused this Certificate to be duly executed on its
behalf by its undersigned Chief Executive Officer as of September 2, 2009.

	 	 	 	 	 
	 	 	 
	 	By:  	          /s/ Zachary S. Gibler
 	 
	 	 	Name:  	Zachary S. Gibler 	 
	 	 	Title:  	Chief Executive Officer 	 
	 

Signature Page to Certificate of Designation of Series D Preferred StockEX-10.1

Exhibit 10.1

INDIVIDUAL LABOR AGREEMENT FOR AN INDEFINITE TERM (HEREINAFTER REFERRED TO AS THE “AGREEMENT”)
EXECUTED, ON ONE SIDE, BY KANSAS CITY SOUTHERN DE MEXICO, S.A. DE C.V. (HEREINAFTER REFERRED TO AS
THE “COMPANY”), REPRESENTED IN THIS ACT BY MR. CRISTIAN LOUSTAUNAU ARMAS AS ITS LEGAL REPRESENTANT
AND, ON THE OTHER SIDE, BY, MR. OSCAR AUGUSTO DEL CUETO CUEVAS (HEREINAFTER REFERRED TO AS THE
“EMPLOYEE”), ON ITS OWN RIGHT, SUBMITTING THEIR WILL TO THE FOLLOWING DECLARATIONS AND CLAUSES:

D E C L A R A T I O N S

	I.	 	The “COMPANY” declares:
	 
	a)	 	That it is a variable capital stock corporation constituted in accordance to the laws of the
United Mexican States.
	 
	b)	 	That in accordance to its social purpose, it has the capability and faculties required to
execute this Agreement.
	 
	c)	 	That its address is located at Montes Urales No. 625, Colonia Lomas de Chapultepec,
Delegacion Miguel Hidalgo, C.P. 11000, Mexico, Federal District.
	 
	d)	 	That it requires the services that will be rendered by the qualified Employee, which has the
necessary skills and knowledge to fulfill its duties as Comptroller.
	 
	II.	 	The Employee declares:
	 
	a)	 	That its name is as it was established in the present Agreement.
	 
	b)	 	That it is of Mexican nationality.
	 
	c)	 	That it is 39 years old.
	 
	d)	 	That its civil status is married.
	 
	e)	 	That it is Male.
	 
	f)	 	That its address is located at Gloria Alejandra No. 1311
Colonia Hacienda Los Canta Apodaca, Nuevo Leon, Mexico and
that if domicile herein provided is modified, it will be obliged to provide a written notice
of said modification to the “COMPANY” in a maximum term of 5 days as of the date in which the
change of domicile was performed, in the understanding that if such obligation is not
fulfilled, it will recognize the last address provided as the authorized address for all the
legal effects derived from the present Agreement and specifically the ones provided by
articles 47 and 991 of the Federal Labor Law.
	 
	g)	 	That he is aware of the work to be executed at the “COMPANY” and that it may eventually
provide services to other subsidiary companies and/or subsidiaries from Kansas City Southern
(which “COMPANY” is also a subsidiary of), and additionally agrees to develop relationships
with and perform works for such companies, and agreeing that the “COMPANY” will be its only
employer.

 

 

	h)	 	That it has the capacity and experience required to provide its personal services to the
“COMPANY” in the position for which it was hired and not having, to this date, any criminal
records, and having the legal capacity required to perform its services when this Agreement is
executed.

	i)	 	That has read, understands, and consents all the internal regulations applicable to the
“COMPANY”’s employees.

Having stated the previous declarations, the parties agree to adjust their labor relationship to
the following:

C L A U S E S

FIRST. “TERM OF THE AGREEMENT”. The present Labor Agreement is executed for an Indefinite
Term and may not be modified, suspended, breached, or terminated if not by the parties’ mutual
agreement or as provided by the Federal Labor Law and its applicable regulations. The “EMPLOYEE”
will commence its services as AVP Transportation of the “COMPANY” on March 15 of 2006.

SECOND. “WORKPLACE”. The “EMPLOYEE” will provide his services to the “COMPANY” in any of
the “COMPANY’s facilities or where such are required, the previous in accordance to the orders
provided by the “COMPANY”’s representatives, and the “EMPLOYEE” will be obliged to render his
services at the location of the facilities where such are required or where the “COMPANY” is
located, including Mexico City and Monterrey. Moreover, the “COMPANY” has the capacity to change
its address at any time, prior notice and agreement between the parties regarding the way to do so.

THIRD. “LENGTH OF THE WORKING DAY”. Due to the nature of the duties to be performed by the
“EMPLOYEE” in connection to its position, same which are considered trust duties, it will
distribute his daily working schedule in accordance to the “COMPANY”’s operating requirements.

FOURTH. “SERVICES PROVIDED”. The “EMPLOYEE” will render his personal and subordinated
services to the “COMPANY” in the category and in the position of AVP Transportation and it agrees
to provide such services in a subordinated manner and subject, at all time, to the “COMPANY”’s
Board of Directors or any other person or entity designated by the “COMPANY”’s Board of Director,
having, due to its position, the following obligations:

a) Be responsible for protecting the “COMPANY”’s legal interests, in relation to legal proceedings,
administrative requirements, and legal procedures, as well as regarding contracts and agreements
with third parties.

b) Implement the “COMPANY”’s policies that enable the compliance of all its legal obligations.

c) Advise the senior management team in connection to all legal aspects of the transactions and
decisions that impact the “COMPANY”.

 

 

d) Supervise the personnel from the Legal Department, as well as external attorneys hired to
represent the “COMPANY”.

e) Act, during the term of the working relationship, with responsibility, observing all the
applicable policies of the “COMPANY” and the instructions given by the Board of Directors of the
“COMPANY”, as well as to observe the applicable legislation and encourage its subordinated
employees to act in the same manner.

f) The services will be provided mostly at the “COMPANY”’s facilities located in
Ave. Manuel L. Barragan No. 4850 Col. Hidalgo, Monterrey, Nuevo Leon,
Mexico; or in any other place where the “COMPANY” maintains its main offices or in the domicile of any of its
subsidiaries or of the companies where the “COMPANY” has any stock or business relationship: but at
all times the beneficiary and responsible of the working relationship herein established will be
the “COMPANY”; and the “EMPLOYEE” herein recognizes the “COMPANY” as its only employer, for which a
main part of the obligations the “EMPLOYEE” will be to maintain the “COMPANY” informed about the
execution of its duties.

Independently, the “EMPLOYEE” will perform, but will not only be limited to perform, all those
activities that are derived and are related to the main obligations of its position, as well as all
the obligations that are accessory of or attached to its main obligations, even though if such are
required to be performed outside its workplace, the previous without detriment to his wage.

If due to the nature of the services to be by the “EMPLOYEE” to the “COMPANY”, it is required for
the “COMPANY” to grant powers of attorney to the “EMPLOYEE”, as employee or representative of any
of the “COMPANY”’s subsidiaries, such will not constitute a working relationship between the
“EMPLOYEE” and the companies that, if applicable, will grant it its corresponding powers of
attorney, that is why the “EMPLOYEE” expressly acknowledges that the only working relationship it
will have will be with the “COMPANY”, which as of today it recognizes as its only employer.

The EMPLOYEE will provide its services to the “COMPANY” under its direction or under the direction
of its representatives, to whose authority it will be subordinated regarding the work; the
“EMPLOYEE” shall perform such with the appropriate intensity, care, and diligence, in the agreed
way, type, and place, having the “COMPANY” the capacity to
modify the “EMPLOYEE”’s obligations
without modifying its labor conditions, specifically in relation to this wage.

FIFTH. VACATIONS, VACATION BONUS, AND ANNUAL BONUS. The “EMPLOYEE” will have the right to
an annual vacation period of 10 (TEN) days. The vacation periods are annual and should not be
accumulated in any case whatsoever.

To enjoy the annual vacation period, at all time the “COMPANY”, alongside the “EMPLOYEE”, will
determine the schedule for the “EMPLOYEE” to enjoy its corresponding vacations.

THE “EMPLOYEE” should have right to the payment of a vacation bonus of 50% of the number of
vacation days corresponding to each year and such should be automatically covered at the moment the
“EMPLOYEE” reaches its first anniversary with the “COMPANY”.

THE “EMPLOYEE” would have the right to an annual bonus, as provided by article 87 of the Federal
Labor Law, for the amount of 30 (thirty) daily wages, same which it will be covered in December;
the “EMPLOYEE” will also have the right to the obligatory rest days provided by

 

 

article 74 of the Federal Labor Law, as well as the weekly rest days, which shall be Saturdays and
Sundays, preferably.

SIXTH. TRAINING. The “EMPLOYEE” obliges itself to receive training in accordance to the
courses established in the programs duly authorized by the Ministry of Labor and Social Welfare, as
provided by Title Four, Chapter III BIS of the Federal Labor Law. The “EMPLOYEE” obligates itself
to assist punctually to the courses, group sessions, and other activities that are part of the
training process, as well to perform instructions related to such programs, and take the
performance and aptitudes tests required as provided by article 153-H of the Federal Labor Law.

SEVENTH. WAGE. THE “EMPLOYEE” will accrue a monthly gross wage of $75,000.00 (Seventy Five
Thousand pesos 00/100 currency applicable in the United States of Mexico) previous to the
corresponding tax deductions for such amount, at the “COMPANY”’s address or in the place assigned
for such matter. The “COMPANY”, through its Board or Board of Directors, will annually determine
and establish the wage of AVP Transportation alongside a
market study (performed by Towers Perrin or any other consultant) and the preparation of the budget for the following year. The previous wage
includes the payment for the seventh day and the corresponding obligatory holidays, as well as the
proportional part the weekly rest days, in accordance to the provisions of the Federal Labor Law,
as well as additional applicable benefits, as provided by the Federal Labor Law or by specific
norms applicable to the “COMPANY” due to its social activity.

Due to the
nature of the “EMPLOYEE”’s duties, and as requested by such, the “COMPANY” will pay is
corresponding wage through a bank deposit system, in the account that the “EMPLOYEE” assigns for
such matter; and the “EMPLOYEE” will be obligated to subscribe the receipt and administrative
controls provided by the “COMPANY”, for which, as of this moment, the vouchers and the bank deposit
receipts would be equivalent to payment receipts, independently if such were signed or not by the
“EMPLOYEE”.

EIGHT. The Parties agreed that the “EMPLOYEE” is obliged to issue the “COMPANY”, in writing, the
receipts corresponding to the payments to which such is entitled to, same which shall include the
payments and deductions expressly accepting such, signing in approval each of the periods
corresponding to such, agreeing that if there are no details in connection to over-time, it is
because the “EMPLOYEE” did not work over-time, hereby granting the broadest settlement applicable
by law in connection to all the payments it was entitled to, therefore each and every explanation
or claim shall be made prior to issuing the corresponding receipt.

NINTH. MEDICAL EXAMS. The “EMPLOYEE” obliges, as provided by the article 134 subsection X
of the Federal Labor Law, to summit itself to all the check-ups and medical exams requested by the
“COMPANY”, as well as to such required as provided by the Health Regulation.

TENTH. CONFIDENTIALITY. The “EMPLOYEE” recognizes that it has, due to the services agreed
herein, access to confidential information, manufacturing secrets, commercial and operational
aspects of the “COMPANY” that are considered an industrial secret; obliging itself not to divulge
nor reveal such information to third parties, except if the “COMPANY”’s representatives issue a
written authorization, being itself subject to the corresponding sanctions in case if such does not
comply with the provisions included in this Clause.

 

 

ELEVENTH. INVENTIONS. The “EMPLOYEE” expressly agrees that any discovery, invention, or
improvement to such or any other technological knowledge that it obtains or contributes to by means
of the activities performed individually or in a team during the execution of its duties in favor
of the “COMPANY”, will be the exclusive property of the “COMPANY”. Therefore, the “EMPLOYEE” does
not reserve any right or action in connection to the use or exploitation of the aforementioned
discoveries, inventions, or technological knowledge, the previous because such activities are
rewarded through the wage paid for the work for which it has been contracted, that is why the
“EMPLOYEE” obliges to perform, alongside the “COMPANY”, all the necessary procedures, as provided
by law, to perform the corresponding registry, same which will be performed under the “COMPANY”’s
name so such may protect and/or exploit the aforementioned industrial property rights. As a result
of the above, the “EMPLOYEE” is obliged to execute any document and to perform the legal acts that
may be required.

TWELVE. “JURISDICTION AND INTERPRETATION.” The matters that are not covered by this
Agreement will be subject to the provisions of the Federal Labor Law and the Applicable Provisions;
therefore, in connection to the interpretation of this Agreement, in case of any dispute the
parties expressly agree to submit themselves to the Federal Conciliation and Arbitration Board
which is applicable due to their domiciles or due to the location of the workplace.

THIRTEEN. For all legal effects is recognized to the employee the seniority in the company
since March 15 2006

The “COMPANY”

KANSAS CITY SOUTHERN DE MEXICO, S.A DE C.V.

	 	 	 
	/s/ Cristian Loustaunau Armas

	 	 
	 

	 	 
	By: Cristian Loustaunau Armas

Cargo: AVP Human Resources

	 	 

The “EMPLOYEE”

	 	 	 
	/s/ OSCAR AUGUSTO DEL CUETO CUEVAS

	 	 
	 

	 	 
	OSCAR AUGUSTO DEL CUETO CUEVAS

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