KANSAS CITY SOUTHERN (Form: 10-Q, Received: 04/27/2010 12:08:08)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended March 31, 2010
or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from to

Commission File Number 1-4717

KANSAS CITY SOUTHERN

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization) 427 West 12th Street, Kansas City, Missouri (Address of principal executive offices)				44-0663509 (I.R.S. Employer Identification No.) 64105 (Zip Code)

816.983.1303

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class		Outstanding at April 20, 2010

Common Stock, $0.01 per share par value		96,712,467 Shares

Kansas City Southern
Form 10-Q
March 31, 2010

Index


			Page

PART I — FINANCIAL INFORMATION
	Item 1.	Financial Statements		3
		Introductory Comments		3
		Consolidated Statements of Operations — Three months ended March 31, 2010 and 2009		4
		Consolidated Balance Sheets — March 31, 2010 and December 31, 2009		5
		Consolidated Statements of Cash Flows — Three months ended March 31, 2010 and 2009		6
		Notes to Consolidated Financial Statements		7
		Report of Independent Registered Public Accounting Firm		26
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		27
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		35
	Item 4.	Controls and Procedures		36
	Item 4T.	Controls and Procedures		36

PART II — OTHER INFORMATION
	Item 1.	Legal Proceedings		36
	Item 1A.	Risk Factors		36
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		36
	Item 3.	Defaults upon Senior Securities		36
	Item 4.	Reserved		36
	Item 5.	Other Information		36
	Item 6.	Exhibits		37
		SIGNATURES		38

Kansas City Southern

Form 10-Q

March 31, 2010

PART I — FINANCIAL INFORMATION


Item 1.	*Financial Statements*

Introductory Comments

The Consolidated Financial Statements included herein have been prepared by Kansas City Southern, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). As used herein, “KCS” or the “Company” may refer to Kansas City Southern or, as the context requires, to one or more subsidiaries of Kansas City Southern. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted, pursuant to such rules and regulations. The Company believes that the disclosures are adequate to enable a reasonable understanding of the information presented. The Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this Form 10-Q should be read in conjunction with the consolidated financial statements and the related notes, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009. Results for the three months ended March 31, 2010 are not necessarily indicative of the results expected for the full year ending December 31, 2010.

Kansas City Southern

Consolidated Statements of Operations


	Three Months Ended March 31,
	2010			2009
	(In millions, except share and per share amounts)
	(Unaudited)

Revenues	$	436.3		$	346.0

Operating expenses:
Compensation and benefits		90.7			78.0
Purchased services		44.9			45.6
Fuel		60.8			43.3
Equipment costs		38.7			39.1
Depreciation and amortization		45.8			46.9
Casualties and insurance		11.9			12.5
Materials and other		35.3			33.0

Total operating expenses		328.1			298.4

Operating income		108.2			47.6
Equity in net earnings of unconsolidated affiliates		6.4			1.0
Interest expense		(44.4	)		(41.8	)
Debt retirement costs		(14.9	)		(5.9	)
Foreign exchange gain (loss)		2.6			(5.1	)
Other income, net		0.5			1.5

Income (loss) before income taxes and noncontrolling interest		58.4			(2.7	)
Income tax expense		24.2			0.1

Net income (loss)		34.2			(2.8	)
Noncontrolling interest		(1.1	)		(0.1	)

Net income (loss) attributable to Kansas City Southern and subsidiaries		35.3			(2.7	)
Preferred stock dividends		2.7			5.4

Net income (loss) available to common shareholders	$	32.6		$	(8.1	)

Earnings (loss) per share:
Basic earnings (loss) per share	$	0.34		$	(0.09	)

Diluted earnings (loss) per share	$	0.34		$	(0.09	)

Average shares outstanding (in thousands):
Basic		95,890			90,743
Potentially dilutive common shares		568			—

Diluted		96,458			90,743

See accompanying notes to consolidated financial statements.

Kansas City Southern

Consolidated Balance Sheets


	March 31,			December 31,
	2010			2009
	(In millions, except
	share amounts)
	(Unaudited)

ASSETS
Current assets:
Cash and cash equivalents	$	126.1		$	117.5
Accounts receivable, net		169.0			139.4
Restricted funds		34.0			35.8
Materials and supplies		107.6			106.4
Deferred income taxes		163.6			151.7
Other current assets		61.5			63.0

Total current assets		661.8			613.8
Investments		53.5			46.8
Property and equipment (including concession assets), net		4,757.9			4,722.4
Other assets		75.9			71.3

Total assets	$	5,549.1		$	5,454.3


LIABILITIES AND EQUITY
Current liabilities:
Debt due within one year	$	64.4		$	68.1
Accounts payable and accrued liabilities		381.9			342.7

Total current liabilities		446.3			410.8
Long-term debt		1,906.9			1,911.9
Deferred income taxes		583.1			558.6
Other noncurrent liabilities and deferred credits		249.1			247.2

Total liabilities		3,185.4			3,128.5

Commitments and contingencies		—			—
Stockholders’ equity:
$25 par, 4% noncumulative, preferred stock, 840,000 shares authorized, 649,736 shares issued, 242,170 shares outstanding		6.1			6.1
Series D — cumulative convertible perpetual preferred stock, $1 par, 5.125%, 210,000 shares authorized and issued, 209,995 shares outstanding with a liquidation preference of $1,000 per share		0.2			0.2
$.01 par, common stock, 400,000,000 shares authorized; 110,583,068 shares issued; 96,718,921 and 96,213,346 shares outstanding at March 31, 2010 and December 31, 2009, respectively		1.0			0.9
Paid-in capital		666.9			661.4
Retained earnings		1,411.3			1,378.8
Accumulated other comprehensive loss		(3.5	)		(4.4	)

Total stockholders’ equity		2,082.0			2,043.0
Noncontrolling interest		281.7			282.8

Total equity		2,363.7			2,325.8

Total liabilities and equity	$	5,549.1		$	5,454.3

See accompanying notes to consolidated financial statements.

Kansas City Southern

Consolidated Statements of Cash Flows


	Three Months Ended
	March 31,
	2010			2009
	(In millions)
	(Unaudited)

Operating activities:
Net income (loss)	$	34.2		$	(2.8	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		45.8			46.9
Deferred income taxes		23.7			(0.7	)
Equity in undistributed earnings of unconsolidated affiliates		(6.4	)		(1.0	)
Share-based compensation		3.2			2.1
Excess tax benefit from share-based compensation		(11.7	)		—
Other deferred compensation		1.5			(1.6	)
Gain on sale of assets		—			(1.0	)
Debt retirement costs		14.9			5.9
Changes in working capital items:
Accounts receivable		(29.5	)		3.5
Materials and supplies		(0.9	)		1.2
Other current assets		0.9			2.7
Accounts payable and accrued liabilities		29.8			21.2
Other, net		6.0			2.9

Net cash provided by operating activities		111.5			79.3

Investing activities:
Capital expenditures		(52.3	)		(115.4	)
Acquisition of an intermodal facility, net of cash acquired		(25.0	)		—
Property investments in MSLLC		(4.8	)		(17.8	)
Proceeds from disposal of property		1.3			3.7
Other, net		(1.0	)		(1.5	)

Net cash used for investing activities		(81.8	)		(131.0	)

Financing activities:
Proceeds from issuance of long-term debt		295.7			214.0
Repayment of long-term debt		(305.7	)		(238.7	)
Debt costs		(20.6	)		(9.3	)
Proceeds from employee stock plans		0.5			0.3
Excess tax benefit from share-based compensation		11.7			—
Preferred stock dividends paid		(2.7	)		(2.8	)

Net cash used for financing activities		(21.1	)		(36.5	)

Cash and cash equivalents:
Net increase (decrease) during each period		8.6			(88.2	)
At beginning of year		117.5			229.9

At end of period	$	126.1		$	141.7

See accompanying notes to consolidated financial statements.

Kansas City Southern

Notes to Consolidated Financial Statements


1.	Accounting Policies, Interim Financial Statements and Basis of Presentation

In the opinion of the management of KCS, the accompanying unaudited consolidated financial statements contain all adjustments necessary for a fair presentation of the results for interim periods. All adjustments made were of a normal and recurring nature. Certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009. The results of operations for the three months ended March 31, 2010 are not necessarily indicative of the results to be expected for the full year ending December 31, 2010. Certain prior year amounts have been reclassified to conform to the current year presentation.

During the third quarter of 2009, the Company identified that changes in accounts payable and accrued liabilities related to capital spending had not been correctly presented in the Company’s prior period consolidated cash flow statements. Changes in these accruals had previously been classified within cash flows from operating activities and should have been classified as capital expenditures within investing activities, in order to report capital expenditures on a cash basis rather than on an accrual basis. The accompanying consolidated cash flow statement for the three months ended March 31, 2010 presents capital expenditures on a cash basis. The accompanying consolidated cash flow statement for the three months ended March 31, 2009 has been revised to present capital expenditures on a cash basis. This revision did not impact the change in cash and cash equivalents as previously reported, however, net cash provided by operating activities, capital expenditures and cash used by investing activities increased by $16.6 million for the three months ended March 31, 2009. This revision did not impact operating income or net income, working capital, or any earnings per share measures as previously reported.

During the first quarter of 2010, the Company elected to change its accounting policy for rail grinding costs from a capitalization method to a direct expense method. Previously, the Company capitalized rail grinding costs as an improvement to the rail. The Company believes it is preferable to expense these costs as incurred to eliminate the subjectivity in determining the period of benefit associated with rail grinding over which to depreciate the associated capitalized costs. The Company has reflected this change as a change in accounting principle from an accepted accounting principle to a preferable accounting principle in accordance with Accounting Standards Codification 250 “Accounting for Changes and Error Corrections”. Comparative financial statements for all periods have been adjusted to apply the change in accounting principle retrospectively.

The following line items in the consolidated statement of operations were affected by the change in accounting principle (in millions, except per share amounts):


	Three Months Ended March 31, 2009
	As reported			As adjusted			Change

Purchased services	$	44.5		$	45.6		$	1.1
Depreciation and amortization		47.1			46.9			(0.2	)
Loss before income taxes and noncontrolling interest		(1.8	)		(2.7	)		(0.9	)
Income tax expense		0.4			0.1			(0.3	)
Net loss		(2.2	)		(2.8	)		(0.6	)
Diluted loss per share	$	(0.08	)	$	(0.09	)	$	(0.01	)

Kansas City Southern

Notes to Consolidated Financial Statements — (Continued)

The following line items in the consolidated balance sheet were affected by the change in accounting principle (in millions):


	December 31, 2009
	As reported		As adjusted		Change

Property and equipment (including concession assets), net	$	4,747.2	$	4,722.4	$	(24.8	)
Deferred income tax liabilities		567.1		558.6		(8.5	)
Other noncurrent liabilities and deferred credits		247.7		247.2		(0.5	)
Retained earnings		1,394.6		1,378.8		(15.8	)
Total equity		2,341.6		2,325.8		(15.8	)

The change in accounting principle and the revision related to the classification of capital expenditures on a cash basis rather than on an accrual basis did not have an impact on the change in cash and cash equivalents in the consolidated statement of cash flows; however, the following line items were affected by these adjustments (in millions):


	Three Months Ended March 31, 2009
	As reported			As adjusted			Change

Net cash provided by operating activities	$	63.8		$	79.3		$	15.5
Net cash used for investing activities		(115.5	)		(131.0	)		(15.5	)

As of January 1, 2008, the cumulative effect of the change in accounting principle on property and equipment (including concession assets), deferred income tax liabilities, other noncurrent liabilities and deferred credits and retained earnings was ($20.5) million, ($7.3) million, ($0.4) million and ($12.8) million, respectively.


2.	Accounting Pronouncements

Effective January 1, 2010, the Company adopted the Financial Accounting Standards Board (the “FASB”) Accounting Standards Update (“ASU”) No. 2009-17, “Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities” (“ASU 2009-17”). ASU 2009-17 addresses the elimination of certain exceptions to consolidating qualifying special-purpose entities, which means more entities will be subject to consolidation assessments and reassessments. The new guidance requires ongoing reassessment of whether a company is the primary beneficiary of a variable interest entity (“VIE”) and clarifies characteristics that identify a VIE. In addition, ASU 2009-17 requires additional disclosures about a company’s involvement with a VIE and any significant changes in risk exposure due to that involvement. The adoption of ASU 2009-17 did not have any impact on the Company’s results of operations and financial condition.


3.	Earnings (Loss) Per Share Data

Basic earnings (loss) per common share is computed by dividing income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Nonvested stock awards granted to employees and officers are included in weighted average shares as they are earned for purposes of computing basic earnings (loss) per common share. Diluted earnings (loss) per share adjusts basic earnings (loss) per common share for the effects of potentially dilutive common shares, if the effect is not anti-dilutive. Potentially dilutive common shares include the dilutive effects of shares issuable upon the conversion of preferred stock to common stock and shares issuable under the Stock Option and Performance Award Plan.

Kansas City Southern

Notes to Consolidated Financial Statements — (Continued)

The following table reconciles the weighted average shares used for the basic earnings (loss) per share computation to the shares used for the diluted earnings (loss) per share computation (in thousands) :


	Three Months
	Ended March 31,
	2010		2009

Basic shares		95,890		90,743
Effect of dilution		568		—

Diluted shares		96,458		90,743

For the three months ended March 31, 2010, the Company excluded from the computation of dilutive shares the assumed conversion of preferred stock to 7,000,000 shares of common stock which was anti-dilutive and approximately 281,000 stock options because the impact would have been anti-dilutive as the option price was higher than the average market price. For the three months ended March 31, 2009, the assumed conversion of preferred stock to 7,000,000 shares of common stock and approximately 561,000 stock options were excluded from the computation of diluted shares because the impact would have been anti-dilutive due to the loss reported in the period.

There are no reconciling items between net income (loss) available to common stockholders for purposes of basic earnings (loss) per share and net income (loss) available to common stockholders for purposes of diluted earnings (loss) per share.


4.	Property and Equipment (including Concession Assets)

Property and Equipment. Property and equipment, including concession assets, and related accumulated depreciation and amortization are summarized below (in millions) :


	March 31,		December 31,
	2010		2009

Land	$	176.3	$	162.9
Concession land rights		137.6		137.6
Road property		4,719.9		4,644.4
Equipment		691.0		679.3
Technology and other		127.0		125.3
Construction in progress		120.5		165.6

Total property		5,972.3		5,915.1
Accumulated depreciation and amortization		1,214.4		1,192.7

Net property	$	4,757.9	$	4,722.4

Concession assets, net of accumulated amortization of $264.7 million and $259.4 million, totaled $1,774.7 million and $1,768.0 million at March 31, 2010 and December 31, 2009, respectively.


5.	Fair Value Measurements

The Company’s short term financial instruments include cash and cash equivalents, accounts receivable, and accounts payable. The carrying value of the short term financial instruments approximates the fair value due to their short term nature.

The fair value of the Company’s debt is estimated using quoted market prices when available. When quoted market prices are not available, fair value is estimated based on current market interest rates for debt with similar maturities and credit quality. The fair value of the Company’s debt was $2,050.9 million and

Kansas City Southern

Notes to Consolidated Financial Statements — (Continued)

$2,031.1 million at March 31, 2010 and December 31, 2009, respectively. The financial statement carrying value was $1,971.3 million and $1,980.0 million at March 31, 2010 and December 31, 2009, respectively.

Assets and liabilities recognized at fair value are required to be classified into a three-level hierarchy. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value in its entirety requires judgment and considers factors specific to the asset or liability.

The following tables present the Company’s assets and liabilities measured at fair value on a recurring basis ( in millions) :


	Fair Value Measurements							Net Assets (Liabilities)
	Level 1		Level 2			Level 3		at Fair Value

March 31, 2010
Interest rate contracts	$	—	$	(3.9	)	$	—	$	(3.9	)
Fuel swap contracts		—		0.6			—		0.6

Net assets (liabilities), at fair value	$	—	$	(3.3	)	$	—	$	(3.3	)


	Fair Value Measurements							Net Assets (Liabilities)
	Level 1		Level 2			Level 3		at Fair Value

December 31, 2009
Interest rate contracts	$	—	$	(4.9	)	$	—	$	(4.9	)

Net assets (liabilities), at fair value	$	—	$	(4.9	)	$	—	$	(4.9	)

The Company determines the fair values of its derivative financial instrument positions based upon pricing models using inputs observed from actively quoted markets. Pricing models take into consideration the contract terms as well as other inputs, including forward interest rate curves. As prescribed by the guidance, the Company recognizes the fair value of its derivative financial instruments as a Level 2 valuation.


6.	Derivative Instruments

The Company does not engage in the trading of derivative financial instruments except where the Company’s objective is to manage the variability of forecasted interest payments attributable to changes in interest rates or fuel price risk. In general, the Company enters into derivative transactions in limited situations based on management’s assessment of current market conditions and perceived risks. However, management intends to respond to evolving business and market conditions and in doing so, may enter into such transactions more frequently as deemed appropriate.

Credit Risk. As a result of the use of derivative instruments, the Company is exposed to counterparty credit risk. The Company manages the counterparty credit risk by entering into contracts with large financial institutions with which the Company has an established banking relationship. As of March 31, 2010, the Company did not expect any losses as a result of default of its counterparties.

Kansas City Southern

Notes to Consolidated Financial Statements — (Continued)

Interest Rate Swaps. During 2008, the Company entered into five forward starting interest rate swaps, which have been designated as cash flow hedges. The forward starting interest rate swaps effectively convert interest payments from variable rates to fixed rates. The swaps are highly effective and as a result there will be de minimus earnings impact associated with ineffectiveness of these hedges. The hedging instruments have an aggregate notional amount of $250.0 million at an average fixed rate of 2.71%, with forward starting settlements indexed to the three-month LIBOR occurring every quarter, expiring September 2010 through March 2011.

Fuel Derivative Transactions. In the first quarter of 2010, the Company entered into fuel swap agreements, which have not been designated as hedging instruments. Gains and losses for derivatives which have not been designated as hedging instruments are recorded in fuel expense in the consolidated statement of operations. As of March 31, 2010, the Company has outstanding fuel swap agreements for 19.7 million gallons of diesel fuel purchases through the end of 2010 at an average swap price of $2.23 per gallon.

In January 2009, the Company entered into fuel swap agreements, which had been designated as cash flow hedges. The effective portion of the gain or loss on the derivative instruments was reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affected earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of the effectiveness were recognized in current earnings. During the second quarter of 2009, it became probable that the hedged transactions would not occur as forecasted. Therefore, the hedging relationship was dedesignated on May 31, 2009 and hedge accounting was discontinued. Changes in the fair value of the derivative instrument after dedesignation were recorded in earnings.

The following table presents the fair value of derivative instruments included in the consolidated balance sheet (in millions) :


	Asset Derivatives
	Balance Sheet	March 31,		December 31,
	Location	2010		2009

Derivatives not designated as hedging instruments:
Fuel swap contracts	Other current assets		0.8		—

Total derivatives not designated as hedging instruments			0.8		—

Total asset derivatives		$	0.8	$	—

Kansas City Southern

Notes to Consolidated Financial Statements — (Continued)


	Liability Derivatives
	Balance Sheet	March 31,		December 31,
	Location	2010		2009

Derivatives designated as hedging instruments:
Interest rate contracts	Accounts payable & accrued liabilities	$	3.9	$	3.2
Interest rate contracts	Other non-current liabilities & deferred credits		—		1.7

Total derivatives designated as hedging instruments			3.9		4.9

Derivatives not designated as hedging instruments:
Fuel swap contracts	Accounts payable & accrued liabilities		0.2		—

Total derivatives not designated as hedging instruments			0.2		—

Total liability derivatives		$	4.1	$	4.9

The following table presents the amounts affecting the consolidated statement of operations for the three months ended March 31, (in millions) :


														Location of	Amount of
														Gain/(Loss)	Gain/(Loss)
								Amount of						Recognized in	Recognized in
	Amount of							Gain/(Loss)						Income on Derivative	Income on Derivative
	Gain/(Loss)						Location of Gain/(Loss)	Reclassified from						(Ineffective Portion	(Ineffective Portion
Derivatives in Cash	Recognized in						Reclassified from	Accumulated OCI						and Amount Excluded	and Amount Excluded
Flow Hedging	OCI on Derivative						Accumulated OCI into Income	into Income						from Effectiveness	from Effectiveness
Relationships	(Effective Portion)						(Effective Portion)	(Effective Portion)						Testing)	Testing)
	2010			2009				2010			2009				2010		2009

Interest rate contracts	$	(0.6	)	$	(0.7	)	Interest expense	$	(1.5	)	$	(0.7	)	Interest expense	$	—	$	—
Fuel swap contracts		—			(1.6	)	Fuel expense		—			(0.2	)	Fuel Expense		—		(2.0	)

Total	$	(0.6	)	$	(2.3	)		$	(1.5	)	$	(0.9	)		$	—	$	(2.0	)

Amount of

Gain/(Loss)

Location of Gain/(Loss)

Recognized in

Recognized in Income on

Income on

Derivatives not designated as hedging instruments

Derivative

2010

2009

Fuel swap contracts

Fuel expense

0.3

—

Total

0.3

—


7.	Acquisition

On March 3, 2010, the Company acquired an intermodal facility in Mexico. The aggregate purchase price for the intermodal facility was $25.0 million, which was funded by existing cash reserves. The Company has determined that the acquisition is not material to the Company’s consolidated financial statements; therefore, pro forma financial information is not presented. In addition, the Company has made a preliminary purchase allocation as of March 31, 2010, based on incomplete valuations. The Company expects to complete the purchase valuation during the second quarter of 2010.

Kansas City Southern

Notes to Consolidated Financial Statements — (Continued)


8.	Long-Term Debt

On January 7, 2010, pursuant to an offer to purchase, Kansas City Southern de México, S.A. de C.V. (“KCSM”), a wholly-owned subsidiary of KCS, commenced a cash tender offer for a portion of its 9 3 / 8 % senior unsecured notes due May 1, 2012 (the “9 3 / 8 % Senior Notes”). On January 22, 2010, the Company purchased $290.0 million of the tendered 9 3 / 8 % Senior Notes in accordance with the terms and conditions of the tender offer set forth in the offer to purchase using the proceeds received from the issuance of $300.0 million of KCSM 8.0% senior unsecured notes due February 1, 2018 (the “KCSM 8.0% Senior Notes”). Additionally, on February 1, 2010, KCSM purchased $6.3 million of the 9 3 / 8 % Senior Notes. KCSM recorded debt retirement costs of $14.9 million in the first quarter of 2010. The remaining 9 3 / 8 % Senior Notes mature on May 1, 2012 and are redeemable by KCSM at its option.

On January 22, 2010, KCSM issued the $300.0 million KCSM 8.0% Senior Notes, which bear interest semiannually at a fixed annual rate of 8.0%. The KCSM 8.0% Senior Notes were issued at a discount to par value, resulting in a $4.3 million discount and a yield to maturity of 8 1 / 4 %. KCSM used the net proceeds from the issuance of the KCSM 8.0% Senior Notes and cash on hand to purchase $290.0 million in principal amount of the 9 3 / 8 % Senior Notes tendered under an offer to purchase and pay all fees and expenses incurred in connection with the KCSM 8.0% Senior Notes offering and tender offer. The KCSM 8.0% Senior Notes are redeemable at KCSM’s option, in whole or in part, on and after February 1, 2014, at the following redemption prices (expressed as percentages of principal amount) plus any accrued and unpaid interest: 2014 — 104.000%, 2015 — 102.000%, 2016 — 100.000%. In addition, KCSM may redeem up to 35% of the KCSM 8.0% Senior Notes any time prior to February 1, 2013 from the proceeds of the sale of capital stock in KCSM or KCS and are redeemable, in whole but not in part, at KCSM’s option at their principal amount in the event of certain changes in the Mexican withholding tax rate.

The KCSM 8.0% Senior Notes are denominated in dollars and are unsecured, unsubordinated obligations, rank pari passu in right of payment with KCSM’s existing and future unsecured, unsubordinated obligations, and are senior in right of payment to KCSM’s future subordinated indebtedness. In addition, the KCSM 8.0% Senior Notes include certain covenants which are customary for these types of debt instruments and borrowers with similar credit ratings. The KCSM 8.0% Senior Notes contain certain covenants that, among other things, prohibit or restrict KCSM from taking certain actions, including KCSM’s ability to incur debt, pay dividends or make other distributions in respect of its stock, issue guarantees, enter into certain transaction with affiliates, make restricted payments, sell certain assets, create liens, engage in sale-leaseback transactions and engage in mergers, divestitures and consolidations. However, these limitations are subject to a number of important qualifications and exceptions.

On March 16, 2010, KCS and The Kansas City Southern Railway Company (“KCSR”), a wholly-owned subsidiary of KCS, entered into a Second Amendment (“Amendment No. 2”) to KCSR’s Amended and Restated Credit Agreement dated April 28, 2006, as amended by Amendment No. 1 dated as of May 31, 2007 (the “Existing Credit Agreement”), which extends the maturity of the revolving credit facility of the Existing Credit Agreement from April 28, 2011 to April 28, 2013. In consideration for this change, the parties to the agreement agreed to increase the Applicable Margin (as defined in Amendment No. 2) in respect of the revolving and swing line credit facilities. In addition, Amendment No. 2 modified certain covenants of the Existing Credit Agreement to permit the incurrence of certain indebtedness and the creation of liens related to such indebtedness, as well as certain prepayments of existing unsecured debt. Amendment No. 2 also provides for certain conforming revisions to the definitions and other terms set forth in the Existing Credit Agreement. Except as amended and supplemented by Amendment No. 2, all terms of the Existing Credit Agreement remained in full force and effect. As the Company intends to repay the outstanding balance under the revolving credit facility within the next twelve months, the outstanding amount of $40.0 million has been classified as a current liability as of March 31, 2010.

Kansas City Southern

Notes to Consolidated Financial Statements — (Continued)


9.	Equity

The following table summarizes the changes in equity ( in millions ):


	Three Months Ended March 31, 2010									Three Months Ended March 31, 2009
	Kansas City									Kansas City
	Southern									Southern
	Stockholders’			Noncontrolling						Stockholders’			Noncontrolling
	Equity			interest			Total Equity			Equity			interest			Total Equity

Beginning Balance	$	2,043.0		$	282.8		$	2,325.8		$	1,896.6		$	273.7		$	2,170.3

Comprehensive income (loss):
Net income (loss)		35.3			(1.1	)		34.2			(2.7	)		(0.1	)		(2.8	)
Unrealized gain (loss) on cash flow hedges, net of tax of $(0.2) million and $(0.9) million		(0.4	)		—			(0.4	)		(1.4	)		—			(1.4	)
Reclassification adjustment from cash flow hedges included in net income, net of tax of $0.6 million and $0.5 million		0.9			—			0.9			0.4			—			0.4
Cumulative translation adjustment — FTVM, net of tax of $0.1 million and $(0.4) million		0.4			—			0.4			0.1			—			0.1

Comprehensive income (loss)		36.2			(1.1	)		35.1			(3.6	)		(0.1	)		(3.7	)
Dividends on $25 par preferred stock		(0.1	)		—			(0.1	)		(0.1	)		—			(0.1	)
Dividends on series D cumulative preferred stock		(2.6	)		—			(2.6	)		(5.3	)		—			(5.3	)
Options exercised and stock subscribed, net of shares withheld for employee taxes		(9.4	)		—			(9.4	)		1.2			—			1.2
Tax benefit from share-based compensation		11.7			—			11.7
Share-based compensation		3.2			—			3.2			2.1			—			2.1

Ending Balance	$	2,082.0		$	281.7		$	2,363.7		$	1,890.9		$	273.6		$	2,164.5


10.	Share-Based Compensation

Market Based Award. On March 1, 2010 the Company granted approximately 191,000 stock options and 108,000 shares of nonvested stock (collectively, the “Award”) under the Kansas City Southern 2008 Stock Option and Performance Award Plan. The Award contains a market condition that accelerates the vesting in three tranches if the closing price of the Company’s common stock is above certain target share prices, as set forth in the Award Agreement, for a period of thirty consecutive trading days. If the target share prices are not met, the Awards will vest in March 2013.

The fair value and service period of each Award is estimated on the date of grant using the Monte Carlo simulation model. The weighted average fair value of stock options and nonvested stock granted during the three months ended March 31, 2010 was $15.96 and $35.41, respectively, and the derived service period ranges from 1.1 to 3.0 years.

Stock Options. During the three months ended March 31, 2010, 678,494 stock options with an intrinsic value of $16.6 million were exercised. Cash received from option exercises during the period was $0.5 million.

Nonvested Stock. During the three months ended March 31, 2010, 269,921 shares vested and the fair value (at vest date) was $9.0 million.

Kansas City Southern

Notes to Consolidated Financial Statements — (Continued)


11.	Commitments and Contingencies

Concession Duty. Under KCSM’s railroad concession from the Mexican government (the “Concession”), the Mexican government has the right to receive a payment from the Company equivalent to 0.5% of the gross revenue during the first 15 years of the Concession period and 1.25% of the gross revenue during the remaining years of the Concession period. For the three months ended March 31, 2010 and 2009, the concession duty expense, which is recorded within operating expenses, amounted to $1.0 million and $0.7 million, respectively.

Litigation. The Company is a party to various legal proceedings and administrative actions, all of which, except as set forth below, are of an ordinary, routine nature and incidental to its operations. Included in these proceedings are various tort claims brought by current and former employees for job-related injuries and by third parties for injuries related to railroad operations. KCS aggressively defends these matters and has established liability reserves, which management believes are adequate to cover expected costs. Although it is not possible to predict the outcome of any legal proceeding, in the opinion of management, other than those proceedings described in detail below, such proceedings and actions should not, individually, or in the aggregate, have a material adverse effect on the Company’s financial condition and liquidity. However, a material adverse outcome in one or more of these proceedings could have a material adverse impact on the results of operations in a particular quarter or fiscal year.

Environmental Liabilities. The Company’s U.S. operations are subject to extensive federal, state and local environmental laws and regulations. The major U.S. environmental laws to which the Company is subject include, among others, the Federal Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA,” also known as the Superfund law), the Toxic Substances Control Act, the Federal Water Pollution Control Act, and the Hazardous Materials Transportation Act. CERCLA can impose joint and several liabilities for cleanup and investigation costs, without regard to fault or legality of the original conduct, on current and predecessor owners and operators of a site, as well as those who generate, or arrange for the disposal of, hazardous substances. The Company does not believe that compliance with the requirements imposed by the environmental legislation will impair its competitive capability or result in any material additional capital expenditures, operating or maintenance costs. The Company is, however, subject to environmental remediation costs as described below.

The Company’s Mexico operations are subject to Mexican federal and state laws and regulations relating to the protection of the environment through the establishment of standards for water discharge, water supply, emissions, noise pollution, hazardous substances and transportation and handling of hazardous and solid waste. The Mexican government may bring administrative and criminal proceedings and impose economic sanctions against companies that violate environmental laws, and temporarily or even permanently close non-complying facilities.

The risk of incurring environmental liability is inherent in the railroad industry. As part of serving the petroleum and chemicals industry, the Company transports hazardous materials and has a professional team available to respond to and handle environmental issues that might occur in the transport of such materials. Additionally, the Company is a partner in the Responsible Care ^® program and, as a result, has initiated additional environmental, health and safety management system programs and has been certified by an outside professional auditing company in the American Chemistry Council’s Responsible Care Management System ^® . The Company performs ongoing reviews and evaluations of the various environmental programs and issues within the Company’s operations, and, as necessary, takes actions intended to limit the Company’s exposure to potential liability.

The Company owns property that is, or has been, used for industrial purposes. Use of these properties may subject the Company to potentially material liabilities relating to the investigation and cleanup of contaminants, claims alleging personal injury, or property damage as the result of exposures to, or release of,

Kansas City Southern

Notes to Consolidated Financial Statements — (Continued)

hazardous substances. Although the Company is responsible for investigating and remediating contamination at several locations, based on currently available information, the Company does not expect any related liabilities, individually or collectively, to have a material impact on its financial position or cash flows. Should the Company become subject to more stringent cleanup requirements at these sites, discover additional contamination, or become subject to related personal or property damage claims, the Company could incur material costs in connection with these sites.

The Company records liabilities for remediation and restoration costs related to past activities when the Company’s obligation is probable and the costs can be reasonably estimated. Costs of ongoing compliance activities to current operations are expensed as incurred. The Company’s recorded liabilities for these issues represent its best estimates (on an undiscounted basis) of remediation and restoration costs that may be required to comply with present laws and regulations. Although these costs cannot be predicted with certainty, management believes that the ultimate outcome of identified matters will not have a material adverse effect on the Company’s consolidated financial position or cash flows.

Environmental remediation expense was $0.6 million and $1.9 million for the three months ended March 31, 2010 and 2009, respectively, and was included in casualties and insurance expense on the consolidated statements of operations. Additionally, as of March 31, 2010, KCS had a reserve for environmental remediation of $4.5 million. This amount was derived from a range of reasonable estimates based upon the studies and site surveys described above and in accordance with the accounting guidance for the recognition of loss contingencies.

Personal Injury Claim Reserves. The Company’s personal injury claim reserve is based on semi-annual actuarial studies performed on an undiscounted basis. This reserve is based on personal injury claims filed and an estimate of claims incurred but not yet reported. While the ultimate amount of claims incurred is dependent on various factors, it is management’s opinion that the recorded liability is a reasonable estimate of aggregate future payments. Adjustments to the liability are reflected within operating expenses in the period in which changes to estimates are known. Personal injury claims in excess of self-insurance levels are insured up to certain coverage amounts, depending on the type of claim and year of occurrence. The activity in the reserve follows (in millions):


	Three Months
	Ended March 31,
	2010			2009

Balance at beginning of year	$	86.9		$	90.7
Accruals, net (includes the impact of actuarial studies)		5.1			5.2
Payments		(5.2	)		(6.5	)

Balance at end of period	$	86.8		$	89.4

The personal injury claim reserve balance as of March 31, 2010 is based on an updated study of personal injury reserves for data through November 30, 2009 and review of the last four months’ experience. Reflecting potential uncertainty surrounding the outcome of personal injury claims, it is reasonably possible based on assessments that future costs to settle personal injury claims may range from approximately $83 million to $91 million.

Settlement Agreement. On February 9, 2010, (i) KCSM and (ii) Ferrocarril Mexicano, S.A. de C.V. (“Ferromex”) , Ferrosur, S.A. de C.V. (“Ferrosur”), Minera México, S.A. de C.V., Infraestructura y Transportes Ferroviarios, S.A. de C.V., Infraestructura y Transportes México, S.A. de C.V., Líneas Ferroviarias de México, S.A. de C.V., Grupo Ferroviario Mexicano, S.A. de C.V., and Grupo México, S.A.B. de C.V. (jointly, the “Ferromex Parties”) entered into a Settlement Agreement (the “Settlement Agreement”).

Kansas City Southern

Notes to Consolidated Financial Statements — (Continued)

Pursuant to the Settlement Agreement, the parties agreed to completely, definitively and irrevocably terminate (i) the private disputes, procedures and controversies among KCSM and the Ferromex Parties, in connection with the merger between Ferromex and Ferrosur, including KCSM’s involvement in such procedures as an interested party; and (ii) the lawsuit filed against KCSM and the Mexican Government in connection with several disputes, procedures and controversies before judicial authorities with respect to the acquisition of the shares of Ferrocarril del Noreste, S.A. de C.V. (now KCSM) by Grupo Transportación Ferroviaria Mexicana, S.A. de C.V., in 1997 (the “Settlement Procedures”). The parties waived their rights to any future actions derived from or related to the Settlement Procedures. Further, the parties did not settle or agree to settle any disputes, controversies or procedures other than the Settlement Procedures.

Under the Settlement Agreement, Ferrosur agreed to grant KCSM certain trackage and switching rights within Veracruz, México, and switching rights in the Puebla-Tlaxcala zone. In a related agreement, the parties further agreed to amend the Ferrocarril y Terminal del Valle de México, S.A. de C.V. (“FTVM”) by-laws to, among other changes, grant certain veto and voting rights to KCSM at the shareholders’ and the board of directors’ levels.

The Settlement Agreement shall remain in effect until the term of the concession title of KCSM expires, unless the parties mutually agree to renew the Settlement Agreement beyond the expiration of KCSM’s concession title. The Settlement Agreement may be terminated earlier upon delivery by KCSM of a notice to the Ferromex Parties indicating any breach by the Ferromex Parties of any of their respective obligations under the Settlement Agreement. Notwithstanding, the settlement and termination of the Settlement Procedures shall not be subject to rescission or termination.

The Settlement Agreement may be terminated, at KCSM’s option, before its stipulated term if Ferromex is sold or if it transfers, directly or indirectly, its concession under its concession title. A change in control of KCSM or its affiliates, however, shall not be a cause for termination. Likewise, the Settlement Agreement will terminate three years after Ferromex and Ferrosur cease to be under the common control of one person or group of persons acting jointly or in agreement to adopt coordinated resolutions (“Common Control”). Notwithstanding, if for any reason Ferromex and Ferrosur are under Common Control within five years after the Settlement Agreement is terminated due to Ferromex and Ferrosur ceasing to be under Common Control, the Settlement Agreement would automatically be reinstated.

In November 2005, Ferromex acquired control of and merged with Ferrosur creating Mexico’s largest railway, though such merger has been previously rejected by Comisión Federal de Competencia (Mexican Antitrust Commission), (“COFECO”). If the COFECO does not authorize the merger of Ferromex and Ferrosur, the Settlement Agreement shall be terminated twelve months after the relevant resolution of the Governmental Authority is issued or when the unwinding is effective, whichever is later.

Trackage Rights Settlement Agreement with Ferromex. KCSM’s operations are subject to certain trackage rights, switching rights, and interline services with Ferromex. KCSM and Ferromex entered into a Trackage Rights, Switching and Interline Settlement Agreement, dated February 9, 2010 (the “Trackage Rights Agreement”). Pursuant to the Trackage Rights Agreement, the parties terminated, in a definitive and irrevocable manner, all actions and procedures regarding: (a) rates applicable to trackage rights, switching and interlinear services from January 1, 2009 onward but not regarding the applicable rates before January 1, 2009 or the amounts owed by the parties to one another prior to the execution of the Trackage Rights Agreement; (b) the scope of certain trackage rights in Monterrey, Nuevo León, Guadalajara, Jalisco and Altamira, Tamaulipas, the Long Trackage Right, and Aguascalientes; and (c) court costs, as well as any other directly-related issue or dispute that arises from, is related in any manner directly or indirectly with, the terms and conditions and/or scope of such mandatory trackage and/or switching rights or that arises by reason of the definition of trackage rights (the “Settlement Controversies”). The parties waived their rights to any future actions derived from or related to the Settlement Controversies. Further, KCSM and Ferromex set the rates applicable for January 1, 2009 for each party for the use of the other party’s trackage. The retroactive

Kansas City Southern

Notes to Consolidated Financial Statements — (Continued)

application of these rates to January 1, 2009 did not have a material impact on the results of operations for the quarter ended March 31, 2010.

Explicitly excluded from the scope and purpose of the Trackage Rights Agreement are all procedures, disputes, lawsuits, remedies, appeals and disagreements that were not expressly identified in the Trackage Rights Agreement, including without limitation, the disputes, claims and lawsuits that relate to the determination of rates for mandatory trackage and/or switching rights and for interconnection and/or terminal services, accrued prior to January 1, 2009, as well as the disputes among the parties regarding amounts payable to one another for trackage rights, interline services and switching services, that are currently being disputed by both parties at the Federal Court of Fiscal and Administrative Justice. Furthermore, the parties did not settle or agree to settle any other trackage and switching rights not specifically mentioned in the Trackage Rights Agreement.

The Trackage Rights Agreement shall remain in effect until the term of the concession title of Ferromex or the concession title of KCSM expire, unless the parties mutually agree to renew the Trackage Rights Agreement beyond the expiration of either party’s concession title. The Trackage Rights Agreement may be terminated, at KCSM’s option, before its stipulated term if Ferromex is sold or if it transfers, directly or indirectly, its concession under its concession title. A change in control of KCSM or its affiliates, however, shall not be a cause for termination.

Certain Disputes with Ferromex. KCSM’s operations are subject to certain trackage rights, haulage rights, and interline services (the “Services”) with Ferromex. Other than the rates to be charged pursuant to the Trackage Rights Agreement, dated February 9, 2010, between KCSM and Ferromex, the rates payable for these Services have not been agreed upon by KCSM and Ferromex for the periods beginning in 1998 through December 31, 2008. If KCSM cannot reach an agreement with Ferromex for rates applicable for Services prior to January 1, 2009 which are not subject to the Trackage Rights Agreement, the Mexican Secretaría de Comunicaciones y Transportes (“Ministry of Communications and Transportation” or “SCT”) is entitled to set the rates in accordance with Mexican law and regulations. KCSM and Ferromex both initiated administrative proceedings seeking a determination by the SCT of the rates that KCSM and Ferromex should pay each other in connection with the Services. The SCT issued rulings in 2002 and 2008 setting the rates for the Services and both KCSM and Ferromex challenged these rulings.

In addition, KCSM is currently involved in judicial, civil and administrative proceedings and negotiations with Ferromex regarding the rates payable to each other for the Services for the periods prior to January 1, 2009. Although KCSM and Ferromex have challenged these matters based on different grounds and these cases continue to evolve, management believes the amounts recorded related to these matters are adequate and does not believe there will be a future material impact to the results of operations arising out of these disputes.

SCT Sanction Proceedings. In April 2006, the SCT initiated proceedings against KCSM, claiming that KCSM had failed to make certain minimum capital investments projected for 2004 and 2005 under its five-year business plan filed with the SCT prior to its April 2005 acquisition by KCS (collectively, the “Capital Investment Proceedings”). KCSM believes it made capital expenditures exceeding the required amounts. KCSM responded to the SCT by providing evidence in support of its investments and explaining why it believes sanctions are not appropriate. In May 2007, KCSM was served with an SCT resolution regarding the Capital Investment Proceeding for 2004, in which the SCT resolved to impose no sanction. In June 2007, KCSM was served with an SCT resolution regarding the Capital Investment Proceeding for 2005, in which the SCT determined that KCSM had indeed failed to make the minimum capital investments required for such year, and imposed a minimal fine. KCSM has filed an action in the Mexican Administrative and Fiscal Federal Court challenging this ruling. KCSM will have the right to challenge any adverse ruling.

In May 2008, the SCT initiated a proceeding against KCSM at the request of a Mexican subsidiary of a large U.S. Auto Manufacturer (the “Auto Manufacturer”), alleging that KCSM impermissibly bundled

Kansas City Southern

Notes to Consolidated Financial Statements — (Continued)

international rail services and engaged in discriminatory pricing practices with respect to rail services provided by KCSM to the Auto Manufacturer. In March 2009, the SCT issued a decision determining that KCSM had engaged in the activities alleged, but imposed no sanction since this was the first time KCSM had engaged in such activities. On May 6, 2009, KCSM challenged the SCT’s decision and the appeal is currently pending in the Administrative and Fiscal Federal Court.

On July 23, 2008, the SCT delivered notice to KCSM of new proceedings against KCSM, claiming, among other things, that KCSM refused to grant Ferromex access to certain trackage over which Ferromex alleges it has trackage rights on six different occasions and thus denied Ferromex the ability to provide service to the Auto Manufacturer at this location. On August 13, 2008, KCSM filed a response to the SCT and final resolution is pending.

KCSM believes it has defenses to the imposition of sanctions for the foregoing proceedings and intends to vigorously contest these allegations. KCSM does not believe that these SCT proceedings will have a material adverse effect on its results of operations or financial condition. However, if KCSM is ultimately sanctioned by the SCT for “generic” sanctions on five occasions over the term of the Concession, KCSM could be subject to possible future SCT action seeking revocation of the Concession.

Disputes Relating to the Provision of Services to the Auto Manufacturer. KCSM is involved in several disputes related to providing services to the Auto Manufacturer. In March 2008, the Auto Manufacturer filed an arbitration suit against KCSM under a contract for services to the Auto Manufacturer’s plants in Mexico, which, as amended, had a stated termination date of January 31, 2008. Among other claims, the Auto Manufacturer claimed that the contract was implicitly extended and continued in effect beyond its stated termination date. The Auto Manufacturer is seeking a declaration by the arbitrator that the rates being assessed by KCSM are discriminatory, even though the rates being charged are within the legal rate limits set by Mexican law for such freight transportation. KCSM claimed that the contract did in fact expire on its stated termination date, and that services rendered thereafter are thus subject to the general terms and conditions (including rates) applicable in the absence of a specific contract, pursuant to Mexican law. Accordingly, KCSM filed a counterclaim against the Auto Manufacturer to, among other things, recover the applicable rate difference between the rates under the contract and KCSM’s rates. The arbitration was divided in two phases. On May 18, 2009, the arbitrator issued an award on the first phase of the arbitration proceeding, ruling that the contract had terminated on May 8, 2008. As of the date of this filing, the second phase of the arbitration proceeding, regarding the claim that the rates assessed by KCSM are discriminatory, is in the evidentiary stage and has not been resolved. Management believes the final resolution of these claims will not have any material impact on KCSM’s results of operations.

Third Party Contractual Agreements. In the normal course of business, the Company enters into various third party contractual agreements related to the use of other railroads’ or governmental entities’ infrastructure needed for the operations of the business. The Company is involved or may become involved in certain disputes involving transportation rates, charges, and interpretations related to these agreements. While the outcome of these matters cannot be predicted with certainty, the Company does not believe, when finally resolved, that these disputes will have a material effect on its results of operations or financial condition. However, an unexpected adverse resolution could have a material effect on the results of operations in a particular quarter or fiscal year.

Income tax. Tax returns filed in the U.S. from 2004 through the current year and in Mexico from 2003 through the current year remain open to examination by the taxing authorities. The 2008 U.S. tax return and the 2003 through 2005 Mexico tax returns are currently under examination. The Company received an audit assessment for the year ended December 31, 2003 from Servicio de Administracion Tributaria (the “SAT”), the Mexican equivalent of the IRS. The Company filed its response to this assessment on March 8, 2010, and continues to negotiate with the SAT. If a settlement is not reached, the matter will be litigated. The Company believes that it has strong legal arguments in its favor and will more likely than not ultimately prevail in any challenge of this assessment. The Company believes that an adequate provision has been made for any

Kansas City Southern

Notes to Consolidated Financial Statements — (Continued)

adjustment (taxes and interest) that will be due for all open periods. However, an unexpected adverse resolution could have a material effect on the results of operations in a particular quarter or fiscal year.

Credit Risk. The Company continually monitors risks related to the economic changes and certain customer receivables concentrations. Significant changes in customer concentration or payment terms, deterioration of customer credit-worthiness or further weakening in economic trends could have a significant impact on the collectability of the Company’s receivables and operating results. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. The Company has recorded reserves for uncollectability based on its best estimate at March 31, 2010.


12.	Geographic Information

The Company strategically manages its rail operations as one reportable business segment over a single coordinated rail network that extends from the midwest and southeast portions of the United States south into Mexico and connects with other Class I railroads. Financial information reported at this level, such as revenues, operating income and cash flows from operations, is used by corporate management, including the Company’s chief operating decision-maker, in evaluating overall financial and operational performance, market strategies, as well as the decisions to allocate capital resources.

The Company’s strategic initiatives, which drive its operational direction, are developed and managed at the Company’s headquarters and targets are communicated to its various regional activity centers. Corporate management is responsible for, among others, KCS’ marketing strategy, the oversight of large cross-border customer accounts, overall planning and control of infrastructure and rolling stock, the allocation of capital resources based upon growth and capacity constraints over the coordinated network, and other functions such as financial planning, accounting, and treasury.

The role of each region is to manage the operational activities and monitor and control costs over the coordinated rail network. Such cost control is required to ensure that pre-established efficiency standards set at the corporate level are attained. The regional activity centers are responsible for executing the overall corporate strategy and operating plan established by corporate management as a coordinated system.

The following tables (in millions) provide information by geographic area in accordance with the accounting guidance on segment reporting:


	Three Months
	Ended March 31,
Revenues	2010		2009

U.S.	$	245.5	$	208.7
Mexico		190.8		137.3

Total revenues	$	436.3	$	346.0


Property and equipment	March 31,		December 31,
(including concession assets), net	2010		2009

U.S.	$	2,497.2	$	2,482.7
Mexico		2,260.7		2,239.7

Total property and equipment (including concession assets), net	$	4,757.9	$	4,722.4


13.	Condensed Consolidating Financial Information

KCSR has outstanding $275.0 million of 8.0% Senior Notes due 2015 and $190.0 million of 13.0% Senior Notes due 2013, which are unsecured obligations of KCSR, which are also jointly and severally and fully and

Kansas City Southern

Notes to Consolidated Financial Statements — (Continued)

unconditionally guaranteed on an unsecured senior basis by KCS and certain wholly-owned domestic subsidiaries. As a result, the following accompanying condensed consolidating financial information (in millions) has been prepared and presented pursuant to SEC Regulation S-X Rule 3-10 “Financial statements of guarantors and issuers of guaranteed securities registered or being registered.” The 8.0% Senior Notes were registered by means of an amendment to KCS’ shelf registration statement filed and automatically effective as of May 23, 2008. The 13.0% Senior Notes were registered under KCS’ shelf registration statement filed and automatically effective as of November 21, 2008.

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS


	Three Months Ended March 31, 2010
							Guarantor			Non-Guarantor			Consolidating			Consolidated
	Parent			KCSR			Subsidiaries			Subsidiaries			Adjustments			KCS

Revenues	$	—		$	217.0		$	4.0		$	221.9		$	(6.6	)	$	436.3
Operating expenses		1.1			163.1			6.7			164.4			(7.2	)		328.1

Operating income (loss)		(1.1	)		53.9			(2.7	)		57.5			0.6			108.2
Equity in net earnings of unconsolidated affiliates		31.8			3.4			—			9.3			(38.1	)		6.4
Interest expense		(0.1	)		(27.4	)		—			(28.0	)		11.1			(44.4	)
Debt retirement costs		—			—			—			(14.9	)		—			(14.9	)
Foreign exchange gain		—			—			—			2.6			—			2.6
Other income, net		10.3			1.0			—			0.9			(11.7	)		0.5

Income (loss) before income taxes and noncontrolling interest		40.9			30.9			(2.7	)		27.4			(38.1	)		58.4
Income tax expense (benefit)		5.6			12.2			(1.0	)		7.4			—			24.2

Net income (loss)		35.3			18.7			(1.7	)		20.0			(38.1	)		34.2
Noncontrolling interest		—			—			—			(1.1	)		—			(1.1	)

Net income (loss) attributable to Kansas City Southern and subsidiaries	$	35.3		$	18.7		$	(1.7	)	$	21.1		$	(38.1	)	$	35.3

Kansas City Southern

Notes to Consolidated Financial Statements — (Continued)


	Three Months Ended March 31, 2009
							Guarantor			Non-Guarantor			Consolidating			Consolidated
	Parent			KCSR			Subsidiaries			Subsidiaries			Adjustments			KCS

Revenues	$	—		$	183.9		$	2.9		$	166.2		$	(7.0	)	$	346.0
Operating expenses		1.3			153.2			3.8			147.7			(7.6	)		298.4

Operating income (loss)		(1.3	)		30.7			(0.9	)		18.5			0.6			47.6
Equity in net earnings of unconsolidated affiliates		5.2			0.5			—			1.0			(5.7	)		1.0
Interest expense		(0.7	)		(18.6	)		—			(23.0	)		0.5			(41.8	)
Debt retirement costs		—			(5.3	)		—			(0.6	)		—			(5.9	)
Foreign exchange loss		—			—			—			(5.1	)		—			(5.1	)
Other income, net		0.3			1.1			—			1.2			(1.1	)		1.5

Income (loss) before income taxes and noncontrolling interest		3.5			8.4			(0.9	)		(8.0	)		(5.7	)		(2.7	)
Income tax expense (benefit)		6.2			4.1			(0.3	)		(9.9	)		—			0.1

Net income (loss)		(2.7	)		4.3			(0.6	)		1.9			(5.7	)		(2.8	)
Noncontrolling interest		—			—			—			(0.1	)		—			(0.1	)

Net income (loss) attributable to Kansas City Southern and subsidiaries	$	(2.7	)	$	4.3		$	(0.6	)	$	2.0		$	(5.7	)	$	(2.7	)

CONDENSED CONSOLIDATING BALANCE SHEETS


	March 31, 2010
						Guarantor		Non-Guarantor		Consolidating			Consolidated
	Parent			KCSR		Subsidiaries		Subsidiaries		Adjustments			KCS

*Assets:*
Current assets	$	2.1		$	225.5	$	5.0	$	459.6	$	(30.4	)	$	661.8
Investments held for operating
purposes and affiliate investment		1,593.3			34.8		1.9		1,616.2		(3,192.7	)		53.5
Property and equipment (including concession assets), net		—			1,733.6		210.5		2,813.8		—			4,757.9
Other assets		1.2			41.9		—		65.0		(32.2	)		75.9

Total assets	$	1,596.6		$	2,035.8	$	217.4	$	4,954.6	$	(3,255.3	)	$	5,549.1

*Liabilities and equity:*
Current liabilities	$	(467.1	)	$	590.7	$	126.4	$	225.6	$	(29.3	)	$	446.3
Long-term debt		0.2			763.6		0.4		1,142.7		—			1,906.9
Deferred income taxes		(22.7	)		430.1		78.6		97.1		—			583.1
Other liabilities		4.2			142.1		3.2		133.0		(33.4	)		249.1
Stockholders’ equity		2,082.0			77.9		8.8		3,074.5		(3,161.2	)		2,082.0
Noncontrolling interest		—			31.4		—		281.7		(31.4	)		281.7

Total liabilities and equity	$	1,596.6		$	2,035.8	$	217.4	$	4,954.6	$	(3,255.3	)	$	5,549.1

Kansas City Southern

Notes to Consolidated Financial Statements — (Continued)


	December 31, 2009
						Guarantor		Non-Guarantor		Consolidating			Consolidated
	Parent			KCSR		Subsidiaries		Subsidiaries		Adjustments			KCS

*Assets:*
Current assets	$	0.5		$	219.1	$	3.4	$	428.8	$	(38.0	)	$	613.8
Investments held for operating
purposes and affiliate investment		1,562.0			31.7		1.9		1,616.0		(3,164.8	)		46.8
Property and equipment (including concession assets), net		—			1,717.5		212.1		2,792.8		—			4,722.4
Other assets		1.3			42.0		—		90.9		(62.9	)		71.3

Total assets	$	1,563.8		$	2,010.3	$	217.4	$	4,928.5	$	(3,265.7	)	$	5,454.3

*Liabilities and equity:*
Current liabilities	$	(455.7	)	$	567.6	$	124.0	$	211.7	$	(36.8	)	$	410.8
Long-term debt		0.2			793.8		0.4		1,147.5		(30.0	)		1,911.9
Deferred income taxes		(27.8	)		416.8		79.5		90.1		—			558.6
Other liabilities		4.1			142.0		3.0		132.2		(34.1	)		247.2
Stockholders’ equity		2,043.0			58.7		10.5		3,064.2		(3,133.4	)		2,043.0
Noncontrolling interest		—			31.4		—		282.8		(31.4	)		282.8

Total liabilities and equity	$	1,563.8		$	2,010.3	$	217.4	$	4,928.5	$	(3,265.7	)	$	5,454.3

Kansas City Southern

Notes to Consolidated Financial Statements — (Continued)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS


	Three Months Ended March 31, 2010
							Guarantor			Non-Guarantor			Consolidating			Consolidated
	Parent			KCSR			Subsidiaries			Subsidiaries			Adjustments			KCS

*Operating activities:*
Excluding intercompany activity	$	0.8		$	56.8		$	(2.0	)	$	55.9		$	—		$	111.5
Intercompany activity		(10.0	)		3.4			2.6			4.0			—			—

Net cash provided (used)		(9.2	)		60.2			0.6			59.9			—			111.5

*Investing activities:*
Capital expenditures		—			(27.9	)		(0.7	)		(23.7	)		—			(52.3	)
Acquisition of an intermodal facility, net of cash acquired		—			—			—			(25.0	)		—			(25.0	)
Property investments in MSLLC		—			—			—			(4.8	)		—			(4.8	)
Other investing activities		—			(4.9	)		—			35.2			(30.0	)		0.3

Net cash used		—			(32.8	)		(0.7	)		(18.3	)		(30.0	)		(81.8	)

*Financing activities:*
Proceeds from issuance of long-term debt		—			—			—			295.7			—			295.7
Repayment of long-term debt		(0.2	)		(34.7	)		—			(300.8	)		30.0			(305.7	)
Debt costs		—			(1.7	)					(18.9	)		—			(20.6	)
Excess tax benefit from share-based compensation		11.7			—			—			—			—			11.7
Other financing activities		(2.2	)		—			—			—			—			(2.2	)

Net cash provided (used)		9.3			(36.4	)		—			(24.0	)		30.0			(21.1	)

*Cash and cash equivalents:*
Net increase (decrease)		0.1			(9.0	)		(0.1	)		17.6			—			8.6
At beginning of year		(0.1	)		12.7			0.3			104.6			—			117.5

At end of period	$	—		$	3.7		$	0.2		$	122.2		$	—		$	126.1

Kansas City Southern

Notes to Consolidated Financial Statements — (Continued)


	Three Months Ended March 31, 2009
							Guarantor			Non-Guarantor			Consolidating			Consolidated
	Parent			KCSR			Subsidiaries			Subsidiaries			Adjustments			KCS

*Operating activities:*
Excluding intercompany activity	$	64.8		$	62.4		$	1.0		$	(48.9	)	$	—		$	79.3
Intercompany activity		(53.4	)		(103.5	)		—			156.9			—			—

Net cash provided (used)		11.4			(41.1	)		1.0			108.0			—			79.3

*Investing activities:*
Capital expenditures		—			(82.9	)		(0.8	)		(32.7	)		1.0			(115.4	)
Return of investment		—			—			—			65.0			(65.0	)		—
Property investments in MSLLC		—			—			—			(17.8	)		—			(17.8	)
Loans to affiliates		(8.7	)		—			—			—			8.7			—
Other investing activities		—			134.3			—			(131.1	)		(1.0	)		2.2

Net cash provided (used)		(8.7	)		51.4			(0.8	)		(116.6	)		(56.3	)		(131.0	)

*Financing activities:*
Proceeds from issuance of long-term debt		—			33.7			—			189.0			(8.7	)		214.0
Repayment of long-term debt		—			(204.7	)		—			(34.0	)		—			(238.7	)
Other financing activities		(2.5	)		(5.1	)		—			(69.2	)		65.0			(11.8	)

Net cash provided (used)		(2.5	)		(176.1	)		—			85.8			56.3			(36.5	)

*Cash and cash equivalents:*
Net increase (decrease)		0.2			(165.8	)		0.2			77.2			—			(88.2	)
At beginning of year		—			177.9			0.2			51.8			—			229.9

At end of period	$	0.2		$	12.1		$	0.4		$	129.0		$	—		$	141.7

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Kansas City Southern:

We have reviewed the accompanying consolidated balance sheet of Kansas City Southern and subsidiaries (the Company) as of March 31, 2010, and the related consolidated statements of operations and cash flows for the three-month periods ended March 31, 2010 and 2009. These consolidated financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the consolidated financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of the Company as of December 31, 2009, and the related consolidated statements of income, changes in equity and comprehensive income, and cash flows for the year then ended (not presented herein); and in our report dated February 11, 2010, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2009 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

KPMG LLP

Kansas City, Missouri

April 27, 2010


Item 2.	*Management’s Discussion and Analysis of Financial Condition and Results of Operations*

The discussion below, as well as other portions of this Form 10-Q, contain forward-looking statements that are not based upon historical information. Such forward-looking statements are based upon information currently available to management and management’s perception thereof as of the date of this Form 10-Q. Readers can identify these forward-looking statements by the use of such verbs as “expects,” “anticipates,” “believes” or similar verbs or conjugations of such verbs. The actual results of operations of Kansas City Southern (“KCS” or the “Company”) could materially differ from those indicated in forward-looking statements. The differences could be caused by a number of factors or combination of factors including, but not limited to, those factors identified in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, which is on file with the U.S. Securities and Exchange Commission (File No. 1-4717) incorporated by reference and in Part II Item 1A — “Risk Factors” in the Form 10-K and any updates contained herein. Readers are strongly encouraged to consider these factors when evaluating forward-looking statements. Forward-looking statements contained in this Form 10-Q will not be updated.

This discussion is intended to clarify and focus on the Company’s results of operations, certain changes in its financial position, liquidity, capital structure and business developments for the periods covered by the consolidated financial statements included under Item 1 of this Form 10-Q. This discussion should be read in conjunction with those consolidated financial statements and the related notes, and is qualified by reference to them.

Critical Accounting Policies and Estimates

The Company’s discussion and analysis of its financial position and results of operations is based upon its consolidated financial statements. The preparation of these consolidated financial statements requires estimation and judgment that affect the reported amounts of revenue, expenses, assets, and liabilities. The Company bases its estimates on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the accounting for assets and liabilities that are not readily apparent from other sources. If the estimates differ materially from actual results, the impact on the consolidated financial statements may be material. The Company’s critical accounting policies are disclosed in the 2009 Annual Report on Form 10-K.

During the first quarter of 2010, the Company elected to change its accounting policy for rail grinding costs from a capitalization method to a direct expense method. Refer to Note 1, Accounting Policies, Interim Financial Statements and Basis of Presentation, for further details of this change in accounting policy. Comparative financial information for all prior periods have been adjusted to reflect the retroactive application of this change in accounting principle.

Overview

The Company is engaged in the freight rail transportation business, operating a coordinated rail network under one reportable business segment. The primary operating subsidiaries of the Company consist of the following: The Kansas City Southern Railway Company (“KCSR”), Kansas City Southern de México, S.A. de C.V. (“KCSM”), Meridian Speedway, LLC (“MSLLC”), and The Texas Mexican Railway Company (“TexMex”). The Company generates revenues and cash flows by providing customers with freight delivery services within its regions, and throughout North America through connections with other Class I rail carriers. Customers conduct business in a number of different industries, including electric-generating utilities, chemical and petroleum products, industrial and consumer products, agriculture and mineral products, automotive products and intermodal transportation. Appropriate eliminations and reclassifications have been recorded in deriving consolidated financial statements.

First Quarter Analysis

The Company reported quarterly earnings of $0.34 per diluted share on consolidated net income of $35.3 million for the three months ended March 31, 2010, compared to a quarterly loss of $0.09 per diluted share on consolidated net loss of $2.7 million for the same period in 2009. This earnings increase reflects a 26% increase in revenues during the three months ended March 31, 2010 as compared to the same period in

2009, driven primarily by the relative improvement in the economy and positive pricing impacts in certain commodity groups. Operating expenses increased 10% compared to the same period in 2009, primarily due to increases in fuel and compensation and benefit expenses; however, the Company was able to leverage its cost control program initiated in 2009 as operating expenses as a percentage of revenues declined to 75.2% for the three months ended March 31, 2010 as compared to 86.2% for the same period in 2009.

Cash flows from operations increased to $111.5 million as compared to $79.3 million for the three month periods ended March 31, 2010 and 2009, respectively. The increase is primarily due to the relative improvement in the economy. Capital expenditures are a significant use of cash due to the capital intensive nature of railroad operations. Cash used for capital expenditures for the three months ended March 31, 2010 was $52.3 million as compared to $115.4 million for the same period in 2009. The decrease is primarily due to the completion of the Victoria-Rosenberg line in the second quarter of 2009.

Results of Operations

The following summarizes KCS’ statements of operations (in millions) :


	Three Months Ended
	March 31,						Change
	2010			2009			Dollars

Revenues	$	436.3		$	346.0		$	90.3
Operating expenses		328.1			298.4			29.7

Operating income		108.2			47.6			60.6
Equity in net earnings of unconsolidated affiliates		6.4			1.0			5.4
Interest expense		(44.4	)		(41.8	)		(2.6	)
Debt retirement costs		(14.9	)		(5.9	)		(9.0	)
Foreign exchange gain (loss)		2.6			(5.1	)		7.7
Other income, net		0.5			1.5			(1.0	)

Income (loss) before income taxes and noncontrolling interest		58.4			(2.7	)		61.1
Income tax expense		24.2			0.1			24.1

Net income (loss)		34.2			(2.8	)		37.0
Noncontrolling interest		(1.1	)		(0.1	)		(1.0	)

Net income (loss) attributable to Kansas City Southern and subsidiaries	$	35.3		$	(2.7	)	$	38.0

Revenues

The following summarizes revenues ( in millions ), carload/unit statistics (in thousands) and revenue per carload/unit:


	Revenues							Carloads and Units							Revenue per Carload/Unit
	Three Months Ended							Three Months Ended							Three Months Ended
	March 31,							March 31,							March 31,
	2010		2009		% Change			2010		2009		% Change			2010		2009		% Change

Chemical and petroleum	$	89.6	$	71.5		25	%		62.2		55.5		12	%	$	1,441	$	1,288		12	%
Industrial and consumer products		99.8		82.0		22	%		73.4		66.1		11	%		1,360		1,241		10	%
Agriculture and minerals		106.0		82.6		28	%		67.3		62.2		8	%		1,575		1,328		19	%

Total general commodities		295.4		236.1		25	%		202.9		183.8		10	%		1,456		1,285		13	%
Coal		59.0		47.3		25	%		72.0		75.0		(4	)%		819		631		30	%
Intermodal		42.6		30.6		39	%		150.5		114.6		31	%		283		267		6	%
Automotive		21.7		12.3		76	%		17.8		10.6		68	%		1,219		1,160		5	%

Subtotal		418.7		326.3		28	%		443.2		384.0		15	%	$	945	$	850		11	%

Other revenue		17.6		19.7		(11	)%

Total revenues(i)	$	436.3	$	346.0		26	%

(i) Included in revenues:
Fuel surcharge	$	34.8	$	16.8

Freight revenues include both revenue for transportation services and fuel surcharges. For the three months ended March 31, 2010, revenues increased $90.3 million compared to the same period in 2009, primarily due to the overall increase in carload/unit volumes resulting from the relative improvement in the economy, positive pricing impacts, increased fuel surcharge and the effect of fluctuations in the value of the U.S. dollar against the value of the Mexican peso. Revenue per carload/unit increased by 11% for the three months ended March 31, 2010, reflecting favorable commodity mix in addition to the factors discussed above.

KCS’s fuel surcharge is a mechanism to adjust revenue based upon changing fuel prices. Fuel surcharges are calculated differently depending on the type of commodity transported. For most commodities, fuel surcharge is calculated using a fuel price from a prior time period that can be up to 60 days earlier. In a period of volatile fuel prices or changing customer business mix, changes in fuel expense and fuel surcharge may differ.

The following discussion provides an analysis of revenues by commodity group:


		Revenues by commodity
		group for the three months
		ended March 31, 2010

Chemical and petroleum. Revenues increased $18.1 million for the three months ended March 31, 2010, compared to the same period in 2009, primarily due to increases in volume and pricing. Petroleum and plastics product volumes increased due to inventory replenishment and new petroleum business. Additionally, petroleum revenues increased in Mexico due to a government initiated oil export program, which resulted in record levels of oil production and storage. Revenues also increased in chemicals used to manufacture glass and paint as a result of the economic improvements in the automotive industry.


		Revenues by commodity
		group for the three months
		ended March 31, 2010

Industrial and consumer products. Revenues increased $17.8 million for the three months ended March 31, 2010, compared to the same period in 2009, primarily due to increases in volume and pricing. Metals and scrap business growth was primarily due to increased length of haul, growing demand for steel coil due to the rebound in the automotive industry and the strengthening economy. Forest products increased primarily due to a restocking of inventory to meet increased demand. In addition, paper mill demand was at a three year high and due to the wet conditions in the southeastern U.S., mills were forced to source from further distances.
Agriculture and minerals. Revenues increased $23.4 million for the three months ended March 31, 2010, compared to the same period in 2009, due to increases in pricing and volume. Grain revenue increased as a portion of the traffic lost to vessel in 2009 was converted back to rail in Mexico. Increased length of haul also drove year over year revenue increases. Food products showed continued strength primarily due to new business.

Coal. Revenue increased $11.7 million for the three months ended March 31, 2010, compared to the same period in 2009, primarily due to increases in pricing and fuel surcharge. Revenue per unit to existing electric generation customers increased due to re-pricing of coal contracts and increased fuel surcharge, which was partially offset by lower unit coal volumes.

Intermodal. Revenues increased $12.0 million for the three months ended March 31, 2010, compared to the same period in 2009, primarily due to an increase in volume. Growth was driven by increased automotive parts traffic, conversion of cross border truck traffic to rail, haulage, trans-Pacific container volume due to inventory replenishment, a rebound in North American demand for automobiles and improvement in the economy.

Automotive. Revenues increased $9.4 million for the three months ended March 31, 2010, compared to the same period in 2009, primarily due to an increase in volume. The volume increase was driven by strong year over year growth in North American automobile sales and an increase in parts and vehicle volume driven by a shift in production and distribution patterns from the U.S. to Mexico.

Operating Expenses

Operating expenses, as shown below ( in millions ), increased $29.7 million for the three months ended March 31, 2010, when compared to the same period in 2009, primarily due to fuel expense, compensation and benefit expense and the effect of fluctuations in the value of the U.S. dollar against the value of the Mexican peso for operating expenses denominated in Mexican pesos.


	Three Months Ended
	March 31,				Change
	2010		2009		Dollars			Percent

Compensation and benefits	$	90.7	$	78.0	$	12.7			16	%
Purchased services		44.9		45.6		(0.7	)		(2	)%
Fuel		60.8		43.3		17.5			40	%
Equipment costs		38.7		39.1		(0.4	)		(1	)%
Depreciation and amortization		45.8		46.9		(1.1	)		(2	)%
Casualties and insurance		11.9		12.5		(0.6	)		(5	)%
Materials and other		35.3		33.0		2.3			7	%

Total operating expenses	$	328.1	$	298.4	$	29.7			10	%

Compensation and benefits. Compensation and benefits increased $12.7 million for the three months ended March 31, 2010, compared to the same period in 2009, primarily due to annual salary rate increases and incentive compensation, including the Mexico statutory profit sharing expense. In addition, compensation and benefits increased in Mexico due to fluctuations in the value of the U.S. dollar against the value of the Mexican peso. These increases were partially offset by lower employee headcount as compared to the prior year.

Purchased services. Purchased services decreased $0.7 million for the three months ended March 31, 2010, compared to the same period in 2009, primarily due to lower locomotive maintenance as a result of a newer locomotive fleet and having fewer locomotives covered by maintenance agreements. Additionally, the opening of the Victoria-Rosenberg line in the second quarter of 2009 resulted in decreased use of certain trackage rights. These decreases were partially offset by volume-sensitive costs including joint facilities, security, and track and terminal services.

Fuel. Fuel expense increased $17.5 million for the three months ended March 31, 2010, compared with the same period in 2009, primarily due to higher diesel fuel prices and consumption driven by increased carload/unit volumes, partially offset by increased fuel efficiency.

Equipment costs. Equipment costs decreased $0.4 million for the three months ended March 31, 2010, compared with the same period in 2009. Lower freight car equipment lease expense was partially offset by the increase in the use of other railroads’ freight cars.

Depreciation and amortization. Depreciation and amortization expenses decreased $1.1 million for the three months ended March 31, 2010, compared to the same period in 2009, primarily due to a change in the estimated useful lives of certain Mexican concession assets, which was effective as of October 1, 2009. In addition, depreciation expense decreased due to the impact of lower rates based on the depreciation study completed in third quarter 2009. The decreases were partially offset by an increase in depreciation expense due to a larger asset base. Depreciation expense on the asset base as of year-end 2009 will be lower on a quarterly basis by approximately $2.6 million due to the change in estimated useful lives of certain Mexican concession assets and approximately $1.0 million as a result of lower rates based on the depreciation study.

Casualties and insurance. Casualties and insurance expenses decreased $0.6 million for the three months ended March 31, 2010, compared to the same period in 2009, primarily due to lower environmental expense.

Materials and other. Materials and other expense increased $2.3 million for the three months ended March 31, 2010, compared to the same period in 2009, primarily due to a settlement related to a legal dispute.

Non-Operating Expenses

Equity in Net Earnings (Losses) of Unconsolidated Affiliates. Equity in earnings from unconsolidated affiliates was $6.4 million for the three month period ended March 31, 2010, compared to $1.0 million for the same period in 2009. Significant components of this change are as follows:


	•	Equity in earnings from the operations of Panama Canal Railway Company was $1.9 million for the three month period ended March 31, 2010, compared to $0.3 million for the same period in 2009. The increase is primarily due to an increase in container volume attributable to the improvement in the economy.

	•	Equity in earnings of Southern Capital Corporation, LLC was $4.3 million for the three month period ended March 31, 2010, compared to $1.1 million for the same period in 2009. The increase is primarily due to the gain on sale of railcars and other equipment in 2010.

	•	KCSM’s equity in earnings of Ferrocarril y Terminal del Valle de México, S.A. de C.V. (“FTVM”) was $0.2 million for the three month period ended March 31, 2010, compared to a loss of $0.4 million for the same period in 2009. The increase is primarily due to a slight recovery in volumes.

Interest Expense. Interest expense increased by $2.6 million for the three months ended March 31, 2010, compared to the same period in 2009, primarily due to higher average interest rates, partially offset by lower debt balances.

Debt Retirement Costs. Debt retirement costs for the three months ended March 31, 2010 and 2009 were $14.9 million and $5.9 million, respectively. In the first quarter of 2010, KCSM purchased $296.3 million of the 9 3 / 8 % Senior Notes due May 1, 2012. The Company recorded debt retirement costs of $14.9 million related to the call premium and the write-off of unamortized debt issuance costs. In January 2009, KCSR redeemed its 7 1 / 2 % Senior Notes due June 15, 2009 and expensed $5.3 million for cash tender offer expenses and unamortized debt issuance costs. In addition, in March 2009, KCSM repaid all amounts outstanding under the 2007 KCSM Credit Agreement and upon termination, wrote-off the unamortized debt issuance cost related to this debt.

Foreign Exchange. For the three months ended March 31, 2010 and 2009, the foreign exchange gain was $2.6 million compared to a foreign exchange loss of $5.1 million for the same period in 2009, due to fluctuations in the value of the U.S. dollar versus the value of the Mexican peso.

Other Income, net. Other income, net decreased by $1.0 million for the three months ended March 31, 2010, primarily due to gains on sale of land recognized in 2009.

Income Tax Expense. For the three months ended March 31, 2010, income tax expense was $24.2 million as compared to $0.1 million for the same period in 2009. The effective income tax rate was 41.4% and (3.7%) for the three months ended March 31, 2010 and 2009, respectively. The changes in income tax expense and the effective tax rate were primarily due to higher pre-tax income and foreign exchange rate fluctuations.

Liquidity and Capital Resources

Overview

KCS’ primary uses of cash are to support operations; maintain and improve its railroad; pay debt service and preferred stock dividends; acquire new and maintain existing locomotives, rolling stock and other equipment; and meet other obligations. KCS’ cash flow from operations has historically been sufficient to fund operations, maintenance capital expenditures and debt service. External sources of cash (principally bank debt, public and private debt, preferred stock and leases) have been used to refinance existing indebtedness and to fund acquisitions, new investments and equipment additions. The Company generated $8.6 million of cash and cash equivalents during the three months ended March 31, 2010 — see “Cash Flow Information” below. On March 31, 2010, total available liquidity (the unrestricted cash balance plus revolving credit facility availability) was approximately $211 million.

The Company believes, based on current expectations, that cash and other liquid assets, operating cash flows, access to debt and equity capital markets, and other available financing resources will be sufficient to

fund anticipated operating, capital and debt service requirements and other commitments in the foreseeable future. The Company intends to repay the outstanding balance of $40.0 million under the KCSR revolving credit facility within the next twelve months. KCS has no significant scheduled debt maturities until 2012.

As of March 31, 2010, KCS has a debt capitalization ratio (total debt as a percentage of total debt plus total equity) of 45.5 percent. Its primary sources of liquidity are cash flows generated from operations, borrowings under its revolving credit facility and access to debt and equity capital markets. Although KCS has had adequate access to the capital markets, as a non-investment grade company, the financial terms under which funding is obtained often contain restrictive covenants. The covenants constrain financial flexibility by restricting or prohibiting certain actions, including the ability to incur additional debt for any purpose other than refinancing existing debt, create or suffer to exist additional liens, make prepayments of particular debt, pay dividends on common stock, make investments, engage in transactions with stockholders and affiliates, issue capital stock, sell certain assets, and engage in mergers and consolidations or in sale leaseback transactions. These restrictions, however, are subject to a number of qualifications and exceptions that provide the Company with varying levels of additional borrowing capacity. The Company was in compliance with all of its debt covenants as of March 31, 2010.

KCS’ operating results and financing alternatives can be unexpectedly impacted by various factors, some of which are outside of its control. For example, if KCS was to experience a reduction in revenues or a substantial increase in operating costs or other liabilities, its earnings could be significantly reduced, increasing the risk of non-compliance with debt covenants. Additionally, the Company is subject to economic factors surrounding debt and equity capital markets and its ability to obtain financing under reasonable terms is subject to market conditions. Volatility in capital markets and the tightening of market liquidity could impact KCS’ access to capital. Further, KCS’ cost of debt can be impacted by independent rating agencies, which assign debt ratings based on certain factors including credit measurements such as interest coverage and leverage ratios, liquidity and competitive position.

Standard & Poor’s Rating Services (“S&P”) rates the senior secured debt as BB-, the senior unsecured debt as B+, and the preferred stock as CCC. S&P maintains a corporate rating of B and its outlook remains stable for all issuers. Moody’s Investors Service (“Moody’s”) rates the senior secured debt as Ba2, the senior unsecured debt as B2, and the preferred stock as B3. Moody’s maintains a corporate rating of B1 for KCS and B2 for KCSM and its outlook remains stable for all issuers.

On January 7, 2010, pursuant to an offer to purchase, Kansas City Southern de México, S.A. de C.V. (“KCSM”), a wholly-owned subsidiary of KCS, commenced a cash tender offer for a portion of its 9 3 / 8 % Senior Notes. On January 22, 2010, the Company purchased $290.0 million of the tendered 9 3 / 8 % Senior Notes in accordance with the terms and conditions of the tender offer set forth in the offer to purchase using the proceeds received from the issuance of $300.0 million of KCSM 8.0% senior unsecured notes due February 1, 2018 (the “KCSM 8.0% Senior Notes”). Additionally, on February 1, 2010, KCSM purchased $6.3 million of the 9 3 / 8 % Senior Notes. KCSM recorded debt retirement costs of $14.9 million in the first quarter of 2010. The remaining 9 3 / 8 % Senior Notes mature on May 1, 2012 and are redeemable by KCSM at its option.

On January 22, 2010, KCSM issued the KCSM 8.0% Senior Notes, which bear interest semiannually at a fixed annual rate of 8.0%. The KCSM 8.0% Senior Notes were issued at a discount to par value, resulting in a $4.3 million discount and a yield to maturity of 8 1 / 4 %. KCSM used the net proceeds from the issuance of the KCSM 8.0% Senior Notes and cash on hand to purchase $290.0 million in principal amount of the 9 3 / 8 % Senior Notes tendered under an offer to purchase and pay all fees and expenses incurred in connection with the KCSM 8.0% Senior Notes offering and tender offer. The KCSM 8.0% Senior Notes are redeemable at KCSM’s option, in whole or in part, on and after February 1, 2014, at the following redemption prices (expressed as percentages of principal amount) plus any accrued and unpaid interest: 2014 — 104.000%, 2015 — 102.000%, 2016 — 100.000%. In addition, KCSM may redeem up to 35% of the KCSM 8.0% Senior Notes any time prior to February 1, 2013 from the proceeds of the sale of capital stock in KCSM or KCS and are redeemable, in whole but not in part, at KCSM’s option at their principal amount in the event of certain changes in the Mexican withholding tax rate.

The KCSM 8.0% Senior Notes are denominated in dollars and are unsecured, unsubordinated obligations, rank pari passu in right of payment with KCSM’s existing and future unsecured, unsubordinated obligations, and are senior in right of payment to KCSM’s future subordinated indebtedness. In addition, the KCSM Senior Notes include certain covenants which are customary for these types of debt instruments and borrowers with similar credit ratings. The KCSM 8.0% Senior Notes contain certain covenants that, among other things, prohibit or restrict KCSM from taking certain actions, including KCSM’s ability to incur debt, pay dividends or make other distributions in respect of its stock, issue guarantees, enter into certain transaction with affiliates, make restricted payments, sell certain assets, create liens, engage in sale- leaseback transactions and engage in mergers, divestitures and consolidations. However, these limitations are subject to a number of important qualifications and exceptions.

On March 16, 2010, KCS and KCSR entered into a Second Amendment (“Amendment No. 2”) to KCSR’s Amended and Restated Credit Agreement dated April 28, 2006, as amended by Amendment No. 1 dated as of May 31, 2007 (the “Existing Credit Agreement”), which extends the maturity of the revolving credit facility of the Existing Credit Agreement from April 28, 2011 to April 28, 2013. In consideration for this change, the parties to the agreement agreed to increase the Applicable Margin (as defined in Amendment No. 2) in respect of the revolving and swing line credit facilities. In addition, Amendment No. 2 modified certain covenants of the Existing Credit Agreement to permit the incurrence of certain indebtedness and the creation of liens related to such indebtedness, as well as certain prepayments of existing unsecured debt. Amendment No. 2 also provides for certain conforming revisions to the definitions and other terms set forth in the Existing Credit Agreement. Except as amended and supplemented by Amendment No. 2, all terms of the Existing Credit Agreement remained in full force and effect. As the Company intends to repay the outstanding balance under the revolving credit facility within the next twelve months, the outstanding amount of $40.0 million has been classified as a current liability as of March 31, 2010.

Cash Flow Information

Summary cash flow data follows (in millions):


	Three Months Ended
	March 31,
	2010			2009

Cash flows provided by (used for):
Operating activities	$	111.5		$	79.3
Investing activities		(81.8	)		(131.0	)
Financing activities		(21.1	)		(36.5	)

Net increase (decrease) in cash and cash equivalents		8.6			(88.2	)
Cash and cash equivalents beginning of year		117.5			229.9

Cash and cash equivalents end of period	$	126.1		$	141.7

As compared to the three months ended March 31, 2009, cash flows from operating activities increased $32.2 million primarily as a result of increased net income from higher carload/unit volumes due to the recent improvement in the economy, partially offset by higher accounts receivable balances. Net investing cash outflows decreased $49.2 million primarily due to the completion of the Victoria-Rosenberg line in the second quarter of 2009. The decrease was partially offset by the acquisition of an intermodal facility in the first quarter of 2010. Additional information regarding capital expenditures is provided below. Financing cash outflows decreased $15.4 million primarily due to debt refinancing activities and associated debt costs payments. During the three months ended March 31, 2010, the Company repaid $305.7 million of outstanding debt, including the repurchase of the 9 3 / 8 % Senior Notes, and paid $20.6 million in debt costs. During the same period, the Company received proceeds of $295.7 million from the issuance of the KCSM 8.0% Senior Notes.

Capital Expenditures

KCS has funded, and expects to continue to fund capital expenditures with funds from operating cash flows, equipment leases, and debt and equity financing.

The following table summarizes capital expenditures by type for the consolidated operations for the three months ended March 31, 2010 and 2009 respectively (in millions).


	Three Months Ended
	March 31,
	2010		2009

Roadway capital program	$	42.2	$	44.4
Equipment		3.3		2.3
Capacity		0.2		44.2
Information technology		3.4		2.7
Other		2.6		5.2

Total capital expenditures (accrual basis)		51.7		98.8
Change in capital accruals		0.6		16.6

Total cash capital expenditures	$	52.3	$	115.4

For the three months ended March 31, 2009, approximately 45% of total capital expenditures were related to the Victoria-Rosenberg line, which was completed in the second quarter of 2009.

Other Matters

Employee and Labor Relations. KCSM union employees are covered by one labor agreement, which was signed on June 23, 1997, between KCSM and the Sindicato de Trabajadores Ferrocarrileros de la República Mexicana (Mexican Railroad Union), for a term of 50 years, for the purpose of regulating the relationship between the parties and improving conditions for the union employees. Approximately 80% of KCSM employees are covered by this labor agreement. The compensation terms under this labor agreement are subject to renegotiation on an annual basis and all other terms are subject to negotiation every two years. The negotiation of the compensation terms and all other benefits was started with the Mexican Railroad Union in June of 2009. As of the date of this filing, these negotiations, as well as the negotiations with the union regarding the retirement benefit continue to be discussed. The anticipated resolutions of these negotiations are not expected to have a material impact to the consolidated financial statements. The union labor negotiation with the Mexican Railroad Union has not historically resulted in any strike, boycott, or other disruption in KCSM’s business operations.

Approximately 80% of KCSR employees are covered by collective bargaining agreements. KCSR participates in industry-wide bargaining as a member of the National Carriers’ Conference Committee. Long-term settlement agreements were reached during 2007 and 2008 covering all of KCSR’s unionized work force through January 1, 2010. A negotiating process for new, major collective bargaining agreements covering substantially all of KCSR’s union employees has been underway since the bargaining round was initiated in November of 2009. The agreements reached in 2007 and 2008 continue in effect until new agreements are reached. Contract negotiations with the various unions generally take place over an extended period of time and have not historically resulted in any strike, boycott, or other disruption in the Company’s business operations. The Company does not believe the expected settlements will have a material impact to the consolidated financial statements.


Item 3.	*Quantitative and Qualitative Disclosures about Market Risk*

There was no material change during the quarter from the information set forth in Part II, Item 7A. “Quantitative and Qualitative Disclosure about Market Risk” in the Annual Report on Form 10-K for the year ended December 31, 2009.


Item 4.	*Controls and Procedures*


(a)	Disclosure Controls and Procedures

As of the end of the period for which this Quarterly Report on Form 10-Q is filed, the Company’s Chief Executive Officer and Chief Financial Officer have each reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have each concluded that the Company’s current disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.


(b)	Changes in Internal Control over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting that occurred during the first quarter of 2010 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.


Item 4T.	*Controls and Procedures*

Not applicable.

PART II — OTHER INFORMATION


Item 1.	*Legal Proceedings*

For information related to the Company’s settlements and other legal proceedings, see Note 10, Commitments and Contingencies under Part I, Item 1, of this quarterly report on Form 10-Q.


Item 1A.	*Risk Factors*

There were no material changes during the quarter to the Risk Factors disclosed in Item 1A — “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2009.


Item 2.	*Unregistered Sale of Equity Securities and Use of Proceeds*

None.


Item 3.	*Defaults upon Senior Securities*

None.


Item 4.	*Reserved*


Item 5.	*Other Information*

None.


Item 6.	*Exhibits*


Exhibit No.
			Description of Exhibits Filed with this Report

	10	.1	Settlement Agreement , dated February 9, 2010, between KCSM and Ferrocarril Mexicano, S.A. de C.V. (“Ferromex”), Ferrosur S.A. de C.V., Minera México, S.A. de C.V., Infraestructura y Transportes Ferroviarios, S.A. de C.V., Infraestructura y Transportes México, S.A. de C.V., Líneas Ferroviarias de México, S.A. de C.V., Grupo Ferroviario Mexicano, S.A. de C.V., and Grupo México, S.A.B. de C.V. is attached to this Form 10-Q as Exhibit 10.1.*
	10	.2	Trackage Rights Agreement, dated February 9, 2010, between KCSM and Ferromex is attached to this Form 10-Q as Exhibit 10.2.*
	15	.1	Letter regarding unaudited interim financial information is attached to this Form 10-Q as Exhibit 15.1.
	18	.1	Letter regarding change in accounting principles is attached to this Form 10-Q as Exhibit 18.1.
	31	.1	Principal Executive Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 is attached to this Form 10-Q as Exhibit 31.1.
	31	.2	Principal Financial Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 is attached to this Form 10-Q as Exhibit 31.2.
	32	.1	Principal Executive Officer’s Certification furnished Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is attached to this Form 10-Q as Exhibit 32.1.
	32	.2	Principal Financial Officer’s Certification furnished Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is attached to this Form 10-Q as Exhibit 32.2.
	101		The following financial information from Kansas City Southern’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, formatted in XBRL (Extensible Business Reporting Language) includes:(i) Consolidated Statements of Operations for the three months ended March 31, 2010 and 2009, (ii) Consolidated Balance Sheets as of March 31, 2010 and December 31, 2009, (iii) Consolidated Statements of Cash Flows for the three months ended March 31, 2010 and 2009, and (iv) the Notes to Consolidated Financial Statements, tagged as blocks of text.


Exhibit No.			Description of Exhibits Incorporated by Reference

	4	.1	Indenture, dated January 22, 2010, between Kansas City Southern de México, S.A. de C.V., and U.S. Bank National Association, as trustee and paying agent, filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K on January 28, 2010 (File No. 1-4717), is incorporated herein by reference as Exhibit 4.1.
	4	.2	Registration Rights Agreement, dated January 22, 2010, between Kansas City Southern de México, S.A. de C.V., and Banc of America Securities LLC, J.P. Morgan Securities Inc., Scotia Capital (USA) Inc., BBVA Securities Inc. and BMO Capital Markets Corp, filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K on January 28, 2010 (File No. 1-4717), is incorporated herein by reference as Exhibit 4.2.
	10	.3	Second Amendment to the Amended and Restated Credit Agreement, dated March 16, 2010, among KCSR, KCS, the subsidiary guarantors, the lenders party thereto and The Bank of Nova Scotia, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on March 22, 2010 (File No. 1-4717) is incorporated herein by reference as Exhibit 10.3.


*	Certain portions of this exhibit have been omitted pursuant to our request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized and in the capacities indicated on April 27, 2010.

Kansas City Southern

/s/ Michael W. Upchurch

Michael W. Upchurch

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

/s/ Mary K. Stadler

Mary K. Stadler

Senior Vice President and Chief Accounting Officer

(Principal Accounting Officer)

Exhibit 10.1

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL
TREATMENT REQUEST, HAVE BEEN OMITTED FROM THIS EXHIBIT AND HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS
COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SETTLEMENT AGREEMENT

among,

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

and

FERROCARRIL MEXICANO, S.A. DE C.V.,
FERROSUR, S.A. DE C.V.,
MINERA M É XICO, S.A. DE C.V.,
INFRAESTRUCTURA Y TRANSPORTES FERROVIARIOS, S.A. DE C.V.,
INFRAESTRUCTURA Y TRANSPORTES M É XICO, S.A. DE C.V
LÍNEAS FERROVIARIAS DE MÉXICO, S.A. DE C.V.,
GRUPO FERROVIARIO MEXICANO, S.A. DE C.V., and
GRUPO MÉXICO, S.A.B. DE C.V.

February 9, 2010

Table of Contents

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, HAVE BEEN OMITTED FROM THIS EXHIBIT AND HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.


Representations			1

Clause One. Definitions and Rules of Interpretation.			7
1.1 Definitions			7
1.2 Rules of Interpretation.			14
1.3 Interpretation of KP References and GPS Measurements.			15
1.4 Exhibits.			17
1.5 Consents from the Ferromex Parties			17

Clause Two. Settlement.			17
2.1 Termination of the Private Procedures and Consideration for Kansas.			17
2.2 Authority of this Agreement.			18
2.3 Settlement Procedures.			18
2.4 CFC Procedures.			19
2.5 Withdrawals; Termination Acts.			19
2.6 The Other Defendants.			20
2.7 General Indemnity.			21
2.8 Future Proceedings.			21

Clause Three. Consideration for Waivers and Termination of the Private Procedures.			21
3.1 Consideration for Termination and Waivers.			21
3.2 Survival of Provisions.			22
3.3 Cooperation and Further Actions.			22

Clause Four. Trackage Rights Rates.			22
4.1 []			22
4.2 []			22
4.3 General Conditions on Rates.			22
4.4 Acknowledgment.			22

Clause Five. Trackage Rights - Veracruz.			23
5.1 Trackage Rights for Trains in the Veracruz Access Zone.			23
5.2 Trackage Rights for Trains to APIVER.			23
5.3 Trackage Rights for other Type of Trains.			24
5.4 Other Provisions.			24

Clause Six. Switching Services.			25
6.1 Veracruz Access Zone.			25
6.2 Puebla-Tlaxcala Industrial Zone/Volkswagen at Panzacola.			26

Clause Seven. Other Access Rights.			28
7.1 FCCM.			28
7.2 Access to and from APIVER.			28
7.3 Ferrovalle By-Pass.			29


7.4 Ferrovalle By-Laws and Certain Rates.			30
7.5 Cooperation and Further Actions.			30

Clause Eight. Maintenance and Operation of Subject Trackage.			30
8.1 General Rules.			30
8.2 License.			31
8.3 Alternative Routes.			31
8.4 Track Connections.			31
8.5 Direction and Control of Construction, Maintenance, Repair, and Renewal.			31
8.6 Direction and Control of Management and Operation.			32
8.7 General Terms and Conditions of the Trackage Rights.			32
8.8 Additional Rules on Management and Operation of Subject Trackage.			33
8.9 Repairs on Dragged Equipment; Removal of Bad Ordered Tractive Equipment.			34
8.10 Derailment and Accidents Involving Hazardous Materials.			35
8.11 Training of Subject Trackage User’s Crews.			36
8.12 Default.			37

Clause Nine. Dispatch of Trains; Traffic Control Centers; Non- Discrimination.			37
9.1 Traffic Control Centers.			37
9.2 Service Schedule.			37
9.3 Non-Discrimination.			37
9.4 Uninterrupted Flow of Traffic and Other Items.			38
9.5 Trackage Rights Use Notice.			38

Clause Ten. Billing.			39
10.1 Billing Forms.			39
10.2 Updating of Rates. []			39
10.3 Default Interest.			39
10.4 Disputed Bills.			39
10.5 Inspections and Audits.			40
10.6 []			40

Clause Eleven. Service Standards Committee.			40
11.1 The Committee.			40
11.2 Limitations of the Committee.			41
11.3 Transition Period.			41

Clause Twelve. Other Obligations.			42

Clause Thirteen. Term; Termination.			43
13.1 Duration.			43
13.2 Abandonment.			44
13.3 Resolution of the Ferromex Merger under the CFC Procedures.			45
13.4 Effects of the Termination.			45

Clause Fourteen. Default and Remedies.			46
14.1 Enforcement, Rescission.			46
14.2 Specific Remedies.			47

Clause Fifteen. Liability.			47
15.1 General Rule.			47
15.2 Liability on the Exercise of Trackage Rights.			47
15.3 []			48
15.4 Litigation and Settlements.			48


15.5 Labor.			49
15.6 []			49

Clause Sixteen. Governmental Approvals.			50

Clause Seventeen. Miscellaneous.			50
17.1 Agreement between the Parties, Language.			50
17.2 Amendments.			50
17.3 Partial Invalidity.			50
17.4 Assignment of Rights and Obligations.			51
17.5 No Damages or Losses from Private Procedures.			51
17.6 Taxes.			51
17.7 Notices.			51

Clause Eighteen. Dispute Resolution.			52

Clause Nineteen. Jurisdiction and Applicable Law.			52
Clause Twenty. Termination of Disputes of the Existing Procedure.			65
Clause Twenty-one.			65
Clause Twenty-two. Acts of Completion.			66
Clause Twenty-three. Waiver of Rights and Actions.			66
Clause Twenty-four. Waiver of Future Proceedings.			66
Clause Twenty-five. Absence of Obligations.			66
Clause Twenty-six. Certain Indemnities.			67
Clause Twenty-seven. Acknowledgments.			67
Clause Twenty-eight. Jurisdiction.			67

Exhibits

Exhibit A Kansas Concession Title

Exhibit B Private Procedures

Exhibit C CFC Procedures

Exhibit D Ferromex Concession Title

Exhibit E Ferrosur Concession Title

Exhibit F Ferromex Parties’ Corporate Structure

Exhibit G Additional Termination Acts

Exhibit H Information to be Delivered in connection with Trackage Rights.

Exhibit I Other Defendants’ Consent.

Exhibit J Ferrovalle By-laws.

iii


Appendix 1 Technical Descriptions

SETTLEMENT AGREEMENT, DATED AS OF FEBRUARY 9, 2010 (THIS “ AGREEMENT ”) , AMONG:

KANSAS CITY SOUTHERN DE MEXICO, S.A. DE C.V. ( “ Kansas ” ), REPRESENTED BY MR. JOSÉ ZOZAYA DELANO;

FERROCARRIL MEXICANO, S.A. DE C.V. (“ Ferromex ”), REPRESENTED BY MR. ALFREDO CASAR PÉREZ;

FERROSUR, S.A. DE C.V. (“ Ferrosur ”), REPRESENTED BY MESSRS. OCTAVIO JAVIER ORNELAS ESQUINCA AND HUGO RAFAEL GÓMEZ DÍAZ;

MINERA MÉXICO, S. A. DE C.V. (“ Minera México ”), REPRESENTED BY MR. ARMANDO FAUSTO ORTEGA GÓMEZ;

INFRAESTRUCTURA Y TRANSPORTES FERROVIARIOS, S.A. DE C.V., (“ ITF ”), REPRESENTED BY MR. ALBERTO DE LA PARRA ZAVALA;

INFRAESTRUCTURA Y TRANSPORTES MÉXICO, S.A. DE C.V. (“ ITM ”), REPRESENTED BY MR. ALBERTO DE LA PARRA ZAVALA ;

LÍNEAS FERROVIARIAS DE MÉXICO, S.A. DE C.V., (“ LFM ”), REPRESENTED BY MR. ALFREDO CASAR PÉREZ;

GRUPO FERROVIARIO MEXICANO, S.A. DE C.V., (“ Grupo Ferroviario ”), REPRESENTED BY MR. ALBERTO DE LA PARRA ZAVALA; and

GRUPO MÉXICO, S.A.B. DE C.V. (“ Grupo México ” and together with Ferromex, Ferrosur, Minera México, ITF, ITM, LFM and Grupo Ferroviario, the “ Ferromex Parties ”), REPRESENTED BY MR. ALBERTO DE LA PARRA ZAVALA;

IN TERMS OF THE FOLLOWING REPRESENTATIONS AND CLAUSES:

Representations

I. Kansas represents that:

( a ) It is a sociedad anónima de capital variable duly incorporated under the laws of the UMS, as evidenced by public deed number 50,413, dated November 22, 1996, granted before Mr. Miguel Alessio Robles Landa, Public Notary No. 19 of the Federal District, registered before the Public Registry of Commerce of Monterrey, Nuevo León under Item 29, Volume 429, Book 3, Second Auxiliary, Commerce Section.

( b ) On December 2, 1996, the Ministry granted in favor of Kansas (formerly, Ferrocarril del Noreste, S.A. de C.V.) a concession title for the operation and exploitation of the Northeast Railway, including for the rendering of railway services thereon (as amended and including all exhibits, hereinafter the “ Kansas Concession Title ”). A copy of the Kansas Concession Title, without exhibits, is attached hereto as Exhibit A .

( c ) The Kansas Concession Title has a term of 50 (fifty) years counted as of July 31, 1997.

( d ) It has knowledge of the terms of each and every act and ruling of any nature related to the procedures listed in Exhibits B and C hereto, including, without limitation, the relevant rulings issued in connection therewith as of the date hereof.

( e ) Its legal representative has the necessary authority to execute this Agreement, as evidenced by public deed number 142,188, dated January 29, 2010, granted before Mr. Cecilio González Márquez, Notary Public No. 151, of the Federal District, which authority has not been revoked or modified in any manner whatsoever as of the date hereof.

II. Ferromex represents that:

( a ) It is a sociedad anónima de capital variable duly incorporated pursuant to the laws of the UMS, as evidenced by public deed number 51,923, dated June 11, 1997, granted before Mr. Miguel Alessio Robles Landa, Notary Public No. 19 of the Federal District, registered before the Public Registry of Commerce of Mexico City under commercial file number 226,005.

( b ) On June 22, 1997, the Ministry granted in favor of Ferromex (formerly, Ferrocarril Pacífico-Norte, S.A. de C.V.) a concession title for the operation and exploitation of the Northern-Pacific Railway, including for the rendering of railway services thereon (as amended and including all exhibits, hereinafter the “ Ferromex Concession Title ”). A copy of the Ferromex Concession Title, without exhibits, is attached hereto as Exhibit D .

( c ) The Ferromex Concession Title has a term of 50 (fifty) years counted as from February 14, 1998.

( e ) Its legal representative has the necessary authority to execute this Agreement, which authority has not been revoked or modified in any manner whatsoever as of the date hereof.

III. Ferrosur represents that:

( a ) It is a sociedad anónima de capital variable duly incorporated pursuant to the laws of the UMS, as evidenced by public deed number 53,664, dated June 22, 1998, granted before Mr. Miguel Alessio Robles Landa, Notary Public No. 19 of the Federal District, registered before the Public Registry of Commerce of Mexico City under commercial file number 239,723.

( b ) On June 29, 1998, the Ministry granted in favor of Ferrosur a concession title for the operation and exploitation of the Southeast Railway, including for the rendering of railway services thereon (as amended and including all exhibits, hereinafter the “ Ferrosur Concession Title ”). A copy of the Ferrosur Concession Title, without exhibits, is attached hereto as Exhibit E .

( c ) The Ferrosur Concession Title has a term of 50 (fifty) years counted as from June 29, 1998.

( e ) Its legal representative has the necessary authority to execute this Agreement, which authority has not been revoked or modified in any manner whatsoever as of the date hereof.

IV. Minera México represents that:

( a ) It is a sociedad anónima de capital variable duly incorporated pursuant to the laws of the UMS.

( b ) It has knowledge of the terms of each and every act and ruling of any nature related to the procedures listed in Exhibits B and C hereto, including, without limitation, the relevant rulings issued in connection therewith as of the date hereof.

( c ) Its legal representative has the necessary authority to execute this Agreement, which authority has not been revoked or modified in any manner whatsoever as of the date hereof.

V. ITF represents that:

( a ) It is a sociedad anónima de capital variable duly incorporated pursuant to the laws of the UMS.

( c ) Its legal representative has the necessary authority to execute this Agreement, which authority has not been revoked or modified in any manner whatsoever as of the date hereof.

VI. ITM represents that:

( a ) It is a sociedad anónima de capital variable duly incorporated pursuant to the laws of the UMS.

( c ) Its legal representative has the necessary authority to execute this Agreement, which authority has not been revoked or modified in any manner whatsoever as of the date hereof.

VII. LFM represents that:

( a ) It is a sociedad anónima de capital variable duly incorporated pursuant to the laws of the UMS.

( c ) Its legal representative has the necessary authority to execute this Agreement, which authority has not been revoked or modified in any manner whatsoever as of the date hereof.

VIII. Grupo Ferroviario represents that:

( a ) It is a sociedad anónima de capital variable duly incorporated pursuant to the laws of the UMS.

( c ) Its legal representative has the necessary authority to execute this Agreement, which authority has not been revoked or modified in any manner whatsoever as of the date hereof.

IX. Grupo México represents that:

( a ) It is a sociedad anónima bursátil de capital variable duly incorporated pursuant to the laws of the UMS, as evidenced by public deed number 56,551, dated September 2, 1999, granted before Mr. Miguel Alessio Robles Landa, Notary Public No. 19 of the Federal District, registered before the Public Registry of Commerce of Mexico City under commercial file number 253,318.

( b ) It is the ultimate shareholder of Ferromex, Ferrosur, Minera México, ITF, ITM, LFM and Grupo Ferroviario, and their corporate structure as per the Ferromex Merger is described in Exhibit F hereto, and as of the date of this Agreement no third party (other than as described in Exhibit F ) has acquired any right with respect to the shares of capital stock issued by them nor are there any agreements or letters or intent that would have the effect of modifying said corporate structure.

( c ) It has knowledge of the terms of each and every act and ruling of any nature related to the procedures listed in Exhibits B and C hereto, including, without limitation, the relevant rulings issued in connection therewith as of the date hereof.

( d ) Its legal representative has the necessary authority to execute this Agreement, which authority has not been revoked or modified in any manner whatsoever as of the date hereof.

X. The Ferromex Parties jointly represent that:

( a ) On or about November, 2005, they and/or their Affiliates and controlling companies entered into a series of agreements and other corporate restructuring measures that eventually resulted in Ferromex and Ferrosur coming under the common control of Grupo México (the “ Ferromex Merger ”).

( b ) Their corporate structure resulting from the Ferromex Merger is described in Exhibit F hereto, and as of the date of this Agreement no third party (other than as described in Exhibit F ) has acquired any right with respect to the shares of capital stock issued by each of them, nor are there any agreements or letters of intent that would have the effect of modifying said corporate structure. As a consequence, Grupo México has control over the rest of the Ferromex Parties.

( c ) The Comisión Federal de Competencia (the “ CFC ”) has been notified of, or initiated, as applicable, the proceedings listed in Exhibit C with respect to the Ferromex Merger and/or its effects, and which are still pending final resolution along with the defense mechanisms also listed in Exhibit C (the “ CFC Procedures ”).

XI. The Ferromex Parties and Kansas jointly represent that:

( a ) Kansas, the Ferromex Parties and the Other Defendants have been, and continue to be, parties in several disputes, procedures and/or controversies before judicial authorities with respect to:

	(i)	the Ferromex Merger or its effects, which proceedings are listed on Exhibit B hereto (the “ Private Procedures ”); and

	(ii)	the lawsuit pending before the Third District Federal Civil Judge in Mexico City under docket number 253/2009, against Kansas and the Mexican Government in connection with several disputes, procedures and/or controversies before judicial authorities with respect to the acquisition of Kansas shares by Grupo TFM, S.A. de C.V., in 1997 (the “ Minera México Lawsuit ” and together with the Private Procedures the “ Settlement Procedures ”)

( b ) The Private Procedures and the CFC Procedures are the only existing procedures regarding the Ferromex Merger or its effects in which, to the knowledge of Kansas and the Ferromex Parties, Kansas is a party.

( c ) It is their intention, through the execution and carrying out of this Agreement and the Ferrovalle Agreement, to:

( i )

completely, definitively and irrevocably terminate the Settlement Procedures;

	( ii )		terminate any and all rights, obligations, actions and/or lawsuits which they have or may have in the future against the other Party in connection with the Settlement Procedures; and

	( iii )		agree on certain provisions as consideration for Kansas’ consenting to the termination of the Private Procedures and its withdrawal as interested party in the CFC Procedures, which are further detailed in this Agreement and the Ferrovalle corporate documents as amended, with the purpose of achieving, among other things ( u ) that each of Ferrosur and Kansas have commercial and operational access to all customers on equivalent service and financial terms at the port facilities currently located or to be developed in the Municipality of Veracruz and its vicinity, as described below; ( v ) that each of Ferrosur and Kansas have equivalent commercial and operational access between Mexico City and the State of Veracruz; ( w ) the amendment of the governing documents of Ferrovalle as provided in the Ferrovalle Agreement; ( x ) the reduction of Kansas’ dependency on the services of Ferrovalle; ( y ) that Kansas obtains access to certain areas and shippers in or around the State of Puebla and Tlaxcala; and ( z ) to provide neutral access to and from the railway lines and tracks indicated in this Agreement.

XII. Each of the Ferromex Parties and Kansas represents, through its respective representative, that:

( a ) This Agreement and the other acts derived herefrom, entered or to be entered by it, constitute, or after their execution shall constitute, as the case may be, valid and binding obligations of such Party, in compliance with the applicable legal framework, enforceable against it in accordance with its terms.

( b ) It has not assigned in any way nor granted in guaranty any of the rights that correspond or may correspond to it with respect to the Settlement Procedures.

( c ) It has not entered into agreements or contracts with any person that may result in a breach of this Agreement or the acts derived herefrom.

( d ) It has no knowledge of any litigation, whether judicial or extrajudicial, administrative or any other procedures (nor threat or warning of any of the foregoing) that prevents or may prevent it from ( i ) entering into this Agreement; ( ii ) entering into the other acts derived herefrom; and/or ( iii ) complying with the obligations derived from (i) and (ii) above.

( e ) The execution of this Agreement and of the other acts derived herefrom, as well as the fulfillment of the obligations derived from the former and latter, will not be contrary to, nor will it result in a violation or breach of agreements or instruments to which it is a party or by means of which it is bound, of the applicable legal framework, or of any law, regulation, decree, official writ, agreement or ruling of any Governmental Authority.

NOW, THEREFORE, in consideration of the foregoing representations, the obligations and agreements contained herein, the parties agree the following:

Clauses

Clause One. Definitions and Rules of Interpretation.

1.1 Definitions. Capitalized terms used and not otherwise defined in this Agreement shall have the meanings ascribed to such terms in this Section 1.1. With respect to any such term that is defined by reference to another agreement or document for purposes hereof, such term shall continue to have the definition in effect as of the date hereof, notwithstanding any termination, expiration or modification of such other agreement or document.

“ AAR ” means the Association of American Railroads.

“Affiliates” means entities owned or controlled by, or under common control with, or whose ultimate parent company is the same as that of, another, named company.

“ Agreement ” shall have the meaning ascribed to such term in the heading of this Agreement.

“APIVER” means, jointly: ( i ) the Administración Portuaria Integral de Veracruz, S.A. de C.V., together with any of its successors or assignees; and/or ( ii ) any person awarded a contract for the provision of port services and/or the construction, use, exploitation, maintenance and operation of a port by any of the entities mentioned in clause (i), including without limitation, through partial assignment of rights agreements ( convenios de cesión parcial de derechos ).

“ Applicable Framework ” means the norms, rules, regulations and/or standards set forth in or issued by: ( i ) the Railroad Service Law, ( ii ) the Regulations, ( iii ) the Ministry, ( iv ) the Concession Titles, ( v ) any other Governmental Authority (including with respect to the preservation of historical sites), ( vi ) any other law, regulation or rule applicable to the Parties, including normas mexicanas and normas oficiales mexicanas , and ( vii ) the AAR (only to the extent not contrary to Mexican law); in each case as they refer to the maintenance of trackage, the maintenance of the assets granted in concession to the Ferromex Parties and Kansas under their respective Concession Titles and/or the performance of railroad services in general.

“Articulated Car” means Dragged Equipment comprised of multiple units coupled permanently or semi-permanently together in a manner that individual units cannot, without modification, be operated separately because they share common trucks and wheels or other mechanical or pneumatic equipment, including, for example, articulated double-stack intermodal Cars.

“ Car ” means Dragged Equipment employed in any form of freight transportation, including articulated, intermodal, articulated-intermodal and any other type of Articulated Car.

“ Car-Kilometer ” means each kilometer travelled by each Party’s unit of Railroad Equipment (loaded or unloaded) over the Trackage of the other Party; provided that: ( i ) each kilometer travelled by a unit of Tractive Equipment over the Trackage of the other Party shall count as 2 (two) Car-Kilometers; ( ii ) each Car-Kilometer traveled by an Articulated Car shall count as 1 (one) Car-Kilometer per platform or well comprising such Articulated Car; and ( iii )

each Car-Kilometer traveled by an Articulated Car servicing automotive traffic (Automax) shall count as 2 (two) Car-Kilometers per unit comprising such Articulated Car.

“ CFC ” shall have the meaning ascribed to such term in Representation X (c) of this Agreement.

“ CFC Procedures ” shall have the meaning ascribed to such term in Representation X (c) of this Agreement, and which are listed in Exhibit C hereof.

“Committee” shall have the meaning ascribed to such term in Section 11.1(a) of this Agreement.

“ Concession Title ” means the Kansas Concession Title, the Ferromex Concession Title, the Ferrovalle Concession Title and/or the Ferrosur Concession Title, as applicable.

“ Dispute ” means a difference, breach or any other form of controversy, between the Parties as to the meaning, compliance, validity, enforcement, interpretation, scope or application of the terms or provisions of this Agreement.

“ Dispute Notice ” shall have the meaning ascribed to such term in Clause Eighteen of this Agreement.

“ Dollars ” means the legal currency of the United States of America.

“ Dragged Equipment ” means Railroad Equipment that lacks self-traction, including Cars.

“ El Chapo ” means Line FA KP 18+000, as further specified in Appendix 1 .

“Empty Car” means a Car that is not a Loaded Car. A Tank Car will be considered an Empty Car when it has been unloaded and is, after unloading, carrying an amount less than 7% (seven percent) of the Car’s rated capacity.

“ Environmental Claim ” means the direct costs of any cleanup, response, removal, remediation, natural resource damage, closure and/or post closure required by any environmental conditions affecting the air, soil, surface waters, ground waters, streams, sediments and similar environmental conditions caused by, resulting from, arising out of, or occurring in connection with this Agreement.

“ Environmental Laws ” means all federal, state and municipal laws, official Mexican standards, statutes, ordinances, regulations, criteria, guidelines and rules of civil law now in effect, and, in each case, as amended, and any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment relating to the regulation and protection of human health, safety, the environment and natural resources, including air emissions, surface water, groundwater, wetlands, land, surface or subsurface strata. Environmental Laws shall include laws and regulations relating to emissions, discharges, releases or threatened releases of Hazardous Materials or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous

Materials. Environmental Laws shall also include the following Mexican laws insofar as they regulate or relate to environmental or public health matters: the General Law for Ecological Equilibrium and the Protection of the Environment ( Ley General de Equilibrio Ecológico y Protección al Ambiente ), the General Law for the Prevention and Integral Handling of Waste ( Ley General para la Prevención y Gestión Integral de los Residuos ), the General Health Law ( Ley General de Salud ), Title Nine of the Federal Labor Law ( Titulo Nueve de Ley Federal del Trabajo ), the General Law for Sustainable Forestry Development ( Ley General de Desarrollo Forestal Sustentable ), the National Waters Law ( Ley de Aguas Nacionales ), the General Law on National Property ( Ley General de Bienes Nacionales ), the Human Settlements General Law ( Ley General de Asentamientos Humanos ), the Federal Regulations on Occupational Safety, Hygiene and Environment ( Reglamento Federal de Seguridad, Higiene y Medio Ambiente de Trabajo ), the Federal Criminal Code ( Código Penal Federal ) and their state and local counterparts or equivalents.

“ FCCM ” means the operator from time to time of the Chiapas-Mayab Railway Unit.

“ Ferromex ” has the meaning ascribed to such term in the heading of this Agreement.

“ Ferromex Concession Title ” shall have the meaning ascribed to such term in Representation II (b) of this Agreement.

“ Ferromex Merger ” shall have the meaning ascribed to such term in Representation X (a) of this Agreement.

“ Ferromex Parties ” shall have the meaning ascribed to such term in the heading of this Agreement.

“ Ferrosur ” shall have the meaning ascribed to such term in the heading of this Agreement.

“ Ferrosur Concession Title ” shall have the meaning ascribed to such term in Representation III (b) of this Agreement.

“ Ferrovalle ” shall have the meaning ascribed to such term in the heading of this Agreement.

“ Ferrovalle Access Zone ” means the trackage granted in concession to Ferrovalle under the Ferrovalle Concession Title, as further described in Appendix 1 .

“ Ferrovalle Agreement ” means, jointly: ( i ) the amended by-laws of Ferrovalle which are modified on the date hereof; and ( ii ) the corporate resolutions and actions with respect to the amendment to the by-laws of Ferrovalle.

“ Ferrovalle Concession Title ” shall have the meaning ascribed to such term in Representation XIII (b) of this Agreement.

“ Governmental Authority ” means any national, state, county, city, town, village, municipal or other de jure or de facto government entity, department, office, commission, board,

bureau, agency, authority or instrumentality of the UMS or any political subdivision thereof, and any person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any of the foregoing entities, including all commissions, boards, bureaus, courts, arbitrators and arbitration panels of any of the foregoing entities, and any authority or other person controlled directly or indirectly by any of the foregoing.

“GPS” means the Global Positioning System, a space-based radionavigation system that provides reliable positioning anywhere in the world.

“ Grupo Ferroviario ” shall have the meaning ascribed to such term in the heading of this Agreement.

“ Grupo México ” shall have the meaning ascribed to such term in the heading of this Agreement.

“ Hazardous Materials ” means and includes any and all radioactive materials, radon and asbestos, heavy metals, organic compounds known as polychlorinated biphenyls, chemicals known to cause cancer or reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic substances, toxic pollutants, petroleum substances or petroleum products, pesticides, and any and all other substances or materials defined as, or included in the definition of “hazardous wastes”, “hazardous materials”, “hazardous substances” , “toxic substances” or “toxic pollutants” under, or for the purposes of, any Environmental Laws.

“ Indemnified Party ” shall have the meaning ascribed to such term in Section 2.7 hereof.

“Indemnifying Party” shall have the meaning ascribed to such term in Section 2.7 hereof.

“ ITF ” shall have the meaning ascribed to such term in the heading of this Agreement.

“ ITM ” shall have the meaning ascribed to such term in the heading of this Agreement.

“Interchange” means the action by which one of the Parties receives from or delivers to another Party Cars.

“Interchange Rules” means the most recently effective edition of the Field Manual of the Interchange Rules adopted by the AAR governing the Interchange of cars and Railroad Equipment between railroads.

“ Kansas ” shall have the meaning ascribed to such term in the heading of this Agreement.

“ Kansas Concession Title ” shall have the meaning ascribed to such term in Representation I (b) of this Agreement.

“ KP ” means: ( i ) each of the kilometer signs currently existing along the trackage comprising the Mexican Railway System; and/or ( ii ) in case no kilometer signs exist for a given

location, the KP means a measurement of the kilometers and meters of said location measured as from the nearest existing sign.

“ Lechería ” means, jointly, the “Piloto” yard on Line A KP 021+000 and the “H” yard on Line H KP 003+000, as further specified in Appendix 1 .

“ Loaded Car ” means a Car carrying any form of freight; provided that: ( a ) in the case of an Articulated Car, if it is carrying at least one empty or loaded container or one empty or loaded trailer, said Car will be deemed as loaded; ( b ) each platform or well of an Articulated Car would be deemed as 1 (one) Car; and ( c ) each unit of an Articulated Car servicing automotive traffic (Automax) would be deemed as 2 (two) Cars. For the avoidance of doubt, when a Car is on the Trackage of another Party under any trackage right, switching service provided for in this Agreement, that Car must be treated as either a Loaded Car or an Empty Car according to the definitions and terms of this Agreement.

“ Loss or Damage ” means, without limitation, all claims, liabilities, costs, losses ( daños ), lost profits ( perjuicios ) and expenses of every nature, including amounts paid under any state or federal compensation law incident to loss or destruction of or damage to property and injury to and death of persons arising from the operation by the Parties on the Subject Trackage.

“ Minera México ” shall have the meaning ascribed to such term in the heading of this Agreement.

“ Minera México Lawsuit ” shall have the meaning ascribed to such term in Representation XI (a)(ii) of this Agreement.

“ Ministry ” means the Secretaría de Comunicaciones y Transportes of the federal Government of the UMS.

“ Other Defendants ” means each of the following companies that are a party as defendants under the Private Procedures: ( i ) Grupo Condumex, S.A. de C.V.; ( ii ) SINCA Inbursa, S.A. de C.V., Sociedad de Inversiones de Capitales; ( iii ) Banco Inbursa, S.A., Institución de Banca Múltiple, Grupo Financiero Inbursa; ( iv ) Grupo Financiero Inbursa, S.A.B. de C.V.; y ( v ) Grupo Carso, S.A.B. de C.V.

“ Parties ” means each of Kansas, on the one hand, and the Ferromex Parties, on the other. For the avoidance of doubt, unless the context requires otherwise, references to one Party, “either Party” or “the other Party” shall be understood as referring to either ( i ) Kansas or ( ii ) each and all of the Ferromex Parties.

“Party of the First Part” shall have the meaning ascribed to such term in Section 10.1(b).

“Party of the Second Part” shall have the meaning ascribed to such term in Section 10.1(b).

“ Person ” shall mean and include an individual, a partnership, a limited liability partnership, a joint venture, a corporation, a limited liability company, a trust, an unincorporated organization, a group and a Governmental Entity.

“ Pesos ” means the legal currency of the UMS.

“ Port of Veracruz ” means, jointly: ( i ) the current port facilities ( recinto portuario ) located in the Municipality of Veracruz, which are granted in Concession to the APIVER, which are identified in Appendix 1 ; and ( ii ) any expansions, amendments or additions to the current port facilities ( recinto portuario ), whether by change in the corresponding concession title or otherwise, that occur in the current port facilities ( recinto portuario ) mentioned in part (i) of this definition after the date hereof.

“ Private Procedures ” shall have the meaning ascribed to such term in Representation XI (a)(i) of this Agreement, and which are listed in Exhibit B hereof.

“Puebla-Tlaxcala Access Zone” means: ( i ) the Puebla Terminal, as identified in Appendix 1 ; ( ii ) any industry and/or User currently or in the future located within the area comprised between: Line VB KP 84+500 and Line VB KP 118+600; ( iii ) any industry and/or User currently or in the future located within the area comprised between: Line SA KP 44+800 and Line SA KP 7+500; and ( iv ) any industry and/or User connected to points (i, ii, and iii) above, whether directly and/or through auxiliary or secondary tracks, siding, escape tracks, spurs, yard tracks, and/or cortavías .

“ Quarter ” means a period of 3 (three) consecutive months of each calendar year that this Agreement is in effect and which periods shall commence on January 1, April 1, July 1 and October 1 of each of such year; provided that the first of such Quarters shall be deemed to commence on the date of this Agreement and conclude on March 31, 2010.

“ Railroad Equipment ” means Dragged Equipment and Tractive Equipment.

“ Railroad Service Law ” means the Mexican Railroad Service Law ( Ley Reglamentaria del Servicio Ferroviario ).

“ Regulations ” means the Mexican Railway Service Regulations ( Reglamento del Servicio Ferroviario ).

“ Relevant Personnel ” means, in connection with any grant of Trackage Rights, all personnel (whether unionized or not) and officers of the Subject Trackage Owner pertaining to the Subject Trackage, as well as the corresponding labor unions.

“Response Action” shall have the meaning ascribed to such term in Section 8.10.

“ Santa Fe ” means Line V KP 454+600, as further specified in Appendix 1 .

“Settlement Procedures” shall have the meaning ascribed to such term in Representation XI (a)(ii) of this Agreement.

“ Sole Employees ” and “ Sole Property ” means, for purposes of trackage rights granted under this Agreement, one or more officers, agents, employees, contractors or Railroad Equipment, while engaged in, en route to or from, or otherwise on duty incident to performing service for the benefit of one Party. Pilots furnished by Subject Trackage Owner to assist in training or qualifying the Subject Trackage User’s crews to operate on the Subject Trackage or to recrew Subject Trackage User’s trains and to operate them temporarily due to unavailability of Subject Trackage User’s crews operating Railroad Equipment of Subject Trackage User shall be considered the Sole Employees of Subject Trackage User while engaged in such operations. All such officers, agents, employees, contractors, or Railroad Equipment, while engaged in, en route to or from, or otherwise on duty incident to repairing Railroad Equipment, re-railing, or clearing wrecks or derailments or engaged in the repair or renewal of the Subject Property subsequent to any such wreck or derailment shall, for the purpose of this Agreement, be deemed the Sole Employees and/or Sole Property of the Party bearing the cost of repair or of the other Loss or Damage of the wreck or derailment. Such officers, agents, employees, contractors or Equipment while en route from performing such repair, re-railing, or clearing of wrecks or derailments or renewing the Subject Property to perform another type of service, shall not be deemed to be performing service incident to the instant repair, re-railing or clearing of a wreck or derailment.

“ Subject Employees ” means, for purposes of trackage rights granted under this Agreement, one or more officers, agents, employees or contractors of Subject Trackage Owner while engaged in maintaining, repairing, constructing, renewing, removing, inspecting, or operating the Subject Property or in making changes in and/or additions thereto for the benefit of both Kansas and any of the Ferromex Parties. Officers, agents, employees or contractors of Subject Trackage Owner shall not be deemed “Subject Employees” while en route from the performance of such work as hereinbefore described to perform service for the benefit of less than all of the Parties hereto.

“ Subject Property ” means, for the purposes of trackage rights granted under this Agreement, the Subject Trackage and all appurtenances thereto and all Railroad Equipment while is engaged in maintaining, repairing, constructing, renewing, removing, or inspecting the Subject Trackage or in making changes in and/or additions thereto for the benefit of both Kansas and any of the Ferromex Parties, or while being prepared to engage in, en route to or from, or otherwise incident to performing such service. Such Railroad Equipment shall not be deemed “Subject Property” while en route from the performance of such work as hereinbefore described to perform service for the benefit of less than all of the Parties hereto.

“ Subject Trackage ” means, for purposes of trackage rights granted under this Agreement provided for in this Agreement, trackage of the Parties described in Clauses Four, Five, Six and Seven of this Agreement to which the Subject Trackage User is granted a right or, by the Parties’ Concession Titles or by the Subject Trackage Owner, of use or access, including a) the necessary right of way, sidings, secondary tracks, industrial tracks, connections, spurs, yard tracks, crossings, and other appurtenances and support facilities; and, b) all changes in and additions thereto existing now or in the future as are required or desirable for the operation of the trains of the Parties.

“ Subject Trackage Owner ” means, for purposes of trackage rights granted under this Agreement, the Party who is granting trackage rights under this Agreement.

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A
CONFIDENTIAL TREATMENT REQUEST, HAVE BEEN OMITTED FROM THIS EXHIBIT AND
HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS
PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

“ Subject Trackage User ” means, for purposes of trackage rights granted under this Agreement, the Party granted the right to use or access the Subject Trackage.

“ Termination Acts ” shall have the meaning ascribed to such term in Section 2.5 of this Agreement.

“ Trackage ” means the trackage granted in concession to the Parties under their respective Concession Title, as applicable.

“ Tractive Equipment ” means a self-propelled railroad vehicle whether employed or not in the movement of the Dragged Equipment.

“ Train ” means Tractive Equipment, whether coupled or not to Dragged Equipment, displaying a marker. The marker can be an end of train device or a light displayed on the rear of the last locomotive in a multiple locomotive consist or on a locomotive at the rear end of a Train (for example, a helper or distributive power locomotive). [****] If specified elsewhere in this Agreement, the maximum Train length for the purposes of particular trackage rights or switching services may be limited to less than the maximum length specified in this definition.

“UMS” means the United Mexican States.

“ User ” means the individual or legal entity that contracts with one of the Parties the rendering of the public railway freight transportation service under the terms of a bill of lading or agreement for the providing of such public service.

“Veracruz Access Zone” means: ( i ) the Veracruz Yard; ( ii ) any industry and/or User currently or in the future located within the area comprised between: ( a ) Line S KP 419+ 000 and Line S KP 409+000; ( b ) Line V KP 469+000 and Line V KP 454+600; ( c ) Line GA KP 0+002 and Line GA KP 16+000; ( iii ) the segment of tracks that connect item (i) and (ii) above; ( iv ) any industry and/or User connected to preceding items (i), (ii) or (iii) whether directly and/or through auxiliary or secondary tracks, siding, escape tracks, spurs, yard tracks, and/or cortavías, as further identified in Appendix 1 .

“Veracruz Yard” means the trackage identified in Appendix 1 , and all yards, auxiliary or secondary tracks, industrial tracks, sidings, escape tracks, spurs, yard tracks, and/or crossings that exist today or that may be built by any of the Ferromex Parties or any third party.

1.2 Rules of Interpretation . In this Agreement, except to the extent that the context otherwise requires:

(i)

the Table of Contents, Clause and Section and Paragraph headings are for convenience only and shall not affect the interpretation of this Agreement;

	(ii)		references to any document, instrument or agreement, including this Agreement, shall include: (a) all exhibits, annexes, schedules, appendices or other attachments hereto or thereto; (b) all documents, instruments or agreements issued or executed in replacement hereof or thereof; and (c) any amendment, restatement, modification, supplement or replacement hereto or thereto, as the case may be;

	(iii)		the words “include,” “includes” and “including” are not limiting;

	(iv)		references to any person shall include such person’s successors and permitted assigns (and in the case of any Governmental Authority, any person succeeding to such Governmental Authority’s functions and capacities);

	(v)		the words “hereof,” “herein” and “hereunder” and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement;

	(vi)		references to “days” means calendar days and references to “business day” shall mean a Monday, Tuesday, Wednesday, Thursday or Friday which is not a legal holiday in Mexico City for the government of the UMS;

	(vii)		both Parties shall be understood as having had equal responsibility for the language of this Agreement such that no rule of contractual construction that holds an alleged ambiguity of language in an agreement against the drafter of the agreement shall be applied in the construction of this Agreement;

	(viii)		any reference to the Ferromex Parties shall be understood to mean each of Ferromex, Ferrosur, Grupo México, Minera México, ITF, ITM, LFM and Grupo in their individual capacity and as joint and several obligors;

	(ix)		any reference to Ferrosur shall include any successor in interest to Ferrosur, whether by merger or otherwise; and

	(x)		the singular includes the plural and the plural includes the singular.

1.3 Interpretation of KP References and GPS Measurements .

(a) In this Agreement and in Appendix 1 hereof, the numbers following the defined term of a given line and the defined term “KP” indicate a point located at the designated kilometers and meters of the corresponding line. For example, a reference to Line A KP 100+090; means a point located at approximately the 90th meter, of the 100th kilometer of the Line A.

(b) Ferromex, Ferrosur and Kansas hereby agree to conduct a process to determine the precise locations of the KP points used in this Agreement. To such end, Kansas, Ferrosur and Ferromex agree to the following:

(i)

During a period of 120 (one hundred and twenty) days following the execution of this Agreement, Kansas (directly or through one or more subcontractors of

Kansas) will take GPS coordinates of the KP locations referred to in this Agreement;

	(ii)		During that period of time, Ferromex, Ferrosur and their Affiliates shall provide Kansas’ personnel and advisors all reasonable access and assistance for such persons to be able to take the GPS coordinates referred above. Personnel and advisors to Ferromex and Ferrosur may be present during the taking of the GPS coordinates if they wish to do so; in the understanding that Kansas shall inform Ferromex and Ferrosur with at least 3 (three) business days in advance of taking any of such GPS coordinates so that Ferromex and Ferrosur are able to determine whether they wish to be present during the taking of such coordinates and/or to coordinate assistance to Kansas personnel and its contractors;

	(iii)		Within 30 (thirty) business days following the measurement period referred in paragraph (i) above, Kansas will submit to Ferromex and Ferrosur a document (which may be an electronic file) indicating the GPS coordinates that correspond to each of the KP points;

	(iv)		After receipt of said document, Ferromex and Ferrosur will have 30 (thirty) business days to make any objections to the GPS coordinates, in the understanding that Ferromex and Ferrosur may only object to individual measurements;

	(v)		Any GPS coordinates not objected by Ferromex and Ferrosur in writing to Kansas within the 30 (thirty) business days period referred to above, shall be deemed as accepted by Ferromex and thereupon such GPS coordinates shall have the effect mentioned in paragraph (c) of this Section 1.3;

	(vi)		Any GPS coordinates objected by Ferromex and Ferrosur in writing, will be submitted to the Committee referred to in Clause Twelve hereof. The Committee shall convene to address the matter within 20 (twenty) business days after the objections from Ferromex were delivered to Kansas;

	(vii)		If, within 20 (twenty) business days after the objections from Ferromex and Ferrosur were delivered to Kansas, the Committee: ( a ) does not meet; or ( b ) having met, fails to issue a unanimous resolution setting forth the applicable GPS coordinates, either Party may submit the matter to URS Corporation (including to one of their Affiliates operating in the UMS, or any other entity that the Parties agree in writing), whose resolution on the subject will be conclusive and binding, and the GPS coordinates accepted in said resolution shall have the effect mentioned in paragraph (c) of this Section 1.3; and

	(viii)		A unanimous resolution from the Committee shall be deemed as accepted by Ferromex, Ferrosur and Kansas, and upon said resolution the GPS coordinates accepted by the Committee shall have the effect mentioned in paragraph (c) of this Section 1.3.

(c) The GPS coordinates resulting from the process described above shall, once they have been conclusive and final in accordance with said process, become the conclusive geographic indication of the KP locations referred to in this agreement, including if the KP signs do not currently exist or are thereafter altered, destroyed or otherwise become not available.

(d) The costs of taking the GPS coordinates will be split equally between Ferromex and Kansas.

1.4 Exhibits . The Exhibits and Appendices listed below are an integral part of this Agreement:

Exhibit A Kansas Concession Title

Exhibit B Private Procedures

Exhibit C CFC Procedures

Exhibit D Ferromex Concession Title

Exhibit E Ferrosur Concession Title

Exhibit F Ferromex Parties’ Corporate Structure

Exhibit G Additional Termination Acts

Exhibit H Information to be Delivered in connection with Trackage Rights.

Exhibit I Other Defendants’ Consent.

Exhibit J Ferrovalle By-laws.

Appendix 1 Technical Descriptions

1.5 Consents from the Ferromex Parties . Whenever this Agreement provides that Ferrosur shall grant trackage, switching or access rights to Kansas, it shall be deemed that the other Ferromex Parties have consented and agreed to the granting of such trackage, switching or access rights to Kansas.

Clause Two. Settlement.

2.1 Termination of the Private Procedures and Consideration for Kansas.

(a) Kansas and the Ferromex Parties enter into this Agreement before a notary public, in order to: ( i ) terminate in a definitive and irrevocable manner the Settlement Procedures; and ( ii ) agree on Kansas’ withdrawal from the CFC Procedures; and ( iii ) agree on the granting and performance of Clauses Four to Nine hereof and the Ferrovalle Agreement as a consideration

( contraprestación ) for the benefit of Kansas in connection with the termination of the Settlement Procedures.

(b) Each of the Ferromex Parties expressly acknowledges and agrees that the execution and full compliance with this Agreement and the Ferrovalle Agreement and the acts deriving therefrom, constitute the consideration ( contraprestación ) that Kansas is entitled to receive in connection with the termination of the Private Procedures and its withdrawal from the CFC Procedures. The Ferromex Parties hereby agree to perform in full their obligations under this Agreement and the Ferrovalle Agreement and the acts deriving therefrom. Kansas likewise hereby agrees to perform in full its obligations under this Agreement and the Ferrovalle Agreement and the acts deriving therefrom.

(c) The Parties shall execute and deliver the additional documents and shall perform the subsequent acts that are necessary to carry out and give force and effect to what is provided under this Agreement and the Ferrovalle Agreement.

(d) Each of Kansas, the Ferromex Parties and Ferrovalle hereby commits to carry out all necessary and desirable acts and actions required to carry out and give force and effect to what is established in this Agreement and the Ferrovalle Agreement.

2.2 Authority of this Agreement .

(a) This Agreement: ( i ) has the authority of res judicata for all legal effects in the broadest terms of article 2953 of the Federal Civil Code regarding the Private Procedures; and ( ii ) terminates in a definitive and irrevocable manner all the Settlement Procedures, as well as any other right, action, claim, procedure, suit, remedy and, in general, any other obligation of any nature in connection with any cause, fact, act, statement and/or procedure of any kind occurred prior to the date of this Agreement with respect to the matter or facts of the Settlement Procedures. This Agreement does not affect in any manner any controversy which is resolved by the Trackage Rights, Switching and Interline Settlement Agreement executed by Ferromex and Kansas on even date herewith.

(b) The termination and settlement of disputes referred to in this Agreement is limited to the Settlement Procedures and the actions concerning the CFC Procedures and it shall not be intended to settle or terminate any other dispute or proceedings other than those expressly terminated and settled herein.

2.3 Settlement Procedures .

(a) Each of the Ferromex Parties and Kansas expressly acknowledge and agree that the Settlement Procedures have been terminated by the execution of this Agreement and the Ferrovalle Agreement and the compliance with the terms hereof and thereof.

(b) Kansas releases the Ferromex Parties and the Ferromex Parties release Kansas of any responsibility, obligation and/or claim derived from, or related by any way with, any controversy that is the subject matter of the Settlement Procedures, without reserving any claim or right to such effect.

2.4 CFC Procedures .

(a) The Ferromex Parties hereby acknowledge that Kansas has no control or responsibility on whether the CFC Procedures are terminated or not. In this respect, this Agreement and the Ferrovalle Agreement shall remain in full force and effect irrespective of the outcome of the CFC Procedures, except as indicated in Clause Thirteen hereof.

(b) The Parties hereby acknowledge and agree that nothing contained in this Agreement shall be interpreted as, nor is to be understood as, binding any of them to refrain from providing the information and cooperation that may be required by the CFC under applicable law in the context of the CFC Procedures.

(c) Kansas hereby acknowledges that by the execution by the Ferromex Parties of this Agreement and their compliance with the terms hereof and the terms of the Ferrovalle Agreement, it: ( i ) has no further complaints to present to CFC in connection with the matters that are the subject of the CFC Procedures; and ( ii ) it does not have or reserve any claims for damages in connection with, or arising out of, such CFC Procedures or the Ferromex Merger caused or accrued prior to the execution of this Agreement and to the fullest extent permitted by applicable law hereby waives any right it may have to bring any claims, suits or actions in connection therewith (including with respect to any resolutions issued by a Governmental Authority in the context of the CFC Procedures). The Parties hereby acknowledge and agree that Kansas is not waiving any rights or claims of whatever nature against any event, circumstance or action occurring after the execution of this Agreement or that Kansas takes knowledge of after the execution of this Agreement, different to the facts and circumstances giving rise to the CFC Procedures.

(d) To the extent permitted by applicable law, Kansas releases the Ferromex Parties and the Ferromex Parties release Kansas of any responsibility, obligation and/or claim derived from, or related to by any way with, any controversy that is the subject matter of the CFC Procedures, without reserving any claim or right to such effect.

2.5 Withdrawals; Termination Acts .

(a) The Parties hereby withdraw any type of suit, action, remedy or procedure related to the Settlement Procedures and the CFC Procedures (insofar as the CFC Procedures refer to Kansas), and agree to ratify such withdrawal before a notary public and, if necessary, promptly before the relevant Governmental Authority (including the Ministry or any judicial or administrative authority).

(b) The Parties hereby agree to carry out any actions listed in Exhibit G , and to cooperate in good faith one with the other, in order to terminate the determinations contained in the rulings and/or resolutions issued with respect to the Settlement Procedures and, if possible, the CFC Procedures. Such obligation includes performing acts and making filings before any judicial and/or administrative authorities, as well as their ratification, but only to the extent necessary to terminate the determinations contained in the rulings and/or resolutions issued with respect to the Settlement Procedures and the CFC Procedures. The Parties explicitly agree, however, that none of the obligations stated in this paragraph shall require any of them to enter

into any agreement that would terminate, modify or limit its rights under this Agreement, the Trackage Rights, Switching and Interline Settlement Agreement executed by the Parties concurrently with this Agreement, the Ferrovalle Agreement and/or their respective Concession Titles.

(c) The Parties hereby agree to file before the courts and the administrative and Governmental Authorities that may be necessary (as the interested Party may require), briefs by means of which they inform of the execution of this Agreement and the terms and conditions agreed to by the Parties herein. Kansas hereby agrees that a copy of this Agreement may be submitted to the CFC by the Ferromex Parties.

(d) The Parties will take all necessary steps to request that the copies filed are treated by the Parties and by any Governmental Authority (including the CFC) as confidential and that the terms of compensation between the Parties for Trackage Rights granted in this Agreement or in any other Agreement not be made public by any Governmental Authority (including the CFC) as a result of the submission of a copy of this Agreement to them. However, the Parties acknowledge that the decision of any Governmental Authority regarding whether or not to disclose the content of this Agreement is beyond their control, and that the disclosure of this Agreement or any of the provisions hereof by any Governmental Authority shall not in any way diminish the duty of any of the Parties to perform all of their duties under this Agreement, the Trackage Rights, Switching And Interline Settlement Agreement and the Ferrovalle Agreement.

(e) The Parties agree to cooperate between them in order to obtain the release and/or cancellation of any bond, back-bond, guaranty or security deposit which have been granted by any of them in connection with the Settlement Procedures and the CFC Procedures. These actions include, but are not limited to, the filing of briefs expressing the conformity of the relevant Party with the release of such bond, back-bond, guaranty or deposit.

(f) The Parties further agree to carry out, enter into, file, notify, ratify and/or grant the actions, acts and documents referred to in paragraphs (a) to (e) of this Section 2.5, hereinafter referred to as the “ Termination Acts ”.

(g) The Termination Acts include, but are not limited to, appearing before the Federal Supreme Court of Justice, the Collegiate Circuit Courts, the Unitary Circuit Courts, the Tax and Administrative Justice Federal Court, District Courts, the Ministry and any other Governmental Authority of any jurisdiction, federal or local, to ratify or grant again the Termination Acts and, in general, to carry out any fact or act necessary or advisable in order to comply with all and each of the issues established in paragraphs (a) to (e) of this Section 2.5.

(h) Except as otherwise stated herein, Kansas and Ferromex agree to carry out the Termination Acts no later than 60 (sixty) calendar days following the execution of this Agreement, unless both Parties expressly agree in writing to extend such term. The Parties shall jointly file briefs providing for the termination of the Settlement Procedures within 10 (ten) business days after the execution of this Agreement.

2.6 The Other Defendants . Each of the Ferromex Parties hereby covenants and agrees to obtain from each of the Other Defendants, within 10 (ten) business days following the

execution hereof, a full acknowledgment and consent with the settlement contained in this Agreement, substantially in the form of Exhibit I hereof. The Ferromex Parties hereby agree that, until such acknowledgment and consent executed by the Other Defendants is delivered to Kansas, in case any of the Other Defendants (including their respective officers or Affiliates) asserts any claim, action, suit or any other form of complaint against Kansas (or against its parent, subsidiary or Affiliates or its or their respective officers, directors, agents, employees, or advisors), the Ferromex Parties shall indemnify, defend and hold harmless Kansas (including its respective officers, advisors, subsidiary and affiliated companies) of any such claim, action, suit or complaint filed by the Other Defendants (including their respective officers or subsidiary or affiliated companies) in connection with or related to this Agreement, the Ferrovalle Agreement, the Private Procedures, the Termination Documents and the Ferromex Merger; provided that Kansas shall have the right (but not the obligation) to choose the legal advisors that handle the dispute and their fees shall be borne by the Ferromex Parties; and provided further that upon delivery of the executed acknowledgment and consent by the Other Defendants the obligation to indemnify assumed by the Ferromex Parties pursuant to this paragraph, shall be retroactively extinguished and released, as if the Ferromex Parties had not granted said indemnity.

2.7 General Indemnity . Each of the Ferromex Parties, on the one hand, and Kansas, on the other hand (each an “Indemnifying Party” ), hereby agrees to hold each of the Ferromex Parties or Kansas, as applicable, and its corresponding parent, subsidiaries and Affiliates and their respective officers, directors, agents, employees, and advisors (the “indemnified parties” and each an “Indemnified Party” ), harmless and indemnify and defend such indemnified parties, in connection with any claim, action, suit or complaint filed by the parent, subsidiaries and Affiliates of the indemnifying party and their respective officers, directors, agents, employees, and advisors, in connection with or related to this Agreement, the Ferrovalle Agreement, the Settlement Procedures, the Termination Documents and the Ferromex Merger, provided that the indemnified party shall have the right (but not the obligation) to choose the legal advisors that handle the relevant dispute and their fees shall be borne by the indemnifying party.

2.8 Future Proceedings . In light of the provisions of the foregoing paragraphs, and in case there is any resolution from a Governmental Authority after the date hereof in connection with the Settlement Procedures, it shall be deemed that such resolution is not binding on the Parties; provided however that this Agreement is not intended to terminate or leave without substance the rights of the Parties acquired hereunder and is not intended to be a waiver of any rights of any of the Parties related to facts or events occurring after the date hereof.

Clause Three. Consideration for Waivers and Termination of the Private Procedures.

3.1 Consideration for Termination and Waivers .

(a) Each of the Parties hereby acknowledges and agrees that the execution and compliance with this Agreement and the Ferrovalle Agreement are an essential part of the settlement contained herein ( motivo determinante ) and are agreed to by the Ferromex Parties as consideration for the waivers granted by Kansas and the termination of the Private Procedures

and withdrawal from the CFC Procedures. The Ferromex Parties hereby acknowledge and agree that their obligations under this Agreement and the Ferrovalle Agreement shall be interpreted so as to provide Kansas with an effective consideration for the waivers and termination of the Private Procedures and its cooperation in the termination of the CFC Procedures as provided hereunder.

(b) Nothing contained in this Agreement shall prevent one of the Parties from seeking specific performance, damages, lost profits and/or the specific remedies for the breach of the obligations contained in this Agreement and the Ferrovalle Agreement, either through judicial or arbitral actions (as the case may be) and/or administrative procedures.

3.2 Survival of Provisions . In case the Ferrovalle Agreement is terminated or amended, in whole or in part, for any reason whatsoever before its stipulated term (including by breach of the Parties with their obligations thereunder) this Agreement shall remain in full force and effect to the fullest extent permitted by applicable law.

3.3 Cooperation and Further Actions . The Parties hereby agree to carry out any actions that are reasonably necessary and to cooperate in good faith one with the other in order to ensure that the provisions of this Agreement and the Ferrovalle Agreement become fully effective. This obligation includes entering into any form of actions and/or agreements and the filing of all types of documents before any judicial and/or administrative authorities, as well as the ratification thereof.

Clause Four. Trackage Rights Rates.

4.1 [****]

4.2 [****]

4.3 General Conditions on Rates.

(a) Value Added Tax . The rates payable in connection with trackage rights under Section 4.1 and 4.2 shall be added with the applicable value added tax.

(b) Periodic Adjustment of Rates . [****]

(c) Billing Terms and Conditions . The terms and conditions of the conciliation, invoicing and payment of the rates referred to in this Clause Four shall be those detailed in Clause Ten of this Agreement, and amended as mutually agreed upon by the authorized representatives of the Parties hereto from time to time.

4.4 Acknowledgment . The Parties hereby acknowledges the validity, in terms of Article 36 of the Railroad Service Law, of the agreements reached with respect to the rates that from now on they shall pay each other for trackage rights pursuant to Sections 4.1 and 4.2

above. In such respect they agree not to petition the Ministry to make any determination of rates in such regard under said Article 36 of said Railroad Service Law or otherwise.

Clause Five. Trackage Rights — Veracruz.

5.1 Trackage Rights for Trains in the Veracruz Access Zone.

(a) Scope . Subject to the terms and conditions provided herein and pursuant to the first paragraph of Article 36 of the Railroad Service Law, Ferrosur hereby grants Kansas trackage rights over the Line V as well as over all sidings, secondary tracks, industrial tracks, connections, spurs, yard tracks, and crossings of Line V between Santa Fe and the Veracruz Yard, as described in Appendix 1 , and any other Trackage within the Veracruz Access Zone, including all sidings, secondary tracks, industrial tracks, connections, spurs, yard tracks, and crossings to directly serve any industry and/or User currently or in the future located within the Veracruz Access Zone with Trains consisting of Cars that are to be delivered to, or picked up from, the same industry and/or User.

(b) A Kansas Train may enter and exit the trackage right granted in paragraph (a) above to deliver directly to, or to pick up directly from, industries and/or Users located within the Veracruz Access Zone only if all of the Cars in the Kansas Train are to be delivered to, or were picked up from, the same industry and/or User. The trackage rights granted under this Section 5.1 shall allow Kansas to operate an unlimited number of Cars or Trains and shall be without limitation on the length of Trains and without limitation on the number of Cars or Trains of Kansas seeking access in any hour, day, week, month or year.

5.2 Trackage Rights for Trains to APIVER .

(a) Scope . Subject to the terms and conditions provided herein and pursuant to the first paragraph of Article 36 of the Railroad Service Law, Ferrosur hereby grants Kansas trackage rights over the Line V as well as over all sidings, secondary tracks, industrial tracks, connections, spurs, yard tracks, and crossings of Line V between Santa Fe and the Veracruz Yard and any Trackage within land owned or controlled by the APIVER (as described in Appendix 1 ) , and any other Trackage within the Veracruz Access Zone, including all sidings, secondary tracks, industrial tracks, connections, spurs, yard tracks, and crossings to directly serve any industry and/or User currently or in the future located within land currently owned or controlled by the APIVER identified in Appendix 1 .

(b) A Kansas Train may enter and exit the trackage right granted in paragraph (a) above to deliver directly to Users located within the APIVER only if (i) all of the Cars in the Kansas Train are to be delivered to the same User, and (ii) such Kansas Train meets and complies with all of APIVER’s requirements and falls within the arrival schedule set by Ferrosur for the operation of the Veracruz Yard (which shall be set on a non-discriminatory basis).

	[a]		after delivery of the Cars to or from the corresponding User, Kansas’ Tractive Equipment shall exit the land currently owned or controlled by the APIVER identified in Appendix 1, without Dragged Equipment; and

	[b]		Ferrosur shall pick up the same number of Cars delivered by Kansas to a single User within APIVER pursuant to paragraphs (a) and (b) above at no cost, and then Interchange them with Kansas at the Veracruz Yard;

5.3 Trackage Rights for other Type of Trains . Subject to the terms and conditions provided herein and pursuant to the first paragraph of Article 36 of the Railroad Service Law, Ferrosur hereby grants Kansas trackage rights over the Line V as well as over all sidings, secondary tracks, industrial tracks, connections, spurs, yard tracks, and crossings of Line V between Santa Fe and the Veracruz Yard (as further detailed in Appendix 1 attached hereto) for all rail freight traffic originating in and/or bound for the Veracruz Yard, subject to the following:

	(i)		If a Kansas’ Train entering the trackage right granted above includes Cars destined to more than one industry and/or User located within the Veracruz Access Zone, or if Kansas notifies Ferrosur that Kansas wishes to move Cars tendered for rail movement from more than one industry and/or User located within the Veracruz Access Zone using a single Kansas Train, Ferrosur shall provide switching services to Kansas to deliver the Cars to or to pick up the Cars from more than one industry and/or User located within the Veracruz Access Zone, and shall Interchange such Cars with Kansas at the Veracruz Yard. These switching services shall be provided under the terms of and through payment of the rate referred to in Section 6.1 below; and

	(ii)		The Parties agree that due to infrastructure constraints at the Veracruz Yard, Kansas shall have the right to enter the Veracruz Yard [****] Car quota shall not be reduced by any Kansas Cars (Loaded or otherwise) located at the Veracruz Yard due to Ferrosur’s failure to: ( a ) deliver such Cars to the relevant industry and/or User; or ( b ) place Kansas Cars for pick up at the Veracruz Yard. Additionally, Ferrosur shall send a notice to Kansas indicating that they cannot receive additional Cars at the Veracruz Yard and providing an estimated time in which they will be able to receive such additional Cars and the number thereof.

5.4 Other Provisions . The Parties hereby further agree that any and all prior specifications, agreements or obligations acquired with respect to any tracks or section of tracks comprised by the Santa Fe-Veracruz trackage right as described in their respective Concession Titles are hereby terminated; provided , however , that in the event this Agreement is terminated or annulled for any reason whatsoever, any agreements between Ferrosur and Kansas in effect before the execution of this Agreement, shall be immediately reinstated

without the need of any further action or agreement among the Parties, including, the limitations on the number of Kansas Railroad Equipment.

Clause Six. Switching Services.

6.1 Veracruz Access Zone.

(a) Ferrosur hereby and as of the execution of this Agreement agrees to provide switching services to Kansas throughout the entire Veracruz Access Zone, as it may be necessary in order to ensure at all times that Kansas is allowed to:

	(i)		provide service to and from the entire Port of Veracruz and the Veracruz Yard; and

	(ii)		provide service to and from any Users and businesses located on land controlled or managed now or in the future by the APIVER; and

	(iii)		provide service to and from any site located within the Veracruz Access Zone identified in Appendix 1 , in addition to those referred to in paragraphs (i) and (ii) above.

(b) The aforesaid switching services shall include access to the docks, yards, auxiliary or secondary tracks, industrial tracks, sidings, escape tracks, spurs, yard tracks, and crossings found currently or in the future within the Port of Veracruz, the Veracruz Access Zone and the APIVER that are Ferrosur Trackage or that Ferrosur has otherwise access to.

(c) For the avoidance of doubt, it is the intention of Kansas and Ferrosur that through the switching services granted in this Section 6.1, Kansas shall have the right to access through switching services provided by Ferrosur all existing port and other facilities and industries to which Ferrosur currently or in the future has access directly, by switching services, joint facility or other arrangements including agreements with the APIVER or any contractor or concessionaire of APIVER and any location within the Port of Veracruz, the Veracruz Access Zone and the APIVER. This shall be deemed to include for the benefit of Kansas any extension, increase, construction, improvements, changes or additions made by the APIVER, the Ferromex Parties or any third party to the Veracruz Yard, the Port of Veracruz or any new ports ( recintos portuarios ) established, built or constructed within the Municipality of Veracruz and its adjacent municipalities, if and to the extent Ferrosur obtains rights to such extensions, increases, constructions, improvements, changes or additions which are at least equivalent to the rights it currently holds to existing facilities.

(d) The agreement to provide switching services is in addition to, and does not exclude any of, the trackage rights granted under Clause Five of this Agreement. In such sense, Kansas shall notify Ferrosur (including by electronic means) on every occasion that Kansas intends to make use of any of the trackage rights referred to in Clause Five or the switching services mentioned in this Section 6.1 [****].

(e) To the extent that, for the provision of the switching services under this Section 5.1, access to the current Veracruz Yard is necessary, the Parties agree that due to infrastructure constraints at the Veracruz Yard, Kansas shall have the right to enter the Veracruz Yard with a maximum of 125 (one hundred and twenty five) Cars, provided the same are delivered in compliance with the rules and schedules of the APIVER per each of the three 8-hour windows comprising the daily arrivals schedule of the Veracruz Yard. [****]

(f) The Parties hereby further agree that any and all prior agreements made in relation to the number of Kansas Railroad Equipment allowed in the Veracruz Access Zone or any tracks or section of tracks comprised by Veracruz Access Zone are hereby terminated; provided, however, that in the event this Agreement is terminated or annulled for any reason whatsoever, any rights that Kansas had before the execution of this Agreement, shall be immediately reinstated without the need of any further action or agreement among the Parties, including, the limitations on the number of Kansas Railroad Equipment.

(g) Rates . In connection with switching services referred to in this Section 6.1, from and after January 1, 2010, Ferrosur shall have the right to charge and Kansas shall have the obligation to pay, [****] for each Loaded Car.

(h) [****]

(i) Billing Terms and Conditions . The terms and conditions of the conciliation, invoicing and payment of the rates referred to in Section 6.1(g) shall be those detailed in Clause Eleven of this Agreement, and amended as mutually agreed upon by the authorized representatives of the Parties hereto from time to time.

(j) Acknowledgment . The Parties hereby acknowledge the validity, in terms of Article 36 of the Railroad Service Law, of the agreements reached with respect to the rates mentioned in this Section 6.1. In such respect they agree not to petition the Ministry to make any determination of rates in such regard under said Article 36 of said Railroad Service Law or otherwise.

6.2 Puebla-Tlaxcala Industrial Zone/Volkswagen at Panzacola .

(a) Ferrosur hereby and as of the execution of this Agreement grants Kansas switching rights in order to ensure that at all times Kansas is allowed to provide service to and

from the Puebla-Tlaxcala Access Zone with an unlimited number of Cars, with access to all existing or future yards, auxiliary or secondary tracks, industrial tracks, sidings, escape tracks, spurs, yard tracks, crossings, facilities and/or industries, to which Ferrosur currently or in the future has access directly or indirectly within the Puebla-Tlaxcala Access, as it may be necessary.

(b) Volkswagen Facility . For the avoidance of doubt, the foregoing includes switching rights granted by Ferrosur to Kansas in order to ensure that at all times Kansas is allowed to provide service to and from the facilities located on Line SA at KP 34+179.00, and including the right to serve any future User operating that facility, with an unlimited number of Cars, with access to all existing or future yards, auxiliary or secondary tracks, industrial tracks, sidings, escape tracks, spurs, yard tracks, crossings, facilities and/or industries, to which Ferrosur currently or in the future has access directly or indirectly, as it may be necessary.

(c) For the purpose of providing the services described in this Section 6.2, the Parties hereby agree to designate Lechería as a point of Interchange, which shall be operated in accordance with the internal regulations of Ferrovalle in effect from time to time.

(d) Rates . Ferrosur shall have the right to charge Kansas and Kansas shall have the obligation to pay to Ferrosur a rate contained in Table 1 in connection with the switching services granted under this Section 6.2:

Table 1

[****]

(e) [****]

(f) Fuel Surcharge . The Parties further agree that Ferrosur shall have the right to apply a fuel surcharge to reflect the increases in the prices of fuel in accordance with current operating practices.

(g) Billing Terms and Conditions . The terms and conditions of the conciliation, invoicing, revision and payment of the rates referred to in this Section 6.2 shall be those detailed in Clause Ten of this Agreement, and amended as mutually agreed upon by the authorized representatives of the Parties hereto from time to time.

(h) Acknowledgment . The Parties hereby acknowledge the validity, in terms of Article 36 of the Railroad Service Law, of the agreements reached with respect to the rates

mentioned in this Section 6.2. In such respect they agree not to petition the Ministry to make any determination of rates in such regard under said Article 36 of said Railroad Service Law or otherwise.

Clause Seven. Other Access Rights.

7.1 FCCM.

(a) Ferrosur, hereby and as of the execution of this Agreement grants FCCM trackage rights over Line V, Line GA, Line G, Line Z and Line FA granted to Ferrosur in the Ferrosur Concession, between El Chapo and Santa Fé (as provided below), with an unlimited number of Cars and Trains seeking access in any time to serve traffic originating in and/or bound for any of the terminals included in the trackage granted in concession to the Chiapas-Mayab Railway Unit and/or the industries currently in or that in the future will be located along such tracks.

(b) Ferrosur hereby agrees to notify FCCM of the rights conferred to it in this Agreement, within 15 (fifteen) days following the execution hereof, so that FCCM may negotiate a compensation for the trackage right granted FCCM by this Section 6.1. [****] From the date such notification is made by either Ferrosur or Kansas, FCCM shall irrevocably acquire the trackage rights mentioned in this Section 7.1.

(d) The Parties hereby acknowledge and agree that the provisions contained in this Section 7.1 shall be interpreted broadly so as to ensure that neutral access between the trackage of FCCM and the trackage of Kansas is restored.

(e) The management, operation, dispatching and maintenance of the tracks subject to trackage rights under Section 7.1 shall, at all times, be under the exclusive direction and control of Ferrosur, and the movement of Railroad Equipment over and along such tracks shall at all times be subject to the direction and control of Ferrosur’s authorized representatives and in accordance with such reasonable operating rules as Ferrosur shall from time to time institute, provided, however, that in the management, operation, dispatching and maintenance of said tracks, Ferrosur and FCCM shall be treated equally. All operating, dispatching and maintenance decisions by Ferrosur affecting the movement of Railroad Equipment over the relevant tracks shall be made on a non-discriminatory basis, without reference to ownership. The foregoing shall include, without limitation, decisions as to terminal departure times, destination terminal receiving times, en-route delays, track maintenance and the scheduling of maintenance windows.

7.2 Access to and from APIVER .

(a) The Ferromex Parties hereby agree that they will take all legal and commercial actions reasonably necessary to ensure that Kansas can make use of any and all access and any other prerogatives granted to any of the Ferromex Parties by the APIVER and/or any person

obtaining a concession for integral port administration ( concesión para la admninistración portuaria integral ) for the operation of a new or adjacent port facility in the Municipality of Veracruz or in the municipalities adjacent to the Municipality of Veracruz and/or the area currently comprised by said municipalities.

(b) The provisions contained in the preceding paragraph shall be deemed to include for the benefit of Kansas, on terms equivalent to those contained in this Agreement, any extension, increase, construction, improvements, changes or additions made by the APIVER, the Ferromex Parties or any third party to the Veracruz Yard, the Port of Veracruz or any new ports ( recintos portuarios ) established, built or constructed within the Municipality of Veracruz and its adjacent municipalities, if and to the extent Ferrosur obtains rights to such extensions, increases, constructions, improvements, changes or additions which are at least equivalent to the rights it currently holds to existing facilities.

(c) The Parties hereby specifically and conclusively agree that nothing in this Agreement is intended, nor shall be construed as intending, to hold Ferrosur liable for pursuing or securing approvals, amendments or any other action from APIVER, relating to Kansas’ use of the trackage and switching rights granted hereunder.

(d) Ferrosur agrees that it will defend and hold Kansas harmless of any claim made by APIVER or any third party in connection with any use that Kansas makes of the prerogatives and access granted by Ferrosur hereunder, when operating in accordance with Ferrosur’s instructions or the provisions of this Agreement. Kansas shall have the right (but not the obligation) to choose the legal advisors that handle the dispute and their fees shall be borne by Ferrosur.

(e) Kansas agrees that it will defend and hold Ferrosur harmless of any claim made by APIVER or any third party in connection with any use that Kansas makes of the prerogatives and access granted by Ferrosur hereunder, when operating in violation of Ferrosur’s instructions or the provisions of this Agreement. Ferrosur shall have the right (but not the obligation) to choose the legal advisors that handle the dispute and their fees shall be borne by Kansas.

7.3 Ferrovalle By-Pass .

(a) [****]

(b) [****]

(c) Unless otherwise agreed in writing by the authorized representatives of Kansas and Ferrosur, the location of tracks designated for pickup and for delivery of the Dragged Equipment of Kansas and Ferrosur under this Section 7.3 at the point of [****].

(d) Dragged Equipment shall be deemed to be in the receiving Party’s account when placed on the designated Interchange tracks and the Tractive Equipment of the delivering carrier

is uncoupled therefrom and said Dragged Equipment is accompanied or preceded by proper forwarding data via electronic methods pursuant to and as defined by the AAR.

7.4 Ferrovalle By-Laws and Certain Rates .

(a) The Ferromex Parties and Kansas hereby agree that they will enter into whatever agreements and actions are necessary (including Shareholders Meetings) in order to amend the By-laws of Ferrovalle in substantially the same terms set forth in Exhibit J hereof. Such agreements, actions and amendments, shall be entered into by the applicable Ferromex Parties, Kansas and Ferrovalle within the 30 (thirty) calendar days following the execution of this Agreement.

(b) Notwithstanding the foregoing, for so long as the by-laws of Ferrovalle have not been amended in accordance with the terms set forth in Exhibit J , the Ferromex Parties and Kansas hereby agree that Ferrovalle shall be managed in accordance with the provisions and principles of said in Exhibit R , including the Financial Policies that form part of such Exhibit J .

(d) The rates referred to in the preceding paragraph may be subject to adjustments as agreed to by Kansas, Ferromex, Ferrosur and Ferrovalle.

(e) [****]

(f) [****]

7.5 Cooperation and Further Actions . The Parties hereby agree to carry out any actions that are reasonably necessary and to cooperate in good faith one with the other in order for the provisions of this Clause Seven to become fully effective. Likewise, they agree to not carry out any act or action that may impede the provisions of this Clause Seven becoming fully effective. Without limiting the above, the Parties shall enter into and deliver the additional documents and shall perform the subsequent acts that are necessary or convenient to carry out the obligations under this Clause Seven in an effective way.

Clause Eight. Maintenance and Operation of Subject Trackage.

8.1 General Rules . Subject to the Applicable Framework, Subject Trackage User shall have the right (but not the obligation) to construct, maintain, repair, and renew, at its sole cost and expense, and, as permitted by the corresponding legal provisions, the tracks and other forms of infrastructure which connect the respective lines of the Parties and which are located on the right-of-way of the Subject Trackage User and to the clearance point in the right-of-way of the Subject Trackage Owner switch connecting to the connecting track constructed by the Subject Trackage User.

8.2 License . Subject Trackage Owner hereby grants to Subject Trackage User a license over that portion of the Subject Trackage Owner’s property between right-of-way line and clearance point of Subject Trackage Owner’s switch connecting to the connecting track constructed by the Subject Trackage User in order for Subject Trackage User to maintain such trackage.

8.3 Alternative Routes .

(a) Subject Trackage Owner, at its expense, shall maintain its corresponding Subject Trackage. In the event that for operating convenience, necessity or emergency, Subject Trackage Owner directs Subject Trackage User to use adjacent Owner’s track and track connections between or beyond the terminal of the Owner’s Subject Trackage as an alternative route, then and in such event, such trackage, track connections and appurtenances shall be deemed to be part of the Owner’s Subject Trackage and shall be governed by all the provisions of this Agreement.

(b) To avoid any negative impacts on the trackage rights rates payable by Subject Trackage User in case an alternative route is determined, if Subject Trackage Owner directs Subject Trackage User to use an alternative route as provided in paragraph (a), the trackage rights rates payable by Subject Trackage User in connection with its use of the alternative route may in no case exceed the total amount that Subject Trackage User would have paid to Subject Trackage Owner for the use of the ordinary route.

8.4 Track Connections . Subject Trackage Owner shall construct, maintain, repair, and renew, at the sole cost and expense of Subject Trackage User, and shall own the portions of the track connections between said tracks of the Parties hereto between the headblock and clearance point of Owner’s switch connecting to the connecting track constructed by Subject Trackage User located on the right-of-way of Subject Trackage Owner. Any costs and expenses to be refunded by the Subject Trackage User under this Section 8.4 shall be reasonable in the context of the work performed by Subject Trackage Owner and, in any case, shall be duly documented by the applicable invoices of the expenses incurred into by the Subject Trackage Owner.

8.5 Direction and Control of Construction, Maintenance, Repair, and Renewal .

(a) The construction, maintenance, repair, and renewal of Subject Trackage shall be under the exclusive direction and control of Subject Trackage Owner. The Subject Trackage Owner shall make any changes in and/or additions to its Subject Trackage which may be required by law, and progressively during construction these shall become part of Owner’s Subject Trackage. Subject Trackage Owner may make any changes in and/or additions to its Subject Trackage which Subject Trackage Owner deems necessary or desirable for the safe, efficient, and economical use of its Subject Trackage by the Parties, and these shall progressively during construction become part of the Owner’s Subject Trackage.

(b) Subject Trackage User may request changes in and/or additions to the Subject Trackage which Subject Trackage User shall deem necessary or desirable for the safe, efficient, and economical use of the Subject Trackage by the Parties, and Subject Trackage Owner shall, if it concurs, construct the same upon such terms and conditions as may be agreed upon and they

shall become part of the Subject Trackage. If Subject Trackage Owner does not concur in the construction of changes in and/or additions the Subject Trackage requested by Subject Trackage User, Subject Trackage Owner shall nevertheless, unless the construction of such changes in and/or additions to the Subject Trackage would materially impair the usefulness of the Subject Trackage at the location of the requested change or addition, construct such changes in and/or additions at Subject Trackage User’s sole expense, in which event, Subject Trackage Owner shall be prohibited from using any part of said changes or additions. Even if Subject Trackage Owner constructs the changes in and/or additions to the Subject Trackage at the sole cost of Subject Trackage User, Subject Trackage Owner shall thereafter maintain such changes in and/or additions to the Subject Trackage as part of the Subject Trackage.

(c) Subject Trackage Owner shall make no retirement, withdrawal, elimination or disposal of any part of the Subject Trackage which would permanently or materially impair the usefulness thereof to the Subject Trackage User.

8.6 Direction and Control of Management and Operation . The management and operation of the Subject Trackage shall be under the exclusive direction and control of Subject Trackage Owner. Subject Trackage Owner shall have the authority to change the management and operations on and over the Subject Trackage as in its judgment may be necessary, expedient, or proper for the operations thereof herein intended provided, however, that Subject Trackage Owner must conform to the operating conditions established by the Service Standards Committee under Clause Twelve hereof. Trains of the Parties hereto shall be given equal dispatch.

8.7 General Terms and Conditions of the Trackage Rights . Subject Trackage User’s use of the trackage rights granted under this Agreement shall be subject to the terms and conditions set forth in the following paragraphs:

(a) Subject to the rest of the terms and conditions provided in this Agreement, Kansas shall have the non-exclusive right to use the Ferrosur Subject Trackage for the operation of its Railroad Equipment over the Ferrosur Subject Trackage; all subject to the terms and conditions contained herein, in common with the Subject Trackage Owner and such other railroad company or companies as Subject Trackage Owner has heretofore admitted or may hereafter at any time in the future admit to the joint use of all or any part of the Subject Trackage; provided, however, that Subject Trackage Owner may not admit to the Subject Trackage after the execution of this Agreement, any other railroad company or companies (other than as provided in Section 7.1 of this Agreement) whose use of the Subject Trackage will impair the quality or viability of Subject Trackage User’s access granted in this Agreement.

(b) Subject Trackage User shall, in good faith, use the Subject Trackage pursuant to, perform all acts required by applicable law to transit and operate over the Subject Trackage owned by Subject Trackage Owner in accordance with, and shall perform all operation over the Subject Trackage in strict compliance with, the requirements of this Agreement and the Applicable Framework.

(c) Immediately prior to accessing the Subject Trackage, the Subject Trackage User shall assure that its Tractive Equipment has sufficient fuel in its fuel tanks and that the members

of its train crew have sufficient hours of service remaining available under law to allow Subject Trackage User’s Train to move the entire length of the Subject Trackage on which the Train is to operate without Subject Trackage User’s Train needing refueling or re-crewing.

(d) Any use of the Subject Trackage by Subject Trackage User other than the use agreed upon in this Agreement is prohibited unless authorized in a writing executed by a duly authorized officer of the Subject Trackage Owner.

(e) It is understood and agreed that in addition to the foregoing limitation, Subject Trackage user shall not have the right, except as specifically provided in this Agreement, to:

	(i)		Exit the section comprised by the trackage right in question at a point other than the opposite end of such trackage right; provided that this limitation shall not be applicable in those cases in which this Agreement specifically provides that the Subject Trackage User shall have the right to serve the industry and/or Users located within the trackage right in question; or,

	(ii)		Set out, pickup, store or switch upon the Subject Trackage, or any part thereof, except as necessary for handling Railroad Equipment that is bad ordered en route, unless otherwise provided in this Agreement or agreed upon in writing by the operating departments of both Parties; or,

	(iii)		Permit or admit any third party to the use of all or any portion of the Subject Trackage, nor under the guise of doing its own business, contract or make any agreement to handle as its own Trains, Tractive Equipment, or Cars over or upon the Subject Trackage, or any portion thereof, or the Trains, Tractive Equipment and Cars of any such third party which in the normal course of business would not be considered as the Trains, Tractive Equipment or Cars of Subject Trackage User; or,

	(iv)		Except as otherwise provided for in this Clause Eight, construct tracks connecting to the Subject Trackage without approval from the Subject Track Owner; or,

	(v)		Handle any cars on or over the Subject Trackage which have a gross weight in excess of the applicable weight limitations contained in the applicable timetable; or,

	(vi)		Establish fueling locations on Subject Trackage; or

	(vii)		Establish any crew change point on Subject Trackage; or

	(viii)		Treat, store or dispose of Hazardous Materials on the Subject Trackage.

8.8 Additional Rules on Management and Operation of Subject Trackage.

(a) Subject Trackage Owner shall employ all persons necessary to construct, operate, maintain, repair, and renew theSubject Trackage. Subject Trackage Owner shall be bound to use only reasonable and customary care, skill, and diligence in the construction, operation,

maintenance, repair, and renewal of the Subject Trackage and in managing same; provided however that said construction, operation, maintenance, repair, and renewal shall at all times be consistent with the Applicable Framework.

(b) Subject Trackage Owner shall keep the Subject Trackage in a state of reasonable repair and reasonably suitable for the combined requirements of the Parties and of such other railroad companies as Subject Trackage Owner has heretofore admitted or may hereafter admit to use of the Subject Trackage, and, at least, in the conditions that are necessary for compliance with the Applicable Framework. In the event there are conditions from time to time which require speed restrictions with respect to any location on the tracks comprised in the Subject Trackage, Subject Trackage Owner shall, with reasonable promptness, notify Subject Trackage User of such speed restrictions and repair such conditions so as to permit the removal of such speed restrictions.

(c) Subject Trackage User shall be given the same advance notice of maintenance plans and schedules as is provided to Subject Trackage Owner’s personnel.

(d) All officers, agents, and employees of Subject Trackage Owner engaged in the management, operation, and maintenance of the Subject Trackage shall perform their duties in a fair, impartial, and just manner.

(e) Subject Trackage Owner may occasionally substitute any track or tracks for those delineated in this Agreement for use by Subject Trackage User; provided that no such substitution may be made without the consent of Subject Trackage User which will not be unreasonably withheld. When any tracks which are not part of the Subject Trackage User are used as provided herein, the Agreement shall govern for purposes of direction and control and liability as if all movement had been made over the Subject Trackage Owner.

(f) To avoid any negative impacts on the trackage rights rates payable by Subject Trackage User in case any substitute tracks are used, if Subject Trackage Owner determines said substitution in accordance with the preceding paragraph, the trackage rights rates payable by Subject Trackage User in connection with its use of the substitute tracks may in no case exceed the total amount that Subject Trackage User would have paid to Subject Trackage Owner for the ordinary tracks.

8.9 Repairs on Dragged Equipment; Removal of Bad Ordered Tractive Equipment .

(a) If the Dragged Equipment of Subject Trackage User is bad ordered en route on the tracks subject to switching services or interline services rights and it is necessary that it be set out, such bad ordered Dragged Equipment shall, after being promptly repaired, be promptly picked up and delivered to Subject Trackage User. Applicable AAR rules shall be applied to determining appropriate billing and payment procedures.

the repairs. Subject Trackage Owner shall then prepare and submit billing directly to and collect from the Dragged Equipment owner for Dragged Equipment owner responsibility items as determined under said Interchange Rules, and Subject Trackage Owner shall prepare and submit billing directly to and collect from Subject Trackage User for line responsibility items as determined under said Interchange Rules.

(c) Subject Trackage Owner shall also submit billing to and collect from Subject Trackage User any charges for repair to Dragged Equipment that is Subject Trackage User responsibility items as determined under said Interchange Rules should said Dragged Equipment owner refuse or otherwise fail to make payment therefor following reasonable good faith efforts by Subject Trackage Owner to collect such charges for repair of Dragged Equipment from the owner thereof.

(d) If Tractive Equipment operated by one Party is bad ordered en route while on the Trackage of the other Party and it is necessary that such Tractive Equipment be set out, such bad ordered Tractive Equipment may be dragged by the Party on whose Trackage the Tractive Equipment became bad ordered to whichever point of Interchange with the other Party is deemed convenient by the operator of the Trackage on which the Tractive Equipment became disabled. Absent other circumstances, this point of Interchange shall be the point of Interchange between the Parties which is closest to the location at which the Tractive Equipment became bad ordered. The Party dragging the other Party’s bad ordered Tractive Equipment is entitled to recover from the Party whose Tractive Equipment is being dragged any reasonable costs and expenses incurred in connection with the dragging or removal of the bad ordered Tractive Equipment, and shall not be bound to make any form of repairs thereto.

8.10 Derailment and Accidents Involving Hazardous Materials .

(a) In case of any incident, accident, derailment, or vehicle striking or being struck by Equipment, involving Equipment operated by a Party hereto carrying Hazardous Materials or pollutants shall occur on the Subject Trackage, any report required by federal, state or local authorities shall be the responsibility of such Party. Each Party shall advise the other Party immediately of the occurrence of a derailment involving Equipment operated by the Party carrying Hazardous Materials.

(b) Unless otherwise agreed by the Parties, Subject Trackage Owner shall undertake any Response Action (as defined below) in accordance with all federal, state, or local regulatory requirements necessitated by a release of Hazardous Materials on Subject Trackage Owner’s right-of-way underlying the Subject Trackage from Equipment operated by either Party hereto upon the occurrence of a derailment. Subject Trackage User shall have data or a representative available at the scene of any derailment involving Equipment operated by it to provide information concerning the characteristics of Hazardous Materials released.

(c) If following a derailment upon the Subject Trackage, Hazardous Materials must be transferred to undamaged Cars or other vehicles, unless otherwise agreed by the Parties, the Party whose Equipment was involved in such derailment shall perform the transfer; provided, however, that if the Hazardous Materials are in damaged Cars of a Train of Subject Trackage User that are blocking the Subject Trackage, Subject Trackage Owner shall transfer the

Hazardous Materials; provided further that transfers of Hazardous Materials by Subject Trackage User shall only be conducted after being authorized by Subject Trackage Owner.

(d) In the event any cleanup, response, removal or remediation of any environmental condition on the Subject Trackage is necessary (collectively a “ Response Action ”), neither Party shall be entitled to any damages, actual or consequential, by reason of the Response Action’s interference with the other Party’s use of the Subject Trackage. Subject Trackage Owner and its contractors shall have full, unrestricted and unconditional access to the Subject Trackage for the purpose of completing or engaging in a Response Action for which Subject Trackage Owner has any responsibility or, at Subject Trackage Owner’s option, a Response Action which Subject Trackage Owner has undertaken should Subject Trackage User fail to diligently pursue and complete such Response Action to the satisfaction of Subject Trackage Owner; provided, however, that any Response Action ( i ) shall be undertaken and completed pursuant to a work plan (including a schedule) submitted to the other Party for its review and, in the case of Subject Trackage Owner, approval, and ( ii ) shall not unreasonably, in terms of duration or otherwise, restrict the other Party’s use of the Subject Trackage. Either Party’s completion of any of the other Party’s obligations hereunder shall not be deemed a release of such obligations under this Agreement. Subject Trackage Owner shall have the right, but not the obligation, to conduct reasonable inspections of any Response Action of Subject Trackage User and Subject Trackage User shall provide Subject Trackage Owner all information requested by Subject Trackage Owner regarding any Response Action of Subject Trackage User or any Environmental Claims for which Subject Trackage User is responsible.

8.11 Training of Subject Trackage User’s Crews .

(a) Subject Trackage Owner has the right to administer to all employees of Subject Trackage User engaged in or connected with the operations of Subject Trackage User on or along the Subject Trackage, periodic examination on the rules of Subject Trackage Owner related to the Subject Trackage, provided , with respect to such examinations that, upon request of Subject Trackage User, Subject Trackage Owner shall qualify one or more of Subject Trackage User’s supervisory officers on said rules and such supervisory officer or officers so qualified shall examine all employees of Subject Trackage User engaged in or connected with Subject Trackage User’s operations on or along the Subject Trackage.

(b) Pending qualification of the crews of Subject Trackage User, Subject Trackage Owner shall furnish a pilot or pilots, at the expense of Subject Trackage User, as deemed necessary by Subject Trackage Owner to assist in operating trains of Subject Trackage User over the Subject Trackage. In addition to all other qualification requirements, crews of Subject Trackage User shall not be deemed qualified to operate on the Subject Trackage until such crew members have completed five (5) trips over the Subject Trackage under the supervision of User’s qualified supervisory officers or Owner-supplied pilot or pilots.

failure on the part of any employee of Subject Trackage User, then upon such notice presented in writing, Subject Trackage Owner and Subject Trackage User shall promptly conduct a joint investigation in which all parties concerned shall participate and bear the expense for its officers, counsel, witnesses, and employees. Notice of such investigations to employees of Subject Trackage User shall be given by Subject Trackage User’s officers, and such investigation shall be conducted in accordance with the terms and conditions of the collective bargaining agreements between Subject Trackage User and its employees. If, in the judgment of Subject Trackage Owner, the result of such investigation warrants, such employee shall, upon written request of Subject Trackage Owner, be withdrawn by Subject Trackage User from service on the Subject Trackage, and Subject Trackage User shall release and indemnify Subject Trackage Owner from and against any and all claims and expenses because of such withdrawal.

(d) If the disciplinary action is appealed by an employee of Subject Trackage User to any tribunal lawfully created to adjudicate such cases, and if the decision of such tribunal sustains the employee’s position, such employee shall not thereafter be barred from service on the Subject Trackage by reason of such occurrence.

(e) In the event the relevant union and/or any of the Subject Employees asserts any claim, action, suit or any other form of complaint against Subject Trackage User (and/or its respective directors, officers, advisors, agents, employees, or Affiliates), and with respect to discipline imposed under this Section 8.11, Subject Trackage Owner hereby covenants and agrees to indemnify, defend and hold Subject Trackage User (including its respective directors, officers, advisors, agents, employees, or subsidiary or Affiliates) harmless of any such claim, action, suit or complaint filed by such union and/or any of the Subject Employees; provided that Subject Trackage User shall have the right (but not the obligation) to ( i ) choose legal advisors to handle the dispute and determine the strategy of such proceedings, whose fees shall be borne by Subject Trackage Owner; and/or ( ii ) at its sole discretion, make the relevant payment to the claiming person(s) and then be reimbursed of such payment by Subject Trackage Owner.

8.12 Default . Should Subject Trackage User handle any traffic over the Subject Trackage in violation of the restrictions set forth in this Agreement, Subject Trackage Owner shall be entitled to receive from Subject Trackage User the payment of thrice the then-current charge for each Car so handled in violation of the aforesaid restrictions.

Clause Nine. Dispatch of Trains; Traffic Control Centers; Non- Discrimination.

9.1 Traffic Control Centers . Subject Trackage Owner shall operate its Trackage by means of duly-staffed traffic control centers that remain operational for 24 (twenty-four) hours each day of the year, that handle the traffic flowing over the Subject Trackage in an orderly and timely fashion and in accordance with the Applicable Framework.

9.2 Service Schedule . All Subject Trackage User-related traffic shall be handled by Subject Trackage Owner in accordance with a schedule provided by Subject Trackage User (including via electronic correspondence) with at least 12 (twelve) hours before the scheduled traffic is to take place.

9.3 Non-Discrimination .

(a) Without limiting the generality of the foregoing, Subject Trackage Owner shall be responsible for the dispatch of all Trains circulating on its Trackage, with the understanding that Subject Trackage User will be treated on a non-discriminatory basis.

(b) For purposes of this Agreement, non-discriminatory treatment includes the obligation of Subject Trackage Owner to treat Subject Trackage User-related traffic under at least the same terms and conditions (operative and otherwise) as it treats its own.

9.4 Uninterrupted Flow of Traffic and Other Items . Subject Trackage Owner shall carry out all traffic management and regulation functions necessary to ensure the safe and uninterrupted flow of traffic and minimal traffic delays in the Subject Trackage, which shall include without limitation:

	(i)		managing the traffic from its traffic operations centers, which shall remain staffed and operational 24 (twenty-four) hours every day of the year;

	(ii)		providing recovery service and ambulance service 24 (twenty-four) hours every day of the year;

	(iii)		coordinating with police and emergency services authorities with respect to traffic control and with other Governmental Authorities, as and when needed; and

	(iv)		carrying out such functions in a non-discriminatory manner, as provided in Section 9.3 above; and

	(v)		coordinated sharing of Automatic Equipment Identification (AEI) reader information as needed to ensure safe and efficient operation.

9.5 Trackage Rights Use Notice. Before each occasion in which Subject Trackage User intends to make use of the Subject Trackage hereunder, Subject Trackage User shall send a notice to Subject Trackage Owner (which may be done by electronic means) indicating the information mentioned in Exhibit H hereto and any other information relevant to the safety of movement of Subject Trackage User’s Train.

Clause Ten. Billing .

10.1 Billing Forms .

(a) [****]

(b) For charges other than trackage rights, switching services and interline rates, billing shall be prepared according to the rules, additives and equipment rental rates as published by Subject Trackage Owner.

(c) Each Party (“ Party of the First Part ”) shall pay, [****], to the other Party (“ Party of the Second Part ”), at the Office of the Treasurer of the Party of the Second Part or at such other location as the Party of the Second Part may from time to time designate, all the compensation and charges of every name and nature which in and by this Agreement Party of the First Part is required to pay. Each such payment, other than payments for those charges which are paid in whole or in part by offset as provided in Section 10.6 below, [****].

(d) Bills shall contain a statement of the amount due on account of the expenses incurred and services rendered during the billing period. Value Added Tax shall be stated separately from the amounts of the corresponding expenses and services.

10.2 Updating of Rates . [****]

10.3 Default Interest . In the event that either Party shall fail to pay any monies due to the other Party [****] days after the invoice date, then such first Party shall pay interest on such unpaid sum [****] after its invoice date to the date of payment by such first Party at an [****].

10.4 Disputed Bills . Errors or disputed items in any bill shall not be deemed a valid excuse for delaying payment, and payments shall be made subject to subsequent adjustment, provided, however, that:

(i)

no exception to any bill shall be honored, recognized, or considered if filed after the expiration of 3 (three) years from the last day of the calendar month during which the bill is rendered and no bill shall be rendered later than 3 (three) years ( a ) after the last day of the calendar month in which the expense covered thereby is incurred, or ( b ) if in connection with a project for which a roadway completion report is required, after the last day of the calendar month in which the roadway completion report is made covering such project, with retirements and additions being reflected as appropriate adjustments to valuation bases retroactive up to 3 (three) years from date of billing, or (c) in the case of claims disputed as to amount or liability, after the amount is settled and/or the liability(ies) established; and

(ii)

[****]

10.5 Inspections and Audits . So much of the books, accounts, and records of each Party hereto as are related to the subject matter of this Agreement shall at all reasonable times be open to inspection by the authorized representatives and agents of the Parties hereto. All books, accounts, and records shall be maintained to furnish readily full information for each item.

10.6 [****]

Clause Eleven. Service Standards Committee.

11.1 The Committee .

(a) A service standards committee (the “ Committee ”), shall be established, and shall be responsible for: ( i ) establishing and updating operating plans as outlined in Section 11.3(a) and (d) – Transition Period — below; ( ii ) establishing rules or standards as appropriate to ensure equal and non-discriminatory treatment, appropriate maintenance and efficient use of the facilities that are a part of the Subject Trackage; and ( iii ) such other functions attributed to the Committee under other agreements entered into by Kansas and the Ferromex Parties.

(b) The Committee shall meet on a regular basis not less often than monthly during the Transition Period and thereafter not less often than every 3 (three) months during the first year of operation under this Agreement, and thereafter within 45 (forty-five) days (unless otherwise mutually agreed) following the date that the Party to this Agreement that requests the meeting (either Kansas or Ferrosur) delivers to the other such party (either Ferrosur or Kansas) 45 (forty five) days’ written notice of its desire to meet to review the overall performance of the rights provided for under this Agreement, to resolve conflicts and consider other relevant matters in the responsibility of the Committee as defined in this Clause Twelve.

(c) If the Committee fails, to reach an agreement, within 10 (ten) business days of beginning its meeting, with respect to any matter within the scope of its responsibilities as outlined herein, the matter shall be referred to the Director of Operations of Kansas and to the Chief Operating Officer of Ferrosur that are ( i ) providing and ( ii ) using the particular service under discussion for further negotiation. The Director of Operations of Kansas and the Chief Operating Officer of Ferrosur shall negotiate for an additional 10 (ten) business days following the date of referral described in this Section 11.1(c) in an effort to resolve their disagreement.

(d) The Committee shall consider technological improvements that may foster more rapid and consistent service on the Subject Trackage. Changes in service standards or decisions on capital investments flowing from such consideration shall be negotiated in good faith and subject to the terms of this Agreement.

(e) The Parties agree that Kansas shall appoint 3 (three) individuals and that Ferrosur shall appoint 3 (three) individuals to the Committee. Appointments and replacements of the individuals shall be made at any time by sending a letter to the Ferromex Parties or Kansas, as applicable, indicating the names of the corresponding appointees or their replacements.

11.2 Limitations of the Committee .

(a) The Parties hereby acknowledge that the Committee is created with the intent of facilitating the implementation of the terms and conditions of this Agreement and the other agreements entered into by Kansas and the Ferromex Parties. The Committee does not have the power to change the provisions of either this Agreement or the other agreements entered into by Kansas and the Ferromex Parties.

(b) No action or omission by the Committee shall be deemed as a waiver, stay or amendment to the rights and obligations of the Parties hereunder and/or the other agreements entered into by Kansas and the Ferromex Parties.

11.3 Transition Period .

(a) For a period that begins on the execution of this Agreement and ends 180 (one hundred and eighty) days thereafter (the “ Transition Period ”), the Parties agree to work together in order to: ( i ) implement the provisions of Clauses Four, Five, Six and Seven under safe and efficient operating conditions, and in full compliance with the Applicable Framework; and ( ii ) attempt to solve all other operational processes that are not critical for the implementation of the rights and services that are provided for in this Agreement.

(b) If during the Transition Period there are any matters referred to in paragraph (a) above that cannot be amicably solved by the Parties, either Party may submit such matter to the Committee. Upon such submission, the matter will be addressed by the Committee and if no Agreement can be reached by the Committee or by the Director of Operations of Kansas and the Chief Operating Officer of Ferrosur ( i ) using and ( ii ) providing the rights or services in dispute, either Party may commence the dispute resolution process set forth in Clause Eighteen hereof and eventually enforce its rights under applicable law.

(c) The Parties hereby acknowledge that the Transition Period is created with the intent of facilitating the implementation of the terms and conditions of this Agreement and the other agreements entered into by Kansas and the Ferromex Parties. Therefore, communications and other work materials prepared in the context of the Transition Period will not constitute: ( i ) a change or amendment of the provisions of either this Agreement or the other agreements entered into by Kansas and the Ferromex Parties; ( ii ) a waiver, stay or amendment to the rights and obligations of the Parties hereunder and/or the other agreements entered into by Kansas and the Ferromex Parties; nor ( iii ) a justification to engage in discriminatory treatment.

(d) The Committee will be responsible for the following:

(i)

Develop a written procedure for requesting and granting access to the rights and services provided for in this Agreement (See Exhibit H)

	(ii)		Define processes for monitoring compliance with requirements for non – discriminatory treatment, equal access, and restrictions to access

	(iii)		Define operational points of Interchange where applicable

	(iv)		Define requirements for electronic exchange of information

	(v)		Define processes for notification regarding changes to operating rules, instructions, and temporary and permanent restrictions, use of alternate routes, and planned maintenance outages

	(vi)		Define processes for notification of proposed physical changes to the Subject Trackage

	(vii)		Define processes for notification of proposed changes to scheduled traffic

	(viii)		Define processes for notification and handling of bad orders, delays en route, derailments, and requests for pilots

	(ix)		Define requirements and processes regarding training and qualifications of crews to conduct trackage rights operations

	(x)		Define processes for other operational considerations covered under this Agreement not identified in the above listing

	(xi)		Consideration and review of proposals for construction of additional facilities contemplated under this Agreement

Clause Twelve. Other Obligations.

(a) The Parties agree to carry out any and all acts that are reasonably necessary to defend the validity and legal force of this Agreement and the Ferrovalle Agreement.

(b) In such respect, the Parties agree to carry out any acts necessary in order for the provisions of this Agreement and the Ferrovalle Agreement to become fully effective. Likewise, they agree to not carry out any act or action that may impede that the provisions of this Agreement and the Ferrovalle Agreement to become fully effective.

(c) Without limiting the above, the Parties to this Agreement shall enter into and deliver any additional documents and perform any subsequent acts as are necessary or convenient to carry out the purposes of this Agreement and the Ferrovalle Agreement in a more effective way.

(d) The Parties agree to modify any provision of this Agreement and the Ferrovalle Agreement that is found to be or becomes contrary to the Applicable Framework in order to make it compatible with such framework, provided that the purpose and sense of the original provision shall be maintained.

(e) Each of the Parties agrees to carry out all necessary and/or desirable acts in order for the other Parties, respectively, to be able to perform any acts or actions required to be performed hereunder and to give full force and effect to the provisions of this Agreement and the Ferrovalle Agreement.

(f) Each of the Parties agrees to make their best efforts to maintain this Agreement as reserved information as a business courtesy to the other Party; in the understanding that in case any of the Parties discloses this document to any third party or Governmental Authority, said disclosure would not be deemed as a breach of this Agreement and the Party making the disclosure would not be liable to the Party for having made said disclosure.

Clause Thirteen. Term; Termination.

13.1 Duration .

(a) This Agreement shall be valid and enforceable as of the date hereof and shall remain in full force and effect until the expiration of the Kansas Concession Title set forth in Representation I.(c) expires, unless the Parties mutually agree to renew the Agreement for an additional term; provided, however, that this Agreement may be terminated earlier, in whole or in part, without the need for any judicial or arbitral resolution (which the Parties hereby expressly waive) upon delivery by Kansas of a notice to the Ferromex Parties indicating any breach by the Ferromex Parties of any of their respective obligations hereunder or under the Ferrovalle Agreement (without prejudice to any other remedies available to Kansas pursuant hereto, including under Clause Fourteen), which termination shall become effective on the date indicated by Kansas in such notice, or immediately if no such date is indicated, provided further that the settlement and termination of the Settlement Controversies shall in no case be subject to rescission or termination.

(b) This Agreement may be terminated prior to the expiration of the Kansas Concession Title set forth in Representation I.(c) by the other Party in case one of the Parties transfers, directly or indirectly, its Concession under the corresponding Concession Title (or the rights related thereto). For the avoidance of doubt, a change of control over Kansas, or its Affiliates and controlling companies, does not constitute a cause for termination of this Agreement.

	(i)		have, directly or indirectly, any common shareholder who holds: ( a ) 10% (ten percent) or more of the issued and outstanding voting securities of both Ferromex and Ferrosur; or ( b ) 20% (twenty percent) or more of the issued and outstanding equity securities of both Ferromex and Ferrosur;

	(ii)		both be Affiliates of Grupo México or any other single Person; and

	(iii)		be under direct or indirect Control of a Person or group of Persons acting jointly or in agreement to adopt coordinated resolutions.

(d) If for any reason Ferromex and Ferrosur were to: ( i ) have, directly or indirectly, any common shareholder who holds: ( a ) 10% (ten percent) or more of the issued and outstanding voting securities of both Ferromex and Ferrosur; or ( b ) 20% (twenty percent) or more of the issued and outstanding equity securities of both Ferromex and Ferrosur or more of the issued and outstanding voting securities of both Ferromex and Ferrosur; ( ii ) both be Affiliates of Grupo México or any other single Person; or ( iii ) be under direct or indirect Control of a Person or group of Persons acting jointly or in agreement to adopt coordinated resolutions, within 5 (five) years after this Agreement has been terminated pursuant to paragraph (c), this Agreement would automatically be reinstated.

For the purposes of Section 13.1(c) and (d), “Control” means: with respect to any Person, that other Person, group of Persons acting jointly, or group of Persons in agreement to adopt coordinated resolutions, is entitled to, directly or indirectly: ( x ) control, operate and/or otherwise manage another Person, whether by reason of the holding of securities, by contract or otherwise; (y) appoint at least one (1) member of the Board of Directors or equivalent corporate body of another Person; or ( z ) appoint senior management of such Person.

(e) Termination of this Agreement on the grounds of the preceding paragraphs (c) or (d), shall not generate any form of compensation or indemnification payable by any of the Ferromex Parties to Kansas.

(f) The trackage rights granted to FCCM pursuant to this Agreement shall automatically be terminated upon acquisition of FCCM and/or its assets by Kansas or any of its Affiliates.

(g) In case of any termination of this Agreement or any part thereof prior to the expiration of the Kansas Concession Title set forth in Representation I.(c): ( i ) the Parties shall remain liable to each other for any amounts due and payable in connection with the provisions of this Agreement, in the understanding that the termination by Kansas under paragraph (a) shall not generate any form of compensation or indemnification payable by Kansas to the Ferromex Parties; and ( ii ) the Ferromex Parties shall be deemed a depository of any asset located on or around the Subject Trackage that is owned or otherwise under the control of Kansas until properly delivered to and accepted by Kansas.

(h) In the event the Subject Trackage Owner shall be involuntarily dispossessed, including threat of condemnation by competent Governmental Authority, of the right to operate upon and maintain any portion of the relevant Subject Trackage, and provided the Subject Trackage Owner shall by such involuntary dispossession lose the right to operate its own Trains on the relevant Subject Trackage, the Subject Trackage Owner shall have no obligation to provide tracks for the User’s use.

13.2 Abandonment .

(a) Under the terms hereinafter stated, and to the extent that the Subject Trackage Owner may lawfully do so, Subject Trackage Owner reserves the exclusive right, exercisable at any time during the life of the Agreement without concurrence of the Subject Trackage User, to elect to abandon all or any part of its Subject Trackage by giving 6 (six) months’ prior written notice to Subject Trackage User of its intention to do so.

(b) If, at the time of such election, Subject Trackage User is the only party (other than Subject Trackage Owner) having the right to use the Subject Trackage via trackage or any other access rights, Subject Trackage Owner shall, concurrently with its notice of abandonment, and to the extent it is legally able to do so, give to Subject Trackage User the option to acquire said Subject Trackage or the part or parts thereof to be abandoned. Subject Trackage User shall have 3 (three) months from the date of receipt of Subject Trackage Owner’s notice to exercise its option to acquire the segment of the Subject Trackage to be abandoned and shall evidence the exercise of its option by giving Subject Trackage Owner written notice thereof. Thereafter, the Parties shall immediately make appropriate application to secure all necessary authorizations from Governmental Authorities for such acquisition. For purpose of this paragraph, it shall be deemed that Subject Trackage User is the only Party (other than Subject Trackage Owner) having the right to use the Subject Trackage via trackage or any other access rights if the other persons with said class of rights are Subject Trackage Owner and/or any other Affiliate of Subject Trackage Owner.

(c) Abandonment by Subject Trackage Owner of any of its Subject Trackage under this Agreement, does not release it from complying with any other obligations set forth herein, including, those related to any portions of the Subject Trackage that are not abandoned.

13.3 Resolution of the Ferromex Merger under the CFC Procedures .

(a) If the CFC does not authorize the Ferromex Merger under the CFC Procedures, this Agreement shall be terminated on the date in which the Ferromex Merger is unwound and dissolved in full in compliance with the corresponding resolution from the CFC, provided that such unwinding is effected at least 12 (twelve) months after the date in which the relevant resolution of the competent Governmental Authority is issued, in the understanding that if the unwind is effected prior to such 12 (twelve) month period, this Agreement shall remain in force and effect until such 12 (twelve) month period concludes. To such effect, the Ferromex Parties shall provide a copy of the final resolution and documents evidencing that each and every one of the items or points of the corresponding CFC resolution have been complied with.

(b) If the CFC authorizes the Ferromex Merger (including an authorization subject to certain conditions), this Agreement shall remain in full force and effect until terminated in accordance with Section 13.1.

13.4 Effects of the Termination .

(a) Clauses that Survive . The provisions of this Agreement that for their nature must be maintained in force even when this Agreement has been terminated, such as those contained in Clauses Two, Three and Four, among others, shall be maintained in force for the time corresponding to their nature or until their purpose is fulfilled or its object exhausted.

(b) No Extinction of Liability . The termination or expiration of this Agreement will not affect or impair the rights or obligations of either Party arising under this Agreement prior to such termination or expiration.

(c) Transition Period after Termination . In any case, whatever the event of termination of this Agreement, and notwithstanding anything else provided therein, the Parties

agree to make their best efforts in order to continue applying the terms and conditions set forth in this Agreement, for the term agreed to by the Parties, but that may not be in any case less than 3 (three) years, counted as from the termination of this Agreement.

(d) Certain Rules on Termination . Upon termination of this Agreement, or any partial termination, as the case may be, however the same may occur, Subject Trackage User shall be released from any and all manner of obligations and shall be deemed to have forever relinquished, abandoned, surrendered, and renounced any and all right possessed by Subject Trackage User to operate over that part of the Subject Trackage to which such termination applied, and as to such part, Subject Trackage User shall forever release and discharge Subject Trackage Owner of and from any and all manner of obligations, claims, demands, causes of action, or suits which Subject Trackage User might have, or which might subsequently accrue to Subject Trackage User growing out of or in any manner connected with, directly or indirectly, the contractual obligations of Subject Trackage Owner under this Agreement, in all events provided, however, the aforesaid relinquishment, abandonment, surrender, renunciation, release, and discharge of Subject Trackage User shall not in any case affect any of the rights and obligations of either Subject Trackage Owner or Subject Trackage User which may have accrued, or liabilities accrued or otherwise, which may have arisen prior to such termination or partial termination. Upon any termination, Subject Trackage Owner will remove from Subject Trackage Owner’s right-of-way any connecting track, and any exclusive facility of Subject Trackage User, at Subject Trackage User’s expense with salvage to be delivered to and retained by Subject Trackage User. Upon any partial termination of the Agreement, however the same may occur, the terms and conditions hereof shall continue and remain in full force and effect for the balance of the Subject Trackage. Notwithstanding the foregoing, upon any termination of this Agreement, any and all rights that Kansas had under the Kansas Concession Title, the Ferrosur Concession Title and/or the Applicable Framework shall immediately be reintstated.

Clause Fourteen. Default and Remedies.

14.1 Enforcement, Rescission .

(a) Upon a default of either Party (that is, Kansas on the one hand or any of the Ferromex Parties on the other) of the terms and conditions hereof, the non-defaulting Party may choose between enforcing this Agreement (including the remedies set forth in Section 14.2 below) or rescinding it, in addition to any claim for damages and/or losses, or any claim for liquidated damages, to which such non-defaulting Party may be entitled in either case, pursuant to the Federal Civil Code; provided that only material breaches of this Agreement may give cause to the rescission hereof and such rescission in no case would have the effect of terminating Clauses Two, Three and Four of this Agreement.

(b) Except for a breach of the obligations of the Parties contained in Clauses Four, Five, Six or Seven hereof, a default for purposes of paragraph (a) above shall be deemed to have occurred if the defaulting Party does not cure the default within: ( i ) the 60 (sixty) days following the date on which notice by Kansas to the Ferromex Parties of the existence of such default becomes effective; and ( ii ) the 60 (sixty) days following the date on which notice by the Ferromex Parties to Kansas of the existence of such default becomes effective.

(c) With respect to the obligations of the Ferromex Parties regarding the granting of trackage rights, switching rights or other forms of access contained in Clauses Five, Six and Sections 7.3 and 7.4 hereof, a default for purposes of paragraph (a) above shall be deemed to have occurred immediately after the breach of the corresponding provision without there being any cure period. With respect to rights and access pursuant to Section 7.2 hereof, once said rights and access have become operational, a default for purposes of paragraph (a) above shall be deemed to have occurred immediately after the breach of the corresponding provision without there being any cure period.

14.2 Specific Remedies . Without prejudice to any other remedies available to it hereunder, upon a default the following shall be applicable:

	(i)		[****]

	(ii)		In the event that Ferrosur defaults (which, for the avoidance of doubt excludes force majeure , acts of god, and justified causes) with any of its obligations under Clauses Five or Six or Sections 7.2 (in this case, once said rights and access have become operational), 7.3 and 7.4 hereof, [****].

Clause Fifteen. Liability .

15.1 General Rule . Except as provided in the preceding Clauses hereof with respect to specific liability issues, the following Sections of this Clause shall govern the liability of the Parties with respect to incidents occurring during the actions authorized by this Agreement:

15.2 Liability on the Exercise of Trackage Rights . For Loss or Damage resulting during the exercise of trackage rights, the following shall apply:

(a) [****]

(b) [****]

(c) Subject Trackage User accepts the Subject Trackage in the condition in which it is found when Subject Trackage User uses the Subject Trackage. Subject Trackage User agrees that it will not seek from Subject Trackage Owner indemnification for any Loss, cost, or Damage Subject Trackage User or any third party incurs that arises in whole or in part from track conditions and without the presence at the location of the damage of a Train of the Subject Trackage Owner

(d) It is understood and agreed that a number of vehicular and pedestrian crossings of the Subject Trackage presently exist, or may be constructed. Subject Trackage User agrees to accept all vehicular and pedestrian crossings in whatever condition they may be during the term of the Agreement and will not assert any claim, demand, or cause of action against Subject Trackage Owner and will hold Subject Trackage Owner harmless from any claim, demand, or cause of action arising out of any vehicular or pedestrian crossing accident on the Subject Trackage in which the Train(s) of Subject Trackage User only is involved.

(e) Except as otherwise provided in the foregoing paragraphs (a) through (d), each Party shall bear all liability for injury, Loss or Damage to the following, regardless of the cause of such Loss or Damage:

	(i)		its Sole Employees and Sole Property;

	(ii)		to freight and freight cars in its sole care, custody and control, including Subject trackage User with respect to security over its Railroad Equipment while in use of the trackage rights;

	(iii)		to patrons, invitees, and others on its Railroad Equipment, or on or about the Subject Property in transaction of business only with such Party.

(f) Except as otherwise provided in the foregoing paragraphs (a) through (e), each Party shall share liability for injury, loss and damage to Subject Employees and to Subject Trackage occurring as a result of the operation of Railroad Equipment by one or more of the Parties (including the mere presence of a Party’s Railroad Equipment on the Subject Trackage), whether or not such operation was negligent, as follows:

	(i)		in the case of injury, Loss, cost or Damage occurring as a result of the operation of Railroad Equipment by only one Party, solely by the Party that operated the Railroad Equipment; and

	(ii)		in the case of injury, Loss or Damage occurring as a result of the operation of Railroad Equipment by more than one Party, in direct proportion to the respective fault of each Party in causing the loss.

(g) Loss or Damage to third parties, Subject Employees or Subject Property involving only Subject Employees and Subject Trackage, or occurring in such a way that it cannot be determined how such Loss or Damage came about shall be apportioned equally among all of the Parties to this Agreement.

15.3 [****]

15.4 Litigation and Settlements .

(a) Each Party hereto shall have the right to settle, or cause to be settled for it, all claims for damages for which such Party shall be liable under the provisions of this Clause Fifteen and to defend or cause to be defended all suits for recovery of any such damages.

(b) In case a suit shall be commenced against either Party hereto for or on account of Loss or Damage for which the other Party hereto may be solely or jointly liable under the provisions of this Clause Fifteen, the Party so sued shall give notice to such other Party of the

pendency of such suit and thereupon such other Party may assume or join in the defense of such suit.

(c) In the event that more than one of the Parties shall be liable hereunder for any damages and the same shall be settled by a voluntary payment of money or other valuable consideration by one of the Parties so jointly liable therefor, release from liability shall be taken for and in the name of all Parties so liable.

(d) In the event of any future settlement in excess of US$10’000.00 (ten thousand Dollars), the settling Party shall notify the other Party prior to settlement. Failure of the settling Party to so notify the other Party prior to settlement shall not relieve the other Party of their obligation under the settlement agreement, so long as the settling Party’s failure to notify did not prejudice the other Party and then only to the extent of such prejudice.

(e) If a judgment shall be recovered against and satisfied by one Party involving a liability which should under the Agreement be borne entirely or participated in by the other Party, then all expenses of whatsoever nature, including costs and fees connected with such judgment and with the prosecution of the suit upon which it was based, shall be settled between the Parties in strict accordance with the provisions of the Agreement and the Party against which such judgment shall have been recovered shall be promptly reimbursed by the other Party to the extent to which the latter is indebted.

15.5 Labor .

(a) Each Party shall be responsible for all labor issues involving its own employees and their unions that arise from the operation and maintenance of its own Trackage.

(b) Subject Trackage Owner shall be the sole employer ( patrón ) for any and all legal purposes of all Subject Employees operating or maintaining the Subject Trackage except for those operating Subject Trackage User’s Trains or other Subject Trackage User Railroad Equipment, and shall be solely responsible for the payment of wages, social security quotas, worker’s housing quotas, bonuses and any other forms of payments or employment benefits towards the Relevant Personnel.

(c) Each Party shall be responsible for any labor claims of, and shall bear the cost of employee protection payable to, its own employees, and the employees of its respective Affiliates with it, to the extent resulting from the entry into or operation of this Agreement. However, in the event the Parties agree that Subject Trackage Owner should retain employees or provide additional employees for the sole benefit of Subject Trackage User, the Parties shall enter into a separate written agreement providing that Subject Trackage User shall bear all cost and expense for any such retained or additional employees, including, without limitation, all cost and expense associated with labor protection payments which are made by Subject Trackage Owner and which would not have been incurred had such retention or provision of employees for the sole benefit of Subject Trackage User not been required.

15.6 [****]

Clause Sixteen. Governmental Approvals . The Parties shall, initiate by appropriate application or petition and thereafter diligently pursue proceedings for the procurement of all necessary consent, approval, exemption or authority from any Governmental Agency for the sanction that may be required for the works and activities associated with the operations to be carried on by Subject Trackage User hereunder. Any expenses arising in connection therewith shall be split equally among the Parties to this Agreement.

Clause Seventeen. Miscellaneous.

17.1 Agreement between the Parties, Language .

(a) This Agreement, and any other documents related hereto and expressly contemplated thereby constitute the complete agreement between the Parties with respect to the matter thereof and supersede all former negotiations and agreements, either oral or written.

(b) This Agreement is executed in English. Within the 90 (ninety) calendar days following the execution of this Agreement, the Parties will work jointly in producing a mutually-acceptable translation of the Agreement into Spanish. After said translation has been approved and signed by both Parties, such approved Spanish version shall be controlling. If the Parties do not reach an agreement on the Spanish version, this Agreement executed in English will remain in full force and effect. Kansas, Ferrosur and Ferromex, hereby agree to cause Ferrovalle to agree and execute the Spanish version of this Agreement once it is agreed to by the Parties.

17.2 Amendments . This Agreement may not be amended or altered except by means of an instrument signed by the Ferromex Parties and Kansas through their respective attorneys-infact, duly authorized.

17.3 Partial Invalidity .

(a) This Agreement is subject to all applicable rules issued by the Governmental Authorities and nothing herein is intended to violate any such law.

(b) If any clause or provision of this Agreement is held to be invalid or unenforceable by any Governmental Authority of competent jurisdiction, the Parties will negotiate in good faith to amend this Agreement to replace the Clause or provision held invalid or unenforceable with a Clause or remedy which as closely as legally possible restores the meaning and financial benefits to the Parties of the Clause found invalid or unenforceable. If the Parties are unable to reach an agreement on such a clause, the appropriate replacement clause or remedy shall be determined by arbitration under the Rules of Arbitration of the International Chamber of Commerce (“ ICC ”). There shall be 3 (three) arbitrators, the first nominated by the initiating Party in the request for arbitration, the second nominated by the other Party within 30 (thirty) days of receipt of the request for arbitration, and the third, who shall act as presiding arbitrator, nominated by the two Parties within 30 (thirty) days of the appointment of the second arbitrator. If any arbitrators are not nominated within these time periods, the President of the ICC International Court of Arbitration shall make the appointment(s). The arbitrators shall be of Mexican nationality. The language of the arbitration shall be Spanish and the place of arbitration shall be Mexico City, UMS.

17.4 Assignment of Rights and Obligations .

(a) The Parties agree to not assign or transfer, in whole or in part, the rights and/or obligations derived from this Agreement without prior written authorization of Kansas or the Ferromex Parties, as applicable, specifically authorizing such assignment or transfer.

(b) The assignment of economic rights under their respective Concession Title to a securitization vehicle or to a special purpose trust or vehicle for purposes of security or payment source of any form of financing or refinancing received by either Party from financial institutions or the securities’ market, shall not be subject to the restrictions set forth in the preceding paragraph.

17.5 No Damages or Losses from Private Procedures . Each of the Parties hereby represents that it has not sustained damages or losses in the execution of this Agreement or in the context of the Private Procedures.

17.6 Taxes . Each of the Parties shall be responsible for the taxes accrued at its charge regarding this Agreement.

17.7 Notices . Any notification or other communications required or permitted in terms hereof shall be made in writing and will be effective on the business day immediately following the date on which they were received by the corresponding Party. The notifications performed in accordance with the provisions of this Clause, may be delivered personally, or by telex, fax, telegram, courier or first class certified mail, and addressed to the corresponding Party, to the following addresses:

			If to Kansas:

			Kansas City Southern de México, S.A. de C.V. Montes Urales No. 625, Colonia Lomas de Chapultepec, C.P. 11000 México, D.F. Tel: 9178-5676 Fax: 9178-5600 Att’n: Presidente y Representante Ejecutivo (or equivalent) eMail: jzozaya@kcsouthern.com.mx

			If to Ferrosur:

			Ferrosur, S.A. de C.V. Montesinos No.1, Colonia Centro, C.P. 91700 Veracruz, Veracruz. México. Tel: 229-989-5841 Fax: 229-989-5842 Att’n: Director de Operaciones (or equivalent) eMail: hgomez@ferrosur.com.mx lolivera@ferrosur.com.mx

			If to any other of the Ferromex Parties:

			Ferrocarril Mexicano, S.A. de C.V. Bosque de Ciruelos, No. 99, Colonia Bosques de las Lomas, C.P. 11700; México, D.F., Tel: 5246-3700 Att’n: Director General Adjunto de Administración y Finanzas (or equivalent) eMail: oornelas@ferromex.com.mx fjurado@ferromex.com.mx

Kansas and the Ferromex Parties shall each acknowledge, in a writing sent by overnight courier service to the Party giving notice at the address stated in this Section 17.7, receipt of each notice given by the said Party under this Agreement. Such written acknowledgement of receipt of a notice given under this Agreement shall be sent to the Party giving the notice within 5 (five) calendar days of the receiving Party’s receipt of the notice.

Clause Eighteen. Dispute Resolution.

(a) The Parties shall seek amicably to settle all Disputes arising out of or in connection with this Agreement by negotiation. If, within 10 (ten) days after written notice by either Party to the other of the existence of a Dispute (a “ Dispute Notice ”), the Parties do not resolve such Dispute, then the Dispute shall be referred to the President of Kansas and to the Chief Executive Officer of Ferrosur for further negotiation.

(b) If the Parties do not resolve their Dispute within 20 (twenty) days of the Dispute Notice has been delivered to the other Party, then the Dispute may be subject to the corresponding dispute resolution mechanisms under applicable law, including filing any form of claims, requests, notices and/or suits before the Ministry and/or the competent courts.

Clause Nineteen. Jurisdiction and Applicable Law . For the interpretation and execution of this Agreement, the Parties submit themselves to the jurisdiction of the laws and competent federal courts of Mexico, Federal District, hereby waiving any other jurisdiction that they may be entitled to by reason of their domiciles or otherwise; provided that solely for purposes of determining a replacement clause under Section 17.3 the Parties shall be subject to arbitration as contemplated under said Section.

THIS AGREEMENT is executed in Mexico, Federal District, on 9, 2010.

[ signatures follow ]


FERROCARRIL MEXICANO, S.A. DE C.V.

/s/ Alfredo Casar Pérez
By: Alfredo Casar Pérez
Title:	Legal Representative

FERROSUR, S.A. DE C.V.

/s/ Octavio Javier Ornelas Esquinca
By: Octavio Javier Ornelas Esquinca
Title:	Legal Representative


/s/ Hugo Rafael Gómez Dias
By: Hugo Rafael Gómez Díaz
Title:	Legal Representative

MINERA MÉXICO, S.A. DE C.V.

/s/ Armando Fausto Ortega Gómez
By: Armando Fausto Ortega Gómez
Title:	Legal Representative

INFRAESTRUCTURA Y TRANSPORTES FERROVIARIOS, S.A. DE C.V.

/s/ Alberto de la Parra Zavala
By: Alberto de la Parra Zavala
Title:	Legal Representative

INFRAESTRUCTURA Y TRANSPORTES MÉXICO, S.A. DE C.V.

/s/ Alberto de law Parra Zavala
By: Alberto de la Parra Zavala
Title:	Legal Representative

[ Signature page to the Settlement Agreement dated February 9, 2010 ]


LÍNEAS FERROVIARIAS DE MÉXICO, S.A. DE C.V.

/s/ Alfredo Casar Pérez
By: Alfredo Casar Pérez
Title:	Legal Representative

GRUPO FERROVIARIO MEXICANO, S.A. DE C.V.
/s/ Alberto de la Parra Zavala

By: Alberto de la Parra Zavala
Title:	Legal Representative

GRUPO MÉXICO, S.A.B. DE C.V.
/s/ Alberto de la Parra Zavala

By: Alberto de la Parra Zavala
Title:	Legal Representative

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

/s/ José Guillermo Zozaya Delano
By: José Guillermo Zozaya Delano
Title:	Legal Representative

[ Signature page to the Settlement Agreement dated February 9, 2010 ]

[English Translation of Original Spanish Document]

Exhibit B

Private Procedures

Ordinary Mercantile Trail .

	•		Fourth District Judge in Civil Matters in the Federal District.

	•		File Number: 270/2007.

	•		Plaintiff: Kansas City Southern de México, S.A. de C.V.

	•		Defendants: Ministry of Communications and Transport; Ferrocarril Mexicano, S.A. de C.V.; Ferrosur, S.A. de C.V.; Infraestructura y Transportes Ferroviarios, S.A. de C.V.; Líneas Ferroviarias de México, S.A. de C.V.; Grupo Condumex, S.A. de C.V.; SINCA Inbursa, S.A. de C.V., Sociedad de Inversiones de Capitales; Banco Inbursa, S.A., Institución de Banca Múltiple, Grupo Financiero Inbursa; Grupo Financiero Inbursa, S.A.B. de C.V.; Grupo Ferroviario Mexicano, S.A. de C.V.; Infraestructura y Transportes México, S.A. de C.V.; Grupo Carso, S.A.B. de C.V.; Grupo México, S.A.B. de C.V.; Doctor Ignacio Pérez Colín; Mr. Guillermo Oliver Bucio; and Mr. Francisco I. Hugues Vélez.

	•		Controversy: The annulment of the purchase agreement of the sale of the shares representing the capital stock of Ferrosur, S.A. de C.V.; and the General Ordinary Shareholders Meeting of ITM, and all legal and other consequences arising therefrom.


II.		Ordinary Civil Trail.

	•		Third District Court in Civil Matters in the Federal District.

	•		File Number: 253/2009.

	•		Plaintiff: Minera México, S.A. de C.V.

	•		Defendants: Federal Treasury; Ministry of Communications and Transport; Ferrocarriles Nacionales de México (in liquidation); Kansas City Southern de México, S.A. de C.V.

	•		Controversy: the annulment of the purchase agreement of the sale of the shares representing the capital stock of Ferrocarril del Noreste, S.A. de C.V. today Kansas City Southern de México, S.A. de C.V.

[English Translation of Original Spanish Document]

Exhibit C

CFC Procedures

•

File CNT-132-2005 and ACCUMULATED , conducted before the Federal Antitrust Commission (“ CFC ”), by reason of the acquisition of Ferrosur by Infraestructura y Transportes Ferroviarios, S.A. de C.V. (“ ITF ”) and Líneas Ferroviarias de México, S.A. de C.V. (“ LFM ”).

•

File RA-21-2006 and ACCUMULATED , conducted by the CFC in connection with the administrative appeal filed against the decision issued in file CNT-132-2005 AND ACCUMULATED, concluded by ruling dated November 8, 2006.

•

Annulment Trail number 3825/07-17-05-8 , commenced by ITF and Infraestructura y Transportes México, S.A. de C.V. (“ ITM ”) against the resolution dated November 8, 2006. It is pending resolution before the High Chambers of the Federal Court of Fiscal and Administrative Justice.

•

Appeal under file number RA 63/2010 , before the First Auxiliary Court for the First Region, filed in connection to the Amparo Trail number 1095/2009, sponsored by Sinca Inbursa S.A de C.V., sociedad de Inversión de Capitales, in its capacity as third party in the procedure of merger notification CNT-132-2005 and Accumulated.

•

File IO-02-2006 conducted by the CFC in connection with the investigation of alleged absolute monopolistic practices, concluded by ruling dated January 22, 2009.

•

File RA-08-2009 and ACCUMULATED , conducted by the CFC in connection with the administrative appeal filed against the decision issued on file IO-02-2006, concluded by ruling dated June 9, 2009.

•

Amparo Trail number 887/2009-III , promoted by Grupo México, S.A.B. de C.V. (“ GMéxico ”) and others, against resolution dated June 9 issued by the CFC in file RA-08-2009 AND ACCUMULATED, filed before the Sixth District Court.

•

Administrative Appeal number RA 330/2009 filed by GMéxico and others against the incidental ruling of June 15, 2009 in amapro file number 887/2009-III, before the Thirteenth Collegiate Administrative Court

[English Translation of Original Spanish Document]

Exhibit G

Additional Termination Acts


		KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V.
		VS.
		THE FEDERAL GOVERNMENT THROUGH THE MINISTRY OF COMMUNICATIONS AND TRANSPORTS AND OTHER . ORDINARY MERCANTILE TRAIL FILE NUMBER : 270/2007

FOURTH DISTRICT JUDGE IN CIVIL MATTERS FOR THE FEDERAL DISTRICT

(1) EDGAR AGUILETA GUTIÉRREZ , in representation of KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V. , capacity which I request to be recognized in terms of the public deed attached hereto as exhibit number 1), (2) GONZALO MARTÍNEZ PUS , in representation of the MINISTRY OF COMMUNICATIONS AND TRANSPORT , which capacity has been duly recognized to me in the procedure indicated in the heading of this brief; (3) LAURA HERNÁNDEZ GONZÁLEZ , in representation of FERROCARRIL MEXICANO, S.A. DE C.V. , which capacity has been duly recognized to me in the procedure indicated in the heading of this brief, (4) ARTURO GARCÍA SANTAELLA , in representation of FERROSUR, S.A. DE C.V. , which capacity has been duly recognized to me in the procedure indicated in the heading of this brief, (5) ARMANDO FAUSTO ORTEGA GÓMEZ and ALFREDO CASAR PÉREZ , in representation of INFRAESTRUCTURA Y TRANSPORTES FERROVIARIOS, S.A. DE C.V. , which capacity has been duly recognized to me in the procedure indicated in the heading of this brief, (6) ARMANDO FAUSTO ORTEGA GÓMEZ in representation of LÍNEAS FERROVIARIAS DE MÉXICO, S.A. DE C.V. , which capacity has been duly recognized to me in the procedure indicated in the heading of this brief, (7) ALEJANDRO ARCHUNDIA BECERRA , in representation of GRUPO CONDUMEX, S.A. DE C.V. , which capacity has been duly recognized to me in the procedure indicated in the heading of this brief, (8) EDUARDO VALDÉS HERRERA , JOSÉ HEREDIA BRETÓN and ROBERTO SANGIACOMO LORDA in representation of de SINCA INBURSA, S.A. DE C.V., SOCIEDAD DE INVERSIONES DE CAPITALES , which capacity has been duly recognized to me in the procedure indicated in the heading of this brief, (9) BLANCA RUTH MARTÍNEZ REYES , in representation of BANCO INBURSA, S.A., INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO FINANCIERO INBURSA , which capacity has been duly recognized to me in the procedure indicated in the heading of this brief, (10) RAÚL HUMBERTO ZEPEDA RUIZ , in representation of GRUPO FINANCIERO INBURSA, S.A.B. DE C.V. , which capacity has been duly recognized to me in the procedure indicated in the heading of this brief, (11) LAURA HERNÁNDEZ GONZÁLEZ , in representation of GRUPO FERROVIARIO MEXICANO, S.A. DE C.V. , which capacity has been duly recognized to me in the procedure indicated in the heading of this brief, (12) ARMANDO FAUSTO ORTEGA GÓMEZ , in representation of INFRAESTRUCTURA Y TRANSPORTES MÉXICO, S.A. DE C.V. , which capacity has been duly recognized to me in

the procedure indicated in the heading of this brief, (13) MARCO ANTONIO SLIM DOMIT in representation of GRUPO CARSO, S.A.B. DE C.V. , which capacity has been duly recognized to me in the procedure indicated in the heading of this brief, (14) ALBERTO DE LA PARRA ZAVALA , in representation of GRUPO MÉXICO, S.A.B DE C.V. , which capacity has been duly recognized to me in the procedure indicated in the heading of this brief, and (15) DOCTOR IGNACIO PÉREZ COLÍN , in representation of the PUBLIC COMMERCE REGISTRY FOR THE FEDERAL DISTRICT , which capacity has been duly recognized to me in the procedure indicated in the heading of this brief, we hereby respectfully appear to state as follows:

That through this brief and as it is the best interest of KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V. , I hereby appear to request the dismissal with prejudice of the legal action perused against each and every one of the defendants and, consequently express that I do not reserve any action or right to exercise against them in connection with the causes of action stated in my original complaint.

As per the foregoing, in representation of THE MINISTRY OF COMMUNICATIONS AND TRANSPORTS , FERROCARRIL MEXICANO, S.A. DE C.V. , FERROSUR, S.A. DE C.V. , INFRAESTRUCTURA Y TRANSPORTES FERROVIARIOS, S.A. DE C.V. , LÍNEAS FERROVIARIAS DE MÉXICO, S.A. DE C.V. , GRUPO CONDUMEX, S.A. DE C.V. , SINCA INBURSA, S.A. DE C.V., SOCIEDAD DE INVERSIONES DE CAPITALES , BANCO INBURSA, S.A., INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO FINANCIERO INBURSA , GRUPO FINANCIERO INBURSA, S.A.B. DE C.V. , GRUPO FERROVIARIO MEXICANO, S.A. DE C.V. , INFRAESTRUCTURA Y TRANSPORTES MÉXICO, S.A. DE C.V. , GRUPO CARSO, S.A.B. DE C.V. , GRUPO MÉXICO, S.A.B DE C.V. , and the PUBLIC REGISTRY OF COMMERCE FOR THE FEDERAL DISTRICT , we hereby appear to express our total and absolute consent in connection with the dismissal with prejudice of the action brought by KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V. and expressly waive to any claim that we may have against it in connection with the filing of the lawsuit, including without limitation any claim for costs and expenses.

In virtue of the foregoing, each and every one of the parties signing this brief waives any right that may correspond to them and express that each one shall cover their own costs and expenses incurred in connection with this trial, therefore, we respectfully request to your Honor to declare this case as totally and absolutely concluded and order that the documents submitted during this trail shall be returned to each one of the parties, after a certified copy of such documents is kept in the judicial files, for any legal purposes.

In virtue of the foregoing;

I respectfully request to YOUR HONOR :

FIRST. To have KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V., as dismissing with prejudice the cause of action claimed against each and every one of the

defendants and, consequently, to expressly acknowledge that it reserves no claim or right against any of them for the causes of action that motivated the filing of the initial lawsuit.

SECOND. To have the SECRETARÍA DE COMUNICACIONES Y TRANSPORTES , FERROCARRIL MEXICANO, S.A. DE C.V. , FERROSUR, S.A. DE C.V. , INFRAESTRUCTURA Y TRANSPORTES FERROVIARIOS, S.A. DE C.V. , LÍNEAS FERROVIARIAS DE MÉXICO, S.A. DE C.V. , GRUPO CONDUMEX, S.A. DE C.V. , SINCA INBURSA, S.A. DE C.V., SOCIEDAD DE INVERSIONES DE CAPITALES , BANCO INBURSA, S.A., INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO FINANCIERO INBURSA , GRUPO FINANCIERO INBURSA, S.A.B. DE C.V. , GRUPO FERROVIARIO MEXICANO, S.A. DE C.V. , INFRAESTRUCTURA Y TRANSPORTES MÉXICO, S.A. DE C.V. , GRUPO CARSO, S.A.B. DE C.V. , GRUPO MÉXICO, S.A.B DE C.V. , and the REGISTRO PÚBLICO DE COMERCIO DEL DISTRITO FEDERAL , having granted their total and absolute consent with the dismissal with prejudice formulated by KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V. and expressly waiving any claim that they mat have against the plaintiff with respect to the filing of the lawsuit, including, without limitation, any claims for costs and expenses.

THIRD. Consider this brief as duly filed by each of us, waiving any rights that we may have and stating that each of us will bear our own costs and expenses originated by reason of this trial.

FOURTH. To declare this case and totally and absolutely concluded and to order that the documents submitted by each of the parties during the trial are returned to them, after a certified copy thereof has been kept in the judicial record, for all legal purposes.

(i)

México, Federal District, February 10th, 2010.

EDGAR AGUILETA GUTIÉRREZ
KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V.

GONZALO MARTÍNEZ POUS
SECRETARÍA DE COMUNICACIONES Y TRANSPORTES

LAURA HERNÁNDEZ GONZÁLEZ
FERROCARRIL MEXICANO, S.A. DE C.V

ARTURO GARCÍA SANTAELLA
FERROSUR, S.A. DE C.V.

ARMANDO FAUSTO ORTEGA GÓMEZ
INFRAESTRUCTURA Y TRANSPORTES FERROVIARIOS, S.A. DE C.V.

ALFREDO CASAR PÉREZ
INFRAESTRUCTURA Y TRANSPORTES FERROVIARIOS, S.A. DE C.V.

ARMANDO FAUSTO ORTEGA GÓMEZ
LÍNEAS FERROVIARIAS DE MÉXICO, S.A. DE C.V.

ALEJANDRO ARCHUNDIA BECERRA
GRUPO CONDUMEX, S.A. DE C.V.

EDUARDO VALDÉS HERRERA
SINCA INBURSA, S.A. DE C.V., SOCIEDAD DE INVERSIONES DE CAPITALES

JOSÉ HEREDIA BRETÓN
SINCA INBURSA, S.A. DE C.V., SOCIEDAD DE INVERSIONES DE CAPITALES

ROBERTO SANGIACOMO LORDA
SINCA INBURSA, S.A. DE C.V., SOCIEDAD DE INVERSIONES DE CAPITALES

BLANCA RUTH MARTÍNEZ REYES
BANCO INBURSA, S.A., INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO FINANCIERO INBURSA

RAÚL HUMBERTO ZEPEDA RUIZ
GRUPO FINANCIERO INBURSA, S.A.B. DE C.V.

LAURA HERNÁNDEZ GONZÁLEZ
GRUPO FERROVIARIO MEXICANO, S.A. DE C.V.

ARMANDO FAUSTO ORTEGA GÓMEZ
INFRAESTRUCTURA Y TRANSPORTES MÉXICO, S.A. DE C.V.

MARCO ANTONIO SLIM DOMIT
GRUPO CARSO, S.A.B. DE C.V.

ALBERTO DE LA PARRA ZAVALA
GRUPO MÉXICO, S.A.B DE C.V.

DOCTOR IGNACIO PÉREZ COLÍN
REGISTRO PÚBLICO DE COMERCIO DEL DISTRITO FEDERAL


		MINERA MÉXICO, S.A. DE C.V.
		VS.
		SECRETARÍA DE COMUNICACIONES Y TRANSPORTES AND OTHERS. ORDINARY CIVIL TRIAL DOCKET NUMBER: 253/2009

THIRD DISTRICT JUDGE IN CIVIL MATTERS FOR THE FEDERAL DISTRICT

(1) ARMANDO FAUSTO ORTEGA GÓMEZ , en in representation of MINERA MÉXICO, S.A. DE C.V. , which capacity has been duly recognized to me in the procedure indicated in the heading of this brief, (2) ANTONIO BALDERAS CRUZ , in representation of THE TESORERÍA DE LA FEDERACIÓN , which capacity has been duly recognized to me in the procedure indicated in the heading of this brief, (3) JUAN MANUEL ÁLVAREZ GONZÁLEZ , in representation of THE SECRETARÍA DE COMUNICACIONES Y TRANSPORTES ; (4) JORGE PÉREZ HERNÁNDEZ , in representation of FERROCARRILES NACIONALES DE MÉXICO (EN LIQUIDACIÓN) , which capacity has been duly recognized to me in the procedure indicated in the heading of this brief, y (5) JESÚS ÁNGEL GUERRA MÉNDEZ , in representation of KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V. , which capacity has been duly recognized to me in the procedure indicated in the heading of this brief, we hereby respectfully appear to state as follows:

As per the foregoing, in representation of TESORERÍA DE LA FEDERACIÓN , the SECRETARÍA DE COMUNICACIONES Y TRANSPORTES , FERROCARRILES NACIONALES DE MÉXICO and KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V. , we hereby appear to express our total and absolute consent in connection with the dismissal with prejudice of the action brought by MINERA MÉXICO, S.A. DE C.V. and expressly waive to any claim that we may have against it in connection with the filing of the lawsuit, including without limitation any claim for costs and expenses.

your Honor to declare this case as totally and absolutely concluded and order that the documents submitted during this trail shall be returned to each one of the parties, after a certified copy of such documents is kept in the judicial files, for any legal purposes.

In virtue of the foregoing;

I respectfully request to YOUR HONOR :

FIRST. To have MINERA MÉXICO, S.A. DE C.V., as dismissing with prejudice the cause of action claimed against each and every one of the defendants and, consequently, to expressly acknowledge that it reserves no claim or right against any of them for the causes of action that motivated the filing of the initial lawsuit.

SEGUNDO. To have the TESORERÍA DE LA FEDERACIÓN , la SECRETARÍA DE COMUNICACIONES Y TRANSPORTES , FERROCARRILES NACIONALES DE MÉXICO and KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V. ,, having granted their total and absolute consent with the dismissal with prejudice formulated by MINERA MÉXICO, S.A. DE C.V., and expressly waiving any claim that they mat have against the plaintiff with respect to the filing of the lawsuit, including, without limitation, any claims for costs and expenses.

THIRD. Consider this brief as duly filed by each of us, waiving any rights that we may have and stating that each of us will bear our own costs and expenses originated by reason of this trial.

(ii)

México, Federal District, February 10th, 2010.

ARMANDO FAUSTO ORTEGA GÓMEZ
MINERA MÉXICO, S.A. DE C.V.

ANTONIO BALDERAS CRUZ
TESORERÍA DE LA FEDERACIÓN

JUAN MANUEL ÁLVAREZ GONZÁLEZ

SECRETARÍA DE COMUNICACIONES Y TRANSPORTES

JORGE PÉREZ HERNÁNDEZ
FERROCARRILES NACIONALES DE MÉXICO

JESÚS ÁNGEL GUERRA MÉNDEZ
KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V.

[English Translation of Original Spanish Document]

Exhibit I

Mexico, Federal District February [*], 2010

Carso Companies (as such term is defined hereinafter)

Dear Gentlemen,

We make reference to the ordinary mercantile trial with file number 270/2007 followed before the Fourth District Court in Civil Matters in Mexico, Federal District in which Kansas City Southern de México, S.A. de C.V. (“ Kansas ”) act as plaintiff and certain of the Grupo Mexico Companies (as such term is defined hereinafter); Grupo Condumex, S.A. de C.V.; SINCA Inbursa, S.A. de C.V., Sociedad de Inversiones de Capitales; Banco Inbursa, S.A., Institución de Banca Múltiple, Grupo Financiero Inbursa; Grupo Financiero Inbursa, S.A.B. de C.V. y Grupo Carso, S.A.B. de C.V. among others, as defendants (collectively the “ Carso Companies ”) (the “ Existing Procedure ”).

On this same date, Kansas on the one hand and Ferrocarril Mexicano, S.A. de C.V. (“ Ferromex ”), Ferrosur, S.A. de C.V. (“ Ferrosur ”), Minera México, S.A. de C.V., Infraestructura y Transportes Ferroviarios, S.A. de C.V., Infraestructura y Transportes México, S.A. de C.V., Líneas Ferroviarias de México, S.A. de C.V., Grupo Ferroviario Mexicano, S.A. de C.V., y Grupo México, S.A.B., de C.V., on the other (collectively, the “ Grupo México Companies ”), have entered in to a Settlement Agreement, (the “ Settlement Agreement ”), by means of which among other things definitely extinguish the Existing Procedure, and agree that Kansas will submit certain consents with the procedures conducted before the Federal Antitrust Commission (“ Comisión Federal de Competencia ”) related to or linked with the merger between Ferromex and Ferrosur, same as the ones listed in Annex A hereof (the “ CFC Procedures ”).

The purpose of this document is to document our mutual consent regarding the termination and definitive extinction of the Existing Procedure, in connection with Kansas and the Carso Companies; in this sense, through their signature of this document it will be understood for all legal effects that the Existing Procedure have been terminated by mutual consent between Kansas and the Carso Companies. In addition, this document governs certain aspects of the CFC Procedures between Kansas and the Carso Companies. Upon the signature of the Carso Companies of this document, the terms and conditions of the agreements between the Carso Companies and Kansas in connection to the Existing Procedure and the CFC Procedures are the following:

Clause Twenty. Termination of Disputes of the Existing Procedure . Kansas and the Carso Companies acknowledge and agree that any disputes, controversies, actions, rights and/or obligations that currently exist in relation to the facts underlining the Existing Procedure, are definitively concluded by means of this instrument (the “ Disputes ”).

Clause Twenty-one. Settlements and Releases in Connection with the Disputes and the Existing Procedure . Kansas releases the Carso Companies and the Carso Companies

release Kansas, from any liability, obligation and/or Claim arising out of or directly related to, any Dispute, the Settlement Procedures and the CFC Procedures, without reserving any right or claim to that effect. This release dose not include a release form any of the events that occurred after the execution of this instrument.

Clause Twenty-two. Acts of Completion . Kansas and the Carso Companies in this act shall desist form any claim, action, appeal or procedure in connection with the Disputes, including, without limitation, the Existing Procedure. Kansas and the Carso Companies agree to ratify the withdrawal before a notary public, and if necessary, before the corresponding judicial authorities. A copy of this document may be submitted by Kansa and/or the Carso Companies before the relevant judicial authorities.

Clause Twenty-three. Waiver of Rights and Actions . Kansas and the Carso Companies in this act expressly waive and irrevocably and definitively conclude:

any rights, actions, claims, proceedings, suites, appeals and in general, any other obligation of any kind and before any governmental authority in connection with the Disputes and/or with the purpose or facts directly related with to them, including, without limitation, any judicial, administrative decision or otherwise;

any rights arising form an action, event, circumstance or act done by the parties in connection with the proceedings related to the Disputes and/or the Existing Procedure, and/or

Any rights, actions, claims, proceedings, suites, criminal complaints, appeals and in general, any other obligation of any other nature and before any other governmental authority in connection with any cause, fact, act, omission, statement and/or proceeding of any nature occurred prior to the date of this instrument with respect to the Disputes.

Clause Twenty-four. Waiver of Future Proceedings . Kansas, on the one hand, and the Carso Companies, on the other, mutually agree to not initiate any proceeding, whether judicial, administrative, arbitratal or of any other nature (including criminal complaints), in the future against, or that in any way may affect the other party based on any acts, actions or omissions that occurred prior to the date hereof, related to or arising form the Disputes and the issues or facts relating thereto, including, without limitation, any decision whether judicial, administrative or of any other nature.

Clause Twenty-five. Absence of Obligations. Kansas in this act expressly recognizes that the Carso Companies are not part of the Settlement Agreement and that the same do not undertake obligations under that agreement. The Carso Companies recognize that the termination or results of the CFC Procedures are not Kansas responsibility or obligation. The obligations and rights between Kansas and the Carso Parties are limited to the provisions of this document.

Clause Twenty-six. Certain Indemnities . Kansas, on one hand, and the Carso Companies, on the other, in this act agree to indemnify each other from any claim, expense, damage, claim, cost and/or complaint that an affiliate, employee or officer of a party brings against the other (or its affiliates, employees or officers) related to the Disputes, the Existing Procedure, the CFC Procedures and/or this document.

Clause Twenty-seven. Acknowledgments . Kansas, on one hand, and the Carso Companies, on the other hand, hereby declare that the execution of this document has not caused them any damage neither in the context f the Disputes and/or the Existing Procedure.

Clause Twenty-eight. Jurisdiction . This document has the nature of a settlement between Kansas and the Carso Companies in relation with the Disputes and the Existing Procedure. In the interpretation and execution of this instrument, Kansas and the Carso Companies are subject to the jurisdiction of the relevant federal laws and courts of Mexico, Federal District, hereby waiving to any other jurisdiction which could correspond to them by reason of their domicile or otherwise.

By the signature of a legal representative dully authorized below, the Carso Companies express their consent with this document.


		Sincerely, Kansas City Southern de México, S.A. de C.V.
		By: José Guillermo Zozaya Délano
		President and Executive Representative

Consent and agreement of the Carso Companies:



By: [*] Grupo Condumex, S.A. de C.V.		By: [*] SINCA Inbursa, S.A. de C.V., Sociedad de Inversiones de Capitales


By: [*] Banco Inbursa, S.A., Institución de Banca Múltiple, Grupo Financiero Inbursa		By: [*] Grupo Financiero Inbursa, S.A.B. de C.V.


By: [*] Grupo Carso, S.A.B. de C.V.

Exhibit A
Procedures Conducted Before the Federal Antitrust Commission (“ Comisión Federal de Competencia ”)

•

File IO-02-2006 conducted by the CFC in connection with the investigation of alleged absolute monopolistic practices, concluded by ruling dated January 22, 2009.

•

File RA-08-2009 and ACCUMULATED , conducted by the CFC in connection with the administrative appeal filed against the decision issued on file IO-02-2006, concluded by ruling dated June 9, 2009.

•

Administrative Appeal number RA 330/2009 filed by GMéxico and others against the incidental ruling of June 15, 2009 in amapro file number 887/2009-III, before the Thirteenth Collegiate Administrative Court.

Exhibit 10.2

TRACKAGE RIGHTS, SWITCHING AND INTERLINE SETTLEMENT AGREEMENT

entered into by and between

KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V.;

and

FERROCARRIL MEXICANO, S.A. DE C.V.;

dated as of February 9, 2010

Table of Contents

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, HAVE BEEN OMITTED FROM THIS EXHIBIT AND HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.


Representations			1

Clause One. Definitions and Rules of Interpretation			4
1.1 Definitions			4
1.2 Rules of Interpretation. In this Agreement:			13
1.3 Interpretation of KP References and GPS Measurements			14
1.4 Exhibits and Appendices			15

Clause Two. Settlement			16
2.1 Purpose of Agreement			16
2.2 Authority of Agreement			18
2.3 Future Proceedings			18

Clause Three. Termination of Settlement Controversies; Waivers			18
3.1 Trackage Rights Definition Controversies			18
3.2 Other Settlement Controversies			18
3.3 Past Rates Controversies and Excluded Procedures			18
3.4 Release			19
3.5 Withdrawals; Termination Acts			19
3.6 Waiver of Actions and Rights			20
3.7 Renunciation of Future Procedures			20
3.8 Additional Documents and Acts			21

Clause Four. Management of Future Traffic			21
4.1 Future Traffic			21
4.2 Additional Documents and Acts			21

Clause Five. Trackage Rights			22
5.1 Ferromex Rates			22
5.2 Kansas Rates			22
5.3 Acknowledgment			22
5.4 Trackage Rights granted to Ferromex at Monterrey			22
5.5 Long Trackage Right			25
5.6 Trackage Rights to Ferromex; Access to Monterrey By-Pass			29
5.7 Trackage Rights to Kansas			30
5.8 General Provisions on Rates			37
5.9 General Terms and Conditions of the Trackage Rights			37
5.10 Maintenance Changes in and/or Additions, Operation and Control			39
5.11 Default			41


5.12 Certain Clarifications on Trackage Rights not included within the Scope of this Agreement			41

Clause Six. Interline Traffic Services Rates			41
6.1 General			41
6.2 Complementary Interline Traffic			42
6.3 Alternative Interline Traffic			42
6.4 [****]			42
6.5 General Provisions on Rates			42
6.6 Acknowledgment			43
6.7 Absence of Participation			43

Clause Seven. Switching Services			43
7.1 [****]			43
7.2 General Provisions on Rates			43
7.3 Acknowledgment			44

Clause Eight. Points of Interchange			44
8.1 General			44
8.2 Monterrey			45
8.3 Altamira			45
8.4 Celaya			45

Clause Nine. Maintenance and Operation of Subject Trackage			46
9.1 General Rules			46
9.2 License			46
9.3 Track Connections			46
9.4 Alternative Routes			46
9.5 Direction and Control of Construction, Maintenance, Repair, and Renewal			46
9.6 Direction and Control of Management and Operation			47
9.7 Derailment and Accidents Involving Hazardous Materials			47
9.8 Additional Rules on Management and Operation of Subject Trackage			48
9.9 Training of Subject Trackage User’s Crews			49
9.10 Repairs on Dragged Equipment; Removal of Bad Ordered Tractive Equipment			50

Clause Ten. Dispatch of Trains; Traffic Control Centers; Non- Discrimination			51
10.1 Traffic Control Centers			51
10.2 [****]			51
10.3 Subject Trackage Use Notice			52
10.4 Non- Discrimination			52
10.5 Uninterrupted flow of Traffic and other Items			52

Clause Eleven. Billing			52
11.1 Billing Forms			52
11.2 [****]			53
11.3 [****]			53
11.4 Disputed Bills			53


11.5 Inspections and Audits			54
11.6 [****]			54
11.7 Payment Failure; Additional Remedy			54
11.8 Incremental Rates in case of Certain Defaults			54

Clause Twelve. Service Standards Committee and Transition Period			54
12.1 The Committee			54
12.2 Limitations of the Committee			55
12.3 Transition Period			55

Clause Thirteen. Other Obligations			57
13.1 Public Statements			57
13.2 Best Efforts			57

Clause Fourteen. Term, Termination			58
14.1 General Term			58
14.2 Events of Termination			58
14.3 Dispossession			58
14.4 Abandonment			58
14.5 Effects of the Termination			59

Clause Fifteen. Liability			60
15.1 Trackage Rights			60
15.2 [****]			61
15.3 Litigation and Settlements			61
15.4 Labor			62
15.5 [****]			63

Clause Sixteen. Governmental Approval			63
16.1 Responsibilities of Subject Trackage User			63
16.2 Cooperation of Subject Trackage Owner			63

Clause Seventeen. Miscellaneous			63
17.1 Agreement between the Parties, Language			63
17.2 Amendments			64
17.3 Partial Invalidity			64
17.4 Assignment of Rights and Obligations			64
17.5 No Damages or Losses from Controversies			64
17.6 Taxes			64
17.7 Notices.:			64

Clause Eighteen. Dispute Resolution			65

Clause Nineteen. Jurisdiction and Applicable Law			65


Exhibit A		Ferromex Concession Title

Exhibit B		Kansas Concession Title

Exhibit C		Settlement Procedures

Exhibit D		Kansas’ complaints before the Ministry of Public Service

Exhibit E		Additional Termination Acts

Exhibit F		Information to be Delivered to Subject Trackage Owner

Exhibit G		Complementary Interlineal Matrix

Appendix 1		Technical Descriptions

TRACKAGE RIGHTS, SWITCHING AND INTERLINE SETTLEMENT AGREEMENT, DATED AS OF FEBRUARY 9, 2010 (THIS “Agreement”), AMONG:

FERROCARRIL MEXICANO, S.A. DE C.V. (“Ferromex”), REPRESENTED BY Messrs. ALFREDO CASAR PÉREZ AND LORENZO REYES RETANA MÁRQUEZ PADILLA; AND

KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V. (“Kansas”), REPRESENTED BY Mr. JOSÉ GUILLERMO ZOZAYA DÉLANO;

IN TERMS OF THE FOLLOWING REPRESENTATIONS AND CLAUSES:

REPRESENTATIONS

I. Ferromex represents that:

(a) It is a sociedad anónima de capital variable duly incorporated pursuant to the laws of the UMS, as evidenced by public deed number 51,923, dated June 11, 1997, granted before Mr. Miguel Alessio Robles Landa, Notary Public No. 19 of the Federal District, registered before the Public Registry of Commerce of Mexico City under commercial file number 226,005.

(b) On June 22, 1997, the Ministry granted in favor of Ferromex (formerly, Ferrocarril Pacífico-Norte, S.A. de C.V.) a concession title for the operation and exploitation of the Northern-Pacific Railway, including for the rendering of railway services thereon (as amended and including all exhibits, hereinafter the “ Ferromex Concession Title ”). A copy of the Ferromex Concession Title, without exhibits, is attached hereto as Exhibit A .

(d) It has knowledge of the terms of each and every act and ruling of any nature related to the Settlement Procedures, including, without limitation, the relevant rulings issued in connection therewith as of the date hereof.

(e) Its legal representatives have the necessary authority to execute this Agreement, as evidenced by public deeds numbers 51,385, dated February 20, 1998, and and 55,809, dated July 18, 2002, both of them granted before Mr. Luis de Angoitia Becerra, Notary Public No. 230 of the Federal District, which authority has not been revoked or modified in any manner whatsoever as of the date hereof.

II. Kansas represents that:

(a) It is a sociedad anónima de capital variable duly incorporated under the laws of the UMS, as evidenced by public deed number 50,413, dated November 22, 1996, granted before Mr. Miguel Alessio Robles Landa, Public Notary No. 19 of the Federal District, registered before the Public Registry of Commerce of Monterrey, Nuevo León under Item 29, Volume 429, Book 3, Second Auxiliary, Commerce Section.

(b) On December 2, 1996, the Ministry granted in favor of Kansas (formerly, Ferrocarril del Noreste, S.A. de C.V.) a concession title for the operation and exploitation of the Northeast Railway, including for the rendering of railway services thereon (as amended and including all exhibits, hereinafter the “ Kansas Concession Title ”). A copy of the Kansas Concession Title, without exhibits, is attached hereto as Exhibit B .

(e) Its legal representative has the necessary authority to execute this Agreement, as evidenced by public deed number 142,188, dated January 29, 2010, granted before Mr. Cecilio González Márquez, Notary Public No. 151, of the Federal District, which authority has not been revoked or modified in any manner whatsoever as of the date hereof.

III. Ferromex and Kansas jointly represent that:

(a) In terms of the Railroad Service Law and its Regulations, as well as of their respective Concession Titles, they are required to grant each other: ( i ) certain trackage and switching rights pursuant to the terms and conditions established in Exhibits Nine, Ten and Eleven of their respective Concession Titles; and ( ii ) interconnection and terminal services.

(b) Kansas and Ferromex have had and continue to have several differences, disputes and/or controversies with respect to the nature, scope, terms, conditions and/or rates applicable both to the trackage and switching rights, as well as to interconnection and terminal services.

(c) Kansas and Ferromex have been, and continue to be, parties in several disputes, procedures and/or controversies before judicial and administrative authorities, regarding the nature, scope, terms, conditions and/or rates applicable both to trackage and switching rights, as well as to interconnection and terminal services.

(d) It is their intention, through the execution of this Agreement, to:

	(i)		completely, definitively and irrevocably terminate the Settlement Controversies (as defined below);

	(ii)		terminate any and all rights, obligations, actions, differences, disputes and/or lawsuits which they have or may have in a future against the other Party in connection with the Settlement Controversies mentioned in paragraph (i) above;

	(iii)		definitively terminate and conclude all the Settlement Procedures which relate to the Settlement Controversies; and

	(iv)		agree on long-term terms and conditions regarding the issues described in this Agreement, in order to avoid future controversies among them.

(e) A list of judicial and administrative procedures to which Kansas and/or Ferromex are a party and which relate to the Settlement Controversies (the “ Settlement Procedures ”), is attached hereto as Exhibit C .

(f) Kansas and Ferromex have other disputes, controversies and legal procedures among them in addition to the Settlement Controversies and the Settlement Procedures. These additional disputes, controversies and legal proceedings are not settled by means of this Agreement and they include (but are not limited to) the Excluded Procedures referred to below.

IV. Each of Ferromex and Kansas represents, through its respective representative, that:

(a) This Agreement and the other acts derived herefrom, entered or to be entered by it, constitute, or after their execution shall constitute, as the case may be, valid and binding obligations of such Party, in compliance with the applicable legal framework, enforceable against it in accordance with its terms.

(b) It has not assigned in any way nor granted in guaranty any of the rights that correspond or may correspond to it with respect to the Settlement Controversies.

(c) It has not entered into agreements or contracts with any person that may derive in a breach of this Agreement or the acts derived herefrom.

(d) It has no knowledge of any litigation, whether judicial or extrajudicial, administrative or any other procedures (nor threat or warning of any of the foregoing) that prevents or may prevent it from: ( i ) entering into this Agreement; ( ii ) entering into the other acts derived herefrom; and/or ( iii ) complying with the obligations derived from (i) and (ii) above.

(e) It has no knowledge of any person (particularly any Affiliate) that has or may have, directly or indirectly, any interest or right in the Settlement Controversies.

(f) The execution of this Agreement and of the other acts derived herefrom, as well as the fulfillment of the obligations derived from the former and latter, will not be contrary to, nor will it result in a violation or breach of agreements or instruments to which it is a party or by means of which it is bound, of the Applicable Framework, as defined in Section 1.1 of this Agreement, including of any law, regulation, decree, official writ, agreement or ruling of any Governmental Authority.

(g) The Parties have submitted to one another a copy of their respective written programs for certifying the qualifications of locomotive engineers (maquinistas) and conductors needed for the trackage rights on Subject Trackage per the Railroad Service Law, its Regulations and their respective internal regulations, and each Party’s written program has been approved by the other Party. Accordingly, the qualification of locomotive engineers and conductors shall not impede or prevent the Parties from making use of the trackage rights set forth in this Agreement.

NOW, THEREFORE , in consideration of the foregoing, the parties hereto agree as follows:

CLAUSES

Clause One. Definitions and Rules of Interpretation .

1.1 Definitions . For the purposes of this Agreement only, capitalized terms used and not otherwise defined in this Agreement shall have the meanings ascribed to such terms in this Section 1.1. With respect to any such term that is defined by reference to another agreement or document for purposes hereof, such term shall continue to have the definition in effect as of the date hereof, notwithstanding any termination, expiration or modification of such other agreement or document.

“ AAR ” means the Association of American Railroads.

“ Affiliates ” means entities owned or controlled by, or under common control with, or whose ultimate parent company is the same as that of, another, named company.

“ Agreement ” shall have the meaning ascribed to such term in the heading of this Agreement.

“ Aguascalientes Access Zone ” means the trackage that is identified in Appendix 1 hereof.

“ Altamira Facilities ” means each of the facilities that are identified in Appendix 1 hereof.

“ Alternative Interline Traffic ” shall have the meaning ascribed to such term in Section 6.3(a).

“ Applicable Framework ” means the norms, rules, regulations and/or standards set forth in or issued by: ( i ) the Railroad Service Law, ( ii ) the Regulations, ( iii ) the Ministry, ( iv ) the Concession Titles, ( v ) any other Governmental Authority (including with respect to the preservation of historical sites), ( vi ) any other law, regulation or rule applicable to the Parties, including normas mexicanas and normas oficiales mexicanas , and ( vii ) the AAR (only to the extent not contrary to Mexican law); in each case as they refer to the maintenance of trackage, the maintenance of the assets granted in concession to Ferromex and Kansas under their respective Concession Titles and/or the performance of railroad services in general.

“Bajío Area” means the States of Jalisco, Querétaro, Hidalgo, Guanajuato and the north of the State of Michoacán.

“ Bulktainer ” means a type of intermodal container, usually comprised in part of a tank vessel, designed to contain bulk liquids, chemicals, gases, meltable solids, slurries, emulsions,

fluidizable solids or other flowable, fungible commodities with a metal frame that allows transport of such materials in the same container on both railcar or ship and by over the road truck. A Bulktainer is a type of container that rides on an intermodal Car.

“ Car ” means Dragged Equipment employed in any form of freight transportation, including articulated, intermodal, articulated-intermodal and any other type of Articulated Car.

“ Committee ” shall have the meaning ascribed to such term in paragraph (a) of Clause Twelve.

“ Complementary Interline Traffic ” shall have the meaning ascribed to such term in Section 6.2(a).

“ Concession Title ” means the Kansas Concession Title and/or the Ferromex Concession Title, as applicable.

“ Dispute Notice ” shall have the meaning ascribed to such term in paragraph (a) of Clause 18.

“ Dollars ” means the legal currency of the United States of America.

“ Doña Cecilia ” means Kansas’ facility located at Line L KP 673+800, which is further identified in Appendix 1 hereof.

“ Dragged Equipment ” means Railroad Equipment that lacks self-traction, including Cars.

including any judicial or administrative order, consent, decree or judgment relating to the regulation and protection of human health, safety, the environment and natural resources, including air emissions, surface water, groundwater, wetlands, land, surface or subsurface strata. Environmental Laws shall include laws and regulations relating to emissions, discharges, releases or threatened releases of Hazardous Materials or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials. Environmental Laws shall also include the following Mexican laws insofar as they regulate or relate to environmental or public health matters: the General Law for Ecological Equilibrium and the Protection of the Environment ( Ley General de Equilibrio Ecológico y Protección al Ambiente ), the General Law for the Prevention and Integral Handling of Waste ( Ley General para la Prevención y Gestión Integral de los Residuos ), the General Health Law ( Ley General de Salud ), Title Nine of the Federal Labor Law ( Titulo Nueve de Ley Federal del Trabajo ), the General Law for Sustainable Forestry Development ( Ley General de Desarrollo Forestal Sustentable ), the National Waters Law ( Ley de Aguas Nacionales ), the General Law on National Property ( Ley General de Bienes Nacionales ), the Human Settlements General Law ( Ley General de Asentamientos Humanos ), the Federal Regulations on Occupational Safety, Hygiene and Environment ( Reglamento Federal de Seguridad, Higiene y Medio Ambiente de Trabajo ), the Federal Criminal Code ( Código Penal Federal ) and their state and local counterparts or equivalents.

“ Equipment ” shall have the meaning ascribed to such term in Section 5.9(b).

“ Excluded Procedures ” shall mean the following disputes, lawsuits, remedies, appeals and/or disagreements among the Parties:

	(i)		the administrative trial against resolution number 120.-347/2002, dated March 13, 2002, issued by the then Dirección General de Tarifas, Transporte Ferroviario y Multimodal of the Ministry, which is currently on the High Chambers of the Federal Court of Fiscal and Administrative Justice under docket 8116/02-17-09-2/1658/08-PL-07-4;

	(ii)		the Past Rate Controversies;

	(iii)		any and all pending appeals, trials and revisions before the High Chambers of the Federal Court of Fiscal and Administrative Justice against resolution number 4.3.-1193/2008, dated June 23, 2008, issued by the then Dirección General de Tarifas, Transporte Ferroviario y Multimodal of the Ministry;

	(iv)		the complaints filed by Kansas before the Ministry of Public Service ( Secretaría de la Función Publica ) identified in Exhibit E hereto;

	(v)		the administrative trial against resolution number 4.3.-1193/2008, dated July 23, 2008, issued by the then Dirección General de Tarifas, Transporte Ferroviario y Multimodal of the Ministry, which is currently on the 9th Regional Chamber of the Federal Court of Fiscal and Administrative Justice under docket 23531/08-17-09-1 with regard to the scope of Trackage Right N-5 (Ramos Arizpe – Encantada);

	(vi)		Article 47, determination of tariff base; and

	(vii)		any other procedures among the Parties or among the Parties and any third party or a Governmental Authority which is not expressly included in the definition of Settlement Procedures.

“ Ferromex ” has the meaning ascribed thereto in the preamble.

“ Ferromex Concession Title ” shall have the meaning ascribed thereto in Representation I.

“ Ferromex Parties ” means Ferromex and its respective Affiliates (current, past and/or future), and their respective officers, directors, partners, shareholders, members, employees, agents, insurers, counsel and other representatives (current, past and/or future), and each of their respective successors and assigns.

“ Ferromex Trackage ” means the trackage granted in concession to Ferromex under the Ferromex Concession Title.

“ Ferrosur ” means Ferrosur, S.A. de C.V.

“ Governmental Authority ” means any national, state, county, city, town, village, municipal or other de jure or de facto government entity, department, office, commission, board, bureau, agency, authority or instrumentality of the UMS or any political subdivision thereof, and any person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any of the foregoing entities, including all commissions, boards, bureaus, courts, arbitrators and arbitration panels of any of the foregoing entities, and any authority or other person controlled directly or indirectly by any of the foregoing.

“ GPS ” means the Global Positioning System, a space-based radionavigation system that provides reliable positioning anywhere in the world.

“ Guadalajara Access Zone ” means: ( i ) the Guadalajara Terminal (as identified in Appendix 1 ); ( ii ) any industry and/or User currently or in the future located within the area comprised between: ( a ) Line T KP 1763+960 and Line T KP 1740+346; ( b ) Line I KP 304+708 and Line I KP 227+000; ( c ) the entire Line IZ that connects to track 02-301 (Former Stem Line) with a length of 3,500 meters; and ( d ) the entire Former Stem Line, in the section comprised between its intersections with Line I; and ( iii ) any industry and/or User connected to preceding items (i) or (ii), whether directly and/or through auxiliary or secondary tracks, siding, escape tracks, spurs, yard tracks, and/or cortavías . Items (i) and (ii) of this definition are further identified in Appendix 1 hereof.

“ Guerrero Facility ” means the industrial plant located on the Former Line F KP 2+275.90 in the Monterrey Access Zone, and which is further identified in Appendix 1 hereof.

toxic substances, toxic pollutants, petroleum substances or petroleum products, pesticides, and any and all other substances or materials defined as, or included in the definition of “hazardous wastes”, “hazardous materials”, “hazardous substances” , “toxic substances” or “toxic pollutants” under, or for the purposes of, any Environmental Laws.

“ Interchange ” means the action by means of which one the Parties receives or delivers Cars to or from the other Party.

“ Interchange Rules ” means the most recently effective edition of the Field Manual of the Interchange Rules adopted by the AAR governing the interchange of Cars and equipment between railroads.

“ Interline Traffic ” means the interconnection service consisting in the Interchange and transportation of Dragged Equipment, wherein one Party requests the other Party to provide public railway freight transportation services to a User.

“ Kansas ” shall have the meaning ascribed thereto in the preamble.

“ Kansas Concession Title ” shall have the meaning ascribed thereto in Representation II.

“ Kansas Parties ” means Kansas and its respective Affiliates (current, past and/or future), and their respective officers, directors, partners, shareholders, members, employees, agents, insurers, counsel and other representatives (current, past and/or future), and each of their respective successors and assigns.

“ Kansas Trackage ” means the trackage granted in concession to Kansas under the Kansas Concession Title.

“ KP ” means: ( i ) each of the kilometer signs currently existing along the trackage comprising the Mexican Railway System; and/or ( ii ) in case no kilometer signs exist for a given location, the KP means a measurement of the kilometers and meters of said location measured as from the nearest existing sign.

“ Local Traffic ” means traffic which is picked up or delivered to an intermediate point on a designated line.

“ Long Trackage Right ” shall have the meaning ascribed thereto in Section 5.5(b).

“ Loss or Damage ” means, without limitation, all claims, liability, cost, and expense of every nature, including amounts paid under any state or federal compensation law incident to loss or destruction of or damage to property and injury to and death of persons arising from the operation by the Parties on the Subject Trackage.

“ Matrix ” shall have the meaning ascribed to such term in Section 6.2(a).

“ Mexico ” means the United Mexican States.

“ Mexico Valley Access Zone ” means the trackage identified in Appendix 1 .

“ Ministry ” means the Secretaría de Comunicaciones y Transportes of the federal Government of the UMS.

“ Monterrey Access Zone ” means: ( i ) the Monterrey Terminal; ( ii ) any industry and/or User currently or in the future located within the area comprised between: ( a ) Line B KP 1023+200 and Line B KP 1029+000; ( b ) Line M KP 518 +000 and Line M KP 523+000; ( c ) Line M KP 525+400 and Line M KP 528+000; ( d ) Line F KP 0+000 and Line F KP 19+000; ( e ) the entire Line BI; ( f ) the entire Line BMA; ( g ) the entire Former Line F; and ( h ) the entire Former Line M; ( iii ) any industry and/or User connected to preceding items (i) or (ii), whether directly and/or through auxiliary or secondary tracks, siding, escape tracks, spurs, yard tracks, and/or cortavías , as further identified in Appendix 1 .

“ Monterrey Adaptation ” shall have the meaning ascribed to such term in Section 8.2(a).

“ Monterrey By-Pass ” means a by-pass around congested portions of the City of Monterrey, which Ferromex might build at its own cost and expense (without having an obligation to do so), and that it has rights in its concession to build, between Line F KP 43+842 (= Line MF KP 17+755) and Line F KP 20+700 and between Line BF KP 39+658 (= Line B KP 1038+323) and Line BF KP 35+876 (= Line M KP 535+811) , as further described in Appendix 1 .

“New Altamira Facility” shall have the meaning ascribed to such term in Section 5.7(d).

“ New Ternium Facility ” shall have the meaning ascribed to such term in Section 5.4(f).

“ Nissan Facility ” means the industrial facility located on the Line A KP 575+650 in the Aguascalientes Access Zone, and which is further identified in Appendix 1 hereof.

“ Parties ” means Kansas and Ferromex.

“ Party ” means either Kansas or Ferromex, respectively.

“ Party of the First Part ” shall have the meaning ascribed to such term in Section 11.1(c).

“ Party of the Second Part ” shall have the meaning ascribed to such term in Section 11.1(c).

“ Past Rates Controversies ” means the disputes, claims and lawsuits that form part of the Excluded Procedures and that relate to the determination of rates for mandatory trackage and/or switching rights and for interconnection and/or terminal services, accrued prior to the date of this Agreement or that may result from a cause, act, action, omission and/or procedure of any species occurring prior to the execution date of this Agreement, and the disputes among the Parties regarding amounts payable to one another for trackage rights, interline services and switching services, provided for under resolutions number 4.3.-1011/2008 dated June 26, 2008, and 4.3.-1200/2008 dated July 23, 2008, and 120.-849/2002, which are currently being disputed by both Parties through:

	(i)		the annulment trial number 25707/08-17-03-08, before the Third Chamber of the Federal Court of Fiscal and Administrative Justice and the annulment trial number 25659/08-17-01-3, before the First Chamber of the Federal Court of Fiscal and Administrative Justice, which have been accumulated under docket 25659/08-17-01-3, before the First Chamber of the Federal Court of Fiscal and Administrative Justice; and

	(ii)		the annulment trial 18117/02-17-04-8/ac1/1061/03-PL-07-04, before the High Chambers of the Federal Court of Fiscal and Administrative Justice, which has been appealed and resolved by the Supreme Court of Justice under docket 127/2006.

For the avoidance of doubt, and as provided in this Agreement, the Parties are settling by means of this Agreement the rates that correspond for mandatory trackage and/or switching rights and for interconnection and/or terminal services starting from January 1, 2009, onwards; but not the applicable rates before January 1, 2009, or the amounts owed by the Parties to one another before the execution of this Agreement.

“ Pesos ” means the legal currency of the UMS.

“Pesquería Facility” means the facility that may be constructed in the vicinity of the Kansas’ Pesquería station on Line F, including if constructed by an Affiliate of Ternium.

“ Railroad Equipment ” means Dragged Equipment and Tractive Equipment.

“ Railroad Service Law ” means the Mexican Railroad Service Law ( Ley Reglamentaria del Servicio Ferroviario ).

“ Regulations ” means the Mexican Railway Service Regulations ( Reglamento del Servicio Ferroviario ).

“ Response Action ” shall have the meaning ascribed to such term in Section 9.7(d).

“ Rule 11 ” means Rule 11 of the General Mandatory Rules (Interline Settlement System) of the Railway Accounting Rules published by the AAR.

“ Settlement Procedures ” shall have the meaning ascribed thereto in Representation III(c) and which are listed in Exhibit C hereto.

“ Settlement Controversies ” means any controversy, divergence, disagreement, discrepancy, claim, request, pretension, action, suit, request for arbitration, dispute, accusation, remedy, obligation, agreement, contract, promise, debt, engagement, lien, ruling, payment obligation, interest, invoice, damage, lost profit, expense (including expenses and fees and other counsel charges), enforcement order and any other obligation or responsibility of any class or

nature, direct or indirect, either derived from law, agreement or otherwise, past, present or future, contingent or not, known or not, claimed or not, or threat of any of the foregoing that any of the Parties may receive or has received from the other Party, that arises from, is related by any manner directly or indirectly with, or by reason of:

	(i)		the definition, terms and conditions and/or scope of the mandatory trackage and/or switching rights N-1 (Topo Grande – Patio Monterrey – Cerro de la Silla) and any other dispute affecting the trackage rights N-1, DPL-1 (Mariscala – Guadalajara), PN-10 (Árbol Grande – Altamira), DPL-2 (Viborillas – Encantada), and N-5 (Ramos Arizpe – Encantada) in connection with DPL-2 as referred to in Appendix 1 hereto (the “ Trackage Rights Definition Controversies ”), which legal proceedings are identified in Exhibit C hereof;

	(ii)		the disputes, claims and lawsuits that relate to the determination of rates for mandatory trackage and/or switching rights and for interconnection and/or terminal services, that will be applicable from January 1, 2009 onwards;

	(iii)		the litigation involving amendment of Ferromex’s Concession Title, identified in Exhibit C hereof; and

	(iv)		the disputes, claims and lawsuits that relate solely to Court Cost ( costas judiciales ) associated with present or future proceedings relating to the Settlement Controversies, including: ( a ) ordinary mercantile trial under docket 623/2001 before the Third Civil Judge of Mexico City; and ( b ) ordinary mercantile trial under docket 293/2004 before the 45th Civil Judge of Mexico City.

For the avoidance of doubt, the definition of Settlement Controversies does not include any controversy, divergence, disagreement, discrepancy, claim, request, pretension, action, suit, request for arbitration, dispute, accusation, remedy, obligation, agreement, contract, promise, debt, engagement, lien, ruling, payment obligation, interest, invoice, damage, lost profit, expense (including expenses and fees and other counsel charges), enforcement order and any other obligation or responsibility of any class or nature, direct or indirect, related to the Excluded Procedures.

Damage of the wreck or derailment. Such officers, agents, employees, contractors or Equipment while en route from performing such repair, re-railing, or clearing of wrecks or derailments or renewing the Subject Property to perform another type of service, shall not be deemed to be performing service incident to the instant repair, re-railing or clearing of a wreck or derailment.

“ Subject Employees ” means, for purposes of trackage rights granted under this Agreement, one or more officers, agents, employees or contractors of Subject Trackage Owner while actually engaged in maintaining, repairing, constructing, renewing, removing, inspecting, or operating the Subject Property or in making changes in and/or additions thereto for the benefit of all of the Parties hereto, or while preparing to engage in, en route to or from, or otherwise on duty incident to performing such service. Officers, agents, employees or contractors of Subject Trackage Owner shall not be deemed “Subject Employees” while en route from the performance of such work as hereinbefore described to perform service for the benefit of less than all of the Parties hereto.

“ Subject Property ” means, for purposes of trackage rights granted under this Agreement, the Subject Trackage and all appurtenances thereto and all Equipment while engaged in maintaining, repairing, constructing, renewing, removing or inspecting the Subject Trackage or in making changes in and/or additions thereto for the benefit of all the parties hereto, or while being prepared to engage in, en route to or from, or otherwise incident to performing such service. Such Equipment shall not be deemed “Subject Property” while en route from the performance of such work as hereinbefore described to perform service for the benefit of less than all of the Parties hereto.

“ Subject Trackage ” means, for purposes of trackage rights granted under this Agreement, trackage of the Parties described in Sections 5.4, 5.5, 5.6, 5.7, 8.2 and 9.4 of this Agreement to which the Subject Trackage User is granted a right, by the Parties’ Concession Titles or by the Subject Trackage Owner, of use or access, including: ( i ) the necessary right of way, sidings, secondary tracks, double tracks, industrial tracks, connections, spurs, yard tracks, crossings, and other appurtenances and support facilities; and ( ii ) all changes in and additions thereto existing now or in the future as are required or desirable for the operation of the trains of the Parties.

“ Subject Trackage Owner ” means, for purposes of trackage rights granted under this Agreement, the Party who is granting trackage rights under this Agreement.

“ Subject Trackage User ” means, for purposes of trackage rights granted under this Agreement, the Party granted the right to use or access the Subject Trackage.

“ Termination Acts ” shall have the meaning ascribed thereto in Section 3.5(f).

“ Termination Documents ” means, jointly ( i ) this Agreement, ( ii ) the waivers and withdrawals referred to in Clause Three hereof, and ( iii ) any other documents executed or to be executed by the Parties in connection with the termination of the Settlement Controversies.

“ Ternium ” means Ternium, S.A., a company incorporated under the laws of the Grand Duchy of Luxembourg, with investments in flat and long steel manufacturing and distribution, including any successors thereof.

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A
CONFIDENTIAL TREATMENT REQUEST, HAVE BEEN OMITTED FROM THIS EXHIBIT AND HAVE BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS
PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

“ Trackage Rights Definition Controversies ” shall have the meaning ascribed thereto in paragraph (i) of the definition of Settlement Controversies.

“ Tractive Equipment ” means a self-propelled railroad vehicle whether employed or not in the movement of the Dragged Equipment.

“ Transition Period ” shall have the meaning ascribed to such term under Section 12.3 (a).

“ TUCE Rates ” means the rates that are registered before the Ministry pursuant to Articles 46 of the Railroad Service Law and 170 of the Regulations as Unique Freight and Express Rate.

“ UMS ” means the United Mexican States.

“ User ” means the individual or legal entity that enters into a contract with one of the Parties for the rendering of the public railway freight transportation service under the terms of a bill of lading or under another type of agreement for the provision of such public service.

1.2 Rules of Interpretation. In this Agreement:

	(i)		Clause, Section and Paragraph headings are for convenience only and shall not affect the interpretation of this Agreement;

	(ii)		references to any document, instrument or agreement, including this Agreement, shall include: (x) all exhibits, annexes, schedules, appendices or other attachments hereto or thereto; (y) all documents, instruments or agreements issued or executed in replacement hereof or thereof; and (z) any amendment, restatement, modification, supplement or replacement hereto or thereto, as the case may be;

	(iii)		the words “include,” “includes” and “including” are not limiting;

	(iv)		references to any person shall include such person’s successors and permitted assigns (and in the case of any Governmental Authority, any Person succeeding to such Governmental Authority’s functions and capacities);

	(v)		the words “hereof,” “herein” and “hereunder” and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement;

	(vi)		references to “days” shall mean calendar days and references to “business day” shall mean a Monday, Tuesday, Wednesday, Thursday or Friday which is not a legal holiday in Mexico City for the government of the UMS;

	(vii)		both Parties shall be understood as having had equal responsibility for the language of this Agreement such that no rule of contractual construction that holds an alleged ambiguity of language in an agreement against the drafter of the agreement shall be applied in the construction of this Agreement; and

	(viii)		the singular includes the plural and the plural includes the singular.

1.3 Interpretation of KP References and GPS Measurements.

(a) In this Agreement and in Appendix 1 hereof, the numbers following the defined term of a given line and the defined term “KP” indicate a point located at the designated kilometers and meters of the corresponding line. For example, a reference to Line B KP 100+090; means a point located at approximately the 90th meter, of the 100th kilometer of the Line B.

(b) Ferromex and Kansas hereby agree to conduct a process to determine the precise locations of the KP points used in this Agreement. To such end, Kansas and Ferromex agree to the following:

	(i)		During a period of 120 (one hundred and twenty) days following the execution of this Agreement, Kansas (directly or through one or more subcontractors of Kansas) will take GPS coordinates of the KP locations referred to in this Agreement;

	(ii)		During that period of time, Ferromex and its Affiliates shall provide Kansas’ personnel and advisors all reasonable access and assistance for such persons to be able to take the GPS coordinates referred above. Personnel and advisors to Ferromex may be present during the taking of the GPS coordinates if they wish to do so; in the understanding that Kansas shall inform Ferromex with at least 3 (three) business days in advance of taking any of such GPS coordinates so that Ferromex is able to determine whether it wishes to be present during the taking of such coordinates and/or to coordinate assistance to Kansas personnel and its contractors;

	(iii)		Within 30 (thirty) business days following the measurement period referred in paragraph (i) above, Kansas will submit to Ferromex a document (which may be an electronic file) indicating the GPS coordinates that correspond to each of the KP points;

	(iv)		After receipt of said document, Ferromex will have 30 (thirty) business days to make any objections to the GPS coordinates, in the understanding that Ferromex may only object to individual measurements;

	(v)		Any GPS coordinates not objected by Ferromex in writing to Kansas within the 30 (thirty) business days period referred to in (iv) above, shall be deemed as accepted by Ferromex and thereupon such GPS coordinates shall have the effect mentioned in paragraph (c) of this Section 1.3;

	(vi)		Any GPS coordinates objected by Ferromex in writing, will be submitted to the Committee referred to in Clause Twelve hereof. The Committee shall convene to address the matter within 20 (twenty) business days after the objections from Ferromex were delivered to Kansas;

	(vii)		If, within 20 (twenty) business days after the objections from Ferromex were delivered to Kansas, the Committee: ( a ) does not meet; or ( b ) having met, fails to issue a unanimous resolution setting forth the applicable GPS coordinates, either Party may submit the matter to URS Corporation (including to one of their Affiliates operating in the UMS, or any other entity that the Parties agree in writing), whose resolution on the subject will be conclusive and binding, and the GPS coordinates accepted in said resolution shall have the effect mentioned in paragraph (c) of this Section 1.3; and

	(viii)		A unanimous resolution from the Committee shall be deemed as accepted by Ferromex and Kansas, and upon said resolution the GPS coordinates accepted by the Committee shall have the effect mentioned in paragraph (c) of this Section 1.3.

(c) The GPS coordinates resulting from the process described above shall, once they have become conclusive and final in accordance with said process, become the conclusive geographic indication of the KP locations referred to in this agreement, including if the KP signs do not currently exist or are thereafter altered, destroyed or otherwise become not available.

(d) The costs of taking the GPS coordinates will be split equally between Ferromex and Kansas.

1.4 Exhibits and Appendices . The Exhibits and Appendices listed below are an integral part of this Agreement:


		Exhibit A		Ferromex Concession Title

		Exhibit B		Kansas Concession Title

		Exhibit C		Settlement Procedures

		Exhibit D		Kansas’ complaints before the Ministry of Public Service


	Exhibit E	Additional Termination Acts

	Exhibit F	Information to be Delivered to Subject Trackage Owner

	Exhibit G	Complementary Interlineal Matrix

Appendix 1		Technical Descriptions

Clause Two. Settlement.

2.1 Purpose of Agreement.

(a) The Parties enter into this Agreement before a notary public, in order to terminate in a definitive and irrevocable manner the Settlement Controversies, as well as any other issue or dispute directly related to such Settlement Controversies.

(b) Notwithstanding the foregoing, the Excluded Procedures shall not be deemed terminated or settled by this Agreement and the Parties reserve their rights to continue with the Excluded Procedures until their definitive conclusion if they wish to do so or otherwise terminate them at their sole discretion in accordance with applicable laws.

	(c)		With respect to:

	(i)		the trackage rights N-1 granted in the Ferromex Concession Title, the rights described in Subsection 5.4 (b) and, in its case 5.4 (f), describe the complete trackage rights of Ferromex to operate said trackage rights and the Parties hereby stipulate and agree that they have no further disagreement about the scope or extent of the trackage rights N-1 and that the only rights granted by such trackage right N-1 are those described in Subsections 5.4 (b) and, in its case 5.4 (f), of this Agreement;

	(ii)		the rights described in Subsection 5.5 describe the complete trackage rights of Ferromex to operate said trackage rights DPL-2, and the Parties hereby stipulate and agree that they have no further disagreement about the scope or extent of the trackage rights DPL-2 and that the only rights granted by trackage right DPL-2 in Ferromex’s Concession Title are those described in Subsection 5.5 of this Agreement;

	(iii)		the trackage rights PN-10 granted in the Kansas Concession Title, the rights described in Subsection 5.7(d) and 5.7(e) describe the complete rights of Kansas to operate said trackage rights PN-10, and the Parties hereby stipulate and agree that they have no further disagreement about the scope or extent of the trackage rights PN-10 and that the only rights granted by trackage right PN-10 in Kansas’

			Concession Title are those described in Subsections 5.7(d) and 5.7(e) of this Agreement;

	(iv)		the rights described in Subsection 5.7(c) describe the complete trackage rights of Kansas to operate said trackage rights DPL-1 and any other related in any way to the Guadalajara Access Zone, and the Parties hereby stipulate and agree that they have no further disagreement about the scope or extent of the trackage rights DPL-1, and any other related in any way to the Guadalajara Access Zone, and that the only rights granted by trackage right DPL-1 and any other related in any way to the Guadalajara Access Zone in Kansas’ Concession Title are those described in Subsection 5.7(c) of this Agreement;

	(v)		the trackage rights PN-11 granted in the Kansas Concession Title and the related switching services in the Aguascalientes Access Zone, the rights described in Subsection 5.7(f) describe the complete rights of Kansas to operate said trackage rights PN-11 and to serve Users in said Aguascalientes Access Zone, and the Parties hereby stipulate and agree that they have no further disagreement about the scope or extent of the trackage rights PN-11 and that the only rights granted by trackage right PN-11 in Kansas’ Concession Title are those described in Subsection 5.7(f) of this Agreement.

(d) For the avoidance of doubt, this Agreement is not intended by the Parties to settle the scope of, or rights granted under, trackage right N-5.

(e) The Parties hereby specifically and conclusively agree that the inclusion of the litigation involving amendment of Ferromex’s Concession Title in this Agreement shall not be deemed as an acceptance on behalf of Kansas of the procedure adopted by the Federal Government of the UMS and/or by Ferromex to amend the Ferromex Concession Title, nor that such is the appropriate procedure to modify the Ferromex Concession Title in the future. Kansas hereby reserves its right to challenge any such future modifications made to the Concession Title of any of the Ferromex Parties, and Ferromex hereby agrees that it will never cite to the Federal Government of the UMS the settlement in this Agreement of the litigation involving amendment of Ferromex’s Concession Title as any agreement by Kansas for the method of making that amendment.

(f) With respect to:

(i)

Waiver of Future Actions, Rights and Procedures . The Parties agree to expressly irrevocably and definitively waive and terminate any rights, actions, claims, procedures, suits, remedies and, in general, any other obligation of any other nature and before any Governmental Authority, and agree not to commence any procedure, either judicial, administrative, arbitral or of any other nature in connection with the enforcement of any right regarding Court Costs ( costas judiciales ) or any similar concepts deriving or related, directly or indirectly to any Court Costs of proceedings related to the Settlement Controversies and/or other controversies related, directly or indirectly with rates applicable to trackage, switching, interlinear or terminal services whether prior to January 1, 2009 or not.

(ii)

Consequently:

	[a]		[****]

	[b]		[****]

	[c]		Each of the Parties hereby grants to the other the broadest release under applicable law in connection with any and all amounts related solely to court costs payable by one of the Parties to other under the mercantile proceedings referred to in paragraphs [a] and [b] .

2.2 Authority of Agreement . This Agreement: ( i ) has the authority of res judicata for all legal effects in the broadest terms of article 2953 of the Federal Civil Code regarding the Settlement Controversies and any matter related to such Settlement Controversies and the procedures related therewith; and ( ii ) terminates in a definitive and irrevocable manner all the Settlement Controversies, as well as any other right, action, claim, procedure, suit, remedy and, in general, any other obligation of any nature in connection with any cause, fact, act, statement and/or procedure of any kind occurred prior to the date of this Agreement with respect to the matter or facts of the Settlement Controversies.

2.3 Future Proceedings . In light of the provisions of Sections 2.1 and 2.2 of this Agreement, and in case there is any resolution from a Governmental Authority after the date of execution hereof in connection with the Settlement Controversies, it shall be deemed that such resolution lacks of substance and is of no force or effect between the Parties.

Clause Three. Termination of Settlement Controversies; Waivers.

3.1 Trackage Rights Definition Controversies . The Parties expressly acknowledge and agree that the Trackage Rights Definition Controversies have been resolved and settled by means of the new definitions of the terms and conditions and/or scope of the mandatory trackage and switching rights referred to in Clause Five of this Agreement, without reserving any claim or right to such effect.

3.2 Other Settlement Controversies . The Parties expressly acknowledge and agree that the other Settlement Controversies have been resolved and settled by means of the execution of this Agreement, without reserving any claim or right to such effect.

3.3 Past Rates Controversies and Excluded Procedures.

(a) The Parties hereby reserve all their rights to continue with any and all of the Excluded Procedures, none of which are settled by means of this Agreement, and to settle such Excluded Procedures if and when they deem convenient by mutual agreement.

(b) For the avoidance of doubt, the Parties acknowledge that the absence of settlement of the Past Rate Controversies does not affect the agreements of the Parties with respect to the rates mentioned in Clauses Five, Six and Seven hereof which shall govern the subject matter of such clauses for any rates that are charged for services or actions occurring on or after the execution date of this Agreement but do not apply to events or traffic movements occurring before the execution date hereof (except as otherwise provided herein).

3.4 Release.

(a) Kansas releases the Ferromex Parties and Ferromex releases the Kansas Parties of any responsibility, obligation and/or claim derived from, or directly related to, any Settlement Controversy and the Settlement Procedures, without reserving any claim or right to such effect.

(b) Ferromex grants to the Kansas Parties and Kansas grants to the Ferromex Parties, respectively, the broadest release that corresponds pursuant to law with respect to the Settlement Controversies, without reserving any claim or right to such effect.

3.5 Withdrawals; Termination Acts.

(a) The Parties hereby withdraw any type of suit, action, remedy or procedure related with the Settlement Controversies, including, without limitation, the Settlement Procedures listed in Exhibit C and agree to ratify such withdrawal before a notary public and, if necessary, promptly before the relevant Governmental Authority (including the Ministry or any judicial or administrative authority).

(b) The Parties hereby agree to carry out any actions that are reasonably necessary and to cooperate in good faith one with the other in order to terminate the determinations contained in the rulings and/or resolutions issued with respect to the Settlement Controversies, to the extent possible. Such obligation includes entering into any type of acts and/or agreements, and the filing of all types of documents, before any judicial and/or administrative authorities, as well as their ratification.

(c) The Parties hereby agree to file before the courts and the administrative and Governmental Authorities that may be necessary (as the interested Party may require), briefs by means of which they inform of the execution of this Agreement and the terms and conditions agreed by the Parties in connection with the subject hereof.

(d) The Parties agree to cooperate between them in order to obtain the release and/or cancellation of any bond, back-bond, guaranty or security deposit which have been granted by any of them in connection with the Settlement Controversies and the Settlement Procedures. These actions include, but are not limited to, the filing of briefs expressing the conformity of the relevant Party with the release of such bond, back-bond, guaranty or deposit.

(e) Without limiting the generality of the foregoing, the Parties agree to carry out the actions and enter into the acts referred to in Exhibit E .

(f) The Parties further agree to carry out, enter into, file, notify, ratify and/or grant the actions, acts and documents referred to in paragraphs (a) to (e) of this Section 3.5, hereinafter referred to as the “ Termination Acts ”.

3.6 Waiver of Actions and Rights . The Parties hereby expressly irrevocably and definitively waive and terminate:

	(i)		any rights, actions, claims, procedures, suits, remedies and, in general, any other obligation of any other nature and before any Governmental Authority in connection with the Settlement Controversies and/or with the subject or facts directly related therewith, including, without limitation, any judicial, administrative and any other decisions of whatever nature; and/or

	(ii)		any rights derived from any action, fact, circumstance or act performed by the Parties in connection with the procedures related to the Settlement Controversies; and

	(iii)		any rights, actions, claims, procedures, suits, criminal complaints, remedies and, in general, any other obligation of any other nature and before any Governmental Authority in connection with any cause, fact, act, omission, statement and/or procedure of any species occurred prior to the date of this Agreement with respect to the Settlement Controversies.

3.7 Renunciation of Future Procedures . The Parties hereby reciprocally agree to not commence any procedure, either judicial, administrative, arbitral or of any other nature (including criminal complaints), in the future against, or that in any way may affect, the other Party or any of the Kansas Parties or the Ferromex Parties, based on any acts, actions or omissions that have occurred prior to the date hereof related with or arising from the Settlement Controversies and with the matter or facts related therewith, including, without limitation, any judicial, administrative and any other decisions of whatever nature.

3.8 Additional Documents and Acts.

(a) The Parties shall enter into and deliver the additional documents and carry out the subsequent acts that are necessary in order to carry out and give force and effect to the provisions of this Clause Three.

(b) Each of Kansas and Ferromex agrees to carry out all necessary and/or desirable acts and actions in order for the Kansas Parties and the Ferromex Parties, respectively, to perform any acts or actions required to carry out and give force and effect to what is established in this Clause Three.

Clause Four. Management of Future Traffic.

4.1 Future Traffic.

(a) Upon the execution of this Agreement the provisions hereof shall apply to all Railroad Equipment of the Parties on the Subject Trackage of the other Party, unless otherwise agreed in writing by the President of Kansas and the Chief Executive Officer of Ferromex; provided, however, that any operational issues arising from the implementation of Sections 5.4, 5.5, 5.6 and 5.7 shall be subject to the Transition Period provisions stated in Section 12.3.

(b) [****]

4.2 Additional Documents and Acts.

(a) The Parties shall execute and deliver the additional documents and shall perform the subsequent acts that may be necessary in order to carry out and give force and effect to the provisions of this Clause Four.

(b) Each of Kansas and Ferromex agrees to carry out all necessary and/or desirable acts and actions now or in the future in order for the Kansas Parties and the Ferromex Parties, respectively, to perform any acts or actions required to carry out and give force and effect to what is established in this Clause Four.

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A
CONFIDENTIAL TREATMENT REQUEST, HAVE BEEN OMITTED FROM THIS EXHIBIT AND
HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS
PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Clause Five. Trackage Rights.

5.1 Ferromex Rates.

(a) Except as otherwise expressly agreed in this Agreement, from and after January 1, 2010, [****] using the trackage rights that correspond to Kansas pursuant to this Agreement, the Kansas Concession Title, the Ferromex Concession Title and/or otherwise, as adjusted pursuant to Section 5.8(c) of this Agreement.

(b) The Parties agree that for trackage rights used by Kansas between January 1, 2009, and January 1, 2010, [****].

5.2 Kansas Rates.

(a) Except as otherwise expressly agreed in this Agreement, from and after the execution date of this Agreement, Kansas shall have the right to charge Ferromex and Ferromex shall have the obligation to pay to Kansas, a rate of [****] using the trackage rights that correspond to Ferromex pursuant to this Agreement, the Kansas Concession Title, the Ferromex Concession Title and/or otherwise, as adjusted pursuant to Section 5.8(c) of this Agreement.

(b) The Parties agree that for trackage rights used by Ferromex between January 1, 2009, and January 1, 2010, the above mentioned rate shall be [****].

5.3 Acknowledgment . The Parties hereby acknowledge the validity, in terms of Article 36 of the Railroad Service Law, of the agreements reached with respect to the rates that from now on they shall pay each other for trackage rights pursuant to Sections 5.1 and 5.2 above. In such respect they agree not to petition the Ministry to make any determination of rates in such regard under said Article 36 of said Railroad Service Law or otherwise.

5.4 Trackage Rights granted to Ferromex at Monterrey.

(a) Subject to the terms and conditions herein provided, including the specific instructions given by the Kansas dispatcher on a case by case basis and by means of payment of the general rate referred to in Section 5.2 above, Kansas hereby grants to Ferromex, pursuant to first paragraph of Article 36 of the Railroad Service Law, trackage rights over the segments of Kansas Trackage indicated in the following paragraphs of this Section 5.4 and as further detailed in Appendix 1 attached hereto.

(b) Trackage Rights to Guerrero Facility . Kansas hereby grants Ferromex a limited trackage right to serve the Guerrero Facility in the Monterrey Access Zone, including the right to serve any future User operating that facility. Ferromex’s access to the Guerrero Facility is limited to the following route, which is further described in Appendix 1 : [ 1 ] from Line M KP 524+000 through Kansas’ Monterrey Terminal on tracks designated by Kansas local supervision to Line BI KP 2+300; and [ 2 ] from Line BI KP 2+300 to the north wye connection at Line BI KP

2+290; [ 3 ] over the north wye connection to Line BMA KP 0+244; [ 4 ] from Line BMA KP 0+244 to the connection with the Former Line F at Line BMA KP 0+640 and Former Line F KP 0+000; [ 5 ] from Former Line F KP 0+000 to and including the switch accessing the Guerrero Facility at Former Line F KP 2+275.90.

(c) Certain Exclusions . For the avoidance of doubt, Ferromex will not have access through trackage rights to any facilities within the Monterrey Access Zone, other than to ( x ) the Guerrero Facility identified in paragraph (b) above and, ( y ) any New Ternium Facility as provided under paragraph (f) of this Section 5.4. For further clarification and for the avoidance of doubt, the following facilities, currently operated by Ternium or an Affiliate of Ternium and that are currently being served by Kansas shall not ever qualify as a New Ternium Facility, and Ferromex shall not be allowed to serve them through trackage rights: ( i ) the facility known as “Churubusco” located at Former Line M KP 2+535.58 and Line F KP 2+836.93; ( ii ) the facility known as “Juventud” located at Former Line F 4+571.50; and ( iii ) the facility known as “Ternium Norte” located at Line F KP 9+734.00. The naming of specific facilities in the immediately preceding sentence is not a limitation on the exclusion stated in the first sentence of this paragraph.

(d) Capacity . Under the trackage right granted under paragraph (b) above, Ferromex shall not tender, and Kansas shall not be obligated to accept, Trains that exceed the capacity of the Guerrero Facility or that in any other manner may unreasonably congest Kansas Trackage; provided, however, that to the extent such congestion occurs, Kansas shall seek to provide if possible an alternative route for Ferromex to be able to access the Guerrero Facility as determined by the Kansas dispatcher on a case by case basis and in a non-discriminatory basis.

(e) Switching to the Guerrero Facility . Should Ferromex choose to serve the Guerrero Facility by means of switching services by Kansas, Kansas will provide switching service for Ferromex to the Guerrero Facility under the terms and conditions specified in Section 5.4(h) and Clause Seven, below.

(f) New Facilities of Ternium . Kansas will also grant Ferromex access through trackage rights to serve other facilities acquired by Ternium (or an Affiliate controlled by Ternium) after the execution of this Agreement and that are located within the Monterrey Access Zone, after the following process has been completed:

	(i)		Ferromex must notify to Kansas the existence of the new facility owned by the relevant Ternium Affiliate (the “ New Ternium Facility ”). This notice shall include: ( a ) the precise location of the New Ternium Facility that Ferromex requests to access; ( b ) the name of the Ternium Affiliate that owns the New Ternium Facility; and ( c ) reasonable evidence that the Affiliate company in question is controlled by Ternium and that the New Ternium Facility is owned by said Affiliate;

	(ii)		Once the documentation has been received by Kansas, Kansas shall have 20 (twenty) business days to review said documents and meet with representatives of Ferromex to solve any questions that Kansas’ may have in connection with the aforementioned notice and/or the New Ternium Facility;

	(iii)		If Kansas is satisfied with the evidence delivered by Ferromex in accordance with paragraph (i) above and/or the documents and information generated or delivered in the meetings held in accordance with paragraph (ii) above, Kansas will deliver Ferromex a notice indicating its satisfaction with said evidence and the institution of the trackage rights (which notice may not be unreasonably withheld);

	(iv)		The rate payable by Ferromex for the trackage rights that, in its case, are granted under this paragraph (f), will be the general rate set forth in Section 5.2 as increased in accordance with this Agreement;

	(v)		The trackage rights to the New Ternium Facility: ( a ) will only begin after the New Ternium Facility has started operations and Kansas has delivered the notice referred in paragraph (iii) above; and ( b ) will cease once the New Ternium Facility stops being owned by a Ternium Affiliate, unless either one of the following requisites are met, in which case the trackage right to that specific New Ternium Facility shall remain in full force and effect until the expiration of this Agreement:

	[a]		That Ternium (or an Affiliate thereof) has owned the New Ternium Facility in question during the five (5) years immediately preceding the sale or transfer of said New Ternium Facility by Ternium (or an Affiliate thereof); or

	[b]		Kansas is evidenced that the purchaser of the relevant New Ternium Facility acted independently from Ferromex and its Affiliates and is a Person who is not an Affiliate of Ferromex and the capital stock of which is not owned in 5% or more by Ferromex or an Affiliate thereof. For these purposes, it shall be considered reasonable evidence if Ferromex delivers, promptly following a sale or transfer of the New Ternium Facility in question, an officer’s certificate stating that the relevant purchaser is not an Affiliate of Ferromex and that its capital stock is not owned, in 5% or more, by Ferromex or an Affiliate thereof.

	(vi)		Any trackage rights granted under this section 5.4(f) will not grant Ferromex trackage rights or any other form of rights to serve any facility other than the New Ternium Facility, in the understanding that this provision does not affect the provision set forth in paragraph (h) of this Section 5.4 with respect to switching services;

	(vii)		Any trackage rights granted under this Section 5.4(f) would be subject to the specific instructions granted by the Kansas dispatcher on a case by case basis;

	(viii)		If and to the extent Ferromex complies with the conditions set forth in this Clause 5.4(f) and obtains trackage rights to a New Ternium Facility that is located within the Monterrey Access Zone on trackage different to the Former M, BMA and Former F Lines, Kansas shall have the right to get trackage rights pursuant to Section 5.7(d) to a New Altamira Facility; and

(ix)

To the extent that there are any trackage rights granted in the future pursuant to this paragraph (f), Ferromex shall not tender, and Kansas shall not be obligated to accept, Trains that exceed the capacity of the New Ternium Facility or that in any other manner may unreasonably congest Kansas Trackage; provided, however, that to the extent such congestion occurs, Kansas shall seek to provide if possible an alternative route for Ferromex to be able to access the New Ternium Facility as determined by the Kansas dispatcher on a case by case basis and in a non-discriminatory basis;

(g) Certain Clarifications . For the avoidance of doubt, Ferromex also has a limited trackage rights under the N-1 trackage right to connect its trackage between Torreón and Tampico and trackage rights to reach the Interchange tracks in Kansas’ Monterrey Yard designated by Kansas supervisors from time to time. Ferromex access is limited to the route: [ 1 ] from Line M KP 500+000 to Line M KP 524+000; and [ 2 ] from Line M KP 524+000 to Line M 528+000 pursuant to the N-1 trackage right, as more specifically described in Appendix 1 .

(h) General Rules . Except for the trackage rights provided in paragraph 5.4(b) above, and in its case under Section 5.4(f), the Parties agree that any service by Ferromex to Users in the Monterrey Access Zone shall be provided by means of switching services that Kansas has agreed to provide to Ferromex in the Monterrey Access Zone, under the terms of and through payment of the rate referred to, in Clause Seven below; provided that: ( x ) if Kansas constructs the Monterrey Adaptation, the Interchange of Equipment between Kansas and Ferromex for said switching services to and from Users in the Monterrey Access Zone shall be made on the Monterrey Adaptation, and ( y ) until the Monterrey Adaptation is constructed, as the case may be, Interchange of Equipment for said switching shall be made at Interchange tracks in Kansas’ Monterrey Terminal designated by Kansas supervisors from time to time. If Kansas constructs the Monterrey Adaptation for the Interchange of Equipment between Kansas and Ferromex for said switching services to and from Users in the Monterrey Access Zone, said Interchange track shall be 2,600 meters long. After construction of the Monterrey Adaptation is completed, if Ferromex and Kansas agree that additional Interchange capacity is needed at that location, the Parties shall divide between them equally the cost of extending the Monterrey Adaptation. For the avoidance of doubt, Kansas is not bound to build the Monterrey Adaptation referred to in this paragraph.

5.5 Long Trackage Right.

(a) Subject to the terms and conditions herein provided, including the specific instructions given by the Kansas dispatcher on a case by-case basis (which instructions shall not alter the rights or responsibilities of the Parties set forth in this Section 5.5), Kansas hereby grants to Ferromex, pursuant to first paragraph of Article 36 of the Railroad Service Law, by means of payment of the general rate referred to in Section 5.2 above, trackage rights over the segments of Kansas Trackage indicated in the following paragraphs of this Section 5.5.

(b) Definition and Extent of the Long Trackage Right . Ferromex shall have a trackage right over Lines B and BC, between Ramos Arizpe at Line B KP 929+007 (= Ferromex’s Line R 424+650) to Line B’s junction with Line BC, and on Line BC from that junction to Viborillas at Line BC KP 8+756, as further described in Appendix 1 hereto (the

“ Long Trackage Right ”). For the avoidance of doubt, the Parties recognize that the Long Trackage Right includes the Line BS. Nonetheless, Kansas shall have the right to use the Line BS at its operating discretion to serve Ferromex overhead trains using the Long Trackage Right.

(c) Rules and Restrictions . In addition to the terms and conditions of the trackage rights further detailed elsewhere in this Agreement, the Parties hereby acknowledge and agree that the use of Long Trackage Right is subject to the following restrictions and limitations:

	(i)		[****]

	(ii)		[****]

	(iii)		[****]

	(iv)		[****]

	(v)		[****]

	(vi)		[****]

	(vii)		[****]

	(viii)		[****]

(d) Number of Trains entering the Long Trackage Right . From the execution date of this Agreement and until January 31, 2011, [****]:

	(i)		[****]

	(ii)		In accordance with the above, the formula to determine the average number of Ferromex Trains that Kansas is obligated to accept in any calendar year after the year 2010, shall be the following:

[****]

			Where:

			[****]

	(iii)		Within the first 10 (ten) business days of January of 2011, and thereafter within the first 10 (ten) business days of every month of January following the year 2011 during which this Agreement is in force, Kansas shall deliver to Ferromex a notice indicating the number of daily Ferromex Trains that Kansas in good faith believes its obligated to accept entering the Long Trackage Right. This notice

shall be accompanied by the calculations made by Kansas to arrive to said number in accordance with the preceding paragraph;

	(iv)		Within the following 10 (ten) business days after receipt of the notice referred to in the preceding paragraph, Ferromex shall notify Kansas if Ferromex agrees or not with the calculations made therein. If no notice is made by Ferromex within such period, it shall be understood that Ferromex accepts the calculations made by Kansas;

	(v)		If Ferromex disagrees with Kansas’ calculations, the notice indicating its disagreement shall indicate the total number of daily Trains that Ferromex in good faith believes that Kansas is obligated to accept during the then current calendar year and the basis for such calculation. The disagreement, will be submitted to the Committee referred to in Clause Twelve hereof. The Committee shall convene to address the matter within 20 (twenty) business days after the objections from Ferromex were delivered to Kansas;

	(vi)		If, within 20 (twenty) business days after the objections from Ferromex were delivered to Kansas, the Committee: ( a ) does not meet; or ( b ) having met, fails to issue a unanimous resolution setting forth the number of daily Ferromex Trains that Kansas in good faith believes its obligated to accept entering the Long Trackage Right for the then current calendar year, either Party may submit the matter to Gálaz, Yamazaki, Ruíz Urquiza, S.C. (or any other Affiliate of Deloitte Touche Tomatsu, providing accounting services in the UMS), whose resolution on the subject will be conclusive and binding, and the number of daily Ferromex Trains that Kansas its obligated to accept entering the Long Trackage Right set forth in said resolution shall be conclusive and binding;

	(vii)		The calculations of the number of daily Ferromex Trains that Kansas its obligated to accept entering the Long Trackage Right shall be in force from February 1 of the calendar year in which they are made, to February 1 of the following calendar year. In case there are any disagreements regarding the calculations made by Kansas from Ferromex, the calculations made by Kansas shall be applicable while the matter is resolved by the Committee or Gálaz, Yamazaki, Ruíz Urquiza, S.C. (or any other Affiliate of Deloitte Touche Tomatsu, providing accounting services in the UMS), as the case may be;

	(viii)		If on a given calendar year Kansas does not send the notice mentioned in the preceding paragraph (i), [****]. The objection shall be filed by delivering the notice referred to in paragraph (iv) above and thereafter the process would follow as if Kansas would have delivered the notice mentioned in paragraph (i) above; and

(ix)

At any point in the process, Kansas and Ferromex may agree in writing to the number of Trains entering the Long Trackage Right for that calendar year.

(e) Re-crewing . With respect to the Long Trackage Right, Kansas and Ferromex currently anticipate that it will ordinarily be necessary to re-crew Ferromex Trains in order for them to complete their transit of the Long Trackage Right. Re-crewing of the Ferromex Trains using the Long Trackage shall be subject to the following:

	(i)		Ferromex shall, immediately prior to its Train accessing the Subject Trackage of the Long Trackage Right, assure that the members of that Train’s crew have a minimum of 10 (ten) hours of service remaining available under law and confirm such hours of service remaining available under law to Kansas’ train dispatcher before entering the Long Trackage Right;

	(ii)		When it is necessary for Ferromex trains to be re-crewed while transiting the Long Trackage Right, the Kansas train dispatcher has sole authority for determining the location at which the Train will be re-crewed and for notifying the designated Ferromex supervisor of the Train’s estimated arrival time at that location, which shall be done with at least 6 (six) hours in advance before Ferromex’s Train is scheduled to arrive at that location. The Kansas train dispatcher will designate re-crewing locations as close to the municipality of San Luis Potosi as is, in that dispatcher’s reasonable operating discretion, operationally feasible; in the understanding that if the re-crewing siding referred to in paragraph (v) below is built by Ferromex, the re-crewing of Ferromex’s Trains would take place on that siding on a regular basis, except that Kansas may direct said re-crewing to occur at some other location for operational reasons not in the ordinary course of business at Kansas’ reasonable operating discretion and for the benefit of both Parties;

	(iii)		To minimize delays, Ferromex will employ its best efforts to have each re-crew crew available for duty at the re-crewing location on the Long Trackage Right designated by the Kansas dispatcher and ready to depart by the Ferromex Train’s estimated arrival time provided by the Kansas dispatcher. Ferromex shall assure that the members of its re-crew crew have sufficient hours of service remaining available under law to allow Ferromex’s Train to move the entire remaining length of the Long Trackage Right without Ferromex’s Train re-crewing again;

	(iv)		If a Ferromex Train is not ready to depart from the Kansas -designated re-crewing location on the Long Trackage Right within 120 (one hundred and twenty) minutes after the Ferromex Train’s actual arrival time at that location, as measured by the lapse of time between the arrival time recorded by the train dispatcher and the ready to depart time reported to the train dispatcher by the Ferromex crew, the re-crew will be counted as a failure. [****]

	(v)		The Parties agree that Ferromex has the option to have constructed at its own cost, or pay for, a siding for the re-crewing referred to in this paragraph (e), which shall be subject to the following:

	[a]		The siding shall be built in a location mutually agreed to by Ferromex and Kansas;

	[b]		The construction of the siding shall be made by Kansas or a contractor submitted by Ferromex and approved in writing by Kansas;

	[c]		Before commencing construction of the siding, Ferromex shall submit to Kansas a copy of the executive project ( proyecto ejecutivo ) of the siding, which shall be approved by Kansas, in the understanding that Kansas may request changes to said executive project ( proyecto ejecutivo ) in order to accommodate for specific technical requirements or compliance with the Applicable Framework;

	[d]		Construction of the siding must be completed within the time frame agreed to by the Parties, in the understanding that Kansas may inspect the construction site from time to time;

	[e]		Ferromex shall be responsible for obtaining and complying with any and all approvals from any Governmental Authority that is required to construct and operate the siding, in the understanding that Kansas will cooperate with Ferromex in obtaining said Governmental Approval;

	[f]		Any land lots that are required to be purchased for the siding, shall be paid for by Ferromex;

	[g]		The materials employed in the construction of the siding shall be of the characteristics and quality reasonably required by Kansas in order to comply with the Applicable Framework;

	[h]		Ferromex shall be responsible for paying all costs associated with the security of the workers engaged in the construction of the siding;

	[i]		The siding shall be used as a re-crewing point in the Long Trackage Right, in the understanding that under no circumstance may Ferromex: ( a ) install crew change facilities at the siding (other than locker rooms); ( b ) build any connection to the siding, other than to the Long Trackage Right and in strict compliance with any requirements indicated by Kansas;

	[j]		The siding must be at least 3,000 (three thousand) meters long;

	[k]		After the construction of the siding is completed and it has received all required approvals from the competent Governmental Authorities, the siding shall become part of Kansas’ Subject Trackage, in the understanding that Ferromex shall, at its sole cost and expense and in its own discretion, maintain and make necessary repairs to said siding.

5.6 Trackage Rights to Ferromex; Access to Monterrey By-Pass.

(a) In the event that Ferromex builds and operates the Monterrey By-Pass, Kansas hereby and as of this moment grants to Ferromex a trackage right, between Line F KP 43+842 (= Line MF KP 17+755) and Line F KP 20+700 and between Line BF KP 39+658 (= Line B KP 1038+323) and Line BF KP 35+876 (= Line M KP 535+811), as further described in Appendix 1 , in order for Ferromex to access the Monterrey By-Pass with Ferromex’s Trains exclusively for the purposes described in 5.6(b) and (c) below. Ferromex may begin to use such trackage right only after the construction of the Monterrey By-Pass effectively begins, and only if Ferromex did provide Kansas with a written notice indicating its intention to begin construction of the Monterrey By-Pass at least 90 (ninety) days before construction is scheduled to commence.

(b) If construction of the Monterrey By-Pass is not completed within 24 (twenty four) months of Ferromex’s first Train moving on said trackage right, said trackage right shall cease until such time as the entire the Monterrey By-Pass has been completed.

(c) Until such time as the entire Monterrey By-Pass has been completed and Kansas’ trackage right on the completed Monterrey By-Pass takes effect, which right is granted in Section 5.7(b) of this Agreement, takes effect, the trackage right granted in this Section 5.6 shall only be used by Ferromex for transporting materials and equipment that will actually and only be used in construction of the Monterrey By-Pass; in the understanding that Ferromex will not be able to use this trackage right for more than 3 (three) Trains and/or Tractive Equipment on any calendar day. Thereafter, Ferromex may use said trackage right only for overhead traffic movements between the Monterrey By-Pass and lines granted to Ferromex in its Concession Title (but not including any line on which trackage rights are granted to Ferromex in the Ferromex Concession Title). For the avoidance of doubt, the immediately preceding sentence means that Ferromex may not use the trackage right granted in Section 5.7(b) to handle Local Traffic in the Subject Trackage over which such trackage right is granted.

(d) Ferromex may not use the trackage right referred to in this Section 5.6 to serve Local Traffic in the Subject Trackage over which such trackage right is granted or to transport any shipment between a point of origin or destination located at an intermediate point between Line F KP 43+842 (= Line MF KP 17+755) and Line F KP 20+700 and between Line BF KP 39+658 (= Line B KP 1038+323) and Line BF KP 35+876 (= Line M KP 535+811) including but not limited to Pesquería nor to any User within the Monterrey Access Zone.

5.7 Trackage Rights to Kansas.

(a) Subject to the terms and conditions herein provided, including the specific instructions given by the Ferromex dispatcher on a case-by-case basis (which instructions shall not alter the rights or responsibilities of the Parties set forth in this Section 5.7), Ferromex hereby grants Kansas, pursuant to first paragraph of Article 36 of the Railroad Service Law, by means of payment of the general rate referred to in section 5.1 above, trackage rights over the following segments of the Ferromex Trackage referenced in the following paragraphs and further detailed in Appendix 1 attached hereto.

(b) Monterrey By-Pass . In the event that Ferromex builds and operates the Monterrey By-Pass, Ferromex hereby and as of this moment grants Kansas a trackage right over the Monterrey By-Pass, in order to allow Kansas to avoid entering congested portions of the City of

Monterrey. Said rights shall not allow Kansas to handle any Local Traffic by delivering to or picking up any shipments for any User at any point on the Monterrey By-Pass.

(c) Guadalajara Access Zone . Ferromex hereby and as of this moment grants Kansas a trackage right over Line A, Line I and Line T, between Mariscala (at Line A KP 263+922) and Guadalajara (at Line T KP 1740+346) as further identified in Appendix 1 , to and/or from the Guadalajara Access Zone, in accordance with the following:

(i)

Number of Trains . From the execution date of this Agreement and until January 31, 2011, [****]:

	[a]		[****]

	[b]		[****]

[****]

			Where:

			[****]

	[c]		Within the first 10 (ten) business days of January of 2011, and thereafter within the first 10 (ten) business days of every month of January following the year 2011 during which this Agreement is in force, Ferromex shall deliver to Kansas a notice indicating the number of daily Kansas Trains that Ferromex in good faith believes its obligated to accept entering this trackage right. This notice shall be accompanied by the calculations made by Ferromex to arrive to said number in accordance with the preceding paragraph;

	[d]		Within the following 10 (ten) business days after receipt of the notice referred to in the preceding paragraph, Kansas shall notify Ferromex if Kansas agrees or not with the calculations made therein. If no notice is made by Kansas within such period, it shall be understood that Kansas accepts the calculations made by Ferromex;

	[e]		If Kansas disagrees with Ferromex’s calculations, the notice indicating its disagreement shall indicate the total number of daily Trains that Kansas in good faith believes that Ferromex is obligated to accept during the then current calendar year and the basis for such calculation. The disagreement, will be submitted to the Committee referred to in Clause Twelve hereof.

			The Committee shall convene to address the matter within 20 (twenty) business days after the objections from Kansas were delivered to Ferromex;

	[f]		If, within 20 (twenty) business days after the objections from Kansas were delivered to Ferromex, the Committee: ( a ) does not meet; or ( b ) having met, fails to issue a unanimous resolution setting forth the number of daily Kansas Trains that Ferromex is obligated to accept entering the Long Trackage Right for the then current calendar year, either Party may submit the matter to Gálaz, Yamazaki, Ruíz Urquiza, S.C. (or any other Affiliate of Deloitte Touche Tomatsu, providing accounting services in the UMS), whose resolution on the subject will be conclusive and binding, and the number of daily Kansas Trains that Ferromex is obligated to accept entering this trackage right set forth in said resolution shall be conclusive and binding;

	[g]		The calculations of the number of daily Kansas Trains that Ferromex is obligated to accept entering the Long Trackage Right shall be in force from February 1 of the calendar year in which they are made, to February 1 of the following calendar year. In case there are any disagreements regarding the calculations made by Ferromex from Kansas, the calculations made by Kansas shall be applicable while the matter is resolved by the Committee or Gálaz, Yamazaki, Ruíz Urquiza, S.C. (or any other Affiliate of Deloitte Touche Tomatsu, providing accounting services in the UMS), as the case may be;

	[h]		[****]

	[i]		At any point in the process, Kansas and Ferromex may agree in writing to the number of Trains entering this trackage right for that calendar year.

	(ii)		Certain Rules and Clarifications . For the avoidance of doubt, a Kansas Train may enter and exit the trackage right granted in this Section 5.7(c) to deliver directly to, or to pick up directly from, industries and/or Users located within the Guadalajara Access Zone above only if all of the Cars in the Kansas Train are to be delivered to, or were picked up from, the same industry and/or User.

	(iii)		Switching Services . If a Kansas Train entering the trackage right granted in this Section 5.7(c) at Mariscala (at Line A KP 263+922) includes Cars destined to more than one industry and/or User located within the Guadalajara Access Zone, or if Kansas notifies Ferromex that Kansas wishes to move Cars tendered for rail movement at more than one industry and/or User located within the Guadalajara Access Zone to exit this trackage right at Mariscala (at Line A KP 263+922) using

			a single Kansas Train, Ferromex shall provide switching services to Kansas to deliver the Cars to or to pick up the Cars from more than one industry and/or User located within the Guadalajara Access Zone, and shall Interchange such Cars with Kansas at the Guadalajara Terminal on the tracks designated by the Ferromex train dispatcher from time to time. Said switching services shall be provided under the terms of and through payment of the rate referred to, in Clause Seven below.

	(iv)		Cross Border Traffic . This trackage right shall not be used to handle any cross-border traffic, which is any traffic moved across the border between the UMS and the United States of America by rail and that has final origin or destination outside of the UMS. In addition to traffic billed directly to or from a country outside the UMS, this provision also precludes moving traffic over the Subject Trackage which has an initial origin or final destination in the United States of America or Canada and that moves on Rule 11 rates and/or which is re-billed at an international border.

	(v)		Tractive Equipment at the Guadalajara Terminal . With respect to this trackage right, Kansas and Ferromex currently anticipate that it will ordinarily be necessary for Kansas’ Tractive Equipment to remain at the Guadalajara Terminal. To this end, Ferromex will allow for Kansas’ Tractive Equipment to remain at the Guadalajara Terminal until those units are ready and re-crewed and prepared to be sent out of the Guadalajara Terminal; in accordance with the following:

	[a]		Until such time as the siding or facility referred to below is built, [****]

	[b]		The Parties agree that Kansas has the option to have constructed at its own cost, or pay for, a siding or other form of facility to store, re-crew and otherwise prepare its units of Tractive Equipment, which shall be subject to the following:

	(1)		The siding or other form of facility shall be built in a location mutually agreed to by Ferromex and Kansas;

	(2)		The construction of the siding shall be made by Ferromex or a contractor submitted by Kansas and approved in writing by Ferromex;

	(3)		Before commencing construction of the siding or facility, Kansas shall submit to Ferromex a copy of the executive project ( proyecto ejecutivo ) of the siding or facility, which shall be approved by Ferromex, in the understanding that Ferromex may request changes to said executive project ( proyecto ejecutivo ) in order to

			accommodate for specific technical requirements or compliance with the Applicable Framework;

	(4)		Construction of the siding or facility must be completed within the time frame agreed to by the Parties, in the understanding that Ferromex may inspect the construction site from time to time;

	(5)		Kansas shall be responsible for obtaining and complying with any and all approvals from any Governmental Authority that is required to construct and operate the siding or facility, in the understanding that Ferromex will cooperate with Kansas in obtaining said Governmental Approval;

	(6)		Any land lots that are required to be purchased for the siding or facility, shall be paid for by Kansas;

	(7)		Kansas shall be responsible for paying all costs associated with the security of the workers engaged in the construction of the siding or facility;

	(8)		The materials employed in the construction of the siding or facility shall be of the characteristics and quality reasonably required by Ferromex in order to comply with the Applicable Framework;

	(9)		The siding or facility shall be used as a point to re-crew, store and prepare Kansas’ Tractive Equipment at Guadalajara in the understanding that Ferromex may direct said re-crewing, storage and preparation at a different location within the Guadalajara Terminal for operational reasons and for the benefit of both Parties;

	(10)		The siding or facility must have sufficient capacity to hold at least 5 (five) units of Tractive Equipment of Kansas;

	(11)		Under no circumstance may Kansas install crew change facilities at the siding (other than locker rooms);

	(12)		After the construction of the siding or facility is completed and it has received all required approvals from the competent Governmental Authorities, the siding shall become part of Ferromex’s Subject Trackage, in the understanding that Kansas shall, at its sole cost and expense and in its own discretion, maintain and make necessary repairs to said siding or facility; and

	(13)		Once the siding or facility has been built and may be operated in accordance with the Applicable Framework, there will be no charge by Ferromex for any of Kansas’ Tractive Equipment held in said siding or facility; provided that if Ferromex directs said re-

crewing, storage and preparation to be made at a different location within the Guadalajara Terminal for operational reasons as provided in paragraph (9) above, there will be no charge by Ferromex for holding the corresponding Kansas’ Tractive Equipment outside of said siding or facility.

(d) Altamira . Ferromex hereby and as of this moment grants Kansas a trackage right over Line MB KP 0+000 to Line MB KP 19+800 and over the tracks that are necessary to reach the Altamira Facilities to provide freight transportation service originating at and/or bound to the Altamira Facilities, including the right to serve any future User operating the corresponding facility. This trackage right shall also be governed by the following:

	(i)		Capacity . Under the trackage right granted under this paragraph (d), Kansas shall not tender, and Ferromex shall not be obligated to accept, Trains that exceed the capacity of the Altamira Facilities or that in any other manner may unreasonably congest Ferromex Trackage; provided, however, that to the extent such congestion occurs, Ferromex shall seek to provide if possible an alternative route for Kansas to be able to access the Altamira Facility as determined by the Ferromex dispatcher on a case by case basis and in a non-discriminatory basis;

	(ii)		Switching to the Altamira Facilities . Should Kansas choose to serve the Altamira Facilities (including the right to serve any future User operating the corresponding facility) by means of switching services by Ferromex, Ferromex will provide switching service for Kansas to the Altamira Facilities under the terms and conditions specified in Clause Seven, below;

	(iii)		Certain Exclusions . For the avoidance of doubt, Kansas does not have trackage rights at the Port of Altamira except as described in this Section 5.7(d); and

	(iv)		New Altamira Facilities . To the extent Ferromex obtains trackage rights pursuant to Section 5.4(f) hereof to a New Ternium Facility located within the Monterrey Access Zone on trackage different to the Former M, BMA and Former F Lines, Kansas shall be entitled to obtain trackage rights to one (1) New Altamira Facility per each such New Ternium Facility located within the Monterrey Access Zone on trackage different to the Former M, BMA and Former F Lines, in the understanding that:

	[a]		The right from Kansas shall begin upon Kansas delivering to Ferromex the notice referred to in Section 5.4(f)(iii), in the understanding that Kansas shall deliver a notice to Ferromex indicating the facility that it intends to serve upon Kansas deciding which facility would that be;

	[b]		The rate payable by Kansas for the trackage rights that, in its case, are granted under this paragraph (iv), will be the general rate set forth in Section 5.1 as increased in accordance with this Agreement;

	[c]		Any trackage rights granted under this Section 5.7(d)(iv) will not grant Kansas trackage rights or any other form of rights to serve any facility

			other than the New Altamira Facility, in the understanding that this provision does not affect the provision set forth in paragraph (ii) of this Section 5.7(d) with respect to switching services;

	[d]		Any trackage rights granted under this Section 5.7(d)(iv) would be subject to the specific instructions granted by the Ferromex dispatcher on a case by case basis;

	[e]		To the extent that there are any trackage rights granted in the future pursuant to this Section 5.7(d)(iv), Kansas shall not tender, and Ferromex shall not be obligated to accept, Trains that exceed the capacity of the New Altamira Facility or that in any other manner may unreasonably congest Ferromex Trackage; provided, however, that to the extent such congestion occurs, Ferromex shall seek to provide if possible an alternative route for Kansas to be able to access the New Altamira Facility as determined by the Ferromex dispatcher on a case by case basis and in a non-discriminatory basis; and

	[f]		For the purposes hereof, a “ New Altamira Facility ” means a facility located within the territory of, or land owned or managed by, the Administración Portuaria Integral de Altamira, S.A. de C.V.

(e) Certain Clarifications . For the avoidance of doubt, Kansas also has trackage rights over Line M, between Line M KP 4+128 (= Line L KP 672+419) and Line M KP 27+571 pursuant to the PN-10 trackage right, for Kansas’ Trains consisting of Cars that are to be delivered to, or picked up from, the same industry and/or User including:

	(i)		all rail freight traffic originating in and/or bound for the Árbol Grande, Miramar and Altamira Stations;

	(ii)		any industry and/or User currently or in the future located within the area comprised between Line M KP 4+128 (= Line L KP 672+419) and Line M KP 27+571; and

	(iii)		any industry and/or User connected to Section 5.7(e)(i or ii) above, whether directly and/or through auxiliary or secondary tracks, siding, escape tracks, spurs, yard tracks, and/or cortavías .

(f) Aguascalientes . Ferromex hereby and as of this moment:

(i)

grants Kansas a trackage right between Line A KP 574+000 and Line A KP 599+320 (= Line L KP 14+320) to provide railroad services to the Nissan Facility and any future User operating such facility;

	(ii)		agrees to provide switching services to Kansas to deliver Cars to or to pick up Cars from any industry and/or User located within the Aguascalientes Access Zone, and agrees to Interchange such Cars with Kansas on the north wye connection from Line L KP 14+783 (= Line A KP 599+783) to connection with siding located in Line A KP 599+735 (as further identified in Appendix 1 ). Said switching services shall be provided under the terms of and through payment of the rate referred to, in Clause Seven below; and

	(iii)		agrees that Kansas may build at its own cost and expense any improvements that Kansas deems convenient to increase the capacity or characteristics of Kansas’ Trackage in the vicinity of the Aguascalientes Access Zone, at the location agreed upon with Ferromex (which consent may not be unreasonably withheld), and after such improvements have been completed, Ferromex agrees that the Interchange point referred to in paragraphs (ii) and (iii) above shall be changed to that location if so requested by Kansas in writing.

5.8 General Provisions on Rates.

(a) Value Added Tax . The rates payable in connection with the trackage rights mentioned in this Clause Five shall be added with the applicable value added tax.

(b) Billing Terms and Conditions . The terms and conditions of the conciliation, invoicing, revision and payment of the rates referred to in this Clause Five shall be those detailed in Clause Eleven of this Agreement, and amended as mutually agreed upon by the authorized representatives of the Parties hereto from time to time.

5.9 General Terms and Conditions of the Trackage Rights.

(a) The trackage rights that the Parties grant to one another hereunder are further subject to the following terms and conditions set forth in the following paragraphs.

(b) Subject to the rest of the terms and conditions provided in this Agreement, Subject Trackage User shall have the non-exclusive right to use the Subject Trackage for the operation of its Railroad Equipment, Tractive Equipment and Dragged Equipment in its account (collectively “ Equipment ”) over the Subject Trackage, all subject to the terms and conditions contained herein, in common with Subject Trackage Owner and such other railroad company or companies as Subject Trackage Owner has heretofore admitted or may hereafter at any time in the future admit to the joint use of all or any part of the Subject Trackage; provided, however, that Subject Trackage Owner may not admit to the Subject Trackage after, the execution date of this Agreement, any other railroad company or companies whose use of the Subject Trackage will impair the quality or viability of Subject Trackage User’s access granted in this Agreement.

(c) Subject Trackage User shall, in good faith, use the Subject Trackage owned by Subject Trackage Owner pursuant to, perform all acts required by applicable law to transit and operate over the Subject Trackage owned by Subject Trackage Owner in accordance with, and shall perform all operation over the Subject Trackage in strict compliance with, the requirements of this Agreement and the Applicable Framework.

(d) Immediately prior to accessing the Subject Trackage, Subject Trackage User shall assure that its Tractive Equipment has sufficient fuel in its fuel tanks to move its entire Train the entire length of the Subject Trackage on which the Train is to operate without Subject Trackage User’s Train needing refueling.

(e) Except with respect to operation of the Long Trackage Right (for which specific rules are provided in Section 5.5(e)), Subject Trackage User shall, immediately prior to accessing the Subject Trackage, assure that the members of its train crew have sufficient hours of service remaining available under law to allow Subject Trackage User’s Train to move the entire length of the Subject Trackage on which the Train is to operate without Subject Trackage User’s Train re-crewing.

(f) Any use of the Subject Trackage by Subject Trackage User other than the use agreed upon in this Agreement is prohibited unless authorized in a writing executed by a duly authorized officer of the Subject Trackage Owner or by means of any detour or reroute agreement executed by both Parties after the execution date of this Agreement.

(g) It is understood and agreed that in addition to the foregoing limitations, Subject Trackage User shall not have the right, except as specifically provided in this Clause Five, to:

	(i)		Exit the section comprised by the trackage right in question at a point other than the opposite end of such trackage right; provided that this limitation shall not be applicable in those cases in which this Clause Five specifically provides that the Subject Trackage User shall have the right to serve industry and/or Users located within the trackage right in question; or,

	(ii)		Set out, pickup, store or switch upon the Subject Trackage, or any part thereof, except as necessary for handling Equipment that is bad ordered en route, unless otherwise provided in this Agreement or agreed upon in writing by the operating departments of both Parties; or,

	(iii)		Serve any industry, customer facility, intermodal or automotive facility, storage, team or house track now existing or constructed in the future along the Subject Trackage, provided that this limitation shall not be applicable in those cases in which this Clause Five specifically provides that the Subject Trackage User shall have the right to serve industry and/or Users located within the trackage right in question; or,

	(iv)		Permit or admit any third party to the use of all or any portion of the Subject Trackage, nor under the guise of doing its own business, contract or make any agreement to handle as its own Trains, Tractive Equipment, or Cars over or upon the Subject Trackage, or any portion thereof, or the Trains, Tractive Equipment

			and Cars of any such third party which in the normal course of business would not be considered as the Trains, Tractive Equipment or Cars of Subject Trackage User; or,

	(v)		Construct tracks connecting to the Subject Trackage without approval from the Subject Trackage Owner; or,

	(vi)		Handle any cars on or over the Subject Trackage which have a gross weight in excess of the applicable weight limitations contained in the applicable timetable; or,

	(vii)		To establish fueling locations on Subject Trackage; or

	(viii)		To establish any crew change point on Subject Trackage, in the understanding that Ferromex has the right to pay for the construction of the siding mentioned in Section 5.5(e) and Kansas has the right to pay for the construction of the siding or facility referred to in Section 5.7(c); or

	(ix)		Treat, store or dispose of Hazardous Materials on the Subject Trackage.

5.10 Maintenance Changes in and/or Additions, Operation and Control.

(a) The trackage rights that the Parties grant to one another hereunder are further subject to the following terms and conditions set forth in the following paragraphs.

(b) Subject Trackage User, at its expense, shall install and maintain upon its Equipment such equipment, radios, or devices as may now or in the future be necessary or appropriate, in the reasonable judgment of Subject Trackage Owner, for operation of said Equipment upon the Subject Trackage. Subject Trackage User will not, however, be required to install any equipment or devices not in use on Equipment of Subject Trackage Owner. Subject Trackage Owner shall consult with Subject Trackage User prior to the adoption of new equipment, radios, or devices, including communication or signaling systems to be employed on the Subject Trackage which have not theretofore been generally adopted in the railroad industry or previously employed upon the Subject Trackage.

(c) Unless otherwise provided or agreed upon by the Parties in a writing signed by an authorized officer of each Party, each Party shall be responsible for furnishing, at its own expense, all labor, fuel, and train supplies necessary for the operation of its own Equipment over the Subject Trackage. In the event a Party hereto does furnish such labor, fuel, or Train supplies to another Party hereto, the Party receiving the same shall promptly, upon receipt of billing therefor, reimburse the Party furnishing same for its reasonable costs thereof.

(d) The operation by Subject Trackage User on or along the Subject Trackage shall at all times be in accordance with the rules, instructions, and restrictions of Subject Trackage Owner, but such rules, instructions, and restrictions shall be reasonable, just, and fair between all Parties using the Subject Trackage and shall not unjustly discriminate against any Party.

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A
CONFIDENTIAL TREATMENT REQUEST, HAVE BEEN OMITTED FROM THIS EXHIBIT AND
HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS
PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

(e) [****] Except as may be specifically provided for elsewhere in this Agreement, nothing herein contained is intended to change practices with respect to Interchange of traffic between the Parties or with other carriers on or along the Subject Trackage.

(f) In case any Equipment of Subject Trackage User is bad ordered en route on the Subject Trackage and it is necessary that it be set out, such bad ordered Equipment shall be handled as stated in Section 9.10 hereof.

(g) If Equipment of Subject Trackage User shall become derailed, wrecked, or otherwise disabled while upon the Subject Trackage, it shall be re-railed or cleared by Subject Trackage Owner, except that employees of Subject Trackage User may re-rail Subject Trackage User’s derailed Equipment on the Subject Trackage whenever use of motorized on or off track equipment is not required and prior permission has been granted by Subject Trackage Owner. The costs and expenses of clearing derailments and wrecks shall be at Subject Trackage User’s expense unless otherwise provided for in Clause Fifteen.

(h) In the event Equipment of User shall be forced to stop on the Subject Trackage, and such stoppage is due to insufficient on duty time remaining among User’s employees, or due to mechanical failure of User’s Equipment, or due to User’s Equipment having inadequate fuel to complete its movement over the Subject Trackage, or any other cause not resulting from an accident or derailment, and such Equipment is unable to proceed, or if a train of User fails to maintain the speed required by Owner on the Subject Trackage, or if in emergencies, crippled or otherwise defective Equipment is set out of Subject Trackage User’s Train on the Subject Trackage, Owner shall have the option to furnish motive power or such other assistance (including, but not limited to, the right to recrew User’s Train) as may be necessary to haul, help or push such Equipment, or to properly move the disabled Equipment off the Subject Trackage or off the main line thereof and onto a siding or into a yard. The reasonable costs and expenses of rendering such assistance shall be at User’s expense.

(i) Before User’s Train enters onto the Subject Trackage, User shall request permission from Owner’s dispatcher or other designated representative, and provide Owner, via electronic means, all of the information for each Train set forth on Exhibit F . Further, User shall ascertain that the Subject Trackage is clear and shall await confirmation from said representative that such permission has been issued to allow User’s movements on or over the Subject Trackage. Once permission is received by User to enter onto the Subject Trackage, User shall realign switches and derails to their normal operating position and leave said switches and derails in their normal operating position after completing its operations and clearing the Subject Trackage. User shall notify Owner’s designated representative that it has completed its operations and that its Equipment has cleared the Subject Trackage. Once User has notified Owner’s representatives that it has cleared the Subject Trackage, User shall not reenter the Subject Trackage without again obtaining permission from Owner’s representative pursuant to the terms of this subsection (i).

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A
CONFIDENTIAL TREATMENT REQUEST, HAVE BEEN OMITTED FROM THIS EXHIBIT AND
HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS
PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

5.11 Default . Except for the cases indicated in Section 11.8 hereof (in which the incremental penalties set forth therein shall be applicable), should Subject Trackage User handle any traffic over the Subject Trackage in violation of the restrictions set forth in this Agreement, Subject Trackage Owner shall be entitled to receive from Subject Trackage User the payment of thrice the then-current charge for each Car so handled in violation of the aforesaid restrictions.

5.12 Certain Clarifications on Trackage Rights not included within the Scope of this Agreement.

(a) General . The Parties hereby represent that any existing or potential controversies regarding the scope, terms or conditions of trackage rights N-2, N-3 and N-5 are not settled by means of this Agreement; provided, however that: ( i ) the Parties have the intention of making certain clarifications with respect to such trackage rights as indicated in the following paragraphs of this Section 5.12; and ( ii ) [****]. In accordance with the foregoing, the Parties hereby expressly reserve any and all rights that they have to initiate and/or continue with whatever legal proceedings they deem appropriate in connection with the aforementioned trackage rights.

(b) Trackage Right N-2 . For the avoidance of doubt, Ferromex has the trackage right identified in the corresponding exhibits to the Ferromex and Kansas Concession Titles as trackage right N-2.

(c) Trackage Right N-3 . For the avoidance of doubt, Ferromex has the trackage right identified in the corresponding exhibits to the Ferromex and Kansas Concession Titles as trackage right N-3.

(d) Pesquería Facility . The Parties hereby acknowledge and agree that the Pesquería Facility is not included within the scope of the trackage rights referred to in paragraphs (b) and (c) of this Section 5.12.

(e) Trackage Right N-5 . For the avoidance of doubt, the Parties hereby agree that the Ferromex Trains using the N-5 trackage right are not to be counted as part of the Ferromex Trains entering the Long Trackage Right as provided under Section 5.5(d).

Clause Six. Interline Traffic Services Rates.

6.1 General . Unless otherwise agreed to herein, from and after the execution date of this Agreement, the Parties agree to the rates for Interline Traffic established in the following Sections of this Clause Six.

6.2 Complementary Interline Traffic.

(a) Complementary Interline Traffic Rates Matrix . For Interline Traffic that needs to go from a point of origin to a point of destination via a particular route because there are no alternative routes (“ Complementary Interline Traffic ”), the applicable rates shall be those indicated in the matrix (the “ Matrix ”) attached hereto as Exhibit G , which determines the portion of the rate that shall be applied to the User that corresponds to each of the Parties for each route specified therein; the rate so determined shall constitute the rate for Complementary Interline Traffic. The Parties shall work jointly to reach an agreement within the following 30 (thirty) calendar days to agree on the applicable rates for any route that is not contemplated in the Matrix. Also, the Parties may change the rate of any particular route within the term set forth in paragraph (c) below.

(b) Rates not Conditional . The Party that is not responsible for contracting with the User shall be entitled to charge the rate applicable under the Matrix regardless of the terms and conditions that are quoted or agreed between the other Party and the User.

(c) Term of the Matrix . The Matrix shall be in force from the execution of this Agreement and until December 31, 2010. Once such term has elapsed, each of the Parties may indicate to the other Party their respective increases to one or more of the rates indicated in said Matrix (in addition to the provisions of Section 6.5 (c)) and in case no agreement can be reached with respect to such rates, the Parties may apply the corresponding TUCE Rates.

6.3 Alternative Interline Traffic.

(a) Free Determination . For Interline Traffic that needs to go from a point of origin to a point of destination that has alternative routes (“ Alternative Interline Traffic ”), [****].

(b) [****]

6.4 [****]

6.5 General Provisions on Rates.

(a) Value Added Tax . The rates payable in connection with Complementary Interline Traffic and Alternative Interline Traffic mentioned in this Clause Six shall be added with the applicable value added tax.

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A
CONFIDENTIAL TREATMENT REQUEST, HAVE BEEN OMITTED FROM THIS EXHIBIT AND
HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS
PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

(b) Billing Terms and Conditions . The terms and conditions of the conciliation, invoicing, revision and payment of the rates referred to in this Clause Six shall be those detailed in Clause Eleven of this Agreement, and amended as mutually agreed upon by the authorized representatives of the Parties hereto from time to time.

(d) [****]

6.6 Acknowledgment . The Parties hereby acknowledge the validity, in terms of Article 36 of the Railroad Service Law, of the agreements reached with respect to the rates that from now on they shall pay each other under this Clause Six. [****]

6.7 Absence of Participation . Nothing contained in this Clause Six shall be deemed as a change or alteration of the rules and restrictions contained in Clause Five with respect to the trackage rights granted to the Parties nor shall the rates provided for in the Matrix be deemed to supersede or replace the applicable rates to be charged in connection with such trackage rights.

Clause Seven. Switching Services.

	7.1		[****]

	(a)		[****]

	(b)		For purposes of the preceding paragraph:

	(i)		a loaded Car means a Car carrying any form of freight; [****]; and

	(ii)		an empty Car is a Car that is not a Loaded Car. A tank Car will be considered an empty Car when it has been unloaded [****].

(c) For the avoidance of doubt, when a Car is on the Trackage of another Party under switching services, that Car must be treated as either a loaded Car or an empty Car according to the above.

(d) The Parties agree that for switching services provided by one Party to [****].

(e) Except as expressly provided otherwise, this Agreement is not intended to create new, or restrict or terminate existing, switching services.

7.2 General Provisions on Rates.

(a) Value Added Tax . The rates payable in connection with the services mentioned in this Clause Seven shall be added with the applicable value added tax.

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A
CONFIDENTIAL TREATMENT REQUEST, HAVE BEEN OMITTED FROM THIS EXHIBIT AND
HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS
PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

(b) Billing Terms and Conditions . The terms and conditions of the conciliation, invoicing, revision and payment of the rates referred to in this Clause Seven shall be those detailed in Clause Eleven of this Agreement, and amended as mutually agreed upon by the authorized representatives of the Parties hereto from time to time.

7.3 Acknowledgment . The Parties hereby acknowledge the validity, in terms of Article 36 of the Railroad Service Law, of the agreements reached with respect to the rates that from now on they shall pay each other pursuant to this Clause Seven. [****].

Clause Eight. Points of Interchange.

8.1 General.

(a) The location of tracks designated for pickup and delivery of Dragged Equipment at the point of Interchange in connection with the provision of switching services and interline services shall be as mutually agreed upon by the authorized representatives of the Parties hereto from time to time unless otherwise specified herein.

(b) Dragged Equipment shall be deemed to be in the receiving Party’s account when placed on the designated Interchange tracks and the Tractive Equipment of the delivering Party is uncoupled therefrom and said Dragged Equipment is accompanied or preceded by proper forwarding data via electronic methods pursuant to and as defined by the AAR. The management, operation, dispatching and maintenance of the tracks subject to switching rights and interline service shall, at all times, be under the exclusive direction and control of owner of such tracks, and the movement of Equipment over and along such tracks shall at all times be subject to the direction and control of the track owner’s authorized representatives and in accordance with such reasonable operating rules as track owner shall from time to time institute, provided, however, that in the management, operation, dispatching and maintenance of said tracks, the track owner and the track user shall be treated equally and in a non-discriminatory basis in accordance with this Agreement and the Applicable Framework.

(c) All operating, dispatching and maintenance decisions by Subject Trackage Owner affecting the movement of Equipment over the Subject Trackage shall be made on a non-discriminatory basis, without reference to ownership. The foregoing shall include, without limitation, decisions as to terminal departure times, destination terminal receiving times, en-route delays, track maintenance and the scheduling of maintenance windows. Subject Trackage Owner shall make timely notification to Subject Trackage User of operating rules and any changes thereto.

8.2 Monterrey.

(a) With the purpose of alleviating traffic in the City of Monterrey and in order to avoid Ferromex’s Equipment entering into the loading yard ( patio de carga ) of Monterrey (as defined in the Kansas’ schedule registered with the Ministry) the Interchange for the switching service shall be made on the tracks that Kansas may construct in the vicinity of Line BF, between Line M KP 535+811 and Line B KP 1038+323 (the “ Monterrey Adaptation ”).

(b) The Parties hereby agree that Kansas shall have the right (but not the obligation) to undertake the Monterrey Adaptation.

(c) Ferromex hereby agrees that, in the event that the construction of the Monterrey Adaptation involves the use of Ferromex’s right of way, including the infrastructure under the Ferromex Concession Title, Ferromex will review in a timely manner the project submitted by Kansas for such purposes, and will grant or reject the approvals necessary therefor based on the impacts such project may have on Ferromex. Ferromex shall not unreasonably refuse Kansas the right to construct the Monterrey Adaptation but shall, instead, work in good faith to find a safe and cost effective means to construct said Monterrey Adaptation.

8.3 Altamira . Except as provided in Section 5.7(d), the Parties agree that Kansas shall not have access through trackage rights of any type to the facilities of any User located in the Port of Altamira. To such effect, the Parties agree that the rendering of the service to Users located at the Port of Altamira (or to the Users described in 5.7(d) above if Kansas so decides), Altamira, Miramar and Árbol Grande shall be made through switching services that Ferromex shall provide to Kansas, through payment of the rate referred to in Clause Seven above, in the understanding that the Interchange of equipment shall be made at Doña Cecilia, on tracks 101, 102 and 103 or such other tracks as are agreed to by the Parties, provided that Ferromex shall access those tracks only through tracks 500 and 501.

8.4 Celaya.

(a) The parties hereby designate the Celaya Yard, located at Line A KP 292+000, and the two sidings located at Line NB KP 68+633 and Line NB KP 67+252, as the point of Interchange for any interlineal traffic originating from, or bound to, industries and/or Users located in the Bajío Area, except as specified in paragraph (b) below. The Parties agree that this Interchange point supersedes any prior agreement regarding Interchange points for interlineal traffic moving to or from points in the Bajío Area, and that any and all prior agreements or obligations acquired with respect to Interchange for traffic moving to or from the Bajío Area are hereby terminated. For the avoidance of doubt, no location within the State of Querétaro shall be used as a point of Interchange except as otherwise agreed by the Parties or ordered by a court of competent jurisdiction.

(b) Paragraph 8.4(a) above shall not apply to interlineal traffic originating from, or bound to industries inside the Guadalajara Access Zone. Instead, such interlineal traffic shall be Interchanged in the Guadalajara Terminal.

Clause Nine. Maintenance and Operation of Subject Trackage.

9.1 General Rules . Subject to the Applicable Framework, Subject Trackage User shall have the right to construct, maintain, repair, and renew, at its sole cost and expense, and, as permitted by the corresponding legal provisions, the tracks which connect the respective lines of the Parties and which are located on the right-of-way of Subject Trackage User and to the clearance point in right-of-way of Subject Trackage Owner.

9.2 License . Subject Trackage Owner hereby grants to Subject Trackage User a license over that portion of Subject Trackage Owner’s property between right-of-way line and clearance point in order for Subject Trackage User to maintain such trackage.

9.3 Track Connections . Subject Trackage Owner shall construct, maintain, repair, and renew, at the sole cost and expense of Subject Trackage User, and shall own the portions of the track connections between said tracks of the Parties hereto between the headblock and clearance point located on the right-of-way of Subject Trackage Owner. Any costs and expenses to be refunded by the Subject Trackage User under this Section 9.3 shall be reasonable in the context of the work performed by Subject Trackage Owner and, in any case, shall be duly documented by the applicable invoices of the expenses incurred into by the Subject Trackage Owner.

9.4 Alternative Routes.

(a) Subject Trackage Owner, at its expense, shall maintain its corresponding Subject Trackage. In the event that for operating convenience, necessity or emergency, Subject Trackage Owner directs Subject Trackage User to use adjacent track and track connections between or beyond the ends of the Subject Trackage owned by Subject Trackage Owner as an alternative route, then and in such event, such trackage, track connections and appurtenances shall be deemed for that movement to be part of the Subject Trackage owned by Subject Trackage Owner and shall be governed by all the provisions of this Agreement.

9.5 Direction and Control of Construction, Maintenance, Repair, and Renewal.

(a) The construction, maintenance, repair, and renewal of the Subject Trackage shall be under the exclusive direction and control of Subject Trackage Owner. Subject Trackage Owner shall make any changes in and additions to the Subject Trackage which may be required by law, and progressively during construction these shall become part of the Subject Trackage. Subject Trackage Owner may make changes and additions to the Subject Trackage which Subject Trackage Owner deems necessary or desirable for the safe, efficient, and economical use of the Subject Trackage by the Parties, and these shall progressively during construction become part of the Subject Trackage.

(b) Subject Trackage User may request changes and additions to the Subject Trackage which Subject Trackage User deems necessary or desirable for the safe, efficient, and economical use of the Subject Trackage by the Parties. Subject Trackage Owner, if it concurs with Subject Trackage User’s request, shall construct the changes or additions requested to which Subject Trackage Owner is agreeable, with the cost of such construction to be divided between the Subject Trackage Owner and the Subject Trackage User in direct proportion to each’s relative percentage of the total Car-Kilometers of traffic moved over the Subject Trackage during the immediately-preceding twelve (12) calendar months. The changes or additions so constructed shall become part of the Subject Trackage. If the Subject Trackage Owner does not concur with Subject Trackage User’s request for changes or additions to the Subject Trackage, Subject Trackage User shall have the option of having the changes or additions that benefit only Subject Trackage User made at Subject Trackage User’s sole cost and expense, so long as such changes or additions do not impair the use of the Subject Trackage for the Subject Trackage Owner. If changes or additions are constructed at the sole cost and expense of the Subject Trackage User, Subject Trackage Owner shall thereafter maintain said changes or additions along with the remainder of the Subject Trackage. If changes or additions are constructed at the sole cost and expense of the Subject Trackage User, and the Subject Trackage User’s trackage right to use the Subject Trackage is lawfully terminated, Subject Trackage User shall have the right to remove from the Subject Trackage at the Subject Trackage User’s sole cost and expense the changes and additions that were constructed at the Subject Trackage User’s sole cost and expense.

9.6 Direction and Control of Management and Operation . The management and operation of the Subject Trackage shall be under the exclusive direction and control of Subject Trackage Owner. Subject Trackage Owner shall have the authority to change the management and operations on and over the Subject Trackage as in its judgment may be necessary, expedient, or proper for the operations thereof herein intended, provided, however, that Subject Trackage Owner must conform to the operating conditions established by the Service Standards Committee under Clause Twelve hereof.

9.7 Derailment and Accidents Involving Hazardous Materials.

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A
CONFIDENTIAL TREATMENT REQUEST, HAVE BEEN OMITTED FROM THIS EXHIBIT AND
HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS
PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

(d) [****] Subject Trackage Owner and its contractors shall have full, unrestricted and unconditional access to the Subject Trackage for the purpose of completing or engaging in a Response Action for which Subject Trackage Owner has any responsibility or, at Subject Trackage Owner’s option, a Response Action which Subject Trackage Owner has undertaken should Subject Trackage User fail to diligently pursue and complete such Response Action to the satisfaction of Subject Trackage Owner; provided, however, that any Response Action ( i ) shall be undertaken and completed pursuant to a work plan (including a schedule) submitted to the other Party for its review and, in the case of Subject Trackage Owner, approval, and ( ii ) shall not unreasonably, in terms of duration or otherwise, restrict the other Party’s use of the Subject Trackage. Either Party’s completion of any of the other Party’s obligations hereunder shall not be deemed a release of such obligations under this Agreement. Subject Trackage Owner shall have the right, but not the obligation, to conduct reasonable inspections of any Response Action of Subject Trackage User and Subject Trackage User shall provide Subject Trackage Owner all information requested by Subject Trackage Owner regarding any Response Action of Subject Trackage User or any Environmental Claims for which Subject Trackage User is responsible.

9.8 Additional Rules on Management and Operation of Subject Trackage.

(a) Subject Trackage Owner shall employ all persons necessary to construct, operate, maintain, repair, and renew the Subject Trackage. Subject Trackage Owner shall be bound to use only reasonable and customary care, skill, and diligence in the construction, operation, maintenance, repair, and renewal of the Subject Trackage and in managing same.

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A
CONFIDENTIAL TREATMENT REQUEST, HAVE BEEN OMITTED FROM THIS EXHIBIT AND
HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS
PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

(b) Subject Trackage shall be kept in a state of reasonable repair and reasonably suitable for the combined requirements of the Parties and of such other railroad companies as Subject Trackage Owner has heretofore admitted or may hereafter admit to use of the Subject Trackage and, at least, in the conditions that are necessary for compliance with the Applicable Framework. In the event there are conditions from time to time which require speed restrictions with respect to any location on the tracks comprised in the Subject Trackage, Subject Trackage Owner shall, with reasonable promptness, notify Subject Trackage User of such speed restrictions and repair such conditions so as to permit the removal of such speed restrictions.

(c) Subject Trackage User shall not, by reason of Subject Trackage Owner’s performing or failing or neglecting to perform any construction, operation, maintenance, repair, renewal, or management of the Subject Trackage, have or make against Subject Trackage Owner any claim or demand for any loss, damage, destruction, injury, or death whatsoever resulting therefrom. Subject Trackage User shall be given the same advance notice of maintenance plans and schedules as is provided to Subject Trackage Owner’s personnel.

(e) Subject Trackage Owner may occasionally substitute tracks for those delineated in this Agreement for use by Subject Trackage User; provided that no such substitution may be made without the consent of Subject Trackage User, which consent will not be unreasonably withheld. When any tracks which are not part of the Subject Trackage are used as provided herein, the Agreement shall govern for purposes of direction and control and liability as if all movement had been made over the Subject Trackage.

(f) [****]

9.9 Training of Subject Trackage User’s Crews.

the Subject Trackage. In addition to all other qualification requirements, crews of Subject Trackage User shall not be deemed qualified to operate on the Subject Trackage until such crew members have completed five (5) trips over the Subject Trackage under the supervision of User’s qualified supervisory officers or Owner-supplied pilot or pilots.

(c) If any employee of Subject Trackage User shall neglect, refuse, or fail to abide by Subject Trackage Owner’s rules, instructions, and restrictions governing the operation on or along the Subject Trackage, such employee shall, upon written request of Subject Trackage Owner, be prohibited by Subject Trackage User from working on the Subject Trackage. If either Party shall deem it necessary to conduct an investigation to establish such neglect, refusal, or failure on the part of any employee of Subject Trackage User, then upon such notice presented in writing, Subject Trackage Owner and Subject Trackage User shall promptly conduct a joint investigation in which all parties concerned shall participate and bear the expense for its officers, counsel, witnesses, and employees. Notice of such investigations to employees of Subject Trackage User shall be given by Subject Trackage User’s officers, and such investigation shall be conducted in accordance with the terms and conditions of the collective bargaining agreements between Subject Trackage User and its employees. If, in the judgment of Subject Trackage Owner, the result of such investigation warrants, such employee shall, upon written request of Subject Trackage Owner, be withdrawn by Subject Trackage User from service on the Subject Trackage, and Subject Trackage User shall release and indemnify Subject Trackage Owner from and against any and all claims and expenses because of such withdrawal.

(e) In the event the relevant union and/or any of the Subject Employees asserts any claim, action, suit or any other form of complaint against Subject Trackage User (and/or its respective directors, officers, advisors, agents, employees, or Affiliates), and with respect to discipline imposed under this Section 9.9, Subject Trackage Owner hereby covenants and agrees to indemnify, defend and hold Subject Trackage User (including its respective directors, officers, advisors, agents, employees, or subsidiary or Affiliates) harmless of any such claim, action, suit or complaint filed by such union and/or any of the Subject Employees; provided that Subject Trackage User shall have the right (but not the obligation) to (i) choose legal advisors to handle the dispute and determine the strategy of such proceedings, whose fees shall be borne by Subject Trackage Owner; and/or (ii) at its sole discretion, make the relevant payment to the claiming person(s) and then be reimbursed of such payment by Subject Trackage Owner.

9.10 Repairs on Dragged Equipment; Removal of Bad Ordered Tractive Equipment.

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, HAVE BEEN OMITTED FROM THIS EXHIBIT AND HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

(b) Unless otherwise agreed, Subject Trackage Owner shall, at Subject Trackage User’s sole cost and expense, furnish the required labor and material and perform light repairs to make such bad ordered Dragged Equipment safe for movement. In the case of such repairs by Subject Trackage Owner for Dragged Equipment in Subject Trackage User’s account, billing therefor shall be in accordance with the Interchange Rules in effect on the date of performance of the repairs. Subject Trackage Owner shall then prepare and submit billing directly to and collect from the Dragged Equipment owner for Dragged Equipment owner responsibility items as determined under said Interchange Rules, and Subject Trackage Owner shall prepare and submit billing directly to and collect from Subject Trackage User for line responsibility items as determined under said Interchange Rules.

Clause Ten. Dispatch of Trains; Traffic Control Centers; Non- Discrimination.

10.1 Traffic Control Centers . Subject Trackage Owner shall operate the Subject Trackage by means of duly-staffed traffic control centers that remain operational for 24 (twenty four) hours each day of the year, that handle the traffic flowing over the Subject Trackage in an orderly and timely fashion and in accordance with the Applicable Framework.

10.2 [****]

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, HAVE BEEN OMITTED FROM THIS EXHIBIT AND HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

10.3 Subject Trackage Use Notice . Before each occasion on which Subject Trackage User intends to make use of Trackage Rights granted hereunder, Subject Trackage User shall send a written notice (which may be done by electronic means) to Subject Trackage Owner containing all of the information listed in Exhibit F hereto and any other information relevant to the safety of movement of Subject Trackage User’s Train.

10.4 Non- Discrimination.

(a) Without limiting the generality of the foregoing, Subject Trackage Owner shall be responsible for the dispatch of all Trains circulating on the Subject Trackage, with the understanding that, all Users, including Subject Trackage User, will be treated on a non-discriminatory basis.

(b) For purposes of this Agreement, non-discriminatory treatment includes the obligation of the Subject Trackage Owner to treat Subject Trackage User-related traffic under at least the same terms and conditions (operative and otherwise) as it treats its own.

10.5 Uninterrupted flow of Traffic and other Items . The Subject Trackage Owner shall carry out all traffic management and regulation functions necessary to ensure the safe and uninterrupted flow of traffic and minimal traffic delays on the Subject Trackage, which shall include without limitation:

	(i)		managing the traffic from its traffic operations centers, which shall remain staffed and operational 24 (twenty four) hours every day of the year;

	(ii)		providing recovery service and ambulance service 24 (twenty four) hours every day of the year;

	(iii)		coordinating with police and emergency services authorities with respect to traffic control and with other Governmental Authorities, as and when needed;

	(iv)		carrying out such functions in a non-discriminatory manner, as provided in paragraph 10.4 above; and

	(v)		coordinate sharing of Automatic Equipment Identification (AEI) reader information as needed to ensure safe and efficient operation.

Clause Eleven. Billing.

	11.1		Billing Forms.

	(a)		[****]

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, HAVE BEEN OMITTED FROM THIS EXHIBIT AND HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

11.2 [****] The failure of a Party to provide such notice to the Party paying the rate shall not be deemed a breach of this Agreement and shall not in any manner affect or delay the taking effect of the automatically adjusted rates provided for by this Agreement.

11.3 [****]

11.4 Disputed Bills . Errors or disputed items in any bill shall not be deemed a valid excuse for delaying payment, and payments shall be made subject to subsequent adjustment, provided, however, that:

	(i)		[**], or ( b ) if in connection with a project for which a roadway completion report is required, after the last day of the calendar month in which the roadway completion report is made covering such project, with retirements and additions being reflected as appropriate adjustments to valuation bases retroactive up to 3 (three) years from date of billing, or (c) [**]

	(ii)		should the amount of any bill rendered by one Party to the other for trackage rights fees due under Clause Five, or for interline rate divisions due under Clause Six, or for switching service fees due under Clause Seven [**] and the receiving Party’s good faith belief as to the amount due. If said representatives are able to resolve the Parties’ differences about the bill at their meeting, the Parties shall make an appropriate reconciliation and supplementary billing or credit notes, [**]. For any items not resolved by the representatives about the bill at their meeting, the matter shall be referred to the Dispute Resolution procedures established by Clause Nineteen.

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, HAVE BEEN OMITTED FROM THIS EXHIBIT AND HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

11.5 Inspections and Audits . So much of the books, accounts, and records of each Party hereto as are related to the subject matter of this Agreement shall at all reasonable times be open to inspection by the authorized representatives and agents of the Parties hereto. All books, accounts, and records shall be maintained to furnish readily full information for each item.

11.6 [****]

11.7 Payment Failure; Additional Remedy . Should Subject Trackage User fail pay when due payments for use of Subject Trackage of the other Party which Subject Trackage User is obligated to pay under this Agreement, or fail in any other respect to perform as required under this Agreement, [****], whereupon the Subject Trackage User shall surrender to Subject Trackage Owner all said Subject Trackage and shall have no claim or demand upon it, by suit at law or otherwise, on account of said exclusion, and Subject Trackage User shall, upon written demand of Subject Trackage Owner, pursue and obtain any required regulatory filings to discontinue use of the Subject Trackage; provided that failure to make any disputed payment which is the subject of litigation between the Parties shall not be deemed, pending the decision in such arbitration or litigation, a cause for forfeiture hereunder.

11.8 Incremental Rates in case of Certain Defaults.

(a) The Parties agree that in the event any of them fails to comply with the provisions of this Agreement indicated in the following paragraph (which are listed as the only cases triggering an incremental rate and not merely as examples), the rates payable to the non-defaulting Party shall be incrementally increased as provided in the following paragraph.

(b) [****]

(c) The remedies set forth above with respect to defaults by the Parties are not exclusive and the enforcement thereof shall not prevent the non-defaulting Party from seeking specific enforcement of the terms and conditions of this Agreement and/or recovering any applicable damages and lost profits to which is entitled for the breach of the other party.

Clause Twelve. Service Standards Committee and Transition Period.

12.1 The Committee.

(a) A service standards committee (the “ Committee ”), shall be established, and shall be responsible for: ( i ) establishing and updating operating plans as outlined in Section 12.3 (a) and (d) — Transition Period below; ( ii ) establishing rules or standards as appropriate to ensure equitable and non-discriminatory treatment, appropriate maintenance and efficient use of the Subject Trackage; ( iii ) such other functions attributed to the Committee under other agreements entered into by Kansas and the Ferromex Parties.

(b) The Committee shall meet on a regular basis not less often than monthly during the Transition Period and thereafter not less often than every 3 (three) months during the first year of operation under this Agreement, and thereafter within 45 (forty-five) days (unless otherwise mutually agreed) following the date that the Party to this Agreement that requests the meeting delivers to the other such party 45 (forty-five) days’ written notice of its desire to meet to review the overall performance of the rights provided for under this Agreement, to resolve conflicts and consider other relevant matters within the responsibility of the Committee as defined in this Clause Twelve.

(c) If the Committee fails to reach an agreement within 10 (ten) business days of beginning its meeting, with respect to any matter within the scope of its responsibilities as outlined herein, the matter shall be referred to the Director of Operations of Kansas and to the Chief Operating Officer of Ferromex that are (i) providing and (ii) using the particular service (including but not limited to the trackage rights provided for in Clause Five hereof and the switching services provided for in Clause Seven hereof) under discussion for further negotiation.

(d) The Director of Operations of Kansas and the Chief Operating Officer of Ferromex shall negotiate for an additional 10 (ten) business days following the date of referral described in Section 12.1(c) immediately above in an effort to resolve their disagreement.

(e) The Committee shall consider technological improvements that may foster more rapid and consistent service in the Subject Trackage. Changes in service standards or decisions on capital investments flowing from such consideration shall be negotiated in good faith and subject to the terms of this Agreement.

(f) The Parties agree that Kansas shall appoint 3 (three) individuals and that Ferromex shall appoint 3 (three) individuals to the Committee. Appointments and replacements of the individuals shall be made at any time by sending a letter to Ferromex or Kansas, as applicable, indicating the names of the corresponding appointees or their replacements.

12.2 Limitations of the Committee.

(a) The Parties hereby acknowledge that the Committee is created with the intent of facilitating the implementation of the terms and conditions of this Agreement and the other agreements providing trackage, haulage or switching rights entered into by Kansas and the Ferromex Parties. The Committee does not have the power to change the provisions of either this Agreement or the other agreements entered into by Kansas and the Ferromex Parties.

12.3 Transition Period.

the Applicable Framework; and ( ii ) attempt to solve all operational processes that are not critical for the implementation of the trackage rights that are provided for in this Agreement.

(b) If during the Transition Period there are any matters referred to in paragraph (a) above that cannot be amicably solved by the Parties, either Party may submit such matter to the Committee. Upon such submission, the matter will be addressed by the Committee and if no Agreement can be reached by the Committee or by the Director of Operations of Kansas and the Chief Operating Officer of Ferromex, either Party may commence the dispute resolution process set forth in Clause Eighteen hereof and eventually enforce its rights under applicable law.

	(d)		The Committee will be responsible for the following:

	(i)		Develop a written procedure for requesting and granting access to the rights and services provided for in this Agreement (See Exhibit F );

	(ii)		Define processes for monitoring compliance with requirements for non — discriminatory treatment, equal access, and restrictions to access;

	(iii)		Define operational points of Interchange where applicable;

	(iv)		Define requirements for electronic exchange of information;

	(v)		Define processes for notification regarding changes to operating rules, instructions, and temporary and permanent restrictions, use of alternate routes, and planned maintenance outages;

	(vi)		Define processes for notification of proposed physical changes to the Subject Trackage;

	(vii)		Define processes for notification of proposed changes to scheduled traffic;

	(viii)		Define processes for notification and handling of bad orders, delays en route, derailments, and requests for pilots;

	(ix)		Define requirements and processes regarding training and qualifications of crews to conduct trackage rights operations;

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, HAVE BEEN OMITTED FROM THIS EXHIBIT AND HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

(x) Define processes for other operational considerations covered under this Agreement not identified in the above listing; and

(xi) Consideration and review of proposals for construction of additional facilities contemplated under this Agreement.

Clause Thirteen. Other Obligations.

13.1 Public Statements.

(a) The Parties shall work together to prepare a joint document for transmission to the media in which the termination of the Settlement Controversies and this Agreement shall be informed. In case the Parties are unable to agree on the contents of such a document, this Agreement, shall continue in full force and effect.

(b) [****]; in the understanding that in case any of the Parties discloses this document to any third party or Governmental Authority, said disclosure would not be deemed as a breach of this Agreement and the Party making the disclosure would not be liable to the Party for having made said disclosure.

13.2 Best Efforts.

(a) The Parties agree to carry out any and all acts that are reasonably necessary to defend the validity and legal force of this Agreement.

(b) In such respect, the Parties agree to carry out any acts necessary in order for the provisions of this Agreement to become fully effective. Likewise, they agree to not carry out any act or action that may impede that the provisions of this Agreement to become fully effective.

(d) The Parties agree to modify any provision of this Agreement that is found to be or becomes contrary to the applicable legal framework in order to make it compatible with such framework, provided that the purpose and sense of the original provision shall be maintained.

(e) Each of the Parties agrees to carry out all necessary and/or desirable acts in order for the other Parties, respectively, to be able perform any acts or actions required to be performed hereunder and give full force and effect to the provisions of this Agreement.

Clause Fourteen. Term, Termination.

14.1 General Term.

(a) This Agreement shall become effective on the date hereof and remain valid until either the term of the Ferromex Concession Title or the Kansas Concession Title set forth in Representations I.(c) and II.(c), respectively, expire, unless the Parties mutually agree to renew the Agreement for an additional term.

(b) Lapse or termination of this Agreement shall not relieve or release either Party hereto from any obligations assumed (including but not limited to obligations to defend, indemnify, save and hold harmless) or from any liability which may have arisen or been incurred by either Party under the terms of this Agreement prior to the termination hereof.

14.2 Events of Termination.

(a) Notwithstanding the provisions of Section 14.1 above, this Agreement may be terminated before its stipulated term if one of the Parties transfers, directly or indirectly, its concession under the respective Concession Title (or the rights related thereto), in which case the other Party may terminate this Agreement giving prior written notice within 6 (six) months subsequent to the date in which it has knowledge of such transfer, without responsibility for any of the Parties. For the avoidance of doubt, a change of control over Kansas, or its Affiliates and controlling companies, does not constitute a cause for termination of this Agreement.

(b) The assignment of economic rights under its respective Concession Title to a securitization vehicle or to a special purpose trust or vehicle for purposes of security or payment source of any form of financing or refinancing received by either Party from financial institutions or the securities’ market, shall not be subject to the restrictions set forth in the preceding paragraph.

14.3 Dispossession . In the event Subject Trackage Owner shall be involuntarily dispossessed, including threat of condemnation by competent Governmental Authority, of the right to operate upon and maintain any portion of the Subject Trackage, and provided Subject Trackage Owner shall by such involuntary dispossession lose the right to operate its own Trains on the Subject Trackage, Subject Trackage Owner shall have no obligation hereunder to provide such tracks of which Subject Trackage Owner has been dispossessed for Subject Trackage User’s use, and Subject Trackage User shall have and shall make no claim of any kind, legal or otherwise, against Subject Trackage Owner for failure to provide such tracks for Subject Trackage User’s use.

14.4 Abandonment.

(a) Under the terms hereinafter stated, and to the extent that Subject Trackage Owner may lawfully do so, Subject Trackage Owner reserves to itself the exclusive right, exercisable at any time during the life of the Agreement without concurrence of Subject Trackage User, to elect to abandon all or any part of the Subject Trackage by giving 6 (six) months’ prior written notice to Subject Trackage User of its intention to do so.

(b) If, at the time of such election, Subject Trackage User is the only party (other than Subject Trackage Owner) having the right to use the Subject Trackage via trackage, haulage or any other access rights, Subject Trackage Owner shall, concurrently with its notice of abandonment, and to the extent it is legally able to do so, give to Subject Trackage User the option to acquire said Subject Trackage or the part or parts thereof to be abandoned. Subject Trackage User shall have 3 (three) months from the date of receipt of Subject Trackage Owner’s notice to exercise its option to acquire the segment of the Subject Trackage to be abandoned and shall evidence the exercise of its option by giving Subject Trackage Owner written notice thereof. Thereafter, Subject Trackage User shall immediately make appropriate application to secure all necessary authorizations from Governmental Authorities for such acquisition. For purpose of this paragraph, it shall be deemed that Kansas is the only Party (other than Subject Trackage Owner) having the right to use the Subject Trackage via trackage, haulage or any other access rights if the other persons with said class of rights are Ferrosur and/or any other Affiliate of Ferromex.

(c) If Subject Trackage User fails to exercise the option herein granted within the time and in the manner above specified, Subject Trackage Owner may forthwith proceed free of all obligation to Subject Trackage User to make appropriate application to secure all necessary authorizations from Governmental Authorities, if any may be required, for such abandonment. In such event, Subject Trackage User shall not oppose any such abandonment directly or indirectly. Subject Trackage User agrees that at such time it will concurrently make application for all necessary authorizations from Governmental Authorities for abandonment of its right to operate over the Subject Trackage and pursue such application to conclusion, if such application is requested by the applicable Governmental Authority for the abandonment to be effective. The Agreement shall terminate as to the section of Subject Trackage so abandoned upon the effective date of such approval by a Governmental Authority.

14.5 Effects of the Termination.

(a) Clauses that Survive . The provisions of this Agreement that for their nature must be maintained in force even when this Agreement has been terminated, such as those contained in Clauses Three and Eleven, among others, shall be maintained in force for the time corresponding to their nature or until their purpose is fulfilled or its object exhausted.

(c) Transition Period after Termination . In any case, whatever the event of termination of this Agreement, and notwithstanding anything else provided therein, the Parties agree to make their best efforts in order to continue applying the terms and conditions set forth in this Agreement, for the term agreed to by the Parties, but that may not be in any case less than 180 (one hundred and eighty) calendar days, counted as from the termination of this Agreement.

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, HAVE BEEN OMITTED FROM THIS EXHIBIT AND HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Clause Fifteen. Liability . Except as provided in the preceding Clauses hereof with respect to specific liability issues, the following rules shall govern the liability of the Parties with respect to incidents occurring during the actions authorized by this Agreement:

15.1 Trackage Rights . For Loss, injury, costs or Damage resulting during the exercise of trackage rights:

(a) [****]

(b) [****]

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, HAVE BEEN OMITTED FROM THIS EXHIBIT AND HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

(e) Except as otherwise provided in the foregoing paragraphs (a) through (d), each Party shall bear all liability for injury, loss and damage to:

	(i)		its Sole Employees and Sole Property;

	(ii)		freight and freight cars in its sole care, custody and control, including Subject Trackage User with respect to security over its Railroad Equipment while in use of the trackage rights;

	(iii)		patrons, invitees, and others on its Equipment, or on or about the Subject Property in transaction of business only with such Party, regardless of the cause of such Loss or Damage.

(f) Except as otherwise provided in the foregoing paragraphs (a) through (e), each Party shall share liability for injury, Loss and Damage to Subject Employees and to Subject Trackage occurring as a result of the operation of Railroad Equipment by one or more of the Parties (including the mere presence of a Party’s Railroad Equipment on the Subject Trackage), whether or not such operation was negligent, as follows:

	(i)		in the case of injury, Loss, cost or Damage occurring as a result of the operation of Equipment by only one Party, solely by the Party that operated the Equipment; and

	(ii)		in the case of injury, Loss or Damage occurring as a result of the operation of Equipment by more than one Party, in direct proportion to the respective fault of each Party in causing the loss.

15.2 [****]

15.3 Litigation and Settlements.

(b) In case a suit shall be commenced against either Party hereto for or on account of Damages for which the other Party hereto may be solely or jointly liable under the provisions of this Clause Fifteen, the Party so sued shall give notice to such other Party of the pendency of such suit and thereupon such other Party may assume or join in the defense of such suit.

(c) In the event that more than one of the Parties shall be liable hereunder for any Damages and the same shall be settled by a voluntary payment of money or other valuable consideration by one of the Parties so jointly liable therefor, release from liability shall be taken for and in the name of all Parties so liable.

(d) In the event of any future settlement in excess of US$10,000.00 (ten thousand Dollars of the United States of America), the settling Party shall notify the other Party prior to settlement. Failure of the settling Party to so notify the other Party prior to settlement shall not relieve the other Party of their obligation under the settlement agreement, so long as the settling Party’s failure to notify did not prejudice the other Party and then only to the extent of such prejudice.

15.4 Labor.

(a) Each Party shall be responsible for all labor issues involving its own employees and their unions that arise from the operation and maintenance of its corresponding Subject Trackage.

(b) Subject Trackage Owner shall be the sole employer (patrón) for any and all legal purposes of all Subject Employees operating or maintaining the Subject Trackage except for those operating Subject Trackage User’s Trains or other Subject Trackage User Railroad Equipment, and shall be solely responsible for the payment of wages, social security quotas, worker’s housing quotas, bonuses and any other forms of payments or employment benefits towards the Relevant Personnel.

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, HAVE BEEN OMITTED FROM THIS EXHIBIT AND HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

(c) Each Party shall be responsible for any labor claims of, and shall bear the cost of employee protection payable to, its own employees, and the employees of its respective Affiliates, to the extent resulting from the entry into or operation of this Agreement. However, in the event the Parties agree that Subject Trackage Owner should retain employees or provide additional employees for the sole benefit of Subject Trackage User, the Parties shall enter into a separate written agreement providing that Subject Trackage User shall bear all cost and expense for any such retained or additional employees, including, without limitation, all cost and expense associated with labor protection payments which are made by Subject Trackage Owner and which would not have been incurred had such retention or provision of employees for the sole benefit of Subject Trackage User not been required.

15.5 [****]

Clause Sixteen. Governmental Approval.

16.1 Responsibilities of Subject Trackage User . Subject Trackage User shall, at its own cost and expense, initiate by appropriate application or petition and thereafter diligently pursue proceedings for the procurement of all necessary consent, approval, exemption or authority from any Governmental Authority for the sanction that may be required for the works and activities associated with the operations to be carried on by Subject Trackage User hereunder.

16.2 Cooperation of Subject Trackage Owner . Subject Trackage Owner, at its expense, shall assist and support said application or petition and will furnish such information and execute, deliver, and file such instrument or instruments in writing as may be necessary or appropriate to obtain such governmental consent, approval, exemption or authority. Subject Trackage User and Subject Trackage Owner agree to cooperate fully to procure all such necessary consent, approval, exemption or authority.

Clause Seventeen. Miscellaneous.

17.1 Agreement between the Parties, Language.

(a) This Agreement constitutes the complete agreement between the Parties with respect to the matter hereof and supersede all former negotiations and agreements, either oral or written.

(b) This Agreement is executed in English. Within the 30 (thirty) calendar days following the execution of this Agreement, the Parties will work jointly in producing a mutually-acceptable translation of the Agreement into Spanish. After said translation has been approved and signed by both Parties, such approved Spanish version shall be controlling. If the Parties do not reach an agreement on the Spanish version, this Agreement executed in English will remain in full force and effect.

17.2 Amendments . This Agreement may not be amended or altered except by means of an instrument signed by both Parties through their respective attorneys-in-fact, duly authorized.

17.3 Partial Invalidity.

(a) This Agreement is subject to all applicable rules issued by the Governmental Authorities and nothing herein is intended to violate any such law.

(b) If any clause or provision of this Agreement is held to be invalid or unenforceable by any Governmental Authority of competent jurisdiction, the Parties will negotiate in good faith to amend this Agreement to replace the Clause or provision held invalid or unenforceable with a Clause or remedy which as closely as legally possible restores the meaning and financial benefits to the Parties of the Clause found invalid or unenforceable. If the Parties are unable to reach an agreement on such a clause, the appropriate replacement clause or remedy shall be determined by arbitration under the Rules of Arbitration of the International Chamber of Commerce. There shall be 3 (three) arbitrators, the first nominated by the initiating Party in the request for arbitration, the second nominated by the other Party within 30 (thirty) days of receipt of the request for arbitration, and the third, who shall act as presiding arbitrator, nominated by the two Parties within 30 (thirty) days of the appointment of the second arbitrator. If any arbitrators are not nominated within these time periods, the President of the ICC International Court of Arbitration shall make the appointment(s). The arbitrators shall be of Mexican nationality. The language of the arbitration shall be Spanish and the place of arbitration shall be Mexico City, UMS.

17.4 Assignment of Rights and Obligations.

(a) The Parties agree to not assign or transfer, in whole or in part, the rights and/or obligations derived from this Agreement without prior written authorization of the other Party to such effect.

17.5 No Damages or Losses from Controversies . Each of the Parties hereby represents that it has not sustained Damages or Losses in the execution of this Agreement or in the context of the Settlement Controversies.

17.6 Taxes . Each of the Parties shall be responsible for the taxes accrued at its charge regarding this Agreement.

telegram, courier or first class certified mail, and addressed to the corresponding Party, to the following addresses:

If to Kansas:
Kansas City Southern de México, S.A. de C.V.
Montes Urales No. 625,
Colonia Lomas de Chapultepec,
C.P. 11000 México, D.F.
Tel: 9178-5676
Fax: 9178-5600
Att’n: Presidente y Representante Ejecutivo (or equivalent)
eMail: jzozaya@kcsouthern.com.mx

If to Ferromex:
Ferrocarril Mexicano, S.A. de C.V.
Bosque de Ciruelos, No. 99,
Colonia Bosques de las Lomas,
C.P. 11700; México, D.F.,
Tel: 5246-3700
Att’n: Director General Adjunto de Administración y Finanzas (or equivalent)
eMail: oornelas@ferromex.com.mx
fjurado@ferromex.com.mx

Clause Eighteen. Dispute Resolution.

(a) The Parties shall seek amicably to settle all disputes arising out of or in connection with this Agreement (each a “ Dispute ”) by negotiation. If, within 10 (ten) days after written notice by either Party to the other of the existence of a Dispute (a “ Dispute Notice ”), the Parties do not resolve such Dispute, then the Dispute shall be referred to the President of Kansas and to the Chief Executive Officer of Ferromex for further negotiation.

purposes of determining a replacement clause under Section 17.3 the Parties shall be subject to arbitration as contemplated under said Section.

THIS AGREEMENT is executed in Mexico, Federal District, on February 9, 2010.

[signatures follow]


FERROCARRIL MEXICANO, S.A. DE C.V.

By: /s/ Alfredo Casar Pérez
Alfredo Casar Pérez
Title: Legal Representative

By: /s/ Lorenzo Reyes Retana Márquez Padilla
Lorenzo Reyes Retana Márquez Padilla
Title: Legal Representative

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

By: /s/ José Guillermo Zozaya Délano
José Guillermo Zozaya Délano
Title: Legal Representative

[SIGNATURE PAGE TO THE TRACKAGE RIGHTS, SWITCHING AND INTERLINE SETTLEMENT AGREEMENT DATED
FEBRUARY 9, 2010]

[English Translation of Original Spanish Document]

Exhibit C

Settlement Procedures

I. Monterrey (N-1) .


Overview
Principal Document:		August 7, 2002 : Te Ministry issued official communication no. 120.-859/2002 on Ferromex’s request


Process
Legal Action:		Parallel administrative annulment procedures ( demandas de nulidad ), commenced by Kansas and Ferromex independently, against the Ministry’s Resolution, subsequently consolidated into a single process.

File Number:		16422/02-17-09-1/ac1/1113/03-PL-06-04-AD-QC (as consolidated).

Initial Filing:		September 24, 2002 (Kansas) and October 10, 2002 (Ferromex).

Forum:		High Chambers of the Federal Court of Fiscal and Administrative Justice.

Plaintiffs:		Kansas and Ferromex, respectively.

Main Defendant:		The Ministry.

Third Parties:		Ferromex and Kansas, respectively.

First Annulment Decision:		February 16, 2005 : The High Chambers of the Federal Court of Fiscal and Administrative Justice ruled on both lawsuits.

Amparo 399/2005		January 31, 2006 : Ruling from the 5th Collegiate Court for Administrative Matters in the First Circuit.

Second Annulment Decision:		March 13, 2006 : Ruling from the High Chambers of the Federal Court of Fiscal and Administrative Justice.

Amparo 351/2006		February 28, 2007 : Ruling from the 5th Collegiate Court for Administrative Matters in the First Circuit.

Third Annulment Decision:		June 11, 2007 : Ruling from the High Chambers of the Federal Court of Fiscal and Administrative Justice.

Amparo 284/2007		April 30, 2008 : Ruling from the 5th Collegiate Court for Administrative Matters in the First Circuit.


Process
Fourth Annulment Decision:		September 17, 2008 : Ruling from the High Chambers of the Federal Court of Fiscal and Administrative Justice.

Amparo 83/2009 (Kansas) and 84/2009 (Ferromex )		June 29, 2009 : The Collegiate Court ruled granting the amparo and giving specific instructions to the High Chambers of the Federal Court of Fiscal and Administrative Justice.

II. Guadalajara (DPL-1) .


Overview
Principal Document:		July 23, 2004 : The Ministry issued official communication 120.-829/2004.


Principal Process
Legal Action:		Parallel administrative annulment procedures ( demandas de nulidad ) commenced by Ferromex and by Kansas independently against the Ministry’s resolution, subsequently consolidated into a single process.

File Number:		26236/04-17-08-5 (as consolidated).

Initial Filing:		September 2, 2004 (Ferromex) and October 6, 2004 (Kansas).

Forum:		Federal Court of Fiscal and Administrative Justice, 8th Chamber (as consolidated).

Plaintiffs:		Ferromex and Kansas, respectively.

Main Defendant:		The Ministry.

Third Parties:		Kansas and Ferromex, respectively.

Status:		November 7, 2006 : The 8th Chamber of the Federal Court of Fiscal and Administrative Justice requested to the High Chambers of that Court to attract this matter.

III. Altamira .


Overview
Principal Document:		August 6, 2007 : The Ministry issued resolution 4.3.-1066/2007.


Principal Process
Legal Action:		Administrative annulment procedure commenced by Kansas against the Ministry’s resolution 4.3.-1066/2007.

File Number:		25300/07-17-07-8.

Initial Filing:		September 5, 2007.

Forum:		Federal Court of Fiscal and Administrative Justice, 7th Chamber.

Plaintiff:		Kansas.

Main Defendant:		The Ministry.

Third Party:		Ferromex.

Status:		No definitive resolution has been issued.

IV. Amendment to Ferromex’s Concession Title (Aguascalientes and Guadalajara)


Overview
Principal Document:		September 19, 2006 : Amendment of Ferromex’s Concession Title. The corresponding decree was published in the Federal Official Gazette on October 18, 2006.


Principal Process
Legal Action:		Administrative annulment procedure commenced by Kansas against the Ministry’s resolution of September 19, 2006 to modify Ferromex’s Concession Title.

File Number:		1458/07-17-07-5.

Initial Filing:		January 12, 2007.

Forum:		High Chambers of the Federal Court of Fiscal and Administrative Justice.

Plaintiff:		Kansas.


Principal Process
Main Defendant:		The Ministry.

Third Party:		Ferromex.

Status:		No definitive resolution has been issued.

Note:		In terms of section 2.7(e) of the Agreement, the Parties hereby specifically and conclusively agree that the inclusion of the litigation involving amendment of Ferromex’s Concession Title in this Exhibit shall not be deemed as an acceptance on behalf of Kansas of the procedure adopted by the Federal Government of the UMS and/or by Ferromex to amend the Ferromex Concession Title, nor that such is the appropriate procedure to modify the Ferromex Concession Title in the future. Kansas hereby reserves its right to challenge any such future modifications made to the Concession Title of any of the Ferromex Parties, and Ferromex hereby agrees that it will never cite to the Federal Government of the UMS the settlement in the Agreement or this Exhibit of the litigation involving amendment of Ferromex’s Concession Title as any agreement by Kansas for the method of making that amendment. The Ministry acknowledges Ferromex’s acknowledgement herein that the settlement in this Agreement or this Exhibit shall not serve as precedent for determining the appropriate procedures for modification of either Party’s Concession Title in the future.


[English Translation of Original Spanish Document]

E XHIBIT D

Kansas’ Complaints Before the Ministry of Public Service

•		Complaints under file number Q.U.- 015/2008 before the *Secretaria de la Función Pública.*

•		Amparo Trail under file 1318/2009, before the First Administrative District Judge


[English Translation of Original Spanish Document]

Exhibit E

Additional Termination Acts


		INFRAESTRUCTURA Y TRANSPORTES FERROVIARIOS, S.A. DE C.V. E INFRAESTRUCTURA AND TRANSPORTES MÉXICO, S.A. DE C.V.

		ADMINISTRATIVE APPEAL.

		FILE No. RA 21-2006 AND ACCUMULATED

PLENARY COMMISSIONERS OF THE FEDERAL ANTITRUST COMMISSION.

EDGAR AGUILETA GUTIÉRREZ, in my capacity as legal representative of KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V. , complainant in the administrative procedure CNT-132-2005 and accumulated, which capacity has been duly recognized to me under this administrative procedure, I hereby respectfully appear to state the following:

I hereby appear before the Members of this Commission, to state under oath, that the Company which I represent has no intention to continue with its efforts in connection with the concentration notified by the companies mentioned in the heading, as such is in the best interest of my principal.

My principal has knowledge that on June 22, 2006, a ruling of “no authorization” was issued in the original procedure, which was appealed by the notifying companies; and that the administrative appeal under such procedure through a ruling dated November 8, 2006, which is still under a further appeal.

In connection with the above, my client has no further legal interest despite having been part in the original procedure filed under file CNT-132-2005 and accumulated and which was processed before the Federal Antitrust Commission, nor in the file mentioned in the heading.

In view of the foregoing, I hereby respectfully request to this Commissionaires to acknowledge the terms contained in this document, and of having stated what is said herein for all legal purposes.

EDGAR AGUILETA GUTIÉRREZ

Mexico, Federal District, February 9, 2010.


		INFRAESTRUCTURA Y TRANSPORTES FERROVIARIOS, S.A. DE C.V. AND INFRAESTRUCTURA AND TRANSPORTES MÉXICO, S.A. DE C.V.

		CONCENTRATION

		FILE No. CNT-132-2005 AND ACCUMULATED.

PLENARY COMMISSIONERS OF THE FEDERAL ANTITRUST COMMISSION.

EDGAR AGUILETA GUTIÉRREZ, in my capacity as legal representative of KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V. , as complainant in the administrative procedure referred to in the heading, which capacity has been duly recognized to me under this administrative procedure, I hereby respectfully appear to state the following:

My principal has knowledge that on June 22, 2006, a ruling of “no authorization” was issued in the original procedure, which was appealed by the notifying companies; and that the administrative appeal number RA-21-2006 and accumulated through a ruling dated November 8, 2006, which is still under a further appeal.

In connection with the above, my client has no further interest despite having been a party in the original procedure conducted under file number set forth in the heading and which was processed before the Federal Antitrust Commission.

In view of the foregoing, I hereby respectfully request to this Commissionaires to acknowledge the terms contained in this document, and of having stated what is said herein for all legal purposes.

EDGAR AGUILETA GUTIÉRREZ

Mexico, Federal District, February 9, 2010.


		AMPARO TRIAL NO. 887/2009-III

		PLAINTIFF: GRUPO MÉXICO, SOCIEDAD ANÓNIMA BURSÁTIL DE CAPITAL VARIABLE AND OTHERS.

		MAIN DOCKET

SIXTH DISTRICT JUDGE IN ADMINISTRATIVE MATTERS
IN THE FEDERAL DISTRICT.

EDGAR AGUILETA GUTIÉRREZ, in my capacity as legal representative of KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V. , as third party in interest in the amparo trial indicated in the heading, which capacity has been duly recognized to me under this administrative procedure, I hereby respectfully appear to state the following:

I hereby appear before your Honor, to state under oath, that the Company which I represent has no intention to continue participating as third party in interest in this amparo trial as such is in the best interest of my principal, because it has entered into a Settlement F dated as of February 9, 2010.

In view of the foregoing, my client has no interest in the survival of the contested actions in the amparo trial in which it participates, without any prejudice to the fact that my client has been a party in the original procedure filed under administrative files IO-02-2006 and RA-08-2009 and accumulated, processed before the Federal Antitrust Commission.

In virtue of the foregoing, I hereby respectfully request to your Honor to acknowledge the terms contained in this document, and of having stated what is said herein for all legal purposes.

EDGAR AGUILETA GUTIÉRREZ

Mexico, Federal District, February 9, 2010.


		APPEAL R.A. 330/2009

		AMPARO TRIAL NO. 887/2009-III

		PLAINTIFF AND APPELLANT: GRUPO MÉXICO, SOCIEDAD ANÓNIMA BURSÁTIL DE CAPITAL VARIABLE AND OTHERS.

MAGISTRATES OF THE THIRTEENTH COLLIGATE COURT FOR ADMINISTRATIVE MATTERS IN THE FIRST CIRCUIT.

I hereby appear before these Magistrates, to state under oath, that the Company which I represent has no intention to continue participating as third party in interest in the amparo trial identified in the heading of this brief, nor in its corresponding appeal, as such is in the best interest of my principal, because it has entered into a Settlement Agreement dated as of February 9, 2010.

In view of the foregoing, my client has no interest in the survival of the ruling appealed on June 15, 2009, nor the survival of the contested actions in the corresponding amparo trial, without any prejudice to the fact that my client has been a party in the original procedure filed under administrative files IO-02-2006 y RA-08-2009 and accumulated, processed before the Federal Antitrust Commission.

In virtue of the foregoing, I hereby respectfully request to these Magistrates to acknowledge the terms contained in this document, and of having stated what is said herein for all legal purposes.

EDGAR AGUILETA GUTIÉRREZ

Mexico, Federal District, February 9, 2010.


		APPEAL R.A. 63/2010

		AMPARO TRIAL NUM. 1095/2008-II

		PLAINTIFF AND APPELLANT: SINCA INBURSA, SOCIEDAD ANÓNIMA DE CAPITAL VARIABLE, SOCIEDAD DE INVERSIÓN DE CAPITALES.

MAGISTRATES OF THE FIRST COLLIGATE COURT OF THE AUXILIARY CENTER OF THE FIRST REGION.

EDGAR AGUILETA GUTIÉRREZ, in my capacity as legal representative of KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V. , as a third party in interest in the amparo trial indicated in the heading, which capacity has been duly recognized to me under this administrative procedure, I hereby respectfully appear to state the following:

In view of the foregoing, my client has no interest in the survival of the ruling appealed on August 21, 2009, nor in the survival of the contested actions in such amparo trial, without any prejudice to the fact that my client has been a party in the original procedure filed under administrative file CNT-132-2005 and accumulated, processed before the Federal Antitrust Commission.

In virtue of the foregoing, I hereby respectfully request to these Magistrates to acknowledge the terms contained in this document, and of having stated what is said herein for all legal purposes.

EDGAR AGUILETA GUTIÉRREZ

Mexico, Federal District, February 9, 2010.


		INFRAESTRUCTURA Y TRANSPORTES FERROVIARIOS, S.A. DE C.V. AND INFRAESTRUCTURA AND TRANSPORTES MÉXICO, S.A. DE C.V.

		FILE No. 3825/07-17-05-8

MAGISTRATES OF THE HIGH CHAMBER OF THE FEDERAL COURT OF FISCAL AND ADMINISTRATIVE JUSTICE.

EDGAR AGUILETA GUTIÉRREZ, in my capacity as legal representative of KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V. , third party in interest in the administrative trial indicated in the heading, which capacity has been duly recognized to me under this administrative procedure, I hereby respectfully appear to state the following:

I hereby appear before these Magistrates, to state under oath, that the Company which I represent has no intention to continue participating as third party in interest in the amparo trial identified in the heading of this brief, because it has entered into a Settlement Agreement dated as of February 9, 2010.

In view of the foregoing, my client has no further interest in the survival of the ruling appealed on November 8, 2005, notwithstanding the fact that my client has been a party in the original procedure field under the administrative procedure number CNT-132-2005 and accumulated, processed before the Federal Antitrust Commission.

In virtue of the foregoing, I hereby respectfully request to your these Magistrates to acknowledge the terms contained in this document, and of having stated what is said herein for all legal purposes.

EDGAR AGUILETA GUTIÉRREZ

Mexico, Federal District, February 9, 2010.


		FILE NO. IO-02-2006.

PLENARY COMMISSIONERS OF THE FEDERAL ANTITRUST COMMISSION.

EDGAR AGUILETA GUTIÉRREZ, in my capacity as legal representative of KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V. , complainant in the administrative procedure indicated in the heading, which capacity has been duly recognized to me under this administrative procedure, I hereby respectfully appear to state the following:

I hereby appear before the Members of this Commission, to state under oath, that the Company which I represent has no intention to continue with its efforts in connection with the administrative procedure indicated in the heading, as such is in the best interest of my principal.

My principal has knowledge that on January 22, 2009, a ruling was issued in the investigation procedure for absolute monopolistic practices, which was then contested by means of several administrative appeals conducted under files RA-08-2009 and accumulated and were both resolved by a ruling dated June 9, 2009, which is still under a further appeal.

In view of the foregoing, my client has no further interest despite having been part within the original procedure filed under the file number indicated on the heading and which was processed by the Federal Antitrust Commission.

In virtue of the foregoing, I hereby respectfully request to the Commissionaires to acknowledge the terms contained in this document, and of having stated what is said herein for all legal purposes.

EDGAR AGUILETA GUTIÉRREZ

Mexico, Federal District, February 9, 2010.


		RA. 08-2009 AND ACCUMULATED.

PLENARY COMMISSIONERS OF THE FEDERAL ANTITRUST COMMISSION.

EDGAR AGUILETA GUTIÉRREZ, in my capacity as legal representative of KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V. , complainant in the administrative procedure indicated in the heading, which capacity has been duly recognized to me under the original administrative procedure conducted under file number IO-02-2006, I hereby respectfully appear to state as follows:

My principal has knowledge that on January 22, 2009, a ruling was issued in the investigation procedure for absolute monopolistic practices conducted under file IO-02-2006, which was then contested by means of several administrative appeals conducted under files indicated in the heading, and were both resolved by a ruling dated June 9, 2009, which is still under a further appeal.

In view of the foregoing, my client has no further interest despite having been part within the original procedure IO-02-2006 that was processed before the Federal Antitrust Commission, as well as the file indicated in the heading.

In virtue of the foregoing, I hereby respectfully request to the Commissionaires to acknowledge the terms contained in this document, and of having stated what is said herein for all legal purposes.

EDGAR AGUILETA GUTIÉRREZ

Mexico, Federal District, February 9, 2010.

GENERAL OFFICE OF RATES, RAILWAY
AND MULTIMODAL TRANSPORTATION OF
THE MINISTRY OF COMMUNICATIONS
AND TRANSPORT.


		KANSAS CITY SOUTHERN DE MÉXICO, S.A.

		DE C.V.

		Ref.: Official Communication No. 120.-859/2002.

		Dismissal with prejudice.

EDGAR AGUILETA GUTIÉRREZ , in my capacity as legal representative of the company indicated in the heading of this brief, which capacity has been duly recognized to me under this administrative procedure, I hereby respectfully appear to state the following:

That Article 36 of the Railroad Service Law sets forth, that the concessionaries exercising their freedom of contract may agree among them, switching and trackage rights, by means of which they may share certain trackage. For a better understanding, hereinbelow a transcription of the provisions of such article:

Article 36. The concessionaries may agree among themselves the switching rights and trackage rights, by means of which they can share a particular trackage. The concessionaire of the trackage will be responsible for the supply of the railroad equipment and the conservation and maintenance of the trackage.

The Ministry may establish, in the bidding guidelines and in the respective concession titles, that for specific sections they shall grant each other certain switching rights and trackage rights. When the concessionaries can not reach an agreement within the 90 calendar days following the date on which the negotiations started, the Ministry, after hearing the parties, will determine the conditions and considerations according to which such rights shall be granted.

The concessionaires shall submit to the Ministry a copy of the agreements executed in terms of this article.

As evidenced in the foregoing article, the railroad regulations privileges the freedom of contract of the parties in order for them to determine the rates of the switching and trackage rights that shall be collected among the concessionaires when sharing a particular trackage.

Furthermore, as it is of the knowledge of this Office, on February 9, 2010 my principal and the company FERROCARRIL MEXICANO, S.A. DE C.V. , executed a settlement agreement in terms of article 36 of the Railroad Service Law.

This being so, and as it is in the best interest of my principal and according to the provisions set forth in article 36 of the Railroad Service Law, I hereby FORMALLY REQUEST THE DISMISSAL WITH PREJUDICE form this administrative procedure and therefore request to this Authority the closure of the records of the administrative file, in view of the fact that the parties have entered into an agreement that does not affect the rule of law, or the social interest and as evidenced, the subject matter thereof may be settled among the parties.

In virtue of the foregoing,

TO THIS GENERAL OFFICE OF RATES, RAILWAY AND MULTIMODAL TRANSPORTATION OF THE MINISTRY OF COMMUNICATIONS AND TRANSPORT , I hereby respectfully request:

FIRST.- To acknowledge receipt of this brief, in my capacity as legal representative of the company KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V. , requesting the closure of the file of this administrative procedure.

SECOND.- After concluding all administrative requirements, order the termination of this administrative procedure.

THIRD.- Issue, at the expense of my principal, a certified copy of the ruling under which the termination of this administrative procedure is ordered.

I HEREBY DECLARE.

México, Federal District, February 9, 2010.

EDGAR AGUILETA GUTIÉRREZ

GENERAL OFFICE OF RATES, RAILWAY
AND MULTIMODAL TRANSPORTATION OF
THE MINISTRY OF COMMUNICATIONS
AND TRANSPORT.


		FERROCARRIL MEXICANO, S.A. DE C.V.
		Ref.: Official Communication No 120.-859/2002.
		Acceptance of dismissal with prejudice.

LAURA HERNÁNDEZ GONZÁLEZ , in my capacity as legal representative of FERROCARRIL MEXICANO, S.A. DE C.V. , capacity which is duly assented in the records of this administrative procedure, I hereby respectfully appear to state as follows:

That through this brief and pursuant to the provisions of the agreement dated February 9, 2010 executed among my principal and KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V. , I hereby express the consent of my principal in connection with the termination of the administrative procedure requested by KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V.

In virtue of the foregoing,

TO THE GENERAL OFFICE OF RATES, RAILWAY AND MULTIMODAL TRANSPORTATION OF THE MINISTRY OF COMMUNICATIONS AND TRANSPORT I hereby respectfully request:

FIRST.- To acknowledge receipt of this brief, in my capacity as legal representative of the company FERROCARRIL MEXICANO, S.A. DE C.V., requesting the closure of the file of this administrative procedure.

SECOND.- After concluding all administrative requirements, order the termination of this administrative procedure.

THIRD.- Issue, at the expense of my principal, a certified copy of the ruling under which the termination of this administrative procedure is ordered.

I HEREBY DECLARE.

México, Federal District, February 9, 2010.

LAURA HERNÁNDEZ GONZÁLEZ

GENERAL OFFICE OF RATES, RAILWAY
AND MULTIMODAL TRANSPORTATION OF
THE MINISTRY OF COMMUNICATIONS
AND TRANSPORT.


		FERROCARRIL MEXICANO, S.A. DE C.V.
		Ref.: Official Communication No. 120.-859/2002.
		Dismissal with prejudice.

LAURA HERNÁNDEZ GONZÁLEZ , in my capacity as legal representative of the company identified in the heading of this brief, which capacity has been duly recognized to me under this administrative procedure, I hereby respectfully appear to state the following:

The concessionaires shall submit to the Ministry a copy of the agreements executed in terms of this article.

In virtue of the foregoing,

TO THIS GENERAL OFFICE OF RATES, RAILWAY AND MULTIMODAL TRANSPORTATION OF THE MINISTRY OF COMMUNICATIONS AND TRANSPORT , I hereby respectfully request:

FIRST.- To acknowledge receipt of this brief, in my capacity as legal representative of the company FERROCARRIL MEXICANO, S.A. DE C.V., requesting the closure of the file of this administrative procedure.

SECOND.- After concluding all administrative requirements, order the termination of this administrative procedure.

THIRD.- Issue, at the expense of my principal, a certified copy of the ruling under which the termination of this administrative procedure is ordered.

I HEREBY DECLARE.

México, Federal District, February 9, 2010.

LAURA HERNÁNDEZ GONZÁLEZ

GENERAL OFFICE OF RATES, RAILWAY
AND MULTIMODAL TRANSPORTATION OF
THE MINISTRY OF COMMUNICATIONS
AND TRANSPORT.


		KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V.
		Ref.: Official Communication No. 120.-859/2002.
		Acceptance of dismissal with prejudice.

EDGAR AGUILETA GUTIÉRREZ , in my capacity as legal representative of KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V. , capacity which is duly assented in the records of this administrative procedure, I hereby respectfully appear to state as follows:

That through this brief and pursuant to the provisions of the agreement dated February 9, 2010 executed among my principal and FERROCARRIL MEXCIANO, S.A. DE C.V. , I hereby express the consent of my principal in connection with the termination of the administrative procedure requested by FERROCARRIL MEXCIANO, S.A. DE C.V.

In virtue of the foregoing,

TO THIS GENERAL OFFICE OF RATES, RAILWAY AND MULTIMODAL TRANSPORTATION OF THE MINISTRY OF COMMUNICATIONS AND TRANSPORT , I respectfully request:

FIRST.- To acknowledge receipt of this brief, in my capacity as legal representative of the company KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V. requesting the closure of the file of this administrative procedure.

SECOND.- After concluding all administrative requirements, order the termination of this administrative procedure.

THIRD.- Issue, at the expense of my principal, a certified copy of the ruling under which the termination of this administrative procedure is ordered.

I HEREBY DECLARE.

México, Federal District, February 9, 2010.

EDGAR AGUILETA GUTIÉRREZ

GENERAL OFFICE OF RATES, RAILWAY
AND MULTIMODAL TRANSPORTATION OF
THE MINISTRY OF COMMUNICATIONS
AND TRANSPORT.


		KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V.
		Ref.: Official Communication No. 120.-829/2004.
		Dismissal with prejudice.

The concessionaires shall submit to the Ministry a copy of the agreements executed in terms of this article.

In virtue of the foregoing,

TO THIS GENERAL OFFICE OF RATES, RAILWAY AND MULTIMODAL TRANSPORTATION OF THE MINISTRY OF COMMUNICATIONS AND TRANSPORT , I hereby respectfully request:

SECOND.- After concluding all administrative requirements, order the termination of this administrative procedure.

THIRD.- Issue, at the expense of my principal, a certified copy of the ruling under which the termination of this administrative procedure is ordered.

I HEREBY DECLARE.

México, Federal District, February 9, 2010.

EDGAR AGUILETA GUTIÉRREZ

GENERAL OFFICE OF RATES, RAILWAY
AND MULTIMODAL TRANSPORTATION OF THE
MINISTRY OF COMMUNICATIONS
AND TRANSPORT.


		FERROCARRIL MEXICANO, S.A. DE C.V.
		Ref.: Official Communication No. 120.-829/2002.
		Acceptance of dismissal with prejudice.

In virtue of the foregoing,

TO THIS GENERAL OFFICE OF RATES, RAILWAY AND MULTIMODAL TRANSPORTATION OF THE MINISTRY OF COMMUNICATIONS AND TRANSPORT , I respectfully request:

SECOND.- After concluding all administrative requirements, order the termination of this administrative procedure.

THIRD.- Issue, at the expense of my principal, a certified copy of the ruling under which the termination of this administrative procedure is ordered.

I HEREBY DECLARE.

México, Federal District, February 9, 2010.

LAURA HERNÁNDEZ GONZÁLEZ

GENERAL OFFICE OF RATES, RAILWAY
AND MULTIMODAL TRANSPORTATION OF
THE MINISTRY OF COMMUNICATIONS
AND TRANSPORT.


		FERROCARRIL MEXICANO, S.A. DE C.V.
		Ref.: Official Communication No. 120.-829/2004.
		Dismissal with prejudice.

The concessionaires shall submit to the Ministry a copy of the agreements executed in terms of this article.

In virtue of the foregoing,

TO THIS GENERAL OFFICE OF RATES, RAILWAY AND MULTIMODAL TRANSPORTATION OF THE MINISTRY OF COMMUNICATIONS AND TRANSPORT , I hereby respectfully request:

SECOND.- After concluding all administrative requirements, order the termination of this administrative procedure.

THIRD.- Issue, at the expense of my principal, a certified copy of the ruling under which the termination of this administrative procedure is ordered.

I HEREBY DECLARE.

México, Federal District, February 9, 2010.

LAURA HERNÁNDEZ GONZÁLEZ

GENERAL OFFICE OF RATES, RAILWAY
AND MULTIMODAL TRANSPORTATION OF
THE MINISTRY OF COMMUNICATIONS
AND TRANSPORT.


		KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V.
		Ref.: Official Communication No. 120.-829/2002.
		Acceptance of dismissal with prejudice.

In virtue of the foregoing,

TO THIS GENERAL OFFICE OF RATES, RAILWAY AND MULTIMODAL TRANSPORTATION OF THE MINISTRY OF COMMUNICATIONS AND TRANSPORT , I respectfully request:

SECOND.- After concluding all administrative requirements, order the termination of this administrative procedure.

THIRD.- Issue, at the expense of my principal, a certified copy of the ruling under which the termination of this administrative procedure is ordered.

I HEREBY DECLARE.

México, Federal District, February 9, 2010.

EDGAR AGUILETA GUTIÉRREZ

GENERAL OFFICE OF RATES, RAILWAY
AND MULTIMODAL TRANSPORTATION OF
THE MINISTRY OF COMMUNICATIONS
AND TRANSPORT.


		KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V.
		Ref.: Official Communication No. 4.3.-1066/2007.
		Dismissal with prejudice.

The concessionaires shall submit to the Ministry a copy of the agreements executed in terms of this article.

This being so, and as it is in the best interest of my principal and according to the provisions set forth in article 36 of the Railroad Service Law, I hereby FORMALLY REQUEST THE DISMISSAL WITH PREJUDICE form this administrative procedure and therefore request to this Authority the closure of the records of the administrative file, in view of the fact that the parties have entered into an agreement that does not affect the rule of law, or the social interest, and as evidenced, the subject matter thereof may be settled among the parties.

In virtue of the foregoing,

TO THIS GENERAL OFFICE OF RATES, RAILWAY AND MULTIMODAL TRANSPORTATION OF THE MINISTRY OF COMMUNICATIONS AND TRANSPORT , I hereby respectfully request:

SECOND.- After concluding all administrative requirements, order the termination of this administrative procedure.

THIRD.- Issue, at the expense of my principal, a certified copy of the ruling under which the termination of this administrative procedure is ordered.

I HEREBY DECLARE.

México, Federal District, February 9, 2010.

EDGAR AGUILETA GUTIÉRREZ

GENERAL OFFICE OF RATES, RAILWAY
AND MULTIMODAL TRANSPORTATION OF
THE MINISTRY OF COMMUNICATIONS
AND TRANSPORT.


		FERROCARRIL MEXICANO, S.A. DE C.V.
		Ref.: Official Communication No. 4.3.-1066/2007.
		Acceptance of dismissal with prejudice.

In virtue of the foregoing,

GENERAL OFFICE OF RATES, RAILWAY AND MULTIMODAL TRANSPORTATION OF THE MINISTRY OF COMMUNICATIONS AND TRANSPORT , I respectfully request:

SECOND.- After concluding all administrative requirements, order the termination of this administrative procedure.

THIRD.- Issue, at the expense of my principal, a certified copy of the ruling under which the termination of this administrative procedure is ordered.

I HEREBY DECLARE.

México, Federal District, February 9, 2010.

LAURA HERNÁNDEZ GONZÁLEZ

GENERAL OFFICE OF RATES, RAILWAY
AND MULTIMODAL TRANSPORTATION OF
THE MINISTRY OF COMMUNICATIONS
AND TRANSPORT.


		FERROCARRIL MEXICANO, S.A. DE C.V.
		Ref.: Official Communication No. 4.3.-1066/2007.
		Dismissal with prejudice.

The concessionaires shall submit to the Ministry a copy of the agreements executed in terms of this article.

In virtue of the foregoing,

TO THIS GENERAL OFFICE OF RATES, RAILWAY AND MULTIMODAL TRANSPORTATION OF THE MINISTRY OF COMMUNICATIONS AND TRANSPORT , I hereby respectfully request:

SECOND.- After concluding all administrative requirements, order the termination of this administrative procedure.

THIRD.- Issue, at the expense of my principal, a certified copy of the ruling under which the termination of this administrative procedure is ordered.

I HEREBY DECLARE.

México, Federal District, February 9, 2010.

LAURA HERNÁNDEZ GONZÁLEZ

GENERAL OFFICE OF RATES, RAILWAY
AND MULTIMODAL TRANSPORTATION OF
THE MINISTRY OF COMMUNICATIONS
AND TRANSPORT.


		KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V.
		Ref.: Official Communication No. 4.3.-1066/2007.
		Acceptance of dismissal with prejudice.

In virtue of the foregoing,

TO THIS GENERAL OFFICE OF RATES, RAILWAY AND MULTIMODAL TRANSPORTATION OF THE MINISTRY OF COMMUNICATIONS AND TRANSPORT , I respectfully request:

FIRST.- T o acknowledge receipt of this brief, in my capacity as legal representative of the company KANSAS CITY SOUTHERN DE MÉXICO, S.A. DE C.V. requesting the closure of the file of this administrative procedure.

SECOND.- After concluding all administrative requirements, order the termination of this administrative procedure.

THIRD.- Issue, at the expense of my principal, a certified copy of the ruling under which the termination of this administrative procedure is ordered.

I HEREBY DECLARE.

México, Federal District, February 9, 2010.

EDGAR AGUILETA GUTIÉRREZ

Exhibit 15.1

The Board of Directors and Stockholders
Kansas City Southern:

Re: Registration Statement Nos. 002-85200, 002-81228, 002-66477, 002-70370, 002-62526, 033-50517, 033-50519, 033-64511, 033-59388, 033-54168, 033-08880, 333-91993, 333-73122, 333-58250, 333-51854, 333-91478, 333-126207, 333-154793 and 333-164240 on Form S-8 and 333-155601 on Form S-3

With respect to the subject registration statements, we acknowledge our awareness of the use therein of our report dated April 27, 2010 related to our review of interim financial information.

Pursuant to Rule 436 under the Securities Act of 1933 (the Act), such report is not considered part of a registration statement prepared or certified by an independent registered public accounting firm, or a report prepared or certified by an independent registered public accounting firm within the meaning of Sections 7 and 11 of the Act.

KPMG LLP

Kansas City, Missouri
April 27, 2010

EXHIBIT 18.1

April 27, 2010

Kansas City Southern

Kansas City, Missouri

Ladies and Gentlemen:

We have been furnished with a copy of the quarterly report on Form 10-Q of Kansas City Southern (the Company) for the three months ended March 31, 2010, and have read the Company’s statements contained in Note 1 to the consolidated financial statements included therein. As stated in Note 1 to the consolidated financial statements, the Company changed its method of accounting for rail grinding costs, from a capitalization method to a direct expense method and states that the newly adopted accounting principle is preferable in the circumstances as it eliminates the subjectivity in determining the period of benefit associated with rail grinding over which to depreciate the associated capitalized costs. In accordance with your request, we have reviewed and discussed with Company officials the circumstances and business judgment and planning upon which the decision to make this change in the method of accounting was based.

We have not audited any financial statements of the Company as of any date or for any period subsequent to December 31, 2009, nor have we audited the information set forth in the aforementioned Note 1 to the consolidated financial statements; accordingly, we do not express an opinion concerning the factual information contained therein.

With regard to the aforementioned accounting change, authoritative criteria have not been established for evaluating the preferability of one acceptable method of accounting over another acceptable method. However, for purposes of the Company’s compliance with the requirements of the Securities and Exchange Commission, we are furnishing this letter.

Based on our review and discussion, with reliance on management’s business judgment and planning, we concur that the newly adopted method of accounting is preferable in the Company’s circumstances.

Very truly yours,

KPMG LLP
Kansas City, Missouri

Exhibit 31.1

PRINCIPAL EXECUTIVE OFFICER’S CERTIFICATION
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael R. Haverty, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Kansas City Southern (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Michael R. Haverty

Michael R. Haverty

Chairman and Chief Executive Officer

Date: April 27, 2010

Exhibit 31.2

PRINCIPAL FINANCIAL OFFICER’S CERTIFICATION
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael W. Upchurch, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Kansas City Southern (the “registrant”);

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Michael W. Upchurch

Michael W. Upchurch

Executive Vice President and Chief Financial Officer

Date: April 27, 2010

Exhibit 32.1

PRINCIPAL EXECUTIVE OFFICER’S CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Kansas City Southern (the “Company”) on Form 10-Q for the period ended March 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael R. Haverty, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael R. Haverty

Michael R. Haverty

Chairman and Chief Executive Officer

April 27, 2010

A signed original of this written statement required by Section 906 has been provided to Kansas City Southern and will be retained by Kansas City Southern and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.2

PRINCIPAL FINANCIAL OFFICER’S CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Kansas City Southern (the “Company”) on Form 10-Q for the period ended March 31, 2010, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael W. Upchurch, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael W. Upchurch

Michael W. Upchurch

Executive Vice President and Chief Financial Officer

April 27, 2010