ADDENDUM
TO EMPLOYMENT AGREEMENT
This
Addendum to Employment Agreement (“Addendum”) dated
this 12th day of February, 2009 is between The Kansas City Southern
Railway Company, a Missouri corporation (“KCSR” or
“Railway” or the “Company”), Kansas City
Southern, a Delaware corporation (“KCS”) and Scott E.
Arvidson, an individual (“Executive”) (collectively,
the “Parties”)).
WHEREAS , Executive, KCSR and KCS previously entered into an
Employment Agreement executed as of May 1, 2000, an Amendment
to Employment Agreement executed as of January 1, 2001, and an
Addendum to Employment Agreement executed September 15, 2004
(collectively, the “Agreement”), which Agreement sets
forth the terms and conditions of Executive’s employment with
KCSR; and
WHEREAS , the Parties desire to amend the Agreement in part
for purposes of compliance with Section 409A of the Internal
Revenue Code of 1986, as amended, and guidance issued thereunder
and in certain other respects.
NOW, THEREFORE , the Parties hereby agree to the following
amendments to the Agreement effective January 1,
2009:
1. Paragraph 1
of the Agreement is deleted and replaced with the following
paragraph:
Employment . The Company employs Executive as its Executive
Vice President & Chief Information Officer. Executive serves at
the pleasure of the Board of Directors of the Company (the
“Company Board”) and has and will have such titles,
duties, powers and responsibilities as may be prescribed or
delegated from time to time by the President of the Company, or
other officer to whom Executive reports, subject to the powers
vested in the Company Board. Executive shall faithfully perform
Executive’s duties under this Agreement to the best of
Executive’s ability and Executive shall devote substantially
all of Executive’s working time and efforts to the business
and affairs of the Company and its subsidiaries, affiliates and
joint ventures.
2. Paragraph 4(a)
(“Termination by Executive”) of the Agreement is hereby
amended by the addition of the following new phrase at the end
thereof:
provided,
however, that the Company’s obligation to pay severance
benefits shall be subject to Paragraph 7(f) (“Resignation
After Control Change Date”), including, but not limited to,
the notice provisions set forth therein.
3. The
first two sentences of subparagraph (ii) of Paragraph 4(d)
(“Termination by Railway Other Than For Cause”) of the
Agreement are hereby deleted and replaced with the following new
sentences:
(ii)
Unless the provisions of Paragraph 7 (“Continuation of
Employment Upon Change in Control”) of this Agreement are
applicable, if Executive’s employment is terminated under
Paragraph 4(d)(i), then, subject to
Executive’s
execution of the release referenced in Paragraph 4(d)(i),
(1) the Company shall, within seventy-five (75) days
following such termination, pay to Executive a lump sum amount
equal to twelve (12) months of the annual base salary
referenced in Paragraph 2(a), at the rate in effect
immediately prior to termination; provided that, in the event the
release referenced in Paragraph 4(d)(i) above is not timely
executed by Executive so as to permit payment under this clause,
the Company shall have no obligation to make payment under this
clause; (2) the Company shall, if Executive elects continued
group health coverage for himself and his eligible dependents
pursuant to COBRA, pay the related premium for such coverage for a
period of fifteen (15) months following such termination; and
(3) the Company shall, for a period of fifteen
(15) months following such termination, reimburse Executive
for the cost of life insurance coverage comparable to the coverage
provided under this Agreement. The obligations of the Company under
(2) and (3) above shall include a reimbursement of state and
federal income taxes payable in connection therewith and shall
continue until the end of the fifteen (15)-month period
notwithstanding the death or disability of Executive during said
period (except, in the event of death, the obligation to reimburse
Executive for the cost of life insurance shall not continue);
provided, however, the Company’s obligation under
(2) and (3) above shall terminate as of the date
Executive is provided comparable life or health insurance coverage
in connection with other employment if earlier than the end of the
fifteen (15)-month period.
4. Paragraph 7(c)
(“Payment”) is hereby deleted in its
entirety.
5. Paragraph 7(f)
is hereby deleted and replaced with the following new
Paragraph 7(f):
(f)
Resignation After Control Change Date . In the event of a
Change in Control as defined in Paragraph 7(d), thereafter,
upon good reason (as defined below), Executive may, at any time
during the three (3)-year period following the Change in Control,
in his sole discretion, resign his employment with the Company only
if: (1) Executive provides written notice to the Secretary of
the Company within ninety (90) days after the initial
occurrence of a good reason event describing in detail the event
and stating that Executive’s employment will terminate upon a
specified date in such notice (the “Good Reason Termination
Date”), which date is not earlier than thirty (30) days
after the date such notice is provided to the Company (the
“Notice Delivery Date”) and not later than ninety
(90) days after the Notice Delivery Date, and (2) the
Company does not remedy the event prior to the Good Reason
Termination Date. Within five (5) days after the Good Reason
Termination Date, the Company shall pay to Executive his full Base
Salary through such Good Reason Termination Date, to the extent not
theretofore paid, plus a lump sum amount equal to the Special
Severance Payment (computed as provided in the first sentence of
Paragraph 7(e), except that for purposes of such computation
all references to “Termination” shall be deemed to be
references to “Good Reason Termination Date”). Upon the
Good Reason Termination Date of Executive, Specified Benefits to
which Executive was entitled immediately prior to the Good Reason
Termination Date shall continue or be reimbursed on the same terms
and conditions as provided in Paragraph 7(e) in the case of
Termination (including equivalent payments
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provided
for therein) and Post-Period Benefits shall be provided on the same
terms and conditions as provided in Paragraph 7(e) in the case of
Termination. For purposes of this Agreement, Executive shall have
“good reason” if there occurs without his
consent:
(i)
the assignment to the Executive of any duties inconsistent in any
adverse respect with the Executive’s position (including
offices, titles, reporting requirements or responsibilities),
authority or duties as contemplated by Section 7(a)(i), or any
other action by the Company which results in a diminution or other
material adverse change in such position, authority or
duties;
(ii)
any failure by the Company to comply with any of the provisions of
Paragraph 7;
(iii)
a material change in the geographic location at which the Executive
must perform his services under this Agreement from the location
described in Section 7(a)(ii);
(iv)
a material diminution in Executive’s base compensation;
and
(v)
any other action or inaction by the Company which constitutes a
material breach of this Agreement.
Provided,
however, that Paragraph 7(f) of Executive’s Employment
Agreement dated May 1, 2000, shall continue for the sole
purpose of determining Executive’s entitlement to Post-Period
Benefits, as if such paragraph had not been deleted.
6. The
following new Paragraph 16 is added to the
Agreement:
16.
Restrictive Covenants .
(a)
Executive agrees that for a period of time beginning upon
Executive’s termination of employment from the Company (the
“Termination Date”) and continuing for a period of one
(1) year, Executive shall not:
(i)
directly or indirectly, either individually or as a principal,
partner, agent, employee, employer, consultant, stockholder,
member, partner, joint venturer, or investor, or as a director,
manager or officer of any corporation or association, or in any
other manner or capacity whatsoever, engage in, assist or have any
active interest in a business, located anywhere in the geographic
area then served by the Company, or by its subsidiaries or joint
ventures or by KCS or its subsidiaries or joint ventures
(“Affiliates”), that competes with or engages in the
business conducted by the Company or its Affiliates on the date
hereof or at any time through the Termination Date.
(ii)
directly or indirectly, either individually, or as a principal,
partner, agent, employee, employer, consultant, stockholder, joint
venturer, or investor, or as a director or officer of any
corporation or association, (1) divert or attempt to divert
(by solicitation or otherwise) from the Company or its Affiliates
any business with any customer, prospective customer or account of
the Company or its Affiliates with which Executive had any contact
or association, which was under Executive’s supervision, or
the identity of which was learned by Executive as a result of
his/her employment with the Company; (2) accept the business
of
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any
customer, prospective customer or account of the Company or its
Affiliates with whom Executive had any contact or association,
which was under Executive’s supervision, or the identity of
which was learned by Executive as a result of his/her employment
with the Com
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