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 the
“Company”), Kansas City Southern, a Delaware
corporation (“KCS”) and Patrick J. Ottensmeyer, an
individual (“Executive”) (collectively, the
“Parties”)).
WHEREAS , Executive and KCS previously entered into an
Employment Agreement executed June 7, 2006, and an Amendment
No. 1 to Employment Agreement executed July 26, 2007 (the
“Agreement”), which Agreement sets forth the terms and
conditions of Executive’s employment; and
WHEREAS , KCS desires to assign the Agreement to KCSR such
that from and after the execution of this Addendum, the Agreement
as modified by this Addendum will be between KCSR as the employer
and Executive, and KCSR and Executive desire to consent to this
assignment; 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 Sales & Marketing. 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 KCS 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 twelve
(12) months following such termination; and (3) the
Company shall, for a period of twelve (12) 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 continue until the end of the twelve
(12)-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 twelve (12)-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
- 2 -
provided
in Paragraph 7(e) in the case of Termination (including equivalent
payments 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 June 7, 2006, 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 17 is added to the
Agreement:
17.
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
- 3 -
as a
result of his/her employment with the Company; (2) accept the
business of 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 Company, whether or not solicited by Executive;
or (3) induce, solicit, or cause any employee of the Company or its
Affiliates to leave the employ of the C
|