EMPLOYMENT AGREEMENT

THIS AGREEMENT, (“Agreement”) made and entered into as of this 15th day of May,
2006, by and between The Kansas City Southern Railway Company, a Missouri
corporation (“Railway”), and Patrick J. Ottensmeyer, an individual
(“Executive”).

WHEREAS, Executive has been offered employment by Railway, and Railway and
Executive desire for Railway to employ Executive on the terms and conditions set
forth in this Agreement and to provide an incentive to Executive to remain in
the employ of Railway hereafter, particularly in the event of any change in
control (as herein defined) of Kansas City Southern, a Delaware corporation
(“KCS”), or Railway, thereby establishing and preserving continuity of
management of Railway.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, it is agreed by and between Railway and Executive as follows:

1. Employment. Railway hereby employs Executive as its Executive Vice President
and Chief Financial Officer, to serve at the pleasure of the Board of Directors
of Railway (the “Railway Board”) and to have such duties, powers and
responsibilities as may be prescribed or delegated from time to time by the
President or other officer to whom Executive reports, subject to the powers
vested in the Railway Board and in the stockholders of Railway. 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 Railway and its
affiliates. For purposes of this Agreement, an “affiliate” of Railway is KCS and
any United States or foreign corporation or partnership or other similar entity
with respect to which Railway or KCS owns, directly or indirectly, at least 15%
of the voting power of such entity.
2. Compensation. Railway shall pay Executive as compensation for Executive’s
services hereunder an annual base salary at the rate approved by the
Compensation and Organization Committee of the Board of Directors of KCS (the
“KCS Board”). Such rate shall not be reduced except as agreed by the parties
hereto or except as part of a general salary reduction program imposed by
Railway for non-union employees and applicable to all officers of Railway, not
related to a Change of Control.
3. Benefits. During the period of Executive’s employment hereunder, Railway
shall provide Executive with coverage under such benefit plans and programs as
are made generally available to similarly situated employees of Railway,
provided (a) Railway shall have no obligation with respect to any plan or
program if Executive is not eligible for coverage thereunder, and (b) Executive
acknowledges that any stock or equity participation awards (including by way of
example, but not limited to, stock options or restricted stock) are granted in
the discretion of the KCS Board or the Compensation and Organization Committee
of the KCS Board and that Executive has no right to receive any such stock or
equity participation awards or any particular number or level of such stock or
equity participation awards, if any. In determining contributions, coverage and
benefits under any disability insurance policy and under any cash
compensation-based plan provided to Executive pursuant to this Agreement, it
shall be assumed that the value of Executive’s annual compensation is 175% of
Executive’s annual base salary. Executive acknowledges that all rights and
benefits under benefit plans and programs shall be governed by the official text
of each plan or program and not by any summary or description thereof or any
provision of this Agreement (except to the extent that this Agreement expressly
modifies such benefit plans or programs) and that neither Railway nor KCS is
under any obligation to continue in effect or to fund any such plan or program,
except as provided in Paragraph 7 hereof.
4. Term and Termination. The “Term” of this Agreement shall begin on the date
first written above and continue until terminated as provided in (a) through
(d) of this Section 4.

(a) Termination by Executive. Executive may terminate this Agreement and
Executive’s employment hereunder by providing at least thirty (30) days advance
written notice to Railway, except that in the event of any material breach of
this Agreement by Railway, Executive may terminate this Agreement and
Executive’s employment hereunder immediately upon notice to Railway.

(b) Death or Disability. This Agreement and Executive’s employment hereunder
shall terminate automatically on the death or disability of Executive, except to
the extent employment is continued under Railway’s disability plan. For purposes
of this Agreement, Executive shall be deemed to be disabled if Executive
qualifies for disability benefits under Railway’s long-term disability plan.

(c) Termination by Railway For Cause. Railway may terminate this Agreement and
Executive’s employment “for cause” immediately upon notice to Executive. For
purposes of this Agreement (except for Paragraph 7), termination “for cause”
shall mean termination based upon any one or more of the following:

(i) Any material breach of this Agreement by Executive;

(ii) Executive’s dishonesty involving Railway or any affiliate of Railway;

(iii) Gross negligence or willful misconduct in the performance of Executive’s
duties as determined in good faith by the Railway Board;

(iv) Executive’s failure to substantially perform Exectuve’s duties and
responsibilities hereunder, including without limitation Executive’s willful
failure to follow reasonable instructions of the President or other officer to
whom Executive reports;

(v) Executive’s breach of an express employment policy of Railway or any
affiliate of Railway;

(vi) Executive’s fraud or criminal activity;

(vii) Embezzlement or misappropriation by Executive; or

(viii) Executive’s breach of Executive’s fiduciary duty to Railway or any
affiliate of Railway.

(d) Termination by Railway Other Than For Cause.

(i) Railway may terminate this Agreement and Executive’s employment other than
for cause immediately upon notice to Executive, and in such event, Railway shall
provide severance benefits to Executive in accordance with Paragraph 4(d)(ii)
below. Executive acknowledges and agrees that such severance benefits constitute
the exclusive remedy of Executive upon termination of employment other than for
cause. Notwithstanding any other provision of this Agreement, as a condition to
receiving such severance benefits, Executive shall execute a full release of
claims in favor of Railway and its affiliates in the form attached hereto as
Appendix A.

(ii) Unless the provisions of Paragraph 7 of this Agreement are applicable, if
Executive’s employment is terminated under Paragraph 4(d)(i), Railway shall:
(1) continue, for a period of twelve (12) months following such termination, to
pay to Executive as severance pay a monthly amount equal to one-twelfth (1/12th)
of the annual base salary referenced in Paragraph 2 above, at the rate in effect
immediately prior to termination, and, (2) for a period of fifteen (15) months
following such termination, reimburse Executive for the cost of continuing the
health insurance coverage provided pursuant to this Agreement or obtaining
health insurance coverage comparable to the health insurance provided pursuant
to this Agreement, and obtaining coverage comparable to the life insurance
provided pursuant to this Agreement, unless Executive is provided comparable
health or life insurance coverage in connection with other employment. The
foregoing obligations of Railway shall continue until the end of such fifteen
(15) month period notwithstanding the death or disability of Executive (except,
in the event of death, the obligation to reimburse Executive for the cost of
life insurance shall not continue). In the calendar year in which termination of
employment occurs, Executive shall be eligible to receive benefits under the
Railway Incentive Compensation Plan and any executive incentive compensation
plan in which Executive participates (the “Executive Plan”) (provided, however,
that such plans then are in existence and Executive was entitled to participate
immediately prior to termination) in accordance with the provisions of such
plans then applicable, and severance pay received in such year shall be taken
into account for the purpose of determining benefits, if any, under the Railway
Incentive Compensation Plan but not under the Executive Plan. After the calendar
year in which termination occurs, Executive shall not be entitled to accrue or
receive benefits under the Railway Incentive Compensation Plan or the Executive
Plan with respect to the severance pay provided herein, notwithstanding that
benefits under either or both such plans are still generally available to
executive employees of Railway. After termination of employment, Executive shall
not be entitled to accrue or receive benefits under any other employee benefit
plan or program, except that Executive shall be entitled to participate in the
KCS 401(k) and Profit Sharing Plan, as amended from time to time, and the KCS
Employee Stock Ownership Plan, as amended from time to time, (provided Railway
active employees then still participate in such plans) in the year of
termination of employment only if Executive meets all requirements of such plans
for participation in such year.

5. Confidentiality and Non-Disclosure.

(a) Executive understands and agrees that Executive will be given Confidential
Information (as defined below) during Executive’s employment with Railway
relating to the business of Railway and its affiliates subject to Executive’s
agreement herein. Executive hereby expressly agrees to maintain in strictest
confidence and not to use in any way (including without limitation in any future
business relationship of Executive), publish, disclose or authorize anyone else
to use in any way, publish or disclose, any Confidential Information relating in
any manner to the business or affairs of Railway or any of its affiliates or
customers. Executive further agrees not to remove or retain any figures,
calculations, letters, documents, lists, papers, or copies thereof, which embody
Confidential Information of Railway or any of its affiliates, and to return,
prior to Executive’s termination of employment for any reason, any such
information in Executive’s possession. If Executive discovers, or comes into
possession of, any such information after Executive’s termination, Executive
shall promptly return it to Railway. Executive acknowledges that the provisions
of this paragraph are consistent with Railway’s policies and procedures to which
Executive, as an employee of Railway, is bound.

(b) For purposes of this Agreement, “Confidential Information” includes, but is
not limited to, information in the possession of, prepared by, obtained by,
compiled by, or that is used by Railway or any of its affiliates or customers
and (i) is proprietary to, about, or created by Railway or any of its affiliates
or customers; (ii) gives Railway or any of its affiliates or customers some
competitive business advantage, the opportunity of obtaining such advantage, or
disclosure of which might be detrimental to the interest of Railway or any of
its affiliates or customers; and (iii) is not typically disclosed by Railway or
any of its affiliates or customers, or known by persons who are not employed by
Railway or any of its affiliates or customers. Without in any way limiting the
foregoing and by way of example, Confidential Information shall include:
information pertaining to business operations of Railway or any of its
affiliates or customers such as financial and operational information and data,
operational plans and strategies, business and marketing strategies, pricing
information, plans for various products and services, and acquisition and
divestiture planning.

(c) In the event of any breach of this Paragraph 5 by Executive, Railway shall
be entitled to terminate any and all remaining severance benefits under
Paragraph 4(d)(ii) and shall be entitled to pursue such other legal and
equitable remedies as may be available. Executive acknowledges, understands and
agrees that Railway and its affiliates will suffer immediate and irreparable
harm if Executive fails to comply with any of Executive’s obligations under this
Paragraph 5, and that monetary damages alone will be inadequate to compensate
Railway or any of its affiliates for such breach. Accordingly, Executive agrees
that Railway and its affiliates shall, in addition to any other remedies
available to it at law or in equity, be entitled to temporary, preliminary, and
permanent injunctive relief and specific performance to enforce the terms of
this Paragraph 5 without the necessity of proving inadequacy of legal remedies
or irreparable harm or posting bond.

6. Duties Upon Termination; Survival.

(a) Duties. Upon termination of this Agreement by Railway or Executive for any
reason, Executive shall immediately sign such written resignations from all
positions as an officer, director or member of any committee or board of Railway
or of any of its affiliates as may be requested by Railway or such affiliate and
shall sign such other documents and papers relating to Executive’s employment,
benefits and benefit plans as Railway may reasonably request.

(b) Survival. The provisions of Paragraphs 5, 6(a) and 7 of this Agreement shall
survive any termination of this Agreement by Railway or Executive, and the
provisions of Paragraph 4(d)(ii) shall survive any termination of this Agreement
by Railway under Paragraph 4(d)(i).

7. Continuation of Employment Upon Change in Control.

(a) Continuation of Employment. Subject to the terms and conditions of this
Paragraph 7, in the event of a Change in Control (as defined in Paragraph 7(d))
at any time during the term of this Agreement, Executive agrees to remain in the
employ of Railway for a period of three years (the “Three Year Period”) from the
date of such Change in Control (the “Control Change Date”), and Railway agrees
to continue to employ Executive for the Three Year Period. During the Three Year
Period, (i) the Executive’s position (including offices, titles, reporting
requirements and responsibilities), authority and duties shall be at least
commensurate in all material respects with the most significant of those held,
exercised and assigned at any time during the 12 month period immediately before
the Control Change Date and (ii) the Executive’s services shall be performed at
the location where Executive was employed immediately before the Control Change
Date or at any other location less than 40 miles from such former location.
During the Three Year Period, Railway shall continue to pay to Executive an
annual base salary on the same basis and at the same intervals as in effect
prior to the Control Change Date at a rate not less than 12 times the highest
monthly base salary paid or payable to the Executive by Railway in respect of
the 12-month period immediately before the Control Change Date.

(b) Benefits. During the Three-Year Period, Executive shall be entitled to
participate, on the basis of the executive position of Executive, in each of the
following Railway plans or KCS plans in which active employees of Railway may
then participate (together, the “Specified Benefits”) in existence, and in
accordance with the terms thereof, at the Control Change Date:

(i) any benefit plan, and trust fund associated therewith, related to: (A) life,
health, dental, disability, accidental death and dismemberment insurance or
accrued but unpaid vacation time; (B) profit sharing, thrift or deferred savings
(including deferred compensation, such as under Section 401(k) plans);
(C) retirement or pension benefits; (D) ERISA excess benefits and similar plans
and (E) tax favored employee stock ownership (such as under ESOP, and Employee
Stock Purchase programs); and

(ii) any other benefit plans hereafter made generally available to executives of
Executive’s level or to the employees of Railway generally.

In addition, if not otherwise occurring under applicable award agreements,
Railway and KCS shall use their best efforts to cause all outstanding options or
other equity awards held by Executive under any stock option or other plan of
KCS or Railway or its affiliates to become immediately vested and exercisable on
the Control Change Date, and to the extent that such awards are not vested and
are subsequently forfeited, the Executive shall receive a lump-sum cash payment
within five (5) days after the awards are forfeited equal to, in the case of
stock options, the difference between the fair market value of the shares of
stock subject to the non-vested, forfeited options determined as of the date
such options are forfeited and the exercise price for such options, and, in the
case of other equity awards, equal to the amount that would have been includible
in the Executive’s gross income on the date of forfeiture if such awards had
instead on such date become vested and, if applicable, were then exercised
(ignoring, for this purpose, the effect of any election made by the Executive
under Section 83(b) of the Internal Revenue Code of 1986, as amended (the
“Code”)). During the Three Year Period Executive shall be entitled to
participate, on the basis of the executive position of Executive, in any
incentive compensation plan of Railway in accordance with the terms thereof at
the Control Change Date; provided that if under Railway programs or Executive’s
Employment Agreement in existence immediately prior to the Control Change Date,
there are written limitations on participation for a designated time period in
any incentive compensation plan, such limitations shall continue after the
Control Change Date to the extent so provided for prior to the Control Change
Date.

If the amount of contributions or benefits with respect to the Specified
Benefits or any incentive compensation is determined on a discretionary basis
under the terms of the Specified Benefits or any incentive compensation plan
immediately prior to the Control Change Date, the amount of such contributions
or benefits during the Three-Year Period for each of the Specified Benefits, to
the extent permissible by law and the applicable plan document, if any, shall
not be less than the average annual contributions or benefits for each Specified
Benefit for the three plan years ending prior to the Control Change Date and, in
the case of any incentive compensation plan, the amount of the incentive
compensation during the Three Year Period shall not be less than 75% of the
maximum that could have been paid to the Executive under the terms of the
incentive compensation plan.

(c) Payment. With respect to any plan or agreement under which Executive would
be entitled at the Control Change Date to receive Specified Benefits or
incentive compensation as a general obligation of Railway which has not been
separately funded (including specifically, but not limited to, those referred to
under Paragraph 7(b)(i)(D) above), Executive shall receive within five (5) days
after such date full payment in cash of all amounts to which he is then entitled
thereunder.

(d) Change in Control. For purposes of this Agreement, a “Change in Control”
shall be deemed to have occurred if:

(i) for any reason at any time less than seventy-five percent (75%) of the
members of the KCS Board shall be individuals who fall into any of the following
categories: (A) individuals who were members of the KCS Board on the date of the
Agreement; or (B) individuals whose election, or nomination for election by
KCS’s stockholders, was approved by a vote of at least seventy-five percent
(75%) of the members of the KCS Board then still in office who were members of
the KCS Board on the date of the Agreement; or (C) individuals whose election,
or nomination for election, by KCS’s stockholders, was approved by a vote of at
least seventy-five percent (75%) of the members of the KCS Board then still in
office who were elected in the manner described in (B) above, or

(ii) any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934 (the “Exchange Act”)) other than KCS shall have
become after the date of the Agreement, according to a public announcement or
filing, the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of Railway or KCS representing
thirty percent (30%) (or, with respect to Paragraph 7(c) hereof, 40%) or more
(calculated in accordance with Rule 13d-3) of the combined voting power of
Railway’s or KCS’s then outstanding voting securities; or

(iii) the stockholders of Railway or KCS shall have approved a merger,
consolidation or dissolution of Railway or KCS or a sale, lease, exchange or
disposition of all or substantially all of Railway’s or KCS’s assets, if persons
who were the beneficial owners of the combined voting power of Railway’s or
KCS’s voting securities immediately before any such merger, consolidation,
dissolution, sale, lease, exchange or disposition do not immediately thereafter,
beneficially own, directly or indirectly, in substantially the same proportions,
more than 60% of the combined voting power of any corporation or other entity
resulting from any such transaction.

(e) Termination After Control Change Date. Notwithstanding any other provision
of this Paragraph 7, at any time after the Control Change Date, Railway may
terminate the employment of Executive (the “Termination”), but unless such
Termination is for Cause as defined in subparagraph (g) or for disability,
within five (5) days of the Termination Railway shall pay to Executive his full
base salary through the Termination, to the extent not theretofore paid, plus a
lump sum amount (the “Special Severance Payment”) equal to the product of:
(i) 175% of his annual base salary specified in Paragraph 7(a) multiplied by
(ii) Three; and Specified Benefits (excluding any incentive compensation) to
which Executive was entitled immediately prior to Termination shall continue
until the end of the 3-year period (“Benefits Period”) beginning on the date of
Termination. If any plan pursuant to which Specified Benefits are provided
immediately prior to Termination would not permit continued participation by
Executive after Termination, then Railway shall pay to Executive within five
(5) days after Termination a lump sum payment equal to the amount of Specified
Benefits Executive would have received under such plan if Executive had been
fully vested in the average annual contributions or benefits in effect for the
three plan years ending prior to the Control Change Date (regardless of any
limitations based on the earnings or performance of Railway or any of its
affiliates) and a continuing participant in such plan to the end of the Benefits
Period. The Executive’s rights under this Paragraph 7(e) shall be in addition
to, and not in lieu of, any post-termination continuation coverage or conversion
rights the Executive may have pursuant to applicable law, including without
limitation continuation coverage required by Section 4980 of the Code. Nothing
in this Paragraph 7(e) shall be deemed to limit in any manner the reserved right
of Railway, in its sole and absolute discretion, to at any time amend, modify or
terminate health, prescription or dental benefits for active or retired
employees generally.

(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-year period following the Change in
Control, in his sole discretion, on not less than thirty (30) days’ written
notice (the “Notice of Resignation”) to the Secretary of Railway and effective
at the end of such notice period, resign his employment with Railway (the
“Resignation”). Within five (5) days of such a Resignation, Railway shall pay to
Executive his full base salary through the effective date of such Resignation,
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 “Resignation”). Upon Resignation of
Executive, Specified Benefits to which Executive was entitled immediately prior
to Resignation shall continue on the same terms and conditions as provided in
Paragraph 7(e) in the case of Termination (including equivalent payments
provided for therein). For purposes of this Agreement, “good reason” means any
of the following:

(i) the assignment to the Executive of any duties inconsistent in any 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 Railway which results in a diminution or other material
adverse change in such position, authority or duties;

(ii) any failure by Railway to comply with any of the provisions of Paragraph 7;

(iii) Railway’s requiring the Executive to be based at any office or location
other than the location described in Section 7(a)(ii);

(iv) any other material adverse change to the terms and conditions of the
Executive’s employment; or

(v) any purported termination by Railway of the Executive’s employment other
than as expressly permitted by this Agreement (any such purported termination
shall not be effective for any other purpose under this Agreement).

A passage of time prior to delivery of the Notice of Resignation or a failure by
the Executive to include in the Notice of Resignation any fact or circumstance
which contributes to a showing of Good Reason shall not waive any right of the
Executive under this Agreement or preclude the Executive from asserting such
fact or circumstance in enforcing rights under this Agreement.

(g) Termination for Cause After Control Change Date. Notwithstanding any other
provision of this Paragraph 7, at any time after the Control Change Date,
Executive may be terminated by Railway “for cause.” Cause means commission by
the Executive of any felony or willful breach of duty by the Executive in the
course of the Executive’s employment; except that Cause shall not mean:

(i) bad judgment or negligence;

(ii) any act or omission believed by the Executive in good faith to have been in
or not opposed to the interest of Railway or any of its affiliates (without
intent of the Executive to gain, directly or indirectly, a profit to which the
Executive was not legally entitled);

(iii) any act or omission with respect to which a determination could properly
have been made by the Railway Board that the Executive met the applicable
standard of conduct for indemnification or reimbursement under Railway’s
by-laws, any applicable indemnification agreement, or applicable law, in each
case in effect at the time of such act or omission; or

(iv) any act or omission with respect to which Notice of Termination of the
Executive is given, more than 12 months after the earliest date on which any
member of the Railway Board, not a party to the act or omission, knew or should
have known of such act or omission.

Any Termination of the Executive’s employment by Railway for Cause shall be
communicated to the Executive by Notice of Termination.

(h) Expenses. If any dispute should arise under this Agreement after the Control
Change Date involving an effort by Executive to protect, enforce or secure
rights or benefits claimed by Executive hereunder, Railway shall pay (promptly
upon demand by Executive accompanied by reasonable evidence of incurrence) all
reasonable expenses (including attorneys’ fees) incurred by Executive in
connection with such dispute, without regard to whether Executive prevails in
such dispute except that Executive shall repay Railway any amounts so received
if a court having jurisdiction shall make a final, non-appealable determination
that Executive acted frivolously or in bad faith by such dispute. To assure
Executive that adequate funds will be made available to discharge Railway’s
obligations set forth in the preceding sentence, Railway has established a trust
and upon the occurrence of a Change in Control shall promptly deliver to the
trustee of such trust to hold in accordance with the terms and conditions
thereof that sum which the Railway Board shall have determined is reasonably
sufficient for such purpose.

(i) Prevailing Provisions. On and after the Control Change Date, the provisions
of this Paragraph 7 shall control and take precedence over any other provisions
of this Agreement which are in conflict with or address the same or a similar
subject matter as the provisions of this Paragraph 7.

8. Mitigation and Other Employment. After a termination of Executive’s
employment pursuant to Paragraph 4(d)(i) or a Change in Control as defined in
Paragraph 7(d), Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise,
and except as otherwise specifically provided in Paragraph 4(d)(ii) with respect
to health and life insurance, no such other employment, if obtained, or
compensation or benefits payable in connection therewith shall reduce any
amounts or benefits to which Executive is entitled hereunder. Such amounts or
benefits payable to Executive under this Agreement shall not be treated as
damages but as severance compensation to which Executive is entitled because
Executive’s employment has been terminated.
9. KCS Not an Obligor. KCS shall have no obligation for the payment of salary,
benefits, or other compensation hereunder, and all such obligations shall be the
sole responsibility of Railway.
10. Notice. Notices and all other communications to any party pursuant to this
Agreement shall be in writing and shall be deemed to have been given when
personally delivered, delivered by facsimile or deposited in the United States
mail by certified or registered mail, postage prepaid, addressed, in the case of
Railway, to Railway at P.O. Box 219335, Kansas City, Missouri 64121-9335,,
Attention: Secretary, or, in the case of the Executive, to him at P.O. Box
219335, Kansas City, Missouri 64121-9335, or to such other address as a party
shall designate by notice to the other party.
11. Amendment. No provision of this Agreement may be amended, modified, waived
or discharged unless such amendment, waiver, modification or discharge is agreed
to in writing signed by Executive and by the President of Railway. No waiver by
a party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the time or at any prior or subsequent time.
12. Successors in Interest. The rights and obligations of Railway under this
Agreement shall inure to the benefit of and be binding in each and every respect
upon the direct and indirect successors and assigns of Railway, regardless of
the manner in which such successors or assigns shall succeed to the interests of
Railway hereunder, and this Agreement shall not be terminated by the voluntary
or involuntary dissolution of Railway or by any merger or consolidation or
acquisition involving Railway, or upon any transfer of all or substantially all
of Railway’s assets, or terminated otherwise than in accordance with its terms.
In the event of any such merger or consolidation or transfer of assets, the
provisions of this Agreement shall be binding upon and shall inure to the
benefit of the surviving corporation or the corporation or other person to which
such assets shall be transferred. Neither this Agreement nor any of the payments
or benefits hereunder may be pledged, assigned or transferred by Executive
either in whole or in part in any manner, without the prior written consent of
Railway.
13. Severability. The invalidity or unenforceability of any particular provision
of this Agreement shall not affect the other provisions hereof, and this
Agreement shall be construed in all respects as if such invalid or unenforceable
provisions were omitted.
14. Controlling Law and Jurisdiction. The validity, interpretation and
performance of this Agreement shall be subject to and construed under the laws
of the State of Missouri, without regard to principles of conflicts of law.
15. Amendment to Agreement for Code Section 409A Compliance. This Agreement may
constitute a nonqualified deferred compensation plan within the meaning of Code
Section 409A of the Internal Revenue Code of 1986, as amended (“Code”), with
respect to certain of its provisions. It is the intention of Executive and KCSR
that in such event this Agreement satisfy the requirements of Code Section 409A
so that benefits hereunder, if any, are not included in gross income under Code
Section 409A (whether or not included in gross income under another Code
provision). At the time of the execution of this Agreement final Treasury
Regulations interpreting Code Section 409A are pending. The parties hereto agree
that subsequent to the finalization of such pending Treasury Regulations, this
Agreement will be amended or restated as necessary for the purpose of satisfying
the requirements of Code Section 409A and until the time of such amendment or
restatement, this Agreement will be interpreted and administered accordingly.
16. Entire Agreement. This Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and terminates and supersedes
all other prior agreements and understandings, both written and oral, between
the parties with respect to the terms of Executive’s employment or severance
arrangements.

[SIGNATURES ON THE FOLLOWING PAGE]

1

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
7th day of June, 2006.

THE KANSAS CITY SOUTHERN RAILWAY COMPANY

By:   /s/ Arthur L. Shoener
Arthur L. Shoener, President and CEO

EXECUTIVE

/s/ Patrick J. Ottensmeyer

    Patrick J. Ottensmeyer

2

Appendix A

WAIVER AND RELEASE

In consideration of the benefits described in the Employment Agreement, I do
hereby fully waive all claims and release the Kansas City Southern Railway
Company (KCSR), and its affiliates, parents, subsidiaries, successors, assigns,
directors and officers, fiduciaries, employees and agents, as well as any
employee benefit plans (collectively “affiliates”) from liability and damages
related in any way to any claim I may have against KCSR or its affiliates. This
Waiver and Release includes, but is not limited to all claims, causes of action
and rights under Title VII of the Civil Rights Act of 1964, as amended; the
Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as
amended; the Civil Rights Act of 1866; the American with Disabilities Act of
1990; the Rehabilitation Act of 1973; the Older Workers Benefit Protection Act
of 1990; the Employee Retirement Income Security Act of 1974, as amended; the
Worker Adjustment and Retraining Notification Act; the Family and Medical Leave
Act; the Federal Employers Liability Act; the KCSR Labor Act, including bumping
rights, rights to file a grievance, rights to a hearing (whether before any
company official, any system, group, regional or special adjustment board, the
National Railroad Adjustment Board, or any other entity), and any rights to
arbitration thereunder; the Missouri Human Rights Act, the Kansas Act Against
Discrimination, the Kansas and Missouri Workers’ Compensation acts, and all
local state and federal statutes and regulations; all claims arising from labor
protective conditions imposed by the Interstate Commerce Commission or the
Surface Transportation Board; any incentive or benefit plan or program of KCSR
or any affiliate, and any rights under any collective bargaining agreement,
including seniority rights, bumping rights and reinstatement rights, rights to
file or assert a grievance or other complaint, rights to a hearing, or rights to
arbitration under such agreement; and all rights under common law such as breach
of contract, tort or personal injury of any sort.

I understand that this Waiver and Release also precludes me from recovering any
relief as a result of any lawsuit, grievance or claims brought on my behalf and
arising out of my employment or resignation of, or separation from employment,
provided that nothing in this Waiver and Release may affect my entitlement, if
any, to workers’ compensation or unemployment compensation. Additionally,
nothing in this Waiver and Release prohibits me from communications with, filing
a complaint with, or full cooperation in the investigations of, any governmental
agency on matters within their jurisdictions. However, as stated above, this
Waiver and Release does prohibit me from recovering any relief, including
monetary relief, as a result of such activities.

If any term, provision, covenant, or restriction of this Waiver and Release is
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of this Waiver and Release and the other terms, provisions,
covenants and restrictions hereof shall remain in full force and effect and
shall in no way be affected, impaired or invalidated. I understand and agree
that, in the event of breach by me of any of the terms and conditions of this
Waiver and Release, KCSR will be entitled to recover all costs and expenses as a
result of my breach, including but not limited to, reasonable attorneys’ fees
and costs.

I have read this Waiver and Release and I understand all of its terms. I enter
into and sign this Waiver and Release knowingly and voluntarily, with full
knowledge of what it means.

     
Date
  Employee Signature
Employee Name (Please Print)
 
   

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