EX-10.1






EXHIBIT 10.1




CONFIDENTIAL SEVERANCE AGREEMENT AND FULL AND GENERAL RELEASE




The purpose of this Confidential Severance Agreement and Full and General Release (this
“Agreement”) is to set forth the terms and conditions of Executive’s separation from employment
with The Kansas City Southern Railway Company, a Missouri Corporation (the “Company”).


The Company and Arthur L. Shoener (“Executive”) agree as follows:



1. Separation Date: Executive’s separation from employment with the Company is effective
June 6, 2008, at the close of business (the “Separation Date”).



2. Benefits Payable: In addition to Executive’s regular compensation through the
Separation Date, the Company will provide the following consideration, collectively referred to as
the “Severance”:



(a) Per Section 4(d) of the Executive’s Employment Agreement dated January 1, 2005 (the
“Employment Agreement”), one (1) year of monthly cash payments, less applicable taxes and
withholdings, each in the amount of one-twelfth (1/12th) of Executive’s annual base
salary in effect on the Separation Date ($537,313), to be paid on regular monthly payroll dates
through Executive’s normal payroll method and commencing on the July monthly payroll date;
provided, however, that in order to comply with Section 409A of the Internal Revenue Code of 1986,
as amended (“Code Section 409A”) in light of Executive’s status as a “specified employee” within
the meaning of Code Section 409A, the first six months of such payments ($268,657) shall be paid on
the December monthly payroll date, and six monthly payments each in the amount of $44,776 shall be
paid on the normal monthly payroll dates in January 2009 through June 2009.



(b) Twenty-four (24) monthly cash payments, less applicable taxes and withholdings, to be paid
on regular monthly payroll dates through Executive’s normal payroll method as follows:




(i) Six (6) months of monthly cash payments each in the amount of $55,970, commencing
on the July monthly payroll date; and




(ii) Six (6) months of monthly cash payments each in the amount of $11,194, commencing
on the first monthly payroll date following the end of the period set forth in Section
2(b)(i) above; and




(iii) Twelve (12) months of monthly cash payments each in the amount of $55,970,
commencing on the first monthly payroll date following the end of the period set forth in
Section 2(b)(ii) above.



(c) A lump sum cash payment of $371,903 to be used to assist Executive with the payment of
relocation expenses and the replacement of term life insurance, and as consideration for all other
amounts to which Executive may have become entitled under the Employment Agreement had he remained
employed. This payment shall be made within fourteen (14) days after the expiration of the
Revocation Period set out in Section 15(f) of this Agreement. This is the exclusive payment to be
made to Executive with respect to relocation-related costs and expenses and Executive shall not be
entitled to any additional payments or reimbursements of such expenses.



(d) Continuing group health coverage for Executive and/or his eligible dependents, provided
Executive timely elects to continue such coverage for himself and/or his eligible dependents
pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) and continues to
timely pay the cost of such coverage at the rate that would be charged to an active employee with
similar coverage. Such subsidy shall continue for as long as the Executive and/or his eligible
dependents remain covered by COBRA coverage or, if earlier, upon the Executive becoming eligible
for comparable health coverage in connection with other employment. In no event shall this subsidy
continue beyond the initial eighteen (18)-month COBRA period. Executive shall receive, under
separate cover, information concerning rights to continue participation in the Company-sponsored
group health plan, in accordance with COBRA.



Executive’s benefits in all other Company-sponsored benefit plans shall terminate in accordance
with the terms and conditions of such plans. To the extent Executive is not vested in any equity
awards as of the Separation Date, including without limitation, with respect to stock options,
restricted stock or performance shares, such unvested equity awards shall be forfeited as of the
Separation Date. Nothing herein shall extend the exercise period applicable to any vested options
outstanding as of the Separation Date. Executive acknowledges that the Severance is good and
valuable consideration in exchange for this Agreement, and further acknowledges and agrees that:
(i) other than the Severance, the Company has paid Executive all compensation due and owing to
Executive related to any employment relationship between Executive and the Company, including,
without limitation, all salary, pay, commissions, bonuses, vacation pay, paid time off, and (ii)
that, as of the Separation Date, Executive is no longer an employee of the Company and may under no
circumstance represent him/herself to be in any way connected with or a representative of such
company.



3. Release: In consideration of the Severance set forth above, and as a material
inducement to the Company to enter into this Agreement, Executive agrees, for him/herself,
Executive’s heirs, executors, administrators, representatives, successors and assigns and anyone
claiming by, through or for Executive, or anyone making a claim on Executive’s behalf (for purposes
of this Section, “Executive”), to irrevocably and unconditionally waive, release and forever
discharge the Company, and its respective present, past, and future parents, subsidiaries, and
affiliated corporations, divisions, affiliates, predecessors, principals, partners, joint
venturers, representatives, successors, and assigns, and its past and present owners, directors,
officers, employees, stockholders, attorneys, agents, and insurers, and all persons acting by,
through, under or in concert with any of them and all other persons, firms and corporations
whomsoever (collectively “Released Parties”) from any and all liability, actions, causes of
actions, common law claims, statutory claims under local, state or federal law including but not
limited to any rights and claims under any state’s human rights act, civil rights laws, or similar
law, any state’s wage payment act or similar law, any wage payment act or similar law, any law
governing any aspect of employment, Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 1981,
the Employee Retirement Income Security Act, the Consolidated Omnibus Budget Reconciliation Act,
the Americans with Disabilities Act of 1990, the Fair Labor Standards Act of 1938, the Family &
Medical Leave Act of 1993, the Age Discrimination in Employment Act of 1967, the Age Discrimination
in Employment Act Amendments of 1990 (sometimes known as the “Older Workers Benefit Protection
Act”), the Equal Pay Act of 1963, the Worker Adjustment Retraining Notification Act of 1988, and
any amendment thereto, the Federal Employer’s Liability Act; all claims arising from labor
protective conditions imposed by the Interstate Commerce Commission or the Surface Transportation
Board; all oral or written contract rights, including any rights under an employment agreement, any
Company incentive or benefit plan or program, including unvested stock options, and ANY
RIGHTS UNDER ANY COLLECTIVE BARGAINING AGREEMENT, INCLUDING ANY SENIORITY RIGHTS, BUMPING RIGHTS
AND REINSTATEMENT RIGHTS, RIGHTS TO FILE OR ASSERT A GRIEVANCE OR OTHER COMPLAINT, 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), OR RIGHTS TO ARBITRATION UNDER
SUCH AGREEMENT; and any claim under any local, state or federal statute, regulation, rule,
ordinance or common law, breach of contract claims, breach of any collective bargaining agreement
claims, and all demands, damages, expenses, fees (including attorney’s fees, court costs, expert
witness fees, etc.), which Executive may now have against the Released Parties and/or have on
account of, arising out of, or in connection with all interactions, transactions or contracts,
express or implied, between Executive and the Released Parties, including, but not limited to
Executive’s employment and the termination thereof, through the date of this Agreement.



Nothing in this Agreement shall limit or impede Executive’s right to file or pursue an
administrative charge with, or participate in, any investigation before the Equal Employment
Opportunity Commission (“EEOC”), any Federal, State, or Local Agency, or to file a claim for
unemployment benefits, and/or any causes of action which by law Executive may not legally waive.
Executive agrees, however, that if Executive or anyone on Executive’s behalf, brings any action
concerning or related to any cause of action or liability released in this agreement, Executive
waives Executive’s right to, and will not accept, any payments, monies, damages, or other relief,
awarded in connection therewith.



THIS MEANS THAT BY SIGNING THIS AGREEMENT EXECUTIVE WILL HAVE WAIVED ANY RIGHT EXECUTIVE MAY HAVE
TO RECOVER IN A LAWSUIT OR OTHER ACTION AGAINST RELEASED PARTIES, INCLUDING BUT NOT LIMITED TO THE
COMPANY, BASED ON ANY ACTIONS OR OMISSIONS MADE BY THE RELEASED PARTIES, INCLUDING BUT NOT LIMITED
TO CLAIMS WHICH IN ANY WAY ARISE FROM OR RELATE TO EXECUTIVE’S EMPLOYMENT RELATIONSHIP AND THE
SEPARATION OF EXECUTIVE’S EMPLOYMENT WITH THE COMPANY, UP TO THE DATE OF THE SIGNING OF THIS
AGREEMENT.



4. Covenant Not to Sue: Executive agrees and covenants, except as allowed by law with
regard to this Agreement, not to sue or file any claims against the Released Parties with regard to
any matters arising prior to the execution of this Agreement. Executive represents and warrants
that no such claim has been filed to date.



5. Non-Disparagement: Executive agrees not to in any way or to any extent slander, libel,
disparage, or otherwise impair the reputation, goodwill, or commercial interest of the Company and
the Released Parties, including but not limited to their employees, officers, directors,
management, shareholders, and/or the Company’s or the Released Parties’ performance, work product
or method of operating. Executive represents and warrants that no such disparagement has occurred
to date. Executive agrees that he will not, without first obtaining written approval from the
Company: (i) make any public statement in the nature of a press release or media interview with
respect to any aspect of Executive’s employment with the Company or any of its operating units,
affiliates or subsidiaries, or (ii) make any statement, written or oral, with respect to past or
projected future financial performance of the Company or any of its operating units, affiliates or
subsidiaries.



6. Non-Competition: During the period Executive receives Severance hereunder, Executive
shall not:



(a) Become employed by or affiliated in any capacity with (including, but not limited to, that
of director, officer, partner, joint venturer or investor, except as the holder of less than five
percent (5%) of the publicly traded voting securities of any issuer) in any Competitor of the
Company or any subsidiary or other affiliate of the Company. As used herein “Competitor” shall
mean any company or other entity which operates a Class 1 railroad in the United States (or in
Mexico or Canada, which if operated in the United States would be regarded as a Class 1 railroad),
including, but not limited to, Canadian National Railway, Canadian Pacific Railway Company, Union
Pacific Corporation, Burlington Northern Santa Fe Corporation, CSX Corporation, Norfolk Southern
Corp., Ferrocarril Mexicano, S.A. de C.V. and Ferrocarril del Sureste, S.A. de C.V.; or



(b) Acquire or agree to acquire, alone or in concert with any other person, directly or
indirectly, any voting securities of Kansas City Southern (“KCS”) (or any rights or options to
acquire beneficial ownership of such voting securities) if after such acquisition Executive and
such person would beneficially own in the aggregate more than five percent (5%) of the number of
such voting securities then outstanding; or participate in any way with respect to any acquisition
or proposal not approved by the Board of Directors of KCS for any purchase of more than five
percent (5%) of the then outstanding voting securities of KCS or any merger, consolidation or
business combination involving KCS, the Company or their respective subsidiaries (collectively, the
“KCS Group”), or with respect to any purchase of a substantial portion of the assets of the KCS
Group; or participate in any solicitation of proxies to vote any voting securities of KCS, or grant
any proxy with respect to any voting securities of KCS owned by such Executive to any person, other
than in each case as authorized or solicited by or on behalf of the KCS Board of Directors; or
participate in any negotiations or arrangements with any person with respect to any of the
foregoing or provide any information or take any action designed to advise, assist, encourage or
act in concert with any person in connection with any of the foregoing; or otherwise act alone or
in concert with others, to seek to control or influence materially the management, Board of
Directors or policies of the KCS Group.



7. Confidential Information: Pursuant to Executive’s Employment Agreement:



(a) Executive understands and agrees that Executive was given Confidential Information (as
defined below) during Executive’s employment with the Company relating to the business of the
Company and its affiliates. Executive shall maintain in strictest confidence and not 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 the Company or any of its affiliates or
customers. Executive further agrees not to remove or retain any calculations, letters, documents,
lists, papers, or copies thereof, which embody Confidential Information of the Company 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 the
Company.



(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 the
Company or any of its affiliates or customers and (i) is proprietary to, about, or created by the
Company or any of its affiliates or customers; (ii) gives the Company 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 the Company or any of its affiliates or
customers; and (iii) is not typically disclosed by the Company or any of its affiliates or
customers, or known by persons who are not employed by the Company 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 the Company 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. Upon separation from employment,
Executive shall notify Human Resources in writing of the name and address of Executive’s intended
future employer.



8. Injunctive Relief/Breach of This Agreement: In the event of any breach of this Agreement
by Executive, the Company shall be entitled to terminate any and all remaining Severance hereunder
and shall be entitled to pursue such other legal and equitable remedies as may be available.
Executive acknowledges, understands and agrees that the Company and its affiliates will suffer
immediate and irreparable harm if Executive fails to comply with any of Executive’s obligations
under this Agreement, and that monetary damages alone will be inadequate to compensate the Company
or any of its affiliates for such breach. Accordingly, Executive agrees that the Company 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 Agreement without the necessity of proving inadequacy of legal remedies
or irreparable harm or posting bond.



9. Property: Executive agrees that Executive has returned all tangible and intangible
property and Confidential Information, as defined in Section 7, belonging to the Company. Such
property includes but is not limited to any and all financial records and data; any written
material in Executive’s possession including but not limited to product information, engineering
information, customer lists, and the Company policies and procedures; automobiles; credit cards;
keys; equipment; product and/or customer lists and data; contracts; personnel information; project
development information; written proposals and studies; and proprietary software purchased or
developed by or for the benefit and use of the Company. Executive further represents and warrants
that Executive has not retained any copies, electronic or otherwise, of such property.



10. Miscellaneous: Executive agrees to make himself reasonably available to the Company to
respond to requests by the Company for information pertaining to or relating to the Company, any
entity related to the Company, or any of its agents, officers, directors, or employees. Executive
will cooperate fully with the Company in connection with any and all existing or future
depositions, litigation, or investigations brought by or against the Company, or any entity related
to the Company, or any of its agents, officers, directors, or employees, whether administrative,
civil, criminal in nature, in which and to the extent the Company deems Executive’s cooperation
necessary. In the event Executive is subpoenaed in connection with any litigation or
investigation, Executive will immediately notify the Company. Reasonable actual expenses incurred
by the Executive and pre-approved by the Company arising from these matters will be reimbursed by
the Company upon sufficient proof. Should Executive provide such services after the period of
severance payments under this Agreement is completed, Executive will be compensated for his/her
time at the same daily rate earned by Executive at the time of his/her separation.



11. Successors: This Agreement binds and inures to the benefit of Executive’s heirs,
administrators, representatives, executors, successors and assigns, and all Released Parties and
their heirs, administrators, representatives, executors, successors and assigns.



12. Entire Agreement/Modification: This Agreement shall be construed as a whole according
to its fair meaning and not strictly for or against Executive, the Company or any Released Party.
This Agreement sets forth the entire Agreement between Executive and the Company, superseding all
previous agreements and may not be modified except by a writing signed by both Executive and an
authorized official of the Company. The parties agree that this Agreement shall be interpreted at
all times in a manner compliant with Code Section 409A.



13. Severability: The parties hereto believe that the provisions of this Agreement are
reasonable and fair in all respects, and are necessary to protect the interests of the parties.
However, in case any one or more of the provisions or parts of a provision contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect in
any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other
provision or part of a provision of this Agreement or any other jurisdiction, but this Agreement
shall be reformed and construed in any such jurisdiction as if such invalid or illegal or
unenforceable provision or part of a provision had never been contained herein and such provision
or part shall be reformed so that it would be valid, legal and enforceable to the maximum extent
permitted in such jurisdiction.



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. Provisions Required by the Age Discrimination in Employment Act/Older Workers Benefit
Protection Act: Executive acknowledges that:



(a) Executive is specifically releasing any and all claims, whether known or unknown, which
are based on the Age Discrimination in Employment Act;



(b) This Agreement does not waive rights or claims that arise after the date this release is
executed;



(c) Executive has signed this Agreement of Executive’s own free will in exchange for the
consideration stated above, which Executive acknowledges constitutes full, fair, reasonable and
adequate consideration, to which Executive is not otherwise entitled, for the affirmations,
certifications, representations and promises made herein;



(d) Executive has carefully read and fully understands all the provisions of this Agreement,
including Section 15 of this Agreement entitled “Provisions Required by the Age Discrimination in
Employment Act/Older Workers Benefit Protection Act,” and that Executive has been afforded at least
twenty-one (21) days from the date this Agreement was presented to him (i.e. until 5:00 p.m. on
June 27, 2008) to consider the terms hereof; Executive agrees that changes made to this Agreement
at Executive’s request do not restart the twenty-one (21) day period which Executive has to review
this Agreement;



(e) Executive has been advised in writing by this Agreement that Executive should consult with
an attorney prior to executing this Agreement;



(f) Executive understands and agrees that this Agreement shall not become effective or
enforceable until seven (7) calendar days after it is executed by Executive and during that seven
(7) day period (the “Revocation Period”) Executive may revoke this Agreement. If Executive wishes
to revoke this Agreement, Executive agrees to do so in writing within seven (7) days and deliver
such written notice of Executive’s intent to revoke to John Derry, Vice President Human Resources.
If Executive does not timely revoke, this Agreement goes into force and effect on the eighth day
following its execution; and



(g) Executive also understands that should Executive decide to revoke this Agreement within
seven (7) days of signing, the Agreement will not be effective and the monies and other
consideration which the Company has promised to provide Executive shall not be paid or provided.



16. Corporate Approval: Executive understands that the terms of this Agreement are
conditioned on and subject to approval by the Compensation Committee of the Company’s Board of
Directors and the Company’s Board of Directors and that no payments shall be made hereunder prior
to such approval. Company shall take all necessary and reasonable actions to obtain such approval
prior to the expiration of the Revocation Period set out in Section 15(f) of this Agreement.



[SIGNATURES ON THE FOLLOWING PAGE]






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I have carefully read this Agreement; I fully understand the Agreement’s contents and the
effects thereof, including the Release in Section 3; I understand that I have a right to review
this Agreement with an attorney of my choice; and I have executed the same of my own free will,
without any coercion by the Company, the Released Parties, or any of the Company’s or the Released
Parties’ directors, officers, employees, agents or representatives.



EXECUTIVE



	 	 	 
	By: /s/ Arthur L. Shoener

	 	6/24/2008
	 

	 	 
	Arthur L. Shoener

	 	Date
	THE COMPANY

	 	

	By: /s/ Michael R. Haverty

	 	6/26/2008
	 

	 	 
	Michael R. Haverty

	 	Date







	 	 	Chairman of the Board,






The Kansas City Southern Railway Company




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