EX-10.7.3






EXHIBIT 10.7.3




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 Michael R. Haverty, an
individual (“Executive”) (collectively, the “Parties”)).



     WHEREAS, Executive is currently the Chairman of the Board of KCSR and employed by KCSR; and



     WHEREAS, Executive, KCSR and KCS previously entered into an Amended and Restated Employment
Agreement executed as of January 1, 2001, an Addendum to Employment Agreement executed August 19,
2004, and an Amendment to Employment Agreement executed as of January 1, 2005, and (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 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.



     2. 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.



     3. Paragraph 7(c) (“Payment”) is hereby deleted in its entirety.



     4. 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 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;



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          (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 January 1, 2001,
shall continue for the sole purpose of determining Executive’s entitlement to Post-Period Benefits,
as if such paragraph had not been deleted.




     5. 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 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
Company or its Affiliates.





          (iii) except that these Restrictive Covenants shall not apply in the event of a Change in
Control as defined in Paragraph 7(d).




          (b) Executive acknowledges that any breach of the restrictive covenants contained in
Paragraph 16(a) (the “Restrictive Covenants”) would cause irreparable injury to the
Company or KCS and that its remedy at law would be



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inadequate and, accordingly, consents to and agrees that temporary and permanent
injunctive relief may be granted, without bond, in any proceeding which may be brought to
enforce the Restrictive Covenants, without the necessity of proof of actual damage. This
right to an injunction shall not prohibit the Company or KCS from pursuing any other
remedies available to it including, but not limited to, the recovery of damages.
Executive further agrees that the Company or KCS may provide a copy of this Agreement to
any prospective employer of Executive that the Company or KCS believes is a competitor.




          (c) If Executive violates the Restrictive Covenants, Executive (i) shall forfeit all
right to future benefits under this Agreement; (ii) shall refund to the Company or KCS (as
the case may be) any severance and benefits paid by the Company or KCS; (iii) shall pay
reasonable attorneys’ fees and all other costs incurred by the Company or KCS as a result
of Executive’s breach; and (iv) acknowledges that the Company or KCS may pursue any other
remedies available to it as a result of Executive’s breach including, but not limited to,
the recovery of damages.



     6. The following new Paragraph 17 is added to the Agreement:



          17. Code Section 409A.





          (a) To extent that the Executive would otherwise be entitled to any payment or
benefit under this Agreement that constitutes deferred compensation within the meaning of
Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”) and that if
paid during the six months beginning on the date of Executive’s termination of employment
would be subject to additional taxes and penalties under Section 409A (“409A Penalties”)
because the Executive is a specified employee (within the meaning of Section 409A), then,
except to the extent specifically addressed under a separate plan or arrangement of the
Company or of KCS, the payment will be paid to the Executive on the earliest of the
six-month anniversary of the termination of employment, a change in ownership or effective
control of the Company (within the meaning of Section 409A) or the Executive’s death. In
addition, any payment or benefit due upon a termination of employment that represents a
“deferral of compensation” within the meaning of Section 409A shall be paid or provided to
the Executive only upon a “separation from service” as defined in Treas. Reg. 1.409A-1(h).
To the extent applicable, each severance payment made under this Agreement shall be
deemed to be a separate payment, and amounts payable under this Agreement shall be deemed
not to be a “deferral of compensation” subject to Section 409A to the extent provided in
the exceptions in Treas. Reg. 1.409A-1(b)(4) (“short-term deferrals”) and (b)(9)
(“separation pay plans,” including the exception under subparagraph (iii)) and other
applicable provisions of Treas. Reg. 1.409A-1 through 1.409A-6.




          (b) Except as otherwise expressly provided herein, to the extent any expense
reimbursement or the provision of any in-kind benefit under this Agreement is determined
to be subject to Section 409A, the amount of any such expenses eligible for reimbursement,
or the provision of any in-kind benefit, in one calendar year shall not affect the
expenses eligible for reimbursement in any other calendar year (except for



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any life-time or other aggregate limitation applicable to medical expenses), in no
event shall any expenses be reimbursed after the last day of the calendar year following
the calendar year in which the Executive incurred such expenses, and in no event shall any
right to reimbursement or the provision of any in-kind benefit be subject to liquidation
or exchange for another benefit.



     7. Attachment A to the Agreement is hereby deleted and replaced with the new Attachment A
attached hereto.



     Except as otherwise expressly set forth in this Addendum, including Attachment A, the
Agreement shall remain unchanged and in full force and effect in accordance with its terms.



     IN WITNESS WHEREOF, the parties have executed this Addendum to Employment Agreement as of the
date set forth above, but effective as of January 1, 2009.





	 	 	 	 	 	 	 	 	 
	EXECUTIVE	 	 	 	 CHAIRMAN, COMPENSATION
COMMITTEE BOARD OF DIRECTORS
KANSAS CITY SOUTHERN	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ Michael R. Haverty

	 	 	 	By:
	 	/s/ Rodney E. Slater	 	 
	 

Michael R. Haverty

	 	 	 	 
	 	  

	 	 







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ATTACHMENT A

Waiver and Release



In consideration of the benefits described in the Employment Agreement, Executive agrees, for
himself/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 the Missouri Human Rights Act, the Missouri Service
Letter Statute, Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 1981, the Employee
Retirement Income Security Act of 1974, 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 separation thereof, through the date of this Waiver and Release.



Nothing in this Waiver and Release 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 Waiver and Release,
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 WAIVER AND RELEASE 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 WAIVER AND RELEASE.



ARBITRATION. EXECUTIVE HEREBY WAIVES AND SHALL NOT SEEK A JURY TRIAL IN ANY LAWSUIT,
PROCEEDING, CLAIM, COUNTERCLAIM, DEFENSE OR OTHER LITIGATION OR DISPUTE UNDER OR IN RESPECT OF THIS
WAIVER AND RELEASE. EXECUTIVE AGREES THAT ANY SUCH DISPUTE RELATING TO OR IN RESPECT OF THIS
WAIVER AND RELEASE, (OTHER THAN INJUNCTIVE OR EQUITABLE RELIEF WHICH, AT THE COMPANY’S OPTION, MAY
BE SOUGHT IN ANY FEDERAL OR STATE COURT HAVING JURISDICTION) SHALL BE SUBMITTED TO, AND RESOLVED
EXCLUSIVELY PURSUANT TO ARBITRATION IN ACCORDANCE WITH THE NATIONAL RULES FOR THE RESOLUTION OF
EMPLOYMENT DISPUTES OF THE AMERICAN ARBITRATION ASSOCIATION INCLUDING EXPEDITED PROCEDURES FOR
EMERGENCY RELIEF WHICH ARE EXPRESSLY ADOPTED HEREIN. SUCH ARBITRATION SHALL TAKE PLACE IN THE
KANSAS CITY, MISSOURI METROPOLITAN AREA OR OTHER MUTUALLY AGREEABLE LOCATION AND SHALL BE SUBJECT
TO THE SUBSTANTIVE LAWS OF THE STATE OF MISSOURI. DECISIONS PURSUANT TO SUCH ARBITRATION SHALL BE
FINAL, CONCLUSIVE AND BINDING ON THE PARTIES. THE PREVAILING PARTY IN ARBITRATION SHALL BE
ENTITLED TO RECOVER REASONABLE COSTS AND ATTORNEYS’ FEES FROM THE OTHER PARTY. UPON THE CONCLUSION
OF ARBITRATION, THE PARTIES MAY APPLY TO ANY FEDERAL OR STATE COURT HAVING JURISDICTION TO ENFORCE
THE DECISION PURSUANT TO SUCH ARBITRATION. EXECUTIVE AND COMPANY SHALL KEEP SUCH ARBITRATION AND
ALL RELATED PROCEEDINGS AND AWARDS CONFIDENTIAL, EXCEPT AS DISCLOSURE MAY BE REQUIRED BY LAW,
REGULATION OR JUDICIAL PROCESS.



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 Waiver and Release does not waive rights or claims that arise after the date this
release is executed;



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     (c) Executive has signed this Waiver and Release 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 Waiver and
Release, including subparagraphs (a)-(g) of this Waiver and Release under the heading 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 to consider the terms
hereof; Executive agrees that changes made to this Waiver and Release at Executive’s request do not
restart the twenty-one (21) day period which Executive has to review this Waiver and Release;



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



     (f) Executive understands and agrees that this Waiver and Release 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 Waiver and Release. If
Executive wishes to revoke this Waiver and Release, Executive agrees to do so in writing within
seven (7) days and deliver such written notice of
Executive’s intent to revoke to
               . If Executive
does not timely revoke, this Waiver and Release goes into force and effect on the eighth day
following its execution; and



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


I have carefully read this Waiver and Release. I fully understand the contents of the Waiver and
Release and the effects thereof; I understand that I have a right to review this Waiver and Release
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.




[SIGNATURES ON THE FOLLOWING PAGE]




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THIS WAIVER AND RELEASE CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE
PARTIES.




EXECUTIVE




	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 

	 	 

Michael R. Haverty
	 	 	 	 

Date
	 	 






Subscribed and sworn to me this                      day of                                   , 20   
                 .




	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Notary Public	 	 
	 

	 	 	 	 	 	My Commission Expires:	 	 
	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 

	 	 






THE COMPANY




	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 

Date
	 	 
	 

	 	 	 	 	 	 	 	 






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