exv10w50w3






EXHIBIT 10.50.3




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 Scott E. Arvidson, an
individual (“Executive”) (collectively, the “Parties”)).



     WHEREAS, Executive, KCSR and KCS previously entered into an Employment Agreement executed as
of May 1, 2000, an Amendment to Employment Agreement executed as of January 1, 2001, and an
Addendum to Employment Agreement executed September 15, 2004 (collectively, the “Agreement”), which
Agreement sets forth the terms and conditions of Executive’s employment with KCSR; and



     WHEREAS, the Parties desire to amend the Agreement in part for purposes of compliance with
Section 409A of the Internal Revenue Code of 1986, as amended, and guidance issued thereunder and
in certain other respects.



     NOW, THEREFORE, the Parties hereby agree to the following amendments to the Agreement
effective January 1, 2009:



     1. Paragraph 1 of the Agreement is deleted and replaced with the following paragraph:



     Employment. The Company employs Executive as its Executive Vice President & Chief
Information Officer. Executive serves at the pleasure of the Board of Directors of the Company
(the “Company Board”) and has and will have such titles, duties, powers and responsibilities as may
be prescribed or delegated from time to time by the President of the Company, or other officer to
whom Executive reports, subject to the powers vested in the Company Board. Executive shall
faithfully perform Executive’s duties under this Agreement to the best of Executive’s ability and
Executive shall devote substantially all of Executive’s working time and efforts to the business
and affairs of the Company and its subsidiaries, affiliates and joint ventures.



     2. Paragraph 4(a) (“Termination by Executive”) of the Agreement is hereby amended by the
addition of the following new phrase at the end thereof:




provided, however, that the Company’s obligation to pay severance benefits shall be subject
to Paragraph 7(f) (“Resignation After Control Change Date”), including, but not limited to,
the notice provisions set forth therein.



     3. The first two sentences of subparagraph (ii) of Paragraph 4(d) (“Termination by Railway
Other Than For Cause”) of the Agreement are hereby deleted and replaced with the following new
sentences:




          (ii) Unless the provisions of Paragraph 7 (“Continuation of Employment Upon
Change in Control”) of this Agreement are applicable, if Executive’s employment is
terminated under Paragraph 4(d)(i), then, subject to













 







Executive’s execution of the release referenced in Paragraph 4(d)(i), (1) the
Company shall, within seventy-five (75) days following such termination, pay to
Executive a lump sum amount equal to twelve (12) months of the annual base salary
referenced in Paragraph 2(a), at the rate in effect immediately prior to
termination; provided that, in the event the release referenced in Paragraph 4(d)(i)
above is not timely executed by Executive so as to permit payment under this clause,
the Company shall have no obligation to make payment under this clause; (2) the
Company shall, if Executive elects continued group health coverage for himself and
his eligible dependents pursuant to COBRA, pay the related premium for such coverage
for a period of fifteen (15) months following such termination; and (3) the Company
shall, for a period of fifteen (15) months following such termination, reimburse
Executive for the cost of life insurance coverage comparable to the coverage
provided under this Agreement. The obligations of the Company under (2) and (3)
above shall include a reimbursement of state and federal income taxes payable in
connection therewith and shall continue until the end of the fifteen (15)-month
period notwithstanding the death or disability of Executive during said period
(except, in the event of death, the obligation to reimburse Executive for the cost
of life insurance shall not continue); provided, however, the Company’s obligation
under (2) and (3) above shall terminate as of the date Executive is provided
comparable life or health insurance coverage in connection with other employment if
earlier than the end of the fifteen (15)-month period.



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



     5. Paragraph 7(f) is hereby deleted and replaced with the following new Paragraph 7(f):




          (f) Resignation After Control Change Date. In the event of a Change in Control
as defined in Paragraph 7(d), thereafter, upon good reason (as defined below), Executive
may, at any time during the three (3)-year period following the Change in Control, in his
sole discretion, resign his employment with the Company only if: (1) Executive provides
written notice to the Secretary of the Company within ninety (90) days after the initial
occurrence of a good reason event describing in detail the event and stating that
Executive’s employment will terminate upon a specified date in such notice (the “Good Reason
Termination Date”), which date is not earlier than thirty (30) days after the date such
notice is provided to the Company (the “Notice Delivery Date”) and not later than ninety
(90) days after the Notice Delivery Date, and (2) the Company does not remedy the event
prior to the Good Reason Termination Date. Within five (5) days after the Good Reason
Termination Date, the Company shall pay to Executive his full Base Salary through such Good
Reason Termination Date, to the extent not theretofore paid, plus a lump sum amount equal to
the Special Severance Payment (computed as provided in the first sentence of Paragraph 7(e),
except that for purposes of such computation all references to “Termination” shall be deemed
to be references to “Good Reason Termination Date”). Upon the Good Reason Termination Date
of Executive, Specified Benefits to which Executive was entitled immediately prior to the
Good Reason Termination Date shall continue or be reimbursed on the same terms and
conditions as provided in Paragraph 7(e) in the case of Termination (including equivalent
payments



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provided for therein) and Post-Period Benefits shall be provided on the same terms and
conditions as provided in Paragraph 7(e) in the case of Termination. For purposes of this
Agreement, Executive shall have “good reason” if there occurs without his consent:




          (i) the assignment to the Executive of any duties inconsistent in any adverse
respect with the Executive’s position (including offices, titles, reporting
requirements or responsibilities), authority or duties as contemplated by Section
7(a)(i), or any other action by the Company which results in a diminution or other
material adverse change in such position, authority or duties;




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




          (iii) a material change in the geographic location at which the Executive must
perform his services under this Agreement from the location described in Section
7(a)(ii);




          (iv) a material diminution in Executive’s base compensation; and




          (v) any other action or inaction by the Company which constitutes a material
breach of this Agreement.



     Provided, however, that Paragraph 7(f) of Executive’s Employment Agreement dated May 1, 2000, shall
continue for the sole purpose of determining Executive’s entitlement to Post-Period Benefits, as if
such paragraph had not been deleted.





     6. The following new Paragraph 16 is added to the Agreement:



          16. Restrictive Covenants.




          (a) Executive agrees that for a period of time beginning upon Executive’s termination
of employment from the Company (the “Termination Date”) and continuing for a period of one
(1) year, Executive shall not:




          (i) directly or indirectly, either individually or as a principal, partner,
agent, employee, employer, consultant, stockholder, member, partner, joint venturer,
or investor, or as a director, manager or officer of any corporation or association,
or in any other manner or capacity whatsoever, engage in, assist or have any active
interest in a business, located anywhere in the geographic area then served by the
Company, or by its subsidiaries or joint ventures or by KCS or its subsidiaries or
joint ventures (“Affiliates”), that competes with or engages in the business
conducted by the Company or its Affiliates on the date hereof or at any time through
the Termination Date.




          (ii) directly or indirectly, either individually, or as a principal, partner,
agent, employee, employer, consultant, stockholder, joint venturer, or investor, or
as a director or officer of any corporation or association, (1) divert or attempt to
divert (by solicitation or otherwise) from the Company or its Affiliates any
business with any customer, prospective customer or account of the Company or its
Affiliates with which Executive had any contact or association, which was under
Executive’s supervision, or the identity of which was learned by Executive as a
result of his/her employment with the Company; (2) accept the business of



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any customer, prospective customer or account of the Company or its Affiliates
with whom Executive had any contact or association, which was under Executive’s
supervision, or the identity of which was learned by Executive as a result of
his/her employment with the 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 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.



     7. 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



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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 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.



     8. 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	 	THE KANSAS CITY SOUTHERN
RAILWAY COMPANY  
	 
	 	 	 	 	 	 
	/s/ Scott E. Arvidson

	 	By:
	 	/s/ John E. Derry	 	 
	 

	 	 	 	 	 	 
	Scott E. Arvidson

	 	Name:
	 	John E. Derry	 	 
	 

	 	Title:
	 	Senior Vice President Human Resources	 	 






KANSAS CITY SOUTHERN




	 	 	 	 	 
	By:

	 	/s/ Michael R. Haverty
	 	 
	 

	 	 	 	 
	Name:

	 	Michael R. Haverty	 	 
	Title:

	 	Chairman & CEO	 	 







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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:
	 	 	 	 
	 

	 	 
	 	 
	 

	 	Scott E. Arvidson
	 	Date





Subscribed and sworn to me this                      day of                                         ,
20                    .




	 	 	 	 	 
	 

	 	 
	 	Notary Public
	 

	 	 	 	My Commission Expires:
	 
	 
	 	 	 	 
	 

	 	 	 	 





THE COMPANY




	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 
	 	 
	 

	 	
	 	Date
	 
	 

	 	 

	 	 







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