Employment Agreement (2003)Full Document 

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                     (Amended and Restated January 1, 2001)

        THIS AGREEMENT, made and entered into as of this 1st day of January,
2001, by and between Kansas City Southern Industries, Inc., a Delaware
corporation ("KCSI") and Louis G. Van Horn, an individual ("Executive").

        WHEREAS, KCSI, Kansas City Southern Lines, Inc., a Missouri corporation
("KCSL") and Executive have heretofore entered into an Employment Agreement, as
amended and restated as of January 1, 1999 (the "Prior Agreement") pertaining to
the employment of Executive by KCSL; and

        WHEREAS, KCSL was administratively merged into KCSI as of December 31,
2000, and thereby ceased existence as a separate entity; and

        WHEREAS, KCSI and Executive desire for KCSI to employ Executive on the
terms and conditions set forth in this Agreement, which shall supercede the
Prior Agreement, and to provide an incentive to Executive to remain in the
employ of KCSI hereafter, particularly in the event of any change in control (as
herein defined) of KCSI or The Kansas City Southern Railway Company ("Railway"),
thereby establishing and preserving continuity of management of KCSI.

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

        1.      Employment. KCSI hereby employs Executive as its Vice President
and Comptroller - KCSR, Vice President and Comptroller - KCSI, to serve at the
pleasure of the Board of Directors of KCSI (the "KCSI 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 KCSI
Board and in the stockholders of KCSI. Executive shall faithfully perform his
duties under this Agreement to the best of his ability and shall devote
substantially all of his working time and efforts to the business and affairs of
KCSI and its affiliates.

        2.      Compensation.

                (a)     Base Compensation. KCSI shall pay Executive as
compensation for his services hereunder an annual base salary at the rate
approved by the KCSI Compensation Committee. Such rate shall not be increased
prior to January 1, 2002 and shall not be reduced except as agreed by the
parties or except as part of a general salary reduction program imposed by KCSI
for non-union employees and applicable to all officers of KCSI.

                (b)     Incentive Compensation. For the year 2001, Executive
shall [not] be entitled to participate in the KCSI Incentive Compensation Plan.

        3.      Benefits. During the period of his employment hereunder, KCSI
shall provide Executive with coverage under such benefit plans and programs as
are made generally available to similarly situated employees of KCSI, provided
(a) KCSI shall have no obligation with respect to any plan or program if
Executive is not eligible for coverage thereunder, and (b) Executive
acknowledges that stock options and other stock and equity participation awards
are granted in the discretion of the KCSI Board or the Compensation Committee of
the KCSI Board and that Executive has no right to receive stock options or other
equity participation awards or any particular number or level of stock options
or other awards. In determining contributions, coverage and benefits under any
disability insurance policy and under any cash compensation-based plan provided
to Executive by KCSI, it shall be assumed that the value of Executive's


annual compensation, pursuant to this Agreement, is 145% 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 KCSI nor Railway is under any
obligation to continue in effect or to fund any such plan or program, except as
provided in Paragraph 7 hereof.

        4.      Termination.

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

                (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 KCSI's disability
plan. For purposes of this Agreement, Executive shall be deemed to be disabled
if he qualifies for disability benefits under KCSI's long-term disability plan.

                (c)     Termination by KCSI For Cause. KCSI 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


                        (ii)    Executive's dishonesty involving KCSI, Railway
        or any subsidiary of KCSI or Railway;

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

                        (iv)    Willful failure by Executive to follow
        reasonable instructions of the President or other officer to whom
        Executive reports;

                        (v)     Executive's fraud or criminal activity; or

                        (vi)    Embezzlement or misappropriation by Executive.

                (d)     Termination by KCSI Other Than For Cause.

                        (i)     KCSI may terminate this Agreement and
        Executive's employment other than for cause immediately upon notice to
        Executive, and in such event, KCSI shall provide severance benefits to
        Executive in accordance with Paragraph 4(d)(ii) below.

                        (ii)    Unless the provisions of Paragraph 7 of this
        Agreement are applicable, if Executive's employment is terminated under
        Paragraph 4(d)(i), KCSI shall continue, for a period of one (1) year
        following such termination, (a) 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(a) above, at the rate in effect immediately
        prior to termination, and, (b) to reimburse Executive for the cost
        (including state and federal income taxes payable with respect to this
        reimbursement) 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,


        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 KCSI shall continue until the end of such one (1) year
        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). In the
        year in which termination of employment occurs, Executive shall be
        eligible to receive benefits under the KCSI Incentive Compensation Plan

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