Employment Agreement (2001)Full Document 

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                             EMPLOYMENT AGREEMENT
                             --------------------
                    (Amended and Restated January 1, 1999)

    THIS AGREEMENT, made and entered into as of this 1st day of January, 1999,
by and between Kansas City Southern Lines, Inc., a Missouri corporation
("KCSL"), Kansas City Southern Industries, Inc., a Delaware corporation ("KCSI")
and Louis G. Van Horn, an individual ("Executive").

    WHEREAS, Executive is now employed by KCSL, and KCSL, KCSI and Executive
desire for KCSL to continue 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 KCSL hereafter, particularly in the event of any change in control
(as herein defined) of KCSI, KCSL or The Kansas City Southern Railway Company
("Railway"), thereby establishing and preserving continuity of management of
KCSL.

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

    1.   Employment.  KCSL hereby continues the employment of Executive as its
Vice President and Comptroller - KCSR, Vice President and Comptroller - KCSI to
serve at the pleasure of the Board of Directors of KCSL (the "KCSL Board") and
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 KCSL Board and the KCSI Board and in the stockholder of
KCSL and 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 KCSL and KCSI and its
affiliates.


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    2.   Compensation.

         (a)  Base Compensation. KCSL shall pay Executive as compensation for
his services hereunder an annual base salary at the rate approved by the KCSI
Compensation Committee on November 17, 1998. Such rate shall not be increased
prior to January 1, 2000 and shall not be reduced except as agreed by the
parties or except as part of a general salary reduction program imposed by KCSL
for non-union employees and applicable to all officers of KCSL.

         (b)  Incentive Compensation. For the year 1999, Executive shall not be
entitled to participate in the KCSL Incentive Compensation Plan.

    3.   Benefits. During the period of his employment hereunder, KCSL shall
provide Executive with coverage under such benefit plans and programs as are
made generally available to similarly situated employees of KCSL, provided (a)
KCSL 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 Board of Directors of KCSI (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 KCSL, 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 none of KCSI, KCSL
nor


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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 KCSL, except that in the event of any material breach of this Agreement by
KCSL, Executive may terminate this Agreement and his employment hereunder
immediately upon notice to KCSL.

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

         (c)  Termination by KCSL For Cause.  KCSL 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 KCSL, KCSI, Railway or any
    subsidiary of KCSL, KCSI or Railway;

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


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              (vi)  Embezzlement or misappropriation by Executive.

         (d)  Termination by KCSL Other Than For Cause.

              (i)   KCSL may terminate this Agreement and Executive's employment
    other than for cause immediately upon notice to Executive, and in such
    event, KCSL 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),
    KCSL 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, 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 KCSL shall continue until the end of such one (1)
    year period notwithstanding the death or disability of Executive during said

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