May 21, 2021
Re: Retention Bonus
As you know, Kansas City Southern (the Company) has agreed to merge with Canadian National Railway Company (the Merger). Reference is made to the Agreement and Plan of Merger, by and among Canadian National Railway Company (Parent), Brooklyn Merger Sub, Inc., and the Company, dated as of May 21, 2021 (the Merger Agreement). Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to them as set forth in the Merger Agreement. Because your leadership is very important to the successful execution of our strategic plans, the Company is prepared to offer you the incentive arrangement described below to ensure that the Company will have the benefit of your continued employment and your strong commitment to the Company.
You will be entitled to a retention bonus equal to $_________ (the Retention Bonus), payable in two installments as follows: (1) 25% on the earlier of: (a) the date on which the Effective Time occurs or (b) the date that is nine months following the public announcement of the Merger, and (2) 75% on the earlier of: (a) the date that is ninety (90) days after the Control Date or (b) June 1, 2023, subject in each case to your continued employment through the applicable payment dates; provided, however, that if you experience a Qualifying Termination on or after the date on which the Effective Time occurs, you will be entitled to payment of any unpaid portion of the Retention Bonus no later than five business days following such Qualifying Termination. Except as specifically provided in the immediately preceding sentence, if your employment with the Company terminates for any reason, you will forfeit any right to receive the Retention Bonus.
For purposes of this letter:
(a) Cause means, for an individual who is party to an agreement with the Company that defines Cause, Cause as defined in such agreement, or, for any other individual, : (i) your conviction for committing an act of fraud, embezzlement, theft, or any other act constituting a felony involving moral turpitude or causing material damage or injury, financial or otherwise, to the Company, (ii) a demonstrably willful and deliberate act or failure to act which is committed in bad faith, without reasonable belief that such action or inaction is in the best interests of the Company, which causes material damage or injury, financial or otherwise, to the Company (but only if such act or inaction is not remedied within 15 business days of your receipt of written notice from the Company which describes the act or inaction in reasonable detail), or (iii) your consistent gross neglect of duties or consistent wanton negligence by you in the performance of your duties (but only if such neglect or negligence is not remedied within a reasonable remedial period after your receipt of written notice from the Company which describes such neglect or negligence in reasonable detail and specifies the remedial period).
(b) Good Reason means, for an individual who is party to an agreement with the Company that defines Good Reason, Good Reason as defined in such agreement, or, for any other individual, the occurrence of any of the following events without your written consent: (i) a