Amendment to Employment Agreement - Jay M. Nadlman

Exhibit 10.16.1

ADDENDUM TO EMPLOYMENT AGREEMENT

     This Addendum to Employment Agreement (“Addendum”) dated the day of August 18, 2004 is between Kansas City Southern, a Delaware corporation (“KCS”), formerly known as Kansas City Southern Industries, Inc. or KCSI, and Jay M. Nadlman, an individual (“Executive”).

     WHEREAS, Executive is currently employed by KCS, and KCS and Executive previously entered into an Employment Agreement dated January 1, 2001 (“Agreement”), which sets forth terms and conditions of Executive’s employment; and

     WHEREAS, the parties desire to amend certain of those terms and conditions in the Agreement as set forth below without amending the remaining terms of the Agreement.

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

Paragraphs 4(c) and 4(d) of the Agreement are hereby deleted and replaced in their entirety with the following:

     (c)     Termination by KCS For Cause. KCS 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 KCS, or any affiliate of KCS;

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

   (iv) Executive’s failure to substantially perform his duties and responsibilities hereunder, including without limitation Executive’s willful failure to follow reasonable instructions of the President or other officer to whom Executive reports;

   (v) Executive’s breach of an express employment policy of KCS or its affiliates;

   (vi) Executive’s fraud or criminal activity;

   (vii) Embezzlement or misappropriation by Executive; or

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   (viii) Executive’s breach of his fiduciary duty to KCS or its affiliates.

     (d)     Termination by KCS Other Than For Cause

               (i)     KCS may terminate this Agreement and Executive’s employment other than for cause immediately upon notice to Executive, and in such event, KCS shall provide severance benefits to Executive in accordance with Paragraph 4(d)(ii). Executive acknowledges and agrees that such severance benefits constitute the exclusive remedy of Executive upon termination of employment other than for cause. Notwithstanding any other provision of this Agreement, as a condition to receiving such severance benefits, Executive shall be required to execute a full release of claims in favor of KCS and its affiliates in the form attached hereto and incorporated herein by reference as Attachment A.

               (ii)     Unless the provisions of Paragraph 7 of this Agreement are applicable, if Executive’s employment is terminated under Paragraph 4(d)(i), KCS shall: (1) continue for a period of one (1) year following such termination, 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), at the rate in effect immediately prior to termination, and, (2) for a period of fifteen (15) months following such termination, 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 KCS shall continue until the end of such respective one (1) year and fifteen (15)-month periods 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 KCS Incentive Compensation Plan and any Executive Plan in which Executive participates (the “Executive Plan”) (if such Plans then are in existence and Executive was entitled to participate immediately prior to termination) in accordance with the provisions of such plans then applicable, and severance pay received in such year shall be taken into account for the purpose of determining benefits, if any, under the KCS Incentive Compensation Plan but not under the Executive Plan. After the year in which termination occurs, Executive shall not be entitled to accrue or receive benefits under the KCS Incentive Compensation Plan or the Executive Plan with respect to the severance pay provided herein, notwithstanding that benefits under such plan there are still generally available to executive employees of KCS. After termination of employment, Executive shall not be entitled to accrue or receive benefits under any other employee benefit plan or program, except that Executive shall be entitled to participate in the KCS Profit Sharing Plan, the KCS Employee Stock Ownership Plan and the KCS Section 401(k) Plan (if KCS employees then still participate in such plans) in the year of termination of employment only if Executive meets all requirements of such plans for participation in such year.

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Paragraph 5 of the Agreement is hereby deleted and replaced in its entirety with the following:

Confidentiality and Non-Disclosure.

     (a)     Executive understands and agrees that he has been and will continue to be given Confidential Information (as defined below) during his employment with KCS relating to the business of KCS and/or its affiliates, in exchange for his agreement herein. Executive hereby expressly agrees to maintain in strictest confidence and not to use in any way (including without limitation in any future business relationship of Executive), publish, disclose or authorize anyone else to use, publish or disclose in any way, any Confidential Information relating in any manner to the business or affairs of KCS and/or its affiliates. Executive agrees further not to remove or retain any figures, calculations, letters, documents, lists, papers, or copies thereof, which embody Confidential Information of KCS and/or its affiliates, and to return, prior to Executive’s termination of employment for any reason, any such information in Executive’s possession. If Executive discovers, or comes into possession of, any such information after his termination he shall promptly return it to KCS. Executive acknowledges that the provisions of this paragraph are consistent with KCS’ policies and procedures to which Executive, as an employee of KCS, is bound.

     (b)     For purposes of this Agreement, “Confidential Information” includes, but is not limited to, information in the possession of, prepared by, obtained by. compiled by. or that is used by KCS or its affiliates or customers and (1) is proprietary to, about, or created by KCS or its affiliates or customers; (2) gives KCS or its affiliates or customers some competitive business advantage, the opportunity of obtaining such advantage, or disclosure of which might be detrimental to the interest of KCS or its affiliates or customers; and (3) is not typically disclosed by KCS or its affiliates or customers, or known by persons who are not employed by KCS or its affiliates or customers. Without in any way limiting the foregoing and by way of example, Confidential Information shall include: information pertaining to KCS or its affiliates’ business operations such as financial and operational information and data, operational plans and strategies, business and marketing strategies, pricing information, plans for various products and services, and acquisition and divestiture planning.

     (c)     In the event of any breach of Paragraph 5 by Executive, Railway shall be entitled to terminate any and all remaining severance benefits under Paragraph 4(d)(ii) and shall be entitled to pursue such other legal and equitable remedies as may be available. Executive acknowledges, understands and agrees that KCS and/or its affiliates will suffer immediate and irreparable harm if Executive fails to comply with any of his obligations under Paragraph 5 of the Agreement, and that monetary damages alone will be inadequate to compensate KCS or its affiliates for such breach. Accordingly, Executive agrees that KCS and/or its affiliates shall, in addition to any other remedies available to it at law or in equity, be entitled to temporary, preliminary, and permanent injunctive relief and specific performance to enforce the terms of Paragraph 5 without the necessity of proving inadequacy of legal remedies or irreparable harm or posting bond.

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Paragraph 6(a) of the Agreement is hereby deleted and replaced in its entirety with the following:

The parenthetical “(discounted to the then present value on the basis of a rate of seven percent (7%) per annum)” is deleted from the first paragraph of paragraph 7(e).

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

     IN WITNESS WHEREOF, the parties hereto have executed this Addendum to Employment Agreement as of the 18th day of August 2004.

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