Document:

exv10w16w1

 

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:

		
	1. 	Paragraphs 4(c) and 4(d) of the Agreement.

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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	2. 	Paragraph 5 of the Agreement.

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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	3. 	Paragraph 6(a) of the Agreement.

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

	 	(a)  	Duties. Upon termination of this Agreement by KCS or Executive for any
reason, Executive shall immediately sign such written resignations from all positions
as an officer, director or member of any committee or board of KCS and all direct and
indirect subsidiaries and affiliates of KCS as may be requested by KCS and shall sign
such other documents and papers relating to Executive’s employment, benefits and
benefit plans as KCS may reasonably request.

		
	4. 	Paragraph 7(e) of the Agreement.

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).

		
	5. 	Remainder of Agreement Unchanged.

     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.

	 	 	 
	 
	 	 
	EXECUTIVE

	 	KANSAS CITY SOUTHERN F/K/A

KANSAS CITY SOUTHERN INDUSTRIES, INC.
	 
	 	 
	 
	 	 
	/s/ Jay M. Nadlman

Jay M. Nadlman

	 	/s/ Michael R. Haverty, Chairman 

Michael R. Haverty, Chairman, President & CEO

4exv10w17

 

Exhibit 10.17

KANSAS CITY SOUTHERN

EXECUTIVE PLAN

(AS AMENDED AND RESTATED JANUARY 1, 2005)

      THIS
AMENDED AND RESTATED EXECUTIVE PLAN (the “Plan”) is
executed this 3rd day of
February, 2005, by Kansas City Southern, a corporation organized under the laws of the
State of Delaware (“KCS”).

      WITNESSETH:

      WHEREAS, KCS established on January 18, 1985, the “Kansas City Southern Industries, Inc. ERISA
Excess Benefits Plan” for the purpose of providing additional benefits to certain executives; and

      WHEREAS, KCS has restated said plan most recently in the form of the “Kansas City Southern
Industries, Inc. Executive Plan (Restated November 17, 1998)”; and

      WHEREAS, KCS reserved the power to amend said plan and wishes to exercise that power to amend
certain provisions and otherwise restate the plan as hereinafter provided.

      NOW, THEREFORE, KCS hereby adopts and restates said plan as the “Kansas City Southern
Executive Plan (As Amended and Restated January 1, 2005)” as set forth herein (the “Plan”).

Article 1. Definitions

      1.1 “Annual Benefit” shall mean the amount of a Participant’s annual benefit under
this Plan with respect to a calendar year, which, subject to the other provisions of this Plan,
shall be a dollar amount equal to 10% of the excess of (a) the Participant’s Compensation, over (b)
the maximum dollar amount of annual compensation that can be taken into account for purposes of
determining a participant’s benefit under a qualified retirement plan as set forth under Section
401(a)(17) of the Code. If the amount determined under (b) of this Section 1.1 exceeds the

 

 

Participant’s Compensation with respect to any calendar year, then the Participant shall not
receive an Annual Benefit under this Plan with respect to such calendar year.

      1.2 “Benefit Election” shall have the meaning set forth in Section 3.4.

      1.3 “Code” shall mean the Internal Revenue Code of 1986 as from time to time amended.

      1.4 “Compensation” shall mean the amount to be used for purposes of determining the
Participant’s benefit under this Plan (which shall be a percentage in excess of 100% of the
Participant’s annual base salary) as set forth in the Participant’s employment agreement with the
Company.

      1.5 “Company” shall mean the employer of a Participant in the Plan, and shall include
KCS and each subsidiary company of KCS that is at least eighty percent (80%) owned by KCS, and that
has been admitted to participate in the Plan upon approval of the Compensation and Organization
Committee.

      1.6 “Compensation and Organization Committee” shall mean the Compensation and
Organization Committee of the Board of Directors of KCS.

      1.7 “Grant Date” shall have the meaning set forth in Section 3.2(a).

      1.8 “KCS” shall mean Kansas City Southern, or any successor entity.

      1.9 “Participant” shall mean an employee of a Company who is eligible to participate
in the Plan under Article 2.

      1.10 “Plan” shall mean the “Kansas City Southern Executive Plan (As Amended and
Restated Effective January 1, 2005),” as set forth herein and as the same may be amended from time
to time.

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      1.11 “Restricted Shares” shall mean shares of common stock of KCS that the Participant
may forfeit if the Participant terminates employment with the Company prior to the end of five
consecutive 12-month periods beginning on the Grant Date. If Restricted Shares constitute the form
of payment of a Participant’s Annual Benefit hereunder, then such Restricted Shares will be granted
to the Participant under the provisions of the Kansas City Southern 1991 Amended and Restated Stock
Option and Performance Award Plan as amended from time to time.

Article 2. Eligibility

      Eligibility to participate in this Plan shall be limited to any executive of a Company who has
an employment agreement with the Company and who is designated by the President of the Company and
by the Compensation and Organization Committee as a Participant in this Plan.

Article 3. Benefits

      3.1 Payment of Annual Benefit. Each Participant’s Annual Benefit, if any, shall be
paid in the form of Restricted Shares unless the Participant has made a timely election, in
accordance with the provisions of Section 3.4, to receive any such Annual Benefit in cash.

      3.2 Time of Payment.

     (a) Restricted Shares. If a Participant’s Annual Benefit for a calendar year
is to be paid in the form of Restricted Shares, the grant date of such Restricted Shares
shall be a date in the calendar year immediately following the calendar year with respect to
which such Annual benefit is paid as selected by the Compensation and Organization Committee
(“Grant Date”); provided, however, the Grant Date shall not be later than the date of the
annual meeting of the stockholders of KCS held in the calendar year immediately following
the calendar year with respect to which such Annual Benefit is paid.

     (b) Cash. If a Participant’s Annual Benefit with respect to a calendar year is
to be paid in cash, then a cash payment in an amount equal to such Annual Benefit shall be
paid to the Participant on, or as soon as practical following, the date determined by the

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Compensation and Organization Committee that would have been the applicable Grant Date under
Section 3.2(a) had such Annual Benefit been paid in the form of Restricted Shares; provided,
however, that if the Participant separates from service with the Company prior to the cash
payment of the Participant’s Annual Benefit and if at the time of the Participant’s
separation from service the Participant is a key employee within the meaning of Section
409A(a)(2)(B)(i) of the Code, then to the extent required under Section 409A(a)(2)(B)(i) of
the Code the cash payment of the Participant’s Annual Benefit shall not be made earlier than
the date which is six months after the date of the Participant’s separation from service
(or, if earlier, the date of the Participant’s death.)

      3.3 Restricted Shares. If Restricted Shares are granted in payment of a Participant’s
Annual Benefit, then the number of Restricted Shares granted shall be such number so that the total
value of the Restricted Shares granted as determined on the Grant Date is equal to 125% (or such
greater percentage as the Compensation and Organization Committee may determine, which percentage
may vary from year to year) of the Participant’s Annual Benefit. The value of the Restricted
Shares for this purpose shall be determined on the Grant Date by the Compensation and Organization
Committee according to the valuation formula it receives from its outside compensation consultants.
If the number of Restricted Shares determined under the preceding sentence would include a
fractional share, then such fractional share shall be rounded up to the nearest whole share.

      3.4 Election of Form of Benefits. Any Participant may elect to receive his entire
Annual Benefit for any calendar year in cash, in accordance with the provisions of Section 3.2(b),
by filing a written election (“Benefit Election”) no later than the last day of the calendar year
preceding the calendar year with respect to which such benefit is paid, or by such earlier date as
specified by the Compensation and Organization Committee. Any such election shall be in such form
and manner, and in accordance with such procedures, as shall be prescribed by the Compensation and
Organization Committee. A Benefit Election may relate to a single calendar year’s Annual Benefit,
or, if so permitted by the Compensation and Organization Committee, may specify that it is to
remain in effect for all future years’ Annual Benefits until rescinded or revoked by the filing of
a new Benefit Election at the time and in the manner specified above. The Annual Benefit of a
Participant for any calendar year with respect to which no Benefit

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Election has been timely filed or is in effect shall be paid in the form of Restricted Shares.
Notwithstanding the preceding provisions of this Section 3.4, a Participant’s Benefit Election for
the 2005 calendar year may be made at any time prior to March 15, 2005.

      3.5 Active Employee Requirement for Grant of Restricted Shares. Notwithstanding any
other provisions of this Plan or any Benefit Election made by a Participant, no Restricted Shares
shall be granted to a Participant unless such Participant is an active employee of a Company on the
Grant Date of the Restricted Shares. Any amounts due under this Plan to any person who is not an
active employee of a Company on such Grant Date shall be paid in cash in accordance with the
provisions of Section 3.2(b).

      3.6 Discretion of Compensation and Organization Committee to Cancel Annual Benefit.
Notwithstanding any other provisions of this Plan, the Compensation and Organization Committee may,
in its sole discretion, prior to the payment of a Participant’s Annual Benefit with respect to a
calendar year, cancel the Participant’s Annual Benefit for such calendar year so that the
Participant will receive no Annual Benefit under this Plan for such calendar year.

Article 4. Additional Provisions

      4.1 No Trust. Nothing contained in this Plan and no action taken pursuant to the
provisions of this Plan shall create or be construed to create a trust of any kind or a fiduciary
relationship between any Company and a Participant or any other person.

      4.2 Source of Payments. Each Participant, and any other person or persons having or
claiming a right to benefits hereunder or to any interest in the Plan through such Participant,
shall rely solely on the unsecured promise of the Company as set forth herein and nothing in the
Plan shall be construed to give the Participant or any other person or persons any right, title,
interest or claim in or to any specific asset, fund, reserve, account or property of any kind
whatsoever owned by any Company or in which any Company has any right, title or interest now or in
the future, but such Participant shall have the right to enforce his claim against the Company
employing such Participant in the same manner as any unsecured creditor.

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      4.3 No Assignment. The right of a Participant or any other person to the payment of
benefits under this Plan shall not be assigned, transferred, pledged or encumbered in any way.

      4.4 Death. If a Participant entitled to an Annual Benefit under this Plan should die
prior to the payment of such benefit under Section 3.2, then the Annual Benefit otherwise payable
to the Participant shall be paid under Section 3.2(b) to the beneficiary designated by the
Participant under this Plan, if any, but if the Participant has not designated any beneficiary
under this Plan then to the beneficiary designated by the Participant, if any, under the stock
option and performance award plan maintained by KCS, but if the Participant has not designated any
beneficiary under such stock option and performance award plan then to the Participant’s estate or
to such person or persons entitled to receive the Participant’s estate as determined by the
Compensation and Organization Committee. Any such payment shall constitute a complete discharge of
the liability of the Company with respect to such payment due under this Plan.

      4.5 Incapacity. If the Compensation and Organization Committee shall find that any
person to whom any payment is payable under this Plan is unable to care for his affairs because of
illness or accident or is a minor, any payment due (unless a prior claim therefor shall have been
made by a duly appointed guardian, committee or other legal representative) may be paid to the
spouse, a child, a parent or a brother or sister of such person, or to any person deemed by the
Compensation and Organization Committee to have incurred expense for such person otherwise entitled
to payment. Any such payment shall constitute a complete discharge of the liability of the Company
with respect to such payment due under this Plan.

      4.6. Compensation and Organization Committee Powers and Liabilities. The Compensation
and Organization Committee in its absolute discretion shall have the full power and authority to
interpret, construe and administer this Plan and the Compensation and Organization Committee’s
interpretations and construction thereof, and action thereunder, including the determination of the
amount or recipient of the payment to be made therefrom, shall be binding and conclusive on all
persons for all purposes. No member of the Compensation and Organization Committee shall be liable
to any person for any action taken or omitted in connection with the interpretation and
administration of this Plan.

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      4.7 Benefits Not Treated as Compensation. Any benefits payable under the Plan shall
not be deemed salary or other compensation to the Participant for the purpose of computing benefits
to which he may be entitled under any profit sharing plan, pension plan or any other arrangement of
any Company for the benefit of its employees.

      4.8 Governing Law. This Plan shall be construed in accordance with and governed by
the law of the State of Missouri, excluding its choice of laws.

      4.9 Merger. Each Company agrees it will not be a party to any merger, consolidation
or reorganization, unless and until its obligations hereunder shall be expressly assumed by its
successor or successors.

      4.10 Amendment. This Plan may be amended at any time and from time to time by the
Compensation and Organization Committee.

      4.11 Binding Effect. This Plan shall be binding upon and inure to the benefit of each
Company, its respective successors and assigns and the Participants and their heirs, executors,
administrators and legal representatives.

      IN WITNESS WHEREOF, this amended and restated Plan has been duly executed as of the day and
year first above stated.

	 	 	 	 	 
	 	KANSAS CITY SOUTHERN

 	 
	 	By:  	/s/ Michael R. Haverty	 
	 	 	Michael R. Haverty, Chairman, President and CEO 	 
	 	 	 	 
	 

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