SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended
December 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from __________ to ___________
Commission file number 1-4717
KANSAS CITY SOUTHERN INDUSTRIES, INC.
(Exact name of Company as specified in its charter)
Delaware 44-0663509
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
114 West 11th Street, Kansas City, Missouri 64105
(Address of principal executive offices) (Zip Code)
Company's telephone number, including area code (816) 556-0303
Securities registered pursuant to Section 12 (b) of the Act:
Name of each exchange on
Title of each class which registered
Preferred Stock, Par Value $25 Per Share,
4%, Noncumulative New York Stock Exchange
Common Stock, $.01 Per Share Par Value New York Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act: None
Indicate by check mark whether the Company (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Company
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Company's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
Company Stock. The Company's common stock is listed on the New York Stock
Exchange under the symbol "KSU". As of February 29, 1996, 38,604,196 shares
of common stock and 242,170 shares of voting Preferred stock were outstanding.
On such date, the aggregate market value of the voting common and Preferred
stock held by non-affiliates was $1,794,325,936 (amount computed based on
closing prices of Preferred and common stock on New York Stock Exchange).
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the following documents are incorporated herein by reference into
Part of the Form 10-K as indicated:
Part of Form 10-K into
Document which incorporated
Company's Definitive Proxy Statement for the 1996 Part III
Annual Meeting of Stockholders, which will be filed
no later than 120 days after December 31, 1995<PAGE>
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
All information provided under Part IV Item 14. Exhibits, Financial Statement
Schedules and Reports on Form 8-K, except for the information within this
Form 10-K/A as provided below, remains unchanged from the Form 10-K filed
with the Securites and Exchange Commission on March 6, 1996.
(a) List of Documents filed as part of this Report
(3) List of Exhibits
(10) Material Contracts
- Exhibit 10.2 attached to this Form 10-K/A
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized and in the capacities indicated on March
19, 1996.
Kansas City Southern Industries, Inc.
/s/ Louis G. Van Horn
Louis G. Van Horn
Comptroller
(Principal Accounting Officer)<PAGE>
KANSAS CITY SOUTHERN INDUSTRIES, INC.
1995 FORM 10-K ANNUAL REPORT
INDEX TO EXHIBITS
Regulation S-K
Exhibit Item 14(a)(3)
No. Document Exhibit No.
10.2 Employment Agreement, dated January 1, 1996, by 10
and between the Company and Joseph D. Monello, Jr.
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of this 1st day of January, 1996,
by and between Kansas City Southern Industries, Inc., a Delaware corporation
("KCSI") and Joseph D. Monello, Jr.Joseph D. Monello, Jr., an individual
("Executive").
WHEREAS, Executive is now employed by KCSI, and KCSI and Executive desire
for KCSI 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 KCSI hereafter, particularly in the event of any change in control
or ownership (as herein defined) of KCSI or The Kansas City Southern Railway
Company, a Missouri corporation ("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 continues the employment of Executive as its
Vice President & Chief Financial Officer 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.<PAGE>
2. Compensation.
(a) Base Compensation. KCSI shall pay Executive as compensation for
his services hereunder an annual base salary at the rate in effect on the date
of this Agreement. Such rate shall not be increased prior to January 1, 1999
and shall not be reduced except as agreed by the parties or except as part of
a general salary reduction program imposed by KCSI and applicable to all
officers of KCSI.
(b) Incentive Compensation. For the years 1996, 1997 and 1998,
Executive shall not be entitled to participate in any KCSI or Railway
incentive compensation plan, except as otherwise provided in Paragraph 7
following a change in control of KCSI.
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 175% 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 such
plan or program and not by any summary or description thereof or any provision
of this Agreement (except to the extent this Agreement expressly modifies such
benefit plans or programs) and that KCSI is not under any obligation to
continue in effect or to fund any such plan or program, except as provided in
Paragraph 7 hereof. KCSI also shall reimburse Executive for ordinary and
necessary travel and other business expenses in accordance with policies and
procedures established by KCSI.
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 Executive;
(ii) Executive's dishonesty involving KCSI or any subsidiary of
KCSI;
(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
concerning the operations or business of KCSI or any subsidiary of KCSI;
(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 Paragraphs 7 or 8 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, 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 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 and the KCSI 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 KCSI Incentive Compensation Plan but not under the KCSI
Executive Plan. After the year in which termination occurs, Executive shall
not be entitled to accrue or receive benefits under the KCSI Incentive
Compensation Plan or the KCSI Executive Plan with respect to the severance pay
provided herein, notwithstanding that benefits under such plan then are still
generally available to executive employees of KCSI. 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 KCSI Profit Sharing Plan, the KCSI Employee
Stock Ownership Plan and the KCSI Section 401(k) Plan in the year of
termination of employment only if Executive meets all requirements of such
plans for participation in such year.
5. Non-Disclosure. During the term of this Agreement and at all times
after any termination of this Agreement, Executive shall not, either directly
or indirectly, use or disclose any KCSI trade secret, except to the extent
necessary for Executive to perform his duties for KCSI while an employee. For
purposes of this Agreement, the term "KCSI trade secret" shall mean any
information regarding the business or activities of KCSI or any subsidiary or
affiliate, including any formula, pattern, compilation, program, device,
method, technique, process, customer list, technical information or other
confidential or proprietary information, that (a) derives independent economic
value, actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain
economic value from its disclosure or use, and (b) is the subject of efforts
of KCSI or its subsidiary or affiliate that are reasonable under the
circumstance to maintain its secrecy. In the event of any breach of this
Paragraph 5 by Executive, KCSI shall be entitled to terminate any and all
remaining severance benefits under Paragraph 4(d)(ii) or Paragraph 8(c) and
shall be entitled to pursue such other legal and equitable remedies as may be
available.
6. Duties Upon Termination; Survival.
(a) Duties. Upon termination of this Agreement by KCSI or Executive
for any reason, Executive shall immediately return to KCSI all KCSI trade
secrets which exist in tangible form and shall sign such written resignations
from all positions as an officer, director or member of any committee or board
of KCSI and all direct and indirect subsidiaries and affiliates of KCSI as may
be requested by KCSI and shall sign such other documents and papers relating
to Executive's employment, benefits and benefit plans as KCSI may reasonably
request.
(b) Survival. The provisions of Paragraphs 5, 6(a) and 7 of this
Agreement shall survive any termination of this Agreement by KCSI or
Executive, and the provisions of Paragraph 4(d)(ii), or, if applicable,
Paragraph 8, shall survive any termination of this Agreement by KCSI under
Paragraph 4(d)(i).
7. Continuation of Employment Upon Change in Control of KCSI.
(a) Continuation of Employment. Subject to the terms and conditions
of this Paragraph 7, in the event of a Change in Control of KCSI (as defined
in Paragraph 7(d)) at any time during the term of this Agreement, Executive
will remain in the employ of KCSI for a period of an additional three years
from the date of such Change in Control of KCSI (the "Control Change Date").
In the event of a Change in Control of KCSI, subject to the terms and
conditions of this Paragraph 7, KCSI shall, for the three year period (the
"Three-Year Period") immediately following the Control Change Date, continue
to employ Executive at not less than the executive capacity Executive held
immediately prior to the Change in Control of KCSI. During the Three-Year
Period, KCSI shall continue to pay Executive base salary on the same basis, at
the same intervals, and at a rate not less than that, paid to Executive at the
Control Change Date.
(b) Benefits. During the Three-Year Period, Executive shall be
entitled to participate, on the basis of his executive position, in each of
the following KCSI plans (together, the "Specified Benefits") in existence,
and in accordance with the terms thereof, at the Control Change Date:
(i) any incentive compensation plan;
(ii) any benefit plan, and trust fund associated therewith,
related to (A) life, health, dental, disability, accidental death and
dismemberment insurance or accrued but unpaid vacation time, (B) profit
sharing, thrift or deferred savings (including deferred compensation, such as
under Sec. 401(k) plans), (C) retirement or pension benefits, (D) ERISA excess
benefits and (E) tax favored employee stock ownership (such as under ESOP, and
Employee Stock Purchase programs); and
(iii) any other benefit plans hereafter made generally
available to executives of Executive's level or to the employees of KCSI
generally. In addition, all outstanding options held by Executive under any
stock option plan of KCSI or its affiliates shall become immediately
exercisable on the Control Change Date, except that such options shall not be
exercisable earlier than six months after the date such options were granted.
(c) Payment. With respect to any plan or agreement under which
Executive would be entitled at the Control Change Date to receive Specified
Benefits as a general obligation of KCSI which has not been separately funded
(including specifically, but not limited to, those referred to under
Paragraphs 7(b)(i) and 7(b)(ii)(D) above), Executive shall receive within five
(5) days after such date full payment in cash (discounted to then present
value on the basis of a rate of seven percent (7%) per annum) of all amounts
to which he is then entitled thereunder.
(d) Change in Control of KCSI. For purposes of this Agreement, a
"Change in Control of KCSI" shall be deemed to have occurred if (i) for any
reason at any time less than seventy-five percent (75%) of the members of the
KCSI Board shall be individuals who fall into any of the following categories:
(A) individuals who were members of the KCSI Board on the date of this
Agreement; or (B) individuals whose election, or nomination for election by
KCSI's stockholders, was approved by a vote of at least seventy-five percent
(75%) of the members of the KCSI Board then still in office who were members
of the KCSI Board on the date of this Agreement; or (C) individuals whose
election or nomination for election by KCSI s stockholders, was approved
by a vote of at least seventy-five percent (75%) of the members of the KCSI
Board then still in office who were elected in the manner described in (A) or
(B) above, or (ii) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange Act")) shall
have become, according to a public announcement or filing, without the prior
approval of the KCSI Board, the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of KCSI
representing thirty percent (30%) (or, with respect to Paragraph 7(c) hereof,
40%) or more (calculated in accordance with Rule 13d-3) of the combined voting
power of KCSI's then outstanding voting securities (such "person" hereafter
referred to as a "Major Stockholder"); or (iii) the stockholders of KCSI shall
have approved a merger, consolidation or dissolution of KCSI or a sale, lease,
exchange or disposition of all or substantially all of KCSI's assets, or a
Major Stockholder shall have proposed any such transaction, unless any such
merger, consolidation, dissolution, sale, lease, exchange or disposition shall
have been approved by a least seventy-five percent (75%) of the members of the
KCSI Board who were individuals who fall into any of the categories described
in (i)(A), (B) or (C) of this Paragraph 7(d).
(e) Termination After Control Change Date. Notwithstanding any
other provision of this Paragraph 7, at any time after the Control Change
Date, KCSI may, through its Board, terminate the employment of Executive (the
"Termination"), but within five (5) days of the Termination it shall pay to
Executive his full base salary through the Termination, to the extent not
theretofore paid, plus a lump sum amount (the "Special Severance Payment")
equal to the product (discounted to then present value on the basis of a rate
of seven percent (7%) per annum) of his annual base salary specified in
Paragraph 7(a) hereof multiplied by the number of years and any portion
thereof remaining in the Three-Year Period (or if the balance of the
Three-Year Period after Termination is less than one year, for one year (such
one year period is hereinafter called the "Extended Period")). Specified
Benefits to which Executive was entitled immediately prior to Termination
shall continue until the end of the Three-Year Period (or the Extended Period,
if applicable); provided that if any plan pursuant to which Specified Benefits
are provided immediately prior to Termination would not permit continued
participation by Executive after Termination, then KCSI shall pay to Executive
within five (5) days after Termination a lump sum payment equal to the amount
of Specified Benefits Executive would have received if Executive had been
fully vested in maximum benefits available to Executive (regardless of any
limitations based on the earnings or performance of KCSI) and a continuing
participant in such plan to the end of the Three-Year Period or the Extended
Period, if applicable.
(f) Resignation After Control Change Date. In the event of a Change
in Control of KCSI, thereafter, upon good reason (as defined below), Executive
may, at any time during the Three-Year Period or the Extended Period, in his
sole discretion, on not less than thirty (30) days' written notice to the
Secretary of KCSI and effective at the end of such notice period, resign his
employment with KCSI (the "Resignation"). Within five (5) days of such a
Resignation, KCSI shall pay to Executive his full base salary through the
effective date of such Resignation, to the extent not theretofore paid, plus a
lump sum amount equal to the Special Severance Payment (computed as provided
in the first sentence of Paragraph 7(e), except that for purposes of such
computation all references to "Termination" shall be deemed to be references
to "Resignation"). Upon Resignation of Executive, Specified Benefits to which
Executive was entitled immediately prior to Resignation shall continue on the
same terms and conditions as provided in Paragraph 7(e) in the case of
Termination (including equivalent payments provided for therein). For
purposes of this Agreement, Executive shall have "good reason" if there occurs
without his consent (i) a reduction in the character of the duties assigned to
Executive or in Executive's level of work responsibility or conditions; (ii) a
reduction in Executive's base salary as in effect immediately prior to the
Control Change Date or as the same may have been increased thereafter; (iii) a
failure by KCSI to (A) continue any of the plans of the type referred to in
Paragraph 7(b) which shall have been in effect at the Control Change Date
(including those providing for Specified Benefits) or to continue Executive as
a participant in any of such plans on at least the basis in effect immediately
prior to the Control Change Date; or (B) provide other plans under which at
least equivalent compensation and benefits are available and in which
Executive continues to participate on a basis at least equivalent to his
participation in the KCSI plans in effect immediately prior to the Control
Change Date; or (C) to make the payment required under Paragraph 7(c); (iv)
requiring Executive to be based in any city different than the city in which
Executive was based immediately prior to the Control Change Date, except for
required travel on KCSI's business to an extent substantially consistent with
Executive's obligations immediately prior to the Control Change Date; or (v)
any breach by KCSI of this Agreement to the extent not previously specified.
(g) Termination for Cause After Control Change Date.
Notwithstanding any other provision of this Paragraph 7, at any time after the
Control Change Date, Executive may be terminated by KCSI "for cause" without
notice and without any payment hereunder only if such termination is for an
act of dishonesty by Executive constituting a felony under the laws of the
State of Missouri which resulted or was intended to result in gain or personal
enrichment of Executive at KCSI's expense.
(h) Gross-Up Provision. If any portion of any payments received by
Executive from KCSI on or after the Control Change Date (whether payable
pursuant to the terms of this Agreement or any other plan, agreement or
arrangement with KCSI or any person whose actions result in a Change of
Control of KCSI), shall be subject to the tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended, or any successor statutory
provision ("Parachute Payments"), KCSI shall pay to Executive, within five (5)
days of Executive's Termination or Resignation such additional amounts as are
necessary so that, after taking into account any tax imposed by such Section
4999 or any successor statutory provision on any such Parachute Payments (as
well as any income tax or Section 4999 tax on payments made pursuant to this
sentence), Executive is in the same after-tax position that Executive would
have been in if such Section 4999 or any successor statutory provision did not
apply and no payments were made pursuant to this sentence.
(i) Expenses. If any dispute should arise under this Agreement
after the Control Change Date involving an effort by Executive to protect,
enforce or secure rights or benefits claimed by Executive hereunder, KCSI
shall pay (promptly upon demand by Executive accompanied by reasonable
evidence of incurrence) all reasonable expenses (including attorneys' fees)
incurred by Executive in connection with such dispute, without regard to
whether Executive prevails in such dispute except that Executive shall repay
KCSI any amounts so received if a court having jurisdiction shall make a
final, non-appealable determination that Executive acted frivolously or in bad
faith by such dispute. To assure Executive that adequate funds will be made
available to discharge KCSI's obligations set forth in the preceding sentence,
KCSI has established a trust and upon the occurrence of a Change in Control of
KCSI shall promptly deliver to the trustee of such trust to hold in accordance
with the terms and conditions thereof that sum which the Board shall have
determined is reasonably sufficient for such purpose.
(j) Prevailing Provisions. On and after the Control Change Date,
the provisions of this Paragraph 7 shall control and take precedence over any
other provisions of this Agreement which are in conflict with or address the
same or a similar subject matter as the provisions of this Paragraph 7.
8. Termination of Employment Upon Change of Ownership .
(a) Change of Ownership. For purposes of this paragraph 8, a "Change of
Ownership" shall be deemed to have occurred if:
(i) Any " person," as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act (other than KCSI, Railway, any trustee or other
fiduciary holding securities under any employee benefit plan of KCSI or
Railway, or any corporation owned, directly or indirectly, by the stockholders
of KCSI or Railway in substantially the same proportions as their ownership of
the stock of KCSI or Railway), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act) directly or indirectly, of
securities of KCSI or Railway representing 50% or more of the combined voting
power of such corporation s then outstanding securities;
(ii) The stockholders of KCSI or Railway approve a merger or
consolidation of such corporation with any other corporation, other than (A) a
merger or consolidation which would result in the voting securities of such
corporation outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities
of the surviving entity) more than 50% of the combined voting power of the
voting securities of such corporation or such surviving entity outstanding
immediately after such merger or consolidation or (B) a merger or
consolidation effected to implement a recapitalization of such corporation (or
similar transaction) in which no "person" (as defined in Paragraph 8(a)(i))
acquires 50% or more of the combined voting power of such corporation s then
outstanding securities; or
(iii) The stockholders of KCSI or Railway approve a plan of
complete liquidation of such corporation or an agreement for the sale or
disposition by such corporation of all or substantially all of such
corporation s assets, unless immediately after such liquidation or disposition
of assets KCSI or Railway is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act) directly or indirectly of securities or
interests of the transferee of the assets of such corporation, representing
more than 50% of the combined voting power of such transferee s then
outstanding securities or other ownership interests.
(b) Termination Other Than For Cause. Executive shall be entitled
to the severance benefits set forth in Paragraph 8(c) below, if, within three
(3) years after a Change of Ownership, Executive's employment is terminated by
KCSI other than for cause, and
(i) KCSI does not offer Executive "similar employment" (as
defined below), or
(ii) KCSI terminates such similar employment other than for
cause within three (3) years after a Change of Ownership. For purposes of
this Paragraph 8(b) and Paragraph 8(c) below, Executive's employment shall be
deemed to be terminated other than for cause if Executive resigns because
Executive's employment is altered other than for cause and without Executive's
consent so it is no longer similar employment. For purposes of this Paragraph
8(b), similar employment shall mean an employment position having duties of a
character similar to the duties previously assigned to Executive and a base
salary, determined in accordance with Paragraph 2(a) above, equal to or
greater than Executive s base salary in effect immediately prior to the Change
of Ownership, but an employment position shall constitute similar employment
whether or not the position involves similar or comparable levels of
responsibility and, provided Executive s relocation costs are paid by KCSI,
regardless of whether the similar employment is in a different city or other
location within the continental United States. If Executive's employment is
terminated other than for cause, and KCSI offers Executive similar employment
but Executive does not accept such similar employment, Executive shall be
entitled to benefits only under Paragraph 4(d)(ii) above and shall not receive
any benefits under Paragraph 8(c) below.
(c) Severance Benefits. When Paragraph 8(b) above is applicable,
and subject to the limitations of Paragraph 8(d) below, KCSI, for the period
from the date of termination of employment or similar employment, whichever is
later, through the end of three (3) years following the Change of Ownership,
or for a period of one (1) year, whichever period is longer, (A) shall 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 the Change of Ownership and, (B) shall 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 shall
continue until the end of the period provided herein 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 addition, notwithstanding the terms of any option agreement
dated prior to the execution of this Agreement, upon a termination of
Executive's employment other than for cause which entitles Executive to the
severance benefits set forth in this Paragraph 8(c), all outstanding options
held by Executive under any stock option plan of KCSI or its affiliates shall
become immediately exercisable, except that no such options shall be
exercisable earlier than one year after the date such options were granted.
For purposes of the underlying option agreements, all such options shall be
deemed to be exercisable immediately prior to such termination of Executive's
employment, and the underlying options agreements hereby are amended to
reflect the provisions of this Agreement. If any of Executive s stock options
do not become exercisable because Executive s termination of employment occurs
within one year of the grant date of the options, KCSI immediately shall pay
Executive the aggregate difference between the option price of such options
and the fair market value of the KCSI stock on the date of termination of
Executive's employment (or on the date of the Change of Ownership, if KCSI
stock no longer exists or is not publicly traded on the date of termination of
employment). In the year in which termination of employment occurs, Executive
shall be eligible to receive benefits under the KCSI Incentive Compensation
Plan and the KCSI 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 KCSI Incentive Compensation Plan but
not under the KCSI Executive Plan. After the year in which termination
occurs, Executive shall not be entitled to accrue or receive benefits under
the KCSI Incentive Compensation Plan with respect to the severance pay
provided herein, notwithstanding that benefits under such plan then are still
generally available to executive employees of KCSI. 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 KCSI Profit Sharing Plan, the KCSI Employee
Stock Ownership Plan and the KCSI Section 401(k) Plan (if KCSI 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.
(d) Prevailing Provisions. If a Change in Control of KCSI (as
defined in Paragraph 7(d) above) occurs prior to or simultaneously with a
Change of Ownership (as defined in this Paragraph 8), Executive shall be
entitled only to the benefits provided in Paragraph 7 of this Agreement and
shall have no rights or benefits under this Paragraph 8. In any circumstance
in which the provisions of Paragraph 8(c) above are applicable, Executive
shall not be entitled to receive any benefits provided in Paragraph 4(d)(ii)
of this Agreement.
9. Mitigation and Other Employment. After a termination of Executive s
employment pursuant to Paragraph 4(d)(i), a Change in Control of KCSI or a
Change of Ownership, Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment or
otherwise, and except as otherwise specifically provided in Paragraphs
4(d)(ii) or 8(c) with respect to health and life insurance, no such other
employment, if obtained, or compensation or benefits payable in connection
therewith shall reduce any amounts or benefits to which Executive is entitled
hereunder. Such amounts or benefits payable to Executive under this
Agreement shall not be treated as damages but as severance compensation to
which Executive is entitled because Executive s employment has been
terminated.
10. Notice. Notices and all other communications to either party
pursuant to this Agreement shall be in writing and shall be deemed to have
been given when personally delivered, delivered by facsimile or deposited in
the United States mail by certified or registered mail, postage prepaid,
addressed, in the case of KCSI, to KCSI at 114 West 11th Street, Kansas City,
Missouri 64105, Attention: Secretary, or, in the case of the Executive, to him
at 10051 Hardy Drive, Overland Park, Kansas 66212, or to such other address as
a party shall designate by notice to the other party.
11. Amendment. No provision of this Agreement may be amended, modified,
waived or discharged unless such amendment, waiver, modification or discharge
is agreed to in a writing signed by Executive and the President of KCSI. No
waiver by any party hereto at any time of any breach by another party hereto
of, or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the time or at any prior or subsequent
time.
12. Successors in Interest. The rights and obligations of KCSI under
this Agreement shall inure to the benefit of and be binding in each and every
respect upon the direct and indirect successors and assigns of KCSI,
regardless of the manner in which such successors or assigns shall succeed to
the interest of KCSI hereunder, and this Agreement shall not be terminated by
the voluntary or involuntary dissolution of KCSI or Railway or by any merger
or consolidation or acquisition involving KCSI or Railway, or upon any
transfer of all or substantially all of KCSI's or Railway's assets, or
terminated otherwise than in accordance with its terms. In the event of any
such merger or consolidation or transfer of assets, the provisions of this
Agreement shall be binding upon and shall inure to the benefit of the
surviving corporation or the corporation or other person to which such assets
shall be transferred. Neither this Agreement nor any of the payments or
benefits hereunder may be pledged, assigned or transferred by Executive either
in whole or in part in any manner, without the prior written consent of KCSI.
13. Severability. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provisions were omitted.
14. Controlling Law and Jurisdiction. The validity, interpretation and
performance of this Agreement shall be subject to and construed under the laws
of the State of Missouri, without regard to principles of conflicts of law.
15. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and terminates
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the terms of Executive's employment
or severance arrangements, including the Employment Agreement between the
parties dated April 1, 1992, except that Paragraph 2(c) of the April 1, 1992
Employment Agreement relating to Restricted Stock shall continue in effect and
is incorporated herein and made a part of this Agreement.<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
KANSAS CITY SOUTHERN INDUSTRIES, INC.
By /s/ Landon H. Rowland
Landon H. Rowland, President
/s/ Joseph D. Monello
Joseph D. Monello, Jr.
