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, 1996
[ ] 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) 983-1303
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. [ ]
Company Stock. The Company's common stock is listed on the New York Stock
Exchange under the symbol "KSU." As of March 3, 1997, 36,032,136 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 $1,913,699,013 (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:
Document Part of Form 10-K into which incorporated
Company's Definitive Proxy Statement for the 1997 Part III
Annual Meeting of Stockholders, which will be filed
no later than 120 days after December 31, 1996<PAGE>
[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
Securities and Exchange Commission on March 20, 1997.
(a) List of Documents filed as part of this Report
(3) List of Exhibits
(a) Exhibits
The Company has incorporated by reference herein certain exhibits as specified
below pursuant to Rule 12b-32 under the Exchange Act.
(3) Articles of Incorporation and Bylaws
Articles of Incorporation
3.4 The Amended Certificate of Designation Establishing the New Series
A Preferred Stock, par value $1.00, dated November 7, 1995, is
attached to this Form 10-K/A as Exhibit 3.4
3.5 The Certificate of Amendment dated May 12, 1987 of the Company's
Certificate of Incorporation adding the Sixteenth paragraph, is
attached to this Form 10-K/A as Exhibit 3.5
Bylaws
3.6 The Company's By-Laws, as amended and restated May 1, 1996, are
attached to this Form 10-K/A as Exhibit 3.6
(4) Instruments Defining the Right of Security Holders, Including Indentures
4.2 Article I, Sections 1,3 and 11 of Article II, Article V and
Article VIII of Exhibit 3.6 hereto are incorporated by reference
as Exhibit 4.2
4.4 The Amended Certificate of Designation dated November 7, 1995
establishing the New Series A Preferred Stock, par value $1.00,
which is attached hereto as Exhibit 3.4, is incorporated by
reference as Exhibit 4.4
(10) Material Contracts
10.13 Exhibit 10.2 to Company's Form 10-K/A for the year ended December
31, 1995 (Commission File No. 1-4717), Employment Agreement, dated
January 1, 1996, by and between the Company and Joseph D. Monello,
Jr., is hereby incorporated by reference as Exhibit 10.13
10.14 The Company's 1983 Employee Stock Option Plan, as amended and
restated September 26, 1996, is attached to this Form 10-K/A as
Exhibit 10.14
10.15 The Company's 1987 Employee Stock Option Plan, as amended and
restated September 26, 1996, is attached to this Form 10-K/A as
Exhibit 10.15
10.16 The Company's 1991 Stock Option and Performance Award Plan, as
amended and restated September 26, 1996, is attached to this Form
10-K/A as Exhibit 10.16
[Page]
10.17 Employment Agreement, dated January 1, 1997, by and between the
Company and Landon H. Rowland, is attached to this Form 10-K/A as
Exhibit 10.17
10.18 The Company's Directors Deferred Fee Plan, adopted August 20,
1982, amended and restated February 1, 1997, is attached to this
Form 10-K/A as Exhibit 10.18
10.19 The Kansas City Southern Industries, Inc. Executive Plan
(restated), as restated January 1, 1992, is attached to this Form
10-K/A as Exhibit 10.19
10.20 Amendment No. 1 as of May 15, 1995, to the Kansas City Southern
Industries, Inc. Executive Plan (restated), as restated January 1,
1992, is attached to this Form 10-K/A as Exhibit 10.20
10.21 Amendment No. 2 dated January 23, 1997, to the Kansas City
Southern Industries, Inc. Executive Plan (restated), as restated
January 1, 1992, is attached to this Form 10-K/A as Exhibit 10.21
(12) Statements Re Computation of Ratios
12.1 The Computation of Ratio of Earnings to Fixed Charges prepared
pursuant to Rule 14(a)(3) under the Exchange Act is attached to
this Form 10-K/A as Exhibit 12.1
(21) Subsidiaries of the Company
21.1 The list of the Subsidiaries of the Company prepared pursuant to
Rule 14(a)(3) under the Exchange Act is attached to this Form 10-K/A
as Exhibit 21.1
(23) Consents of Experts and Counsel
23.1 The Consent of Independent Accountants prepared pursuant to Rule
14(a)(3) under the Exchange Act is attached to this Form 10-K/A as
Exhibit 23.1
(27) Financial Data Schedule
27.1 The Financial Data Schedule prepared pursuant to Rule 14(a)(3)
under the Exchange Act is attached to this Form 10-K/A as Exhibit
27.1
<PAGE>
[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 25, 1997.
Kansas City Southern Industries, Inc.
By: /s/ L. G. Van Horn
L.G. Van Horn
Vice President and Comptroller
(Principal Accounting Officer)
AMENDED
CERTIFICATE OF
DESIGNATIONS ESTABLISHING THE
NEW SERIES PREFERRED STOCK, SERIES A
OF
KANSAS CITY SOUTHERN INDUSTRIES, INC.
Kansas City Southern Industries, Inc. a corporation organized and
existing under the laws of Delaware (the "Corporation"), pursuant to the
provisions of Section 151(g) of the Delaware General Corporation Law, as
amended, submits this Certificate of Designation for the purpose of amending
the Company's Certificate of Designation filed May 19, 1986 for the creation
of a Series A within the class of its New Series Preferred Stock, par value
$1.00 per share. The Corporation, through its president and Secretary, hereby
certifies that:
1. The name of the Corporation is Kansas City Southern Industries,
Inc.
2. By the Corporation's certificate of incorporation, as amended (the
"Certificate of Incorporation"), duly filed, the total number of shares of
capital stock authorized that the Corporation may issue is stated by Paragraph
FOURTH to be 402,840,000 shares, of which 840,000 shares, having a par value
of $25.00 per shares, shall be preferred stock, 2,000,000 shares, having a par
value of $1.00 per share, shall be New Series Preferred Stock, and 400,000,000
shares, having a par value of $0.01 per share, shall be common stock; and, by
such Certificate of Incorporation, the shares of the New Series Preferred
Stock are authorized to be issued in one or more series as may be determined
from time to time by the Board of Directors.
3. The Corporation duly filed a Certificate of Designation on May 19,
1986 creating New Series Preferred Stock, Series A (the "Series A Preferred
Stock").
4. No shares of the Series A Preferred Stock have been issued by the
Corporation.
5. The following resolutions, amending and restating the relative
rights and preferences of such Series A Preferred Stock pursuant to the
authority conferred on the Board of Directors by the Certificate of
Incorporation and Section 151(g) of the Delaware General Corporation Law, as
amended, were duly adopted by the Board of Directors of the Corporation at a
meeting duly convened and held on September 19, 1995:
RESOLVED, that pursuant to the authority expressly granted to the Board
of Directors by the provisions of Paragraph FOURTH of the Certificate of
Incorporation, as amended, of the Corporation and Section 151(g) of the
Delaware General Corporation Law, as amended, the Board of Directors hereby
amends and restates the designations, powers, preferences and rights of the
New Series Preferred Stock, Series A and the qualifications, limitations and
restrictions thereof, subject to compliance with the applicable provisions of
the Certificate of Incorporation, as amended, as follows:
1. Designation and Amount. The shares of such series shall be
designated as "New Series Preferred Stock, Series A (the "Series A Preferred
Stock") and the number of shares initially constituting such series shall be
150,000 (which number may be increased or decreased by the Board of Directors
without a vote of Stockholders).
2. Dividends and Distributions.
A. Subject to any prior and superior rights of the holders of
any series of Preferred Stock ranking prior and superior to the shares of
Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock shall be entitled prior to the payment of any
dividends on shares ranking junior to the Series A Preferred Stock to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the last day
of March, June, September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $10.00 or (b)
subject to the provision for adjustment hereinafter set forth, 1,000 times the
aggregate per share amount of all cash dividends, and 1,000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions other than a dividend payable in shares of Common Stock,
par value $0.01 per share, of the Corporation (the "Common Stock") or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock, since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any whole or fractional
share of Series A Preferred Stock. In the event the Corporation shall at any
time after October 12, 1995 (the "Rights Declaration Date") (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount to which holders
of shares of Series A Preferred Stock were entitled immediately prior to such
event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event. Such adjustment shall be made
successively whenever such a dividend or change in the Common Stock is
consummated.
B. The Corporation shall declare a dividend or distribution on
the Series A Preferred Stock as provided in paragraph (A) above immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided, that in the event no
dividend or distribution shall have been declared on the Common Stock during
the period between any Quarterly Dividend Payment Date and the next
subsequent. Quarterly Dividend Payment Date, a dividend of $10.00 per share
on the series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
C. Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date or is
a date after the record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive a quarterly dividend and before
such Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid
on the shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall
be allocated pro rata on a share-by-share basis among all such shares at the
time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be no more than 30 days prior to the date fixed for the payment
thereof.
3. Voting Rights. The holders of shares of Series A Preferred Stock
shall have the following voting rights:
A. Subject to the provision for adjustment hereinafter set
forth, each 1/1,000th share of Series A Preferred Stock shall entitle the
holder thereof to one vote on all matters voted on at a meeting of the
stockholders of the Corporation. In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the number of votes per share to which holders
of shares of Series A Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event. Such adjustment
shall be made successively whenever such a dividend or change in the Common
Stock is consummated.
B. Except as otherwise provided hereon or by law, the holders
of shares of Series A Preferred Stock and the holders of shares of Common
Stock shall vote together as one class on all matters voted on at a meeting of
stockholders of the Corporation.
C. Except as set forth herein, holders of Series A Preferred
Stock shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
4. Certain Restrictions.
A. Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
i. declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for consideration
any shares of capital stock of the Corporation ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock;
ii. declare or pay dividends on or make any other
distributions on any shares of capital stock of the Corporation ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except dividends paid ratably on the Series
A Preferred Stock and all such parity stock on which dividends are payable or
in arrears in proportion to the total amounts to which the holders of all such
shares are then entitled;
iii. redeem or purchase or otherwise acquire for
consideration shares of any capital stock of the Corporation ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock; provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such parity stock in
exchange for shares of any capital stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding up) to the
Series A Preferred Stock; or
iv. purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock or any shares of stock ranking on a parity
with the Series A Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall determine
in good faith will result in fair and equitable treatment among the respective
series or classes.
B. The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
capital stock of the Corporation unless the Corporation could, under paragraph
(A) of this Section 4, purchase or otherwise acquire such shares at such time
and in such manner.
5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued
shares of New Series Preferred Stock and may be reissued as part of a new
series of New Series Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
6. Liquidation, Dissolution or Winding Up.
A. In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, no distribution shall be made on
any shares of capital stock of the Corporation that rank junior (whether as to
dividends or upon liquidation, dissolution or winding up) to Series A
Preferred Stock unless prior thereto the holders of shares of Series A
Preferred Stock shall have received an amount per share equal to 1,000 times
the aggregate amount to be distributed per share to holders of the Common
Stock.
B. In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A liquidation preference and
the liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series A Preferred Stock, then such remaining
assets shall be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences.
C. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the amount that the holders of the Series A Preferred Stock
were entitled to receive upon liquidation, dissolution or winding up of the
Corporation immediately prior to such event shall be adjusted by multiplying
such number by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event. Such adjustment shall be made successively
whenever such a dividend or change in the Common Stock is consummated.
7. Merger; Consolidation, etc. In case the Corporation shall enter
into any merger, consolidation, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share
of Series A Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1,000 times the aggregate amount of stock,
securities, cash and/or other property (payable in kind), as the case may be,
into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time after the Rights Declaration
Date (i) declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then, in each such
case, the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event. Such adjustment shall be made
successively whenever such a dividend or change in the Common Stock is
consummated.
8. No Redemption. The Series A Preferred Stock shall not be
redeemable.
9. Ranking. The Series A Preferred Stock shall rank on a parity
with all other series of the Corporation's Preferred Stock as to the payment
of dividends and other distribution of assets, unless the terms of any such
other series shall provide otherwise.
10. Amendment. The Certificate of Incorporation of the Corporation
shall not be further amended in any manner that would materially alter or
change the powers, preferences, rights, qualifications, limitations and
restrictions of the Series A Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of a majority or more of the
outstanding shares of Series A Preferred Stock, voting separately as a class.
11. Fractional Shares. Series A Preferred Stock may be issued in
fractions of a share, which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
IN WITNESS HEREOF, the Corporation has caused this Certificate to be
executed in its name by the undersigned, thereunto duly authorized, this 7th
day of November, 1995.
KANSAS CITY SOUTHERN INDUSTRIES, INC.
By: /s/ Landon H. Rowland, President
By: /s/ Richard P. Bruening, Secretary
STATE OF MISSOURI )
) SS.
COUNTY OF JACKSON )
BE IT REMEMBERED that on this 7th day of November, 1995 personally came
before me, a Notary Public in and for the county and state aforesaid, LANDON
H. ROWLAND, President and RICHARD P. BRUENING, Secretary of Kansas City
Southern Industries, Inc., a corporation of the State of Delaware, and they
duly executed said Certificate before me and acknowledged the said Certificate
to be their act and deed and the act and deed of said Corporation and the
facts stated therein are true; and that the seal affixed to said Certificate
and attested by the Secretary of said Corporation is the common or corporate
seal of said Corporation.
IN WITNESS HEREOF, I have hereunto set my hand and seal on the day and
year last above written.
/s/ Julia A. Robinson, Notary Public
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
KANSAS CITY SOUTHERN INDUSTRIES, INC.
______________________________
Kansas City Southern Industries, Inc., a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware.
DOES HEREBY CERTIFY:
FIRST, That at a meeting of the Board of Directors of Kansas City
Southern Industries, Inc., resolutions were duly adopted setting forth a
proposed amendment of the Certificate of Incorporation of said corporation,
declaring the amendment to be advisable and calling a meeting of the
stockholders of said corporation for consideration thereof. Said amendment:
Add a new Article "SIXTEENTH" which shall read as follows:
SIXTEENTH. To the fullest extent permitted by the
General Corporation Law of the State of Delaware and any
amendments thereto, no director of the corporation shall be
liable to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director.
SECOND, That, thereafter, pursuant to resolution of its Board of
Directors, the regular annual meeting of the stockholders of said corporation
was duly called and held, upon notice in accordance with Section 222 of the
General Corporation Law of the State of Delaware at which meeting the
necessary number of shares as required by statute and the Certificate of
Incorporation (including the necessary number of shares of each class of
stock, where class votes were required) were voted in favor of the amendment.
THIRD, That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH, That the capital of said corporation shall not be reduced under
or by reason of said amendment.
IN WITNESS WHEREOF, said Kansas City Southern Industries, Inc. has caused
its corporate seal to be hereunto affixed and this certificate to be signed by
Robert E. Zimmerman, its Senior Vice President, and Sherry K. Cooper, its
Assistant Secretary, this 12th day of May, 1987.
By: /s/ Robert E. Zimmerman
ATTEST: Senior Vice President
[CORPORATE SEAL] By: /s/ Sherry Cooper
Assistant Secretary
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
BE IT REMEMBERED that on this 12th day of May, 1987 personally came
before me, a Notary Public in and for the county and state aforesaid, ROBERT
E. ZIMMERMAN, a Senior Vice President of Kansas City Southern Industries,
Inc., a corporation of the State of Delaware, and he duly executed said
Certificate before me and acknowledged the said Certificate to be his act and
deed and the act and deed of said Corporation and the facts stated therein are
true; and that the seal affixed to said Certificate and attested by the
Assistant Secretary of said Corporation is the common or corporate seal of
said Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office the
day and year last above written.
/s/ Irene Paulhe
Notary Public
[SEAL]
BY-LAWS
OF
KANSAS CITY SOUTHERN INDUSTRIES, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
As amended and restated to May 1, 1996
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. (As amended by the Board of Directors May
16, 1969) Meetings of stockholders for any purpose may be held at such time
and place, within or without the State of Delaware, as shall be designated by
the Board of Directors and stated in the notice of the meeting.
Section 2. Annual Meetings. (As amended by the Board of Directors
January 29, 1988) The annual meeting of the stockholders, at which they shall
elect directors and transact such other business as may properly be brought
before the meeting, shall be held on the first Tuesday of May in each year
unless the Board of Directors shall designate some other date therefor in
April, May or June.
To be properly brought before the meeting, business must be either (i)
specified in the notice of the meeting (or any supplement thereto) given by or
at the direction of the Board of Directors, (ii) otherwise properly brought
before the meeting by or at the direction of the Board of Directors, or (iii)
otherwise properly brought before the meeting by a stockholder. In addition
to any other applicable requirements, for business to be properly brought
before the meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the Secretary of the Corporation. To be timely,
such a stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation, not less than 45 days nor more
than 90 days prior to the meeting; provided, however, that in the event that
the meeting is designated by the Board of Directors to be held at a date other
than the first Tuesday in May and less than 60 days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, to be
timely, the notice by the stockholder must be so received not later than the
close of business on the 15th day following the day on which such notice of
the date of the meeting was mailed or such public disclosure was made,
whichever first occurs. A stockholder's notice to the Secretary shall set
forth as to each matter the stockholder proposes to bring before the meeting
(i) a brief description of the business desired to be brought before the
meeting and the reasons for conducting such business at the meeting, (ii) the
name and address of the stockholder proposing such business, (iii) the class
and number of shares of capital stock of the Corporation which are
beneficially owned by the stockholder and the name and address of record under
which such stock is held and (iv) any material interest of the stockholder in
such business.
Notwithstanding anything in these By-Laws to the contrary, no business
shall be conducted at the annual meeting except in accordance with the
procedures set forth in this Section 2 of Article I; provided, however, that
nothing in this Section 2 of Article I shall be deemed to preclude discussion
by any stockholder of any business properly brought before the annual meeting.
The Chairman of the annual meeting shall have the power to determine
whether or not business was properly brought before the meeting in accordance
with the provisions of this Section 2 of Article I, and, if the Chairman
should determine that any such business was not properly brought before the
meeting, the Chairman shall so declare to the meeting and any such business
shall not be transacted.
Section 3. Notice of Annual Meetings. Written notice of each annual
meeting of the stockholders stating the place, day and hour of the meeting,
shall be given to each stockholder entitled to vote thereat, at least ten (10)
days before the date of the meeting.
Section 4. Quorum. Except as otherwise required by statute, by the
Certificate of Incorporation or by these By-Laws, the presence, in person or
by proxy, of stockholders holding a majority in number of shares of the stock
issued and outstanding and entitled to vote, shall constitute a quorum at all
meetings of the stockholders. If, at any such meeting, such quorum shall not
be present or represented, the stockholders present in person or by proxy
shall have power to adjourn the meeting from time to time without notice other
than announcement at the meeting until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present in
person or by proxy, any business may be transacted which might have been
transacted at the meeting as originally noticed.
Section 5. Voting. (As amended by the Board of Directors August 15,
1969) Each holder of shares of common stock and preferred stock shall be
entitled to vote on the basis of one vote for each voting share held by him,
except as provided in the Certificate of Incorporation and except that in
elections for directors when the holders of the preferred stock do not have
the right, voting as a class, to elect two directors, each holder of voting
shares shall be entitled to as many votes as shall equal the number of shares
which he is entitled to vote, multiplied by the number of directors to be
elected and he may cast all of such votes for a single director or may
distribute them among the number to be voted for, or any two or more of them,
as he may see fit.
Section 6. List of Stockholders Entitled to Vote. (As amended by the
Board of Directors May 16, 1969) The Board of Directors shall cause the
officer who has charge of the stock ledger of the corporation to prepare and
make, at least ten (10) days before every election of directors, a complete
list of the stockholders entitled to vote at said election, arranged in
alphabetical order, showing the address of and the number of shares of common
stock and preferred stock registered in the name of each stockholder. Such
list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at
least ten (10) days prior to the election, either at a place within the city
where the election is to be held, and which place be specified, at the place
where said meeting, or, if not specified, at the place where said meeting is
to be held, and the list shall be produced and kept at the time and place of
election during the whole time thereof, and subject to the inspection of any
stockholder who may be present.
Section 7. Inspectors. (As amended by the Board of Directors May 16,
1969) For each meeting of stockholders there may be appointed by the Board of
Directors or by the Chairman of the meeting three (3) inspectors of election.
If any inspector shall fail or be unable to serve as inspector or for any
reason be unable to complete his duties, an alternate inspector shall be
appointed by the Board of Directors or the Chairman of the meeting. The
inspectors of election shall examine and canvass the proxies and ballots, and
make and submit a signed report of the votes cast at the meeting, which shall
be entered at large upon the records.
Section 8. Inspectors' Oath. An inspector, before he enters on the
duties of his office, shall take and subscribe an oath substantially in the
following form before any officer authorized by law to administer oaths:
"I do solemnly swear that I will execute the duties of an
inspector of the election now to be held with strict impar-
tiality and according to the best of my ability."
Section 9. Special Meeting. (As amended by the Board of Directors
November 21, 1980) Special meetings of the stockholders for any purpose or
purposes may be called at any time by the Chairman of the Board of Directors,
the Chief Executive Officer or the President, or at the request in writing of
a majority of the Board of Directors, by giving ten (10) days written notice
thereof to the stockholders. Business transacted at any special meeting of
the stockholders shall be limited to the purpose stated in the notice.
Section 10. Organization. (As amended by the Board of Directors January
29, 1988) The Chairman of the Board of Directors, and in his absence the
Chief Executive Officer, the President or one of the Vice Presidents, shall
call meetings of the stockholders to order and act as Chairman of such
meeting. In the absence of all these officers, the Board of Directors may
appoint a Chairman of the meeting. The Secretary of the Corporation shall act
as secretary at all meetings of the shareholders; but the Board of Directors
may designate an Assistant Secretary for that purpose before the meeting and,
if no such designation shall have been made, then such designation may be made
by the Chairman of the meeting. The conduct of any meeting of the
stockholders shall be governed by such rules, regulations and procedures as
the Chairman of the meeting, in his sole and exclusive discretion shall
determine.
Section 11. Stockholder Nomination of Directors. (Adopted by the Board
of Directors January 29, 1988) Not less than 45 days nor more than 90 days
prior to the date of any meeting of the stockholders at which directors are to
be elected ("the Election Meeting") any stockholder who intends to make a
nomination at the Election Meeting shall deliver a notice in writing (the
"Stockholder's Notice") to the Secretary of the Corporation setting forth (a)
as to each nominee whom the stockholder proposes to nominate for election or
re-election as a director, (i) the name, age, business address and residence
address of the nominee, (ii) the principal occupation or employment of the
nominee, (iii) the class and number of shares of capital stock of the
Corporation which are beneficially owned by the nominee and (iv) any other
information concerning the nominee that would be required, under the rules of
the Securities and Exchange Commission, in a proxy statement soliciting
proxies for the election of such nominee; and (b) as to the stockholder giving
the notice, (i) the name and address of the stockholder and (ii) the class and
number of shares of capital stock of the Corporation which are beneficially
owned by the stockholder and the name and address of record under which such
stock is held; provided, however, that in the event that the Election Meeting
is designated by the Board of Directors to be held at a date other than the
first Tuesday in May and less than 60 days' notice or prior public disclosure
of the date of the Election Meeting is given or made to stockholders, to be
timely, the Stockholder's Notice must be so delivered not later than the close
of business on the 15th day following the day on which such notice of the date
of the meeting was mailed or such public disclosure was made, whichever first
occurs. The Stockholder's Notice shall include a signed consent of each such
nominee to serve as a director of the Corporation, if elected. The
Corporation may require any proposed nominee or stockholder proposing a
nominee to furnish such other information as may reasonably be required by the
Corporation to determine the eligibility of such proposed nominee to serve as
a director of the Corporation or to properly complete any proxy or information
statement used for the solicitation of proxies in connection with such
Election Meeting.
ARTICLE II
BOARD OF DIRECTORS
Section 1. General Powers. The general management of the business and
affairs and all the corporate powers of the Corporation shall be vested in and
exercised by its Board of Directors which shall exercise all of the powers of
the Corporation except such as are by statute, or by the Certificate of
Incorporation or by these By-Laws, conferred upon or reserved to the
stockholders. The directors shall act only as a Board and the individual
directors shall have no power as such.
Section 2. Number, Term and Qualifications. (As amended by the Board
of Directors January 19, 1990) The number of directors shall not be less than
three nor more than eighteen, the exact number of directors to be determined
from time to time by resolution adopted by a majority of the whole Board, and
such exact number shall be eighteen until otherwise determined by resolution
adopted by a majority of the whole Board. Directors need not be stockholders.
The Board of Directors shall be divided into three classes as nearly
equal in number as possible. At each annual meeting of stockholders,
successors to directors of the class whose terms then expire shall be elected
to hold office for a term expiring at the third succeeding annual meeting of
stockholders. When the number of directors is changed, any newly created
directorships or any decrease in directorships shall be so apportioned among
the classes as to make all classes as nearly equal in number as possible.
Notwithstanding the foregoing, whenever the holders of the preferred stock
shall have the right, voting as a class, to elect two directors at the next
annual meeting of stockholders, the terms of all directors shall expire at the
next annual meeting of stockholders, and then and thereafter all directors
shall be elected for a term of one year expiring at the succeeding annual
meeting.
From and after January 19, 1990, no person who has attained the age of 72
shall be eligible to be nominated or to serve as a member of the Board of
Directors, but any person who shall attain the age of 72 during the term of
directorship to which he was elected shall be eligible to serve the remainder
of such term; provided, however, that any person, regardless of age, who, on
January 19, 1990, is an incumbent director, shall be eligible to be nominated
for election and to serve one (1) additional term.
Section 3. Election of Directors. Directors shall be elected at the
annual meetings of stockholders by ballot in the manner provided in these
By-Laws and the Certificate of Incorporation.
Section 4. Newly Created Directorships and Vacancies. (As amended by
the Board of Directors August 15, 1969) Newly created directorships and
vacancies which shall occur in the Board of Directors because of death,
resignation, disqualification or any other cause, may be filled by a majority
of the directors then in office, though less than a quorum, pursuant to
Section 223 of the General Corporation Law of Delaware. Such directors may,
by resolution, eliminate any vacant directorship thereby reducing the size of
the whole Board of Directors but in no event shall the size of the Board of
Directors be reduced to less than three directors. No decrease in the Board
of Directors shall shorten the term of any incumbent directors.
Section 5. Resignations. Any director of the Corporation may resign at
any time by giving written notice to the President or to the Secretary of the
Corporation. Such resignation shall take effect at the date of the receipt of
such notice or at any later time specified therein. Unless otherwise provided
therein, the acceptance of such resignation shall not be necessary to make it
effective.
Section 6. Organization. The Board of Directors shall hold its
organizational meeting as soon as practicable after the Annual Meeting of
Stockholders. The Chairman of the Board of Directors, or in his absence the
President, shall preside at all meetings of the Board of Directors.
Section 7. Place of Meetings. (As amended by the Board of Directors May
16, 1969) The Board of Directors may hold its meetings, both regular and
special, at such place or places, within or without the State of Delaware as
determined by the Board of Directors.
Section 8. Regular Meetings. Regular meetings of the Board of Directors
may be held without notice at such times and at such places as shall from time
to time be determined by the Board of Directors.
Section 9. Special Meetings. (As amended by the Board of Directors May
16, 1969) Special meetings of the Board of Directors may be called at the
request of the Chairman of the Board of Directors, the Executive Committee, or
of the President, or of any three members of the Board of Directors. Notice
of the time and place of such meeting shall be given either by mail to each
director at least three (3) days before such meeting or personally, by
telephone, or by telegram to each director at least twelve (12) hours before
such meeting.
Section 10. Quorum. A majority of the Board of Directors at a meeting
duly assembled shall be necessary to constitute a quorum for the transaction
of business except as otherwise provided by statute, by the Certificate of
Incorporation or by these By-Laws. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the
Board of Directors. In the absence of a quorum, a majority of the directors
present may adjourn the meeting from time to time until a quorum be present,
without notice other than by announcement at the meeting.
Section 11. Report to Stockholders. The President and Board of
Directors shall make a report or statement of the affairs of the Corporation
at each regular annual meeting of the stockholders subsequent to the first
annual meeting.
Section 12. Compensation. (As amended by the Board of Directors January
19, 1990; Effective January 1, 1990) The directors may receive reasonable
fees to be determined from time to time by the Board of Directors for services
actually performed in attending meetings and for other services actually
performed and the expenses of attendance, if any, may be allowed for
attendance at each regular or special meeting of the Board of Directors. A
director who is, at the same time, an officer or employee of the Corporation
or of any subsidiary or affiliate, shall not be entitled to receive any
compensation or fee for service as a director or as a member of any committee
of the Board of Directors.
Section 13. Consent of Directors in Lieu of Meeting. Unless otherwise
restricted by the Certificate of Incorporation or By-Laws, any action required
or permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting if all members of the Board
or Directors or Committee, as the case may be, consent thereto in writing and
the writing or writings are filed with the minutes of proceedings of the Board
of Directors or Committee.
<PAGE>
ARTICLE III
COMMITTEES
Section 1. Executive Committee: Organization and Powers. (As amended
by the Board of Directors May 1, 1996) There shall be an Executive Committee
to consist of the Chairman of the Board of Directors, the Chief Executive
Officer and two (2) or more non-officer directors, the number of which being
fixed from time to time by resolution adopted by a majority vote of the whole
Board of Directors. The Board of Directors shall elect the members of the
Executive Committee by vote of a majority of the whole Board of Directors and
one member of the Executive Committee shall be elected as Chairman by the vote
of a majority of the whole Board of Directors. The members of the Executive
Committee shall be elected annually at the Board's organizational meeting or
as soon as thereafter as possible.
When the Board of Directors is not in session, the Executive Committee
shall have and may exercise all the powers of the Board of Directors in the
management of the business and affairs of the Corporation in all cases in
which specific directions shall not have been given by the Board of Directors
including, but not limited to, the power to declare dividends on the common
and preferred stock of the Corporation, and to authorize the seal of the
Corporation to be affixed to all papers which may require it. The members of
the Executive Committee shall act only as a committee and individual members
shall have no power as such.
The Executive Committee shall have full power to act as the Nominating
Committee, which, when acting as such, shall have the power and duty to make
recommendations to the Board of Directors as to suitable nominees for election
to the Board of Directors by the stockholders or by the remaining members of
the Board of Directors, to fill newly created directorships and to fill any
vacancies which shall occur.
When acting as the Nominating Committee, it shall have the power to meet
with and consider suggestions from such other members of the Board of
Directors, stockholders, members of management, consultants and other persons,
firms or corporations as they deem necessary or advisable in the premises to
assist them in making such recommendations.
The Chief Executive Officer shall not be eligible to vote upon any matter
coming before the Committee when acting as the Nominating Committee.
Section 2. Compensation and Organization Committee: Organization and
Powers. (As amended by the Board of Directors May 1, 1996) There shall be a
Compensation and Organization Committee to consist of three (3) or more
non-officer directors, the number of which being fixed from time to time by
resolution adopted by a majority vote of the whole Board of Directors, each of
whom shall be a "disinterested person" within the meaning ascribed thereto
under Rule 16b-3 promulgated under the Securities Exchange Act of 1934 as
amended from time to time and interpreted by the Securities and Exchange
Commission. The Board of Directors shall elect the members of the
Compensation and Organization Committee by vote of a majority of the whole
Board of Directors, and one member of the Compensation and Organization
Committee shall be elected its Chairman by the vote of a majority of the whole
Board of Directors. The members of the Compensation and Organization
committee shall be elected annually at the Board's organizational meeting or
as soon thereafter as possible.
The Compensation and Organization Committee shall have the power: to
authorize and determine all salaries for the officers and supervisory
employees of the Corporation and subsidiary companies as may be prescribed
from time to time by resolution adopted by the Board of Directors; to
administer the incentive compensation plans of the Corporation, The Kansas
City Southern Railway Company and the other subsidiaries of the Corporation in
accordance with the powers and authority granted in such plans; and to
determine any incentive allowances to be made to officers and staff of the
Corporation and its subsidiaries. The Compensation and Organization Committee
shall have the power to administer the Employee Stock Purchase Plan of the
Corporation under which eligible employees of the Corporation and its
subsidiaries and affiliates are permitted to subscribe to and to purchase
shares of the Corporation common stock through payroll deductions.
The Compensation and Organization Committee shall have full power: to act
as the Stock Option Plan Committee to construe and interpret any stock option
plan or similar plan of the Corporation and all options, stock appreciation
rights and limited rights granted under this plan or any other plan; to
determine the terms and provisions of the respective option agreements,
including such terms and provisions as, in the judgement of the Committee, are
necessary or desirable to qualify any of the options as "incentive stock
options"; to establish and amend rules for its administration; to grant
options, stock appreciation rights and limited rights under any stock option
plan of the Corporation; to determine and designate the recipients of
options, stock appreciation rights and limited rights; to determine and
designate the dates that options, stock appreciation rights and limited rights
are granted; to determine and designate the number of shares subject to
options, stock appreciation rights and limited rights; to determine and
designate the option prices and option periods; and to correct any defect or
supply any omission or reconcile any inconsistency in any stock option plan of
the Corporation or in any option, stock appreciation right or limited right to
the extent the Committee deems desirable to carry any stock option plan or any
option, stock appreciation right or limited right into effect.
The Compensation and Organization Committee shall also have the power:
to review the consolidated earnings of the Corporation and to make recommen-
dations to the Board of Directors with respect to the allocation of funds to
the Corporation's Profit Sharing Plan; and to review the results of the
investment program of the Profit Sharing Plan and make reports thereof to the
Board of Directors.
The Compensation and Organization Committee shall also have the power and
duty to initiate, review and approve succession plans and major organizational
plans and changes within the Corporation and its subsidiaries.
Section 3. Audit Committee: Organization and Powers. There shall be
an Audit Committee to consist of three (3) or more non-officer directors, the
number of which being fixed from time to time by resolution adopted by a
majority vote of the whole Board of Directors. The Board of Directors shall
elect the members of the Audit Committee by vote of a majority of the whole
Board of Directors and one member of the Audit Committee shall be elected as
Chairman by a vote of a majority of the whole Board of Directors. The members
of the Audit Committee shall be appointed by the Board of Directors to serve
staggered three-year terms.
The Audit Committee shall have the power and the duty to meet with and
consider suggestions from members of management and of the Corporation's
internal audit staff, as well as with the Corporation's independent accoun-
tants, concerning the financial operations of the Corporation. The Audit
Committee shall additionally have the power to review audited financial
statements of the Corporation and consider and recommend the employment of,
and approve the fee arrangement with, independent accountants for both audit
functions and for advisory and other consulting services.
Section 4. Finance and Strategy Committee: Organization and Powers.
(Adopted by the Board of Directors February 15, 1990; Effective May 1, 1990)
There shall be a Finance and Strategy Committee to consist of the Chairman of
the Board of Directors and three (3) or more non-officer directors, the number
of which being fixed from time to time by resolution adopted by a majority
vote of the whole Board of Directors. The Board of Directors shall elect the
members of the Finance and Strategy Committee by a vote of a majority of the
whole Board of Directors, and one member of the Finance and Strategy Committee
shall be elected as Chairman by a vote of the majority of the whole Board of
Directors. The members of the Finance and Strategy Committee shall be elected
annually at the Board of Directors' organizational meeting or as soon
thereafter as possible.
The Finance and Strategy Committee shall have the power and duty to
review the financial plans, major capital investments, long term strategic
plans and the acquisition and divestiture programs of the Corporation and to
make recommendations relating thereto to the Board of Directors.
Section 5. Rules, Records and Reports. The Committees may make and
adopt such rules and regulations governing their proceedings as they may deem
proper and which are consistent with the statutes of the State of Delaware,
the Certificate of Incorporation and By-Laws. The committees shall keep a
full and accurate record of all their acts and proceedings and report the same
from time to time to the Board of Directors.
Section 6. Meetings. Regular meetings of the committees shall be held
at such times and at such places as from time to time may be fixed by the
committees. Special meetings of the committees may be held at such other
times as may in the judgement of the Chairman or, he being absent, in the
judgement of a member, be necessary. Notice of regular meetings need not be
given. Notice of special meetings shall be given to each member by mail not
less than three (3) days before the meeting or personally, by telephone or
telegram to each member not less than twelve (12) hours before the meeting,
unless the Chairman of the committee, or a member acting in that capacity in
his absence, shall deem a shorter notice expedient.
Section 7. Quorum. A majority of members of a committee shall constitute
a quorum for the transaction of business and the act of a majority of those
present shall be the act of the committee (except with respect to the
Compensation and Organization Committee, in which any act of the Compensation
and Organization Committee when acting as the Stock Option Plan Committee
under any stock option plan, must be authorized and approved by at least (3)
members).
Section 8. Subcommittees. A committee may appoint such subcommittees as
it shall deem necessary.
Section 9. Vacancies. Any vacancy in a committee shall be filled by a
majority of the whole Board of Directors.
Section 10. Substitute Members. Whenever at any time a member of any
committee shall be absent from a meeting of that committee and it shall be
necessary in order to constitute a quorum or, for other reason, it may be
deemed expedient or desirable, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute
a quorum, may unanimously designate a director (subject to the eligibility
requirements set forth in Sections 2, 3, and 4 above) to serve and act in his
stead; and in the event that the absence of a committee member shall be
prolonged, such substitute member may, subject to the approval of the
committee, continue to act for the term of its duration. A director so
designated shall rank as a duly qualified member of the committee during
incumbency, and shall be entitled to participate in its deliberations with the
same force and effect as if elected in the manner herein elsewhere provided.
Section 11. Compensation. Subject to the provisions of Section 12 of
Article II of these By-Laws, each member of any committee may receive a
reasonable fee to be fixed by the Board of Directors for services actually
performed in attending meetings, and for other services actually performed,
and shall receive expenses of attendance, if any actually incurred by him for
attendance at any meeting of the committee.
<PAGE>
ARTICLE IV
OFFICERS, AGENTS AND EMPLOYEES
Section 1. Election of Officers. (As amended by the Board of Directors
November 21, 1980) The Board of Directors at its annual organizational
meeting, shall elect a Chairman of the Board of Directors and President of the
Corporation, who shall be a member of the Board of Directors. The Board of
Directors may elect a Chief Executive Officer and a Chief Operating Officer
who shall be members of the Board of Directors.
Section 2. Vice Presidents. The Board of Directors may, in its
discretion, appoint an Executive Vice President and one or more additional
Vice Presidents.
Section 3. Other Officers. The Board of Directors shall appoint a
Secretary, a Treasurer, a General Counsel and Comptroller. The Board of
Directors may also appoint one or more Assistant Secretaries, and one or more
Assistant Treasurers.
Section 4. Powers, Duties and Responsibilities. The powers, duties and
responsibilities of the officers and employees of the Corporation, which are
not prescribed by statute, by the Certificate of Incorporation or by these
By-Laws, shall be defined in rules or regulations which may be adopted and
from time to time modified or changed by the Board of Directors.
Section 5. Vacancies. The Board of Directors shall, as soon as
practicable, fill any vacancy in the office of Chairman of the Board of
Directors or President. Any vacancy in any other office may be filled
temporarily by the Chairman of the Board of Directors or the President. In
case of temporary incapacity or absence of any of the officers, the Chairman
of the Board of Directors, or the President, may make an appointment pro tem
and confer on such appointee full power and authority to act in place of any
of said officers or appointees so temporarily incapacitated or absent; but
such appointment shall be subject to change by the Board of Directors or by
the Executive Committee at any regular or special meeting.
Section 6. Absence from Duty. No officer or employee of the Corporation
shall be absent from duty without the consent of the President or the head of
the department in which he is employed.
Section 7. Resignations. Any officer may resign at any time giving
written notice to the President or to the Secretary of the Corporation. Such
resignation shall take effect at the date of the receipt of such notice, or at
any later time specified therein and, unless otherwise provided therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 8. Removals. All officers and agents of the Corporation shall
be subject to removal at any time by the affirmative vote of a majority of the
members of the Board of Directors present at any meeting. All officers and
employees not appointed by the Board of Directors shall hold their offices at
the discretion of the Executive Committee or of the officer appointing them.
Section 9. Term of Office. The officers of the Corporation shall hold
office for one year and until their successors shall have been duly elected or
appointed and qualified, or until they shall die, resign or be removed.
Section 10. Salaries. (As amended by the Board of Directors May 16,
1969) The salaries of officers elected or appointed by the Board of Directors
or by the Executive Committee, shall be fixed by the Compensation and
Organization Committee. The salaries of all other officers and employees
shall be fixed by the President, or by the heads of departments subject to the
approval of the President; and the compensation of all officers and employees
shall be subject to the control of the Board of Directors or of the Compensa-
tion and Organization Committee.
No special compensation shall be paid to any officer or employee unless
authorized by the Board of Directors, the Executive Committee or the
Compensation and Organization Committee.
CHAIRMAN OF THE BOARD OF DIRECTORS
Section 11. Duties. (As amended by the Board of Directors November 21,
1980) The Chairman of the Board of Directors shall preside at all meetings of
the Stockholders and the Board of Directors at which he is present and perform
such other duties as the Board of Directors may prescribe. In his absence,
the President shall discharge the duties of the Chairman of the Board of
Directors.
CHAIRMAN OF THE EXECUTIVE COMMITTEE
Section 12. Duties. The Chairman of the Executive Committee shall
preside at all meetings of the Executive Committee. In the absence of the
Chairman of the Executive Committee, his duties shall be discharged by the
President.
PRESIDENT
Section 13. General Powers and Duties. (As amended by the Board of
Directors November 21, 1980) The President shall have the general care,
supervision and control of the Corporation's business and operation in all
departments under control of the Board of Directors. The President shall have
such other powers and perform such other duties as the Board of Directors may
from time to time prescribe and shall perform such other duties as are
incidental to the office of President. In the absence or incapacity of the
Chairman of the Board of Directors, he shall preside at all meetings of the
Board of Directors and stockholders.
Section 14. Appointments. Except as otherwise provided by statute, the
Certificate of Incorporation, or these By-Laws, the President may appoint such
additional officers and may employ such persons as he shall deem necessary for
the proper management of the business and property of the Corporation.
VICE PRESIDENTS
Section 15. Powers and Duties. The Vice Presidents shall have such
powers and perform such duties as shall from time to time be conferred and
prescribed by the Board of Directors or by the Executive Committee. The
Executive Vice President shall, however, be the ranking officer in the affairs
of the Corporation next below the President.
SECRETARY
Section 16. Duties. The Secretary, or, in his absence, an Assistant
Secretary, shall attend all meetings of the stockholders, of the Board of
Directors and of the Executive Committee, and shall record their proceedings.
He shall report to the Board of Directors and the Executive Committee and
through the respective Chairman.
Section 17. Notice of Meetings. The Secretary shall give due notice of
all meetings of the stockholders and of the Board of Directors and of the
Executive Committee, where such notice is required by law, by the Certificate
of Incorporation, by these By-Laws, by the Board of Directors or by the
Executive Committee.
Section 18. Custody of Seal, Etc. The Secretary shall be custodian of
the seal of the Corporation and of its records, and of such papers and
documents as may be committed to his care by the Board of Directors or of the
Executive Committee. He shall have power to affix the seal of the Corporation
to instruments to which the same is authorized to be affixed by the Board of
Directors or by the Executive Committee, and shall have power to attest the
same. He shall perform such other duties as may be assigned to him by the
Chairman of the Board of Directors, the President, the Board of Directors or
the Executive Committee, or as may be prescribed in the rules or regulations
to be adopted by the Board of Directors.
Section 19. Duties of Assistant Secretaries. The Assistant Secretary or
Secretaries shall perform such duties as may be assigned to him or them by the
Board of Directors or by the Executive Committee or the President, or as may
be prescribed in the rules or regulations, if any, to be adopted by the Board
of Directors or the Executive Committee; and, when authorized by the Board of
Directors or by the Executive Committee, he or they shall have the power to
affix the corporate seal to instruments and to attest the same, and to sign
the certificates of stock of the Corporation.
<PAGE>
TREASURER
Section 20. Duties. The Treasurer, either in person or through
competent and faithful assistants, shall receive, keep and disburse all
moneys, belonging or coming to the Corporation; he shall keep regular, true
and full accounts of all receipts and disbursements, and make detailed reports
of the same to the President, to the Board of Directors or to the Executive
Committee, through the Chairman of said Board of Directors or Committee, as
and when required.
Section 21. Other Duties. The Treasurer shall perform such other duties
in connection with the administration of the financial affairs of the
Corporation as the Board of Directors or the Executive Committee shall assign
to him or as may be prescribed in the rules or regulations to be adopted by
the Board of Directors or the Executive Committee. The Treasurer shall give
bond in such amount as shall be required by the Board of Directors or by the
Executive Committee. Any Assistant Treasurer appointed pursuant to the
provisions of these By-Laws shall also give bond in such amount as shall be
required by the Board of Directors or by the Executive Committee.
GENERAL COUNSEL
Section 22. Duties. The General Counsel shall render such legal
services and perform such duties as the Board of Directors, Executive
Committee, Chairman of the Board of Directors, President or other elected or
appointed officer may request from time to time.
COMPTROLLER
Section 23. Duties. The Comptroller shall have charge of the Accounting
Department. He shall have the supervision and management of all accounts of
the Corporation, and shall prescribe, enforce and maintain the system of
bookkeeping, and the books, blanks, etc., for keeping the accounts of the
Corporation. He shall have the cooperation of all departments. He shall keep
regular sets of books, showing a complete record of the general business
transactions of the Corporation, and for that purpose shall receive from the
Treasurer, Assistant Treasurers and agents of the Corporation such daily or
other reports of receipts and disbursements as he may require.
Section 24. Custody of Contracts. The Comptroller shall have the
custody of all written contracts and other similar written instruments to
which the Corporation is a party.
Section 25. Statements by Comptroller. The Comptroller shall render
such statements of the affairs of the Corporation, shown by his books and
records, as may be required for the information of the Board of Directors or
of the Executive Committee, and shall by proper distribution and
classification of the accounts under his charge, be prepared to furnish such
reports as may be required by the Chairman of the Board of Directors, the
President, the Board of Directors, and the Executive Committee, or any state
or federal official.
ARTICLE V
CERTIFICATE OF STOCK
Section 1. Provision for Issue, Transfer and Registration. The Board of
Directors shall provide for the issue, transfer and registration of the
capital stock of the Corporation in the City of New York or elsewhere, and for
that purpose may appoint the necessary officers, transfer agents and
registrars of transfers.
Section 2. Certificates of Stock. Every holder of stock in the
Corporation shall be entitled to have a certificate, signed by, or in the name
of the Corporation by, the President or a Vice President and the Treasurer or
an Assistant Treasurer, or the Secretary or an Assistant Secretary of the
Corporation, certifying the number of shares owned.
Section 3. Facsimile Signatures of Certificates. Where a certificate is
countersigned (1) by a Transfer Agent or an Assistant Transfer Agent or by a
Transfer Clerk acting on behalf of the Corporation and (2) by a Registrar, the
signature of the President, Vice President, Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary may be facsimile. In case any officer or
officers who have signed, or whose facsimile signature or signatures have been
used on, any such certificate or certificates shall cease to be such officer
or officers of the Corporation, whether because of death, resignation or
otherwise, before such certificate or certificates have been delivered by the
Corporation, such certificate or certificates may nevertheless be adopted by
the Corporation and be issued and delivered as though the person or persons
who signed such certificate or certificates or whose facsimile signature or
signatures have been used thereon had not ceased to be such officer or
officers of the Corporation. Record shall be kept by the Transfer Agent of
the number of each certificate, the date thereof, the name of the person
owning the shares represented thereby, and the number of shares. Every
certificate surrendered to the Corporation for transfer or otherwise in
exchange for a new certificate shall be cancelled by perforation or otherwise
with the date of cancellation indicated thereon.
Section 4. Transfer of Stock. Transfer of stock of the capital stock of
the Corporation shall be made only on the books of the Corporation by the
holder thereof, or by his attorney thereunto authorized by a power of attorney
duly executed and filed with the Transfer Agent of the Corporation, and on
surrender for cancellation of the certificate or certificates for such shares.
A person in whose name shares of stock stand on the books of the Corporation
and no one else shall be deemed the owner thereof as regards the Corporation.
Section 5. Registrar and Transfer Agent. The Corporation shall at all
times maintain a registrar, which shall in every case be a bank or trust
company, and a transfer agent, to be appointed by the Board of Directors, in
accordance with the requirements of the New York Stock Exchange, and
registration and transfer of the Corporation's stock certificates shall be in
accordance with the rules and regulations of said stock exchange. The Board
of Directors may also make such additional rules and regulations as it may
deem expedient concerning the issue, transfer and registration of certificates
for shares of the capital stock of the Corporation.
Section 6. Closing of Transfer Books; Record Date. (As amended by the
Board of Directors May 16, 1969) The Board of Directors may close the stock
transfer books of the Corporation for a period not more than sixty (60) days
nor less than ten (10) days preceding the date of any meeting of stockholders
or the date for payment of any dividend or the date for the allotment of
rights or the date when any change or conversion or exchange of capital stock
shall go into effect. In lieu of closing the stock transfer books as
aforesaid, the Board of Directors may fix in advance a date, not more than
sixty (60) days nor less than ten (10) days preceding the date of any meeting
of stockholders, or the date for the payment of any dividend, or the date for
the allotment of rights, or the date when any change or conversion or exchange
of capital stock shall go into effect, as a record date for the determination
of the stockholders entitled to notice of, and to vote at, any such meeting,
and any adjournment thereof, or entitled to receive payment of any such
dividend, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital stock and, in
such case, such stockholders and only such stockholders as shall be
stockholders of record on the date so fixed shall be entitled to such notice
of, and to vote at, such meeting and any adjournment thereof, or to receive
payment of such dividend, or to receive such allotment of rights, or to
exercise such rights, as the case may be notwithstanding any transfer of any
stock on the books of the Corporation after any such record date fixed as
aforesaid.
ARTICLE VI
SEAL
Section 1. (As amended by the Board of Directors May 16, 1969) The
authorized seal shall have inscribed thereon the name of the Corporation, the
year of incorporation and the name of the state of incorporation. The seal
may be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise applied.
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Corporation shall commence on the
first day of January of each year.
<PAGE>
ARTICLE VIII
NOTICES
Section 1. Form of Notice. (As amended by the Board of Directors May
16, 1969) Where notice, other than by publication, is required to be given by
Delaware law, the Certificate of Incorporation or By-Laws, notice to directors
and stockholders shall not be construed to mean personal notice, but such
notice may be given in writing, by mail, addressed to such directors or
stockholders at such address as appears on the books of the Corporation.
Notice by mail shall be deemed to be given at the time when the same shall be
mailed. Notice to directors may also be given personally, by telephone, by
telegram or in such other manner as may be provided in these By-Laws.
Section 2. Waiver of Notice. Whenever any notice is required to be
given under the provisions of the statutes or of the Certificate of Incor-
poration or of these By-Laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated herein, shall be deemed equivalent thereto.
ARTICLE IX
(As amended by the Board of Directors October 8, 1971)
INDEMNIFICATION, AMENDMENTS AND MISCELLANEOUS
Section 1. Indemnification. Each person who, at any time is, or shall
have been, a director, officer, employee or agent of the Corporation, and is
threatened to be or is made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is, or was, a director, officer,
employee or agent of the Corporation, or served at the request of the
Corporation as a director, officer, employee, trustee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall be
indemnified against expense (including attorneys' fees), judgment, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with any such action, suit or proceeding to the full extent
provided under Section 145 of the General Corporation Law of the State of
Delaware. The foregoing right of indemnification shall in no way be exclusive
of any other rights of indemnification to which any such director, officer,
employee or agent may be entitled, under any By-Law, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 2. Amendments. These By-Laws may be altered, amended or
repealed by a vote of a majority of the whole Board of Directors at any
meeting of the Board of Directors. The Board of Directors in its discretion
may, but need not, submit any proposed alteration, amendment or repeal of the
By-Laws to the stockholders at any regular or special meeting of the
stockholders for their adoption or rejection; provided notice of the proposed
alteration, amendment or repeal be contained in the notice of such
stockholders' meeting.
Section 3. Proxies. Unless otherwise provided by resolution of the
Board of Directors, the President or, in his absence or disability, a Vice
President, from time to time in the name and on behalf of the Corporation: may
appoint an attorney or attorneys, agent or agents of the Corporation (who may
be or include himself), in the name and on behalf of the Corporation to cast
the votes which the Corporation may be entitled to cast as a stockholder or
otherwise in any other corporation any of whose stock or other securities may
be held by the Corporation, at meetings of the holders of the stock or other
securities of such other corporations or to consent in writing to any action
by such other corporation; may instruct the person or persons so appointed as
to the manner of casting such votes or giving such consent; and may execute or
cause to be executed in the name and on behalf of the Corporation and under
its corporate seal all such written proxies or other instruments as may be
necessary or proper to evidence the appointment of such attorneys and agents.
KANSAS CITY SOUTHERN INDUSTRIES. INC.
1983 STOCK OPTION PLAN
(as amended September 26, 1996)
1. Plan and Eligibility.
Options to purchase shares of the Company's common stock and stock
appreciation rights and Limited Rights with respect to such options may be
granted to such key management employees of the Company or of its subsidiaries
or of the "Milwaukee-Kansas City Southern Joint Agency," who are regularly
employed for more than twenty hours per week and more than five months per
year as salaried employees and who are selected by the Stock Option Plan
Committee of the Company's Board of Directors (the "Committee"). Such options
to purchase shares of the Company's common stock granted hereunder shall be
either qualified incentive stock options as defined by Section 422A of the
Internal Revenue Code of 1954 (the "Code") or non-incentive stock options, as
may be designated by the Committee.
2. Limitation on Aggregate Shares.
No more than two million (2,000,000) shares of common stock in the
aggregate may be sold pursuant to options or delivered upon the exercise of
stock appreciation rights granted under this Plan. Such two million
(2,000,000) shares of common stock may be either authorized and unissued
shares, treasury shares, or a combination thereof, as the Committee shall
determine. Any shares that, prior to exercise, cease to be subject to
previously granted options, stock appreciation rights or Limited Rights,
whether by expiration, cancellation or otherwise, shall be available for
reoffering under this Plan, except as otherwise provided in paragraph 4(b).
3. Options.
Subject to the terms of this Plan, the Committee shall determine and
designate the recipients of options, the status of the option as incentive
stock options or non-incentive stock options, the dates options are granted,
the number of shares subject to option, the option prices and the option
periods. Options granted under this Plan shall be subject to such terms and
conditions and evidenced by agreements in such form as shall be determined
from time to time by the Committee and shall in any event be subject to the
terms and conditions set forth below and in paragraph 5, and in the case of
incentive stock options, subject also to the express provisions in paragraph
6:
(a) Option price. The option price per share shall be fixed by the
Committee at not less than one hundred percent (100%) of the fair
market value of the shares on the date of grant, subject to
amendment as provided in paragraph 7.
(b) Term of Options. Except as otherwise provided in paragraph 5(b)
and 7, no option shall be made exercisable more than ten (10) years
after the date of grant.
(c) Exercise of Option. Options shall be exercised by written notice
to the Company (attention of the Corporate Secretary) accompanied by
payment in full of the option price. Such payment is to be made in
cash, or, if approved by the Committee by the transfer and delivery
to the Company of shares of common stock of the Company having a
fair market value equal to the option price of the shares to be
received in exchange therefor.
4. Stock Appreciation Rights.
Subject to the terms of this Plan, the Committee shall determine and
designate the recipients of stock appreciation rights, the dates stock
appreciation rights are granted, and the number of shares subject to stock
appreciation rights. Stock appreciation rights may be granted only with
respect to shares of common stock as to which options have been granted
hereunder, whether such options are granted previous to, or contemporaneous
with, such stock appreciation rights. Stock appreciation rights shall be
subject to such terms and conditions and evidenced by agreements in such form
as may be determined from time to time by the Committee and shall in any event
be subject to the terms and conditions set forth below and in paragraph 5:
(a) Nature of Stock Appreciation Rights. Stock appreciation rights
shall be exercisable at such time and to such extent as the option
to which such rights relate (the "Related Option") shall be
exercisable. A stock appreciation right shall entitle an optionee
to receive from the Company, at the time of exercise of such right,
an amount equal to the excess of the fair market value (at the date
of exercise) of a common share over the option price of the Related
Option multiplied by the number of shares as to which the optionee
is exercising the stock appreciation right. The amount payable to
the optionee hereunder may be paid by the Company in common stock
(at fair market value on the date of exercise), in cash, or in a
combination thereof, as the Committee may determine, which
determination shall be made after considering any preference
expressed by the optionee.
(b) Exercise. A stock appreciation right shall be exercised by
written notice to the Company (attention of the Corporate Secretary)
at any time prior to its stated expiration (which shall not be more
than ten years after the date of grant), and the Related Option
shall be deemed canceled to the extent the stock appreciation right
is exercised. Upon exercise of a stock appreciation right, shares
covered by the Related Option, or the applicable portion thereof
(whether or not stock is delivered upon such exercise), shall not be
available for the granting of further options under this Plan.
4-A. Limited Rights.
Subject to the terms of this Plan, the Committee shall determine and
designate the recipients of Limited Rights, the dates Limited Rights are
granted, and the number of shares subject to Limited Rights. Limited Rights
may be granted only with respect to shares of common stock as to which options
have been granted hereunder, whether such options are granted previous to, or
contemporaneous with, such Limited Rights. Limited Rights shall be subject to
such terms and conditions and evidenced by agreements in such form as may be
determined from time to time by the Committee and shall in any event be
subject to the terms and conditions set forth below and in paragraph 5:
(a) Nature of Limit ed Rights. A Limited Right shall be exercis able to
the exten t as the option to which such Limited Right relat es (the
"Related Option") is exercisable and only during the three ( 3) month period
immediately following a Cha nge in Control of the Company (as defined in
subparagraph (g) of Paragraph 5 hereof). A Limited Right shall entitle an
optionee to receive from the Company, at the time of exercise of the Limited
Right, an amount equal to the excess of (i) the fair market value (at the date
of exercise) of one (1) share of the Company's common stock, over (ii) the
option price of the Related Option, multiplied by the number of shares as to
which the optionee is exercising the Limited Right, if the Related Option is
an incentive
stock option, or an amount equal to the excess of (i) the greater of
(A) the highest price per share of KCSI common stock paid in connection
with any Change in Control of the Company, or (B) the fair market value
(at the date of exercise) of one (1) share of the Company's common
stock, over (ii) the option price of the Related Option, multiplied by
the number of shares as to which the optionee is exercising the Limited
Right, if the Related Option is a non-incentive stock option. A
Limited Right may only be exercised when the excess, as computed above,
results in a positive value. The amount payable to the optionee
hereunder shall be paid by the Company in cash.
(b) Exercise. A Limited Right shall be exercised by written notice to
the Company (attention of the Corporate Secretary) at any time prior to
its stated expiration (which shall be the date of the expiration of the
Related Option or such earlier date as may be specified in the agreement
granting the Limited Rights), and the Related Option and any stock
appreciation right granted in connection with the Related Option (the
"Related Stock Appreciation Right") shall be deemed canceled to the
extent the Limited Right is exercised. Any exercise of the Related
Option or Related Stock Appreciation Right prior to the exercise of a
Limited Right shall be deemed to cancel the Limited Right to the extent
the Related Option or Related Stock Appreciation Right is so exercised.
Upon exercise of a Limited Right, shares covered by the Related Option,
or the applicable portion thereof, shall not be available for the
granting of further options under this Plan.
5. Additional Provisions Applicable to Options, Stock appreciation
Rights and Limited Rights.
(a) Conditions and Limitations on Exercise. Options, stock appreciation
rights and Limited Rights may be made exercisable in one (1) or more
installments, upon the happening of certain events, upon the passage of
a specified period of time, or upon the fulfillment of a condition, as
the Committee shall decide in each case when the option, stock
appreciation right or Limited Right is granted. Except as otherwise
provided in paragraph 5(b), no option, stock appreciation right or
Limited Right shall be exercisable earlier than one (1) year after the
date of grant, except that in the case of an extension of a previously
granted option, stock appreciation right or Limited Right or a grant of
a stock appreciation right with respect to a previously granted option,
such option, stock appreciation right or Limited Right shall not be
exercisable earlier than six months after the date of such extension
or grant. A stock appreciation right granted hereunder may be
exercised only when there is a positive spread, i.e., when the market
price of the stock subject to the option exceeds the exercise price of
the option.
(b) Termination of Employment. In the event the employment of an
employee to whom an option, stock appreciation right or Limited Right
has been granted under the Plan shall be terminated other than by death
or by the Company for cause (as determined by the Board of Directors)
or, in the case of voluntary termination by the employee, without the
Company's consent, such option, stock appreciation right or Limited
Right may be exercised (to the extent that the employee was entitled to
do so immediately prior to termination of his or her employment) at any
time within three (3) months after such termination of employment, or
one (1) year after such termination in the case of any person who is
disabled within the meaning of Section 22(e)(3) of the Code, but in no
event after the expiration of the term for which the option was granted
(except that the Committee may, in its discretion, include in any option
or stock appreciation right an acceleration of the time within which
such option or stock appreciation right may be exercised in the event of
the optionee's disability). However, in the event that the employee's
termination of employment is as a result of retirement pursuant to any
retirement plan of the Company (as determined by the Board of
Directors), any option, stock appreciation right or Limited Right held
by such employee may be exercised (to the extent that the employee was
entitled to do so immediately prior to termination of his or her
employment) after such termination of employment until the expiration of
the term for which the option or right was granted; provided, however,
that no shares of stock acquired by such employee upon exercise of an
incentive stock option will be eligible to qualify for tax treatment
under Section 422A of the Internal Revenue Code unless such employee
acquires such stock by exercising such incentive stock option not later
than three (3) months from the date such employee is last employed by
the Company. Options, stock appreciation rights and Limited Rights
granted under the Plan shall not be affected by any change of duties or
position so long as the optionee continues to be in the employ of the
Company. The option agreements may contain such provisions as the
Committee shall approve with reference to the effect of approved leaves
of absence.
If a person holding an option, stock appreciation right, or Limited
Right which has not expired or terminated shall die, then the estate of
the decedent or the person or persons to whom his or her rights under
the option, stock appreciation right or Limited Right were transferred
by will or by the laws of descent and distribution or pursuant to a
written designation of beneficiary by such person filed with, and
approved by, the Committee prior to such person's death may, at any time
within twelve (12) months after the date of such death (whether or not
the three (3) month or one (1) year period specified in the prior
paragraph, if applicable, had commenced to run on the date of such
death), but in no event after the expiration of the term for which the
option, stock appreciation right or Limited Right was granted, exercise
such option, stock appreciation right or Limited Right with respect to
any shares as to which such person could have exercised such option,
stock appreciation right or Limited Right at the time of his or her
death (except that the Committee may, in its discretion, include in any
option or stock appreciation right an acceleration of the time within
which such option or stock appreciation right may be exercised in the
event of the optionee's death). Any such exercise shall be effected by
written notice to the Committee from the person entitled to exercise the
option, stock appreciation right or Limited Right and the person or
persons giving the same shall furnish to the Committee such other
documents or papers as the Committee may reasonably require, including,
without limitation, evidence of the authority of such person or persons
to exercise the option, stock appreciation right or Limited Right and
evidence satisfactory to the Committee that any death taxes payable with
respect to such shares, if applicable, have been paid or provided for.
(c) Nontransferability. Options, stock appreciation rights and Limited
Rights may not be transferred other than by will or the laws of descent
and distribution or pursuant to a written designation of beneficiary as
provided in paragraph 5(b) and, during the lifetime of the optionee, may
be exercised only by the optionee.
(d) Listing, Registration and Compliance With Laws and Regulations.
Each option, stock appreciation right and Limited Right shall be subject
to the requirement that if at any time the Committee shall determine, in
its discretion, that the listing, registration or qualification of the
shares subject to the option or appreciation right upon any securities
exchange or under any state or federal securities or other law or
regulation, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in connection
with, the granting of such option, stock appreciation right or Limited
Right or the issue or purchase of the shares thereunder, no such option,
stock appreciation right or Limited Right may be exercised in whole or
in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions
not acceptable to the Committee, and the optionee will supply the
Company with such certificates, representations and information as the
Company shall request and shall otherwise cooperate with the Company in
obtaining such listing, registration, qualification, consent or
approval. In the case of officers and other persons subject to Section
16(b) of the Securities Exchange Act of 1934, the Committee may at any
time impose any limitations upon the exercise of an option, stock
appreciation right or Limited Right which, in the Committee's
discretion, are necessary or desirable to permit transactions hereunder
by such persons to comply with Section 16(b) and the rules and
regulations thereunder. If the Company, as part of an offering of
securities or otherwise, finds it desirable because of federal or state
regulatory requirements to reduce the period during which any options,
stock appreciation rights or Limited Rights may be exercised, the
Committee may, in its discretion and without the optionees' consent, so
reduce such period on not less than fifteen (15) days' written notice to
the optionees.
(e) Adjustment for Change in Common Stock. In order to prevent the
dilution or enlargement of options, stock appreciation rights or Limited
Rights in the event of a reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, consolidation or other
change in the Company's common stock, the Committee shall make such
changes as it may deem appropriate in the number and type of shares
authorized by this Plan, the number and type of shares covered by
outstanding options, stock appreciation rights and Limited Rights, and
the prices specified in outstanding options, stock appreciation rights
and Limited Rights.
(f) Taxes. The Company shall be authorized to withhold from any option,
stock appreciation right or Limited Right granted, payment due or shares
or other property transferred under the Plan the amount of income,
withholding and payroll taxes due and payable in respect of an option,
stock appreciation right or Limited Right, payment or shares or other
property transferred hereunder and to take such other action as may be
necessary in the opinion of the Company to satisfy all obligations for
the payment of such taxes. The Company may require the employee to pay
to it such tax prior to and as a condition of the making of such payment
or transfer of shares or property under the Plan. In accordance with
any applicable administrative guidelines it establishes, the Committee
may allow or may require the employee exercising the option, stock
appreciation right or Limited Right to pay the amount of taxes due or
payable in respect of such option, stock appreciation right or by
withholding from any payment of shares due as a result of such option,
stock appreciation right or Limited Right, or by permitting the employee
to deliver to the Company, shares having a fair market value, as
determined by the Committee, equal to the amount of such taxes.
(g) Acceleration upon Change in Control. Notwithstanding anything
contained herein to the contrary, in the event of a Change in Control of
the Company (as hereinafter defined), each outstanding option, stock
appreciation right, and Limited Right shall become immediately
exercisable in full; provided, however, that no option, stock
appreciation right, or Limited Right shall be exercisable earlier than
six (6) months after the date of grant. For purposes of this Plan, a
"Change in Control of the Company" shall be deemed to have occurred if
(i) for any reason at any time at least seventy-five percent (75%) of
the members of the Board of Directors of the Company shall no longer be
comprised of individuals who were members of such Board on the date of
adoption of the Third Amendment to this Plan or individuals whose
election, or nomination for election by the Company's stockholders, was
approved by a vote of at least seventy-five percent (75%) of the members
of the Board then still in office who were members of such Board on the
date of adoption of the Third Amendment to this Plan, 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
without the prior approval of the Board of Directors of the Company, the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing
twenty-five percent (25%) or more of the combined voting power of the
Company's then outstanding voting securities (such "person" hereafter
referred to as a "Major Stockholder"); or (iii) the stockholders of the
Company shall have approved a merger, consolidation or dissolution of
the Company or a sale, lease or exchange of all or substantially all of
the Company's assets, or a Major Stockholder shall have proposed any
such transaction, unless any such merger, consolidation, dissolution,
sale, lease or exchange shall have been approved by at least
seventy-five percent (75%) of the members of the Board of Directors of
the Company who were either (A) members of such Board of Directors on
the date of adoption of the Third Amendment to this Plan or (B) elected
or nominated by at least seventy-five percent (75%) of the members of
the Board of Directors then still in office who were members of the
Board of Directors on the date of adoption of the Third Amendment to
this Plan.
6. Additional Provisions Applicable to Incentive Stock Options.
(a) Stock Ownership Limitation. No incentive stock option shall be
granted to any employee if at the time the option is granted such
employee owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company unless (i)
the option price is at least one hundred ten percent (110%) of the fair
market value of the Company stock at the time of the grant, and (ii)
such option by its terms is not exercisable after the expiration of five
years from the date such option is granted.
(b) Fair Market Value Limitation. With respect to any option granted
after December 31, 1980, and before January 1, 1987, the aggregate fair
market value (determined as of the time the option is granted) of the
stock for which any employee may be granted incentive stock options in
any calendar year (under all incentive stock option plans of the Company
or any subsidiary corporation) shall not exceed one hundred thousand
($100,000) plus any unused limit carryover (as defined in Section
422A(c)(4)) to such year. With respect to any option granted after
December 31, 1986, the aggregate fair market value (determined as of the
time the option is granted) of the stock with respect to which incentive
stock options are exercisable for the first time by any employee during
any calendar year (under all incentive stock option plans of the Company
or any subsidiary corporation) shall not exceed one hundred thousand
($100,000) or such greater amount as may be permitted under subsequent
amendments to Section 422A. With respect to any option granted on or
after May 21, 1987, no fair market value limitation of the stock for
which any employee may be granted options in any calendar year or with
respect to which options are exercisable for the first time by any
employee shall be applicable.
(c) Exercise of Option. Except as provided in paragraph 5(b), no
incentive stock option granted hereunder may be exercised by the
optionee unless the optionee is then in the employ of the Company and
shall have been continuously so employed by the Company since the date
such option was granted.
(d) Sequential Exercise. To the extent required by section 422A of the
Code and the applicable regulations thereunder any incentive stock
option granted under the Plan before January 1, 1987, Shall by its terms
provide that it is not exercisable while there is outstanding any
incentive stock option which was granted before the granting of such
option to such optionee to purchase stock in the Company or in a
corporation which (at the time of granting of such option) is a
subsidiary corporation of the Company or any predecessor corporation of
any such corporations. For purposes of the preceding sentence, an
incentive stock option shall be considered to be outstanding until it is
exercised in full or expires by reason of the lapse of time.
(e) Intent to Qualify as Incentive Stock Options. Each of the incentive
stock options granted pursuant to the Plan is intended to qualify as an
"incentive stock option" and the Plan shall be interpreted, and the
power and authority granted to the Committee shall be exercised, only in
a manner consistent with such intent.
7. Administration.
This Plan shall be administered by the Committee, which shall consist of
at least that number of directors required by Rule 16b-3 and/or Code Section
162(m), each of whom is a non-employee director within the meaning of Rule
16b-3 and an outside director within the meaning of Code Section 162(m).
The Committee shall have full power to construe and interpret this Plan and
options, stock appreciation rights and Limited Rights granted under this Plan,
to determine the terms and provisions of the respective option agreements,
which need not be identical, including such terms and provisions as in the
judgment of the Committee are necessary or desirable to qualify any of the
options as "incentive stock options," to establish and amend rules for its
administration, to grant options, stock appreciation rights and Limited Rights
under this Plan and to correct any defect or supply any omission or reconcile
any inconsistency in this Plan or in any option, stock appreciation right or
Limited Right to the extent the Committee deems desirable to carry this Plan
or any option, stock appreciation right or Limited Right into effect. The
Committee may, with the consent (except as otherwise provided in paragraph
5(d)) of the person entitled to exercise any outstanding option, stock
appreciation right or Limited Right, amend such option or right, including
reducing the price to not less than the fair market value of the common stock
at the time of the amendment and extending the period so long as it is not
more than ten years from the time such option was granted.
The Committee may act by a majority of a quorum present at a meeting or by
an instrument executed by all of its members. All actions taken and decisions
made by the Board of Directors or the Committee pursuant to this Plan shall be
binding and conclusive on all persons interested in this Plan. The Committee
may from time to time authorize the Chairman of the Board or the President of
the Company to determine the dates on which options, stock appreciation rights
or Limited Rights shall be granted to persons designated by the Committee for
such number of shares as the Committee shall have designated at prices
determined by or in a manner specified by the Committee.
8. Definitions.
"Common Stock" means shares of common stock, one cent ($.01) par value per
share, of the Company, or such other shares as are substituted pursuant to the
adjustment provisions of paragraph 5(e). The "Company" means Kansas City
Southern Industries, Inc., its subsidiaries and, where appropriate, the
"Milwaukee-Kansas City Southern Joint Agency." "Subsidiaries" means any
"subsidiary corporation" as that term is defined in Section 425 of the Code.
"Incentive stock option" means an option granted pursuant to and meeting the
qualifications of Section 422A of the Code. "Optionee" means the holder of an
option, stock appreciation right or Limited Right. The "fair market value" of
the Company's common stock on any given date means the average of the highest
and lowest reported sales prices on such common stock (on the New York Stock
Exchange Composite Transactions Table, if so reported) on such date or if
there is no sale on such date, then on the last previous date on which a sale
was reported.
9. Termination and Amendment.
The Board of Directors or the Committee at any time may suspend or terminate
this Plan and make such additions or amendments as it deems advisable under
this Plan, except that it may not, without further approval by the
stockholders (i) increase the maximum number of shares as to which options,
stock appreciation rights or Limited Rights may be granted under this Plan,
except as may be permitted under the provisions of paragraph 5(e) above, (ii)
extend the term of this Plan, (iii) change the method of determining the
minimum price specified in an option pursuant to paragraph 3(a), except as set
forth in paragraph 5(e) and 7, or (iv) change the class of employees to whom
options, stock appreciation rights or Limited Rights may be granted under this
Plan. No options, stock appreciation rights or Limited Rights may be granted
under the Plan after February 16, 1993.
KANSAS CITY SOUTHERN INDUSTRIES. INC.
1987 STOCK OPTION PLAN
(as amended September 26, 1996)
1. Plan and Eligibility.
Options to purchase shares of the Company's common stock and stock
appreciation rights and Limited Rights with respect to such options may be
granted to such key management employees of the Company or of its subsidiaries
or of the "Milwaukee-Kansas City Southern Joint Agency," who are regularly
employed for more than twenty hours per week and more than five (5) months per
year as salaried employees and who are selected by the Stock Option Plan
Committee of the Company's Board of Directors (the "Committee"). Such options
to purchase shares of the Company's common stock granted hereunder shall be
either incentive stock options as defined by Section 422A of the Internal
revenue Code of 1986 (the "Code") or non-incentive stock options, as may be
designated by the Committee.
2. Limitation on Aggregate Shares.
No more than one million eight hundred thousand (1,800,000) shares of
common stock in the aggregate may be sold pursuant to options or delivered
upon the exercise of stock appreciation rights granted under this Plan. Such
one million eight hundred thousand (1,800,000) shares of common stock may be
either authorized and unissued shares, treasury shares, or a combination
thereof, as the Committee shall determine. Any shares that, prior to
exercise, cease to be subject to previously granted options or stock
appreciation rights, whether by expiration, cancellation or otherwise, shall
be available for reoffering under this Plan, except as otherwise provided in
paragraphs 4(b) and 5(b).
3. Options.
Subject to the terms of this Plan, the Committee shall grant options
hereunder, determine and designate the recipients of options, the status of
the option as incentive stock options or non-incentive stock options, the
dates options are granted (which shall be the date the Committee adopts a
resolution granting an option pursuant to this Plan or such later date as may
be specified by the Committee in such resolution (the "Grant Date")), the
number of shares subject to option, the option prices and the option periods.
Options granted under this Plan shall be subject to such terms and conditions
and evidenced by agreements in such form as shall be determined from time to
time by the Committee and shall in any event be subject to the terms and
conditions set forth below and in paragraph 6, and in the case of incentive
stock options, subject also to the express provisions in paragraph 7:
(a) Option Price. The option price per share shall be fixed by the
Committee at not less than one hundred percent (100%) of the fair market
value of the shares on the date of grant, subject to amendment as
provided in paragraph 7.
(b) Term of Options. No option shall be made exercisable more ten (10)
years after the date of grant.
(c) Exercise of Option. Options shall be exercised by written notice
to the Company (attention of the Corporate Secretary) accom panied by
payment in full of the option price. Such payment is to be made in
cash, or, if approved by the Committee by the transfer and delivery to
the Company of shares of common stock of the Company having a fair
market value equal to the option price of the shares to be received in
exchange therefor.
4. Stock Appreciation Rights.
Subject to the terms of this Plan, the Committee shall determine and
designate the recipients of stock appreciation rights, the dates stock
appreciation rights are granted, and the number of shares subject to stock
appreciation rights. Stock appreciation rights may be granted only with
respect to shares of common stock as to which options have been granted
hereunder, whether such options are granted previous to, or contemporaneous
with, such stock appreciation rights. Stock appreciation rights shall be
subject to such terms and conditions and evidenced by agreements in such form
as may be determined from time to time by the Committee and shall in any event
be subject to the terms and conditions set forth below and in paragraph 6:
(a) Nature of Stock Appreciation Rights. Stock appreciation rights
shall be exercisable at such time and to such extent as the option to which
such rights relate (the "Related Option") shall be exercisable. A stock
appreciation right shall entitle an optionee to receive from the Company, at
the time of exercise of such right, an amount equal to the excess of the fair
market value (at the date of exercise) of a common share over the option
price of the Related Option multiplied by the number of shares as to which the
optionee is exercising the stock appreciation right. The amount payable to
the optionee hereunder may be paid by the Company in common stock (at fair
market value on the date of exercise), in cash, or in a combination thereof,
as the Committee may determine, which determination shall be made after
considering any preference expressed by the optionee.
(b) Exercise. A stock appreciation right shall be exercised by written
notice to the Company (attention of the Corporate Secretary) at any time
prior to its stated ex piration (which shall not be more than ten (10)
years after the date of grant of the Related Option), and the Related
Option shall be deemed canceled to the extent the stock a ppreciation right
is exercised. Any exercise of the Related Option or any Limited Rights
granted in connection with a stock appreciation right (the "Related Limited
Right") prior to the exercise of a stock appreciation right shall be deemed to
cancel the stock appreciation rights to the extent the Related Option or
Related Limited Right is so exercised. Upon exercise of a stock appreciation
right, shares covered by the Related Option, or the applicable portion thereof
(whether or not stock is delivered upon such exercise), shall not be available
for the granting of further options under this Plan.
5. Limited Rights.
Subject to the terms of this Plan, the Committee shall determine and
designate the recipients of Limited Rights, the dates Limited Rights are
granted, and the number of shares subject to Limited Rights. Limited Rights
may be granted only with respect to shares of common stock as to which options
have been granted hereunder, whether such options are granted previous to, or
contemporaneous with, such Limited Rights. Limited Rights shall be subject to
such terms and conditions and be evidenced by agreements in such form as may
be determined from time to time by the Committee and shall in any event be
subject to the terms set forth below in paragraph 6:
(a) Nature of Limited Rights. A Limited Right shall be exercisable to
such extent as the option to which such Limited Right relates (the "Related
Option") is exercisable and only during the three (3) month period immediately
following a Change in Control of the Company (as defined in subparagraph (i)
of paragraph 6 hereof). A Limited Right shall entitle an optionee to receive
from the Company, at the time of exercise of the Limited Right, an amount
equal to the excess of (i) the fair market value (at the date of exercise) of
one (1) share of the Company's common stock, over (ii) the option price of the
Related Option, multiplied by the number of shares as to which the optionee is
exercising the Limited Right, if the Related Option is an incentive stock
option, or an amount equal to the excess of (i) the greater of (A) the highest
price per share of KCSI common stock paid in connection with any Change in
Control of the Company, or (B) the fair market value (at the date of exercise)
of one (1) Share of the Company's common stock, over (ii) the option price of
the Related Option, multiplied by the number of shares as to which the
optionee is exercising the Limited Right, if the Related Option is a
non-incentive stock option. The amount payable to the optionee hereunder shall
be paid by the Company in cash.
(b) Exercise. A Limited Right shall be exercised by written notice to
the Company (attention of the Corporate Secretary) at any time prior to its
stated expiration (which shall be the date of the expiration of the Related
Option or such earlier expiration date as may be specified in the agreement
granting the Limited Rights), and the Related Option and any stock
appreciation right granted in connection with the Related Option (the "Related
Stock Appreciation Right") shall be deemed canceled to the extent the Limited
Right is exercised. Any exercise of the Related Option or Related Stock
Appreciation Right prior to the exercise of a Limited Right shall be deemed to
cancel the Limited Right to the extent the Related Option or Related Stock
Appreciation Right is so exercised. Upon exercise of a Limited Right, shares
covered by the Related Option, or the applicable portion thereof, shall not be
available for the granting of further options under this Plan.
6. Additional Provisions Applicable to Options, Stock Appreciation Rights and
Limited Rights.
(a) Conditions and Limitations on Exercise. Options, stock
appreciation rights and Limited Rights may be made exercisable in one (1) or
more installments, upon the happening of certain events, up on the passage of
a specified period of time, or upon the fulfillment of conditions, as the
Committee shall decide in each case when the option, stock appreciation right
or Limited Right is granted. Except as otherwise provided in paragraph 6(c)
or 6(i), no option, stock appreciation right or Limited Right shall be
exercisable earlier than one (1) year after the date of grant of the option,
except that in the case of an extension of a previously granted option, stock
appreciation right or Limited Right or a grant of a stock appreciation right
or Limited Right with respect to a previously granted option, such option,
stock appreciation right, or Limited Right shall not be exercisable earlier
than six (6) months after the date of such extension or grant. A stock
appreciation right or Limited Right granted hereunder may be exercised only
when there is a positive spread, i.e., when the market price of the stock
subject to the option exceeds the exercise price of the option.
(b) Termination of Emp loy ment. In the event the employment of an
employee to whom an option, stock appreciation right or Limited Right has been
granted under the Plan shall be terminated other than by death or by the
Company for cause (as determined by the Board of Directors) or, in the case of
voluntary termination by the employee, without the Company's consent, such
option, stock appreciation right or Limited Right may be exercised (to the
extent that the employee was entitled to do so immediately prior to
termination of his or her employment) at any time within three (3) months
after such termination of employment, or one (1) year after such
termination
in the case of any person who is disabled within the meaning of Section
22(e)(3) of the Code, but in no event after the expiration of the term for
which the option was granted (except that the Committee may, in its
discretion, include in any option or stock appreciation right an acceleration
of the time within which such option or stock appreciation right may be
exercised in the event of the option's disability). However, in the event
that the employee' s termination of employment is as a result of retirement
pursuant to any retirement plan of the Company (as determined by the Board of
Directors), any option, stock appreciation right or Limited Right held by such
employee may be exercised (to the extent that the employee was entitled to do
so immediately prior to termination of his or her employment) after such
termination of employment until the expiration of the term for which the
option or right was granted; provided, however, that no shares of stock
acquired by such employee upon exercise of an incentive stock option will be
eligible to qualify for tax treatment under Section 422A of the Internal
Revenue Code unless such employee acquires such stock by exercising such
incentive stock option not later than three (3) months from the date such
employee is last employed by the Company. Options, stock appreciation rights
and Limited Rights granted under the Plan shall not be affected by any change
of duties or position so long as the optionee continues to be in the employ of
the Company. Retirement pursuant to any retirement plan of the Company shall
be deemed to be a termination of employment with the Company. The option
agreements may contain such provisions as the Committee shall approve with
reference to the effect of approved leaves of absence.
(c) Death of Optionee. If a person holding an option, stock
appreciation right, or Limited Right which has not expired or terminated
shall die, then the estate of the decedent or the person or persons to
whom his or her rights under the op tion, stock appreciation right or Limited
Right were transferred by will or by the laws of descent and distribution or
pursuant to a written designation of beneficiary by such person filed with,
and approved by, the Committee prior to such person's death may, at any time
within twelve (12) months after the date of such death (whether or not the
three (3) month or one (1) year period specified in subparagraph (b), if
applicable, had commenced to run on the date of such death), but in no event
after the expiration of the term for which the option, stock appreciation
right or Limited Right was granted, exercise such option, stock appreciation
right or Limited Right with respect to any shares as to which such person
could have exercised such option, stock appreciation right or Limited Right at
the time of his or her death (except that the Committee may, in its
discretion, include in any option or stock appreciation right an acceleration
of the time within which such optio n or stock appreciation right may be
exercised in the event of t he option's death). Any such exercise shall be
effected by written notice to the Committee from the person entitled to
exercise the option, stock appreciation right or Limited Right and the person
or persons giving the same shall furnish to the Committee such other documents
or papers as the Committee may reasonably require, including, without
limitation, evidence of the authority of such person or persons to exercise
the option, stock appreciation right or Limited Right and evidence
satisfactory to the Committee that any death taxes payable with respect to
such shares, if applicable, have been paid or provided for.
(d) Termination for Cause. In the event that the employment of a n
employee to whom an option has been granted under the Plan has been terminated
by the Company for cause (as determined by the board of Directors), then any
outstanding options and stock appreciation rights granted to such employee
shall terminate and cease to be exercisable immediately upon such termination
of employment.
(e) Nontransferability. Options, stock appreciation rights and Limited
Rights may not be transferred other than by will or the laws of descent and
distribution or pursuant to a written designation of beneficiary as provided
in paragraph 6(c) and, during the lifetime of the optionee, may be exercised
only by the optionee.
(f) Listing, Registration and Compliance With Laws and Regulations.
Each option, stock appreciation right and Limited Right shall be subject to
the requirement that if at any time the Committee shall determine, in its
discretion, that the listing, registration or qualification of the shares
subject to the option or appreciation right upon any securities exchange or
under state or federal securities or other law or regulation, or the consent
or approval of any governmental regulatory body, is necessary or desirable as
a condition of, or in connection with, the granting of such option, stock
appreciation right or Limited Right or the issue or purchase of the shares
thereunder, no such option, stock appreciation right or Limited Right may be
exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free
of any conditions not acceptable to the Committee, and the optionee will
supply the Company with such certificates, representations and information as
the Company shall request and shall otherwise cooperate with the Company in
obtaining such listing, regist ration, qualification, consent or approval.
In the case of officers and other persons subject to Section 16(b) of the
Securities Exchange Act of 1934, the Committee may at any time impose any
limitations upon the exercise of an option, stock appreciation right or
Limited Right which, in the Committee's discretion, are necessary or
desirable to permit transactions hereunder by such persons to comply with
Section 16(b) and the rules and regulations thereunder. If the Company,
as part of an offering of securities or otherwise, finds it desirable
because of federal or state regulatory requirements to reduce the period
during which any options, stock appreciation rights or Limited Right may
be exercised, the Committee may, in its discretion and without the
options' consent, so reduce such period on not less than fifteen (15) days'
written notice to the optionees.
(g) Adjustment for Change in Common Stock. In order to prevent the
dilution or enlargement of options, stock appreciation rights or Limited
Rights in the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidatio nor other change in the
Company's common stock, the Committee shall make such changes as it may deem
appropriate in the number and type of shares authorized by this Plan, the
number and type of shares covered by outstanding options, stock appreciation
rights and Limited Rights, and the prices specified in outstanding options,
stock appreciation rights and Limited Rights.
(h) Taxes. The Company shall be authorized to withhold from any option,
stock appreciation right or Limited Right granted, payment due or shares or
other property transferred under the Plan the amount of income, withholding
and payroll taxes due and payable in respect of an option , stock appreciation
right or Limited Right, payment or shares or other property transferred
hereunder and to take such other action as may be necessary in the opinion of
the Company to satisfy all obligations for the payment of such taxes. The
Company may require the employee to pay to it such tax prior to and as a
condition of the making of such payment or transfer of shares or property
under the Plan. In accordance with any applicable administrative guidelines
it establishes, the Committee may allow or may require the employee exercising
the option, stock appr eciation right or Limited Right to pay the amount of
taxes due or payable in respect of such option, stock appreciation right or
Limited Right by withholding from any payment of shares due as a result of
such option, stock appreciation right or Limited Right, or by permitting the
employee to deliver to the Company, shares having a fair market value, as
determined by the Committee, equal to the amount of such taxes.
(i) Acceleration upon Change in Control. Notwithstanding anything
contained herein to the contrary, in the event of a Change in Control of the
Company (as hereinafter defined), each outstanding option, stock appreciation
right, and Limited Right shall become immediately exercisable in full;
provided, however, that no option, stock appreciation right, or Limited Right
shall be exercisable earlier than six (6) months after the date of grant. For
purposes of this Plan, a "Change in Control of the Company" shall be deemed
to have occurred if (i) for any reason at any time at least seventy-five
percent (75%) of the members of the Board of Directors shall be individuals
who were members of such Board on the date of adoption of this Plan or
individuals whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least seventy-five percent (75%) of
the members of the Board then still in office who were members of such Board
on the date of adoption of the this Plan, 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 Board of Directors of the
Company, the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing
twenty-five percent (25%) or more (calculated in accordance with Rule 13d-3)
of the combined voting power of the Company's then outstanding voting
securities (such "person" hereafter referred to as a "Major Stockholder"); or
(iii) the stockholders of the Compa ny shall have approved a merger,
consolidation or dissolution of the Company or a sale, lease, exchange or
disposition of all or substantially all of the Company'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 at least seventy-five percent (75%) of the members of the
Board of Directors of the Company who were either (A) members of such Board of
Directors on the date of adoption of this Plan or (B) elected or nominated by
at least seventy-five percent (75%) of the members of the Board of Directors
then still in office who were members of the Board of Directors on the date of
adoption of this Plan.
7. Additional Provisions Applicable to Incentive Stock Options.
(a) Stock Ownership Limitation. No incentive stock option shall be
granted to any employee if at the time the option is granted such employee
owns stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company unless (i) the option price is at
least one hundred and ten percent (110%) of the fair market value of the
Company stock at the time of the grant, and (ii) such option by its terms is
not exercisable after the expiration of five (5) years from the date such
option is granted.
(b) Fai r Market Value Limitation. With respect to any option granted
after December 31, 1986, and before May 21, 1987, the aggregate fair market
value (determined as of the time the option is granted) of the stock with
respect to which incentive stock options are exercisable for the first time by
any employee during any calendar year (under all incentive stock option plans
of the Company or any subsidiary corporation) shall not exceed one hundred
thousand ($100,000) or such greater amount as may be permitted under
subsequent amendments to Section 422A. With respect to any option granted on
or after May 21, 1987, no fair market value limitation of the stock with
respect to which options are exercisable for the first time by any employee
during any calendar year shall be applicable.
(c) Exercise of Option. Except as provided in paragraph 6(b) or 6(c),
no incentive stock option granted hereunder may be exercised by the optionee
unless the optionee is then in the employ of the Company and shall have been
continuously so employed by the Company since the date such option was
granted.
(d) Intent to Qualify as Incentive Stock Options. Each of the incentive
stock options granted pursuant to the Plan is intended to qualify as an
"incentive stock option" and the Plan shall be interpreted, and the power and
authority granted to the Committee shall be exercised, only in a manner
consistent with such intent.
8. Administration.
This Plan shall be administered by the Committee, which shall consist of
at least that number of directors required by Rule 16b-3 and/or Code Section
162(m), each of whom is a non-employee director within the meaning of Rule
16b-3 and an outside director within the meaning of Code Section 162(m).
The Committee shall have full power to construe and interpret this Plan
and options, stock appreciation rights and Limited Rights granted under this
Plan, to determine the terms and provisions of the respective option
agreements, which need not be identical, including such terms and provisions
as in the judgment of the Committee are necessary or desirable to qualify any
of the options as "incentive stock options," to establish and amend rules for
its administration, to grant options, stock appreciation rights and Limited
Rights under this Plan and to correct any defect or supply any omission or
reconcile any inconsistency in this Plan or in any option, stock appreciation
right or Limited Right to the extent the Committee deems desirable to carry
this Plan or any option, stock appreciation right or Limited Right into
effect. The Committee may, with the consent (except as otherwise provided in
paragraph 6(f)) of the person entitled to exercise any outstanding option,
stock appreciation right or Limited Right, amend such option or right,
including reducing the price to not less than the fair market value of the
common stock at the time of the amendment and extending the period so long as
it is not more than ten (10) years from the time such option was granted.
The Committee may act by a majority of a quorum present at a meeting or
by an instrument executed by all of its members. All actions taken and
decisions made by the Board of Directors or the Committee pursuant to this
Plan shall be binding and conclusive on all persons interested in this Plan.
The Committee may from time to time authorize the Chairman of the Board or the
President of the Company to determine the dates on which options or stock
appreciation rights shall be granted to persons designated by the Committee
for such number of shares as the Committee shall have designated at prices
determined by or in a manner specified by the Committee.
9. Definitions.
"Common Stock" means shares of common stock, one cent ($.01) par value
per share, of the Company, or such other shares as are substituted pursuant to
the adjustment provisions of paragraph 6(g). The "Company" means Kansas City
Southern Industries, Inc., its subsidiaries and the "Milwaukee-Kansas City
Southern Joint Agency." "Subsidiaries" means any "subsidiary corporation" as
that term is defined in Section 425 of the Code. "Incentive stock option"
means an option granted pursuant to and meeting the qualifications of Section
422A of the Code. "Optionee" means the holder of an option or stock
appreciation right. The "fair market value" of the Company's common stock on
any given date means the average of the highest and lowest reported sales
prices of such common stock (on the New York Stock Exchange Composite
Transactions Table, if so reported) on such date or if there is no sale on
such date, then on the last previous date on which a sale was reported.
10. Termination and Amendment.
The term of this Plan shall be ten (10) years from February 20, 1987,
and no options, stock appreciation rights or Limited Rights may be granted
under the Plan after February 19, 1997. Options, stock appreciation rights or
Limited Rights outstanding on February 19, 1997 shall thereafter continue to
have force and effect in accordance with the provisions of the instruments
evidencing such options, stock appreciation rights and Limited Rights. The
Board of Directors or the Committee at any time may suspend or terminate this
Plan and make such additions or amendments as it deems advisable under this
Plan, except that it may not, without further approval by the stockholders (i)
increase the maximum number of shares as to which options or stock
appreciation rights may be granted under this Plan, except as may be permitted
under the provisions of paragraph 6(g) above, (ii) extend the term of this
Plan, (iii) change the method of determining the minimum price specified in an
option pursuant to paragraph 3(a), except as set forth in paragraph 6(g) and
8, (iv) change the class of employees to whom options or stock appreciation
rights may be granted under this Plan, or (v) make any other amendments
requiring shareholder approval by reason of corporate, securities or tax laws.
KANSAS CITY SOUTHERN INDUSTRIES, INC.
1991 AMENDED AND RESTATED STOCK OPTION AND
PERFORMANCE AWARD PLAN
(as amended and restated September 26, 1996)
Section 1. Purpose.
The purposes of the Kansas City Southern Industries, Inc. 1991 Stock
Option and Performance Award Plan (the "Plan") are to generate an increased
incentive for Employees of the Company to contribute to the Company's future
success, to secure for the Company and its stockholders the benefits inherent
in equity ownership by Employees of the Company and to enhance the ability of
the Company and its Affiliates to attract and retain exceptionally qualified
Employees upon whom, in large measure, the sustained progress, growth and
profitability of the Company depend. By encouraging Employees of the Company
and its Affiliates to acquire a proprietary interest in the Company's growth
and performance, the Company intends to more closely align the interests of
the Company's Employees, management and stockholders and motivate Employees to
enhance the value of the Company for the benefit of all stockholders.
Section 2. Definitions.
As used in the Plan, the following terms shall have the meanings set
forth below:
(a) "Affiliate" means (i) any Person that directly, or through one (1)
or more intermediaries, controls, or is controlled by, or is under
common control with, the Company, (ii) any entity in which the Company
has an equity interest of at least fifty percent (50%), and (iii) any
entity in which the Company has any other significant equity interest,
as determined by the Committee.
(b) "Award" means any Option, Stock Appreciation Right, Limited Right,
Performance Share, Performance Unit, Dividend Equivalent, or any other
right, interest, or option relating to Shares granted pursuant to the
provisions of the Plan.
(c) "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing any Award granted hereunder and signed
by both the Company and the Participant or by both the Company and an
Outside Director.
(d) "Board" means the Board of Directors of the Company.
(e) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(f) "Committee" means the Compensation and Organization Committee of
the Board, or such other committee designated by the Board, authorized
to administer the Plan under Section 3 hereof. The Committee shall
consist of at least that number of directors required by Rule 16b-3
and/or Code Section 162(m), each of whom is a non-employee director
within the meaning of Rule 16b-3 and an outside director within the
meaning of Code Section 162(m).
(g) "Company" means Kansas City Southern Industries, Inc., a Delaware
corporation.
(h) "Dividend Equivalent" means any right granted pursuant to Section
13(f) hereof.
(i) "Employee" means any non-union employee of the Company or of any
Affiliate, as determined by the Committee, regularly employed for more
than twenty (20) hours per week and more than five (5) months per year.
(j) "Exchange Act" means the Securities Exchange Act of 1934, or any
successors thereto, and the rules and regulations promulgated
thereunder, all as shall be amended from time to time.
(k) "Fair Market Value" means, with respect to any property, the market
value of such property determined by such methods or procedures as shall
be established from time to time by the Committee.
(l) "Incentive Stock Option" means an Option granted under Section 6
hereof that is intended to meet the requirements of Section 422 of the
Code or any successor provision thereto.
(m) "Limited Right" means any right granted to a Participant pursuant
to Section 7(b) hereof.
(n) "Non-Qualified Stock Option" means an Option granted under Section
6 hereof that is not intended to be an Incentive Stock Option, and an
Option granted to an Outside Director pursuant to Section 9 hereof.
(o) "Option" means an Incentive Stock Option or Non-Qualified Stock
Option.
(p) "Outside Director" means a member of the Board who is not an
Employee of the Company or of any Affiliate.
(q) "Participant" means an Employee who is selected to receive an Award
under the Plan.
(r) "Performance Award" means any Award of Performance Shares or
Performance Units pursuant to Section 8 hereof.
(s) "Performance Period" means that period established by the Committee
at the time any Performance Award is granted or at any time thereafter
during which any performance goals specified by the Committee with
respect to such Award are to be measured.
(t) "Performance Share" means any grant pursuant to Section 8 hereof of
Shares or any unit valued by reference to a designated number of Shares.
(u) "Performance Unit" means any grant pursuant to Section 8 hereof of
a unit valued by reference to a designated amount of property other than
Shares.
(v) "Person" means any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, or
government or political subdivision thereof.
(w) "Rule 16b-3" means Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Exchange Act or any successor rule or
regulation thereto.
(x) "Shares" means shares of the common stock of the Company, one cent
($.01) par value.
(y) "Stock Appreciation Right" means any right granted to a Participant
pursuant to Section 7(a) hereof.
(z) "Stockholders Meeting" means the annual meeting of stockholders of
the Company in each year.
Section 3. Administration.
The Plan shall be administered by the Committee. Subject to applicable
law and the terms of the Plan, the Committee shall have full power and
authority to: (i) designate Participants; (ii) determine the type or types of
Awards to be granted to each Participant hereunder; (iii) determine the number
of Shares to be covered by (or with respect to which payments, rights, or
other matters are to be calculated in connection with) each Award; (iv)
determine the terms and conditions of any Award and to amend, waive or
otherwise change such terms and conditions; (v) determine whether, to what
extent, and under what circumstances Awards may be settled or exercised in
cash, Shares, other securities, other Awards, or other property, or canceled,
forfeited, or suspended, and the method or methods by which Awards may be
settled, exercised, canceled, forfeited, or suspended; (vi) determine whether,
to what extent and under what circumstances cash, Shares, other securities,
other Awards, other property and other amounts payable with respect to an
Award under this Plan shall be deferred either automatically or at the
election of the Participant or the Committee; (vii) interpret and administer
the Plan and any instrument or agreement relating to, or Award made under, the
Plan; (viii) establish, amend, suspend or waive such rules and regulations and
appoint such agents as it shall deem appropriate for the proper administration
of the Plan; and (ix) make any other determination and take any other action
that the Committee deems necessary or desirable for administration of the
Plan. Subject to the terms of the Plan (including without limitation Section
11 hereof), the Committee shall also have the authority to grant Awards in
replacement of Awards previously granted under this Plan or any other
compensation plan of the Company or an Affiliate. Unless otherwise
expressly provided in the Plan, all determinations, designations,
interpretations, and other decisions of the Committee shall be final,
conclusive and binding upon all Persons, including the Company, any
Participant, any stockholder, and any Employee of the Company or of any
Affiliate. All determinations of the Committee shall be made by a majority of
its members. The Committee, in its discretion, may delegate its authority and
duties under the Plan to the Chief Executive Officer and/or to other officers
of the Company under such conditions and/or limitations as the Committee may
establish; provided, however, that only the Committee may select and grant
Awards, or otherwise take any action with respect to Awards, to Participants
who are (i) officers or directors of the Company for purposes of Section 16 of
the Exchange Act; or (ii) Participants who are "covered employees" under
Section 162(m) of the Code. Notwithstanding the above, the Committee shall
not have any discretion with respect to the Options granted to Outside
Directors pursuant to Section 9 hereof.
Section 4. Shares Subject to the Plan.
(a) Subject to adjustment as provided in Section 4(c), a total of Eight
Million Four Hundred Thousand (8,400,000) Shares shall be available for
the grant of Awards under the Plan. Any Shares issued hereunder may
consist, in whole or in part, of authorized and unissued shares or
treasury shares. If any Shares subject to any Award granted hereunder
are forfeited or such Award otherwise terminates without the issuance of
such Shares or of other consideration in lieu of such Shares, the Shares
subject to such Award, to the extent of any such forfeiture or
termination, shall again be available for grant under the Plan. In
addition, to the extent permitted by Section 422 of the Code, any Shares
issued by, and any Awards granted by or that become obligations of, the
Company through or as the result of the assumption of outstanding grants
or the substitution of Shares under outstanding grants of an acquired
company shall not reduce the Shares available for grants under the Plan
(except in the case of Awards granted to Participants who are officers
or directors of the Company to the extent required by Section 16 of the
Exchange Act).
(b) For purposes of this Section 4,
(i) If an Award (other than a Dividend Equivalent)
is denominated in Shares, the number of Shares covered by
such Award, or to which such Award relates, shall be counted
on the date of grant of such Award against the aggregate
number of Shares available for granting Awards under the
Plan;
(ii) Dividend Equivalents and Awards not denominated
in Shares shall be counted against the aggregate number of
Shares available for granting Awards under the Plan in such
amount and at such time as the Committee shall determine
under procedures adopted by the Committee consistent with
the purposes of the Plan; and
(iii) Awards that operate in tandem with (whether
granted simultaneously with or at a different time from),
or that are substituted for, other Awards or awards under
other Company plans may be counted or not counted under
procedures adopted by the Committee in order to avoid
double counting.
(c) In the event that the Committee shall determine that any
dividend or other distribution (whether in the form of cash,
Shares, or other securities or property), stock split, reverse
stock split, merger, reorganization, consolidation,
recapitalization, split-up, spin-off, repurchase, exchange of
shares, issuance of warrants or other rights to purchase Shares or
other securities of the Company, or other transaction or event
affects the Shares such that an adjustment is determined by the
Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Committee may: (i) make
adjustments in the aggregate number and class of shares or
property which may be delivered under the Plan and may substitute
other shares or property for delivery under the Plan, including
shares of another entity which is a party to any such merger,
reorganization, consolidation or exchange of shares; and (ii)
make adjustments in the number, class and option price of shares
or property subject to outstanding Awards and Options granted
under the Plan, and may substitute other shares or property for
delivery under outstanding Awards and Options, including shares of
another entity which is a party to any such merger,
reorganization, consolidation or exchange of shares, as may be
determined to be appropriate by the Committee in its sole
discretion, provided that the number of Shares subject to any
Award or Option shall always be a whole number. The preceding
sentence shall not limit the actions which may be taken by the
Committee under Section 10 of the Plan. No adjustment shall be
made with respect to Awards of Incentive Stock Options that would
cause the Plan to violate Section 422 of the Code, and the number
and price of shares subject to outstanding Options granted to
Outside Directors pursuant to Section 9 hereof shall be subject to
adjustment only as set forth in Section 9.
Section 5. Eligibility.
Any Employee shall be eligible to be selected as a Participant.
Notwithstanding any other provision of the Plan to the contrary, no
Participant may be granted an Option, Limited Right or Stock Appreciation
Right in any one (1) calendar year, which, when added to any other Option,
Limited Right or Stock Appreciation Right granted hereunder in the same year,
shall exceed Five Hundred Thousand (500,000) Shares. If an Option, Limited
Right or Stock Appreciation Right is canceled, the canceled Option, Limited
Right or Stock Appreciation Right continues to count against the maximum
number of Shares for which an Option, Limited Right or Stock Appreciation
Right may be granted to a Participant in any year. All Shares specified in
this Section 5 shall be adjusted to the extent necessary to reflect
adjustments to Shares required by Section 4(c) hereof.
Section 6. Stock Options.
Options may be granted hereunder to Participants either alone or in
addition to other Awards granted under the Plan. Options may be Incentive
Stock Options within the meaning of Section 422 of the Code or Non-Qualified
Stock Options (i.e., stock options which are not Incentive Stock Options), or
a combination thereof. Any Option granted to a Participant under the Plan
shall be evidenced by an Award Agreement in such form as the Committee may
from time to time approve. Any such Option shall be subject to the following
terms and conditions and to such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee shall deem
desirable:
(a) Option Price. The purchase price per Share purchasable
under an Option shall be determined by the Committee; provided,
however, that such purchase price shall not be less than one
hundred percent (100%) of the Fair Market Value of the Share on
the effective date of the grant of the Option (or, if the
Committee so determines, in the case of any Option retroactively
granted in tandem with or in substitution for another Award or any
outstanding Award granted under any other plan of the Company, on
the effective date of grant of such other Award or award under
another Company plan).
(b) Option Term. The term of each Option shall be fixed by
the Committee in its sole discretion, except as provided below for
Incentive Stock Options.
(c) Exercisability. Except as otherwise provided in Section
10(a), Options shall be exercisable at such time or times as
determined by the Committee at or subsequent to grant.
(d) Method of Exercise. Subject to the other provisions of
the Plan and any applicable Award Agreement, any Option may be
exercised by the Participant in whole or in part at such time or
times, and the Participant may make payment of the option price in
such form or forms as the Committee shall determine, including,
without limitation, payment by delivery of cash, Shares or other
consideration (including, where permitted by law and the
Committee, Awards) having a Fair Market Value on the exercise date
equal to the total option price, or by any combination of cash,
Shares and other consideration as the Committee may specify in the
applicable Award Agreement.
(e) Incentive Stock Options. In accordance with rules and
procedures established by the Committee, the aggregate Fair
Market Value (determined as of the time of grant) of the Shares with
respect to which Incentive Stock Options held by any Participant
are exercisable for the first time by such Participant during any
calendar year under the Plan (and under any other benefit plans of
the Company or of any parent or subsidiary corporation of the
Company as defined in Section 424 of the Code) shall not exceed
One Hundred Thousand Dollars ($100,000) or, if different, the
maximum limitation in effect at the time of grant under Section
422 of the Code, or any successor provision, and any regulations
promulgated thereunder. The option price per Share purchasable
under an Incentive Stock Option shall not be less than one hundred
percent (100%) of the Fair Market Value of the Share on the date
of grant of the Option. No incentive stock option may be granted
after ten (10) years from the date of adoption of this plan, and
each Incentive Stock Option shall expire not later than ten (10)
years from its date of grant. No Incentive Stock Option shall be
granted to any Participant if at the time the Option is granted
such Participant owns stock possessing more than ten percent (10%)
of the total combined voting power of all classes of stock of the
Company, its parent or its subsidiaries unless (i) the option
price per Share is at least one hundred and ten percent (110%) of
the Fair Market Value of the Share on the date of grant, and (ii)
such Option by its terms is not exercisable after the expiration
of five (5) years from the date such Option is granted. The terms
of any Incentive Stock Option granted hereunder shall comply in
all respects with the provisions of Section 422 of the Code, or
any successor provision, and any regulations promulgated thereunder.
(f) Form of Settlement. In its sole discretion, the Committee
may provide at the time of grant that the Shares to be issued upon
an Option's exercise shall be in the form of Shares subject to
restrictions as the Committee may determine, or other similar
securities, or may reserve the right so to provide after the time
of grant.
Section 7. Stock Appreciation and Limited Rights.
(a) Stock Appreciation Rights may be granted hereunder to
Participants either alone or in addition to other Awards granted
under the Plan and may, but need not, relate to a specific Option
granted under Section 6. The provisions of Stock Appreciation
Rights need not be the same with respect to each recipient. Any
Stock Appreciation Right related to a Non-Qualified Stock Option
may be granted at the same time such Option is granted or at any
time thereafter before exercise or expiration of such Option. Any
Stock Appreciation Right related to an Incentive Stock Option must
be granted at the same time such Option is granted and must have a
grant price equal to the option price of such Option. In the case
of any Stock Appreciation Right related to any Option, the Stock
Appreciation Right or applicable portion thereof shall terminate
and no longer be exercisable upon the termination or exercise of
the related Option, except that a Stock Appreciation Right granted
with respect to less than the full number of Shares covered by a
related Option shall not be reduced until the exercise or
termination of the related Option exceeds the number of Shares not
covered by the Stock Appreciation Right. Any Option related to
any Stock Appreciation Right shall no longer be exercisable to the
extent the related Stock Appreciation Right has been exercised.
Any Stock Appreciation Right related to an Option shall be
exercisable to the extent, and only to the extent, that the
related Option is exercisable. The Committee may impose such
other conditions or restrictions on the exercise of any Stock
Appreciation Right as it shall deem appropriate. Subject to the
terms of the Plan and any applicable Award Agreement, a Stock
Appreciation Right granted under the Plan shall confer on the
holder thereof a right to receive, upon exercise thereof, the
excess of (i) the Fair Market Value of one (1) Share on the date of
exercise or with respect to any right related to an Option other
than an Incentive Stock Option, at any time during a specified
period before or after the date of exercise as determined by the
Committee over (ii) the grant price of the right as specified by
the Committee, which shall not be less than the Fair Market Value
of one (1) Share on the date of grant of the Stock Appreciation
Right (or, if the Committee so determines, in the case of any Stock
Appreciation Right retroactively granted in
tandem with or in substitution for another Award or any
outstanding award granted under any other plan of the Company, on
the date of grant of such other Award or award), multiplied by the
number of Shares as to which the holder is exercising the Stock
Appreciation Right. Subject to the terms of the Plan and any
applicable Award Agreement, the terms and conditions of any Stock
Appreciation Right shall be as determined by the Committee.
The Committee may impose such conditions or restrictions on the
exercise of any Stock Appreciation Right as it may deem
appropriate.
(b) Limited Rights may be granted hereunder to Participants
only with respect to an Option granted under Section 6 hereof or a
stock option granted under another plan of the Company. The
provisions of Limited Rights need not be the same with respect to
each recipient. Any Limited Right related to a Non-Qualified
Stock Option may be granted at the same time such Option is
granted or at any time thereafter before exercise or expiration of
such Option. Any Limited Right related to an Incentive Stock
Option must be granted at the same time such Option is granted. A
Limited Right shall terminate and no longer be exercisable upon
termination or exercise of the related Option, except that a
Limited Right granted with respect to less than the full number of
Shares covered by a related Option shall not be reduced until the
exercise or termination of the related Option exceeds the number
of Shares not covered by the Limited Right. Any Option related to
any Limited Right shall no longer be exercisable to the extent the
related Limited Right has been exercised. Any Limited Right shall
be exercisable to the extent, and only to the extent, the related
Option is exercisable and only during the three (3) month period
immediately following a Change in Control of the Company (as
defined in Section 10 hereof). The Committee may impose such
other conditions or restrictions on the exercise of any Limited
Right as it shall deem appropriate. Subject to the terms of the
Plan and any applicable Award Agreement, a Limited Right granted
under the Plan shall confer on the holder thereof a right to
receive, upon exercise thereof, an amount equal to the excess of
(i) the Fair Market Value of one (1) Share on the date of exercise
or if greater and only with respect to any Limited Right related
to an Option other than an Incentive Stock Option, the highest
price per Share paid in connection with any Change in Control of
the Company, over (ii) the option price of the related Option,
multiplied by the number of Shares as to which the holder is
exercising the Limited Right. The amount payable to the holder
shall be paid by the Company in cash. Subject to the terms of the
Plan and any applicable Award Agreement, the terms and conditions
of any Limited Right shall be as determined by the Committee. The
Committee may impose such conditions or restrictions on the
exercise of any Limited Right as it may deem appropriate.
Section 8. Performance Awards.
Performance Awards may be issued hereunder to Participants in the form of
Performance Shares or Performance Units, for no cash consideration or for such
minimum consideration as may be required by applicable law, either alone or in
addition to other Awards granted under the Plan. The value represented by a
Performance Share or Unit shall be payable to, or upon the exercise by, the
Participant holding such Award, in whole or in part, following achievement of
such performance goals during such Performance Period as determined by the
Committee. Except as provided in Section 10, Performance Awards will be paid
only after the end of the relevant Performance Period. Performance Awards may
be paid in cash, Shares, other property or any combination thereof, in the
sole discretion of the Committee at the time of payment. The length of the
Performance Period, the performance criteria or levels to be achieved for each
Performance Period, and the amount of the Award to be distributed shall be
conclusively determined by the Committee. Performance Awards may be paid in a
lump sum or in installments following the close of the Performance Period or,
in accordance with procedures established by the Committee, on a deferred
basis. An Award of Performance Shares may consist of or include a grant of
Shares which may be subject to such restrictions, conditions and contingencies
as determined by the Committee. As to any such grant of Shares, the value
represented by the Award and the payment of the Award may consist solely of
the value of any right to the Shares or such other form of value and payment
as determined by the Committee. To the greatest extent possible when making
Performance Awards the Committee shall adopt performance goals, certify
completion of such goals and comply with any other Code requirements necessary
to be in compliance with the performance-based compensation requirements of
Code Section 162(m).
Section 9. Outside Directors' Options.
(a) Grant of Options. At the time an outside Director first
becomes a member of the Board after February 26, 1996, the Outside
Director shall automatically be granted an option to purchase
6,000 Shares. On the date each Stockholders Meeting is actually
held in each of the years beginning with 1996 and through 2005,
each Outside Director shall automatically be granted an Option to
purchase 3,000 Shares; provided, however, that an Outside Director
shall not be entitled to receive and shall not be granted any such
Option on the date of any particular Stockholders Meeting if he
will not continue to serve as an Outside Director immediately
following such Stockholders Meeting. An Outside Director who
first takes a position on the Board at the Annual Stockholders
Meeting, shall be entitled to receive the 6,000 Share initial
service option plus the 3,000 Share Option granted at that
Stockholders Meeting to each Outside Director. All such Options
shall be Non-Qualified Stock Options. The price at which each
Share covered by such Options may be purchased shall be one
hundred percent (100%) of the fair market value of a share on the
date the Option is granted. Fair market value for the purposes of
this Section 9 shall be deemed to be the average of the high and
low prices of the Shares as reported on the New York Stock
Exchange Composite Transactions tape for the date the Option is
granted or, if no sale of Shares shall have been made on that
date, the next preceding date on which there was a sale of Shares.
(b) Exercise of Options. Except as set forth in this Section
9, an Option granted to an Outside Director shall become
exercisable only after one year from the date of grant of the
Option. No Option shall be exercisable more than ten (10) years
after the date of grant. Options may be exercised by an Outside
Director during the period he remains an Outside Director and for
a period of five (5) years after ceasing to be a member of the
Board by reason of death or retirement, or for a period of one (1)
year after ceasing to be a member of the Board for reasons other
than retirement or death; however, only those Options exercisable
at the date the Outside Director ceases to be a member of the
Board shall remain exercisable and in no event shall the Options
be exercisable more than ten (10) years after the date of grant.
For purposes of this Section 9, "retirement" shall mean
discontinuance of service as a director after the director has
reached age fifty-five (55) and has at least five (5) years or
more of service on the Board. All Options shall immediately
become exercisable in the event of a Change in Control, as
hereinafter defined, except that Options shall not be exercisable
earlier than six (6) months from the date of grant to the extent
required by Section 16 of the Exchange Act.
If a former Outside Director shall die holding an Option
that has not expired and has not been fully exercised, the Option
shall remain exercisable until the later of one (1) year after the
date of death or the end of the period in which the former Outside
Director could have exercised the Option had he not died, but in
no event shall the Option be exercisable more than ten (10) years
after the date of grant. In the event of the death of an Outside
Director or former Outside Director, his Options shall be
exercisable only to the extent that they were exercisable at his
date of death and only by the executor or administrator of the
Outside Director's estate, by the person or persons to whom the
Outside Director's rights under the Option shall pass under the
Outside Director's will or the laws of descent and distribution,
or by a beneficiary designated in writing in accordance with
Section 13(a) hereof.
(c) Payment. An Option granted to an Outside Director shall
be exercisable upon payment to the Company of the full purchase
price of the Shares with respect to which the Option is being
exercised. Payment for the Shares shall be in United States
dollars, payable in cash or by check, or by delivery of Shares
having a Fair Market Value on the exercise date equal to the total
Option price, or by any combination of cash and Shares.
(d) Adjustment of Options. In the event there shall be a
merger, reorganization, consolidation, recapitalization, stock
split, reverse stock split, stock dividend or other change in
corporate structure such that the Shares of the Company are
changed into or become exchangeable for a larger or smaller number
of Shares or shares of a different class of stock, thereafter the
number of Shares subject to outstanding Options and the number of
Shares available for the grant of Options under this Plan shall be
increased or decreased, as the case may be, in direct proportion
to the increase or decrease in the number of Shares of the Company
by reason of such change in corporate structure; and the shares of
any such other class of stock shall be treated as Shares for
purposes of this Plan; provided, that the number of Shares shall
always be a whole number, and the purchase price per share of any
outstanding Options shall, in the case of an increase in the
number of Shares, be proportionately reduced, and in the case of a
decrease in the number of Shares, shall be proportionately
increased.
(e) No Obligation. Nothing in this Plan shall be deemed to
create an obligation on the part of the Board or a committee
thereof to nominate any Outside Director for reelection by the
Company's Stockholders, nor confer upon any Outside Director the
right to remain a member of the Board for any period of time, or
at any particular rate of compensation.
Section 10. Change in Control.
(a) In order to maintain the Participants' rights in the event
of any Change in Control of the Company, as hereinafter defined,
the Committee, as constituted before such Change in Control, may,
in its sole discretion, as to any Award (except Options granted
pursuant to Section 9), either at the time an Award is made
hereunder or any time thereafter, take any one (1) or more of the
following actions: (i) provide for the purchase by the Company of
any such Award, upon the Participant's request, for an amount of
cash equal to the amount that could have been attained upon the
exercise of such Award or realization of the Participant's rights
had such Award been currently exercisable or payable; (ii) make
such adjustment to any such Award then outstanding as the
Committee deems appropriate to reflect such Change in Control; or
(iii) cause any such Award then outstanding to be assumed, or new
rights substituted therefor, by the acquiring or surviving
corporation after such Change in Control. In the event a Change
of Control, there shall be an automatic acceleration of any time
periods relating to the exercise or realization of any such Award
and all performance award standards shall be deemed satisfactorily
completed without any action required by the Committee so that
such Award may be exercised or realized in full on or before
a date fixed by the Committee, except no Award shall be
exercisable earlier than six (6) months after the date of grant to
the extent required by Section 16 of the Exchange Act. The
Committee may, in its discretion, include such further provisions
and limitations in any agreement documenting such Awards as it may
deem equitable and in the best interests of the Company.
(b) For purposes of this Plan, a "Change in Control"
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 Board
shall be individuals who fall into any of the following
categories: (A) individuals who were members of such Board on
February 26, 1996; or (B) individuals whose election, or
nomination for election by the Company's stockholders, was
approved by a vote of at least seventy-five percent (75%) of the
members of the Board then still in office who were members of such
Board on February 26, 1996; or (c) individuals whose election, or
nomination for election by the Company's stockholders, was
approved by a vote of at least seventy-five percent (75%) of the
members of the 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 Exchange
Act) shall have become, according to a public announcement or
filing, without the prior approval of the Board of Directors of
the Company, the "beneficial owner" (as defined in Rule 13(d)-3
under the Exchange Act) directly or indirectly, of securities of
the Company representing forty percent (40%) or more (calculated
in accordance with Rule 13(d)-3) of the combined voting power of
the Company's then outstanding voting securities (such "person"
hereafter referred to as a "Major Stockholder"); or (iii) the
stockholders of the Company shall have approved a merger,
consolidation or dissolution of the Company or a sale, lease,
exchange or disposition of all or substantially all of the
Company's assets, or a Major Stockholder shall have proposed any
such transaction, unless such merger, consolidation, dissolution,
sale, lease, exchange or disposition shall have been approved by
at least seventy-five percent (75%) of the members of the Board of
Directors of the Company who are individuals falling into any
combination of the following categories:
(A) individuals who were members of such Board of Directors on
February 26, 1996, or (B) individuals whose election or
nomination for election by the Company's stockholders was
approved by at least seventy-five percent (75%) of the members of
the Board of Directors then still in office who are members of
the Board of Directors on February 26, 1996, or (C) individuals
whose election, or nomination for election by the Company's
stockholders was approved by a vote of at least seventy-five
percent (75%) of the members of the Board then still in office
who were elected in manner described in (A) or (B) above.
Section 11. Amendments and Termination.
The Board or the committee may amend, alter, suspend, discontinue, or
terminate the Plan, but no amendment, alteration, suspension, discontinuation,
or termination shall be made that would impair the rights of an Optionee or
Participant under an Award theretofore granted, without the Optionee's or
Participant's consent. In addition, no amendment shall be effective without
the approval of stockholders as may be required by Section 16 of the Exchange
Act or Section 162(m) of the Code as the case may be, including to:
(a) materially increase the total number of Shares available
for Awards under the Plan, except as is provided in Section 4(c)
of the Plan;
(b) materially increase benefits accruing to Participants
under the Plan;
(c) materially modify the requirements as to eligibility for
participation in the Plan;
(d) change in any way the Options provided for in Section 9 of
the Plan (other than reduce the number of shares for which an
Option that is to be automatically granted is exercisable); or
(e) cause the Plan not to comply with Section 162(m) of the
Code.
However, in no event, shall the provisions relating to the timing,
amount, exercise price or designated recipients of Options provided for in
Section 9 of the Plan be amended more than once every six (6) months, other
than to comport with changes in the Code, the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder.
The Committee may amend the terms of any Award theretofore granted
(except Options granted pursuant to Section 9 hereof), prospectively or
retroactively, and may also substitute new Awards for Awards previously
granted under this Plan or for awards granted under any other compensation
plan of the Company or an Affiliate to Participants, including without
limitation previously granted Options having higher option prices, but no such
amendment or substitution shall impair the rights of any Participant without
his consent.
The Committee shall be authorized, without the Participant's consent, to
make adjustments in Performance Award criteria or in the terms and conditions
of other Awards in recognition of events that it deems in its sole discretion
to be unusual or nonrecurring that affect the Company or any Affiliate or the
financial statements of the Company or any Affiliate, or in recognition of
changes in applicable laws, regulations or accounting principles, whenever the
Committee determines that such adjustments are appropriate in order to prevent
the dilution or enlargement of benefits or potential benefits under the Plan.
The Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it
shall deem desirable to carry it into effect. In the event the Company shall
assume outstanding employee benefit awards or the right or obligation to make
future such awards in connection with the acquisition of another corporation
or business entity, the Committee may, in its discretion, make such
adjustments in the terms of Awards under the Plan as it shall deem
appropriate. Notwithstanding the above, the Committee shall not have the
right to make any adjustments in the terms or conditions of outstanding
Options granted pursuant to Section 9.
Section 12. Termination of Employment and Noncompetition.
The Committee shall have full power and authority to determine whether,
to what extent and under what circumstances any Award (other than an Option
granted pursuant to Section 9) shall be canceled or suspended and shall
promulgate rules and regulations to (i) determine what events constitute
disability, retirement, termination for an approved reason and termination for
cause for purposes of the Plan, and (ii) determine the treatment of a
Participant under the Plan in the event of his death, disability, retirement,
or termination for an approved reason. If a Participant's employment with the
Company or an Affiliate is terminated for cause, all unexercised, unearned,
and/or unpaid Awards, including, but not by way of limitation, Awards earned,
but not yet paid, all unpaid dividends and dividend equivalents, and all
interest accrued on the foregoing shall be canceled or forfeited, as the case
may be, unless the Participant's Award Agreement provides otherwise. In
addition, but without limitation, all outstanding Awards to any Participant
shall be canceled if the Participant, without the consent of the Committee,
while employed by the Company or after termination of such employment, becomes
associated with, employed by, renders services to, or owns any interest in
(other than any nonsubstantial interest, as determined by the Committee), any
business that is in competition with the Company or any Affiliate, or with any
business in which the Company or any Affiliate has a substantial interest as
determined by the Committee or such officers or committee of senior officers
to whom the authority to make such determination is delegated by the
Committee.
<PAGE>
Section 13. General Provisions.
(a) Nonassignability. No Award shall be assignable or
transferable by a Participant or an Outside Director otherwise
than by will or by the laws of descent and distribution; provided,
however, that a Participant or Outside Director may, pursuant to a
written designation of beneficiary filed with the Committee prior
to his death, designate a beneficiary to exercise the rights of
the Participant with respect to any Award upon the death of the
Participant or Outside Director. Each Award shall be exercisable
during the lifetime of the Participant or the Outside Director,
only by the Participant or the Outside Director or, if permissible
under applicable law, by the guardian or legal representative of
the Participant or Outside Director.
(b) Terms. Except for Options granted pursuant to Section 9,
the term of each Award shall be for such period of months or years
from the date of its grant as may be determined by the Committee;
provided, however, that in no event shall the term of any
Incentive Stock Option or any Stock Appreciation or Limited Right
related to any Incentive Stock Option exceed a period of ten (10)
years from the date of its grant.
(c) Rights to Awards. No Employee, Participant or other
Person shall have any claim to be granted any Award under the
Plan, and there is no obligation for uniformity of treatment of
Employees, Participants, or holders or beneficiaries of Awards
under the Plan.
(d) No Cash Consideration for Awards. Awards shall be granted
for no cash consideration or for such minimal cash consideration
as may be required by applicable law.
(e) Restrictions. All certificates for Shares delivered under
the Plan pursuant to any Award shall be subject to such
stock-transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock
exchange upon which the Shares are then listed, and any applicable
Federal or state securities law, and the Committee may cause a
legend or legends to be placed on any such certificates to make
appropriate reference to such restrictions.
(f) Dividend Equivalents. Subject to the provisions of this
Plan and any Award Agreement, the recipient of an Award
(including, without limitation, any deferred Award, but excluding
Options granted pursuant to Section 9) may, if so determined by
the Committee, be entitled to receive, currently or on a deferred
basis, interest or dividends, or interest or dividend equivalents,
with respect to the number of Shares covered by the Award, as
determined by the Committee, in its sole discretion, and the
Committee may provide that such amounts (if any) shall be deemed
to have been reinvested in additional Shares or otherwise
reinvested.
(g) Withholding. The Company shall be authorized to withhold
from any Award granted, payment due or shares or other property
transferred under the Plan the amount of income, withholding and
payroll taxes due and payable in respect of an Award, payment or
shares or other property transferred hereunder and to take such
other action as may be necessary in the opinion of the Company to
satisfy all obligations for the payment of such taxes. The
Company may require the Participant or Outside Director to pay to
it such tax prior to and as a condition of the making of such
payment or transfer of Shares or property under the Plan. In
accordance with any applicable administrative guidelines it
establishes, the Committee may allow or may require participants
to pay the amount of taxes due or payable in respect of an Award
by withholding from any payment of Shares due as a result of such
Award, or by permitting the Participant to deliver to the Company,
Shares having a fair market value, as determined by the Committee,
equal to the amount of such taxes.
(h) Deferral of Awards. At the discretion of the Committee,
payment of a Performance Dividend Equivalent or any portion
thereof may be deferred by a Participant until such time as the
Committee may establish. All such deferrals shall be accomplished
by the delivery on a form provided by the Company of a written,
irrevocable election by the Participant prior to such time payment
would otherwise be made. Further, all deferrals shall be made in
accordance with administrative guidelines established by the
Committee to ensure that such deferrals comply with all applicable
requirements of the Code and its regulations. Deferred payments
shall be paid in a lump sum or installments, as determined by the
Committee. The Committee may also credit interest, at such rates
to be determined by the Committee, on cash payments that are
deferred and credit Dividend Equivalents on deferred payments
denominated in the form of Shares.
(i) No Limit on Other Compensation Arrangements. Nothing
contained in this Plan shall prevent the Company or any Affiliate
from adopting other or additional compensation arrangements,
subject to stockholder approval if such approval is required, and
such arrangements may be either generally applicable or applicable
only in specific cases.
(j) Governing Law. The validity, construction, and effect of
the Plan and any rules and regulations relating to the Plan shall
be determined in accordance with the laws of the State of Delaware
and applicable federal law.
(k) Severability. If any provision of this Plan or any Award
is or becomes or is deemed to be invalid, illegal or unenforceable
in any jurisdiction, or as to any Person or Award, or would
disqualify the Plan or any Award under any law deemed applicable
by the Committee, such provision shall be construed or deemed
amended to conform to applicable laws, or if it cannot be
construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan or the
Award, it shall be stricken and the remainder of the Plan and any
such Award shall remain in full force and effect.
(l) No Right to Employment. The grant of an Award shall not
be construed as giving a Participant the right to be retained in the
employ of the Company or any Affiliate. Further, the Company or an
Affiliate may at any time terminate the employment of a Participant,
free from any liability, or any claim under the Plan, unless
otherwise expressly provided in the Plan or in any Award Agreement.
(m) No Trust or Fund Created. Neither the Plan nor any Award
shall create or be construed to create a trust or separate fund of
any kind or a fiduciary relationship between the Company or any
Affiliate and a Participant or any other Person. To the extent
that any Person acquires a right to receive payments from the
Company or any Affiliate pursuant to an Award, such right shall be
no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
(n) No Fractional Shares. No fractional Shares shall be
issued or delivered pursuant to the Plan or any Award, and the
Committee shall determine whether cash, other securities, or other
property shall be paid or transferred in lieu of any fractional
Shares, or whether such fractional Shares or any rights thereto
shall be canceled, terminated, or otherwise eliminated.
(o) Headings. Headings are given to the Sections and
subsections of the Plan solely as a convenience to facilitate
reference. Such headings shall not be deemed in any way material
or relevant to the construction or interpretation of the Plan or
any provision thereof.
(p) With respect to persons subject to Section 16 of the
Exchange Act, transactions under this Plan are intended to comply
with all applicable conditions of Rule 16b-3. To the extent any
provision of this Plan or action by the Committee fails to so
comply, the Committee may deem, for such persons, such provision
or action null and void to the extent permitted by law. Should
any provision of this Plan be unnecessary to comply with the
requirements of Section 16 of the Exchange Act, the Committee may
waive such provision.
Section 14. Effective Date of Plan.
The Plan shall be effective as of May 7, 1991, subject to approval of the
Plan by the Company's stockholders.
Section 15. Term of Plan.
No Award shall be granted pursuant to the Plan after February 25, 2006,
but any Award theretofore granted may extend beyond that date.
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of this 1st day of January,
1997, by and between Kansas City Southern Industries, Inc., a Delaware
corporation ("KCSI") and Landon H. Rowland, 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 President and Chief Executive 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 KCSI Board or its Chairman, 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 of Seven-Hundred Fifty
Thousand Dollars ($750,000). 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 KCSI and
applicable to all officers of KCSI.
(b) Incentive Compensation. For the years 1997, 1998 and 1999,
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 and Stock Ownership.
(a) 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, except
that KCSI shall provide Executive with life insurance and disability insurance
comparable to that provided under Executive s previous employment agreement
dated January 1, 1992, 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 Eight Hundred and Seventy Five Thousand Dollars ($875,000).
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.
(b) Stock Ownership. During the period of his employment
hereunder, Executive shall retain ownership in himself or in members of his
immediate family of at least a majority of the number of shares of (i) KCSI
Restricted Stock awarded to Executive on or after January 1, 1992, and (ii)
shares of KCSI stock acquired upon the exercise of stock options granted on or
after December 12, 1991, but excluding from such number of shares any such
shares transferred to KCSI to pay the purchase price upon the exercise of
stock options or to meet withholding tax requirements.
4. Termination.
(a) Termination by Executive. Executive may terminate this
Agreement and his employment hereunder by at least one (1) year 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 and Executive shall thereafter no longer be entitled to receive
further compensation or benefits under this Agreement. 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 KCSI Board or its Chairman 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 two (2) years
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 two (2)
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 such
a 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 such a 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 such a 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 and Non-Compete.
(a) 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 (i) 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 (ii) is the subject of
efforts of KCSI or its subsidiary or affiliate that are reasonable under the
circumstance to maintain its secrecy.
(b) Non-Compete. Following termination of this agreement, except
termination pursuant to Paragraph 4(d) or any termination after a Change in
Control of KCSI (as hereinafter defined), for a period ending three (3) years
after the last payment of salary or severance pay to Executive, Executive
shall not, directly or indirectly, as an individual, consultant, employer,
employee, officer, director, advisory director, principal, agent, partner,
member, stockholder (except non-controlling holdings of stock of not more than
2% of a publicly traded company) or otherwise, (i) engage in a business in
competition with any business conducted by KCSI or any subsidiary of KCSI at
any time within five (5) years preceding the commencement of the period of
non-compete provided herein or any business which KCSI or any of its
subsidiaries was actively considering for ownership or conduct during the
aforesaid five (5) year period, or (ii) participate in management of any
holding company owning, directly or indirectly, more than 5% of any such
business. Executive acknowledges that certain subsidiaries of KCSI now
conduct business throughout the United States and in foreign countries, and
agrees that this non-compete shall apply in all countries and jurisdictions in
which KCSI or any of its subsidiaries conduct business or was actively
considering for the conduct of business during the aforesaid five (5) year
period.
(c) Remedies. 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. Executive
expressly acknowledges and agrees that the restrictions set forth in
Paragraphs 5(a) and (b) of this Agreement are necessary for the protection of
KCSI against irreparable harm and loss of goodwill and business and,
therefore, Executive intends and agrees, that upon failure or refusal of
Executive to comply with the provisions of either such Paragraph, KCSI would
be irreparably harmed and shall be entitled to specifically enforce such
provisions in a court of proper jurisdiction by an injunction or such other
relief as may be available to require performance in accordance with this
Agreement. Executive hereby consents to the entry of an injunction or other
appropriate order or decree in any and all countries and jurisdictions in
which such a breach or violation may occur and agrees that such relief shall
be in addition to other legal rights and remedies available to KCSI.
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 12717 Mt. Olivet Road, Kansas City, MO 64166, 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 Chairman or other duly
authorized officer 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
KANSAS CITY SOUTHERN INDUSTRIES, INC.
By /s/ Paul H. Henson
Paul H. Henson, Chairman
/s/ Landon H. Rowland
Landon H. Rowland
KANSAS CITY SOUTHERN INDUSTRIES, INC.
DIRECTORS' DEFERRED FEE PLAN
ADOPTED: AUGUST 20, 1982
AS AMENDED AND RESTATED TO FEBRUARY 1, 1997
Section 1. Establishment
1.1 Establishment. Kansas City Southern Industries, Inc. (hereinafter
called "Company") established, pursuant to resolution adopted by the Board of
Directors of the Company, at a meeting held on August 20, 1982, a deferred fee
plan for members of its Board of Directors, which is known as "KANSAS CITY
SOUTHERN INDUSTRIES, INC. DIRECTORS DEFERRED FEE PLAN" (the "Plan).
1.2 Transition. This plan originally became effective on January 1,
1983, and this restated plan is hereby made effective February 1, 1997.
Section 2. Definitions
2.1 Definitions. Whenever used in the Plan the following terms shall
have the meaning set forth below:
a. The term "Board" means the Board of Directors of the Company.
b. The term "Director" means a member of the Board of Directors of the
Company.
c. The term "Participant" means a Director or former Director who has an
account under the Plan.
d. The term "Fees" means direct monetary remuneration from the Company due to
the Directors for the discharge of their duties as directors.
2.2 Gender and Number. Except when otherwise indicated by the context,
any masculine terminology used herein shall also include the feminine gender,
and the definition of any term herein in the singular shall also include the
plural.
Section 3. Eligibility for Participation
A Director shall be eligible for participation in the Plan and may elect
to defer Fees to be earned as a Director of the Company in accordance with the
provisions of this Plan for a period consisting of any calendar year or years
during which he is a member of the Board. In the case of a newly elected
Director who was not a Director on the preceding December 31st, he shall
become eligible for participation for a period consisting of the balance of
the calendar year following such election, and for succeeding calendar years.
Section 4. Election to Defer Fees
4.1 Procedure for Election to Defer Fees. On or before December 31st
of any calendar year, a Director may elect to become a Participant beginning
the following calendar year. Any person elected to fill a vacancy on the Board
of a newly created Directorship who was not a Director on the preceding
December 31st may elect within 10 days of becoming a Director to become a
Participant for the balance of the calendar year during which he was elected
to the Board. An election to participate in the Plan shall be effected by the
Director submitting a letter so stating to the administrator of the Plan.
4.2 Effect of Election or Failure to Elect to Participate.
Failure to effect a timely election in accordance with the foregoing
provisions shall preclude a Director's participation during the calendar year
or portion of the calendar year in question, but shall not preclude the
Director from becoming eligible for participation in any subsequent calendar
year.
An election to commence participation, made in accordance with the
foregoing provision, shall be irrevocable for the immediately ensuing calendar
year, or the balance of the current year in the case of a newly elected
Director. Such election shall continue in effect with respect to each calendar
year thereafter until modified in accordance with subsection 4.4.
4.3 Amount Deferred. A Director may defer any amount up to 100% of the
Fees for the calendar year. If less than 100% of the Fees are deferred, then
the amount deferred will be prorated over the payment periods anticipated to
be served by the Director during the calendar year, or until the directorship
is terminated.
4.4 Modification of Election. On or before December 31st of each year a
Participant may elect, within the limits of subsection 4.3, to increase or
decrease the amount of his Fees to be deferred during the ensuing calendar
years, and this election shall include the right to terminate the deferral of
Fees earned in such ensuing calendar years.
Section 5. Crediting of Fees
5.1 Participants' Accounts. The Company shall establish a bookkeeping
account ("account") for each Participant to be credited as of the date the Fee
is deferred.
5.2 Earnings on Accounts. Earnings shall accrue on deferred Fees from
the date the Fees are credited to the Participant's account, and on the
earnings on deferred Fees from the date the earnings are credited to the
account. The rate of earnings shall be determined annually and shall be at a
rate one percentage point less than the prime rate in effect at Chemical Bank,
a New York banking corporation, on the last day of the calendar year (accrued
interest shall be credited to the account at the end of each year). PROVIDED,
a Participant shall have the right to request in writing directed to the plan
administrator that the rate of earnings shall be determined by reference to
the gains and losses on the following hypothetical investments as if an amount
equal to the Participant's account had been invested as follows:
Prior to February 6, 1997
50 percent of the account in Janus Venture Fund and
50 percent of the account in Janus Twenty Fund
On and after February 6, 1997
33 1/3 percent of the account in Janus Venture Fund and
33 1/3 percent of the account in Janus Twenty Fund
33 1/3 percent of the account in Janus Worldwide Fund
PROVIDED, HOWEVER; the plan administrator shall not be obligated to follow
such Participant's request, and shall at its sole discretion be able to decide
to continue to determine earnings by reference to the aforementioned prime
rate in effect at Chemical Bank.
Section 6. Distribution upon Cessation as Director of the Company
Whenever a Participant ceases to be a Director of the Company, the Board
shall exercise its sole discretion in electing one of the following methods of
distributing the value of the Participant's account.
a. Installment Method. The value of the Participant's account as of the
end of the calendar year in which a Participant ceases to be a Director shall
be distributed to the Participant in annual installments over a ten-year
period beginning with the first day of the year immediately following the year
in which the Participant ceases to be a Director. The interest credited to the
Participant's account pursuant to subsection 5.2 shall be included in the
calculation of the value of the Participant's account for distribution
purposes. The value of the Participant's account shall be divided into ten
equal amounts, each such amount being a principal installment. The principal
installments shall accrue earnings in the same manner as an account pursuant
to subsection 5.2. The Company shall distribute to the Participant, annually,
one principal installment, and all earnings accrued on such principal
installment, such distributions to continue until all principal installments
have been distributed. Upon completion of the distributions provided for
above, the Participant's account shall be closed.
b. Single Payment Method. The value of the Participant's account shall
be distributed to the Participant in a lump sum within one year after the date
upon which the Participant ceases to be a Director. The earnings on the
Participant's account pursuant to subsection 5.2 shall be included in the
calculation of the value of the Participant's account for distribution
purposes. Upon delivery of the lump sum payment provided for above, the
Participant's account shall be closed.
Section 7. Distribution Upon Extraordinary Circumstances
7.1 Death of Director or Former Director. Each Participant may
designate one or more beneficiaries on a form provided by the plan
administrator and delivered to the plan administrator before his death. Any
such beneficiary thereafter may be changed without the consent of any prior
beneficiary by similar written designation delivered to the plan administrator
before the Participant's death. If no such beneficiary shall have been
designated or if no designated beneficiary shall survive the Participant's
death, any part or all of the balance of the Participant's account may be paid
to the Participant's estate. Any remaining installment payments due a
Participant at the time of his death may be paid at such time or times as
directed by the Board in its sole discretion to the Participant's beneficiary
or beneficiaries, if the Participant has designated one or more beneficiaries
on the form described in this Section 7.1, or, if no beneficiary has been
designated, or if no designated beneficiary shall survive the Participant, to
the Participant's estate.
7.2 Financial Hardship of a Participant Caused by a Medical Emergency or
Disability. Upon the determination by the Board that a Participant, or a
member of the Participant's immediate family, has suffered a medical emergency
or disability which has resulted in a financial hardship for the Participant,
then the Board may, at its sole discretion, direct that some or all of the
Participant's account be paid to the Participant; PROVIDED, that the amount
paid to the Participant shall not exceed the amount determined by the Board to
be necessary to relieve the financial hardship caused by the medical emergency
or disability. The Board may require the Participant to provide any expert
medical or financial information or opinions that the Board deems necessary to
arrive at a determination.
7.3 Loss of Principal Residence of a Participant. Upon the
determination by the Board that a Participant's principal residence, that
being the personal residence at which he spends a majority of his time, has
been damaged or destroyed by accident or natural causes, then the Board may,
at its sole discretion, direct that some or all of the Participant's account
be paid to the Participant; PROVIDED, that the amount paid to the Participant
shall not exceed the amount determined by the Board to be necessary to relieve
the financial hardship caused by the loss of the principal residence. The
Board may require the Participant to provide any expert opinion or financial
information that the Board deems necessary to arrive at a determination.
7.4 Financial Hardship of a Participant Caused By Other Unanticipated
Events. Upon the determination by the Board that a Participant has suffered
or will suffer a severe financial hardship because of unanticipated
circumstances caused by an event beyond the reasonable control of such
Participant, the Board may, at its sole discretion, direct that some or all of
the Participant's account be paid to the Participant; PROVIDED, that the
amount paid to the Participant shall not exceed the amount determined by the
Board to be necessary to relieve the financial hardship. The Board may require
the Participant to provide any expert opinion or financial information that
the Board deems necessary to arrive at an opinion.
7.5 Special Provisions. Payments made pursuant to these Sections 7.2
through 7.4 during a Section 6(a) ten-year distribution shall be deemed to
have been made from the last principal installment or installments to be made
and the earnings credited to such installment or installments.
For purposes of Sections 7.3 and 7.4 the Board shall not include the
Participant if the Participant is a Director.
Section 8. Transfers From Retirement Plan
8.1 Transferred Amounts. On May 2, 1996, this Plan shall accept a
transfer of accrued benefits from the Kansas City Southern Industries, Inc.
Retirement Plan for Directors (the "Retirement Plan") with respect to
Directors continuing as Directors after such date. For each Participant with
an account balance in the Retirement Plan to be transferred to this Plan, the
Company shall establish a bookkeeping account ("retirement plan account")
separate from the accounts established pursuant to Section 5.1 above. The
amount in each Participant's retirement plan account shall earn a return
determined by reference to the gains and losses on a hypothetical investment
as if an amount equal to the Participant's retirement plan account had been
invested in Company common stock, with a starting value for such common stock
equal to the mean between the high and low for such common stock as reported
on the New York Stock Exchange for May 2, 1996. When the Participant ceases to
be a Director due to retirement or for any other reason, the balance in the
Participant's retirement plan account as of the Director's last day of service
as a Director shall be paid to the Director within 30 days. The Director, or
his designated beneficiary or estate, as the case may be, shall have the
election to receive the retirement plan account balance in either Company
common stock, valued at the mean between the high and low prices reported by
the New York Stock Exchange for such stock on the Participant's last day as a
Director, or in cash.
8.2 Other Provisions. The provisions of this Plan other than Sections
3, 4, 5 and 6 shall be applicable to amounts transferred to this Plan in
accordance with Section 8.1.
Section 9. Dissolution. Liquidation, Merger, Consolidation and Sale of Assets
9.1 Dissolution or Liquidation of Company. Notwithstanding anything
herein to the contrary, upon the dissolution or liquidation of the Company,
each Participant who is a Director of the Company on the day preceding the
date of the dissolution or liquidation shall be deemed to have ceased to be a
Director of the Company on the date preceding such dissolution or liquidation.
The accounts of all Participants shall be valued and distributed in lump sums
at the time of such liquidation.
9.2 Merger, Consolidation, and Sale of Assets. Notwithstanding anything
herein to the contrary, in the event that the Company consolidates with,
merges into, or transfers all or substantially all of its assets to another
corporation (hereinafter referred to as "Successor Corporation"), such
Successor Corporation shall assume all obligations under this Plan. Upon such
assumption, the Board of Directors of the Successor Corporation shall be
substituted for the Board in this Plan.
Section 10. Rights of Participants
10.1 Rights of Participants. No Participant nor any Participant's
estate or heirs shall have any interest in any fund or in any specific asset
or assets of the Company by reason of any payments made under the Plan, or by
reason of any account maintained for the Participant under the Plan. The
Company shall have merely a contractual obligation to make payments when due
hereunder and the Company shall not hold any funds in reserve or trust to
secure payments hereunder.
No Participant nor any Participant's estate or heirs may assign, pledge
or in any way encumber his interest under the Plan, or any part thereof.
Section 11. Administration and Amendment
11.1 Administration. The Board may designate an administrator of the
Plan. Absent designation of an administrator by the Board, the Secretary of
the Company shall administer the Plan. The Board may, from time to time,
establish rules for the administration of the Plan that are not inconsistent
with the provisions of the Plan.
11.2 Amendment. This Plan may be amended by a favorable vote of
two-thirds of the members of the Board who are not Participants in the Plan
or, in the event all Directors are Participants, by a favorable vote of a
majority of the stockholders present or represented and voting at an annual or
special meeting of the stockholders.
IN WITNESS WHEREOF, this restated Plan has been duly executed as of this 1st
day of February, 1997.
Kansas City Southern Industries, Inc.
By /s/Landon H. Rowland
Landon H. Rowland, President
KANSAS CITY SOUTHERN INDUSTRIES, INC.
EXECUTIVE PLAN
(RESTATED)
THIS PLAN, executed this 1st day of December 1992, but effective for all
purposes as of January 1, 1992, by Kansas City Southern Industries, Inc., a
corporation organized under the laws of the State of Delaware ("KCSI").
WITNESSETH:
WHEREAS, KCSI owns certain subsidiary corporations, which along with KCSI
comprise a controlled group of corporations; and
WHEREAS, KCSI and certain of its subsidiaries maintain qualified plans
("the Qualified Plans") subject to Sections 401 (a) (17) and 415 of the Internal
Revenue Code, which limits the annual contributions permitted to certain
participants in such plans; and
WHEREAS, KCSI prefers to provide a benefit to certain participants in
addition to the annual contributions permitted under the Qualified Plans and
therefore established on January 18, 1985, the "Kansas City Southern
Industries, Inc. ERISA Excess Benefits Plan" to provide such additional
benefits; and
WHEREAS, KCSI restated said plan in the form of the "Kansas City Southern
Industries, Inc. ERISA Excess Benefits Plan (Restated 1986), " again restated
the plan in the form of the "Kansas City Southern Industries, Inc. ERISA
Excess Benefits Plan (Restated 1991)" ("1991 Restatement"), and again
restated the plan in the form of "Kansas City Southern Industries, Inc. ERISA
Excess Benefits Plan (Restated 1992)" and again restated the plan in the
form of the "Kansas City Southern Industries, Inc. Executive Plan"; and
WHEREAS, KCSI reserved the power to amend the Plan and wishes to exercise
that power to amend certain provisions and otherwise restate the Plan as
hereinafter provided.
NOW, THEREFORE, KCSI hereby establishes this restated Plan to provide as
follows:
1.1 Definitions.
1.2 "Account" shall mean the separate account which the Company shall
maintain for a Participant under the Plan.
1.3 "Accounting Date" shall be December 31, each year.
1.4 "Compensation" shall mean actual cash compensation paid to a
Participant for a taxable year, consisting of base compensation and incentive
compensation, but not including any amount paid as severance pay. If a
Participant and the Company have entered into an agreement fixing the value
of a Participant's annual compensation for purposes of this Plan for a
particular year, then that value shall be deemed to be such Participant's annual
base and incentive compensation for that year, and such annual base and
incentive compensation shall be deemed to be paid ratably throughout that year.
1.5 "Contributions" shall mean the amount of the annual contribution to a
Participant's Account by the company under this Plan, which shall be the amount
by which (a) below exceeds (b) below:
(a) The amount of the annual contributions which the Participant would
have been entitled to receive under one or more of the Qualified Plans, except
that (1) any limitations imposed on such contributions under Section 401 (a)(17)
or 415 of the Internal Revenue Code shall be disregarded, (2) in computing
such amount, the definition of "Compensation" contained in Section 1.4 herein
shall be used instead of the definition of "Compensation" contained in such
Qualified Plans, if different, and (3) any eligibility requirements for
participation in the Qualified Plans shall be disregarded; and
(b) The amount of the annual contributions which the Participant is
entitled to receive under the Qualified Plans as limited by Sections
401(a)(17) and 425 of the Internal Revenue Code and any eligibility
requirements for participation in the Qualified Plans.
1.6 "Beneficiary" is a person designated by a Participant who is or may
become entitled to a benefit under the Plan.
1.7 "Company" shall mean Kansas City Southern Industries, Inc., and each
of its subsidiary companies which is at least eighty percent (80%) owned;
PROVIDED, such subsidiary company is admitted to participate in the Plan upon
approval by the Compensation Committee of the Board of Directors of KCSI
("Compensation Committee").
1.8 "Compensation Committee" shall mean the Compensation Committee of the
Board of Directors of Kansas City Southern Industries, Inc.
1.9 "Financial Hardship" shall mean a severe financial hardship for a
Participant because of unanticipated circumstances caused by an event beyond the
reasonable control of such Participant.
1.10 "Participant" is an employee of the company who is eligible to
participate in the plan under Section 2.1 and whose participation in the Plan
is recommended by the Chief Executive Officer and the Chairman of the Board of
the Company (or upon the recommendation of the Chief Executive Officer alone, if
there is no Chairman of the Board then in office) and approved by the
Compensation Committee.
1.11 "Plan" shall mean the deferred compensation plan established and
continued by the Company in the form of this Plan, designated as the "Kansas
City Southern Industries, Inc. Executive Plan (Restated)."
1.12 "Qualified Plans" shall mean the Kansas City Southern Industries, Inc.
Profit Sharing Plan, Kansas City Southern Industries, Inc. Employee Stock
Ownership Plan, DST Systems, Inc. Profit Sharing Plan, and DST Systems, Inc.
Section 401(k) Plan.
2.1 Eligibility. Eligibility in the Plan shall be limited to any
Employee of the Company who is a corporate officer of the Company for whom the
Company's contributions to the Qualified Plans are limited or prohibited as
provided under (1) Section 401(a)(17) of the Internal Revenue Code, (2)
Section 415 of the Internal Revenue Code, and/or (3) the eligibility
requirements of one or more of the Qualified Plans.
3.1 Contributions. As of the Accounting Date each year, a Contribution
will be added by the Company to the Account established on behalf of each
Participant on the records of the Company. In addition, on each subsequent
Accounting Date following the Accounting Date on which Account is first
established, the Company shall increase the amount in the Account as
determined as of each Accounting Date to conform with the percentage rate then
being credited under the "Kansas City Southern Industries, Inc. Directors
Deferred Fee Plan." Nevertheless, effective as of the date of execution of
the 1991 Restatement, the Compensation Committee shall have the discretion to
make adjustments to the Account on the following alternative basis:
adjustments to the Account shall be determined on the basis that an amount equal
to the Participant's Account had been invested in the following hypothetical
investments:
50 percent of the Account in Janus Venture Fund
and
50 percent of the Account in Janus Twenty Fund
Moreover, subsequent contributions to the Account shall be deemed to be
credited 50 percent each to the aforementioned hypothetical investments.
4.1 Benefits. The benefits under this plan shall be paid as follows:
4.2 Retirement. If the Participant's employment is terminated on or
after the Participant shall have reached the age of sixty-five, the
Participant's Account shall be paid to him in five annual installments of
substantially equal amounts. Each annual installment shall include the
increase as provided in section 3.1 on the remaining balance until the Account
shall have been paid out in full. If the Participant should die on or after his
sixty-fifth birthday and before the five annual payments are made, the unpaid
balance will continue to be paid in installments for the unexpired portion of
such five-year period to his designated Beneficiary in the same manner as set
forth above.
4.3 Termination of Employment. If the Participant's employment with the
Company is terminated for any reason other than death or disability but before
the Participant shall have reached the age of sixty-five, then the
Participant shall receive a nonforfeitable percentage of the Participant's
Account (forfeiting the balance, if any) equal to that same vesting percentage
which would be applicable to such Participant under the terms and provisions
of the Kansas City Southern Industries, Inc. Profit Sharing Plan, and such
amount shall be paid in five annual installments of substantially equal
amounts to the Participant in the same manner and to the same extent as
provided in Section 4.2 above.
4.4 Disability or Death. If the Participant's employment with the
Company is terminated because of disability or death before he has reached the
age of sixty-five, then the Participant's Account shall be paid in five annual
installments of substantially equal amounts to the Participant (in the event
of his disability) or his designated Beneficiary (in the event of his death)
in the same manner and to the same extent as provided in section 4.2 above.
4.5 Death, Lump Sum Payment. If both the Participant and his designated
Beneficiary should die before a total for five annual payments are made under
this Plan, then the remaining value of the Account shall be determined as of the
date of the death of the designated Beneficiary and shall be paid as promptly
as possible in one lump sum to the estate of such designated Beneficiary or
as specified in the Beneficiary's Last Will and Testament, as the case may be.
4.6 Financial Hardship. If the Compensation Committee in its sole
discretion shall determine that a Participant has suffered a Financial
Hardship, so much of a participant's Account as is necessary, in the sole
discretion of the Compensation Committee, to alleviate such Financial
Hardship shall be paid in such Participant in a lump sum.
4.7 Designated Beneficiary. The Beneficiary referred to in this section 4
may be designated or changed by the Participant (without the consent of any
prior Beneficiary) on a form provided by the Company and delivered to the
Company before his death. If no such Beneficiary shall have been designated,
or if no designated Beneficiary shall survive the Participant, the
installment payments payable under Section 4 shall be payable to the
Participant's estate.
4.8 Disability Determination. The Participant shall be deemed to have
become disabled for purposes of section 4.4 above if the Compensation Committee
shall find on the basis of medical evidence satisfactory to the Compensation
Committee that the Participant is totally disabled, mentally or physically,
so as to be prevented from engaging in further employment by the Company and
that such disability will be permanent and continuous during the remainder of
his life.
4.9 Payment Commencement. The installment payments to be made to the
Participant under section 4.2 or 4.3 shall commence on the first day of the
calendar year next following the date of the termination of his employment.
The installment payments to be made to the designated Beneficiary under the
provisions of section 4.4 shall commence on a date to be selected by the
Compensation Committee but within six months from the date of death or
disability for the Participant. Notwithstanding what is otherwise provided
herein, the Compensation Committee in its absolute discretion may elect to make
any payments provided for under this Plan in the form of cash in one lump sum.
4.10 Other Forms of Payment. With respect to any employee pension benefit
plan of the Company that is not qualified under section 401(a) of the Internal
Revenue Code of 1986, whether such plan is now in existence or becomes effective
in the future, the Board may approve the Compensation Committee's approval of a
request by any participant or other person entitled to receive a benefit
under such plan for any form of distribution of such Participant's or other
person's benefit under such plan, if in the opinion of the Board, (1) such form
of distribution does not cause any benefit under such plan to be currently
includable in the gross income of any other Participant or other person
entitled to receive a benefit under such plan and (2) such form of
distribution does not increase the amount of the liability of the Company to
such participant.
5.1 No Trust. Nothing contained in this Plan and no action taken pursuant
to the provisions of the Plan shall create or be construed to create a trust of
any kind or a fiduciary relationship between the Company and the Participant,
his designated Beneficiary or any other person.
6.1 Source of Payments. The Participant, Beneficiary and any other person
or person having or claiming a right to payments hereunder or to any interest
in this Plan shall rely solely on the unsecured promise of the Company set forth
herein and nothing in this Plan shall be construed to give the Participant,
Beneficiary or any other person or person any right, title, interest or claim
in or to any specific asset, fund, reserve, account or property of any kind
whatsoever owned by Company or in which it may have any right, title or interest
now or in the future, but Participant shall have the right to enforce his claim
against the company in the same manner as any unsecured creditor.
7. No Assignment. The right of the Participant or any other person to the
payment of benefits under this Plan shall not be assigned, transferred, pledged
or encumbered in any way.
8.1 Incapacity of Participant or Beneficiary. If the Compensation
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
duly appointed guardian, committee or other legal representative) may be paid
to the spouse, a child, a parent or a brother or sister, or to any person
deemed by the Compensation Committee to have incurred expense for such person
otherwise entitled to payment in accordance with the applicable provisions of
section 4 above. Any such payment shall be a complete discharge of the
liabilities of the Company under this Plan.
9.1 Compensation Committee Powers and Liabilities. The Compensation
Committee in its absolute discretion shall have the full power and authority to
interpret, construe and administer this Plan and the Compensation 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 Committee shall be liable to any person for any
action taken or omitted in connection with the interpretation and
administration of this Plan unless attributable to his own willful misconduct
or lack of good faith.
10.1 Benefits Not Treated as Compensation. Any benefits payable under
this 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 the Company for
the benefit of its employees.
11.1 Governing Law. This Plan shall be construed in accordance with and
governed by the law of the State of Missouri.
12.1 Merger. The 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.
13.1 Amendment. This Plan may be amended at any time and from time to
time by a written instrument executed by a duly authorized officer of the
Company provided such amendment is communicated to those Participants
participating in this Plan.
14.1 Binding Effect. This Plan shall be binding upon and inure to the
benefit of the Company, its successors and assigns and the Participants and
their heirs, executors, administrators and legal representatives.
IN WITNESS WHEREOF, this restated Plan has been duly executed as of the day
and year first above stated.
KANSAS CITY SOUTHERN INDUSTRIES, INC.
By /s/ L.H. Rowland
L.H. Rowland
Its President and Chief Executive Officer
AMENDMENT NO. 1 TO
KANSAS CITY SOUTHERN INDUSTRIES, INC.
EXECUTIVE PLAN
(as restated effective January 1, 1992)
Sections 4.2 and 4.3 of the Executive Plan are amended to provide as follows:
4.2 Retirement. If the Participant's employment is terminated on or
after the Participant shall have reached the age of sixty-five (or age
fifty-five with consent of the Compensation Committee), the Participant's
Account shall be paid to him in five annual installments of substantially equal
amounts. Each annual installment shall include the increase as provided in
section 3.1 on the remaining balance until the Account shall have been paid
out in full. If the Participant should die on or after his termination of
employment and before the five annual payments are made, the unpaid balance
will continue to be paid in installments for the unexpired portion of such
five-year period to his designated Beneficiary in the same manner as set forth
above.
4.3 Termination of Employment. If the Participant's employment with
the Company is terminated for any reason other than death or disability but
before the Participant shall have reached the age of sixty-five (or age
fifty-five with consent of the Compensation Committee), then the Participant
shall receive a nonforfeitable percentage of the Participant's Account
(forfeiting the balance, if any) equal to that same vesting percentage which
would be applicable to such Participant under the terms and provisions of the
Kansas City Southern Industries, Inc. Profit Sharing Plan, and such amount
shall be paid in five annual installments of substantially equal amounts to the
Participant in the same manner and to the same extent as provided in Section
4.2 above.
IN WITNESS WHEREOF, this amendment has been duly executed as of this
15th day of May 1995.
KANSAS CITY SOUTHERN INDUSTRIES, INC.
/s/ L.H. Rowland
L.H. Rowland
Its President and Chief Executive Officer
AMENDMENT NO. 2 TO
KANSAS CITY SOUTHERN INDUSTRIES, INC.
EXECUTIVE PLAN
(as restated effective January 1, 1992)
Sections 1.5 and 1.12 of the Executive Plan are amended to provide as follows:
1.5 "Contributions" shall mean the amount of the annual contribution to
a Participant's Account by the Company under this Plan, which shall be the
amount by which (a) below exceeds (b) below:
(a) The amount of the annual contributions (other than elective
deferrals) which the Participant would have been entitled to receive under one
or more of the Qualified Plans, except that (1) any limitations imposed on
such contributions under Section 401(a)(17) or 415 of the Internal Revenue
Code shall be disregarded, (2) in computing such amount, the definition of
"Compensation" contained in Section 1.4 herein shall be used instead of the
definition of "Compensation" contained in such Qualified Plans, if different,
(3) the amount of matching contributions that the Participant would have been
entitled to receive under the Kansas City Southern Industries, Inc. 401(k)
Plan ("401(k) Plan") shall be deemed to be equal to a percentage of the
Participant's Compensation equal to the maximum contribution rate for matching
contributions under Section 3.01 of the 401(k) Plan, disregarding the
limitations of Sections 3.05, 3.07 and Article XII of the 401(k) Plan, and (4)
any eligibility requirements for participation in the Qualified Plans shall be
disregarded; and
(b) The amount of the annual contributions (other than elective
deferrals) which the Participant is entitled to receive under the Qualified
Plans as limited by Sections 401(a)(17) and 415 of the Internal Revenue Code
and any eligibility requirements for participation in the Qualified Plans, and
with respect to the 401(k) Plan, treating the Participant as having received
the maximum matching contributions available under Section 3.01 of the 401(k)
Plan, as if the Participant had made the maximum elective deferrals permitted
by Section 402(g) of the Code, disregarding the limitations of Sections 3.05,
3.07 and Article XII of the 401(k) Plan.
1.12 "Qualified Plans" shall mean the Kansas City Southern Industries,
Inc. Profit Sharing Plan, The Employee Stock Ownership Plan, and the Kansas
City Southern Industries, Inc. 401(k) Plan.
IN WITNESS WHEREOF, this Amendment No. 2 has been duly executed as of
this 23rd day of January, 1997, but effective for all purposes as of January
1, 1996.
KANSAS CITY SOUTHERN INDUSTRIES, INC.
By /s/ L.H. Rowland
L.H. Rowland, President & Chief Executive Officer
<TABLE>
KANSAS CITY SOUTHERN INDUSTRIES, INC.
AND SUBSIDIARY COMPANIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Millions)
<CAPTION>
Years Ended December 31,
1996 1995(a) 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Earnings:
Pretax Income, excluding
equity in earnings of
unconsolidated affiliates $167.2 $484.5 $148.9 $160.9 $ 92.8
Interest expense
on Indebtedness 59.6 77.0 53.6 51.2 33.1
Portion of Rents
Representative of an
Appropriate Interest Factor 13.9 17.2 17.7 11.0 8.3
Equity in Undistributed
Net Earnings of 50%
Owned Affiliates 0.8 5.7 15.6 9.0 8.2
Distributed Earnings
of Less Than 50%
Owned Affiliates 3.7 0.9 0.1 0.5 0.6
Fixed Charges of
50% Owned Affiliates 1.3 1.3 0.9 1.4 1.0
Income as Adjusted $246.5 $586.6 $236.8 $234.0 $144.0
Fixed Charges:
Interest Expense
on Indebtedness $ 59.6 $ 77.0 $ 53.6 $ 51.2 $ 33.1
Portion of Rents
Representative of an
Appropriate Interest Factor 13.9 17.2 17.7 11.0 8.3
Fixed Charges of
50% Owned Affiliates 1.3 1.3 0.9 1.4 1.0
Total Fixed Charges $ 74.8 $ 95.5 $ 72.2 $ 63.6 $ 42.4
Ratio of Earnings to
Fixed Charges 3.30 6.14 3.28 3.68 3.40
(a) Financial information from which the ratio of earnings to fixed charges
is computed for the year ended December 31, 1995 reflects DST Systems,
Inc. ("DST") as a majority owned unconsolidated subsidiary through
October 31, 1995, and as an unconsolidated affiliate beginning November
1, 1995, as a result of the DST public offering and associated
transactions (as discussed in Note 2 to the Consolidated Financial
Statements in this Form 10-K), which reduced the Company's ownership in
DST to approximately 41%.
</TABLE>
Subsidiaries of the Company
Kansas City Southern Industries, Inc., a Delaware Corporation, has no parent.
All subsidiaries of the Company listed below are included in the consolidated
financial statements unless otherwise indicated
State or
Percentage other Jurisdiction
of of Incorporation
Ownership or Organization
Animal Resources, Inc. (3)* 49% Missouri
BBOI Worldwide LLC (8) 50 Delaware
Berger Associates, Inc. 80 Delaware
Carland, Inc. (5) 100 Delaware
DST Systems, Inc.* 41 Missouri
Fountain Investments, Inc. 100 Missouri
Gateway Western Railway Company (9) 100 Illinois
Janus Capital Corporation 83 Colorado
Janus Capital International Ltd (7) 100 Colorado
Janus Service Corp. (7) 100 Colorado
KCS Transportation Company 100 Delaware
KCS Transport Co., Inc. (1) 100 Louisiana
Landa Motor Lines (1) 100 Texas
Louisiana, Arkansas & Texas Trans. Co. (1) 100 Delaware
Martec Pharmaceutical, Inc. (3)* 49 Delaware
Mexrail, Inc.* 49 Delaware
Mid-South Microwave, Inc. 100 Delaware
Pabtex, Inc. (4) 100 Delaware
PVI, Inc. 100 Delaware
Rice-Carden Corporation 100 Missouri
Southern Capital Corporation, LLC* 50 Delaware
Southern Credit Corporation, Inc. (2) 100 Delaware
Southern Development Company 100 Missouri
Southern Group, Inc. 100 Delaware
Southern Industrial Services, Inc. 100 Delaware
The Kansas City Southern Railway Company 100 Missouri
Tolmak, Inc. 100 Delaware
TransFin Insurance, Ltd. 100 Vermont
Transportacion Ferroviaria
Mexicana S. de R.L. de C.V.* 49 Mexico
Trans-Serve, Inc. (4) (6) 100 Delaware
Veals, Inc. 100 Delaware
Wyandotte Garage Corporation 80 Missouri
* Unconsolidated Affiliate, Accounted for Using the Equity Method
(1) Subsidiary of The Kansas City Southern Railway Company
(2) Subsidiary of Southern Group, Inc.
(3) Subsidiary of PVI, Inc.
(4) Subsidiary of Southern Industrial Services, Inc.
(5) Subsidiary of Southern Credit Corporation, Inc.
(6) Conducting business as Superior Tie & Timber
(7) Subsidiary of Janus Capital Corporation
(8) Unconsolidated Affiliate of Berger Associates, Inc.
(9) Subsidiary of KCS Transportation Company accounted for as an
unconsolidated subsidiary under the equity method
Subsidiaries and Affiliates not shown, if taken in the aggregate, would not
constitute a significant subsidiary of the Company. Subsidiaries and
affiliates of DST Systems, Inc. are not shown.
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 33-69060, 33-50517 and 33-50519), and in the
Prospectus constituting part of the Registration Statement on Form S-3 (No.
33-69648) of Kansas City Southern Industries, Inc. of our report dated
February 20, 1997, appearing on page 39 of this Form 10-K. We also consent to
the incorporation by reference of our report dated February 20, 1997 related
to the consolidated financial statements of DST Systems, Inc., which appears
in the DST Systems, Inc. Annual Report on Form 10-K, which is incorporated in
this Annual Report on Form 10-K.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Kansas City, Missouri
March 20, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE, SUBMITTED AS EXHIBIT 27.1 TO FORM 10-K, CONTAINS
SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE
SHEET AND STATEMENT OF INCOME OF KANSAS CITY SOUTHERN INDUSTRIES, INC.,
COMMISSION FILE NUMBER 1-4717, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 22,900,000
<SECURITIES> 0
<RECEIVABLES> 141,400,000
<ALLOWANCES> 3,300,000
<INVENTORY> 39,300,000
<CURRENT-ASSETS> 292,100,000
<PP&E> 1,710,600,000
<DEPRECIATION> 491,300,000
<TOTAL-ASSETS> 2,084,100,000
<CURRENT-LIABILITIES> 244,600,000
<BONDS> 637,500,000
0
7,100,000
<COMMON> 400,000
<OTHER-SE> 708,200,000
<TOTAL-LIABILITY-AND-EQUITY> 2,084,100,000
<SALES> 0
<TOTAL-REVENUES> 847,300,000
<CGS> 0
<TOTAL-COSTS> 643,400,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,400,000
<INTEREST-EXPENSE> 59,600,000
<INCOME-PRETAX> 237,300,000
<INCOME-TAX> 70,600,000
<INCOME-CONTINUING> 150,900,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 150,900,000
<EPS-PRIMARY> 3.92
<EPS-DILUTED> 0
</TABLE>
