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.