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