THE KANSAS CITY SOUTHERN RAILWAY COMPANY
DIRECTORS' DEFERRED FEE PLAN
ADOPTED: AUGUST 20, 1982
As Amended and Restated to March 19, 1997
Section 1. Establishment
1.1 Establishment. The Kansas City Southern Railway Company (hereinafter
called "Company") hereby establishes, 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 shall be known
as "THE "KANSAS CITY SOUTHERN RAILWAY COMPANY DIRECTORS' DEFERRED FEE PLAN"
(the "Plan").
1.2 Transition. This plan shall become effective on January 1, 1983. The
members of that certain Directors' Deferred Fee Plan, adopted by resolution of
the Board of Directors of the Company on November 21, 1975 ("1975 Plan"), may
become participants of the Plan by terminating their election under the 1975
Plan and electing to participate in the Plan. Amounts deferred pursuant to the
1975 Plan shall be distributed in accordance with the 1975 Plan. Any director
not a participant under the 1975 Plan may elect to participate in the Plan in
accordance with the requirements set forth in subsection 4.1.
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 Electing 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 or 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 Chase Manhattan 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 calendar 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 March 19, 1997
50 percent of the account in Janus Venture Fund and
50 percent of the account in Janus Twenty Fund
On and after March 19, 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 1/2 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 Chase Manhattan 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 calendar 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 interest 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 interest 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 interest earned 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. Upon the death of a
Participant, any part or all of the balance of the Participant's account may,
if directed by the Board in its sole discretion, be payable to the
Participant's estate on the first day of the calendar year following the year
in which the Participant dies.
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 as 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 Special Provisions. Payments made pursuant to this Section 7 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 interest credited
to such installment or installments.
For purposes of Sections 7.2 and 7.3 the Board shall not include the
Participant if the Participant is a Director.
Section 8. Dissolution, Liquidation, Merger,
Consolidation and Sale of Assets
8.1 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 at the time of
such liquidation.
8.2 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 9. Rights of Participants
9.1 Rights of Participants. No Participant nor any Participant's estate or
heirs shall have any interest 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 10. Administration and Amendment
10.1 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.
10.2 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 19th
day of March, 1997.
The Kansas City Southern Railway Company
By /s/ Landon H. Rowland
Landon H. Rowland, Chairman of the Board