KANSAS CITY SOUTHERN INDUSTRIES, INC.
EXECUTIVE PLAN
(Restated November 17, 1998)
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THIS RESTATED EXECUTIVE PLAN (the "Plan") is executed this 17th day of
November, 1998, by Kansas City Southern Industries, Inc. ("KCSI"), a corporation
organized under the laws of the State of Delaware.
WITNESSETH:
WHEREAS, KCSI and certain of its subsidiaries maintain qualified plans
subject to Sections 401(a)(17) and 415 of the Internal Revenue Code, which limit
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 this Executive Plan on January 18, 1985; and
WHEREAS, KCSI now wishes to amend the Plan to change the method and
timing for the payment of benefits hereunder.
NOW, THEREFORE, KCSI hereby amends and restates the Plan to provide as
follows:
1.1 Definitions.
1.2 "Account" shall mean the separate account which the Company
has maintained for a Participant under the Plan through the date of this
restatement of the Plan.
1.3 "Annual Benefit" shall mean the amount of a Participant's
annual benefit under the Plan, which shall be the amount by which (a) below
exceeds (b) below:
(a) The amount of the annual contributions (other than elective
deferrals) and forfeitures 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 3% of the
Participant's Compensation, 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) and forfeitures 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 Article
XII of the 401(k) Plan.
1.4 "Compensation" shall mean actual cash compensation paid to a
Participant as base compensation and incentive compensation for a taxable year,
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 "Company" shall mean Kansas City Southern Industries, Inc., and
each of its subsidiary companies which is at least eighty percent (80%) owned.
1.6 "Compensation Committee" shall mean the Compensation and
Organization Committee of the Board of Directors of Kansas City Southern
Industries, Inc.
1.7 "Participant" is an employee of the Company who is eligible to
participate in the Plan under Section 2 and whose participation in the Plan is
approved by the Chief Executive Officer and the Chairman of the Board of the
Company (or upon the approval of the Chief Executive Officer alone, if there is
no Chairman of the Board then in office).
1.8 "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 November 17,
1998)."
1.9 "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 or any successor plans.
1.10 "Vesting Schedule" shall mean the vesting schedule applicable to
each Participant under the terms and provisions of the KCSI Profit Sharing Plan.
2. 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. Election of Form of Benefits. Each Participant may elect to receive
the Annual Benefit available under the Plan either in cash or through a grant of
non-qualified stock options to purchase shares of common stock of the Company
("Stock Options"). Such election shall be made with respect to each calendar
year covered by the Plan, but will be an on-going election which remains in
effect until changed, unless the Participant otherwise specifies in the
election. The election for calendar year 1997 shall be made not later than the
later of November 15, 1997 or at least fifteen (15) days before the actual grant
of the Participant's benefits for 1997, and elections for subsequent calendar
years must be made not later than October 31 of that year, or, for 1998, at
least fifteen (15) days before the actual grant of benefits for the Participant
for 1998. An on-going election may be changed at any time by a Participant, but
any such change shall not be effective for the calendar year in which the
election is made unless such change is made prior to October 31 of such year,
except for 1998, such change must be made at least fifteen (15) days before the
actual grant of benefits for the Participant for 1998. If no election is made by
a Participant for a calendar year, the Participant's Annual Benefit for that
year shall be in the form of a grant of Stock Options. Elections of part cash
and part Stock Options will not be permitted. Notwithstanding the foregoing or
any election made by a Participant to receive an Annual Benefit in Stock
Options, no Stock Options will be issued unless the Participant is an active
employee of the Company on the date of grant of the Stock Options, but instead
the Annual Benefit will be paid in cash.
4.1 Payment of Annual Benefit. Annual Benefits under the Plan shall be
paid as Stock Options, unless the Participant shall have elected in accordance
with Section 3 hereof to receive cash.
4.2 Time of Payment. Annual Benefits shall be paid by no later than the
end of the year following the calendar year to which the Annual Benefits relate.
4.3 Stock Option Grants. If a Participant has elected to receive his or
her benefit in the form of Stock Options, the Compensation Committee shall grant
the Participant Stock Options which the Compensation Committee determines have a
value equal to 125% of the Annual Benefit, rounded to the nearest whole share.
The Compensation Committee shall value the Stock Options as of the time of grant
using the Black-Scholes method in the manner determined by the Compensation
Committee applied on a consistent basis.
4.4 Termination During a Calendar Year. If a Participant's
employment is terminated during a calendar year for any reason, the Participant
shall be entitled to an Annual Benefit for the year of termination only if the
Participant is entitled to a contribution under one or more Qualified Plans in
such year. Following the date of termination of employment, the Participant
shall not be entitled to any further benefits under the Plan (except for payment
of Annual Benefits, if any, through the date of termination of employment).
4.5 Vesting Schedule. Stock Options granted under this Plan shall
become exercisable in accordance with the Vesting Schedule. Notwithstanding any
other provision of this Plan to the contrary, no cash distributions shall be
made from the Plan except to the extent that the amount distributed is vested in
accordance with the Vesting Schedule, and any undistributed cash balance of any
Account shall earn a return based on a hypothetical investment of such
undistributed cash balance in the following investments: 33 1/3 percent in Janus
Venture Fund, 33 1/3 percent in Janus Twenty Fund and 33 1/3 percent in Janus
Worldwide Fund, and shall be distributed as it vests under the Vesting Schedule.
5. Distribution of Existing Balances. Each Participant with an existing
balance held in an Account as of November 17, 1998 shall be given an election to
receive his existing balance either in cash or through a grant of Stock Options.
Such election shall be made not later than at least fifteen (15) days before the
actual distribution of the existing balances from Accounts, which distribution
shall take place promptly following the restatement of this Plan on November 17,
1998.
6. 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 or any other person.
7. Source of Payments. The Participant and any other person or persons
having or claiming a right to benefits hereunder or to any interest in the Plan
shall rely solely on the unsecured promise of the Company set forth herein and
nothing in the Plan shall be construed to give the Participant or any other
person or persons any right, title, interest or claim in or to any specific
asset, fund, reserve, account or property of any kind whatsoever owned by the
Company or in which it may have any right, title or interest now or in the
future, but the Participant shall have the right to enforce his claim against
the Company in the same manner as any unsecured creditor.
8. No Assignment. The right of the Participant or any other
person to the payment of benefits under the Plan shall not be assigned,
transferred, pledged or encumbered in any way.
9. Incapacity of Participant or Beneficiary. If the Compensation
Committee shall find that any person to whom any payment is payable under the
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 the Plan.
10. Compensation Committee Powers and Liabilities. The Compensation
Committee in its absolute discretion shall have the full power and authority to
interpret, construe and administer the 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 the Plan.
11. Benefits Not Treated as Compensation. Any benefits payable under
the 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 the Plan or
any profit sharing plan, pension plan or any other arrangement of the Company
for the benefit of its employees.
12. Governing Law. This Plan shall be construed in accordance
with and governed by the law of the State of Missouri, excluding its choice of
laws.
13. 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.
14. Amendment. This Plan may be amended at any time and from time
to time by the Compensation Committee.
15. 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/ Landon H. Rowland
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Landon H. Rowland, President