Exhibit 10.37
AGREEMENT
TO FOREGO COMPENSATION
An Agreement is made between Michael G. Fitt (the "Director") and Kansas City
Southern Industries, Inc. (the "Company").
WHEREAS, the Director has been and continues to be a valued member of the Board
of Directors of the Company;
WHEREAS, the Company desires to assist the Director in acquiring a life
insurance policy on the lives of the Director and the Director's spouse (the
"Policy"), by loaning an amount to the Director (or to a trust to be created by
the Director), so that the loaned amount can be used by the Director (or the
trust) to pay a premium for the Policy; and
WHEREAS, the Director agrees to forego all of the balance payable to the
Director under the Retirement Plan Account in the Directors' Deferred Fee Plan
of Kansas City Southern Industries, Inc. (the "Plan").
NOW, THEREFORE, in consideration for the aforementioned promises, and for other
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows, intending to be legally bound.
1. The Company agrees to enter into a loan agreement (the "Loan Agreement")
to provide a loan to the Director or to a trust (the "Trust") created by
the Director. The terms of the loan shall be documented by a Promissory
Note (the "Note") to be executed by the Company and the Director (or the
Trust).
2. In consideration for the Company's promise to enter into the Loan
Agreement, the Director's Retirement Plan Account balance in the Plan
shall be reduced to zero effective March 31, 2001. The Director's
balance in such account as of such date shall be foregone by the
Director, and the Director hereby irrevocably waives his right to
payment of such amount.
IN WITNESS WHEREOF, the parties hereby execute this Agreement, intending to be
legally bound,
Kansas City Southern Industries, Inc.
/s/ Michael G. Fitt By: /s/ Eric B. Freestone
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Michael G. Fitt
3-26-2001 3-30-01
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Date Date
Exhibit 10.37
LOAN AGREEMENT
This Loan Agreement is made between Michael G. Fitt (the "Director") and Kansas
City Southern Industries, Inc. (the "Company").
WHEREAS, the Director has been and continues to be a valued member of the Board
of Directors of the Company;
WHEREAS, the Director and the Company have entered into an Agreement to Forego
Compensation (the "Agreement") under which the Director has agreed to forego
certain compensation; and
WHEREAS, in consideration for the Director entering into the Agreement, the
Company has agreed, pursuant to this Loan Agreement, to make a loan to a trust
created by the Director.
NOW THEREFORE, in consideration for the aforementioned promises, and for other
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows, intending to be legally bound.
1. The Company agrees to loan $975,346 to The Michael G. and Doreen E. Fitt
Irrevocable Trust, Anne E. Sykes, Colin M-D. Fitt and Ian D. G. Fitt,
Trustees (the "Trust") with interest at the Applicable Federal Rate
(AFR) provided for in Internal Revenue Code Section7872(f)(2)(A) in
effect at the time the loan is made, with the loan principal amount to
be used by the Trust to pay a premium on a life insurance policy on the
lives of the Director and the Director's spouse.
2. The terms of the loan shall be documented by a Promissory Note (the
"Note") to be executed by the Company and the Trust.
IN WITNESS WHEREOF, the parties hereby execute this Agreement, intending to be
legally bound,
Kansas City Southern Industries, Inc.
/s/ Michael G. Fitt By: /s/ Eric B. Freestone
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Michael G. Fitt
August 13th 2001 September 7, 2001
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Date Date
Exhibit 10.37
PROMISSORY NOTE
Principal Sum: $975,346
Maker: The Michael G. and Doreen E. Fitt Irrevocable Insurance Trust,
Anne E. Sykes, Colin M-D. Fitt and Ian D. G. Fitt, Trustees
Holder: Kansas City Southern Industries, Inc.
FOR VALUE RECEIVED, the undersigned Maker (also referred to herein as the
"Trust") promises to pay to the order of the Holder the Principal Sum, plus
interest from the Loan Date (as hereinafter defined, and as indicated on
Schedule A attached hereto) until the date paid, at the Loan Rate indicated in
Schedule A.
The Maker agrees that the entire Principal Sum shall be used to pay a premium on
the life insurance Policy described in Schedule A, and that no part of the
Principal Sum shall be used for any other purpose. Such premium shall be paid by
the Maker within ninety (90) days after the Loan Date (subject to an extension
of up to sixty (60) days if so agreed by the parties). The "Loan Date" shall be
the date on which the Holder pays the Principal Sum to the Maker, or if the
Maker instructs the Holder to pay the Principal Sum amount directly to the
insurer issuing the Policy, the date on which the Holder pays the amount to the
insurer.
The entire Principal Sum, plus accrued interest thereon, shall be due and
payable within ninety (90) days following the death of the last survivor of the
Insureds (as listed in Schedule A). Maker agrees to take all reasonable steps to
ensure payment of the Policy death benefit promptly following the deaths of the
Insureds.
All payments hereon shall be made in lawful money of the United States of
America to the order of the Holder at 114 West 11th Street, Kansas City, MO
64105-1804 or at such other place as the Holder may designate in writing to the
Maker from time to time. This Note may be prepaid by the Maker in whole or in
part at any time without penalty or premium. If any payment due is not paid
within ten (10) business days of the due date, such overdue amount shall bear
interest from and after the due date until paid in full at the rate of 10% per
annum, compounded annually, or at the maximum rate permitted by law, whichever
is less.
The Maker agrees that the Policy shall be owned solely by the Maker, that the
Trust shall be designated as beneficiary to receive the Policy death benefit or
any benefit paid at policy maturity, and that no other person or entity will
have any interest in the policy, except as otherwise provided herein. Also, the
Maker shall not surrender the Policy, in
Exhibit 10.37
whole or in part, withdraw cash value from or borrow from the Policy, or
otherwise pledge or encumber the Policy, except as expressly permitted by the
terms of this Note. Maker further agrees that the entire Principal Sum and
accrued interest shall become immediately due and payable, without any further
demand or notice, all of which are expressly waived, upon the occurrence of any
of the following events:
(1) The Maker fails to pay the Policy premium within the time allowed by the
terms of this Note (including any permitted extensions).
(2) The Maker attempts to transfer all or any part of its interest in the
Policy to any party, except that a transfer of Policy rights to a successor
trustee under the terms of the Trust shall not be deemed a transfer for the
purpose of this sentence.
(3) The Maker surrenders the Policy in whole or in part, or borrows from or
withdraws cash value from the Policy, or otherwise pledges or encumbers the
Policy.
(4) The Maker reduces the face amount of the Policy without the consent of the
Holder, but only if the face amount reduction results in a distribution of
policy cash values.
The obligations created by this Note are obligations of the Maker only, and no
individual or entity who is a trustee of the Trust shall have any personal
responsibility or liability with respect to this Note, except in such party's
fiduciary capacity as a trustee. In addition, no beneficiary of the Trust, or
creator of the Trust, shall have any personal responsibility or liability with
respect to this Note, except to the extent of any Policy death benefits paid to
any such beneficiary, in which case the Holder may pursue available legal
remedies to recover any such amount if the Holder has not received payment of
the full amount due to the Holder.
The Maker, the creator of the Trust, and any trustee or beneficiary of the Trust
shall not be responsible for paying any additional amounts as Policy premiums,
even if it becomes necessary to do so to prevent the Policy from lapsing.
However, any such party may pay additional Policy premiums as it elects.
The Holder may transfer or assign its rights under this Note to any individual
or entity without the consent of the Maker. However, notice of any such transfer
or assignment shall be given to the Maker by the Holder.
The Maker hereby waives presentment, demand for payment, notice of default and
notice of protest. The Maker agrees to pay on demand all losses, costs and
expenses incurred by the Holder in connection with the enforcement of this Note.
This Note shall be governed by and construed in accordance with the laws of the
state of Missouri.
Exhibit 10.37
IN WITNESS WHEREOF, the undersigned parties have caused this Note to be duly
executed under seal as of the date first above written.
Holder Maker
By:/s/ Eric B. Freestone By: /s/ Anne E. Sykes
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Kansas City Southern Industries, Inc. Anne E. Sykes, Trustee
September 7, 2001 /s/ Colin M-D. Fitt
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Date Colin M-D. Fitt, Trustee
/s/ Ian D.G. Fitt
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Ian D. G. Fitt, Trustee
August 29, 2001
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Date
Exhibit 10.37
PROMISSORY NOTE
SCHEDULE A
Loan Date: September 19, 2001
Loan Rate: 5.49% per annum, compounded semi-annually
Policy
Insurer: American General Life Insurance Company
Policy Number: VL1005765V
Insureds: Michael G. Fitt and Doreen E. Fitt