Exhibit 10.38
KANSAS CITY SOUTHERN
EMPLOYEE STOCK OWNERSHIP PLAN
(AS AMENDED AND RESTATED EFFECTIVE APRIL 1, 2002)
KANSAS CITY SOUTHERN
EMPLOYEE STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
Article I. DEFINITIONS......................................................................................... 2
1.01 "Plan"............................................................................................... 2
1.02 "Employer"........................................................................................... 3
1.03 "Trustee"............................................................................................ 3
1.04 "Plan Administrator"................................................................................. 3
1.05 "Advisory Committee"................................................................................. 3
1.06 "Employee"........................................................................................... 3
1.07 "Highly Compensated Employee"........................................................................ 3
1.08 "Participant"........................................................................................ 4
1.09 "Beneficiary"........................................................................................ 4
1.10 "Compensation"....................................................................................... 4
1.11 "Account"............................................................................................ 5
1.12 "Accrued Benefit".................................................................................... 5
1.13 "Nonforfeitable"..................................................................................... 5
1.14 "Plan Year".......................................................................................... 6
1.15 "Effective Date"..................................................................................... 6
1.16 "Plan Entry Date".................................................................................... 6
1.17 "Accounting Date".................................................................................... 6
1.18 "Trust".............................................................................................. 6
1.19 "Trust Fund"......................................................................................... 6
1.20 "Nontransferable Annuity"............................................................................ 6
1.21 "ERISA".............................................................................................. 6
1.22 "Code"............................................................................................... 6
1.23 "Service"............................................................................................ 6
1.24 "Hour of Service".................................................................................... 6
1.25 "Disability"......................................................................................... 8
1.26 SERVICE FOR PREDECESSOR EMPLOYER..................................................................... 8
1.27 RELATED EMPLOYERS.................................................................................... 8
1.28 LEASED EMPLOYEES..................................................................................... 8
1.29 DETERMINATION OF TOP HEAVY STATUS.................................................................... 8
1.30 PLAN MAINTAINED BY MORE THAN ONE EMPLOYER............................................................ 10
1.31 "Disqualified Person"................................................................................ 10
1.32 "Employer Securities"................................................................................ 10
1.33 "Exempt Loan"........................................................................................ 11
1.34 "Leveraged Employer Securities"...................................................................... 11
1.35 "Issuer"............................................................................................. 11
Article II. EMPLOYEE PARTICIPANTS.............................................................................. 11
2.01 ELIGIBILITY.......................................................................................... 11
2.02 SERVICE - PARTICIPATION.............................................................................. 12
2.03 BREAK IN SERVICE - PARTICIPATION..................................................................... 12
2.04 PARTICIPATION UPON REEMPLOYMENT...................................................................... 12
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Article III. EMPLOYER CONTRIBUTIONS AND FORFEITURES............................................................ 12
3.01 AMOUNT............................................................................................... 12
3.02 CONTRIBUTION ALLOCATION.............................................................................. 13
3.03 LIMITATIONS ON ALLOCATIONS TO PARTICIPANTS' ACCOUNTS................................................. 14
3.04 DEFINITIONS.......................................................................................... 15
3.05 DETERMINATION OF CONTRIBUTION........................................................................ 17
3.06 TIME OF PAYMENT OF CONTRIBUTION...................................................................... 17
3.07 FORFEITURE ALLOCATION................................................................................ 17
3.08 ACCRUAL OF BENEFIT................................................................................... 17
Article IV. PARTICIPANT CONTRIBUTIONS.......................................................................... 18
4.01 PARTICIPANT VOLUNTARY CONTRIBUTIONS.................................................................. 18
4.02 PARTICIPANT ROLLOVER CONTRIBUTIONS................................................................... 18
Article V. TERMINATION OF SERVICE - PARTICIPANT VESTING........................................................ 18
5.01 NORMAL RETIREMENT AGE................................................................................ 18
5.02 PARTICIPANT DISABILITY OR DEATH...................................................................... 18
5.03 VESTING SCHEDULE..................................................................................... 18
5.04 CASH-OUT DISTRIBUTION TO PARTIALLY-VESTED PARTICIPANTS/ RESTORATION OF FORFEITED ACCRUED BENEFIT..... 19
5.05 [RESERVED]........................................................................................... 20
5.06 YEAR OF SERVICE - VESTING............................................................................ 20
5.07 BREAK IN SERVICE - VESTING........................................................................... 21
5.08 INCLUDED YEARS OF SERVICE - VESTING.................................................................. 21
5.09 FORFEITURE OCCURS.................................................................................... 21
Article VI. TIME AND METHOD OF PAYMENT OF BENEFITS............................................................. 21
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT................................................................... 21
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT................................................................. 23
6.03 BENEFIT PAYMENT ELECTIONS............................................................................ 25
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS................................................................ 26
6.05 SPECIAL DISTRIBUTION AND PAYMENT REQUIREMENTS........................................................ 26
6.06 [Reserved]........................................................................................... 27
6.07 DISTRIBUTIONS UNDER DOMESTIC RELATIONS ORDERS........................................................ 27
6.08 ROLLOVER DISTRIBUTIONS............................................................................... 28
Article VII. EMPLOYER ADMINISTRATIVE PROVISIONS................................................................ 29
7.01 INFORMATION TO COMMITTEE............................................................................. 29
7.02 NO LIABILITY......................................................................................... 29
7.03 INDEMNITY OF COMMITTEE............................................................................... 29
7.04 AMENDMENT TO VESTING SCHEDULE........................................................................ 29
Article VIII. PARTICIPANT ADMINISTRATIVE PROVISIONS............................................................ 30
8.01 BENEFICIARY DESIGNATION.............................................................................. 30
8.02 NO BENEFICIARY DESIGNATION........................................................................... 30
8.03 PERSONAL DATA TO COMMITTEE........................................................................... 31
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8.04 ADDRESS FOR NOTIFICATION............................................................................. 31
8.05 ASSIGNMENT OR ALIENATION............................................................................. 31
8.06 NOTICE OF CHANGE IN TERMS............................................................................ 31
8.07 LITIGATION AGAINST THE TRUST......................................................................... 31
8.08 INFORMATION AVAILABLE................................................................................ 31
8.09 APPEAL PROCEDURE FOR DENIAL OF BENEFITS.............................................................. 32
8.10 ESOP DIVERSIFICATION................................................................................. 32
8.11 STILWELL SHARES AND INVESTMENT FUNDS................................................................. 33
Article IX. ADVISORY COMMITTEE -- DUTIES WITH RESPECT TO PARTICIPANTS' ACCOUNTS................................ 34
9.01 MEMBERS' COMPENSATION, EXPENSES...................................................................... 34
9.02 GENERAL.............................................................................................. 34
9.03 FUNDING POLICY....................................................................................... 35
9.04 INDIVIDUAL ACCOUNTS.................................................................................. 35
9.05 VALUE OF PARTICIPANT'S ACCRUED BENEFIT............................................................... 36
9.06 ALLOCATIONS TO PARTICIPANTS' ACCOUNTS................................................................ 36
9.07 UNCLAIMED ACCOUNT PROCEDURE.......................................................................... 37
9.08 TERM................................................................................................. 38
9.09 POWERS............................................................................................... 38
9.10 MANNER OF ACTION..................................................................................... 38
9.11 AUTHORIZED REPRESENTATIVE............................................................................ 38
9.12 INTERESTED MEMBER.................................................................................... 38
9.13 INDIVIDUAL STATEMENT................................................................................. 38
9.14 ACCOUNT CHARGED...................................................................................... 38
9.15 BLACK-OUT PERIOD..................................................................................... 39
9.16 ELECTRONIC ELECTIONS................................................................................. 39
Article X. TRUSTEE POWERS AND DUTIES........................................................................... 39
10.01 TRUSTEE POWERS AND DUTIES............................................................................ 39
10.02 [RESERVED]........................................................................................... 39
10.03 INVESTMENT POWERS.................................................................................... 39
10.04 [RESERVED]........................................................................................... 41
10.05 [RESERVED]........................................................................................... 41
10.06 [RESERVED]........................................................................................... 41
10.07 [RESERVED]........................................................................................... 41
10.08 DISTRIBUTION OF TRUST FUND........................................................................... 41
10.09 [RESERVED]........................................................................................... 42
10.10 [RESERVED]........................................................................................... 42
10.11 [RESERVED]........................................................................................... 42
10.12 [RESERVED]........................................................................................... 42
10.13 [RESERVED]........................................................................................... 42
10.14 [RESERVED]........................................................................................... 42
10.15 PARTICIPANT VOTING RIGHTS - EMPLOYER SECURITIES AND STILWELL SHARES ................................. 42
10.16 [RESERVED]........................................................................................... 43
10.17 USE OF INDEPENDENT APPRAISER......................................................................... 43
10.18 [RESERVED]........................................................................................... 43
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10.19 STILWELL SHARES RESTRICTION.......................................................................... 43
Article XI. REPURCHASE OF EMPLOYER SECURITIES.................................................................. 43
11.01 PUT OPTION........................................................................................... 43
11.02 CONTINUATION OF PUT OPTION........................................................................... 45
Article XII. MISCELLANEOUS..................................................................................... 45
12.01 EVIDENCE............................................................................................. 45
12.02 NO RESPONSIBILITY FOR EMPLOYER ACTION................................................................ 45
12.03 FIDUCIARIES NOT INSURERS............................................................................. 45
12.04 WAIVER OF NOTICE..................................................................................... 45
12.05 SUCCESSORS........................................................................................... 45
12.06 WORD USAGE........................................................................................... 45
12.07 STATE LAW............................................................................................ 45
12.08 EMPLOYMENT NOT GUARANTEED............................................................................ 46
12.09 ELECTRONIC MEDIA..................................................................................... 46
Article XIII. EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION........................................................ 46
13.01 EXCLUSIVE BENEFIT.................................................................................... 46
13.02 AMENDMENT BY EMPLOYER................................................................................ 46
13.03 DISCONTINUANCE....................................................................................... 47
13.04 FULL VESTING ON TERMINATION.......................................................................... 47
13.05 MERGER/DIRECT TRANSFER............................................................................... 47
13.06 TERMINATION.......................................................................................... 48
Article XIV. PROVISIONS EFFECTIVE UPON CHANGE IN CONTROL....................................................... 49
14.01 DEFINITION OF "CHANGE IN CONTROL OF KCS"............................................................. 49
14.02 PROVISIONS EFFECTIVE UPON CHANGE IN CONTROL.......................................................... 50
14.03 RIGHT TO AMEND PART 1 OF ARTICLE XIV PRIOR TO CHANGE IN CONTROL OF KCS............................... 50
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ALPHABETICAL LISTING OF DEFINITIONS
Plan Definition Reference
(Page Number)
Account................................................................................................... 1.11(5)
Accounting Date........................................................................................... 1.17(6)
Accrued Benefit........................................................................................... 1.12(5)
Advisory Committee........................................................................................ 1.05(3)
Affiliate ................................................................................................ 1.27(6)
Annual Addition........................................................................................ 3.04(a)(6)
Annuity Starting Date .................................................................................... 6.01(6)
Beneficial Owner ..................................................................................... 14.01(b)(6)
Beneficiary............................................................................................... 1.09(4)
Break in Service for Vesting Purposes..................................................................... 5.07(6)
Cash-Out Distribution .................................................................................... 5.04(6)
Change in Control of KCS................................................................................. 14.01(6)
Claimant.................................................................................................. 8.09(6)
Code...................................................................................................... 1.22(6)
Code Section 411(d)(6) Protected Benefits................................................................ 13.02(6)
Compensation.............................................................................................. 1.10(4)
Compensation for Code Section 415 Purposes ............................................................ 3.04(b)(6)
Compensation for Top Heavy Purposes.................................................................... 1.29(c)(6)
Deemed Cash-Out Rule .................................................................................. 5.04(C)(6)
Defined Contribution Plan.............................................................................. 3.04(g)(6)
Defined Benefit Plan................................................................................... 3.04(h)(6)
Determination Date..................................................................................... 1.29(g)(6)
Disability................................................................................................ 1.25(6)
Disqualified Person....................................................................................... 1.31(6)
Effective Date............................................................................................ 1.15(6)
Elective Contributions ................................................................................... 1.10(5)
Elective Transfer ....................................................................................... 13.05(6)
Eligible Accrued Benefit.................................................................................. 8.10(6)
Eligible Portion.......................................................................................... 6.05(6)
Employee.................................................................................................. 1.06(3)
Employer.................................................................................................. 1.02(3)
Employer for Code Section 415 Purposes................................................................. 3.04(c)(6)
Employer for Top Heavy Purposes........................................................................ 1.29(f)(6)
Employer Securities....................................................................................... 1.32(6)
Employment Commencement Date.............................................................................. 2.01(6)
ERISA..................................................................................................... 1.21(6)
Excess Amount.......................................................................................... 3.04(d)(6)
Exempt Loan............................................................................................... 1.33(6)
Exchange Act ............................................................................................ 14.01(6)
Excluded Employee ........................................................................................ 2.01(6)
5% Owner.................................................................................................. 1.07(3)
Forfeiture Break in Service .............................................................................. 5.08(6)
Highly Compensated Employee............................................................................... 1.07(3)
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Hour of Service........................................................................................... 1.24(6)
Investment Manager .................................................................................... 9.02(i)(6)
Issuer.....................................................................................................1.35(6)
KCS................................................................................................... 14.01(a)(6)
Key Employee........................................................................................... 1.29(a)(6)
Leased Employees ......................................................................................... 1.28(6)
Leveraged Employer Securities............................................................................. 1.34(6)
Limitation Year........................................................................................ 3.04(e)(6)
Master Trust.............................................................................................. 1.18(6)
Maximum Permissible Amount................................................................................ 3.01(6)
Minimum Distribution Incidental Benefit (MDIB)......................................................... 6.02(A)(6)
Non-Key Employee....................................................................................... 1.29(b)(6)
Nonforfeitable............................................................................................ 1.13(5)
Nontransferable Annuity................................................................................... 1.20(6)
Normal Retirement Age .................................................................................... 5.01(6)
Participant............................................................................................... 1.08(4)
Permissive Aggregation Group........................................................................... 1.29(e)(6)
Plan...................................................................................................... 1.01(2)
Plan Administrator........................................................................................ 1.04(3)
Plan Entry Date........................................................................................... 1.16(6)
Plan Year................................................................................................. 1.14(6)
Qualified Domestic Relations Order ....................................................................... 6.07(6)
Related Employers ........................................................................................ 1.27(6)
Required Aggregation Group ............................................................................ 1.29(d)(6)
Required Beginning Date ............................................................................... 6.01(B)(6)
Service................................................................................................... 1.23(6)
Top Heavy Minimum Allocation .......................................................................... 3.02(B)(6)
Top Heavy Ratio .......................................................................................... 1.29(6)
Sponsor................................................................................................... 1.02(3)
Trust..................................................................................................... 1.18(6)
Trust Fund................................................................................................ 1.19(6)
Trustee................................................................................................... 1.03(3)
Years of Service.......................................................................................... 5.08(6)
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Exhibit 10.38
KANSAS CITY SOUTHERN
EMPLOYEE STOCK OWNERSHIP PLAN
(AS AMENDED AND RESTATED EFFECTIVE APRIL 1, 2002)
INTRODUCTION
Kansas City Southern ("KCS") (known as Kansas City Southern Industries,
Inc. prior to May 2, 2002) hereby amends and restates this Kansas City Southern
Employee Stock Ownership Plan (the "Plan") (known as the Kansas City Southern
Industries, Inc. Employee Stock Ownership Plan prior to May 2, 2002), originally
established effective as of February 3, 1988, for the administration and
distribution of contributions made by the Employers for the purpose of providing
retirement benefits for eligible Employees.
Prior to July 12, 2000 (the "Spinoff Date"), Stilwell Financial Inc.
("Stilwell") and its subsidiaries (collectively, the "Stilwell Group") were
members of the controlled group of corporations (within the meaning of Code
Section 414(b)) that includes KCS. As of the Spinoff Date, all of the shares of
Stilwell held by KCS were distributed to the shareholders of KCS as a spinoff
dividend (such transaction being referred to herein as the "Spinoff") and the
members of the Stilwell Group thereby ceased to be members of the controlled
group of corporations that includes KCS.
As of October 1, 1999, the Plan was split into two separate plans: (1)
an employee stock ownership plan providing benefits to eligible employees of KCS
and certain of its affiliates (exclusive of the Stilwell Group), which continued
to hold the assets of the Plan allocable to employees and former employees of
KCS and certain of its affiliates other than the Stilwell Group, and which
continued to be known as the Kansas City Southern Industries, Inc. Employee
Stock Ownership Plan; and (2) an employee stock ownership plan providing
benefits to eligible employees of the Stilwell Group, to which were transferred
the assets of the Plan allocable to employees and former employees of the
Stilwell Group, and which is known as the Stilwell Financial Inc. Employee Stock
Ownership Plan.
As a result of the Spinoff, Participants' Accounts under the Plan held
both KCS Shares and shares of common stock of Stilwell ("Stilwell Shares") that
were received as dividends with respect to such KCS Shares. KCS determined that
in order to provide Participants with the opportunity to continue to hold the
same economic investment following the Spinoff as before and enhanced investment
flexibility following the Spinoff, the Plan shall provide for not only the
holding of KCS Shares, but also the holding of Stilwell Shares and interests in
certain diversified investment funds ("Investment Funds") that may be designated
from time to time by the Advisory Committee as available for investment under
the Plan. As provided in Section 8.11, and subject to the provisions thereof,
following the Spinoff, Participants may elect to continue holding Stilwell
Shares in their Accounts under the Plan, or may elect to sell Stilwell Shares
and reinvest the proceeds in KCS Shares or in one or more Investment Funds. The
continued holding of Stilwell Shares is limited to those Stilwell Shares that
were allocated to Participants' Accounts as a result of the Spinoff.
Accordingly, no future contributions to or earnings of the Plan, and no amounts
transferred from the Investment Funds, may be invested in Stilwell Shares. Cash
dividends on Stilwell Shares received by the Plan shall be invested in KCS
Shares or in one or more Investment Funds, as elected by Participants.
Prior to January 1, 2001, the Plan was intended to be an employee stock
ownership plan, and to qualify as such under Section 4975(e)(7) of the Code and
under Treasury Regulation Section 54.4975-11. Effective as of January 1, 2001,
the Plan was amended and restated, and as so amended and restated the Plan (i)
is intended to continue to be an employee stock ownership plan for periods on
and after January 1, 2001, and to qualify as such under Section 4975(e)(7) of
the Code and under Treasury Regulation Section 54.4975-11, in respect of that
portion of the Plan as is invested in Employer Securities (including KCS Shares
acquired by the Plan in exchange for or with proceeds from the sale of Stilwell
Shares and also Employer Securities that are contributed to the Plan or are
purchased with cash contributions made to the Plan with the proceeds of an
Exempt Loan on or after January 1, 2001); (ii) is intended to be a stock bonus
plan for periods on and after January 1, 2001, and to qualify as such under
Section 401(a) of the Code (including Section 401(a)(23) of the Code) and
applicable regulations, in respect of the remainder of the Plan; and (iii) is
intended to satisfy the requirements of Treasury Regulation Section 54.4975-11
(including the requirement to provide participants with nonterminable
protections and rights set forth in Treasury Regulation
Section 54.4975-11(a)(3)) necessary to maintain the qualification of the Plan in
its entirety as an employee stock ownership plan under Section 4975(e)(7) of the
Code and Treasury Regulation Section 54.4975-11 with respect to all periods
prior to January 1, 2001.
Effective as of January 1, 2002, the Plan was amended and restated to
reflect certain provisions of the Economic Growth and Tax Relief Reconciliation
Act of 2001 ("EGTRRA"). The amendment and restatement is intended as good faith
compliance with the requirements of EGTRRA and plan provisions should be
construed in accordance with EGTRRA and guidance issued thereunder.
The Plan is hereby further amended and restated effective as of April
1, 2002 (the "Effective Date"). Effective as of April 1, 2002, KCS appointed a
new Trustee and entered into a service agreement with a new recordkeeper. In
order to facilitate the change to the new recordkeeper and Trustee, the Advisory
Committee imposed a black-out period, as defined in Section 9.15, effective as
of March 15, 2002 and continuing until the Advisory Committee, in its sole
discretion, deems it no longer necessary to impose such a black-out period.
Except as otherwise provided, the provisions of this Plan, as hereby amended and
restated, shall be effective as of April 1, 2002. Unless otherwise indicated,
the provisions of this amended and restated Plan shall apply solely to an
Employee who is employed by an Employer on or after the Effective Date. If a
participant terminated employment from his last Employer prior to the Effective
Date, the benefits to which he is entitled shall be determined under the terms
of the Plan as in effect on the date of the Employee's termination of
employment, unless otherwise indicated.
ARTICLE I.
DEFINITIONS
1.01 "Plan" means the retirement plan established and continued by
KCS as set forth herein, designated as the "Kansas City Southern Employee Stock
Ownership Plan", and known as the "Kansas City Southern Industries, Inc.
Employee Stock Ownership Plan" prior to May 2, 2002. The Sponsor has designed
this Plan to invest contributions made to the Plan on and after January 1, 2001
primarily in Employer Securities.
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1.02 "Employer" means Kansas City Southern ("KCS" or the "Sponsor")
(known as Kansas City Southern Industries, Inc. ("KCSI") prior to May 2, 2002),
or any other Employer who, with the written consent of KCS, adopts this Plan.
1.03 "Trustee" means Nationwide Trust Company, FSB, or any
successor in office who in writing accepts the position of Trustee.
1.04 "Plan Administrator" is Kansas City Southern unless KCS
designates another person to hold the position of Plan Administrator. In
addition to its other duties, the Plan Administrator has full responsibility for
compliance with the reporting and disclosure rules under ERISA as respects this
Plan.
1.05 "Advisory Committee" means the Sponsor's Advisory Committee
for the Plan as from time to time constituted.
1.06 "Employee" means any employee of the Employer, excluding any
Leased Employee, and excluding any individual who performs services for an
Employer and (i) is working in a classification described as an independent
contractor (even if such person is subsequently determined to be a common-law
employee of the Employer), (ii) is paid, directly or indirectly, through an
Employer's accounts payable system, or (iii) performs such services pursuant to
a contract or agreement which provides that the person is an independent
contractor or consultant (even if such person is subsequently determined to be a
common-law employee of the Employer).
1.07 "Highly Compensated Employee" means, for any Plan Year,
commencing on or after January 1, 1997, any individual who (i) is an Employee
described in subsection (a) or (b) below, or (ii) is a former Employee described
in subsection (c), below:
(a) An Employee who at any time during the current Plan
Year or the preceding Plan Year is a more than five percent (5%) owner
(or is considered as owning more than five percent (5%) within the
meaning of Section 318 of the Code) ("5% Owner") of the Employer;
(b) An Employee who (i) received Compensation during the
preceding Plan Year in excess of $80,000 (in 1996, as adjusted in
accordance with regulations and rulings under Section 414(q) of the
Code), and (ii) if the Advisory Committee elects by amendment of the
Plan to apply this clause (ii) to determine the Highly Compensated
Employees for a Plan Year, for this Plan and, except as otherwise
permitted, consistently for all plans of the Employer whose plan years
begin in the same calendar year as such preceding Plan Year, is in the
group consisting of the top twenty percent (20%) of the total number of
persons employed by the Employer when ranked on the basis of
Compensation paid during the preceding Plan Year, provided that, for
purposes of determining the total number of persons employed by the
Employer, the following Employees shall be excluded:
(1) Employees who have not completed an
aggregate of six (6) months of service during the preceding
Plan Year,
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(2) Employees who work less than seventeen and
one-half (17-1/2) hours per week for 50% or more of the total
weeks worked by such employees during the preceding Plan Year,
(3) Employees who normally work during not more
than six (6) months during any year,
(4) Employees who have not attained age 21 by
the end of the preceding Plan Year,
(5) Employees who are nonresident aliens and who
receive no earned income (within the meaning of Section
911(d)(2) of the Code) from the Employer which constitutes
income during the preceding Plan Year from sources within the
United States (within the meaning of Section 861(a)(3) of the
Code), and
(6) Except to the extent provided in regulations
prescribed by the Secretary of the Treasury, Employees who are
members of a collective bargaining unit represented by a
collective bargaining agent with which an Employer has or has
had a bargaining agreement.
For purposes of this Section 1.07, "Compensation" means
Compensation as defined in Section 1.10, and Compensation must include
Elective Contributions.
The Advisory Committee must make the determination of who is a
Highly Compensated Employee, including the determinations of the number
and identity of the top paid 20% group and the relevant Compensation,
consistent with Code Section 414(q) and regulations issued under that
Code section. The Employer may make a calendar year election to
determine the Highly Compensated Employees for the Plan Year, as
prescribed by Treasury regulations. Except as otherwise permitted, a
calendar year election must apply to all plans and arrangements of the
Employer.
(c) The term "Highly Compensated Employee" also includes
any former Employee who separated from Service (or has a deemed
Separation from Service, as determined under Treasury regulations)
prior to the Plan Year, performs no Service for the Employer during the
Plan Year, and was a Highly Compensated Employee either for the
separation year or for any Plan Year ending on or after his 55th
birthday.
1.08 "Participant" is an Employee who is eligible to be and becomes
a Participant in accordance with the provisions of Section 2.01.
1.09 "Beneficiary" is a person designated by a Participant who is
or may become entitled to a benefit under the Plan. A Beneficiary who becomes
entitled to a benefit under the Plan remains a Beneficiary under the Plan until
the Trustee has fully distributed his benefit to him. A Beneficiary's right to
(and the Plan Administrator's, the Advisory Committee's or a Trustee's duty to
provide to the Beneficiary) information or data concerning the Plan does not
arise until he first becomes entitled to receive a benefit under the Plan.
1.10 "Compensation" means a Participant's wages, salaries, fees for
professional service and other amounts received for personal services actually
rendered in the course of
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employment with the Employer maintaining the Plan as defined in Code
Section 3401(a) for purposes of income tax withholding at the source but
determined without regard to any rules that limit remuneration included in wages
based on the nature or location of the employment or the services performed
(such as the exception for agricultural labor in Section 3401(a)(2)).
Compensation includes Elective Contributions made by the Employer on the
Employee's behalf. "Elective Contributions" are amounts excludible from the
Employee's gross income under Code Sections 125, 402(a)(8), 402(h) or
403(b), and contributed by the Employer, at the Employee's election, to a Code
Section 401(k) arrangement, simplified employee pension, cafeteria plan or
tax-sheltered annuity. A Compensation payment includes Compensation paid by the
Employer to an Employee through another person under the common paymaster
provisions of Code Sections 3121(s) and 3306(p).
Any reference in this Plan to Compensation is a reference to the
definition in this Section 1.10, unless the Plan reference specifies a
modification to this definition. The Advisory Committee will take into account
only Compensation actually paid for the relevant period.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, the annual
Compensation of each Employee taken into account under the Plan shall not exceed
the EGTRRA annual compensation limit. The EGTRRA annual compensation limit is
$200,000, as adjusted by the Commissioner for increases in the cost of living in
accordance with Code Section 401(a)(17)(B). The cost-of-living adjustment in
effect for a calendar year applies to any period, not exceeding 12 months, over
which Compensation is determined (determination period) beginning in such
calendar year. If a determination period consists of fewer than 12 months, the
EGTRRA annual compensation limit will be multiplied by a fraction, the numerator
of which is the number of months in the determination period, and the
denominator of which is 12.
Any reference in this Plan to the limitation under Code
Section 401(a)(17) shall mean the EGTRRA annual compensation limit set forth in
this provision.
Nondiscrimination. For purposes of determining whether the Plan
discriminates in favor of Highly Compensated Employees, Compensation means
Compensation as defined in this Section 1.10, unless KCS elects to use an
alternate nondiscriminatory definition, in accordance with the requirements of
Code Section 414(s) and the regulations issued under that Code section. KCS may
elect to include all Elective Contributions made by the Employer on behalf of
the Employees. KCS's election to include Elective Contributions must be
consistent and uniform with respect to Employees of the Employer and all plans
of the Employer for any particular Plan Year. KCS may make this election to
include Elective Contributions for nondiscrimination testing purposes,
irrespective of whether this Section 1.10 includes Elective Contributions in the
general Compensation definition applicable to the Plan.
1.11 "Account" means the separate account(s) which the Advisory
Committee or the Trustee maintains for a Participant under the Plan.
1.12 "Accrued Benefit" means the amount standing in a Participant's
Account(s) as of any date derived from both Employer contributions and Employee
contributions, if any.
1.13 "Nonforfeitable" means a Participant's or Beneficiary's
unconditional claim, legally enforceable against the Plan, to the Participant's
Accrued Benefit.
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1.14 "Plan Year" means the fiscal year of the Plan, a 12
consecutive month period ending every December 31.
1.15 "Effective Date" of this amended and restated Plan is
April 1, 2002.
1.16 "Plan Entry Date" means July 1, 2002 and every October 1,
January 1, April 1 and July 1 thereafter.
1.17 "Accounting Date" is the last day of the Plan Year. Unless
otherwise specified in the Plan, the Advisory Committee shall make all Plan
allocations for a particular Plan Year as of the last Accounting Date of that
Plan Year.
1.18 "Trust" means the Master Trust established pursuant to the
Directed Trust Agreement between KCS and Nationwide Trust Company, FSB and/or
any other trust that may be established under this Plan. 1.19 "Trust Fund" means
all property of every kind held or acquired by the Trustee under the Plan.
1.20 "Nontransferable Annuity" means an annuity which by its terms
provides that it may not be sold, assigned, discounted, pledged as collateral
for a loan or security for the performance of an obligation or for any purpose
to any person other than the insurance company. If the Trustee distributes an
annuity contract, the contract must be a Nontransferable Annuity.
1.21 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
1.22 "Code" means the Internal Revenue Code of 1986, as amended.
1.23 "Service" means any period of time the Employee is in the
employ of the Employer, including any period the Employee is on an unpaid leave
of absence authorized by the Employer under a uniform, nondiscriminatory policy
applicable to all Employees. Notwithstanding any provision of this Plan to the
contrary, contributions, benefits and service credit with respect to qualified
military service shall be provided in accordance with Section 414(u) of the
Code. "Separation from Service" means a severance from employment with the
Employer maintaining this Plan and all Related Employers.
1.24 "Hour of Service" means:
(a) Each Hour of Service for which the Employer, either
directly or indirectly, pays an Employee, or for which the Employee is
entitled to payment, for the performance of duties. The Advisory
Committee credits Hours of Service under this paragraph (a) to the
Employee for the computation period in which the Employee performs the
duties, irrespective of when paid;
(b) Each Hour of Service for back pay, irrespective of
mitigation of damages, to which the Employer has agreed or for which
the Employee has received an award. The Advisory Committee credits
Hours of Service under this paragraph (b) to the Employee for the
computation period(s) to which the award or the agreement pertains
- 6 -
rather than for the computation period in which the award, agreement or
payment is made; and
(c) Each Hour of Service for which the Employer, either
directly or indirectly, pays an Employee, or for which the Employee is
entitled to payment (irrespective of whether the employment
relationship is terminated), for reasons other than for the performance
of duties during a computation period, such as leave of absence,
vacation, holiday, sick leave, illness, incapacity (including
disability), layoff, jury duty or military duty. The Advisory Committee
will credit no more than 501 Hours of Service under this paragraph (c)
to an Employee on account of any single continuous period during which
the Employee does not perform any duties (whether or not such period
occurs during a single computation period). The Advisory Committee
credits Hours of Service under this paragraph (c) in accordance with
the rules of paragraphs (b) and (c) of Labor Reg. Section 2530.200b-2,
which the Plan, by this reference, specifically incorporates in full
within this paragraph (c).
The Advisory Committee will not credit an Hour of Service under more
than one of the above paragraphs. A computation period for purposes of this
Section 1.24 is the Plan Year, Year of Service period, Break in Service period
or other period, as determined under the Plan provision for which the Advisory
Committee is measuring an Employee's Hours of Service.
The Employer will credit every Employee with Hours of Service on the
basis of the "actual" method. For purposes of the Plan, "actual" method means
the determination of Hours of Service from records of hours worked and hours for
which the Employer makes payment or for which payment is due from the Employer.
However, for an Employee who is paid on other than an hourly basis, Hours of
Service shall be credited according to the following schedule, based on the
payroll period of the Employee, for each payroll period with respect to which he
or she is paid or is entitled to payment of compensation:
Payroll Period Hours of Service
-------------- ----------------
Daily 10
Weekly 45
Bi-Monthly 95
Monthly 190
Solely for purposes of determining whether the Employee incurs a Break
in Service under any provision of this Plan, the Advisory Committee must credit
Hours of Service during an Employee's unpaid absence period due to maternity or
paternity leave. The Advisory Committee considers an Employee on maternity or
paternity leave if the Employee's absence is due to the Employee's pregnancy,
the birth of the Employee's child, the placement with the Employee of an adopted
child, or the care of the Employee's child immediately following the child's
birth or placement. The Advisory Committee credits Hours of Service under this
paragraph on the basis of the number of Hours of Service the Employee would
receive if he were paid during the absence period or, if the Advisory Committee
cannot determine the number of Hours of Service the Employee would receive, on
the basis of 8 hours per day during the absence period. The Advisory Committee
will credit only the number (not exceeding 501) of Hours of Service necessary to
prevent an Employee's Break in Service. The Advisory Committee credits all Hours
of Service described in this paragraph to the computation period in which the
absence
- 7 -
period begins or, if the Employee does not need these Hours of Service to
prevent a Break in Service in the computation period in which his absence period
begins, the Advisory Committee credits these Hours of Service to the immediately
following computation period.
1.25 "Disability" means that the Participant has been determined to
be disabled by the Railroad Retirement Board or the Social Security
Administration.
1.26 SERVICE FOR PREDECESSOR EMPLOYER. If the Employer maintains
the plan of a predecessor employer, the Plan treats service of the Employee with
the predecessor employer as service with the Employer.
1.27 RELATED EMPLOYERS. A related group is a controlled group of
corporations (as defined in Code Section 414(b)), trades or businesses (whether
or not incorporated) which are under common control (as defined in Code
Section 414(c)) or an affiliated service group (as defined in Code
Section 414(m) or in Code Section 414(o)). If the Employer is a member of a
related group, the term "Employer" includes, for the time period during which
the relation exists, the related group members for purposes of crediting Hours
of Service, determining Years of Service and Breaks in Service under Articles II
and V, applying the limitations on allocations in Article III, applying the top
heavy rules and the minimum allocation requirements of Article III, the
definitions of Employee, Highly Compensated Employee, Compensation and Leased
Employee, and for any other purpose required by the applicable Code section or
by a Plan provision. In addition, (i) the Plan shall treat all service prior to
the Spinoff Date that is credited with respect to an Employee under the terms of
the Plan in effect prior to October 1, 1999 as service with the Employer, and
(ii) the Plan shall treat service of an Employee on or after the Spinoff Date
with an "affiliate" of KCS during the time it is an "affiliate" as service with
the Employer. For purposes of this Section 1.27, the term "affiliate" means any
corporation, partnership, joint venture or other business entity with respect to
which twenty-five percent (25%) or more of the equity interests therein are
owned, directly or indirectly, by Kansas City Southern or by any entity at least
80% of the equity interests of which are owned by Kansas City Southern. However,
only an Employer described in Section 1.02 may contribute to the Plan and only
an Employee employed by an Employer described in Section 1.02 is eligible to
participate in this Plan. For Plan allocation purposes, "Compensation" does not
include Compensation received from a related employer that is not participating
in this Plan.
1.28 LEASED EMPLOYEES. The Plan does not treat a Leased Employee as
an Employee of the Employer. A Leased Employee is an individual (who otherwise
is not an Employee of the Employer) who, pursuant to a leasing agreement between
the Employer and any other person, has performed services for the Employer (or
for the Employer and any persons related to the Employer within the meaning of
Code Section 144(a)(3)) on a substantially full time basis for at least one year
and who performs services under the primary direction or control of the
Employer. A Leased Employee who performs services for the Employer pursuant to a
contract or agreement which provides that the person is a Leased Employee will
not become eligible to participate in this Plan merely by reason of a
determination that the person is a common-law employee of the Employer, unless
and until the Employer changes the employment classification of such person.
1.29 DETERMINATION OF TOP HEAVY STATUS. If this Plan is the only
qualified plan maintained by the Employer, the Plan is top heavy for a Plan Year
if the top heavy
- 8 -
ratio as of the Determination Date exceeds 60%. The top heavy ratio is a
fraction, the numerator of which is the sum of the present value of Accrued
Benefits of all Key Employees in the Plan as of the Determination Date and the
denominator of which is a similar sum determined for all Employees in the Plan.
The Advisory Committee must include in the top heavy ratio, as part of the
present value of Accrued Benefits, any contribution by the Employer not made as
of the Determination Date but includible under Code Section 416 and the
applicable Treasury regulations, distributions on account of Separation From
Service, death or disability made within the Determination Period and any other
distributions made within the 5-year period ending on the Determination Date.
The Advisory Committee must calculate the top heavy ratio by disregarding the
Accrued Benefit (and distributions, if any, of the Accrued Benefit) of any
Non-Key Employee who was formerly a Key Employee, and by disregarding the
Accrued Benefit (including distributions, if any, of the Accrued Benefit) of an
individual who has not received credit for at least one Hour of Service with the
Employer during the Determination Period. The Advisory Committee must calculate
the top heavy ratio, including the extent to which it must take into account
distributions, rollovers and transfers, in accordance with Code Section 416 and
the regulations under that Code section.
If the Employer maintains other qualified plans (including a simplified
employee pension plan), or maintained another such plan which now is terminated,
the Plan is top heavy only if it is part of the Required Aggregation Group, and
the top heavy ratio for the Required Aggregation Group and for the Permissive
Aggregation Group, if any, each exceeds 60%. The Advisory Committee will
calculate the top heavy ratio in the same manner as required by the first
paragraph of this Section 1.29, taking into account all plans within the
Aggregation Group. To the extent the Advisory Committee must take into account
distributions to a Participant, the Advisory Committee must include
distributions from a terminated plan which would have been part of the Required
Aggregation Group if it were in existence on the Determination Date. The
Advisory Committee will calculate the present value of Accrued Benefits under
defined benefit plans or simplified employee pension plans included within the
group in accordance with the terms of those plans, Code Section 416 and the
regulations under that Code section. If a Participant in a defined benefit plan
is a Non-Key Employee, the Advisory Committee will determine his Accrued Benefit
under the accrual method, if any, which is applicable uniformly to all defined
benefit plans maintained by the Employer or, if there is no uniform method, in
accordance with the slowest accrual rate permitted under the fractional rule
accrual method described in Code Section 411(b)(1)(C). To calculate the present
value of benefits from a defined benefit plan, the Advisory Committee will use
the actuarial assumptions (interest and mortality only) prescribed by the
defined benefit plan(s) to value benefits for top heavy purposes. If an
aggregated plan does not have a valuation date coinciding with the Determination
Date, the Advisory Committee must value the Accrued Benefits in the aggregated
plan as of the most recent valuation date falling within the 12-month period
ending on the Determination Date, except as Code Section 416 and applicable
Treasury regulations require for the first and second plan year of a defined
benefit plan. The Advisory Committee will calculate the top-heavy ratio with
reference to the Determination Dates that fall within the same calendar year.
Definitions. For purposes of applying the provisions of this
Section 1.29:
(a) "Key Employee" means, as of any Determination Date,
any Employee or former Employee (or Beneficiary of such Employee) who,
for the Plan Year that includes the Determination Date: (i) has
Compensation in excess of $130,000 (as adjusted under
- 9 -
Code Section 416 (i)(1) for Plan Years beginning after December 31,
2002) and is an officer of the Employer; (ii) is a more than 5% owner
of the Employer; or (iii) is a more than 1% owner of the Employer and
has Compensation of more than $150,000. The constructive ownership
rules of Code Section 318 (or the principles of that section, in the
case of an unincorporated Employer) will apply to determine ownership
in the Employer. The number of officers taken into account under clause
(i) will not exceed the greater of 3 or 10% of the total number (after
application of the Code Section 414(q)(8) exclusions) of Employees, but
no more than 50 officers. The Advisory Committee will make the
determination of who is a Key Employee in accordance with Code
Section 416(i)(1) and the regulations under that Code section.
(b) "Non-Key Employee" is an Employee who does not meet
the definition of Key Employee.
(c) "Compensation" means Compensation as determined under
Section 1.07 (relating to the Highly Compensated Employee definition).
(d) "Required Aggregation Group" means: (1) each
qualified plan of the Employer in which at least one Key Employee
participates at any time during the Determination Period; and (2) any
other qualified plan of the Employer which enables a plan described in
clause (1) to meet the requirements of Code Section 401(a)(4) or Code
Section 410.
(e) "Permissive Aggregation Group" is the Required
Aggregation Group plus any other qualified plans maintained by the
Employer, but only if such group would satisfy in the aggregate the
requirements of Code Section 401(a)(4) and Code Section 410. The
Advisory Committee will determine the Permissive Aggregation Group.
(f) "Employer" means the Employer that adopts this Plan
and any related employers described in Section 1.27.
(g) "Determination Date" for any Plan Year is the last
Accounting Date of the preceding Plan Year or, in the case of the first
Plan Year of the Plan, the last Accounting Date of that Plan Year. The
"Determination Period" is the 1-year period ending on the Determination
Date.
1.30 PLAN MAINTAINED BY MORE THAN ONE EMPLOYER. If more than one
Employer maintains this Plan, then for purposes of determining Service and Hours
of Service, the Advisory Committee will treat all Employers maintaining this
Plan as a single employer.
1.31 "Disqualified Person" has the meaning ascribed to that term
under Code Section 4975(e)(2).
1.32 "Employer Securities" means voting common stock issued by
Kansas City Southern, or by a corporation which is a member of the same
controlled group of corporations, which is readily tradable on an established
securities market. Noncallable preferred stock of Kansas City Southern shall be
treated as Employer Securities if such stock is convertible at any time into
voting common stock issued by Kansas City Southern if such conversion is at a
conversion price which (as of the date of acquisition by the Plan) is
reasonable. Under regulations under Code Section 409(l), preferred stock shall
be treated as noncallable if after the call
- 10 -
there will be a reasonable opportunity for a conversion which meets the
requirements of the preceding sentence.
1.33 "Exempt Loan" means a loan made to this Plan by a Disqualified
Person, or a loan to this Plan which a Disqualified Person guarantees, provided
the loan satisfies the requirements of Treas. Reg. Section 54.4975-7(b).
1.34 "Leveraged Employer Securities" means Employer Securities
acquired by the Trust with the proceeds of an Exempt Loan and which satisfy the
definition of "qualifying employer securities" in Code Section 4975(e)(8) with
respect to the Plan to which the Exempt Loan was made.
1.35 "Issuer" means the corporation that issued the Employer
Securities.
ARTICLE II.
EMPLOYEE PARTICIPANTS
2.01 ELIGIBILITY. Each Employee (other than an Excluded Employee)
becomes a Participant in the Plan on the Plan Entry Date (if employed on that
date) coincident with or immediately following the later of his Employment
Commencement Date or the date he attains age 18. Each Employee who was a
Participant in the Plan on the day before the Effective Date and who continues
as an Employee on the Effective Date continues as a Participant in the Plan on
the Effective Date. The term "Employment Commencement Date" means the date on
which the Employee first performs an Hour of Service for an Employer.
An Employee is an Excluded Employee if he is (a) a nonresident alien
who receives no earned income (within the meaning of Code Section 911(d)(2))
from an Employer which constitutes income from sources within the United States
(within the meaning of Code Section 861(a)(3)), or (b) a member of a collective
bargaining unit, unless the collective bargaining agreement provides otherwise.
An Employee is a member of a collective bargaining unit if he is included in a
unit of employees covered by an agreement which the Secretary of Labor finds to
be a collective bargaining agreement between employee representatives and one or
more employers if there is evidence that retirement benefits were the subject of
good faith bargaining between such employee representatives and such employer or
employers. The term "employee representatives" does not include an organization
more than one half the members of which are owners, officers or executives of an
Employer.
If a Participant has not incurred a Separation from Service but becomes
an Excluded Employee, then during the period such a Participant is an Excluded
Employee, the Advisory Committee will limit that Participant's sharing in the
allocation of Employer contributions and Participant forfeitures, if any, under
the Plan by disregarding his Compensation paid by an Employer for services
rendered in his capacity as an Excluded Employee. However, during such period of
exclusion, the Participant, without regard to employment classification,
continues to receive credit for vesting under Article V for each included Year
of Service and the Participant's Account continues to share fully in Trust Fund
allocations under Section 9.06.
If an Excluded Employee who is not a Participant becomes eligible to
participate in the Plan by reason of a change in employment classification, he
will participate in the Plan immediately if he would have been a Participant had
he not been an Excluded Employee during
- 11 -
his period of Service. Furthermore, the Plan takes into account all of the
Participant's included years of Service with an Employer as an Excluded Employee
for purposes of vesting credit under Article V.
A Leased Employee who performs services for the Employer pursuant to a
contract or agreement which provides that the person is a Leased Employee will
not become eligible to participate in this Plan merely by reason of a
determination that the person is a common-law employee of the Employer, unless
and until the Employer changes the employment classification of such person. If
a Leased Employee who is not a Participant becomes eligible to participate in
the Plan by reason of a change in employment classification, he will participate
in the Plan immediately if he has satisfied the eligibility conditions of
Section 2.01 and would have been a Participant had he not been a Leased Employee
during his period of Service. Furthermore, the Plan takes into account all of
the Participant's included Years of Service with an Employer as a Leased
Employee for purposes of vesting credit under Article V.
2.02 SERVICE - PARTICIPATION. For purposes of an Employee's
participation in the Plan under Section 2.01, the Plan does not apply any
minimum Hour of Service requirement. The Plan does not require an Employee who
terminates employment to establish a new Employment Commencement Date if
reemployed by an Employer.
2.03 BREAK IN SERVICE - PARTICIPATION. For purposes of
participation in the Plan, the Plan does not apply any Break in Service rule.
2.04 PARTICIPATION UPON REEMPLOYMENT. A Participant whose
employment terminates reenters the Plan as a Participant on the date of his
reemployment. An Employee who satisfies the Plan's eligibility conditions but
who terminates employment prior to becoming a Participant becomes a Participant
in the Plan on the later of the Plan Entry Date on which he would have entered
the Plan had he not terminated employment or the date of his reemployment. Any
Employee who terminates employment prior to satisfying the Plan's eligibility
conditions becomes a Participant in accordance with the provisions of
Section 2.01.
ARTICLE III.
EMPLOYER CONTRIBUTIONS AND FORFEITURES
3.01 AMOUNT. For each Plan Year, the Employer may contribute to the
Trust an amount which the Employer may from time to time deem advisable. The
Employer may not make a contribution to the Trust for any Plan Year to the
extent the contribution would exceed the Participants' "Maximum Permissible
Amounts" under Section 3.04.
The Employer contributes to this Plan on the condition its contribution
is not due to a mistake of fact and the Internal Revenue Service will not
disallow the deduction for its contribution. The Trustee, upon written request
from the Employer, must return to the Employer the amount of the Employer
contribution made by the Employer by mistake of fact or the amount of the
Employer's contribution disallowed as a deduction under Code Section 404. The
Trustee will not return any portion of the Employer's contribution under the
provisions of this paragraph more than one year after:
(a) The Employer made the contribution by mistake of
fact; or
- 12 -
(b) The disallowance of the contribution as a deduction,
and then, only to the extent of the disallowance.
The Trustee will not increase the amount of the Employer contribution
returnable under this Section 3.01 for any earnings attributable to the
contribution, but the Trustee will decrease the Employer's contribution
returnable for any losses attributable to it. The Trustee may require the
Employer to furnish it whatever evidence the Trustee deems necessary to enable
the Trustee to confirm the amount the Employer has requested be returned is
properly returnable under ERISA.
The Employer may make its contribution in cash or in Employer
Securities as the Employer from time to time may determine. The Employer may
make its contribution of Employer Securities at fair market value determined at
the time of contribution.
3.02 CONTRIBUTION ALLOCATION.
(A) Method of Allocation. Subject to Section 3.02(B) and any restoration
allocation required under Section 5.04, the Advisory Committee will allocate and
credit each annual Employer contribution (and Participant forfeitures, if any)
to the Account of each Participant in the Plan who satisfies the conditions of
Section 3.08, in the same ratio that each such Participant's Compensation for
the Plan Year bears to the total Compensation of all such Participants for the
Plan Year.
(B) Top Heavy Minimum Allocation.
(1) Minimum Allocation. If the Plan is top heavy in any
Plan Year:
(a) Each Non-Key Employee (as defined in
Section 1.29) who is a Participant in the Plan and is employed
by the Employer on the last day of the Plan Year will receive
a top heavy minimum allocation for that Plan Year,
irrespective of whether he satisfies the Hours of Service
condition under Section 3.08(B); and
(b) The top heavy minimum allocation is the
lesser of 3% of the Non-Key Employee's Compensation for the
Plan Year or the highest contribution rate for the Plan Year
made on behalf of any Key Employee in the Plan (as defined in
Section 1.29). However, if a defined benefit plan maintained
by the Employer which benefits a Key Employee in the Plan
depends on this Plan to satisfy the antidiscrimination rules
of Code Section 401(a)(4) or the coverage rules of Code
Section 410 (or another plan benefiting the Key Employee so
depends on such defined benefit plan), the top heavy minimum
allocation is 3% of the Non-Key Employee's Compensation
regardless of the contribution rate for the Key Employees in
the Plan.
For purposes of clause (b), "Compensation" means Compensation
as defined in Section 1.10. For purposes of this Section 3.02(B), a
Participant's contribution rate is the sum of Employer contributions
(including Employer matching contributions described in Code
Section 401(m) but not including Employer contributions to Social
Security) and forfeitures allocated to the Participant's Account for
the Plan Year under Sections 3.02
- 13 -
and 3.07 divided by his Compensation for the entire Plan Year. However,
a Non-Key Employee's contribution rate does not include any Elective
Contributions under a Code Section 401(k) arrangement maintained by the
Employer. To determine a Participant's contribution rate, the Advisory
Committee must treat all qualified top heavy defined contribution plans
maintained by the Employer (or by any related Employers described in
Section 1.27) as a single plan.
(2) Method of Compliance. The Plan will satisfy the
top-heavy minimum allocation in accordance with this Section
3.02(B)(2). The Advisory Committee first will allocate the Employer
contributions (and Participant forfeitures, if any) for the Plan Year
in accordance with the allocation formula under Section 3.02(A). The
Employer then will contribute an additional amount for the Account of
any Participant in the Plan who is entitled under this Section 3.02(B)
to a top heavy minimum allocation and whose contribution rate for the
Plan Year is less than the top heavy minimum allocation. The additional
amount is the amount necessary to increase the Participant's
contribution rate to the top-heavy minimum allocation. The Advisory
Committee will allocate the additional contribution to the Account of
the Participant on whose behalf the Employer makes the contribution.
3.03 LIMITATIONS ON ALLOCATIONS TO PARTICIPANTS' ACCOUNTS. The
amount of Annual Additions which the Advisory Committee may allocate under the
Plan on a Participant's behalf for a Limitation Year may not exceed the Maximum
Permissible Amount. If the amount the Employer otherwise would contribute to the
Participant's Account would cause the Annual Additions for the Limitation Year
to exceed the Maximum Permissible Amount, the Employer will reduce the amount of
its contribution so the Annual Additions for the Limitation Year will equal the
Maximum Permissible Amount. If an allocation of Employer contributions, pursuant
to Section 3.02, would result in an Excess Amount (other than an Excess Amount
resulting from the circumstances described in Section 3.02(B)) to the
Participant's Account, the Advisory Committee will reallocate the Excess Amount
to the remaining Participants in the Plan who are eligible for an allocation of
Employer contributions for the Plan Year in which the Limitation Year ends. The
Advisory Committee will make this reallocation on the basis of the allocation
method under the Plan as if the Participant whose Account otherwise would
receive the Excess Amount is not eligible for an allocation of Employer
contributions.
(A) Estimation of Compensation. Prior to the determination of a
Participant's actual Compensation for a Limitation Year, the Advisory Committee
may determine the Maximum Permissible Amount on the basis of the Participant's
estimated annual Compensation for such Limitation Year. The Advisory Committee
must make this determination on a reasonable and uniform basis for all
Participants in the Plan similarly situated. The Advisory Committee must reduce
any Employer contributions (including any allocation of forfeitures) based on
estimated annual Compensation by any Excess Amount carried over from prior
years. As soon as is administratively feasible after the end of the Limitation
Year, the Advisory Committee will determine the Maximum Permissible Amount for
such Limitation Year on the basis of the Participant's actual Compensation for
such Limitation Year.
- 14 -
(B) Disposition of Excess Amount. If, pursuant to Section 3.03(A), or
because of the allocation of forfeitures, there is an Excess Amount with respect
to a Participant in the Plan for a Limitation Year, the Advisory Committee will
dispose of such Excess Amount as follows:
(a) The Advisory Committee will return any nondeductible
voluntary Employee contributions to the Participant to the extent that
the return would reduce the Excess Amount.
(b) If, after the application of paragraph (a), an Excess
Amount still exists, and the Plan covers the Participant at the end of
the Limitation Year, then the Advisory Committee will use the Excess
Amount(s) to reduce future Employer contributions (including any
allocation of forfeitures) under the Plan for the next Limitation Year
and for each succeeding Limitation Year, as is necessary, for the
Participant.
(c) If, after the application of paragraph (a), an Excess
Amount still exists, and the Plan does not cover the Participant at the
end of the Limitation Year, then the Advisory Committee will hold the
Excess Amount unallocated in a suspense account. The Advisory Committee
will apply the suspense account to reduce Employer contributions
(including allocation of forfeitures) for all remaining Participants in
the Plan in the next Limitation Year, and in each succeeding Limitation
Year if necessary.
(d) Except as provided in paragraph (a), the Advisory
Committee will not distribute any Excess Amount(s) to Participants or
to former Participants.
(C) More Than One Plan. If the Advisory Committee allocated an Excess
Amount to a Participant's Account on an allocation date of the Plan which
coincides with an allocation date of another defined contribution plan
maintained by the Employer, the Advisory Committee will attribute the Excess
Amount allocated as of such date first to the profit sharing plan component of
the Kansas City Southern 401(k) and Profit Sharing Plan. If an Excess Amount
remains, it will then be attributed to this Plan and then, if necessary, to the
401(k) plan component of the Kansas City Southern 401(k) and Profit Sharing
Plan.
(D) Catch-Up Contributions. Notwithstanding the foregoing, the provisions
of this Article III shall be applied in a manner consistent with permitting, if
applicable, catch-up contributions to be made to the Kansas City Southern 401(k)
and Profit Sharing Plan in accordance with, and subject to the limitations of,
Code Section 414(v).
3.04 DEFINITIONS. For purposes of Article III, the following terms
mean:
(a) "Annual Addition" - The sum of the following amounts
allocated in the Plan on behalf of a Participant for a Limitation Year:
(i) all Employer contributions; (ii) all forfeitures; and (iii) all
Employee contributions. Except to the extent provided in Treasury
Regulations, Annual Additions include excess contributions described in
Code Section 401(k), excess aggregate contributions described in Code
Section 401(m) and excess deferrals described in Code Section 402(g),
irrespective of whether the plan distributes or forfeits such excess
amounts. Annual Additions also include Excess Amounts reapplied to
reduce Employer contributions under Section 3.03. Amounts allocated
after March 31, 1984, to an individual medical account (as defined in
Code Section 415(l)(2)) included as part of a defined benefit plan
maintained by the Employer are Annual Additions. Furthermore,
- 15 -
Annual Additions include contributions paid or accrued after December
31, 1985, for taxable years ending after December 31, 1985,
attributable to post-retirement medical benefits allocated to the
separate account of a key employee (as defined in Code
Section 419A(d)(3)) under a welfare benefit fund (as defined in Code
Section 419(e)) maintained by the Employer, but only for purposes of
the dollar limitation applicable to the Maximum Permissible Amount.
"Annual Additions" do not include any Employer contributions
applied by the Advisory Committee (not later than the due date,
including extensions, for filing the Employer's Federal income tax
return for that Plan Year) to pay interest on an Exempt Loan, and any
Leveraged Employer Securities the Advisory Committee allocates as
forfeitures; provided, however, the provisions of this sentence do not
apply in a Plan Year for which the Advisory Committee allocates more
than one-third (1/3) of the Employer contributions applied to pay
principal and interest on an Exempt Loan to Restricted Participants.
The Advisory Committee may reallocate the Employer contributions in
accordance with Section 3.03 to the Accounts of non-Restricted
Participants to the extent necessary in order to satisfy this special
limitation. For purposes of this Section 3.04, "Restricted
Participants" mean Participants in the Plan who are Highly Compensated
Employees within the meaning of Code Section 414(q).
(b) "Compensation" - For purposes of applying the
limitations of Section 3.03, "Compensation" means Compensation as
defined in Section 1.10, disregarding any exclusions from Compensation
and disregarding Elective Contributions with respect to Plan Years
commencing before January 1, 1998, but including Elective Contributions
for Plan years commencing after December 31, 1997.
(c) "Employer" - The Employer that adopts this Plan and
any related employers described in Section 1.27. Solely for purposes of
applying the limitations of Section 3.03, the Advisory Committee will
determine related employers described in Section 1.27 by modifying Code
Section 414(b) and (c) in accordance with Code Section 415(h).
(d) "Excess Amount" - The excess of the Participant's
Annual Additions for the Limitation year over the Maximum Permissible
Amount.
(e) "Limitation Year" - The Plan Year. If the Employer
amends the Limitation Year to a different 12 consecutive month period,
the new Limitation Year must begin on a date within the Limitation Year
for which the Employer makes the amendment, creating a short Limitation
Year.
(f) "Maximum Permissible Amount" - The lesser of (i)
$40,000 (as adjusted for increases in the cost-of-living under Code
Section 415(d)), or (ii) 100% of the Participant's Compensation for the
Limitation Year. If there is a short Limitation Year because of a
change in Limitation Year, the Advisory Committee will multiply the
$40,000 (or adjusted) limitation by the following fraction:
Number of months in the short Limitation Year
---------------------------------------------
12
- 16 -
(g) "Defined contribution plan" - A retirement plan which
provides for an individual account for each participant and for
benefits based solely on the amount contributed to the participant's
account, and any income, expenses, gains and losses, and any
forfeitures of accounts of other participants which the plan may
allocate to such participant's account. The Advisory Committee must
treat all defined contribution plans (whether or not terminated)
maintained by the Employer as a single plan. For purposes of the
limitations of Section 3.03, the Advisory Committee will treat employee
contributions made to a defined benefit plan maintained by the Employer
as a separate defined contribution plan. The Advisory Committee also
will treat as a defined contribution plan an individual medical account
(as defined in Code Section 415(l)(2)) included as part of a defined
benefit plan maintained by the Employer and, for taxable years ending
after December 31, 1985, a welfare benefit fund under Code
Section 419(e) maintained by the Employer to the extent there are
post-retirement medical benefits allocated to the separate account of a
key employee (as defined in Code Section 419A(d)(3)).
(h) "Defined benefit plan" - A retirement plan which does
not provide for individual accounts for Employer contributions. The
Advisory Committee must treat all defined benefit plans (whether or not
terminated) maintained by the Employer as a single plan.
3.05 DETERMINATION OF CONTRIBUTION. The Employer, from its records,
determines the amount of any contributions to be made by it to the Trust under
the terms of the Plan.
3.06 TIME OF PAYMENT OF CONTRIBUTION. An Employer may pay its
contribution for each Plan Year in one or more monthly installments without
interest. An Employer must make its contribution to the Trust within the time
prescribed by the Code or applicable Treasury regulations.
3.07 FORFEITURE ALLOCATION. The amount of a Participant's Accrued
Benefit forfeited under the Plan is a Participant forfeiture. Subject to any
restoration allocation required under Sections 5.04 or 9.07, the Advisory
Committee will allocate the forfeiture in accordance with Section 3.02, as an
Employer contribution for the Plan Year in which the forfeiture occurs, as if
the Participant forfeiture were an additional Employer contribution for that
Plan Year. The Advisory Committee will continue to hold the undistributed,
non-vested portion of a terminated Participant's Accrued Benefit in his Account
solely for his benefit until a forfeiture occurs at the time specified in
Section 5.09. Except as provided under Section 5.04, a Participant will not
share in the allocation of a forfeiture of any portion of his Accrued Benefit.
In making a forfeiture allocation under this Section 3.07, the Advisory
Committee will base forfeitures of Employer Securities upon the fair market
value of the Employer Securities as of the Accounting Date of the forfeitures.
3.08 ACCRUAL OF BENEFIT. The Advisory Committee will determine the
accrual of benefit (Employer contributions and Participant forfeitures) on the
basis of the Plan Year.
(A) Compensation Taken Into Account. In allocating an Employer contribution
to a Participant's account, the Advisory Committee, except for purposes of
determining the top heavy minimum contribution under Section 3.02(B), will take
into account only the Compensation determined for the portion of the Plan Year
in which the Employee actually is a Participant.
- 17 -
(B) Hours of Service Requirement. Subject to the top heavy minimum
allocation requirement of Section 3.02(B), the Advisory Committee will not
allocate any portion of an Employer contribution or Participant forfeiture for a
Plan Year to any Participant's Account if the Participant does not complete a
minimum of 1,000 Hours of Service during the Plan Year, unless the Participant
terminates employment during the Plan Year because of death or disability or
because of the attainment of Normal Retirement Age in the current Plan Year or
in a prior Plan Year.
(C) Employment Requirement. A Participant who, during a particular Plan
Year, completes the Hours of Service requirement under this Section 3.08 will
share in the allocation of Employer contributions and Participant forfeitures
without regard to whether he is employed by an Employer on the last day of that
Plan Year.
ARTICLE IV.
PARTICIPANT CONTRIBUTIONS
4.01 PARTICIPANT VOLUNTARY CONTRIBUTIONS. The Plan does not permit
or require Participant contributions.
4.02 PARTICIPANT ROLLOVER CONTRIBUTIONS. The Plan does not permit
Participant rollover contributions.
ARTICLE V.
TERMINATION OF SERVICE - PARTICIPANT VESTING
5.01 NORMAL RETIREMENT AGE. A Participant's Normal Retirement Age
is 65 years of age. A Participant who remains in the employ of an Employer after
attaining Normal Retirement Age will continue to participate in Employer
contributions. A Participant's Accrued Benefit derived from Employer
contributions is 100% Nonforfeitable upon and after his attaining Normal
Retirement Age (if employed by an Employer on or after that date).
5.02 PARTICIPANT DISABILITY OR DEATH. If a Participant's employment
with an Employer terminates as a result of death or disability, the
Participant's Accrued Benefit derived from Employer contributions will be 100%
Nonforfeitable.
5.03 VESTING SCHEDULE. Except as provided in Sections 5.01 and
5.02, for each Year of Service, a Participant's Nonforfeitable percentage of his
Accrued Benefit derived from Employer contributions equals the percentage in the
following vesting schedule:
Percent of
Years of Service Nonforfeitable
With the Employer Accrued Benefit
----------------- ---------------
Less than 5................................ None
5 or more...................................100%
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For any Plan Year in which the Plan is a top heavy Plan (as defined in
Section 1.29) the Advisory Committees will calculate a Participant's
Nonforfeitable percentage of his Accrued Benefit under the following schedule:
Percent of
Year of Service Nonforfeitable
With the Employer Accrued Benefit
----------------- ---------------
Less than 2................................................None
2............................................................20%
3............................................................40%
4............................................................60%
5 or more...................................................100%
The Advisory Committee will apply the top-heavy schedule to
Participants who earn at least one Hour of Service after the top-heavy schedule
becomes effective. A shift between vesting schedules under this Section 5.03 is
an amendment to the vesting schedule and the Advisory Committee must apply the
rules of Section 7.04 accordingly. A shift to a new vesting schedule under this
Section 5.03 is effective on the first day of the Plan Year for which the
top-heavy status of the Plan changes.
5.04 CASH-OUT DISTRIBUTION TO PARTIALLY-VESTED PARTICIPANTS/
RESTORATION OF FORFEITED ACCRUED BENEFIT. If, pursuant to Article VI, a
partially-vested Participant receives a cash-out distribution from the Plan
before he incurs a Forfeiture Break in Service (as defined in Section 5.08), the
cash-out distribution will result in a forfeiture of the non-vested portion of
the Participant's Accrued Benefit derived from Employer contributions in the
Plan as of the last day of the Plan Year in which the cash-out distribution
occurs. See Section 5.09. A partially-vested Participant is a Participant whose
Nonforfeitable Percentage determined under Section 5.03 is less than 100%. A
cash-out distribution is a distribution of the entire present value of the
Participant's Nonforfeitable Accrued Benefit.
(A) Restoration and Conditions upon Restoration. A partially vested
Participant who is reemployed by an Employer after receiving a cash-out
distribution of the Nonforfeitable percentage of his Accrued Benefit may repay
the Plan the amount of the cash-out distribution attributable to Employer
contributions, unless the Participant no longer has a right to restoration under
the requirements of this Section 5.04. If a partially-vested Participant makes
the cash-out distribution repayment, the Advisory Committee, subject to the
conditions of this paragraph (A), must restore his Accrued Benefit attributable
to Employer contributions in the Plan to the same dollar amount as the dollar
amount of his Accrued Benefit on the Accounting Date, or other valuation date,
immediately preceding the date of the cash-out distribution, unadjusted for any
gains or losses occurring subsequent to that Accounting Date, or other valuation
date. Restoration of the Participant's Accrued Benefit includes restoration of
all Code Section 411(d)(6) protected benefits with respect to that restored
Accrued Benefit, in accordance with applicable Treasury regulations. The
Advisory Committee will not restore a reemployed Participant's Accrued Benefit
under this paragraph if:
(1) 5 years have elapsed since the Participant's
first reemployment date following the cash-out distribution; or
- 19 -
(2) The Participant incurred a Forfeiture Break
in Service (as defined in Section 5.08). This condition also applies if
the Participant makes repayment within the Plan Year in which he incurs
the Forfeiture Break in Service and that Forfeiture Break in Service
would result in a complete forfeiture of the amount the Advisory
Committee otherwise would restore.
(B) Time and Method of Restoration. If neither of the two conditions
preventing restoration of the Participant's Accrued Benefit applies, the
Advisory Committee will restore the Participant's Accrued Benefit as of the Plan
Year Accounting Date coincident with or immediately following the repayment. To
restore the Participant's Accrued Benefit, the Advisory Committee, to the extent
necessary, will allocate to the Participant's Account:
(1) First, the amount, if any, of Participant
forfeitures the Advisory Committee would otherwise allocate under
Section 3.07;
(2) Second, the amount, if any, of the net
income or gain for the Plan for the Plan Year; and
(3) Third, the Employer contribution for the
Plan Year to the extent made under a discretionary formula.
To the extent the amounts described in clauses (1), (2) and (3) are
insufficient to enable the Advisory Committee to make any required restoration,
the Employer must contribute, without regard to any requirement or condition of
Section 3.01, the additional amount necessary to enable the Advisory Committee
to make the required restoration. If, for a particular Plan Year, the Advisory
Committee must restore the Accrued Benefit of more than one reemployed
Participant, then the Advisory Committee will make the restoration allocation(s)
to each such Participant's Account in the same proportion that a Participant's
restored amount for the Plan Year bears to the restored amount for the Plan Year
of all reemployed Participants in the Plan. The Advisory Committee will not take
into account the allocation under this Section 5.04 in applying the limitation
on allocations under Section 3.03.
(C) 0% Vested Participant. The deemed cash-out rule applies to a 0% vested
Participant. A 0% vested Participant is a Participant whose Accrued Benefit
derived from Employer contributions is entirely forfeitable at the time of his
Separation from Service. Under the deemed cash-out rule, the Advisory Committee
will treat a 0% vested Participant as having received a cash-out distribution on
the last day of the Plan Year in which he separates from Service. For purposes
of applying the restoration provisions of this Section 5.04, the Applicable
Advisory Committee will treat the 0% vested Participant as repaying his cash-out
"distribution" on the first date of his reemployment with an Employer.
5.05 [RESERVED].
5.06 YEAR OF SERVICE - VESTING. For purposes of vesting under
Section 5.03, Year of Service means any Plan Year during which an Employee
completes not less than 1,000 Hours of Service, including Plan Years prior to
the Effective Date of the Plan.
- 20 -
5.07 BREAK IN SERVICE - VESTING. For purposes of this Article V, a
Participant incurs a "Break in Service" if during any Plan Year he does not
complete more than 500 Hours of Service.
5.08 INCLUDED YEARS OF SERVICE - VESTING. For purposes of
determining "Years of Service" under Section 5.06, the Plan takes into account
all Years of Service an Employee completes with an Employer. For the sole
purpose of determining a Participant's Nonforfeitable percentage of his Accrued
Benefit derived from Employer contributions which accrued for his benefit prior
to a Forfeiture Break in Service, the Plan disregards any Year of Service after
the Participant first incurs a Forfeiture Break in Service. The Participant
incurs a Forfeiture Break in Service when he incurs 5 consecutive Breaks in
Service.
5.09 FORFEITURE OCCURS. A Participant's forfeiture, if any, of his
Accrued Benefit derived from Employer contributions occurs under the Plan on the
earlier of:
(a) The last day of the Plan Year in which the
Participant first incurs a Forfeiture Break in Service; or
(b) The last day of the Plan Year in which the
Participant receives a cash-out distribution.
The Advisory Committee determines the percentage of a Participant's
forfeiture, if any, under this Section 5.09 solely by reference to the vesting
schedule of Section 5.03. A Participant will not forfeit any portion of his
Accrued Benefit for any other reason or cause except as expressly provided by
this Section 5.09 or as provided under Section 9.07. Employer Securities and
Stilwell Shares allocated to the Participant's Account under Section 9.06 or
8.11 of the Plan must be forfeited only after other assets.
ARTICLE VI.
TIME AND METHOD OF PAYMENT OF BENEFITS
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT. Unless, pursuant to
Section 6.03, the Participant or the Beneficiary elects in writing to a
different time or method of payment, the Advisory Committee will direct the
Trustee to commence distribution of a Participant's Nonforfeitable Accrued
Benefit in accordance with this Section 6.01. A Participant must consent, in
writing, to any distribution required under this Section 6.01 if the present
value of the Participant's Nonforfeitable Accrued Benefit, at the time of the
distribution to the Participant, exceeds $5,000 and the Participant has not
attained Normal Retirement Age. For all purposes of this Article VI, the term
"annuity starting date" means the first day of the first period for which the
Plan pays an amount as an annuity or in any other form. Requests for
distributions under this Article VI may be made at such times, on such forms and
in accordance with such procedures as the Advisory Committee may from time to
time prescribe. The distribution of a Participant's Account shall be made or
commenced as soon as administratively practicable following receipt by the
Advisory Committee of a properly completed request for distribution (or, if the
Participant's Nonforfeitable Accrued Benefit does not exceed $5,000, following
the Participant's Separation from Service).
(A) Termination of Employment For a Reason Other Than Death. For a
Participant who terminates employment with the Employer for a reason other than
death, the Advisory
- 21 -
Committee will direct the Trustee to commence distribution of the Participant's
Accrued Benefit, as follows:
(1) Participant's Nonforfeitable Accrued Benefit Not
Exceeding $5,000. In a lump sum, as soon as administratively
practicable following the Participant's Separation from Service, but in
no event later than the 60th day following the close of the Plan Year
in which the Participant attains Normal Retirement Age. If the
Participant has attained Normal Retirement Age when he separates from
Service, the distribution under this paragraph will occur no later than
the 60th day following the close of the Plan Year in which the
Participant's Separation from Service occurs.
(2) Participant's Nonforfeitable Accrued Benefit Exceeds
$5,000. In a form and at the time elected by the Participant, pursuant
to Section 6.03. Unless the Participant has elected otherwise, the
Advisory Committee will direct the Trustee to distribute the
Participant's Nonforfeitable Accrued Benefit in a lump sum on the 60th
day following the close of the Plan Year in which the latest of the
following events occurs: (a) the Participant attains Normal Retirement
Age; or (b) the Participant's Separation from Service; provided
however, that a Participant's failure to make an election pursuant to
Section 6.03 shall be deemed to be an election to defer commencement of
distribution for purposes of this Section 6.01. Notwithstanding any
other provision herein, or any elections made by the Participant,
benefit payments shall be made or shall commence not later than the
Required Beginning Date.
(B) Required Beginning Date. If any distribution commencement date
described under Paragraph (A) of this Section 6.01, either by Plan provision or
by Participant election (or non-election), is later than the Participant's
Required Beginning Date, the Advisory Committee instead must direct the Trustee
to make distribution under this Section 6.01 on the Participant's Required
Beginning Date. A Participant's Required Beginning Date is the April 1 of the
calendar year following the later of (i) the calendar year in which the
Participant attains age 70-1/2 or (ii) the calendar year in which the
Participant separates from Service. However, clause (ii) of the preceding
sentence shall not apply if the Participant is a 5% owner (as defined in Section
1.07(a)) with respect to the Plan Year ending in the calendar year in which he
attains age 70-1/2). Mandatory distributions commencing at the Participant's
Required Beginning Date will be made in an amount equal to the Participant's
required minimum distribution for the calendar year determined in accordance
with Section 6.02(A), unless the Participant, pursuant to the provisions of this
Article VI, makes a valid election to receive an alternative form of payment.
(C) Death of the Participant. The Advisory Committee will direct the
Trustee, in accordance with this Section 6.01(C), to distribute to the
Participant's Beneficiary the Participant's Nonforfeitable Accrued Benefit
remaining in the Trust at the time of the Participant's death.
(1) Deceased Participant's Nonforfeitable Accrued Benefit
Does Not Exceed $5,000. The Advisory Committee must direct the Trustee
to pay the deceased Participant's Nonforfeitable Accrued Benefit in a
single lump sum, as soon as administratively practicable following the
Participant's death or, if later, the date on which the Advisory
Committee receives notification of or otherwise confirms the
Participant's death.
- 22 -
(2) Deceased Participant's Nonforfeitable Accrued Benefit
Exceeds $5,000. The Advisory Committee will direct the Trustee to pay
the deceased Participant's Nonforfeitable Accrued Benefit at the time
and in the form elected by the Participant or, if applicable by the
Beneficiary, as permitted under this Article VI. In the absence of an
election, the Advisory Committee will direct the Trustee to distribute
the Participant's undistributed Nonforfeitable Accrued Benefit in a
lump sum as soon as administratively practicable following the date on
which the Participant's death occurs or, if later, the date on which
the Advisory Committee receives notification of or otherwise confirms
the Participant's death.
If the death benefit is payable to the Participant's surviving spouse
in full, the surviving spouse, in addition to the distribution options provided
in this Section 6.01(C), may elect distribution at any time or in any form this
Article VI would permit for a Participant.
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. Subject to any
restrictions prescribed by Section 6.03, a Participant or Beneficiary may elect
distribution under one, or any combination, of the following methods: (a) by
payment in a lump sum; or (b) by payment in monthly, quarterly or annual
installments over a fixed reasonable period of time, not exceeding the life
expectancy of the Participant, or the joint life and last survivor expectancy of
the Participant and his Beneficiary.
The installment distribution options permitted under this Section 6.02
are available only if the present value of the Participant's Nonforfeitable
Accrued Benefit, at the time of the distribution to the Participant, exceeds
$5,000. To facilitate installment payments under this Article VI, at the
election of the Participant, the Advisory Committee may direct the Trustee to
segregate all or any part of the Participant's Accrued Benefit in a separate
Account. The Trustee will invest the Participant's segregated Account in
Federally insured interest bearing savings account(s) or time deposit(s) (or a
combination of both), or in other fixed income investments. A segregated Account
remains a part of the Trust, but it alone shares in any income it earns, and it
alone bears any expense or loss it incurs. A Participant or Beneficiary may
elect to receive an installment distribution in the form of a Nontransferable
Annuity Contract. The Nontransferable Annuity Contract option will be eliminated
with respect to distributions commencing on or after the earlier of ninety (90)
days after a Participant receives a summary of material modification of the
elimination of such option or two (2) years after the date of the adoption of
this amendment and restatement of the Plan if such Participant does not receive
a summary of material modification. Under an installment distribution, the
Participant or Beneficiary, at any time, may elect to accelerate the payment of
all, or any portion, of the Participant's unpaid Nonforfeitable Accrued Benefit.
(A) Minimum Distribution Requirements for Participants. The Advisory
Committee may not direct the Trustee to distribute the Participant's
Nonforfeitable Accrued Benefit, nor may the Participant elect to have the
Trustee distribute his Nonforfeitable Accrued Benefit, under a method of payment
which, as of the Required Beginning Date, does not satisfy the minimum
distribution requirements under Code Section 401(a)(9) and the applicable
Treasury regulations.
The minimum distribution for a calendar year for a Participant in the
Plan equals the Participant's Nonforfeitable Accrued Benefit in the Plan as of
the latest valuation date preceding the beginning of the calendar year divided
by the Participant's life expectancy or, if applicable,
- 23 -
the joint and last survivor expectancy of the Participant and his designated
Beneficiary (as determined under Article VIII, subject to the requirements of
the Code Section 401(a)(9) regulations). The Advisory Committee will increase
the Participant's Nonforfeitable Accrued Benefit in the Plan, as determined on
the relevant valuation date, for contributions or forfeitures allocated after
the valuation date and by December 31 of the valuation calendar year, and will
decrease the valuation by distributions made after the valuation date and by
December 31 of the valuation calendar year. For purposes of this valuation, the
Advisory Committee will treat any portion of the minimum distribution for the
first distribution calendar year made after the close of that year as a
distribution occurring in that first distribution calendar year. In computing a
minimum distribution, the Advisory Committee must use the unisex life expectancy
multiples under Treas. Reg. Section 1.72-9. The Advisory Committee, only upon
the Participant's written request, will compute the minimum distribution for a
calendar year subsequent to the first calendar year for which the Plan requires
a minimum distribution by redetermining the applicable life expectancy. However,
the Advisory Committee may not redetermine the joint life and last survivor
expectancy of the Participant and a non-spouse designated Beneficiary in a
manner which takes into account any adjustment to a life expectancy other than
the Participant's life expectancy.
If the Participant's spouse is not his designated Beneficiary, a method
of payment to the Participant may not provide more than incidental benefits to
the Beneficiary. For Plan Years beginning after December 31, 1988, the Plan must
satisfy the minimum distribution incidental benefit ("MDIB") requirement in the
Treasury regulations issued under Code Section 401(a)(9) for distributions made
on or after the Participant's Required Beginning Date and before the
Participant's death. To satisfy the MDIB requirement, the Advisory Committee
will compute the minimum distribution required by this Section 6.02(A) by
substituting the applicable MDIB divisor for the applicable life expectancy
factor, if the MDIB divisor is a lesser number. Following the Participant's
death, the Advisory Committee will compute the minimum distribution required by
this Section 6.02(A) solely on the basis of the applicable life expectancy
factor and will disregard the MDIB factor. For Plan Years beginning prior to
January 1, 1989, the Plan satisfies the incidental benefits requirement if the
distributions to the Participant satisfied the MDIB requirement or if the
present value of the retirement benefits payable solely to the Participant is
greater than 50% of the present value of the total benefits payable to the
Participant and his Beneficiaries. The Advisory Committee must determine whether
benefits to the Beneficiary are incidental as of the date the Trustee is to
commence payment of the retirement benefits to the Participant, or as of any
date the Trustee redetermines the payment period to the Participant.
The minimum distribution for the first distribution calendar year is
due by the Participant's Required Beginning Date. The minimum distribution for
each subsequent distribution calendar year, including the calendar year in which
the Participant's Required Beginning Date falls, is due by December 31 of that
year. If the Participant receives distribution in the form of a Nontransferable
Annuity Contract, the distribution satisfies this Section 6.02(A) if the
contract complies with the requirements of Code Section 401(a)(9) and the
applicable Treasury regulations.
(B) Minimum Distribution Requirements for Beneficiaries. The method of
distribution to the Participant's Beneficiary must satisfy Code Section
401(a)(9) and the applicable Treasury regulations. If the Participant's death
occurs after his Required Beginning Date, the method of payment to the
Beneficiary must provide for completion of payment over a period which does
- 24 -
not exceed the payment period which had commenced for the Participant. If the
Participant's death occurs prior to his Required Beginning Date, the method of
payment to the Beneficiary, must provide for completion of payment to the
Beneficiary over a period not exceeding: (i) 5 years after the date of the
Participant's death; or (ii) if the Beneficiary is a designated Beneficiary, the
designated Beneficiary's life expectancy.
The Advisory Committee may not direct payment of a Participant's
Nonforfeitable Accrued Benefit in the Plan over a period described in clause
(ii) above unless the Trustee will commence payment to the designated
Beneficiary no later than the December 31 following the close of the calendar
year in which the Participant's death occurred or, if later, and the designated
Beneficiary is the Participant's surviving spouse, December 31 of the calendar
year in which the Participant would have attained age 70-1/2. If the Trustee
will make distribution in accordance with clause (ii), the minimum distribution
for a calendar year equals the Participant's Nonforfeitable Accrued Benefit in
the Plan as of the latest valuation date preceding the beginning of the calendar
year divided by the designated Beneficiary's life expectancy.
The Advisory Committee must use the unisex life expectancy multiples
under Treas. Reg. Section 1.72-9 for purposes of applying this Section 6.02(B).
The Advisory Committee, only upon the written request of the Participant or of
the Participant's surviving spouse, will recalculate the life expectancy of the
Participant's surviving spouse not more frequently than annually, but may not
recalculate the life expectancy of a non-spouse designated Beneficiary after the
Trustee commences payment to the designated Beneficiary. The Advisory Committee
will apply this Section 6.02(B) by treating any amount paid to the Participant's
child, which becomes payable to the Participant's surviving spouse upon the
child's attaining the age of majority, as paid to the Participant's surviving
spouse. Upon the Beneficiary's written request, the Advisory Committee must
direct the Trustee to accelerate payment of all, or any portion, of the
Participant's unpaid Accrued Benefit, as soon as administratively practicable
following the effective date of that request.
6.03 BENEFIT PAYMENT ELECTIONS. Not earlier than ninety (90) days
before nor later than thirty (30) days before the Participant's annuity starting
date, the Plan Administrator must provide a benefit notice to a Participant who
is eligible to make an election under this Section 6.03. The benefit notice must
explain the optional forms of benefit in the Plan, including the material
features and relative values of those options, and the Participant's right to
defer distribution until he attains Normal Retirement Age.
A distribution may commence less than 30 days after the benefit notice
is given, provided that:
(1) the Plan Administrator clearly informs the
Participant that the Participant has a right to a period of at least 30
days after receiving the notice to consider the decision of whether or
not to elect a distribution (and, if applicable, a particular
distribution option), and
(2) the Participant, after receiving the notice,
affirmatively elects a distribution.
If a Participant or Beneficiary makes an election prescribed by this
Section 6.03, the Advisory Committee will direct the Trustee to distribute the
Participant's Nonforfeitable
- 25 -
Accrued Benefit in accordance with that election. Any election under this
Section 6.03 is subject to the requirements of Section 6.02. The Participant or
Beneficiary must make an election under this Section 6.03 by filing his election
form with the Advisory Committee at any time before the Trustee otherwise would
commence to pay a Participant's Accrued Benefit in accordance with the
requirements of Article VI.
(A) Participant Elections After Termination of Employment. If the present
value of a Participant's Nonforfeitable Accrued Benefit exceeds $5,000, he may
elect to have the Trustee commence distribution as soon as administratively
practicable following the Participant's Separation from Service. The Participant
may reconsider an election at any time prior to the annuity starting date and
elect to commence distribution as of any other distribution date, but not
earlier than the date described in the first sentence of this Section 6.03(A).
If the Participant is partially vested in his Accrued Benefit, an election under
this Section 6.03(A) to distribute prior to the Participant's incurring a
Forfeiture Break in Service (as defined in Section 5.08), must be in the form of
a cash-out distribution (as defined in Article V). A Participant may not receive
a cash-out distribution if, prior to the time the Trustee actually makes the
cash-out distribution, the Participant returns to employment with an Employer.
(B) Participant Elections Prior to Termination of Employment. During his
employment with an Employer, the Participant does not have any right to commence
distribution of his Nonforfeitable Accrued Benefit for any reason, unless
required by Section 6.01(B).
(C) Death Benefit Elections. If the present value of the deceased
Participant's Nonforfeitable Accrued Benefit exceeds $5,000, the Participant's
Beneficiary may elect to have the Trustee distribute the Participant's
Nonforfeitable Accrued Benefit in a form and within a period permitted under
Section 6.02. The Beneficiary's election is subject to any restrictions
designated in writing by the Participant and not revoked as of his date of
death.
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS. The joint and survivor
annuity requirements of the Code do not apply to this Plan. The Plan does not
provide any annuity distributions to Participants. A transfer agreement
described in Section 13.05 may not permit a plan which is subject to the
provisions of Code Section 417 to transfer assets to this Plan.
6.05 SPECIAL DISTRIBUTION AND PAYMENT REQUIREMENTS. If the
Participant elects (unless other distribution provisions of the Plan require
earlier distribution of the Participant's Accrued Benefit), the Trustee must
distribute the portion of the Participant's vested Accrued Benefit attributable
to Employer Securities (the "Eligible Portion") no later than the time
prescribed by this Section 6.05, irrespective of any other provision of the
Plan. The distribution provisions of this Section 6.05 are subject to the
consent and form of distribution requirements of Articles V and VI of the Plan.
(a) If the Participant separates from Service by reason
of the attainment of Normal Retirement Age, death, or disability, the
Advisory Committee will direct the Trustee to commence distribution of
the Eligible Portion not later than one year after the close of the
Plan Year in which that event occurs.
(b) If the Participant separates from Service for any
reason other than by reason of the attainment of Normal Retirement Age,
death or disability, the Advisory Committee will direct the Trustee to
commence distribution of the Eligible Portion not
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later than one year after the close of the fifth Plan Year following
the Plan Year in which the Participant separates from Service. If the
Participant resumes employment with an Employer on or before the last
day of the fifth Plan Year following the Plan Year of his Separation
from Service, the distribution provisions of this paragraph (b) do not
apply.
For purposes of this Section 6.05, Employer Securities do not include
any Employer Securities acquired with the proceeds of an Exempt Loan until the
close of the Plan Year in which the borrower repays the Exempt Loan in full.
Notwithstanding anything else in this Plan, unless the Participant
otherwise elects, the distribution of the Participant's Accrued Benefit will be
in substantially equal periodic payments (not less frequently than annually)
over a period not longer than the greater of:
(c) Five years, or
(d) In the case of a Participant with an Accrued Benefit
in excess of Five Hundred Thousand Dollars ($500,000) (or beginning
January 1, 1990, such larger amount as the Commissioner of Internal
Revenue shall prescribe), five (5) years plus one (1) additional year
(not more than five (5) additional years) for each One Hundred Thousand
Dollars ($100,000) (or beginning January 1, 1990, such larger amount as
the Commissioner of Internal Revenue shall prescribe) or fraction
thereof by which such balance exceeds $500,000.
The foregoing provisions of this paragraph shall not be construed so as to
preclude the distribution of a Participant's Accrued Benefit in the form of a
single lump-sum payment.
6.06 [Reserved]
6.07 DISTRIBUTIONS UNDER DOMESTIC RELATIONS ORDERS. Nothing
contained in this Plan prevents the Trustee, in accordance with the direction of
the Advisory Committee, from complying with the provisions of a qualified
domestic relations order (as defined in Code Section 414(p)). This Plan
specifically permits distribution to an alternate payee under a qualified
domestic relations order as soon administratively practicable, irrespective of
whether the Participant has attained his earliest retirement age (as defined
under Code Section 414(p)) under the Plan. A distribution to an alternate payee
prior to the Participant's attainment of earliest retirement age is available
only if: (1) the order specifies distribution at that time or permits an
agreement between the Plan and the alternate payee to authorize an earlier
distribution; and (2) if the present value of the alternate payee's benefits
under the Plan exceeds $5,000, and the order requires, the alternate payee
consents to any distribution occurring prior to the Participant's attainment of
earliest retirement age. Nothing in this Section 6.07 permits a Participant a
right to receive distribution at a time otherwise not permitted under the Plan
nor does it permit the alternate payee to receive a form of payment not
permitted under the Plan.
The Plan Administrator must establish reasonable procedures to
determine the qualified status of a domestic relations order. Upon receiving a
domestic relations order, the Plan Administrator promptly will notify the
Participant and any alternate payee named in the order, in writing, of the
receipt of the order and the Plan's procedures for determining the qualified
status of the order. Within a reasonable period of time after receiving the
domestic relations order, the Plan Administrator must determine the qualified
status of the order and must notify the
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Participant and each alternate payee, in writing, of its determination. The Plan
Administrator must provide notice under this paragraph by mailing to the
individual's address specified in the domestic relations order, or in a manner
consistent with Department of Labor regulations.
If any portion of the Participant's Nonforfeitable Accrued Benefit is
payable during the period the Plan Administrator is making its determination of
the qualified status of the domestic relations order, the Advisory Committee
must make a separate accounting of the amounts payable. If the Plan
Administrator determines the order is a qualified domestic relations order
within 18 months of the date amounts first are payable following receipt of the
order, the Advisory Committee will direct the Trustee to distribute the payable
amounts in accordance with the order. If the Plan Administrator does not make
its determination of the qualified status of the order within the 18-month
determination period, the Advisory Committee will direct the Trustee to
distribute the payable amounts in the manner the Plan would distribute if the
order did not exist and will apply the order prospectively if the Plan
Administrator later determines the order is a qualified domestic relations
order.
To the extent it is not inconsistent with the provisions of the
qualified domestic relations order, at the election of the alternate payee(s),
the Advisory Committee may direct the Trustee to invest any partitioned amount
in a segregated subaccount or separate account and to invest the account in
Federally insured, interest-bearing savings account(s) or time deposit(s) (or a
combination of both), or in other fixed income investments. A segregated
subaccount remains a part of the Trust, but it alone shares in any income it
earns, and it alone bears any expense or loss it incurs. The Trustee will make
any payments or distributions required under this Section 6.07 by separate
benefit checks or other separate distribution to the alternate payee(s).
6.08 ROLLOVER DISTRIBUTIONS. Notwithstanding any provision of the
Plan to the contrary that would otherwise limit a distributee's election under
this Section 6.08, a distributee may elect, at the time and in the manner
prescribed by the Plan Administrator, to have any portion of an eligible
rollover distribution paid directly to an eligible retirement plan specified by
the distributee in a direct rollover. For purposes of this Section 6.08, the
following definitions shall apply.
(a) Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of the balance
to the credit of the distributee, except that an eligible rollover
distribution does not include: any distribution that is one of a series
of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee and
the distributee's designated beneficiary, or for a specified period of
ten years or more; and any distribution to the extent such distribution
is required under Code Section 401(a)(9).
(b) Eligible retirement plan: An eligible retirement plan
is an individual retirement account described in Code Section 408(a),
an individual retirement annuity described in Code Section 408(b), an
annuity plan described in Code Section 403(a), an annuity contract
described in Code Section 403(b), an eligible plan under Code
Section 457(b) which is maintained by a state, political subdivison of
a state, or any agency or instrumentality of a state or political
subdivision of a state, or a qualified trust described in Code
Section 401(a), that accepts and agrees to separately account for the
distributee's eligible rollover distribution.
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(c) Distributee: A distributee includes an Employee or
former Employee. In addition, the Employee's or former Employee's
surviving spouse and the Employee's or former Employee's spouse or
former spouse who is the alternate payee under a qualified domestic
relations order, as defined in section 414(p) of the Code, are
distributees with regard to the interest of the spouse or former
spouse.
(d) Direct rollover: A direct rollover is a payment by
the Plan to an eligible retirement plan specified by the distributee.
ARTICLE VII.
EMPLOYER ADMINISTRATIVE PROVISIONS
7.01 INFORMATION TO COMMITTEE. The Employer must supply current
information to the Advisory Committee as to the name, date of birth, date of
employment, annual compensation, leaves of absence, Years of Service and date of
termination of employment of each Employee who is, or who will be eligible to
become, a Participant under the Plan, together with any other information which
the Advisory Committee considers necessary. The Employer's records as to the
current information the Employer furnishes to the Advisory Committee are
conclusive as to all persons.
7.02 NO LIABILITY. No Employer assumes any obligation or
responsibility to any of its Employees, Participants or Beneficiaries for any
act of, or failure to act, on the part of the Advisory Committee (unless the
Employer is the Advisory Committee), the Trustee or the Plan Administrator
(unless the Employer is the Plan Administrator).
7.03 INDEMNITY OF COMMITTEE. The Employer indemnifies and saves
harmless the Plan Administrator and the members of the Advisory Committee, and
each of them, from and against any and all loss resulting from liability to
which the Plan Administrator and the Advisory Committee, or the members of the
Advisory Committee, may be subjected by reason of any act or conduct (except
willful misconduct or gross negligence) in their official capacities in the
administration of this Trust or Plan or both, including all expenses reasonably
incurred in their defense, in case the Employer fails to provide such defense.
The indemnification provisions of this Section 7.03 do not relieve the Plan
Administrator or any member of the Advisory Committee from any liability he may
have under ERISA for breach of a fiduciary duty. Furthermore, the Plan
Administrator and the members of the Advisory Committee and the Employer may
execute a letter agreement further delineating the indemnification agreement of
this paragraph, provided the agreement must be consistent with and must not
violate ERISA. The indemnification provisions of this paragraph extend to the
Trustee solely to the extent provided by a letter agreement executed by the
Trustee and the Employer.
7.04 AMENDMENT TO VESTING SCHEDULE. Though the Employer reserves
the right to amend the vesting schedule of the Plan at any time, the Advisory
Committee will not apply the amended vesting schedule to reduce the
Nonforfeitable percentage of any Participant's Accrued Benefit derived from
Employer contributions (determined as of the later of the date the amendment is
adopted, or the date the amendment becomes effective) to a percentage less than
the Nonforfeitable percentage computed under the Plan prior to the amendment.
If an Employer makes a permissible amendment to the vesting schedule,
each Participant having at least 3 Years of Service with an Employer may elect
to have the percentage of his
- 29 -
Nonforfeitable Accrued Benefit computed under the Plan without regard to the
amendment. The Participant must file his election with the Plan Administrator
within sixty (60) days of the latest of (a) the adoption of the amendment; (b)
the effective date of the amendment; or (c) his receipt of a copy of the
amendment. The Plan Administrator, as soon as practicable, must forward a true
copy of any amendment to the vesting schedule to each affected Participant,
together with an explanation of the effect of the amendment, the appropriate
form upon which the Participant may make an election to remain under the vesting
schedule provided under the Plan prior to the amendment and notice of the time
within which the Participant must make an election to remain under the prior
vesting schedule. For purposes of this Section 7.04, an amendment to the vesting
schedule includes any Plan amendment which directly or indirectly affects the
computation of the Nonforfeitable percentage of an Employee's rights to his
Employer derived Accrued Benefit.
ARTICLE VIII.
PARTICIPANT ADMINISTRATIVE PROVISIONS
8.01 BENEFICIARY DESIGNATION. Any Participant may from time to time
designate, in writing, any person or persons, contingently or successively, to
whom the Trustee will pay his Accrued Benefit in the event of his death and the
Participant may designate the form and method of payment. The Advisory Committee
will prescribe the form for the written designation of Beneficiary and, upon the
Participant's filing the form with the Advisory Committee, the form effectively
revokes all designations filed prior to that date by the same Participant.
A married Participant's Beneficiary designation is not valid unless the
Participant's spouse consents, in writing, to the Beneficiary designation. The
spouse's consent must acknowledge the effect of that consent and a notary public
or the Plan Administrator (or his representative) must witness that consent. The
spousal consent requirements of this paragraph do not apply if: (1) the
Participant and his spouse are not married throughout the one-year period ending
on the date of the Participant's death; (2) the Participant's spouse is the
Participant's sole primary beneficiary; (3) the Participant's spouse cannot be
located; (4) the Participant is legally separated or has been abandoned (within
the meaning of State law) and the Participant has a court order to that effect;
or (5) other circumstances exist under which the Secretary of the Treasury will
excuse the consent requirement. If the Participant's spouse is legally
incompetent to give consent, the spouse's legal guardian (even if the guardian
is the Participant) may give consent.
8.02 NO BENEFICIARY DESIGNATION. If a Participant fails to name a
Beneficiary in accordance with Section 8.01, or if the Beneficiary named by a
Participant predeceases him, then the Trustee will pay the Participant's Accrued
Benefit in accordance with Section 6.02 in the following order of priority to:
(a) The Participant's surviving spouse;
(b) The Participant's surviving children, including adopted
children, in equal shares;
(c) The Participant's surviving parents, in equal shares; or
(d) The legal representative of the estate of the Participant.
- 30 -
If the Beneficiary does not predecease the Participant, but dies prior
to the distribution of the Participant's entire Nonforfeitable Accrued Benefit,
the Trustee will pay the remaining Nonforfeitable Accrued Benefit to the
Beneficiary's estate unless the Participant's Beneficiary designation provides
otherwise. The Advisory Committee will direct the Trustee as to the method and
to whom the Trustee will make payment under this Section 8.02.
8.03 PERSONAL DATA TO COMMITTEE. Each Participant (and each
Beneficiary of a deceased Participant) must furnish to the Advisory Committee
such evidence, data or information as the Advisory Committee considers necessary
or desirable for the purpose of administering the Plan. The provisions of this
Plan are effective for the benefit of each Participant upon the condition
precedent that each Participant will furnish promptly full, true and complete
evidence, data and information when requested by the Advisory Committee,
provided the Advisory Committee advises each Participant of the effect of his
failure to comply with its request.
8.04 ADDRESS FOR NOTIFICATION. Each Participant (and each
Beneficiary of a deceased Participant) must file with the Advisory Committee
from time to time, in writing, his post office address and any change of post
office address. Any communication, statement or notice addressed to a
Participant, or Beneficiary, at his last post office address filed with the
Advisory Committee, or as shown on the records of an Employer, binds the
Participant, or Beneficiary, for all purposes of this Plan.
8.05 ASSIGNMENT OR ALIENATION. Subject to Code Section 414(p)
relating to qualified domestic relations orders, neither a Participant nor a
Beneficiary may anticipate, assign or alienate (either at law or in equity) any
benefit provided under the Plan, and the Trustee will not recognize any such
anticipation, assignment or alienation. Furthermore, a benefit under the Plan is
not subject to attachment, garnishment, levy, execution or other legal or
equitable process.
8.06 NOTICE OF CHANGE IN TERMS. The Plan Administrator, within the
time prescribed by ERISA and the applicable regulations, must furnish all
Participants and Beneficiaries in the Plan a summary description of any material
amendment to, or notice of discontinuance of, the Plan and all other information
required by ERISA to be furnished without charge.
8.07 LITIGATION AGAINST THE TRUST. A court of competent
jurisdiction may authorize any appropriate equitable relief to redress
violations of ERISA or to enforce any provisions of ERISA or the terms of the
Plan. A fiduciary may receive reimbursement of expenses properly and actually
incurred in the performance of his duties with the Plan.
8.08 INFORMATION AVAILABLE. Any Participant in the Plan or any
Beneficiary may examine copies of the Plan description, latest annual report,
any bargaining agreement, this Plan and Trust, contract or any other instrument
under which the Plan was established or is operated. The Plan Administrator will
maintain all of the items listed in this Section 8.08 in his office, or in such
other place or places as he may designate from time to time in order to comply
with the regulations issued under ERISA, for examination during reasonable
business hours. Upon the written request of a Participant or Beneficiary the
Plan Administrator will furnish him with a copy of any item listed in this
Section 8.08. The Plan Administrator may make a reasonable charge to the
requesting person for the copy so furnished.
- 31 -
8.09 APPEAL PROCEDURE FOR DENIAL OF BENEFITS. The Plan
Administrator will provide adequate notice in writing to any Participant or to
any Beneficiary ("Claimant") whose claim for benefits under the Plan the
Advisory Committee has denied. The Plan Administrator's notice to the Claimant
must set forth:
(a) The specific reason for the denial;
(b) Specific references to pertinent Plan provisions on
which the Advisory Committee based its denial;
(c) A description of any additional material and
information needed for the Claimant to perfect his claim and an
explanation of why the material or information is needed; and
(d) That any appeal the Claimant wishes to make of the
adverse determination must be in writing to the Advisory Committee
within 75 days after receipt of the Plan Administrator's notice of
denial of benefits. The Plan Administrator's notice must further advise
the Claimant that his failure to appeal the action to the Advisory
Committee in writing within the 75-day period will render the Advisory
Committee's determination final, binding and conclusive.
If the Claimant should appeal to the Advisory Committee, he, or his
duly authorized representative, may submit, in writing, whatever issues and
comments he, or his duly authorized representative, feels are pertinent. The
Claimant, or his duly authorized representative, may review pertinent plan
documents. The Advisory Committee will reexamine all facts related to the appeal
and make a final determination as to whether the denial of benefits is justified
under the circumstances. The Advisory Committee must advise the Claimant of its
decision within sixty (60) days of the Claimant's written request for review,
unless special circumstances (such as a hearing) would make the rendering of a
decision within the sixty (60) day limit unfeasible, but in no event may the
Advisory Committee render a decision respecting a denial for a claim for
benefits later than 120 days after its receipt of a request for review.
The Plan Administrator's notice of denial of benefits must identify the
name of each member of the Advisory Committee and the name and address of the
Advisory Committee member to whom the Claimant may forward his appeal.
8.10 ESOP DIVERSIFICATION. Except as provided in this Section 8.10
and in Section 8.11, a Participant does not have the right to direct the Trustee
with respect to the investment or reinvestment of the assets comprising the
Participant's individual Account. Each Qualified Participant may direct the
Trustee as to the investment of 25% of the value of the Participant's Accrued
Benefit attributable to Employer Securities (the "Eligible Accrued Benefit"),
within 90 days after the Accounting Date of each Plan Year (to the extent a
direction amount exceeds the amount to which a prior direction under this
Section 8.10 applies) during the Participant's Qualified Election Period. For
the last Plan Year in the Participant's Qualified Election Period, the Trustee
will substitute "50%" for "25%" in the immediately preceding sentence. The
Qualified Participant must make his direction to the Trustee in writing at such
time and in such manner as the Advisory Committee shall prescribe, the direction
may be effective no later than 180 days after the close of the Plan Year to
which the direction applies, and the direction must either (i) request
distribution of the portion of the Qualified Participant's
- 32 -
Eligible Accrued Benefit covered by the election or (ii) if the Advisory
Committee has designated Investment Funds to be available under the Plan,
specify the Investment Fund or Funds from among those designated by the Advisory
Committee as available under the Plan. The Trustee will make a distribution
requested under this Section 8.10 within 90 days after the last day of the
period during which the Qualified Participant may make the election.
For purpose of this Section 8.10, the following definitions apply:
(1) "Qualified Participant" means a Participant who has
attained age 55 and who has completed at least 10 years of
participation in the Plan. A "year of participation" means a Plan Year
in which the Participant was eligible for an allocation of Employer
contributions, irrespective of whether the Employer actually
contributed to the Plan for that Plan Year.
(2) "Qualified Election Period" means the six (6) Plan
Year period beginning with the Plan Year in which the Participant first
becomes a Qualified Participant.
A Participant's right under this Section 8.10 to direct the investment
of his Account applies solely to Employer Securities acquired by the Plan after
December 31, 1986.
8.11 STILWELL SHARES AND INVESTMENT FUNDS.
(A) Stilwell Shares Received In Spinoff. All of the Stilwell Shares that
are received in the Spinoff as a dividend with respect to KCS Shares allocated
to Participants' Accounts shall, as soon as possible following the Spinoff Date
as is consistent with prudent investment standards as determined by the Trustee,
be sold and the sale proceeds reinvested in the Investment Fund designated by
the Advisory Committee for this purpose; provided, however, that, at such time,
in such manner and subject to such restrictions regarding minimum share
dispositions or holdings as the Advisory Committee shall prescribe, a
Participant may elect to have all or any portion of the Stilwell Shares that are
received in the Spinoff as a dividend with respect to KCS Shares allocated to
such Participant's Account (1) continued to be held in such Account as whole
(but no fractional) Stilwell Shares, (2) sold (or exchanged for KCS Shares) and
the sale proceeds reinvested in KCS Shares, (3) sold and the sale proceeds
reinvested in one or more Investment Funds, or (4) any combination of the
foregoing.
(B) On-Going Participant Investment Direction. Following the Spinoff, each
Participant whose Account includes Stilwell Shares or interests in one or more
Investment Funds may elect, at such times, in such manner and subject to such
restrictions regarding minimum share dispositions or holdings as the Advisory
Committee shall prescribe, (1) to have all or any portion of such whole Stilwell
Shares sold and the sale proceeds reinvested in (i) KCS Shares, (ii) one or more
Investment Funds, or (iii) any combination thereof, and (2) to have all or any
portion of such Investment Fund interests sold and the sale proceeds reinvested
in (i) KCS Shares, (ii) one or more Investment Funds or (iii) any combination
thereof.
(C) Stilwell Dividends. Cash dividends received by the Plan with respect to
Stilwell Shares held in a Participant's Account shall be invested in KCS Shares
or in one or more Investment Funds, as elected by the Participant. In the
absence of a Participant election, such dividends shall be invested in KCS
Shares.
- 33 -
(D) Forfeiture of Stilwell Shares. If Stilwell Shares held in a
Participant's Account are forfeited pursuant to Section 5.09 or 9.07,
immediately prior to the occurrence of such forfeiture such Stilwell Shares
shall be sold, the sale proceeds shall be reinvested in KCS Shares and such KCS
Shares shall be allocated in accordance with Section 3.07.
(E) KCS Shares. Such portion of a Participant's Account that is invested in
KCS Shares, whether as a result of such Participant's election pursuant to
Section 8.11(A) or (B), the reinvestment of Stilwell dividends pursuant to
Section 8.11(C) or the allocation of forfeitures pursuant to Section 8.11(D),
shall remain invested in KCS Shares and shall not be subject to investment
direction by the Participant except to the extent permitted by, and in
accordance with the provisions of, Section 8.10.
(F) Investment Funds and Participant Investment Elections. The Advisory
Committee may designate the Investment Funds to be available for investment
under Section 8.10 or 8.11. The Advisory Committee may from time to time
designate additional Investment Funds, terminate the availability of any
Investment Fund or modify the investment characteristics of any Investment Fund
as it deems appropriate in its sole discretion. The Advisory Committee shall
prescribe the times and the manner in which Participant investment elections may
be made pursuant to Section 8.10 or 8.11. The Advisory Committee may prescribe
such limitations and restrictions on the number, timing and frequency of
investment elections and such other rules and procedures as it may deem
appropriate in its sole discretion.
ARTICLE IX.
ADVISORY COMMITTEE -- DUTIES WITH RESPECT TO
PARTICIPANTS' ACCOUNTS
9.01 MEMBERS' COMPENSATION, EXPENSES. Kansas City Southern must
appoint an Advisory Committee to administer the Plan, the members of which may
or may not be Participants in the Plan, or which may be the Plan Administrator
acting alone. The members of the Advisory Committee will serve without
compensation for services as such. All expenses of the Plan and Trust (including
Trustee fees) will be paid out of the assets of the Plan except to the extent
paid by the Employer
9.02 GENERAL. The Advisory Committee, in its sole and absolute
discretion, shall have all powers necessary to discharge its duties under this
Plan including, without limitation, the following:
(a) To select a Secretary, who need not be a member of
the Advisory Committee;
(b) To determine the rights of eligibility of an Employee
to participate in the Plan, the value of a Participant's Accrued
Benefit in the Plan and the Nonforfeitable percentage of each
Participant's Accrued Benefit in the Plan;
(c) To adopt rules of procedure and regulations necessary
for the proper and efficient administration of the Plan provided the
rules are not inconsistent with the terms of this Plan;
- 34 -
(d) To construe, interpret and enforce the terms of the
Plan (including making factual determinations) and the rules and
regulations it adopts, including interpretation of the Plan documents
and documents related to the Plan's operation, and its decisions shall
be final and binding on all interested persons;
(e) To direct the Trustee as respects the crediting and
distribution of the Trust;
(f) To review and render decisions respecting a claim for
(or denial of a claim for) a benefit under the Plan;
(g) To furnish the Employer with information which the
Employer may require for tax or other purposes;
(h) To engage the service of agents whom it may deem
advisable to assist it with the performance of its duties; and
(i) To engage the services of an Investment Manager or
Managers (as defined in ERISA Section 3(38)), each of whom will have
full power and authority to manage, acquire or dispose (or direct the
Trustee with respect to acquisition or disposition) of any asset in the
Plan under its control.
The Advisory Committee must exercise all of its powers, duties and
discretion under the Plan in a uniform and nondiscriminatory manner.
9.03 FUNDING POLICY. The Advisory Committee will review, not less
often than annually, all pertinent Employee information and Plan data in order
to establish the funding policy of the Plan and to determine the appropriate
methods of carrying out the Plan's objectives. The Advisory Committee must
communicate periodically, as it deems appropriate, to the Trustee and to any
Plan Investment Manager the Plan's short-term and long-term financial needs so
investment policy can be coordinated with Plan financial requirements.
9.04 INDIVIDUAL ACCOUNTS. The Trustee shall maintain a separate
Account, or multiple separate Accounts, in the name of each Participant in the
Plan to reflect the Participant's Accrued Benefit under the Plan. The Trustee
must maintain one Account designated as the Employer Securities Account to
reflect a Participant's interest in Employer Securities held by the Plan, and
another Account designated as the General Investments Account to reflect the
Participant's interest in the Plan attributable to assets other than Employer
Securities. If a Participant reenters the Plan subsequent to his having a
Forfeiture Break in Service (as defined in Section 5.08), the Trustee must
maintain separate Accounts for the Participant's pre-Forfeiture Break in Service
Accrued Benefit and separate Accounts for his post-Forfeiture Break in Service
Accrued Benefit unless the Participant's entire Accrued Benefit under the Plan
is 100% Nonforfeitable.
The Trustee shall make its allocations to the Accounts of the
Participants in the Plan in accordance with the provisions of Section 9.06. The
Trustee may and if directed by the Advisory Committee shall maintain a temporary
segregated investment Account in the name of a Participant to prevent a
distortion of income, gain or loss allocations under Section 9.06. The Trustee
shall maintain records of its activities.
- 35 -
9.05 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. The value of each
Participant's Accrued Benefit consists of that portion of the net worth (at fair
market value) of the Plan which the net credit balance in his Accounts bears to
the total net credit balance in the Accounts of all Participants in the Plan.
For purposes of a distribution under the Plan, the value of a Participant's
Accrued Benefit is its value as of the valuation date immediately preceding the
date of the distribution. A Participant's Accrued Benefit shall not include or
be deemed to include, any Employer Security held in a suspense account, as
provided in Section 10.03(B).
9.06 ALLOCATIONS TO PARTICIPANTS' ACCOUNTS. A "valuation date"
under this Plan is each Accounting Date and each interim valuation date
designated by the Advisory Committee which is a business day on which the New
York Stock Exchange is open for business. As of each valuation date the Trustee
must adjust Accounts to reflect net income, gain or loss since the last
valuation date. The valuation period is the period beginning the day after the
last valuation date and ending on the current valuation date.
(A) Employer Securities Account. As of the Accounting Date of each Plan
Year, the Trustee first will reduce Employer Securities Accounts in the Plan for
any forfeitures arising under Section 5.09 and then will credit the Employer
Securities Account maintained for each Participant in the Plan with the
Participant's allocable share of Employer Securities (including fractional
shares) purchased and paid for by the Trust or contributed in kind to the Trust,
with any forfeitures of Employer Securities and with any stock dividends on
Employer Securities allocated to his Employer Securities Account. The Trustee
will allocate Employer Securities acquired with an Exempt Loan under Section
10.03(B) in accordance with that Section. Except as otherwise specifically
provided in Section 10.03(B), the Trustee will base allocations to the
Participants' Accounts on dollar values expressed as shares of Employer
Securities or on the basis of actual shares where there is a single class of
Employer Securities. In making a forfeiture reduction under this Section
9.06(A), the Trustee, to the extent possible, first must forfeit from a
Participant's General Investment Account before making a forfeiture from his
Employer Securities Account.
(B) GENERAL INVESTMENT ACCOUNT.
Trust Fund Accounts. The allocation provisions of this paragraph apply
to all Participant General Investment Accounts in the Plan other than segregated
investment Accounts. The Trustee first will adjust such Participant General
Investment Accounts, as those Accounts stood at the beginning of the current
valuation period, by reducing the Accounts for any forfeitures arising under
Section 5.09 or under Section 9.07, for amounts charged during the valuation
period to the Accounts in accordance with Section 9.14 (relating to
distributions) and for the amount of any such General Investment Account which
the Trustee has fully distributed since the immediately preceding valuation
date. The Trustee then, subject to the restoration allocation requirements of
Section 5.04 or of Section 9.07, will allocate the net income, gain or loss pro
rata to the adjusted Participant General Investment Accounts in the Plan. The
allocable net income, gain or loss is the net income (or net loss), including
the increase or decrease in the fair market value of assets, since the last
valuation date. In making its allocations under this Section 9.06(B), the
Trustee will exclude Employer Securities allocated to Employer Securities
Accounts, stock dividends on allocated Employer Securities and interest paid by
the Trust on an Exempt Loan. The Trustee will include cash dividends on Employer
Securities as income (available for payment on an Exempt Loan to the extent such
dividends are attributable to
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Employer Securities acquired with the proceeds of an Exempt Loan) except cash
dividends which the Advisory Committee has directed the Trustee to distribute in
accordance with Section 10.08, or which the Advisory Committee has directed the
Trustee to use for the payment of principal and/or interest on any Exempt Loan,
or to use for the funding of a benefit distribution in cash, in lieu of Employer
Securities, to a Participant pursuant to Section 10.08. If dividends on any
Employer Securities are used for the funding of such a benefit distribution in
cash pursuant to Section 10.08, then the Employer Securities which, but for such
benefit distribution in cash rather than Employer Securities, would have been
distributed to the Participant shall be allocated for the Plan Year in which
such cash benefit distribution occurred to the Accounts of Participants as if
such Employer Securities constituted earnings for such Plan Year.
Segregated Investment Accounts. A segregated investment Account
receives all income it earns and bears all expense or loss it incurs. As of the
valuation date, the Trustee must reduce a segregated investment Account for any
forfeiture arising under Section 5.09 after the Trustee has made all other
allocations, changes or adjustments to the Account for the Plan Year.
Additional Rules. An Excess Amount or suspense account described in
Article III does not share in the allocation of net income, gain or loss
described in this Section 9.06(B). The Trustee will allocate the Employer
contributions and Participant forfeitures, if any, in accordance with Article
III.
9.07 UNCLAIMED ACCOUNT PROCEDURE. The Plan does not require either
the Trustee or the Advisory Committee to search for, or ascertain the
whereabouts of, any Participant or Beneficiary. At the time the Participant's or
Beneficiary's benefit becomes distributable under Article VI, the Advisory
Committee, by certified or registered mail addressed to his last known address
of record with the Advisory Committee or the Employer, must notify the
Participant, or Beneficiary, that he is entitled to a distribution under this
Plan. The notice must quote the provisions of this Section 9.07 and otherwise
must comply with the notice requirements of Article VI. If the Participant, or
Beneficiary, fails to claim his distributive share or make his whereabouts known
in writing to the Advisory Committee within 6 months from the date of mailing of
the notice, the Advisory Committee will treat the Participant's or Beneficiary's
unclaimed payable Accrued Benefit as forfeited and will reallocate the unclaimed
payable Accrued Benefit in accordance with Section 3.07. Where the benefit is
distributable to the Participant, the forfeiture under this paragraph occurs as
of the last day of the notice period, if the Participant's Nonforfeitable
Accrued Benefit does not exceed $5,000, or as of the first day the benefit is
distributable without the Participant's consent, if the present value of the
Participant's Nonforfeitable Accrued Benefit exceeds $5,000. Where the benefit
is distributed to a Beneficiary, the forfeiture occurs on the date the notice
period ends except, if the Beneficiary is the Participant's spouse and the
Nonforfeitable Accrued Benefit payable to the spouse exceeds $5,000, the
forfeiture occurs as of the first day the benefit is distributable without the
spouse's consent. Pending forfeiture, the Advisory Committee, following the
expiration of the notice period, may direct the Trustee to segregate the
Nonforfeiture Accrued Benefit in the Plan in a segregated Account and to invest
that segregated Account in Federally insured interest bearing savings accounts
or time deposits (or in a combination of both), or in other fixed income
investments.
If a Participant or Beneficiary in the Plan who has incurred a
forfeiture of his Accrued Benefit in the Plan under the provisions of the first
paragraph of this Section 9.07 makes a claim,
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at any time, for the forfeited Accrued Benefit, the Advisory Committee must
restore such forfeited Accrued Benefit to the same dollar amount as the dollar
amount of the Accrued Benefit forfeited, unadjusted for any gains or losses
occurring subsequent to the date of the forfeiture. The Advisory Committee will
make the restoration during the Plan Year in which the Participant or
Beneficiary makes the claim, first from the amount, if any, of Participant
forfeitures the Advisory Committee otherwise would allocate for the Plan Year in
the Plan, then from the amount, if any, of the Trust Fund net income or gain
allocable to the Plan for the Plan Year and then from the amount, or additional
amount, that the Employer contributes to enable the Advisory Committee to make
the required restoration. The Advisory Committee will direct the Trustee to
distribute the Participant's or Beneficiary's restored Accrued Benefit to him
not later than 60 days after the close of the Plan Year in which the Advisory
Committee restores the forfeited Accrued Benefit. The forfeiture provisions of
this Section 9.07 apply solely to the Participant's or the Beneficiary's Accrued
Benefit derived from Employer contributions.
9.08 TERM. Each member of the Advisory Committee serves until the
appointment of his successor.
9.09 POWERS. In case of a vacancy in the membership of the Advisory
Committee, the remaining members of the Advisory Committee may exercise any and
all of the powers, authority, duties and discretion conferred upon the Advisory
Committee pending the filling of the vacancy.
9.10 MANNER OF ACTION. The decision of a majority of the members
appointed and qualified controls.
9.11 AUTHORIZED REPRESENTATIVE. The Advisory Committee may
authorize any one of its members, or its Secretary, to sign on its behalf any
notices, directions, applications, certificates, consents, approvals, waivers,
letters or other documents. The Advisory Committee must evidence this authority
by an instrument signed by all its members and filed with the Trustee.
9.12 INTERESTED MEMBER. No member of the Advisory Committee may
decide or determine any matter concerning the distribution, nature or method of
settlement of his own benefits under the Plan, except in exercising an election
available to that member in his capacity as a Participant, unless the Plan
Administrator is acting alone in the capacity of the Advisory Committee.
9.13 INDIVIDUAL STATEMENT. As soon as practicable after the last
Accounting Date of each Plan Year, but within the time prescribed by ERISA and
the regulations under ERISA, the Plan Administrator will deliver to each
Participant (and to each Beneficiary) a statement reflecting the condition of
his Accrued Benefit in the Trust as of that date and such other information
ERISA requires be furnished the Participant or Beneficiary. No Participant,
except a member of the Advisory Committee, has the right to inspect the records
reflecting the Account of any other Participant.
9.14 ACCOUNT CHARGED. The Advisory Committee will charge all
distributions made to a Participant or to his Beneficiary from his Account
against the Account of the Participant when made.
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9.15 BLACK-OUT PERIOD. Notwithstanding any other provisions in the
Plan to the contrary, in the event of a change in recordkeepers, trustees,
investment vehicles or other similar change or event, the Advisory Committee
shall have the power and authority to impose such temporary restrictions and
limitations on loans, withdrawals, distributions and Participant investment
elections as necessary to facilitate such a change or event (a "black-out
period"). In the event of a change in investment funds, the Advisory Committee
shall have the authority to direct the investment of each Participant's Accounts
and contributions in investment vehicles having investment objectives and risks
similar to those investment vehicles being eliminated or replaced.
9.16 ELECTRONIC ELECTIONS. Anything in the Plan to the contrary
notwithstanding, the Advisory Committee, in its discretion, may make disclosure
or give information to Participants and Beneficiaries and permit Participants or
their Beneficiaries to make electronic or telephonic elections in lieu of
written disclosure, information or elections provided in the Plan. In making
such a determination, the Advisory Committee shall consider the availability of
electronic and telephonic disclosure of information and elections to
Participants and Beneficiaries, the protection of the rights of Participants and
their Beneficiaries, the appropriateness of the standards for authentication of
identity and other security considerations involved in the electronic or
telephonic election system and any guidance issued by the Internal Revenue
Service and the Department of Labor. Notwithstanding the foregoing, any election
requiring spousal consent shall be made only on such written forms as approved
by the Advisory Committee.
ARTICLE X.
TRUSTEE POWERS AND DUTIES
10.01 TRUSTEE POWERS AND DUTIES. In addition to the powers and
duties set forth in the Master Trust Agreement, the Trustee shall have the
powers and duties set forth in this Article X.
10.02 [RESERVED]
10.03 INVESTMENT POWERS.
(A) [RESERVED]
(B) Exempt Loan. This Section 10.03(B) specifically authorizes the Trustee
to enter into an Exempt Loan transaction with respect to the Plan. The following
terms and conditions will apply to any Exempt Loan authorized by this Section
10.03(B).
(1) The Trustee will use the proceeds of the loan within
a reasonable time after receipt only for any or all of the following
purposes: (i) to acquire Employer Securities, (ii) to repay such loan,
or (iii) to repay a prior Exempt Loan. Except as provided under Article
XI, no Employer Security acquired with the proceeds of an Exempt Loan
may be subject to a put, call or other option, or buy-sell or similar
arrangement while held by and when distributed from this Plan, whether
or not this Plan is then an employee stock ownership plan.
- 39 -
(2) The interest rate of the loan may not be more than a
reasonable rate of interest.
(3) Any collateral the Trustee pledges to the creditor
must consist only of the assets purchased by the borrowed funds and
those assets the Trust used as collateral on the prior Exempt Loan
repaid with the proceeds of the current Exempt Loan.
(4) The creditor may have no recourse against the Trust
under the loan except with respect to such collateral given for the
loan, contributions (other than contributions of Employer Securities)
made to the Trust to meet its obligations under the loan, and earnings
attributable to such collateral and the investment of such
contributions. The payment made with respect to an Exempt Loan by the
Plan during a Plan Year must not exceed an amount equal to the sum of
such contributions and earnings received during or prior to the year
less such payments in prior years. The Advisory Committee and the
Trustee must account separately for such contributions and earnings in
the books of account of the Plan until the Trust repays the loan.
(5) In the event of default upon the loan, the value of
Plan assets transferred in satisfaction of the loan must not exceed the
amount of the default, and if the lender is a Disqualified Person, the
loan must provide for transfer of Plan assets upon default only upon
and to the extent of the failure of the Plan to meet the payment
schedule of the loan.
(6) The Trustee must add and maintain all assets acquired
with the proceeds of an Exempt Loan in a Suspense Account. In
withdrawing assets from the Suspense Account, the Trustee will apply
the provisions of Treas. Reg. Sections 54.4975-7(b)(8) and (15) as
if all securities in the Suspense Account were encumbered. Upon the
payment of any portion of the loan, the Trustee will effect the release
of assets in the Suspense Account from encumbrances. For each Plan Year
during the duration of the loan, the number of Employer Securities
released must equal the number of encumbered Employer Securities held
immediately before release for the current Plan Year multiplied by a
fraction. The numerator of the fraction is the amount of principal and
interest paid for the Plan Year. The denominator of the fraction is the
sum of the numerator plus the principal and interest to be paid for all
future Plan Years. The number of future Plan Years under the loan must
be definitely ascertainable and must be determined without taking into
account any possible extension or renewal periods. If the interest rate
under the loan is variable, the interest to be paid in future Plan
Years must be computed by using the interest rate applicable as of the
end of the Plan Year. If collateral includes more than one class of
Employer Securities, the number of Employer Securities of each class to
be released for a Plan Year must be determined by applying the same
fraction to each such class. The Advisory Committee will allocate
assets withdrawn from the Suspense Account to the Accounts of
Participants who otherwise share in the allocation of the Employer's
contribution for the Plan Year for which the Trustee has paid the
portion of the loan resulting in the release of the assets. The
Advisory Committee consistently will make this allocation as of each
Accounting Date on the basis of nonmonetary units, taking into account
the relative Compensation of all such Participants for such Plan Year.
Notwithstanding the foregoing provisions for the allocation of Employer
Securities withdrawn from the Suspense Account, if dividends on any
Employer Securities which are allocated to any Participant are used to
make any payment on an Exempt Loan, then
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Employer Securities with a fair market value not less than the amount
of such dividends shall be allocated to the Account of such Participant
for the Plan Year in which, but for the use of the dividends to make a
payment on the loan, such dividends would have been allocated to the
Account of such Participant. Employer Securities acquired by the Trust
must be accounted for in accordance with the provisions of Treasury
Regulation Section 54.4975-11(d)(1), both while they are held in the
Suspense Account and after release therefrom.
(7) The loan must be for a specific term and may not be
payable at the demand of any person except in the case of default.
(8) Notwithstanding the fact this Plan ceases to be an
employee stock ownership plan, Employer Securities acquired with the
proceeds of an Exempt Loan will continue after the Trustee repays the
loan to be subject to the provisions of Treas. Reg.
Sections 54.4975-7(b)(4), (10), (11) and (12) relating to put,
call or other options and to buy-sell or similar arrangements, except
to the extent these regulations are inconsistent with Code
Section 409(h).
10.04 [RESERVED]
10.05 [RESERVED]
10.06 [RESERVED]
10.07 [RESERVED]
10.08 DISTRIBUTION OF TRUST FUND. In the absence of a contrary
Participant election, the Trustee shall make all distributions of benefits to
such Participant under the Plan in cash. A Participant may, however, elect to
receive distributions of benefits in whole shares of Employer Securities or in a
combination of cash and whole shares of Employer Securities. The Trustee shall
pay in cash any fractional security share to which a Participant or his
Beneficiary is entitled. Any remaining balance in a Participant's Accounts shall
be paid in cash, except that, at the Participant's election, such balance shall
be applied to provide whole shares of common stock of Kansas City Southern for
Participants in the Plan for distribution at the then fair market value.
If the charter or bylaws of the Issuer of the Employer Securities
restrict ownership of substantially all shares of Employer Securities to
Employees and the Trust, as described in Code Section 409(h)(2), the Trustee may
make the distribution of a Participant's Accrued Benefit entirely in cash
without granting the Participant the right to demand distribution in shares of
Employer Securities.
In addition to the distribution options set forth above, a Participant
may elect to receive a distribution in the form of such number (or any fewer
number) of whole Stilwell Shares held in his or her Account as of the date of
distribution.
Notwithstanding the preceding provisions of this Section 10.08, the
Trustee, if directed in writing by the Advisory Committee, shall pay, in cash,
any cash dividends on Employer Securities allocated, or allocable to
Participants' Employer Securities Account in the Plan,
- 41 -
irrespective of whether a Participant is fully vested in his Employer Securities
Account. The Advisory Committee's direction shall state whether the Trustee is
to pay the cash dividend distributions currently, or within the ninety (90) day
period following the close of the Plan Year in which the Employer pays the
dividends to the Trust. The Advisory Committee may request the Employer to pay
dividends on Employer Securities directly to Participants in the Plan.
10.09 [RESERVED]
10.10 [RESERVED]
10.11 [RESERVED]
10.12 [RESERVED]
10.13 [RESERVED]
10.14 [RESERVED]
10.15 PARTICIPANT VOTING RIGHTS - EMPLOYER SECURITIES AND STILWELL
SHARES . Each Participant (or the Beneficiary thereof) acting as a named
fiduciary shall have the right, with respect to Employer Securities, to direct
the Trustee as to the manner in which (a) to vote any stock allocated to his
Employer Securities Account as of the applicable record date of any shareholder
meeting in any matter put to a shareholder vote; and (b) to respond to a tender
offer, exchange offer or any other offer to purchase Employer Securities
allocated to the Participant's Employer Securities Account.
Before any meeting in which a shareholder vote is to be taken, the
Employer will deliver to the Trustee or its designee such quantities of proxy
soliciting materials as are necessary to solicit voting instructions from the
Participants. The Trustee or its designee will mail the proxy solicitation
materials (and any additional material made available to other shareholders or
otherwise deemed appropriate by the Trustee) to the Participants within a
reasonable time before the meeting. A reasonable deadline for the return of such
materials may be specified.
Shares will be voted as instructed by the Participants on each matter
brought before the meeting. Such participants are appointed as named fiduciaries
to direct the Trustee as to the voting of shares allocated to the accounts of
Participants who have not timely instructed the Trustee how to vote them and any
unallocated shares. Such shares will be voted in the same proportions as the
shares for which the Trustee has received timely instructions. The Trustee may
submit to the Employer one summary proxy for the aggregate number of shares.
With regard to any tender offer, exchange offer or any other offer to
purchase Employer Securities, the Trustee or its designee will solicit such
instructions from Participants by distributing to each Participant such
information as is distributed to shareholders of the Employer, generally in
connection with any such offer, and any additional information the Trustee deems
appropriate in order for each Participant to give instructions. A reasonable
deadline for the return of such materials may be specified.
Shares will, in response to a tender offer, exchange offer or other
offer to purchase, be tendered, exchanged or sold as instructed by the
Participants. Fractional shares will be
- 42 -
aggregated for purposes of tendering, exchanging or selling shares, to the
extent possible, to reflect the instructions of the Participants. Such
participants are appointed as named fiduciaries to direct the Trustee as to the
tender, exchange or sale of shares allocated to an account of a Participant who
has not timely instructed the Trustee how to respond to such offer and any
unallocated shares. Such shares will be tendered, exchanged or sold in the same
proportion as shares for which the Trustee has received timely instructions.
For purposes of receiving, tabulating and transmitting instructions,
the Trustee will establish a procedure to insure that instructions received from
individual Participants regarding voting or responding to a tender offer,
exchange offer, or any other offer are held in confidence, and are not divulged,
released or otherwise utilized in a manner that, in the Trustee's reasonable
judgment, might influence the Participant's free exercise of the rights set
forth in this Section 10.15.
Voting, tender and exchange rights with respect to Stilwell Shares held
by the Plan shall be exercised in the same manner as such rights are exercised
with respect to Employer Securities as described in this Section 10.15.
10.16 [RESERVED]
10.17 USE OF INDEPENDENT APPRAISER. All valuations of Employer
Securities or Stilwell Shares acquired after December 31, 1986, which are not
readily tradable on an established securities market (within the meaning of Code
Section 401(a)(28)(C)) with respect to activities carried on by the Plan shall
be by an independent appraiser. For purposes of the preceding sentence, the term
"independent appraiser" means any appraiser meeting requirements similar to the
requirements of the Treasury Regulations prescribed under Code Section
170(a)(1).
10.18 [RESERVED]
10.19 STILWELL SHARES RESTRICTIONS. Stilwell Shares received by the
Plan in the Spinoff with respect to Employer Securities acquired with the
proceeds of an exempt loan shall continue to be subject to the provisions of
Treas. Regs. Sections 54.4975-7(b)(4), (10), (11) and (12) relating to
put, call or other options and to buy-sell or similar arrangements, except to
the extent such regulations are inconsistent with Code Section 409(h).
ARTICLE XI.
REPURCHASE OF EMPLOYER SECURITIES
11.01 PUT OPTION. Shares of Employer Securities distributed to a
Participant from the Trust shall be subject to a "put" option at the time of
distribution, provided that at such time the shares are either not readily
tradable on an established market within the meaning of Code Section 409(h) or
are subject to a trading limitation. The "put" option shall be exercisable by
the Participant or his Beneficiary, by the donees of either, or by a person
(including an estate or its distributee) to whom the Employer Securities pass by
reason of the Participant's or Beneficiary's death. The "put" option shall
provide that for a period of at least fifteen (15) months after such shares are
distributed, the holder of the option shall have the right to cause the
Employer, by notifying it in writing, to purchase such shares at their fair
market value, as determined by the Advisory Committee, in accordance with
Treasury Regulation Section 54.4975-11(d)(5) and Section 10.17 hereof. The
Advisory Committee may give the Trustee the option to assume the rights and
- 43 -
obligations of the Employer at the time the "put" option is exercised, insofar
as the repurchase of Employer Securities is concerned. The period during which
the "put" option is exercisable shall not include any period during which the
holder is unable to exercise such "put" option because the Employer is
prohibited from honoring it by federal or state law. If the Employer is
prohibited from honoring the "put" option by federal or state law, the holder
shall be entitled to cause it to be honored, consistent with such law, by an
affiliate or shareholder of the Employer that has substantial net worth and
whose net worth is reasonably expected to remain substantial. If shares of
Employer Securities are readily tradable on an established market on the date of
distribution, but cease to be readily tradable on an established market (as
described above) within fifteen (15) months after such date, the Employer
Securities distributed shall be subject to the "put" option described herein for
the balance of the fifteen (15) month period. The Employer shall give written
notice to each shareholder within ten (10) days of the date the Employer
Securities cease to be readily tradable on an established market or that the
Employer Securities become subject to a trading limitation that the Employer
Securities are subject to the "put" option for the remainder of the fifteen (15)
month period. If the Employer fails to give such notice to the shareholder
within such ten (10) day period, then the number of days between such tenth
(10th) day and the date on which the notice is actually given shall be added to
the duration of the fifteen (15) month period. The terms of payment for the
purchase of such shares of Employer Securities shall be as set forth in the
"put" option and, if the Employer Securities are distributed as part of a total
distribution, may be either in a lump sum or in installments, as determined by
the Advisory Committee. For purposes of the preceding sentence, the term "total
distribution" means the distribution within one taxable year to the Participant
of the balance to the credit of the Participant's Account. If the "put" option
is exercised with respect to Employer Securities constituting part of an
installment distribution to a Participant, the amount to be paid for the
Employer Securities shall be paid not later than thirty (30) days after the date
the "put" option is exercised.
An installment payment in connection with a "put" option shall:
(1) provide for acceleration in the event of thirty (30)
days' default in the payment of interest or principal and shall permit
prepayment of the installment obligation in whole or in part at any
time or times without penalty;
(2) be adequately secured and bear a reasonable rate of
interest, both as determined by the Advisory Committee;
(3) require equal annual payments;
(4) have a payment period not longer than five (5) years
from the date the "put" option is exercised;
(5) require that any payments pursuant to the installment
obligation must be substantially equal and begin to be made no later
than thirty (30) days after the date the "put" option is exercised; and
(6) satisfy the requirements of Treasury Regulation
Section 54.4975-7(b)(12), except to the extent this regulation is
inconsistent with Code Section 409(h).
- 44 -
11.02 CONTINUATION OF PUT OPTION. The "put" option provided for by
Section 11.01 is nonterminable and shall continue to apply to shares of Employer
Securities distributed hereunder notwithstanding the repayment of any Exempt
Loan or any amendment to, or termination of, this Plan which causes the Plan or
a portion of the Plan to cease to be an employee stock ownership plan within the
meaning of Code Section 4975(e)(7).
ARTICLE XII.
MISCELLANEOUS
12.01 EVIDENCE. Anyone required to give evidence under the terms of
the Plan may do so by certificate, affidavit, document or other information
which the person to act in reliance may consider pertinent, reliable and
genuine, and to have been signed, made or presented by the proper party or
parties. Both the Advisory Committee and the Trustee are fully protected in
acting and relying upon any evidence described under the immediately preceding
sentence.
12.02 NO RESPONSIBILITY FOR EMPLOYER ACTION. Neither the Trustee nor
Advisory Committee has any obligation or responsibility with respect to any
action required by the Plan to be taken by an Employer, any Participant or
eligible Employee, or for the failure of any of the above persons to act or make
any payment or contribution, or to otherwise provide any benefit contemplated
under this Plan. Furthermore, the Plan does not require the Trustee or the
Advisory Committee to collect any contribution required under the Plan, or to
determine the correctness of the amount of any Employer contribution. Neither
the Trustee nor Advisory Committee needs to inquire into or be responsible for
any action or failure to act on the part of the others. Any action required of
Kansas City Southern must be by its Board of Directors, the Compensation and
Organization Committee of such Board, or the designees of such Board or
Committee. Any action required of any other corporate Employer must be by its
Board of Directors or its designates.
12.03 FIDUCIARIES NOT INSURERS. The Trustee, the Advisory Committee,
the Plan Administrator and the Employers in no way guarantee the Trust Fund from
loss or depreciation. The Employers do not guarantee the payment of any money
which may be or becomes due to any person from the Trust Fund. The liability of
the Advisory Committee and the Trustee to make any payment from the Trust Fund
at any time and all times is limited to the then available assets of the Trust.
12.04 WAIVER OF NOTICE. Any person entitled to notice under the Plan
may waive the notice.
12.05 SUCCESSORS. The Plan is binding upon all persons entitled to
benefits under the Plan, their respective heirs and legal representatives, upon
the Employer, its successors and assigns, and upon the Trustee and the Advisory
Committee and their successors.
12.06 WORD USAGE. Words used in the masculine also apply to the
feminine where applicable, and wherever the context of the Plan dictates, the
plural includes the singular and the singular includes the plural.
12.07 STATE LAW. Missouri law will determine all questions arising
with respect to the provisions of this Plan except to the extent Federal law
supersedes Missouri law.
- 45 -
12.08 EMPLOYMENT NOT GUARANTEED. Nothing contained in this Plan, or
with respect to the establishment of the Trust, or any modification or amendment
to the Plan or Trust, or in the creation of any Account, or the payment of any
benefit, gives any Employee, Employee-Participant or any Beneficiary any right
to continue employment, any legal or equitable right against an Employer, or
Employee of an Employer or against the Trustee, or its agents or employees, or
against the Plan Administrator, except as expressly provided by the Plan, the
Trust, ERISA or by a separate agreement.
12.09 ELECTRONIC MEDIA. Under procedures authorized or approved by
the Advisory Committee, any form for any notice, election, designation, or
similar communication required or permitted for a Participant or Beneficiary
under this Plan (other than a designation of Beneficiary or spousal consent
thereto under Section 8.01) may be made available to such Participant or
Beneficiary through an electronic medium (including a computer network, WEB
site, e-mail or voice response system) which (i) affords the Participant or
Beneficiary a reasonable opportunity to obtain written confirmation, (ii) is
given under a system that is reasonably designed to preclude an individual other
than the Participant or Beneficiary from taking the action contemplated by such
communication, and (iii) provides the Participant or Beneficiary a reasonable
opportunity to review and to confirm, modify or rescind such action. Any such
communication to or from a Participant or Beneficiary through such electronic
medium shall be fully effective under this Plan for all purposes and any copy or
regeneration of such communication by such electronic medium under its normal
storage and retrieval parameters shall be effective as a fully authentic
executed writing for all purposes of this Plan absent manifest error in the
storage or retrieval process.
ARTICLE XIII.
EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION
13.01 EXCLUSIVE BENEFIT. Except as provided under Article III, no
Employer has any beneficial interest in any asset of the Trust and no part of
any asset in the Trust may ever revert to or be repaid to an Employer, either
directly or indirectly; nor, prior to the satisfaction of all liabilities with
respect to the Participants and their Beneficiaries under the Plan, may any part
of the corpus or income of the Trust Fund, or any asset of the Trust, be (at any
time) used for, or diverted to, purposes other than the exclusive benefit of the
Participants or their Beneficiaries.
13.02 AMENDMENT BY EMPLOYER. Kansas City Southern, by duly adopted
resolution of its Board of Directors, or of the Compensation and Organization
Committee of its Board of Directors, has the right at any time and from time to
time:
(a) To amend this Plan in any manner it deems necessary
or advisable in order to qualify (or maintain qualification of) this
Plan and the Trust created under it under the appropriate provisions of
Code Section 401(a), or
(b) To amend this Plan in any other manner.
No amendment may authorize or permit any of the Trust Fund (other than
the part which is required to pay taxes and administration expenses) to be used
for or diverted to purposes other than for the exclusive benefit of the
Participants or their Beneficiaries or estates. No amendment may cause or permit
any portion of the Trust Fund to revert to or become a property of the Employer.
No amendment may be made which affects the rights, duties or responsibilities of
the
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Trustee or the Plan Administrator without the written consent of the affected
Trustee or the Plan Administrator. No amendment may be made which affects the
rights, duties or responsibilities of the Advisory Committee without the written
consent of the affected member of the Advisory Committee.
Code Section 411(d)(6) Protected Benefits. An amendment (including the
adoption of this Plan as a restatement of an existing plan) may not decrease a
Participant's Accrued Benefit, except to the extent permitted under Code
Section 412(c)(8), and may not reduce or eliminate Code Section 411(d)(6)
protected benefits determined immediately prior to the adoption date (or, if
later, the effective date) of the amendment. An amendment reduces or eliminates
Code Section 411(d)(6) protected benefits if the amendment has the effect of
either (1) eliminating or reducing an early retirement benefit or a
retirement-type subsidy (as defined in Treasury regulations), or (2) except as
provided by Treasury regulations, eliminating an optional form of benefit. The
Advisory Committee must disregard an amendment to the extent application of the
amendment would fail to satisfy this paragraph. If the Advisory Committee must
disregard an amendment because the amendment would violate clause (1) or clause
(2), the Advisory Committee must maintain a schedule of the early retirement
option or other optional forms of benefit the Plan must continue for the
affected Participants.
All amendments must be made in writing. Each amendment must state the
date to which it is either retroactively or prospectively effective.
13.03 DISCONTINUANCE. Each Employer has the right, at any time, to
suspend or discontinue its contributions under the Plan. The Board of Directors
of Kansas City Southern, or the Compensation and Organization Committee thereof,
or any other duly authorized committee thereof, has the right to terminate the
Plan at any time. The Plan will terminate upon the first to occur of the
following:
(a) The date terminated by action of the Board of
Directors of Kansas City Southern, or the Compensation and Organization
Committee thereof, or any other duly authorized committee thereof; or
(b) The date Kansas City Southern is judicially declared
bankrupt or insolvent, unless the proceeding authorized continued
maintenance of the Plan.
13.04 FULL VESTING ON TERMINATION. Upon either full or partial
termination of the Plan, or, if applicable, upon complete discontinuance of
contributions to the Plan, an affected Participant's right to his Accrued
Benefit is 100% Nonforfeitable, irrespective of the Nonforfeitable percentage
which otherwise would apply under Article V.
13.05 MERGER/DIRECT TRANSFER. The Plan may not be a party to any
merger or consolidation with another plan, or to a transfer of assets or
liabilities to another plan, unless immediately after the merger, consolidation
or transfer, the surviving Plan provides each Participant a benefit equal to or
greater than the benefit each Participant would have received had the Plan
terminated immediately before the merger or consolidation or transfer. The
Advisory Committee possesses the specific authority to enter into merger
agreements or direct transfer of assets agreements with the trustees of other
retirement plans described in Code Section 401(a), including an elective
transfer, and to accept the direct transfer of plan assets, or to transfer plan
assets, as a party to any such agreement.
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The Advisory Committee may accept a direct transfer of plan assets on
behalf of an Employee prior to the date the Employee satisfies the Plan's
eligibility conditions. If the Advisory Committee accepts a direct transfer of
plan assets under this paragraph, the Advisory Committee must treat the Employee
as a Participant in the Plan for all purposes of the Plan except the Employee is
not a Participant in the Plan for purposes of sharing in Employer contributions
or Participant forfeitures under the Plan until he actually becomes a
Participant in the Plan.
The Advisory Committee may not consent to, or be a party to a merger,
consolidation or transfer of assets with a defined benefit plan, except with
respect to an elective transfer. The Trustee will hold, administer and
distribute the transferred assets as a part of the Trust Fund and the Trustee
must maintain a separate Employer contribution Account for the benefit of the
Employee on whose behalf the Advisory Committee accepted the transfer in order
to reflect the value of the transferred assets. Unless a transfer of assets to
this Plan is an elective transfer, the Plan will preserve all Code Section
411(d)(6) protected benefits with respect to those transferred assets, in the
manner described in Section 13.02. A transfer is an elective transfer if: (1)
the transfer satisfies the first paragraph of this Section 13.05; (2) the
transfer is voluntary, under a fully informed election by the Participant; (3)
the Participant has an alternative that retains his Code Section 411(d)(6)
protected benefits (including an option to leave his benefit in the transferor
plan, if that plan is not terminating); (4) the transfer satisfies the
applicable spousal consent requirements of the Code; (5) the transferor plan
satisfies the joint and survivor notice requirements of the Code, if the
Participant's transferred benefit is subject to those requirements; (6) the
Participant has a right to immediate distribution from the transferor plan, in
lieu of the elective transfer; (7) the transferred benefit is at least the
greater of the single sum distribution provided by the transferor plan for which
the Participant is eligible or the present value of the Participant's accrued
benefit under the transferor plan payable at that plan's normal retirement age;
(8) the Participant has a 100% Nonforfeitable interest in the transferred
benefit; and (9) the transfer otherwise satisfies applicable Treasury
regulations. An elective transfer may occur between qualified plans of any type.
Distribution Restrictions Under Code Section 401(k). If the Plan
receives a direct transfer (by merger or otherwise) of Elective Contributions
(or amounts treated as Elective Contributions) under a Plan with a Code
Section 401(k) arrangement, the distribution restrictions of Code
Sections 401(k)(2) and (10) continue to apply to those transferred Elective
Contributions.
13.06 TERMINATION. Upon termination of the Plan, the distribution
provisions of Article VI remain operative, with the following exceptions:
(1) if the present value of the Participant's
Nonforfeitable Accrued Benefit does not exceed $5,000, the Advisory
Committee will direct the Trustee to distribute the Participant's
Nonforfeitable Accrued Benefit to him in lump sum as soon as
administratively practicable after the Plan terminates; and
(2) if the present value of the Participant's
Nonforfeitable Accrued Benefit exceeds $5,000 the Participant or the
Beneficiary, in addition to the distribution events permitted under
Article VI, may elect to have the Trustee commence distribution of his
Nonforfeitable Accrued Benefit as soon as administratively practicable
after the Plan terminates.
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To liquidate the Trust, the Advisory Committee will purchase a deferred
annuity contract for each Participant which protects the Participant's
distribution rights under the Plan, if the Participant's Nonforfeitable Accrued
Benefit exceeds $5,000 and the Participant does not elect an immediate
distribution pursuant to Paragraph (2). The Trust will continue until the
Trustee in accordance with the direction of the Advisory Committee has
distributed all of the benefits under the Plan.
On each valuation date, the Advisory Committee will credit any part of
a Participant's Accrued Benefit retained in the Trust with its allocable share
of the Trust's income, expenses, gains and losses, both realized and unrealized.
Upon termination of the Plan, the amount, if any, in a suspense account under
such portion under Article III will revert to the Employer, subject to the
conditions of the Treasury regulations permitting such a reversion. A resolution
or amendment to freeze all future benefit accruals but otherwise to continue
maintenance of this Plan is not a termination for purposes of this
Section 13.06.
ARTICLE XIV.
PROVISIONS EFFECTIVE UPON CHANGE IN CONTROL
14.01 DEFINITION OF "CHANGE IN CONTROL OF KCS". For purposes of this
Plan, a "Change in Control of KCS" shall be deemed to have occurred if:
(a) for any reason at any time less than seventy-five
percent (75%) of the members of the Board of Directors of Kansas City
Southern, a Delaware corporation, shall be individuals who fall into
any of the following categories: (A) individuals who were members of
such Board on September 1, 1995; or (B) individuals whose election, or
nomination for election by KCS'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 September 1, 1995; or
(C) individuals whose election, or nomination for election, by KCS'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 elected
in the manner described in (A) or (B) above, or
(b) 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 after September 1, 1995, according to a public
announcement or filing, without the prior approval of the Board of
directors of KCS, the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of KCS,
representing forty percent (40%) or more (calculated in accordance with
Rule 13d-3) of the combined voting power of KCS's, then outstanding
voting securities (such "person" hereinafter referred to as a "Major
Stockholder of KCS"); or
(c) the stockholders of KCS shall have approved a merger,
consolidation or dissolution of KCS or a sale, lease, exchange or
disposition of all or substantially all of KCS's assets, or a Major
Stockholder of KCS shall have proposed any such transaction, unless
such merger, consolidation, dissolution, sale, lease, exchange or
disposition shall have been approved by at least seventy-five percent
(75%) of the members of the Board of Directors of KCS who are
individuals falling into any combination of the following categories:
(i) individuals who were members of such Board of Directors on
September 1, 1995, (ii) individuals whose election, or nomination for
election by KCS's
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stockholders, was approved by at least seventy-five percent (75%) of
the members of the Board of Directors then still in office who are
members of the Board of Directors on September 1, 1995, or (iii)
individuals whose election or nomination for election by KCS'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 elected
in the manner described in (i) or (ii) above.
14.02 PROVISIONS EFFECTIVE UPON CHANGE IN CONTROL. Upon a Change in
Control of KCS as defined in Section 14.01, notwithstanding what is otherwise
provided in this Plan, the following provisions will supersede the indicated
sections and otherwise govern the operation of the Plan and Trust from that
point forward:
(a) "Section 5.03, Vesting Schedule" shall provide as
follows:
5.03 VESTING SCHEDULE. A Participant's Accrued
Benefit derived from Employer contributions in the Plan
shall be One Hundred Percent (100%) Nonforfeitable at all
times.
(b) Except for the right to amend the Plan pursuant to
Section 13.02(a) to qualify or maintain the qualification of the Plan
under the appropriate provisions of Code Section 401(a), the Board of
Directors of Kansas City Southern, the Compensation and Organization
Committee thereof, or any other duly authorized officer or committee
thereof, shall not exercise its right to amend pursuant to Section
13.02(b), discontinue or terminate pursuant to Section 13.03, or merge
pursuant to Section 13.05, the Plan without the prior written consent
to such aforesaid action by seventy-five percent (75%) of the
Participants in the Plan on a per-capita basis.
14.03 RIGHT TO AMEND PART 1 OF ARTICLE XIV PRIOR TO CHANGE IN
CONTROL OF KCS. The Board of Directors of Kansas City Southern, or any duly
authorized committee thereof, reserves the right to amend or eliminate this
Article XIV prior to the date of a Change in Control of KCS.
IN WITNESS WHEREOF, the Employer has executed this Plan in Kansas City,
Missouri, as of this 30th day of May, 2002.
KANSAS CITY SOUTHERN
By: /s/ Eric Freestone/TLR
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WITNESS:
/s/ Tony L. Robertson
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