EXHIBIT 10.23
INTERCOMPANY AGREEMENT
This Intercompany Agreement is made and entered into this 16th day of
August 1999, by and between Kansas City Southern Industries, Inc., a Delaware
corporation ("KCSI") and Stilwell Financial, Inc., a Delaware corporation
("Stilwell").
WHEREAS, KCSI plans to separate its transportation and financial
services businesses through a spin-off of a holding company for the financial
services businesses to the shareholders of KCSI; and
WHEREAS, Stilwell has been formed as the holding company for KCSI's
financial services businesses, and Stilwell and KCSI desire to enter into
this agreement with respect to the proposed spin-off and the relationship of
KCSI and Stilwell thereafter.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereby agree as follows:
1. EFFECTIVE DATE
--------------
This agreement shall become effective on the date that the Board
of Directors ("the Board") of KCSI approves the distribution of all or
substantially all of the shares of Stilwell stock owned by KCSI to the
shareholders of KCSI (the "Spin-off") and fixes a record date (the "Record
Date") and a payment or distribution date for the Spin-off. The date of such
Board action hereinafter is referred to as the "Effective Date". The date
for the distribution of the Stilwell shares in the Spin-off is referred to as
the "Distribution Date".
2. CONTRIBUTION AGREEMENT
----------------------
KCSI and Stilwell acknowledge that on July 7, 1999 they entered
into a Contribution Agreement providing for the transfer of all of KCSI's
financial services subsidiaries, investments and related assets to Stilwell
and the assumption by Stilwell of all liabilities related to such assets
effective July 1, 1999 (the "Contribution Agreement"). The principal
financial services companies now owned by Stilwell are Janus Capital
Corporation (approximately 82%), Berger Associates, Inc. (100%), Nelson Money
Managers PLC (80%), and DST Systems, Inc. (approximately 32%). Such
companies are hereinafter referred to as Janus, Berger, Nelson, and DST,
respectively.
3. ASSIGNMENT OF AGREEMENTS
------------------------
Subject to Stilwell's securing any consents in writing necessary to
assign and transfer the following described agreements and providing copies
of such consents to KCSI prior to the Effective Date, KCSI hereby assigns and
transfers to Stilwell, as of the Effective Date, all of its interest in and
rights, and Stilwell hereby assumes and agrees to satisfy and discharge and
to be bound by all of KCSI's obligations, under the following agreements or
portions of agreements:
(a) Agreements relating to Janus:
- Stock Purchase Agreement dated April 13, 1984, between
Kansas City Southern Industries, Inc. and Thomas H. Bailey, et al,
as amended on January 4, 1985, March 18, 1988, February 5, 1990
and January 1, 1996.
- Stock Purchase Agreement dated January 5, 1995, between
Kansas City Southern Industries, Inc., Janus Capital
Corporation and Thomas H. Bailey, et al.
- Stock Purchase Agreement dated May 4, 1995, between
Kansas City Southern Industries, Inc., Janus Capital
Corporation and Thomas F. Marsico, et al.
- Stock Purchase Agreement dated August 1, 1995, between
Kansas City Southern Industries, Inc., Janus Capital
Corporation and Jack R. Thompson, et al.
- Restriction Agreement dated January 5, 1995, between
Kansas City Southern Industries, Inc., Janus Capital
Corporation and Jack R. Thompson, et al, as amended on
August 1, 1995, December 31, 1996 and September 22,
1997.
- Agreement Imposing Restrictions on Shares dated
September 29, 1997, among Kansas City Southern
Industries, Inc., Janus Capital Corporation and each
of the following individuals (each being party to a
separate agreement):
Laurence J. Chang Blaine P. Rollins
David J. Corkins Sandy R. Rufenacht
David C. Decker Claire Young
Helen Y. Hayes Steven R. Goodbarn
C. Mike Lu Marjorie G. Hurd
Brent A. Lynn Scott W. Schoelzel
Thomas R. Malley Christine K. Snyder
Lester K. Moore Ronald V. Speaker
Elias M. Pinto Mark B. Whiston
Karen L. Reidy
- Restricted Stock Agreement dated March 27, 1998 among
Janus Capital Corporation, Kansas City Southern
Industries, Inc. and each of the following
individuals (each being party to a separate agreement):
Laurence J. Chang Elias M. Pinto
David J. Corkins Karen L. Reidy
David C. Decker Blaine P. Rollins
Brent A. Lynn Sandy R. Rufenacht
C. Mike Lu Claire Young
Thomas R. Malley
- Right of First Refusal and Exchange Agreement dated
September 29, 1997 by and between Janus Capital
Corporation, Kansas City Southern Industries, Inc.,
Norwest Bank Colorado, N.A. and Lawrence J. Chang,
et al.
- Note and Pledge Agreements signed by certain employees
of Janus Capital Corporation or its subsidiaries as
listed in paragraph 2(e) of the Contribution Agreement.
- Restricted Stock Agreement dated December 14, 1998
among Janus Capital Corporation, Kansas City Southern
Industries, Inc., and each of the following
individuals (each being party to a separate agreement):
Thomas A. Early
Helen Y. Hayes
Scott W. Schoelzel
- Agreement Imposing Restrictions on Shares dated April
16, 1999, among Janus Capital Corporation, Kansas
City Southern Industries, Inc., and each of the
following individuals (each being party to a separate
agreement):
Scott W. Schoelzel John Schreiber
Helen Y. Hayes Ron Sachs
Will Bales Mike Dugas
Jonathan Coleman Julian Roberts
Brent Lynn Tom Early
- Tax Allocation Agreement between KCSI and Janus Capital
Corporation dated January 1, 1989, as amended effective
January 1, 1998.
- Intercorporate Revolving Credit Agreement between KCSI
and Janus effective January 1, 1998.
As to any agreement relating to Janus which is not assigned to
Stilwell because of Stilwell's inability to secure a required
consent for assignment of such agreement,
i) Stilwell shall be required to perform, for KCSI, all
obligations KCSI is obligated to perform for another party under such
agreement at the time and in the same manner as KCSI is required to perform
its obligation to such other party.
ii) All benefits and assets that are received by KCSI under such
agreement shall be transferred to Stilwell at the same time and in the same
manner as such benefits and assets are received by KCSI.
iii) If Stilwell is required to deliver any funds to KCSI by reason
of the foregoing, Stilwell shall deliver such funds to KCSI in time so as to
allow KCSI to use such funds to satisfy its obligations under such agreement.
iv) If KCSI receives any notice or has any elections or choices
under any such agreement, KCSI shall provide a copy of any such notice to
Stilwell within two (2) business days of KCSI's receipt thereof, and KCSI
shall make any election or choice under any such agreement only as approved
in writing by Stilwell.
v) KCSI will not provide any consents or waivers under any
such agreement or agree to any amendment of any such agreement without the
prior written approval of Stilwell.
(b) AGREEMENTS RELATING TO BERGER:
-----------------------------
- Stock Purchase Agreement among Kansas City Southern Inc.,
Berger Associates, Inc., and William M. B. Berger, et al
dated July 6, 1994, as supplemented on October 21, 1997.
- Exchange Agreement among Kansas City Southern Industries,
Inc., Louis P. Bansbach III, Lynda B. Collins, Trustee of
the Louis P. Bansbach IV, Trust 1 and Lynda B. Collins,
Trustee of the Brooke Allison Bansbach, Trust 1, dated
as December 3, 1997.
(c) AGREEMENTS RELATING TO NELSON:
-----------------------------
- All rights and obligations of KCSI, as Guarantor,
contained in the Agreement for the acquisition of the
majority of the issued share capital of Nelson Money
Managers PLC among David Cassidy and others, Barclays
Industrial Development Limited and others, FAM UK
Limited, Kansas City Southern Industries, Inc., and
Nelson Money Managers PLC dated April 9, 1998.
- Shareholders agreement among David Cassidy and others,
FAM UK Limited and Kansas City Southern Industries, Inc.
dated April 20, 1998.
(d) AGREEMENTS RELATING TO DST:
--------------------------
- Registration Rights Agreement between Kansas City
Southern Industries, Inc. and DST Systems, Inc. dated
October 24, 1995.
- Agreement between DST Systems, Inc. and Kansas City
Southern Industries, Inc. dated April 2, 1998, relating
to Midland claims.
- Letter Agreement dated September 2, 1998 between Kansas
City Southern Industries, Inc. and DST Systems, Inc.
relating to KCSI's spin-off of its financial services
business.
(e) AGREEMENTS RELATING TO MIDWEST SUPERCONDUCTIVITY, INC.:
------------------------------------------------------
- Loan agreement dated July 12, 1996, among Kansas City
Southern Industries, Inc., SOS & Co. and Midwest
Superconductivity, as amended on January 31, 1997, July
25, 1997 and November 24, 1997.
- Convertible Promissory Note of Midwest Superconductivity,
Inc. dated July 12, 1996 in the principle amount of
$1,300,000.
- Security Agreement dated July 12, 1996 among Midwest
Superconductivity, Inc., Kansas City Southern Industries,
Inc. and SOS & Co.
- Patent Security Agreement dated July 12, 1996 among
Midwest Superconductivity, Inc., Kansas City Southern
Industries, Inc. and SOS & Co.
- Letter agreement dated September 3, 1996 between Kansas
City Southern Industries, Inc., and SOS & Co.
(f) OTHER AGREEMENTS
----------------
- Consulting Agreement with Albert P. Mauro dated June 27,
1995, as amended on June 28, 1996, June 30, 1997, June 26,
1998 and May 7, 1999.
- Consulting Agreement with Victor D. Canterbury dated
December 29, 1998.
4. KCSI AND STILWELL STOCK OPTIONS
-------------------------------
(a) KCSI acknowledges and agrees that all KCSI stock options
held by present and former employees and directors of Stilwell and its
subsidiaries and affiliates on the Distribution Date shall continue to be
exercisable by such persons in accordance with the terms of such options as
in effect on the Distribution Date and that the Spin-off shall not constitute
or result in a termination of employment or directorship for purposes of any
KCSI option plan or agreement, and neither the Spin-off nor the transfer of
employment or directorship from KCSI to Stilwell in connection with the Spin-
off will result in the termination of any KCSI stock options.
(b) Not later than the Distribution Date, Stilwell shall grant
stock options for the purchase of Stilwell common stock to all persons who
hold KCSI stock options on the day after the Record Date (the "Stilwell
Substitute Options"). The number of Stilwell Substitute Options granted to
each holder shall bear the same ratio to the holder's KCSI stock options as
the number of Stilwell shares distributed in the Spin-off bears to the number
of KCSI shares outstanding on the Record Date. Each Stilwell Substitute
Option shall have substantially the same terms as the KCSI stock option to
which it relates, including a term of option which will expire on the same
date as the related KCSI option, except that the exercise price shall be a
prorated amount of the exercise price for the related KCSI option determined
by reference to the average trading prices of KCSI and Stilwell common stock
for the first three business days on which there is trading on the New York
Stock Exchange in both Stilwell shares and KCSI shares "ex-dividend." The
trading prices of KCSI and Stilwell common stock on each day shall be the
mean between the high and the low prices of the shares on the New York Stock
Exchange on the day in question.
(c) For purposes of this Agreement, a subsidiary shall mean any
corporation, partnership or any other entity of which at least 50% of the
voting stock or other controlling interests is or was owned, directly or
indirectly, by the party in question and an affiliate shall mean any
corporation, partnership, or other entity (which is not a subsidiary) of
which at least 10% of the voting stock or other controlling interest is or
was owned, directly or indirectly by the party in question or its
subsidiaries or affiliates.
5. EMPLOYEES, OFFICERS AND DIRECTORS
---------------------------------
(a) The individuals listed on Exhibit A are now or will become
by the Distribution Date employees of Stilwell (the "Stilwell Employees"), and
Stilwell shall have full responsibility for all compensation and benefits for
the Stilwell Employees earned after the Distribution Date, except as
otherwise provided in this agreement. KCSI and Stilwell shall use reasonable
efforts to cause any existing employment agreements between Stilwell
Employees and KCSI to be terminated not later than the Distribution Date, and
Stilwell shall assume responsibility for any obligations of KCSI under any
employment agreement with a Stilwell Employee that is not terminated.
(b) Stilwell shall reimburse KCSI for the cost of any medical
plan benefits, life insurance and long term disability insurance for the
inactive or former employees listed on Exhibit B. KCSI's cost of such program
shall be determined based upon KCSI's actual costs of premiums and claims
incurred in providing such benefits or insurance under its programs, plus an
administrative fee equal to 5% of such cost.
(c) KCSI shall cause each of its employees who will remain KCSI
employees to resign, effective not later than the close of business of the
Distribution Date, from all positions as a director, officer and/or committee
member of Stilwell and any Stilwell subsidiary; and Stilwell shall cause each
of its employees to resign, effective not later than the close of business on
the Distribution Date, from all positions as a director, officer and/or
committee member of KCSI or any KCSI subsidiary (other than Stilwell and
Stilwell subsidiaries), except as otherwise agreed between the parties.
(d) The Contribution Agreement provides that certain
obligations of KCSI under the KCSI Directors' Deferred Fee Plan will be
assumed by Stilwell and that certain assets related to such obligations will
be transferred to Stilwell. Accordingly, after the Distribution Date, KCSI
shall have no obligations to the Stilwell outside directors under the KCSI
Directors' Deferred Fee Plan.
6. PENDING CLAIMS AND LITIGATION
-----------------------------
(a) KCSI and Stilwell agree that the following claims,
lawsuits or other proceedings pending by or against KCSI or its present or
former subsidiaries are related to the historical financial services
businesses of KCSI:
i) FIRST AUSA LIFE INSURANCE COMPANY, ET AL, V. KANSAS CITY
SOUTHERN INDUSTRIES, INC., et. al., Case No. 95-0297-CV-W-6 in the United
States District Court for the Western District of Missouri.
ii) FOUNTAIN INVESTMENTS, INC., ET AL V. MLS, L.P., et al,
Case No. 98-1096-CV-W-9 in the United States District Court for the Western
District of Missouri.
iii) PVI, INC. AND WILLIAM G. SKELLY V. RATIOPHARM GMBH, Case
No. 95-0899-CV-W-2 in the United States District Court for the Western
District of Missouri.
iv) PVI, INC. AND WILLIAM G. SKELLY V. KLAUS LICTENBERGER, et
al, Case No. CV96-25818 in the Circuit Court of Jackson County, Missouri at
Kansas City.
(b) Legal title to the above-listed claims and lawsuits shall remain with
KCSI, which shall continue to prosecute and/or defend the claims asserted in
such lawsuits in its own name. However, Stilwell shall be entitled to make all
decisions concerning all such claims and lawsuits,
including the prosecution of all related claims, counterclaims and cross-
claims in the name of KCSI; the defense of all related claims, counterclaims
and cross-claims in the name of KCSI; and the authorization and approval of
any and all settlements or compromises (all of the foregoing litigation,
claims, counterclaims, settlements and compromises are hereinafter referred
to as the "Stilwell-related Litigation"). Stilwell shall be entitled to
direct the handling of all matters involving the Stilwell-related Litigation
directly with legal counsel selected by Stilwell and to direct and authorize
any activities required of counsel in connection with the Stilwell-related
Litigation.
(c) KCSI shall cooperate with Stilwell in the handling of the
Stilwell-related Litigation and shall take all action and sign all documents
as may reasonably be requested or directed by Stilwell in connection with the
Stilwell-related Litigation, including any action relating to the following
agreements:
- Agreement for Purchase and Sale of Corporate Stock and
Limited Partnership Interest between Kansas City Southern
Industries, Inc., and Fountain Investments, Inc. and
Midland Data Systems, Inc. dated February 26, 1996.
- Agreement between Midland Data Systems, Inc., Midland Loan
Services, L.P., MLS Investors, L.L.C., Alan L. Atterbury,
A. Keith Weber, Fountain Investments, Inc., Kansas City
Southern Industries, Inc., and DST Systems, Inc. dated
April 2, 1998.
- Escrow Agreement between Midland Data Systems, Inc.,
Midland Loan Services, L.P., MLS Investors, L.L.C., Alan L.
Atterbury, A. Keith Weber, Fountain Investments, Inc.,
Kansas City Southern Industries, Inc., DST Systems, Inc.
and UMB Bank, N.A. dated April 2, 1998, as amended.
KCSI shall not make or agree to any changes, amendments or modifications to
the foregoing agreements or provide any waivers, consents or notifications
pursuant to such agreements, except as specifically requested or directed in
writing by Stilwell.
(d) KCSI shall pay to Stilwell, within two business days of receipt
by KCSI, any and all amounts received or collected by KCSI in connection with
Stilwell-related Litigation, including amounts received or collected by
reason of final judgment, settlement or otherwise.
(e) Stilwell agrees to satisfy and discharge all liabilities and
obligations of KCSI relating to Stilwell-related Litigation and to pay
directly or reimburse KCSI for all out-of-pocket expenses, including
attorneys' fees, paid or incurred after the Effective Date relating to such
Stilwell-related Litigation. If Stilwell is required to deliver any funds to
KCSI by reason of the foregoing, Stilwell shall deliver such funds to KCSI in
time so as to allow KCSI to use such funds to satisfy its obligations.
7. ON-GOING RELATIONSHIPS
----------------------
(a) For a period of 90 days after the Distribution Date, Stilwell may
continue to occupy office space currently occupied by Stilwell employees, and
KCSI shall provide normal office services (including fax, photocopy,
telephone, computers, maintenance and cleaning) during the time Stilwell
occupies such space. Stilwell may vacate such space on fifteen days' advance
written notice to KCSI. Stilwell shall pay KCSI for the use of such space
and services at the rate of $6,250 per calendar month, prorated for any
partial month.
(b) At Stilwell's request, KCSI shall continue medical, dental,
vision, life insurance and long-term disability coverage for some or all of
the Stilwell Employees as specified by Stilwell from the Distribution Date
through December 31, 1999. Stilwell shall pay KCSI the cost of providing such
coverage to Stilwell Employees, determined on the basis of KCSI's actual costs
for such premiums and claims, plus an administrative fee equal to 5% of such
cost. If any such Stilwell Employees retire while covered by KCSI's plans,
KCSI shall provide such individuals with retiree medical plan coverage,
retiree life insurance and retiree disability insurance and Stilwell shall
reimburse KCSI for the costs thereof in accordance with paragraph 5(b). KCSI
reserves the right to change the terms of its medical, dental, vision, life
insurance and long-term disability coverage at any time.
(c) KCSI shall continue coverage of Stilwell and its subsidiaries
under KCSI's business insurance policies until the earlier of December 31,
1999 or the expiration of the existing policies. Any cost incurred by KCSI as
the result of the continuing of such coverage for Stilwell shall be paid for
by Stilwell. KCSI shall maintain its directors' and officers' liability
insurance and executive risk coverage through the Distribution Date for all
KCSI and Stilwell directors, officers and executives. Stilwell shall be
responsible for its own directors' and officers' liability insurance and
executive risk coverage commencing on the day after the Distribution Date.
(d) KCSI shall provide Stilwell with full, active access to KCSI's
Geac Enterprise ("Geac") accounting system and associated data available on
that system until December 31, 1999. After December 31, 1999, Stilwell may,
upon written request to KCSI, obtain from KCSI, through its Geac support
provider, DST, a data tape of historical financial and accounting records and
information applicable to Stilwell and its subsidiaries, affiliates and
investments. The format of the data tape, requested by Stilwell, must be
technologically available and acceptable to DST. Stilwell may also, upon
written request, obtain copies of printed historical reports, transaction
ledgers or other financial and accounting records and information, related to
Stilwell as KCSI may have available. KCSI understands that Stilwell has
implemented and is utilizing a new accounting software system from Great
Plains Software for its transactional accounting requirements. Stilwell
acknowledges that the computer information available to Stilwell after
December 31, 1999, as created using the Geac system, has not been remediated
or tested for year 2000 readiness. KCSI makes no assurances that the
information contained on any requested data tape made available after December
31, 1999, will be accessible, readable, printable or usable, in any manner, by
any computer system. Stilwell shall reimburse KCSI for any reasonable out-of-
pocket costs resulting from Stilwell's access or requests for information
provided in this section.
(e) After the Distribution Date, KCSI shall use reasonable efforts to
cause Wyandotte Garage Corporation ("Wyandotte") to continue to make parking
spaces available in its parking facility for individuals who are employees or
directors of Stilwell after the Distribution Date and who now park in the
garage. In addition, KCSI shall use reasonable efforts to cause Wyandotte to
make additional parking spaces available in the garage for other employees,
directors or guests of Stilwell as may be requested from time to time by
Stilwell for its reasonable business purposes. Stilwell or its employees
shall pay Wyandotte for such spaces at the rates generally applicable to the
public. The provisions of this paragraph shall remain in effect as long as
KCSI directly or indirectly owns at least 50% of Wyandotte.
(f) From and after the Distribution Date, each party hereto shall
afford to the other party and its authorized accountants, counsel and other
designated representatives (collectively, "Representatives") reasonable access
(including using reasonable efforts to give access to third parties possessing
information) and duplicating rights during normal business hours to all
business records, books, contracts (except this Agreement, the Contribution
Agreement and the Tax Disaffiliation Agreement), instruments, accounting and
financial information, employee and payroll information, computer data and
other data and information (collectively, "Information") within such party's
possession relating to such other party or any subsidiary or affiliate of such
other party, insofar as such access is reasonably required by such other
party. Information may be requested under this paragraph 7(f) for, without
limitation, audit, accounting, claims, litigation (including Stilwell-related
Litigation) and tax purposes, as well as for purposes of fulfilling disclosure
and reporting obligations and for performing this Agreement and the
transactions contemplated hereby. Also, each of KCSI and Stilwell and their
respective subsidiaries shall use reasonable efforts to make available to the
other party and their subsidiaries, upon written request, their present and
former directors, officers, employees and agents (for purposes of this
paragraph 7(f), individually or collectively, "Personnel") to the extent that
any of such Personnel may reasonably be required (including for reasonable
affidavits) in connection with any matters referred to in this paragraph 7(f)
or any legal, administrative or other proceedings in which the requesting
party may from time to time be involved. The requesting party shall pay to
the party providing access to Information or Personnel reasonable out-of-
pocket costs associated with providing such Information or Personnel and shall
also pay a per diem fee for the use of Personnel of the party providing
Information or Personnel based on the Personnel's salary (if such Personnel is
employed by the party providing the Personnel), if the requesting party uses
such Personnel for more than two full working days.
(g) Each party shall provide to the other party from time to time all
Information regarding the providing party's employees, former employees,
benefit plans, payrolls and other Information reasonably needed by the
receiving party for the administration of such party's benefit plans and human
resource policies and for the transition of Stilwell's employees to Stilwell
benefit plans from KCSI benefit plans. Such Information shall include,
without limitation, reports by each of Stilwell and KCSI to the other party
containing the information described in Exhibit C until all stock options held
by employees and former employees of the providing party and its subsidiaries
and affiliates for shares of the other party's stock have been exercised or
have expired.
(h) For a period of two years after the Distribution Date, KCSI shall
provide Stilwell and its Representatives access to KCSI's law and tax
libraries. Stilwell shall reimburse KCSI for any reasonable out-of-pocket
costs resulting from Stilwell use.
(i) Except as otherwise required by law, each of KCSI and Stilwell
shall retain, and shall cause their subsidiaries to retain, for a period
following the Distribution Date consistent with normal practice and with
relevant law, all significant Information relating to the business of the
other party and the other party's subsidiaries and affiliates, except that all
Information relating to tax matters shall be retained until all issues for the
years in question are closed by the relevant statute of limitations or by
final resolution of all issues, and all Information relating to any litigation
or other legal proceedings shall be retained until the proceedings are finally
concluded. KCSI will retain all historical general ledger accounting records
indefinitely, provided if KCSI no longer wishes to maintain such records, it
shall transfer to Stilwell those that relate to Stilwell operations.
(j) KCSI and Stilwell each shall hold, and shall cause its
subsidiaries and Representatives to hold, in strict confidence, all
Information concerning the other party or its subsidiaries or affiliates in
its possession or furnished by the other party or the other party's
Representatives pursuant to either this Agreement, the Contribution Agreement
or the Tax Disaffiliation Agreement (except to the extent that such
information (i) is on the date hereof or hereafter becomes generally available
to the public other than as a result of an unauthorized disclosure, directly
or indirectly, by such party or its subsidiaries or Representatives or (ii)
was or becomes available to such party on a non-confidential basis prior to
its disclosure to such party or its subsidiaries or Representatives, in each
case from a source other than the party furnishing such information, which
source was not itself bound by a confidentiality agreement with the party
furnishing such information and had not received such information, directly or
indirectly, from a person or entity so bound, and each party shall not release
or disclose such information to any other person or entity, except its
auditors, attorneys, financial advisors, bankers and other consultants and
advisors, unless compelled to disclose by judicial or administrative process
or, as advised by its counsel, by other requirements of law.
(k) Stilwell acknowledges that it has no interest in and no right to
use or display the name, trademark or other intellectual property of KCSI or
any KCSI subsidiary and shall cease any such use or display within 90 days
after the Distribution Date. KCSI acknowledges that it has no interest in and
no right to use or display the name, trademark or other intellectual property
of Stilwell or any Stilwell subsidiary, and shall cease any such use or
display within 90 days after the Distribution Date.
(l) Stilwell shall not directly or indirectly, through a subsidiary
or otherwise, for a period of one year after the Distribution Date, solicit or
hire any employee of KCSI or any KCSI subsidiary to consider employment with
Stilwell or any Stilwell subsidiary without the prior written consent of KCSI.
KCSI shall not directly or indirectly, through a subsidiary or otherwise, for
a period of one year after the Distribution Date, solicit or hire any employee
of Stilwell or any Stilwell subsidiary to consider employment with KCSI or any
KCSI subsidiary without the prior written consent of Stilwell.
8. OTHER MATTERS
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(a) KCSI and Stilwell acknowledge that KCSI maintains a donor
advisory fund with the Greater Kansas City Community Foundation which holds
shares of DST stock, shares of Kansas City Royals Preferred Class C stock and
cash or cash equivalents. On or before the Distribution Date, such donor
advisory fund shall be split into two funds which funds shall be the existing
donor advisory fund and a new Stilwell donor advisory fund. All Kansas City
Royals Preferred Class C Stock and cash or cash equivalents in the amount of
$3,000,000 shall remain in the existing donor advisory fund and all remaining
assets shall be transferred to the new Stilwell donor advisory fund.
(b) On or before the Distribution Date, all leases for company
automobiles relating to Stilwell Employees and carried on the books of KCSI
or any subsidiary of KCSI shall be assigned to Stilwell.
9. REPRESENTATIONS AND WARRANTIES
------------------------------
(a) Stilwell represents and warrants to KCSI that (1) to the actual
knowledge of Landon H. Rowland, Joseph D. Monello, Danny R. Carpenter and
Anthony P. McCarthy, there are no claims or liabilities with respect to KCSI
or Stilwell, or any of their respective subsidiaries or affiliates, except
those (A) reflected on the KCSI books or for which some amount of reserves
has been established on the KCSI books, (B) which are otherwise disclosed in
the KCSI financial statements, (C) which are the subject of or related to
pending litigation, (D) which arise in the ordinary course of business, or
(E) which are already known by Michael R. Haverty, Richard P. Bruening,
Robert H. Berry, Warren K. Erdman or Louis G. Van Horn; and (2) the
agreements referred to in paragraph 3 are all of the agreements between KCSI
and any of the Stilwell Group with continuing performance obligations.
(b) KCSI represents and warrants to Stilwell that to the actual
knowledge of Michael R. Haverty, Richard P. Bruening, Robert H. Berry, Warren
K. Erdman and Louis G. Van Horn, there are no claims or liabilities with
respect to KCSI or Stilwell, or any of their respective subsidiaries or
affiliates, except those (i) reflected on the KCSI books or for which some
amount of reserves has been established on the KCSI books, (ii) which are
otherwise disclosed in the KCSI financial statements, (iii) which are the
subject of or related to pending litigation, (iv) which arise in the ordinary
course of business, or (v) which are already known by Landon H. Rowland,
Joseph D. Monello, Danny R. Carpenter or Anthony P. McCarthy.
10. INDEMNIFICATION
---------------
(a) Except with respect to any matter otherwise specifically
provided for under this Agreement, the Contribution Agreement or the Tax
Disaffiliation Agreement between KCSI and Stilwell dated August 16, 1999 (the
"Tax Disaffiliation Agreement"), Stilwell shall indemnify, defend and hold
harmless KCSI and all KCSI subsidiaries and their directors, officers,
employees and agents from and against any and all Losses (as hereinafter
defined) of KCSI and KCSI subsidiaries (i) arising out of or relating to
Stilwell, any present or former financial services subsidiary or affiliate
listed in Exhibit D (Stilwell and such subsidiaries and affiliates are
hereafter referred to individually and collectively as the "Stilwell Group")
or the business conducted (formerly or currently) or to be conducted by the
Stilwell Group whether such Losses relate to events occurring, or are
asserted before, on or after, the Distribution Date, (ii) arising out of or
based upon any untrue statement or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading, made in the Information Statement
(except matters relating to KCSI's transportation businesses or the KCSI
Group, as defined below) contemplated to be sent to the holders of KCSI
common stock in connection with the Spin-off or made with respect to the
Stilwell Group in any other securities filing or disclosure document prepared
or filed by Stilwell or (iii) arising out of any breach by Stilwell of any
representation, warranty or covenant contained in this Agreement or the
Contribution Agreement or (iv) arising out of or relating to any of the
agreements referred to in paragraph 3.
(b) Except with respect to any matter otherwise specifically
provided for under this Agreement, the Contribution Agreement or the Tax
Disaffiliation Agreement, KCSI shall indemnify, defend and hold harmless
Stilwell and all Stilwell subsidiaries and their directors, officers,
employees and agents from and against any and all Losses (as hereinafter
defined) of Stilwell and Stilwell subsidiaries (i) arising out of or relating
to KCSI's transportation division, any present or former transportation
subsidiary or affiliate listed in Exhibit E (KCSI's transportation division
and such subsidiaries and affiliates are hereafter referred to individually
and collectively as the "KCSI Group") or the business conducted (formerly or
currently) or to be conducted by the KCSI Group, whether such Losses relate
to events occurring, or are asserted before, on or after, the Distribution
Date, (ii) arising out of or relating to KCSI after the Distribution Date,
(iii) arising out of or based upon any untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading, made
in the Confidential Information Memorandum or the Supplemental Prospectus
(except matters relating to KCSI's financial services businesses or the
Stilwell Group) used or contemplated to be used by KCSI in connection with an
offering of securities or made with respect to KCSI or its subsidiaries or
affiliates in any other securities filing or disclosure document prepared or
filed by KCSI, (iv) arising out of any breach by KCSI of any representation,
warranty, or covenant contained in this Agreement or the Contribution
Agreement, or (v) arising out of any failure to cooperate by KCSI or any
refusal by KCSI to take action or sign documents as requested by Stilwell in
connection with the Stilwell-related Litigation described in paragraph 6(c)
of this Agreement.
(c) For any liability of KCSI which is not covered by indemnity
under paragraph 10(a) or 10(b) of this Agreement or by Section 3.3 or Section
5.1 of the Tax Disaffiliation Agreement ("KCSI Holding Company Matters"),
KCSI and Stilwell agree the liability shall be split between them, with each
of KCSI and Stilwell paying one-half of any such liability. If the liability
arises from a claim or lawsuit, KCSI and Stilwell agree to determine how to
divide the handling of the defense of KCSI Holding Company Matters on a case-
by-case basis, with each party agreeing to provide prompt notice to the other
of KCSI Holding Company Matters and each party participating in KCSI Holding
Company Matters in a good faith manner. In the absence of a subsequent
agreement to the contrary, KCSI and Stilwell shall each pay one-half of all
costs of claims and litigation relating to KCSI Holding Company matters,
including reasonable attorneys' and expert fees.
(d) For purposes of this paragraph 10, the term "Loss" or "Losses"
means all losses, liabilities, damages, claims, demands, judgments or
settlements of any kind or nature, known or unknown, fixed, accrued, absolute
or contingent, liquidated or unliquidated, including reasonable attorneys'
fees and other reasonable costs and expenses relating thereto; provided,
however, that the amount of any Losses shall be reduced by any insurance
proceeds recovered or recoverable by or on behalf of the person or entity
incurring the Losses. Losses incurred by a KCSI or Stilwell subsidiary or a
director, officer, employee or agent of KCSI or Stilwell or a subsidiary, may
be recovered under this Agreement directly by KCSI or Stilwell, as the case
may be, as if such losses were incurred in their entirety by such party.
(e) The amount which a party (the "Indemnifying Party") is or may
be required to pay to any other person or entity (an "Indemnitee") pursuant
to paragraph 10(a) or (b) shall be reduced by any insurance proceeds or other
amounts actually recovered from unrelated third parties by or on behalf of
such Indemnitee, in reduction of the related Loss, net of expenses associated
with such recovery. Each indemnitee shall be obligated to use reasonable
efforts to maximize recovery of insurance proceeds and other amounts in
reduction of the related Loss. If an Indemnitee shall have received the
payment required by this Agreement from the Indemnifying Party in respect of
any Loss and shall subsequently actually receive insurance proceeds or other
amounts in reduction of such Loss, then such Indemnitee shall pay to such
Indemnifying Party a sum equal to the amount of such insurance proceeds or
other amounts actually received net of expenses associated with such recovery
(not in excess of the amount of any indemnity payment made hereunder).
(f) If an Indemnitee shall actually realize a tax saving by reason
of having incurred a Loss for which such Indemnitee shall have received a
payment from the Indemnifying Party, then such Indemnitee shall pay to such
Indemnifying Party an amount equal to such tax saving actually realized.
Whenever there is a substantial likelihood that an Indemnitee will receive a
tax saving by reason of a Loss, such Indemnitee shall file its tax returns in
a manner designed to recover such tax saving, provided that such Indemnitee
shall have the sole responsibility for the preparation of its tax returns and
reporting thereon such Loss and any payments received from the Indemnifying
Party. An Indemnitee shall be deemed actually to have realized a tax saving
with respect to a Loss if, and to the extent that, for any taxable period,
whether ending before, on or after the Distribution Date, the aggregate
federal, state, local and foreign tax liability actually payable by such
Indemnitee and any of its consolidated subsidiaries, computed by taking into
account any deductions, credits or other items attributable to a Loss and the
receipt of an indemnity payment with respect thereto, is less than such
aggregate tax liability, computed without regard to such deductions, credits
or other items attributable to a Loss or the receipt of an indemnity payment
with respect thereto. In the event that, following a payment by an
Indemnitee pursuant to this paragraph 10(f) in respect of a tax saving, there
shall be a final adjustment to the amount of such tax saving as a result of
an audit or other proceeding in respect of such Indemnitee's tax returns, the
parties shall take appropriate actions to reflect such adjustment. The term
"tax saving" shall be determined net of any expenses associated with such tax
saving and shall also be deemed to include any interest received from a
governmental tax authority, net of any federal, state, local or foreign taxes
payable thereon.
(g) If the amount of any Loss shall, at any time subsequent to the
payment required by this Agreement, be reduced by recovery, settlement or
otherwise, the amount of such reduction, less any expenses incurred in
connection therewith, shall promptly be repaid by the Indemnitee to the
Indemnifying Party.
11. PROCEDURES FOR INDEMNIFICATION OF THIRD PARTY CLAIMS
----------------------------------------------------
(a) If an Indemnitee shall receive notice or learn of the assertion
by a person or entity (including, without limitation, any governmental
entity) which is not a party to this Agreement of any claim or of the
commencement by any such person or entity of any proceeding with respect to
which the Indemnifying Party may be obligated to provide indemnification
pursuant to paragraph 10 of this Agreement (a "Third Party Claim"), such
Indemnitee shall give such Indemnifying Party written notice thereof promptly
(and in any event within 30 calendar days) after becoming aware of such Third
Party Claim; PROVIDED, HOWEVER, that the failure of any Indemnitee to give
notice as provided in this paragraph 10(a) shall not relieve the Indemnifying
Party of its obligations under this Agreement, except and only to the extent
that such Indemnifying Party is prejudiced by such failure to give notice.
Such notice shall describe the Third Party Claim in reasonable detail and, if
ascertainable, shall indicate the amount (estimated if necessary) of the Loss
that has been or may be sustained by such Indemnitee.
(b) The Indemnifying Party may elect to defend any Third Party
Claim against the Indemnitee at such Indemnifying Party's own expense and by
such Indemnifying Party's own counsel. Within 30 calendar days of the
receipt of notice from an Indemnitee in accordance with paragraph 10(a) (or
sooner, if the nature of such Third Party Claim so requires), the
Indemnifying Party shall notify the Indemnitee of its election whether the
Indemnifying Party will assume responsibility for defending such Third Party
Claim, which election shall specify any reservations or exceptions. After
notice from the Indemnifying Party to an Indemnitee of its election to assume
the defense of a Third Party Claim, the Indemnifying Party shall not be
liable to such Indemnitee under this Agreement for any legal or other
expenses (except expenses approved in writing in advance by the Indemnifying
Party) subsequently incurred by such Indemnitee in connection with the
defense thereof; PROVIDED, HOWEVER, that if the defendants in any such Third
Party Claim include both the Indemnifying Party or one or more of its
affiliates and one or more Indemnitees, in any Indemnitee's reasonable
judgment a conflict of interest between one or more of such Indemnitees and
such Indemnifying Party exists in respect of such Third Party Claim or if the
Indemnifying Party shall have assumed responsibility for such Third Party
Claim with any reservations or exceptions, such Indemnitees shall have the
right to employ separate counsel to represent such Indemnities and in that
event the reasonable fees and expenses of such separate counsel (but not more
than one separate counsel or law firm other than local counsel) and separate
experts and consultants shall be paid by the Indemnifying Party. If the
Indemnifying Party elects not to assume responsibility for defending a Third
Party Claim or fails to notify an Indemnitee of its election as provided in
this paragraph 10(b), such Indemnitee may defend or (subject to the remainder
of this paragraph 10(b)) seek to compromise or settle such Third Party Claim.
Notwithstanding the foregoing, an Indemnitee may not settle or compromise any
Third Party Claim without the consent of the Indemnifying Party; PROVIDED,
HOWEVER, that consent to settlement or compromise shall not be unreasonably
withheld.
(c) In the event of payment by the Indemnifying Party to any
Indemnitee in connection with any Third Party Claim, the Indemnifying Party
shall be subrogated to and shall stand in the place of such Indemnitee as to
any events or circumstances in respect of which such Indemnitee may have any
right or claim relating to such Third Party Claim against any claimant
asserting such Third Party Claim or against any other person or entity. Such
Indemnitee shall cooperate with the Indemnifying Party in a reasonable
manner, and at the cost and expense of the Indemnifying Party, in prosecuting
any subrogated right or claim.
(d) The remedies provided in this paragraph 11 shall be cumulative
and shall not preclude assertion by any Indemnitee of any other rights or the
seeking of any and all other remedies against any Indemnifying Party.
12. PRIVILEGED MATTERS
------------------
The parties hereto recognize that legal and other professional
services that have been and will be provided on and prior to the Distribution
Date have been and will be rendered for the benefit of KCSI and Stilwell and
their subsidiaries and affiliates, and that each of the foregoing should be
deemed to be the client for the purposes of asserting all privileges which
may be asserted under applicable law. To allocate the interests of each
party in the Information as to which any party or any of its subsidiaries or
affiliates is entitled to assert a privilege, the parties agree as follows:
(a) Stilwell shall be entitled, in perpetuity, to control the
assertion or waiver of all privileges in connection with privileged Information
which relates to the Stilwell Group, to the business of the Stilwell Group or to
any Stilwell-related Litigation, whether or not the privileged Information is in
the possession of or under the control of KCSI or Stilwell or any of their
subsidiaries or affiliates.
(b) KCSI shall be entitled, in perpetuity, to control the
assertion or waiver of all privileges in connection with privileged Information
which relates to the KCSI Group or to the business of the KCSI Group, whether or
not the privileged Information is in the possession of or under the control of
KCSI or Stilwell or any of their subsidiaries or affiliates.
(c) With respect to any matter not related to either the KCSI
Group or the Stilwell Group, KCSI and Stilwell agree that neither shall waive,
modify or fail to assert any privilege in connection with privileged Information
without the consent of the other.
(d) Upon receipt by either party hereto or by any subsidiary or
affiliate thereof of any subpoena, discovery or other request which calls for
the production or disclosure of Information subject to a privilege which the
other party has the right hereunder to assert, such party shall promptly notify
the other party of the existence of the request and shall provide the other
party a reasonable opportunity to review the Information and to assert any
rights it may have under this paragraph 12 to prevent the production or
disclosure of such privileged information.
(e) Neither the access to Information pursuant to paragraph 7(f)
nor the access to individuals pursuant to paragraph 7(f) shall be deemed a
waiver of any privilege that has been or may be asserted pursuant this Agreement
or otherwise.
13. MEDIATION AND ARBITRATION
-------------------------
If any dispute arises between the parties relating to the
separation of the KCSI transportation and financial services businesses, or
relating to any of the subjects included in this Agreement, the Contribution
Agreement or the Tax Disaffiliation Agreement, then such dispute shall be
resolved exclusively as set forth in this section.
(a) First, the parties shall try in good faith to settle the
dispute between themselves, without the intervention of any other person or
agency. However, if it appears to either party that the parties are unable to
resolve the dispute themselves, then either party may at any time elect to
invoke mediation as set forth below.
(b) Second, and as a prerequisite to any further dispute
resolution procedure, either party may submit the dispute to mediation in which
both parties must participate.
i) Mediation shall be initiated by written notice from
one party to the other, setting forth the nature of
the dispute.
ii) Following receipt of written notice, the parties
shall have 30 days to agree upon a mediator and a
time and place for the mediation session.
iii) If the parties fail to so agree within 30 days, then
the mediation shall be administered by the American
Arbitration Association ("AAA") under its Commercial
Mediation Rules.
iv) If, after participating in at least one mediation
session, it appears to either party that mediation will
not resolve the dispute, then either party may invoke
arbitration as set forth below.
(c) Third, and as the final dispute resolution procedure, either
party may submit the dispute to arbitration administered by the AAA in
accordance with its Commercial Arbitration Rules (including the Emergency
Interim Relief Procedures), and both parties must participate in such
arbitration.
i) If the dispute involves a total amount of less than
$100,000, then there shall be one neutral arbitrator;
otherwise, there shall be three neutral arbitrators. There
shall be a tape or stenographic record of any arbitration
hearing conducted by three neutral arbitrators.
ii) The place of arbitration shall be Kansas City, Missouri.
iii) The parties acknowledge that this agreement evidences a
transaction involving interstate commerce; therefore, the
Federal Arbitration Act shall govern the interpretation,
enforcement and proceedings pursuant to this arbitration
clause in this agreement.
iv) Consistent with the expedited nature of arbitration, each
party will, upon the written request of the other party,
within 30 days of receipt of the request, provide the
other with copies of documents relevant to the issues
raised by any claim, counterclaim, or defense. Any dispute
regarding discovery shall be determined by the
arbitrator(s), which determination shall be conclusive.
All document discovery shall be completed within 60 days
following the appointment of the arbitrator(s).
v) At the request of a party, the arbitrator(s) shall have
the discretion to order examination by deposition of
witnesses to the extent the arbitrator(s) deems such
deposition relevant and appropriate. Depositions should be
limited to a maximum of 3 per party, and should be held
within 30 days of the making of a request, unless the
arbitrator(s) for good cause determines otherwise. All
deposition objections are reserved for the arbitration
hearing except for objections based on privilege and
proprietary or confidential information.
vi) The arbitrator(s) will have no authority to award punitive
or other damages not measured by the prevailing party's
actual damages, except as may be specifically authorized
by statute.
vii) Any monetary award may, at the discretion of the
arbitrator(s), include pre-award interest at the rate then
provided by Missouri law.
viii) The arbitrator(s) shall allocate the arbitrator(s')
compensation and the administrative fees of the
arbitration between the parties. Except for such
compensation and fees, each party shall bear its own
costs.
ix) The award shall be in writing, shall be signed by a
majority of the arbitrators, and shall include a statement
of the reasons for the disposition of each claim.
x) Except as may be required by law, neither the parties nor
any arbitrator(s) shall disclose the existence, content or
results of any arbitration hereunder without the prior
written consent of both parties.
xi) Unless an appeal is permitted and is taken as set forth
below, the award shall be final and binding, and judgment
may be entered by a court having jurisdiction thereof.
xii) Within 30 days of receipt of any award in excess of the
total amount of $1,000,000 against any one party, either
party may notify the AAA of an intention to appeal to a
second arbitral tribunal, constituted in the same manner
as the initial tribunal. The appeal tribunal shall
consider the first arbitration hearing record, any new
written briefs and oral arguments of the parties, but not
any other evidence. The appeal tribunal shall be entitled
to affirm the initial award, modify or set aside the
initial award, or substitute a new award for the initial
award; however, the appeal tribunal shall not modify, set
aside or replace the initial award except for clear errors
of law or because of clear and convincing factual errors.
The award of the appeal tribunal shall be final and
binding, and judgment may be entered by a court having
jurisdiction thereof.
14. FURTHER ASSURANCES
------------------
From time to time after the Distribution Date, KCSI and Stilwell each
shall take such action and execute and deliver to the other party or its
subsidiaries or affiliates all such instruments and documents as such other
party may reasonably request to carry out the intent and purposes of this
Agreement and the transactions contemplated hereby.
15. MISCELLANEOUS
-------------
(a) Each party shall pay all of its own costs and expenses related
to the Spin-Off.
(b) This Agreement, the Contribution Agreement and the Tax
Disaffiliation Agreement, including any schedules and exhibits hereto or
thereto, and other agreements and documents referred to herein, shall constitute
the entire agreement between the parties with respect to the subject matter
hereof and shall supersede all previous commitments and writings with respect to
such subject matter, except that KCSI and Stilwell acknowledge that they may
deal with specific ongoing items such as Stilwell employee parking in the
Wyandotte Garage or the use of the KCSI airplane by separate agreements.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the State of Missouri, without regard to the principles of
conflicts of laws thereof.
(d) All notices hereunder shall be in writing and shall be delivered
personally or by courier or sent by registered or certified mail (postage
prepaid) to the other party at the following address (or at such other addresses
for a party as shall be specified by like notice) and shall be deemed given on
the date on which such notice is received:
if to KCSI:
Kansas City Southern Industries, Inc.
114 West 11th Street
Kansas City, MO 64105
Attn: Senior Vice President, General Counsel & Secretary
if to Stilwell:
Stilwell Financial, Inc.
114 West 11th Street
Kansas City, MO 64105
Attn: President
(e) This Agreement may not be modified or amended except by an
instrument in writing signed by each of the parties.
(f) This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns. No party may assign its respective rights or delegate its
respective obligations under this Agreement without the express prior written
consent of the other party hereto.
(g) Titles and headings to sections herein are inserted for the
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.
(h) If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party.
(i) The failure of any party hereto to enforce at any time any
provision of this Agreement shall not be construed to be a waiver of such
provision, nor in any way to affect the validity of this Agreement or any part
hereof or the right of any party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be held to constitute
a waiver of any other or subsequent breach.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
Kansas City Southern Industries, Inc.
By: /s/ M. R. Haverty
-----------------------------------
Name: Michael R. Haverty
Title: Executive Vice President
Stilwell Financial, Inc.
By: /s/ Landon H. Rowland
------------------------------------
Name: Landon H. Rowland
Title: Chairman, President and
Chief Executive Officer
EXHIBIT A
INTERCOMPANY AGREEMENT
STILWELL EMPLOYEES
Astorga, Martha
Brown, Phillip
Burgess, Julie
Cecil, Mark
Carpenter, Danny
Cooper, Sherry
Hamilton, Vickie
Ince, Nancy
McCarthy, Anthony
Monello, Joseph Jr.
Nickerson, Doug
Pittman, Douglas
Rowland, Landon
Royle, Gwen
Simkins, Jeff
Vogel, Judy
Wood, E. Faye
EXHIBIT B
INTERCOMPANY AGREEMENT
LIST OF INACTIVE OR FORMER EMPLOYEES
EMPLOYEES (SPOUSES) COMPANY - DEPARTMENT
- ------------------- --------------------
Retirees:
Armstrong, Jan KCSI Corporate Secretary
Bates, W. A. MATV
Brown, Phillip S. (12/31/99 retirement) KCSI Legal
Canterbury, Vic KCSI Security
Lagomancino, Richard Argus
Mauro, Albert P. KCSI Corporate Secretary
Smith, O. J. KCSI Executive
Spidle, B. S. KCSI Executive
Zind, Richard KCSI Executive
Long Term Disability:
Smith, Gerald Central Biomedia
EXHIBIT C
EXCHANGE OF INFORMATION FOR STOCK OPTION GRANTS
Stilwell and KCSI will exchange the following information in order to track
the various periods of exercisability of stock options following a grantee's
termination of employment and to calculate the correct withholding and payroll
taxes for each grantee upon exercise of an option.
HUMAN RESOURCES
Each company will provide a monthly and year-to-date report of the employee
and director terminations by the third business day of each month. These
listings will show all holders of options whose relationship with the company
has been terminated or who have been placed on leave and will include the
following fields:
PRINTED REPORT TO STOCK OPTION ADMINISTRATOR
Name Effective date of termination
Reason for Termination: Employee ID #
Resignation with notice Company or Work Location
Retirement, Official Effective Date of Total
Discharged Disability
Deceased Age
Total Disability
Other ________________
PAYROLL
Each company will provide the necessary information to determine the tax
liability for each employee option exercise. Federal and state withholding
percentages must be determined, and any payroll tax with a cap (FICA, Tier 1 or
Tier 2) must be calculated so maximums are not exceeded. Due to the large number
of employees involved in the option plan it will be necessary to exchange
electronic files (with a confirming hard copy report) not less frequently than
monthly containing the following information:
ELECTRONIC FILE TO STOCK OPTION ADMINISTRATOR (WITH PRINTED REPORT):
Name SS#
Number of Exemptions from W-4 Married or Single
Pay Period: Monthly, semi-monthly, etc. Previous pay period wages
State for withholding Year to date FICA or Tier 1
Year to date Tier 2
ELECTRONIC FILE TO PAYROLL FROM STOCK OPTION ADMINISTRATOR (WITH PRINTED
REPORT) FOR ALL EMPLOYEE OPTION EXERCISES:
Name SS#
Taxable Income Federal Tax Withheld
State Tax Withheld Local Tax Withheld
FICA or Tier 1 Withheld Tier 2 Withheld
Medicare Withheld Type of Tax Form: W-2 or 1099
Company
EXHIBIT D
INTERCOMPANY AGREEMENT
FINANCIAL SERVICES SUBSIDIARIES AND AFFILIATES
- ----------------------------------------------
Animal Resources, Inc.
Argus Computing
Argus Health Systems, Inc.
Argus PMS, Inc.
Argus Research International, Inc.
Ash Pharmaceutical, Inc.
Barco Laboratories of Iowa, Inc.
Barco Laboratories, Inc.
BBOI Worldwide LLC
Bellview Pharmaceutical, Inc.
Belvedere Financial Systems, Inc.
Berger Associates, Inc.
Berger/Bay Isle LLC
Berger Distributors, Inc.
Birch Pharmaceutical, Inc.
Board of Trade Building, Inc.
Brighton Pharmaceutical, Inc.
Brookside Water Treatment, Inc.
Central Biomedia, Inc.
Data Retrieval Services, Inc.
DST Acquisition Corporation
DST Clearing, Inc.
DST Keywest, Inc.
DST Realty, Inc.
DST Securities, Inc.
DST Systems of Delaware, Inc.
DST Systems, Inc.
Eleventh Street Corridor Development Corporation
Elm Pharmaceutical, Inc.
FAM UK Limited
Fillmore Agency, Inc.
First President Corporation
Fountain Investments, Inc.
Fountain Investments UK
H.B. Shaine & Co., Inc.
EXHIBIT D
INTERCOMPANY AGREEMENT
FINANCIAL SERVICES SUBSIDIARIES AND AFFILIATES
- ----------------------------------------------
Hickory Pharmaceutical, Inc.
Hillside Properties Corporation
Holly Pharmaceutical, Inc.
IDEManagement Company
Infra-Park, Inc.
James Keller & Associates, Inc.
Janus Capital Corporation
Janus Capital International Ltd.
Janus Distributors, Inc.
Janus Service Corporation
Jefferson Building Corporation
Jerian Pharmaceutical, Inc.
Joseph Nelson Limited
Kansas City Microwave Communications, Inc.
KC-PW, Inc.
Lincoln Pharmaceutical, Inc.
Linden Pharmaceutical, Inc.
Loess Corporation
Mail Processing Systems, Inc.
Martec Pharmaceutical of Missouri, Inc.
Martec Pharmaceutical, Inc.
MGI Output Technologies, Inc.
Midcon Laboratories of Iowa
Midcon Laboratories, Inc.
Monitor Capital Management, Inc.
Monitor Development, Inc.
Monitor Services, Inc.
National Realty Partners, Inc.
Nelson Investment Planning Limited
Nelson Management Limited
Nelson Money Managers PLC
Network Graphics, Inc.
Northern Pharmaceutical, Inc.
NRS Bayshore Development, Inc.
NRS Development, Inc.
NRS Palmetto Development, Inc.
Olive Pharmaceutical, Inc.
EXHIBIT D
INTERCOMPANY AGREEMENT
FINANCIAL SERVICES SUBSIDIARIES AND AFFILIATES
- ----------------------------------------------
Oread Pharmaceutical, Inc.
OTI Vital Records Storage Group, Inc. (Formerly DRS)
Output Technologies Central Region, Inc. (UMSI)
Output Technologies Eastern Region, Inc. (Mail Processing)
Output Technologies Network Graphics Design Group, Inc.
Output Technologies of California
Output Technologies of Illinois, Inc.
Output Technologies Omni Media Group, Inc. (James Keller)
Output Technologies Phoenix Litho Group, Inc.
Output Technologies SRI Group (Formerly SRI)
Output Technologies Summit Development Corporation
Output Technologies Western Region, Inc. (Formerly UMSI-CO)
Output Technologies, Inc.
Pathco, Inc.
Phoenix Litho, Inc.
Pioneer Western Corporation
Pioneer Western Energy Corporation
Pioneer Western Financial Corporation
Pioneer Western Financial Planning Corp.
Pioneer Western Management, Inc.
Pioneer Western Marketing Corp.
Pioneer Western Properties Corporation
Piowest Agency, Inc.
Policyholder Service Corporation
Property Resource & Entity Management, Inc.
PVI, Inc.
PW Distributors, Inc.
PW Securities, Inc.
Rockhill Pharmaceutical, Inc.
RX Data, Inc.
SERA, Inc.
Spring Pharmaceutical, Inc.
Stanton Pharmaceutical, Inc.
Stilwell Financial, Inc.
Support Resources, Inc.
Taproot Limited
The L.M. Johnson Company
Transaction Services, Inc.
EXHIBIT D
INTERCOMPANY AGREEMENT
FINANCIAL SERVICES SUBSIDIARIES AND AFFILIATES
- ----------------------------------------------
Troost Pharmaceutical, Inc.
UMS Enterprises, Inc.
UMSI of Colorado, Inc.
United Micrographic Systems, Inc.
U.S.I. Technology, Inc.
Vantage P & C Systems, Inc.
Vantage Computer Systems, Inc.
VCS Systems, Inc.
Villa Mare Development, Inc.
Winchester Business Center, Inc.
Z-Gard, Inc.
EXHIBIT E
INTERCOMPANY AREEMENT
TRANSPORTATION SUBSIDIARIES AND AFFILIATES
- ------------------------------------------
American Coleman Company
Bates County Land, Inc.
Canama Transportation
Carland, Inc.
CAYMEX Transportation, Inc.
City Cellular Telephone, Inc.
Fort Smith & Van Buren Railway Company
Gateway Eastern Railway
Gateway Western Railway
Global Terminaling Services, Inc. (formerly Pabtex)
Graysonia Nashville & Ashdown Railroad Company
Grupo Transportacion Ferroviaria Mexicana S.A. de C.V.
Joplin Southern Corporation
Joplin Union Depot
K&M Newco, Inc.
Kansas City Southern Transport Company, Inc.
KCS Investment Management, Inc.
KCS Transport Company, Inc.
Landa Motor Lines
LDX Broadcast, Inc.
LDX Group, Inc.
LDX Midwest Cellular, Inc.
LDX Net, Inc.
LDX Telecom Services, Inc.
Louisiana, Arkansas & Texas Transportation Company
Louisiana & Arkansas Railway Company
Mexrail, Inc.
Mid-American Cellular, Inc.
Mid-South Corporation
Mid-South Microwave, Inc.
Midlouisiana Rail Corporation
Midsouth Rail Corporation
Mulberry Western Company
NAFTA Rail S.A. de C.V.
North American Freight Transportation Alliance Railroad Company
EXHIBIT E
INTERCOMPANY AREEMENT
TRANSPORTATION SUBSIDIARIES AND AFFILIATES
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Panama Canal Railway Company
Port Arthur Bulk Marine Terminal Company
Rice-Carden Corporation
Southern Capital LLC
Southern Commercial Credit Corporation
Southern Credit Corporation
Southern Development Company
Southern Group, Inc.
Southern Industrial Services, Inc.
Southern Leasing Corporation
Southern Pacific Acquisition Company
Southrail Corporation
Telecom Consulting Group, Inc.
Telecom Engineering
Tennrail Corporation
Texas Mexican Railway Company
TFM S.A. de C.V.
The Arkansas Western Railway
The Kansas & Missouri Railway & Terminal Company
The Kansas City Northern Railway Company
The Kansas City Southern Railway Company
The Maywood & Sugar Creek Railway
Tolmak, Inc.
TransFin Insurance Ltd.
Trans-Serve, Inc.
United Energy Partners
Veals Baton Rouge I
Veals Baton Rouge II
Veals Baton Rouge III
Veals, Inc.
Wyandotte Garage Corporation