STOCK PURCHASE AGREEMENT, dated April 13, 1984, by and among Kansas
City Southern Industries, Inc., a Missouri corporation ("KCSI"), and Thomas
H. Bailey, William C. Mangus, Bernard E. Niedermeyer III, Michael Stolper,
and Jack R. Thompson, as individuals.
WHEREAS, Janus Capital Corporation, a Colorado corporation ("JCC"), is
a registered investment adviser under the Investment Advisers Act of 1940,
managing assets for corporations, individuals, and pension and profit-sharing
plans; and
WHEREAS, Janus Management Corporation, a Colorado corporation ("JMC"),
is a registered investment adviser under the Investment Advisers Act of 1940
and is the investment adviser to Janus Fund, Inc. ("Janus Fund"); and
WHEREAS, Thomas H. Bailey, William C. Mangus, Bernard E. Niedermeyer
III, Michael Stolper, and Jack R. Thompson (referred to collectively as the
"Shareholders of JCC") own all of the outstanding capital stock of JCC,
consisting of 400 shares of Common Stock, par value $.01 per share, and all
of the outstanding capital stock of JMC, consisting of 24,014 shares of
Common Stock, par value $.01 per share;
WHEREAS, immediately after the initial stock purchase by KCSI
contemplated by this Agreement, JMC will merge into JCC in accordance with
Colorado law, JCC to be the surviving corporation; and
WHEREAS, the Shareholders of JCC and KCSI after the merger of JMC into
JCC, will own all of the authorized and outstanding capital stock of JCC,
then consisting of 10,000,000 shares of common stock, $.01 par value per
share (the "JCC Shares"); and
WHEREAS, KCSI and the Shareholders of JCC desire that KCSI acquire from
the Shareholders of JCC, shares of JMC and JCC such that KCSI will own 80% of
the shares of JCC outstanding after such merger, on the terms and conditions
set forth herein.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
STOCK PURCHASES AND MERGER
Subject to the terms and conditions set forth below, the stock
purchases contemplated by the parties shall be effectuated at the following
times and in the following manner:
1.01 At the Closing provided for in paragraph 3.01 hereof, KCSI shall
purchase and each of the Shareholders of JCC shall sell, convey, assign,
transfer and deliver to KCSI, free and clear of all liens and encumbrances, a
total of 16,996 shares of JMC and 253 shares of JCC for a total price of
$10,937,922.24, in the following proportions:
NO. OF SHARES SOLD PURCHASE
NAME OF SELLER JMC JCC PRICE
- -------------- --- --- -------
Thomas H. Bailey 5,454 153 $5,016,009.33
William C. Mangus 10,054 100 $5,428,826.99
Bernard E. Niedermeyer III 645 -0- $ 213,736.84
Michael Stolper 843 -0- $ 279,349.08
Jack R. Thompson -0- -0- $ -0-
1.02 Immediately upon consummation of the stock purchases by KCSI
provided for in paragraph 1.01, KCSI and the Shareholders of JCC shall take
all steps necessary to effect a duly and validly authorized merger of JMC
into JCC in accordance with the laws of the State of Colorado and other
applicable laws, JCC to be the surviving corporation. Upon consummation of
such merger, each of the Shareholders of JCC and KCSI shall own the number of
JCC Shares set forth below, which shall be all of the issued and outstanding
capital stock of JCC:
NUMBER OF
SHARES OF
NAME OF HOLDER JCC
-------------- ---------
Thomas H. Bailey 2,898,671
William C. Mangus -0-
Bernard E. Niedermeyer III 134,039
Michael Stolper 175,181
Jack R. Thompson 75,789
KCSI 6,716,320
1.03 As soon after October 31, 1985 as the amount of Net After-Tax
Earnings of JCC for the fiscal year then ended has been determined as
provided in paragraph 2.04, but not later than thirty days after the date of
such determination, KCSI shall purchase and the Shareholders of JCC other
than William C. Mangus (the "Remaining Shareholders of JCC") shall sell,
convey, assign, transfer and deliver to KCSI, free and clear of all liens and
encumbrances, on a pro-rata basis, or on such other basis as the Shareholders
of JCC shall agree among themselves which does not violate the other
provisions of this Agreement, a total of 427,894 of the JCC shares at a price
per share equal to fifteen times the Net After-Tax Earnings per share of JCC
for the fiscal year ended October 31, 1985.
1.04 As soon after October 31, 1986 as the amount of Net After-Tax
Earnings of JCC for the fiscal year then ended has been determined as
provided in paragraph 2.04, but not later than thirty days after the date of
such determination, KCSI shall purchase and the Remaining Shareholders of JCC
shall sell, convey, assign, transfer and deliver to KCSI, free and clear of
all liens and encumbrances, on a pro-rata basis, or on such other basis as
the Shareholders of JCC shall agree among themselves which does not violate
the other provisions of this Agreement, a total of 427,893 of the JCC shares
at a price per share equal to fifteen times the Net After-Tax Earnings per
share of JCC for the fiscal year ended October 31, 1986.
1.05 As soon after October 31, 1987 as the amount of Net After-Tax
Earnings of JCC for the fiscal year then ended has been determined as
provided in paragraph 2.04, but not later than thirty days after the date of
such determination, KCSI shall purchase and the Remaining Shareholders of JCC
shall sell, convey, assign, transfer and deliver to KCSI, free and clear of
all liens and encumbrances, on a pro-rata basis, or on such other basis as
the Shareholders of JCC shall agree among themselves which does not violate
the other provisions of this Agreement, a total of 427,893 of the JCC shares
at a price per share equal to fifteen times the Net After-Tax Earnings per
share of JCC for the fiscal year ended October 31, 1987.
ARTICLE II
NET AFTER-TAX EARNINGS
2.01 The term "Net After-Tax Earnings of JCC" as used in this
Agreement shall mean all income of JCC for the applicable period from
operations in the ordinary course of business, less the expenses of JCC for
the applicable period, including salaries, bonuses and related employee
costs, rent, utilities, depreciation, taxes, travel and entertainment
expenses and all other operating expenses, and including federal and state
income taxes payable on account of such income, all calculated in accordance
with generally accepted accounting principles applied on a consistent basis;
provided that "Net After-Tax Earnings of JCC" shall not include earnings, nor
be reduced by losses, of any corporation or other entity acquired by JCC
(including any acquisition of substantially all the assets of any such
corporation or other entity) after the date of the Closing provided for in
Section 3.01 of this Agreement. For purposes of this calculation, (i) no
charge shall be made to JCC by KCSI or any affiliate of KCSI for any services
furnished to JCC by KCSI or any such affiliate unless such services have been
approved by Thomas H. Bailey and (ii) no change shall be made in the kind or
methods of computing of such expenses from the kind and methods employed
during the year ended October 31, 1983, without KCSI's consent in advance.
2.02 Whenever KCSI is permitted to consolidate the income of JCC with
the income of KCSI for federal income tax purposes, the tax rate to be
applied to net earnings to determine the Net After-Tax Earnings of JCC shall
be the federal income tax rate which would be applicable to JCC if no such
consolidation were to have occurred.
2.03 For purposes of determining the Net After-Tax Earnings of JCC,
the direct, out-of-pocket cost of organizing a new mutual fund requested in
writing by KCSI and initially registering such fund or its shares under the
Investment Company Act of 1940, the Securities Act of 1933 and state
securities or Blue Sky laws, including legal, accounting and printing costs,
shall be shared equally by JCC and by KCSI or an affiliate of KCSI.
2.04 At the end of each fiscal year during which at any time any of
the Shareholders of JCC owned, beneficially or otherwise, any JCC Shares, the
Net After-Tax Earnings of JCC as defined in this Article II shall be
determined and certified by Price Waterhouse, or a comparable certified
public accounting firm (one of the so called "Big Eight" firms) then
providing accounting services to JCC.
ARTICLE III
CLOSING
3.01 The Closing of the purchase and sale provided for in paragraph
1.01 (the "Closing") shall be held in the offices of Davis, Graham & Stubbs
in Denver, Colorado at 10:00 a.m. Mountain Standard Time on the first
business day following the obtaining of shareholder approval required by
paragraphs 7.06 and 8.02 (the "Closing Date"), or at such other time or place
as KCSI and the Shareholders of JCC may agree.
3.02 At the Closing, each of the Shareholders of JCC shall deliver a
certificate or certificates representing the shares of JMC and JCC being sold
by him pursuant to paragraph 1.01, duly endorsed to KCSI with such
endorsement signature guaranteed, and KCSI shall deliver to each of the
Shareholders of JCC a certified or bank check for the purchase price of the
shares being purchased from such Shareholder of JCC.
3.03 Closings of the purchases and sales of JCC Shares provided for in
paragraphs 1.03, 1.04 and 1.05 shall be held at the offices of JCC in Denver,
Colorado, at such time (no later than thirty days after the date that the
amount of Net After-Tax Earnings of JCC for the preceding fiscal year has
been determined as provided in paragraph 2.04) as KCSI and the Remaining
Shareholders of JCC may agree. At each such closing, the Remaining
Shareholders of JCC shall deliver certificates representing the JCC Shares
being sold and KCSI shall deliver payment for such shares in the manner
provided in paragraph 3.02.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF KCSI
KCSI hereby represents and warrants as follows:
4.01 KCSI is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has full corporate
power and authority to carry on the business it is now conducting.
4.02 The execution, delivery and performance of this Agreement by KCSI
has been duly and validly authorized and approved by all necessary action of
KCSI, and this Agreement is a valid and binding obligation of KCSI,
enforceable against it in accordance with its terms.
4.03 Neither the execution, the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby nor compliance by KCSI
with any of the provisions hereof will (i) violate or conflict with, or
result in a breach of any provisions of the Certificate of Incorporation or
Bylaws of KCSI, or (ii) constitute a default under, or result in the
termination of, any material note, bond, mortgage, indenture, deed of trust,
license, agreement or other instrument or obligation to which KCSI is a
party, or (iii) violate any order, writ, injunction or decree applicable to
KCSI or any of KCSI's material assets, or (iv) violate any applicable law or
any order, rule or regulation of any regulatory or governmental authority
having jurisdiction.
4.04 KCSI has not entered into and will not enter into any agreement,
arrangement or understanding with any person or firm which will result in an
obligation of JCC or JMC to pay any finder's fee, brokerage commission, or
similar payment in connection with the transactions contemplated by this
Agreement.
4.05 The representations and warranties contained in this Article IV
shall survive the Closing, and remain in effect for a period of three years
following the Closing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
THE SHAREHOLDERS OF JCC
The Shareholders of JCC hereby represent and warrant as follows:
5.01 The shares of JMC and JCC to be sold under this Agreement have
been and will remain upon delivery to KCSI duly and validly authorized for
issuance, legally issued, fully paid and non-assessable. As to the shares
being delivered to KCSI at each closing provided for in Article III (i) each
of the Shareholders of JCC has and will have immediately prior to delivery to
KCSI hereunder full right, title and interest to his respective portion of
such shares free and clear of all liens and encumbrances, (ii) except as set
forth in this Agreement, there are no agreements or understandings with
respect to the voting of such shares, (iii) there are not outstanding, and
will not be outstanding at the Closing Date or at the date of the other
closings provided for in Article III any options, warrants or rights to
purchase or otherwise acquire any of such shares, except as provided herein,
and (iv) upon proper endorsement and delivery of the certificate or
certificates representing any such shares to KCSI, KCSI shall have full
right, title and interest to such shares free and clear of all liens and
encumbrances.
5.02 JCC and JMC are corporations duly organized, validly existing and
in good standing under the laws of the State of Colorado, have full corporate
power and authority to carry on the businesses they are now conducting and to
own or lease and operate the assets and properties now owned or leased and
operated by them, and are not required to be qualified to do business in any
other jurisdiction except for jurisdictions in which failure to be so
qualified could not subject JCC or JMC to any material liability or
disability by reason of such failure. Neither JCC nor JMC have any
subsidiaries.
5.03 The Shareholders of JCC have delivered to KCSI balance sheets of
JCC and JMC as of October 31, 1983, and statements of operations and
statements of changes in financial position of JCC and JMC for the fiscal
year ended October 31, 1983, all of which have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods indicated and present fairly the financial position of JCC and
JMC and their results of operations and changes in financial position for the
periods indicated. Other than as disclosed on the JCC and JMC balance sheets
dated October 31, 1983 and in exhibit 5.03 attached hereto and made a part
hereof, but without expanding the scope of the other representations and
warranties herein, JCC and JMC do not have any liability of any nature,
including without limitation liability for federal, state, local or foreign
taxes, which is material, whether accrued or contingent, other than
liabilities arising since October 31, 1983 in the ordinary course of business
which are not inconsistent with the representations and warranties made
herein.
5.04 JCC and JMC have filed, or caused to be filed, with the
appropriate governmental agencies, all federal, state and local tax returns
and all reports with respect to income and other reports, the filing of which
is necessary for the conduct of their businesses or required by any taxing
authority having jurisdiction. All such tax returns and reports properly
reflect the taxes attributable to the businesses of JCC and JMC for the
periods covered thereby. All federal, state and local taxes, assessments,
interest, penalties, deficiencies, fees or other governmental charges or
impositions called for by such tax returns or reports, or to JCC's or JMC's
knowledge are claimed to be due by any taxing authority, have been properly
paid. JCC or JMC have not received any notice of deficiency or assessment or
a proposed deficiency or assessment from the Internal Revenue Service or any
other taxing authority. JCC or JMC have not waived any law or regulation
fixing, or consented to the extension of, any period of time for assessment
of any tax.
5.05 The Shareholders of JCC have furnished to KCSI a schedule listing
all policies of insurance maintained by JCC and JMC. All such policies are
outstanding and duly in force on the date hereof, are in the amounts shown
in, and insure against the losses and risks described in said schedule. JCC
or JMC have not received notice from any insuror or its agent of cancellation
of any insurance policy or that substantial actions will have to be taken or
that substantial capital improvements or other expenditures will have to be
made in order to continue such insurance.
5.06 Other than as disclosed to KCSI in exhibits 5.06 and 5.08
attached hereto and made a part hereof, there is no (i) litigation,
proceeding, arbitral action or governmental investigation pending or, as far
as is known to any of the Shareholders of JCC or to JCC or JMC, threatened
against JCC or JMC or their assets, (ii) fact known to any of the
Shareholders of JCC or to JCC or JMC that may give rise to any such
litigation, proceeding or investigation, nor (iii) decree, injunction or
order of any court or governmental department or agency outstanding against
JCC or JMC with respect to its business.
5.07 To the best knowledge of the Shareholders of JCC after reasonable
investigation, except as disclosed to KCSI in exhibit 5.07 attached hereto
and made a part hereof, JCC and JMC hold all material licenses, permits, and
authorizations necessary for the lawful conduct of their businesses under,
and are otherwise in compliance with, all applicable statutes, regulations,
orders, ordinances, and other laws of the United States and all states and
local governments, and agencies thereof, that have a material effect upon
JCC or JMC or the conduct of their businesses. Neither JCC nor JMC has
received any notice or otherwise been advised that it is in violation of any
such statute, regulation, order, ordinance, or other law. Neither JCC, JMC
nor any of the Shareholders of JCC knows after reasonable investigation of
any existing circumstance that is likely to result in such a violation.
Except for properties which in the aggregate are not material to JCC or JMC,
JCC and JMC respectively have good and marketable title to all of their
respective real and personal properties except for such minor imperfections
in title which do not materially detract from the value, nor prohibit the
present use, of such properties. To the best knowledge of the Shareholders of
JCC after reasonable investigation, the respective real and personal
properties of JCC and JMC are subject to no mortgage, pledge, lien,
encumbrance, charge, security interest or other security arrangement except
for (i) liens for the payment of taxes, the payment of which is not
delinquent or subject to penalty and (ii) encumbrances incidental to the
conduct of their respective businesses which were not incurred in connection
with the borrowing of money and which do not in the aggregate materially
detract from the value of such properties or materially impair the use
thereof, except as disclosed on their respective financial statements or in
exhibit 5.07 attached hereto and made a part hereof. All leases pursuant to
which JCC or JMC lease any substantial amount of real or personal property
are valid and effective in accordance with their terms.
5.08 Except as disclosed to KCSI in exhibit 5.08 attached hereto and
made a part hereof, no officer, director, or employee of JCC or JMC is a
party or is expected to become a party to any material transaction with JCC
or JMC, including without limitation any contract, agreement, or other
arrangement (i) providing for the furnishing of services by, (ii) providing
for the rental of real or personal property from, or (iii) otherwise
requiring payments (other than for service as officer, director, or employee)
to any such person or corporation, partnership, trust, or other entity in
which any such person has a substantial interest as an officer, director,
trustee, or partner.
5.09 Since October 31, 1983, (i) JCC and JMC have operated their
businesses in the ordinary course and exercised all reasonable efforts to
preserve their businesses intact, to keep available the services of their
employees and to preserve the goodwill of their clients, (ii) there has been
no change in JCC's or JMC's condition (financial or otherwise), assets,
liabilities, earnings, or businesses, except for changes in the ordinary
course of business which are not individually or in the aggregate materially
adverse to JCC or JMC, and (iii) JCC and JMC have not declared or paid any
dividend or made any distribution in respect of any JCC or JMC shares, or
issued, redeemed, purchased or otherwise acquired or disposed of any of their
shares of capital stock except as contemplated herein.
5.10 To the best knowledge of the Shareholders of JCC after reasonable
investigation, JCC and JMC are in compliance with all provisions of the
Investment Advisers Act of 1940 applicable to them and their operations, and,
except as disclosed to KCSI in exhibit 5.10 attached hereto and made a part
hereof, with all investment adviser registration or qualification
requirements of applicable state securities or Blue Sky laws.
5.11 To the best knowledge of the Shareholders of JCC after reasonable
investigation, except as disclosed to KCSI in exhibit 5.11 attached hereto
and made a part hereof, Janus Fund is in compliance with all applicable
requirements of the Securities Act of 1933, the Investment Company Act of
1940.
5.12 Neither the execution or delivery of this Agreement, the
consummation of the transactions contemplated hereby, nor compliance by the
Shareholders of JCC with any of the provisions hereof will (i) violate or
conflict with, or result in a breach of any provisions of the Articles of
Incorporation or Bylaws of JCC or JMC, or (ii) constitute a default under, or
result in the termination of, any material note, bond, mortgage, indenture,
deed of trust, license, agreement or other instrument or obligation to which
JCC, JMC or the Shareholders of JCC is a party, or (iii) violate any order,
writ, injunction or decree applicable to JCC, JMC or the Shareholders of JCC,
or any of their material assets, or (iv) to the best knowledge of the
Shareholders of JCC after reasonable investigation, except as disclosed to
KCSI in exhibit 5.12 attached hereto and made a part hereof, violate any
applicable law or any order, rule or regulation of any regulatory or
governmental authority having jurisdiction.
5.13 JCC and JMC have not entered into and will not enter into any
agreement, arrangement or understanding with any person or firm which will
result in an obligation of JCC, JMC or KCSI to pay any finder's fee,
brokerage commission, or similar payment in connection with the transactions
contemplated by this Agreement.
5.14 JCC and JMC have delivered to KCSI a complete and accurate copy
of the Articles of Incorporation and Bylaws of JCC and JMC, as in effect on
the date hereof, and a list of all material investment advisory and other
contracts, agreements, instruments, leases and licenses of JMC and JCC. True
and complete copies of the documents referred to in such list have been made
available to KCSI. To the best knowledge of the Shareholders of JCC after
reasonable investigation neither JMC nor JCC nor any other party to any such
contract, agreement, instrument, lease or license is in default in complying
with any material provision thereof, and each such contract, agreement,
instrument, lease and license is in full force and is valid and effective in
accordance with its respective terms. Neither JCC nor JMC is a party to or is
bound by any contract, agreement, deed, instrument, lease or license, or
subject to any charter or other corporate restriction, which has had or which
is reasonably likely to have a material adverse effect on the financial
condition, results of operation, business, properties, assets or liabilities
of JMC or JCC.
5.15 JCC and JMC have delivered to KCSI a list of all pension,
profit-sharing, option and other employee benefit plans of JCC and JMC. True
and complete copies of the documents referred to in such list have been made
available to KCSI. All obligations of JCC and JMC under such plans are fully
funded as to past service benefits and all accrued payments thereunder have
been paid except as disclosed in such list. As to any plan purporting to be a
qualified plan under Section 401(a) of the Internal Revenue Code, (i) all
necessary action has been taken to effect and maintain the qualification of
such plan, (ii) any trust established in connection with any such plan has no
liability of any nature which is accrued or contingent including without
limitation liability for federal, state, local or foreign taxes, except as
described in such list, and (iii) no such plan or trust is in violation of,
or in default with respect to, any law, order, judgment, decree, or
regulation.
5.16 It is expressly understood that Michael Stolper is a Shareholder
of JCC but not an employee of JCC or JMC, and that he is not expected to make
inquiry into any of the matters about which the Shareholders of JCC make
representations to the best of their knowledge after reasonable investigation
in this Article V. The representations and warranties contained in this
Article V shall survive the Closing and remain in effect for a period of
three years following the Closing.
5.17 None of the Shareholders of JCC have any claims or causes of
action against JCC or JMC, or knowledge of any basis for any such claims or
causes under any contracts or agreements, for any tort or alleged tort, or
upon any other basis or with respect to any other matter.
ARTICLE VI
AFFIRMATIVE COVENANTS
6.01 Until the date of the Closing (the "Closing Date"), the
Shareholders of JCC will cause JCC and JMC to conduct their businesses only
in the ordinary course except as otherwise permitted or required by this
Agreement or consented to by KCSI in writing. In addition, JCC and JMC, prior
to the Closing Date, will not, except as otherwise permitted or required by
this Agreement or consented to by KCSI in writing, (i) declare, set aside or
pay any dividend or other distribution of assets to the Shareholders of JCC,
except that nothing herein shall prevent the payment of bonuses to employees
of JCC or JMC on a basis which is in accordance with past practices and is
not inconsistent with the financial projections heretofore furnished KCSI by
the Shareholders of JCC, (ii) make any change in the number of shares of
authorized or issued capital stock of JCC or JMC or other securities or
obligations to issue securities, (iii) lend any money or otherwise pledge the
credit of JCC or JMC except in the ordinary course of business, (iv) fail in
any material respect to comply with any statutes, laws, ordinances, rules,
regulations or other governmental restrictions applicable to them or with any
contract, commitment or agreement to which either of them is a party, or (v)
merge or consolidate with, purchase substantially all the assets of, or
otherwise acquire any business or proprietorship, firm, association,
corporation or other business organization or division thereof, other than
the merger of JMC into JCC contemplated herein.
6.02 Until the Closing Date, the Shareholders of JCC shall cause JCC
and JMC to (i) duly comply in all material respects with all laws and
regulations applicable to JCC and JMC and to the conduct of their businesses
and all laws and regulations applicable to the transactions contemplated by
this Agreement, (ii) maintain in full force and effect the insurance policies
heretofore maintained by JCC and JMC (or policies providing substantially the
same coverage), and (iii) maintain all books and records in the usual,
regular and ordinary manner and promptly advise KCSI in writing of any
material adverse change in their condition (financial or otherwise), assets,
liabilities or businesses.
6.03 Until the Closing Date, subject to the merger of JMC into JCC,
the Shareholders of JCC will use their best efforts to preserve the business
organizations of JCC and JMC intact, to continue operations as in the past,
to keep available to KCSI the services of the present officers and employees
of JCC and JMC, and to preserve for KCSI the goodwill of the clients and
others having business relations with JCC or JMC.
6.04 Prior to the Closing Date, the Shareholders of JCC shall seek the
approval of the Board of Directors and shareholders of Janus Fund to a new
Investment Advisory Agreement to be entered into between JCC and Janus Fund,
which shall become effective upon the purchase of stock of JMC and JCC by
KCSI as provided for in paragraph 1.01 and upon the consummation of the
merger between JMC and JCC as provided for in paragraph 1.02. Such Investment
Advisory Agreement shall contain terms substantially identical to the terms
of the present Investment Advisory Agreement between Janus Fund and JMC,
except for changes (none of which shall materially change the allocation of
expenses between Janus Fund and the investment adviser) that are deemed
necessary or desirable to conform to applicable rules or regulations of the
Securities and Exchange Commission or the National Association of Securities
Dealers, Inc. and which are consented to in advance by KCSI.
6.05 Prior to the Closing Date, the Shareholders of JCC shall seek the
consent of each of JCC's principal investment advisory clients to the
continuation of the investment advisory relationship between JCC and each of
such clients subsequent to the Closing Date.
6.06 The Shareholders of JCC shall deliver to KCSI copies of financial
statements of JCC or JMC prepared monthly commencing January 31, 1984 to the
Closing Date and copies of any filings by JCC or JMC with, and notices or
orders received by JCC or JMC from, the Securities and Exchange Commission,
and any state securities commission or authority, during such period.
6.07 Prior to the Closing Date, the Shareholders of JCC shall cause
JMC and JCC to allow the officers, employees and authorized representatives
of KCSI to have full access to all offices, properties, files, books and
records of JCC and JMC, and shall provide all information reasonably
requested by such officers, employees and authorized representatives of KCSI
which is within their knowledge or reasonably obtainable by them concerning
JCC, JMC and Janus Fund, including, without limitation, information about
their respective operations, capitalization and shareholders, and any of
their investment advisory clients. The Shareholders of JCC shall cause the
officers and employees of JMC and JCC to cooperate with and assist KCSI in
its review and investigation of the businesses and affairs of JCC, JMC and
Janus Fund and shall permit Price Waterhouse to review, audit or examine, at
KCSI's discretion and expense, such books, records, financial data and other
information relating to the business of JCC and JMC as KCSI may direct.
6.08 In addition to the approvals and consents to be obtained pursuant
to paragraphs 6.04 and 6.05, prior to the Closing Date, the Shareholders of
JCC shall cause JCC and JMC to use their best efforts, and KCSI shall use its
best efforts, to obtain all requisite approvals and consents from
governmental or regulatory bodies or agencies, or pursuant to leases,
mortgages, contracts or agreements, permits or licenses of or affecting JCC
or JMC or KCSI, respectively, relative to the transactions contemplated by
this Agreement.
6.09 The Shareholders of JCC shall not transfer, dispose of, or in any
way encumber any of their shares of JMC or JCC in any manner which would
prevent them from selling such shares to KCSI as herein provided and the
certificates for all shares of JCC to be delivered after the Closing Date
pursuant to the subsequent closings provided for in Article III shall bear a
legend disclosing the existence of this Agreement and the limitations upon
disposition set forth in this paragraph 6.10. Notwithstanding the
limitations set forth in this paragraph 6.10, any Shareholder of JCC may
transfer any share of JCC after the Closing Date to any relative of such
Shareholder, or to any trust or other entity for the benefit of such
relative, provided such transfer is effected in accordance with law,
including applicable securities laws and regulations, and such relative,
trust or entity agrees to be, and becomes at the time of such transfer, bound
by the terms and provisions of this Stock Purchase Agreement.
6.10 Settlement of the litigation pending in the District Court of
Denver County, Denver, Colorado, entitled GORDON YALE V. JANUS MANAGEMENT
CORPORATION, THOMAS H. BAILEY AND WILLIAM C. MANGUS, shall be made only as
approved or directed by KCSI, and any amounts paid, or obligations incurred,
by JMC or JCC (except for the fees and expenses of their counsel) in
connection with such litigation, including any settlement thereof not in
excess of $100,000 or satisfaction of any judgment obtained therein, shall be
borne solely by Thomas H. Bailey and William C. Mangus provided that they
shall bear the costs of settlement up to $100,000 only if they have approved
such settlement, in the same proportion as their respective ownership of the
shares of JCC and JMC owned by them immediately prior to the Closing Date.
If, at the time of any such settlement or judgment, Thomas H. Bailey or
William C. Mangus is an employee of JCC, in lieu of receiving reimbursement
for any amount that such employee may be liable for hereunder, JCC shall
reduce such employee's compensation by such amount.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF THE SHAREHOLDERS OF JCC TO CLOSE
The obligations of the Shareholders of JCC under this Agreement with
respect to the sale of their shares shall be subject to the fulfillment on or
prior to the Closing Date of each of the following conditions:
7.01 All of the representations and warranties by KCSI contained in
this Agreement shall be true and correct as of the Closing Date. KCSI shall
have complied with and performed all of the agreements, covenants and
conditions required by this Agreement to be performed and complied with by it
on or prior to the Closing Date. The Shareholders of JCC shall have been
furnished at the Closing Date with a Certificate dated the Closing Date,
signed by the President and Secretary of KCSI, certifying to the best of
their knowledge, but without personal liability under such certificate except
for intentional misstatements or omissions, the fulfillment of the foregoing
conditions.
7.02 There shall have been delivered to the Shareholders of JCC an
opinion, dated the Closing Date, and addressed to the Shareholders of JCC by
Richard P. Bruening, Esq., KCSI's general counsel, or such other counsel as
shall be acceptable to the parties hereto, to the effect that:
(a) KCSI is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has corporate
power to carry on its business as it is then being conducted;
(b) Such counsel does not know of any material litigation,
proceeding, arbitral action or governmental investigation pending or
threatened against KCSI that seeks to prevent, or claims damages arising out
of, the transactions contemplated by this Agreement;
(c) The execution, delivery and performance of this Agreement
has been duly authorized and approved on behalf of KCSI by all corporate
action required and this Agreement has been duly executed and delivered by
KCSI pursuant to such authorization and constitutes a valid and binding
obligation of KCSI subject to applicable bankruptcy, insolvency and other
laws affecting the enforcement of creditors' rights generally; and
(d) Neither the execution, the delivery of this Agreement, nor
the consummation of the transactions contemplated hereby nor compliance by
KCSI with any of the provisions hereof (i) violates or conflicts with, or
results in a breach of any provisions of the Certificate of Incorporation or
Bylaws of KCSI, or (ii) to the best of such counsel's knowledge constitutes a
default under, or results in the termination, any material note, bond,
mortgage, indenture, deed of trust, license, agreement or other instrument or
obligation of which such counsel has knowledge to which KCSI is a party,
except for such conflict, breach or default as to which requisite waivers or
consents shall have been obtained by KCSI prior to the Closing Date, or (iii)
violates any order, writ, injunction or decree, of which such counsel has
knowledge, applicable to KCSI or any of KCSI's material assets.
7.03 KCSI shall have obtained all approvals and consents required of
it from governmental or regulatory bodies or agencies or pursuant to leases,
mortgages, contracts, agreements, permits or licenses to which KCSI is a
party relative to the transactions contemplated by this Agreement.
7.04 No adverse change in ownership of KCSI (as defined in paragraph
10.06) shall have occurred after this date hereof and prior to the Closing
Date.
7.05 There shall not have been instituted any suit or proceeding to
restrain or invalidate this transaction or seeking damages from or to impose
obligations upon JCC or JMC which in JCC's or JMC's judgment, reasonably
exercised, would involve expenses or lapses of time that would be materially
adverse to JCC's or JMC's interests.
7.06 The approval of the Board of Directors and shareholders of Janus
Fund to a new Investment Advisory Agreement as provided for in paragraph 6.04
shall have been duly obtained.
ARTICLE VIII
CONDITIONS PRECEDENT TO KCSI'S OBLIGATION TO CLOSE
The obligation of KCSI under this Agreement to purchase shares of JMC
and JCC at the Closing shall be subject to the fulfillment of each of the
following conditions, on or prior to the Closing Date, and the obligation of
KCSI to purchase shares of JCC after the Closing Date shall be subject to
fulfillment of the conditions set forth in paragraphs 8.10 and 8.13 on or
prior to each of such closings;
8.01 All of the representations and warranties of the Shareholders of
JCC contained in this Agreement shall be true and correct at and as of the
Closing Date except for changes contemplated herein. The Shareholders of JCC
shall have complied with and performed all of the agreements, covenants, and
conditions required by this Agreement to be performed and complied with by
them on or prior to the Closing Date. KCSI shall have been furnished at the
Closing Date with a Certificate, dated as of the Closing Date, signed by
Thomas H. Bailey and William C. Mangus, individually and as officers of JCC,
certifying to the best of their knowledge, but without personal liability
under such certificate beyond their personal liability otherwise arising
hereunder except for intentional misstatements or omissions, the fulfillment
of the foregoing conditions.
8.02 The approval of the Board of Directors and shareholders of Janus
Fund to a new Investment Advisory Agreement as provided for in paragraph 6.04
shall have been duly and validly obtained.
8.03 Since October 31, 1983, there shall have been no change in the
condition (financial or otherwise), assets, liabilities, earnings, or
business of JCC from that of JCC and JMC combined as of October 31, 1983,
except for changes in the ordinary course of business of JCC and JMC which
are not in the aggregate materially adverse to JCC.
8.04 The principal advisory clients of JCC shall have been given
notice of the proposed change of control that will result from the
transactions provided for herein and advisory clients accounting for at least
75% of the assets managed by JCC at December 1, 1983 shall have consented to
such change.
8.05 The Shareholders of JCC and JMC shall have obtained all requisite
approvals and consents from governmental or regulatory bodies or agencies or
pursuant to leases, mortgages, contracts or agreements (other than those
referred to in paragraphs 6.04 and 6.05 hereof), permits or licenses relative
to the transactions contemplated by this Agreement.
8.06 There shall have been delivered to KCSI an opinion, dated the
Closing Date (and, at the option of KCSI, with respect to the Remaining
Shareholders' interests under paragraph 8.06(f), the date of each of the
other closings pursuant to Article III) and addressed to KCSI of Davis,
Graham & Stubbs, counsel to the Shareholders of JCC, to the effect that:
(a) JCC and JMC are corporations duly organized and existing
and in good standing under the laws of the State of Colorado;
(b) Such counsel does not know, after reasonable investigation,
of any material litigation, proceeding, arbitral action or governmental
investigation pending or threatened against JCC or JMC that seeks to prevent,
or claims damages arising out of, the transactions contemplated by this
Agreement;
(c) This Agreement constitutes a valid and binding obligation
of each of the Shareholders of JCC;
(d) Neither the execution or delivery of this Agreement, the
consummation of the transactions contemplated hereby, nor compliance by the
Shareholders of JCC with any of the provisions hereof violates or conflicts
with, or results in a breach of any provisions of (i) the Articles of
Incorporation or Bylaws of JMC or JCC, or (ii) to the best of such counsel's
knowledge constitutes a default under, or results in the termination of, any
material note, bond, mortgage, indenture, deed of trust, license, agreement
or other instrument or obligation of which such counsel has knowledge to
which JCC, JMC or the Shareholders of JCC is a party, except the Investment
Advisory Agreement between Janus Fund and JMC, and except for Investment
Advisory Agreements between JCC and any of its clients who have not consented
and do not consent to the change of control of JCC that results from the
transactions provided for herein, or (iii) violates any order, writ,
injunction or decree of which such counsel has knowledge, applicable to JCC,
JMC or the Shareholders of JCC, or any of their material assets;
(e) The authorized capital stock of JCC consists of 6,000
shares of common stock, $.01 par value per share and the authorized capital
stock of JMC consists of 50,000 shares of Common stock, $0.01 par value per
share; all outstanding shares of each such stock have been duly authorized
and are validly issued, fully paid and non-assessable; and
(f) To the best knowledge of such counsel, the Shareholders of
JCC own the JMC and JCC shares free and clear of any liens or encumbrances
and have full right, power and authority to sell and deliver said shares to
KCSI as contemplated in this Agreement.
(g) To the best knowledge of such counsel, no affiliation
between the Janus Fund and Cerberus Partners, Ltd. or between the Janus Fund
and Taurus Partners, Ltd. exists at the Closing Date which would result in
any transactions by such entities being deemed "joint transactions" violative
of Section 17(d) of the Investment Company Act of 1940 or Rule 17(d)
thereunder.
(h) The Janus Fund Proxy Statement does not contain any
material misstatements or omissions which would be in violation of SEC Rule
14a-9, except that such counsel need express no opinion with respect to
compliance with state securities or Blue Sky laws.
8.07 There shall have been delivered to KCSI an opinion, dated the
Closing Date and addressed to KCSI, of counsel to the Janus Fund to the
effect that the shareholders of such Fund have duly approved an Investment
Advisory Agreement, in the form attached as Exhibit 8.07 hereto, to be
entered into and to become effective immediately following the merger of JMC
and JCC, and upon due execution and delivery of such Agreement by such Fund
and JCC, such Agreement will be in full force and effect in accordance with
its terms.
8.08 The approval of the Janus Fund Board of Directors and
shareholders provided for in paragraph 6.04 shall have been duly obtained.
8.09 KCSI shall not have advised the Shareholders of JCC prior to that
date which shall be one week after the date hereof that KCSI is dissatisfied,
in its sole judgment, with the results of its investigation of JCC and JMC
pursuant to paragraph 6.07.
8.10 On or prior to each of the closings provided for under Article
III, the representations and warranties of the Shareholders of JCC provided
for in paragraph 5.01 remain true and correct at and as of each such date
except for changes contemplated herein.
8.11 All pending or known claims, and all litigation, against JCC, JMC
or the Janus Fund shall have been resolved, or provision for such resolution
made, on a basis which is satisfactory to KCSI.
8.12 Receipt by KCSI of the duly executed escrow agreement referred to
in paragraph 17.01.
8.13 Prior to any purchase by KCSI of shares of JCC after the Closing
Date, JMC shall have merged into JCC in a duly and validly authorized merger
in accordance with the laws of the State of Colorado and any other applicable
laws, and such merger shall have become effective.
8.14 JCC shall have registered in each state in which its rendition of
investment advisory service requires such registration.
8.15 There shall not have been any material revision of the Janus Fund
proxy material as filed with the Securities and Exchange Commission on or
about March 31, 1984, which revision is objected to by KCSI.
8.16 The Board of Directors or Executive Committee of KCSI shall have
approved this Agreement.
ARTICLE IX
OTHER TRANSFERS OF SHARES; RIGHTS OF FIRST REFUSAL
9.01 If at any time after the Closing Date, any Shareholder other than
Thomas H. Bailey of JCC desires to sell or otherwise dispose of any of his
remaining JCC Shares, he shall first offer the shares he desires to dispose
of to such employee or employees of JCC as might be designated by JCC
pursuant to paragraph 9.10 to be eligible to purchase such JCC Shares or a
portion thereof, and to the other Remaining Shareholders of JCC (other than
KCSI) in writing for thirty days, at a price per share equal to fifteen times
the Net After-Tax Earnings per share of JCC for the fiscal year ended
immediately prior to such sale, except that if such sale occurs before
October 31, 1985 the price shall be $1.6373 per share. Any such employee or
employees designated by JCC shall have a prior right to purchase an amount of
JCC Shares designated by JCC, and any remaining shares may be purchased by
the other Remaining Shareholders of JCC (other than KCSI) in the proportion
that each such other Shareholder's holding in JCC bears to the holdings of
all such other Remaining Shareholders of JCC. If any Shareholder of JCC to
whom an offer is made pursuant to this paragraph 9.01 does not accept the
offer with respect to all the JCC Shares offered to him, the other
Shareholders of JCC to whom an offer was also made shall have the right to
purchase any remaining JCC Shares on such basis as they may agree among
themselves and at the price specified herein, provided such purchase by such
other Shareholders of JCC occurs within thirty days after the offer to such
employee or employees made pursuant to this paragraph 9.01.
9.02 If within thirty days after any JCC Shares are offered pursuant
to paragraph 9.01, any designated employee or employees of JCC or the other
Shareholders of JCC (other than KCSI) have not accepted the offer with
respect to all of the JCC Shares offered, any remaining shares shall be
offered to JCC in writing for 30 days at the price specified in paragraph
9.01.
9.03 If within thirty days after the JCC Shares are offered pursuant
to paragraph 9.02, JCC has not accepted the offer with respect to all the JCC
Shares offered, any remaining shares shall be purchased by KCSI at the price
provided for in paragraph 9.01.
9.04 If, after the Closing Date, Bernard E. Niedermeyer III, Jack R.
Thompson or any employee of JCC who first acquired JCC Shares after the
Closing Date leaves the employ of JCC for any reason, including, without
limitation, death or disability, but not including sick leave or a leave of
absence or sabbatical for a period of up to one year that has been authorized
by the Board of Directors of JCC, the JCC Shares held by such Shareholder
shall be offered first to any designated employee or employees of JCC and the
other Shareholders of JCC, then to JCC, and finally to KCSI, under the
procedures and at the price specified in paragraphs 9.01 through 9.03.
9.05 If, after the Closing Date, Thomas H. Bailey dies or becomes
disabled, or if his employment by JCC is terminated by the Board of Directors
of JCC other than for cause (as hereinafter defined), Mr. Bailey (or his
personal representative if he is deceased or legally incompetent) shall sell,
and KCSI shall purchase all of Mr. Bailey's JCC Shares not theretofore
purchased by KCSI at a price equal to fifteen times the Net After-Tax
Earnings per share of JCC for the fiscal year ended immediately prior to the
date of such death, disability or termination, except that if such date is
before October 31, 1985, the price shall be $1.6373 per share.
9.06 Thomas H. Bailey hereby agrees that he will continue to serve as
the chief executive officer of JCC at least until October 31, 1987. If,
notwithstanding such agreement, Mr. Bailey terminates his employment by JCC
prior to October 31, 1987, or if his employment is terminated by the Board of
Directors of JCC for cause, KCSI is hereby granted an option, which KCSI may
exercise at any time within 120 days following such termination, to purchase
all of Mr. Bailey's JCC Shares at a price equal to fifteen times the Net
After-Tax Earnings per share of JCC for the fiscal year ended immediately
prior to the date of such termination of employment, except that if such date
is before October 31, 1985, the price shall be $1.6373 per share. Such option
may be exercised by written notice to Mr. Bailey within such 120-day period
and upon such exercise Mr. Bailey shall promptly sell and deliver such shares
to KCSI as provided in this paragraph 9.06.
9.07 If, after October 31, 1987, Thomas H. Bailey desires to sell or
otherwise dispose of any of his remaining JCC Shares, he shall notify KCSI
of such desire, stating the number of shares he desires to sell and he shall
thereupon be obligated to sell and KCSI shall be obligated to purchase the
specified shares at a price equal to fifteen times the Net After-Tax Earnings
per share of JCC for the fiscal year ended immediately prior to the date of
such notice.
9.08 For purposes of paragraphs 9.05 and 9.06, "cause" for terminating
the employment of Thomas H. Bailey shall be his failure or refusal to perform
the responsibilities of the chief executive officer of JCC as reasonably
prescribed by the Board of Directors of JCC, and the continuation of such
failure or refusal for 30 days after written notice to him by the Board of
Directors of JCC specifying the nature of such failure. Performance of his
responsibilities in a manner substantially similar to the manner in which Mr.
Bailey has performed those responsibilities prior to the date of this
Agreement shall not constitute "cause" for his termination, nor shall his
absence by reason of illness nor a leave of absence or sabbatical for a
period of up to one year that has been approved by the Board of Directors of
JCC constitute such "cause."
9.09 If Michael Stolper dies, or becomes disabled, or if Thomas H.
Bailey disposes of all of his JCC Shares or if his employment by JCC is
terminated for any reason, the JCC Shares held by Michael Stolper shall be
offered first to any designated employee or employees of JCC and the other
Shareholders of JCC, then to JCC, and finally to KCSI, under the procedures
and at the price provided for in paragraphs 9.01 to 9.03.
9.10 JCC shall be permitted in the discretion of its Board of
Directors after the Closing Date to designate an employee or employees, other
than Thomas H. Bailey, to be eligible to purchase a specified amount of any
JCC Shares offered pursuant to paragraphs 9.01, 9.04 or 9.09. JCC shall also
be permitted, in the discretion of its Board of Directors to sell to its
employees, other than Thomas H. Bailey, any JCC Shares acquired by JCC
pursuant to this Article IX, at a price no less than the price at which it
acquired such shares, on such terms as the Board of Directors of JCC may deem
appropriate. Each such JCC employee so purchasing any JCC Shares shall
thereafter (subject to the provisions of paragraph 9.12) be deemed to be a
Shareholder of JCC, with the same restrictions on transfer of his JCC Shares
and entitled to the same rights and obligations as the Remaining Shareholders
of JCC under the provisions of this Article IX, and shall be required at the
time of purchase to sign a written agreement to that effect.
9.11 During such time as any Remaining Shareholder of JCC holds any
JCC Shares, neither KCSI nor any of the Remaining Shareholders of JCC shall
cause JCC to transfer or otherwise dispose of any JCC Shares held by JCC to
anyone other than KCSI, the Remaining Shareholders of JCC, or JCC's
employees, in accordance with the provisions of this Agreement.
9.12 At such time as any Shareholder of JCC no longer holds any shares
of JCC, he shall cease to be a Shareholder of JCC with the rights and
obligations conferred upon Shareholders of JCC by the provisions of this
Article IX and Article X.
9.13 The closing of any purchase of JCC Shares made pursuant to this
Article IX shall take place as the parties to such sale may agree, within
thirty days after the date of acceptance of an offer to sell, the exercise of
an option to purchase, or the incurring of an obligation to purchase,
pursuant to this Article IX. At each such closing, the selling Shareholders
of JCC shall deliver certificates representing the JCC Shares being sold and
KCSI shall deliver payment for such shares in the manner provided in
paragraph 3.02.
9.14 No purchase by KCSI pursuant to the provisions of this Article IX
shall in any way affect the obligation and right of KCSI to purchase JCC
Shares from the Shareholders of JCC or their permitted purchasers under
paragraphs 9.01 and 9.02 in accordance with the provisions of Article I.
9.15 If after KCSI acquires 80% or more of the JCC Shares, KCSI
determines to sell all of its shares of JCC for cash, stock or other
consideration, the then owners of the JCC Shares not owned by KCSI shall at
KCSI's request, sell their shares of JCC to KCSI or to KCSI's designee at the
price which shall be the greater of $1.6373 per share, fifteen times the Net
After-Tax Earnings per share of JCC for the fiscal year immediately preceding
the year of such sale or the consideration to be received by KCSI in such
transaction, such sale to occur at such time and place and in such manner as
KCSI shall reasonably request.
ARTICLE X
ADVERSE CHANGE IN OWNERSHIP OF KCSI
10.01 If, after the Closing Date but prior to the time that KCSI owns
80% of the JCC Shares, there is an adverse change in ownership of KCSI (as
hereinafter defined), the Remaining Shareholders of JCC other than KCSI shall
have the option in the manner provided in this Article X either:
(a) to purchase from KCSI all JCC Shares acquired by KCSI; or
(b) to require KCSI to purchase from them all the JCC Shares
still owned by them, provided the condition precedent contained in paragraph
8.10 of this Agreement shall be met or waived by KCSI prior to such purchase.
10.02 Any sale of JCC Shares which occurs pursuant to this Article X
shall be at a price per share equal to fifteen times the Net After-Tax
Earnings per share of JCC for the fiscal year ending immediately after the
adverse change in ownership giving rise to such sale, or $1.6373, whichever
is greater.
10.03 If notice is served upon KCSI in accordance with paragraph 10.05
that the holders of a majority of the JCC Shares other than KCSI desire to
purchase shares from KCSI pursuant to paragraph 10.01(a), KCSI shall sell to
the JCC Shareholders, and the JCC Shareholders shall purchase from KCSI, all
of KCSI's JCC Shares on a pro rata basis according to the proportion that
each such purchasing Shareholder's holding in JCC bears to all such
purchasing Shareholders' holdings in JCC. Any JCC Shareholder who does not
purchase from KCSI his pro rata portion of KCSI's JCC Shares in accordance
with this paragraph shall sell all his JCC Shares to the other Shareholders
of JCC other than KCSI and such other Shareholders of JCC shall purchase such
JCC Shares of such JCC Shareholder and of KCSI on the same pro rata basis.
Until KCSI has acquired the JCC Shares to be acquired pursuant to Article I,
KCSI shall not transfer, dispose of, or in any way encumber any JCC Shares
acquired by it in any manner which would prevent it from complying with a
notice served under this paragraph 10.03.
10.04 If notice is served upon KCSI in accordance with paragraph 10.05
that the holders of a majority of the JCC Shares other than KCSI desire to
sell to KCSI in accordance with paragraph 10.01(b), KCSI shall purchase from
the Shareholders of JCC, and each such other Shareholder of JCC shall sell to
KCSI, any and all JCC Shares not owned by KCSI.
10.05 Written notice of a purchase or sale to occur pursuant to
paragraph 10.03 or 10.04 shall have been received by KCSI no more than six
months after the JCC Shareholders are notified by KCSI of the change in
ownership of KCSI. Such notice shall be signed by the holders of a majority
of the JCC Shares held by other than KCSI and shall state the date upon which
the Shareholders of JCC were notified by KCSI of the change in ownership.
10.06 For purposes of this Article X, "adverse change in ownership of
KCSI" shall mean a transfer of 25% or more of KCSI's voting stock outstanding
at the time of such transfer to one person, or to an identifiable group of
persons acting in concert, not presently controlling KCSI, which in the
reasonable judgment of the holders of a majority of the JCC Shares held at
that time by other than KCSI will have an adverse effect upon JCC or its
operations.
10.07 The closing of any purchase or sale of JCC Shares to occur
pursuant to this Article X shall take place as the parties to such purchase
or sale may agree, within 30 days of the date upon which KCSI receives notice
of the purchase or sale in accordance with paragraph 10.05, or within 30 days
after the date upon which the applicable Net After-Tax Earnings of JCC shall
be determined, whichever is later. At any such closing, the Remaining
Shareholders of JCC shall deliver certificates representing the JCC Shares
being sold and KCSI shall deliver payment for such shares, or vice versa as
the case may be, in the manner provided in paragraph 3.02.
ARTICLE XI
CONTINUITY OF MANAGEMENT
11.01 The parties hereto have agreed that the present management of JCC
shall continue to operate the business of JCC, including the business of JMC
prior to the merger of JMC into JCC, of providing investment advice and
management services to Janus Fund, as hereinafter provided. So long as Thomas
H. Bailey is a holder of at least 5% of the shares of JCC and continues to be
employed as President of JCC, (i) he shall continue to establish and
implement policy with respect to the investment advisory and portfolio
management activity of JCC, (ii) without his consent, KCSI shall not cause
JCC to implement, or impose on the management of JCC any policies, conditions
or restrictions regarding the policy referred to in (i) other than those
which were in place at November 15, 1983, and (iii) any changes in management
philosophy, style or approach influencing the management of JCC with respect
to the policy referred to in (i) shall be mutually agreed to by him and by
KCSI. In furtherance of this objective, so long as Thomas H. Bailey is a
holder of at least 5% of the shares of JCC and continues to be employed as
President of JCC, KCSI agrees to vote its JCC Shares to elect directors of
JCC, at least a majority of whom shall be selected by Thomas H. Bailey,
subject to KCSI's approval, which approval shall not be unreasonably
withheld. Immediately following the merger provided for in paragraph 1.07 the
Board of Directors of JCC shall consist of the persons whose names appear on
Exhibit 11.01 attached hereto. Each of the preceding provisions set forth in
this paragraph is expressly conditioned, however, upon such management and
Thomas H. Bailey continuing to perform their respective duties with
reasonable care and in a manner which is consistent with past practice and
not contrary to the best interests of JCC.
ARTICLE XII
DISTRIBUTION OF DIVIDENDS
12.01 So long as there are shareholders of JCC other than KCSI, KCSI
shall cause JCC, within four months after the end of each fiscal year of JCC,
to declare and distribute dividends to the shareholders of JCC (including
KCSI) in an amount equal to 90% of the Net After-Tax Earnings of JCC for each
such fiscal year. The record date for such dividends for the fiscal years
ended October 31, 1985, 1986, and 1987 shall be immediately prior to the date
that the purchases of JCC Shares by KCSI pursuant to paragraphs 1.03, 1.04
and 1.05, respectively, are made.
ARTICLE XIII
CONFIDENTIAL TREATMENT OF INFORMATION
13.01 Until the Closing Date, KCSI shall hold in strict confidence all
confidential information of whatever type or form which it obtains concerning
JCC, JMC or Janus Fund, and shall not use or disclose such information to
anyone other than such officers, employees and representatives of JCC and
KCSI as may be necessary or advisable to reasonably fulfill the purposes of
this Agreement, except as such information was public knowledge at the time
it was obtained, or became public knowledge thereafter other than by a breach
of this provision by KCSI, and except as may be necessary or advisable in
connection with the application for approvals or rulings from, or filing
reports or tax returns with, such governmental authorities as KCSI deems
necessary or advisable.
13.02 If for any reason the purchase of shares of JMC and JCC provided
for in paragraph 1.01 does not occur on or before June 30, 1984, or such
later date to which the Closing Date may be extended pursuant to paragraph
3.01, or if before KCSI acquires the JCC Shares to be acquired under Article
I, the Shareholders of JCC elect to repurchase the JCC Shares pursuant to
Article X, KCSI shall cause all confidential information concerning JCC, JMC
or Janus Fund of whatever type or form obtained in connection with the
negotiation and performance of this Agreement, which information was not
public knowledge at the time it was obtained by KCSI, or became public
knowledge thereafter other than by a breach of this provision by KCSI, to
continue being treated confidentially, as provided in paragraph 13.01, and to
the extent practicable, shall cause all copies of documents containing such
information to be returned to JCC, and KCSI shall not use, or knowingly
permit others to use, any such information in any manner.
ARTICLE XIV
COVENANT OF NON-SOLICITATION
14.01 Simultaneously with the purchase of shares of JMC and JCC by KCSI
provided for in paragraph 1.01, Thomas H. Bailey shall execute and deliver to
KCSI a covenant of non-solicitation, by which shall be prohibited, for a
period of one year from the date of his notice of termination from the
employment of JCC, from soliciting any client who has an account being
managed or advised by JCC at the date of his notice of termination, other
than the Taurus Partnership and the Cerberus Partnership; provided that, if
such notice of termination is given before October 31, 1987 such prohibition
shall be for a period of three years or until that date which shall be 1 year
after October 31, 1987, whichever is sooner. Such covenant of nonsolicitation
shall not apply in the event that Mr. Bailey's employment by JCC is
terminated concurrently with or following a notice to KCSI pursuant to
paragraph 10.05 hereof of a purchase of KCSI's JCC Shares pursuant to
paragraph 10.01(a).
ARTICLE XV
NO UNFAIR BURDEN ON FUND
15.01 KCSI and the Shareholders of JCC shall not impose, and shall not
cause or permit JCC to impose, any unfair burden upon Janus Fund as a result
of the transactions contemplated herein, or any expressed or implied terms,
conditions, or understandings applicable thereto, and specifically shall not
cause or permit any arrangement, during the two-year period after the Closing
Date, whereby JCC or any interested person of JCC (as that term is defined in
the Investment Company Act of 1940) receives or is entitled to receive any
compensation directly or indirectly
(i) from any person in connection with the purchase or sale of
securities or other property to, from, or on behalf of Janus
Fund, other than bona fide ordinary compensation as principal
underwriter for such company; or
(ii) from Janus Fund or its security holders for other than bona fide
investment advisory or other services;
ARTICLE XVI
TERMINATION
16.01 This Agreement may be terminated at or at any time prior to the
Closing Date as follows: (i) by mutual consent of the Shareholders of JCC
and.KCSI; (ii) by KCSI or the Shareholders of JCC, respectively, if, upon the
Closing Date, any condition precedent to closing set forth herein for the
benefit of KCSI or the Shareholders of JCC, respectively, shall not have been
timely met; (iii) by KCSI or the Shareholders of JCC if the Closing shall not
have occurred on or before June 30, 1984, or such later date as may have been
agreed upon by KCSI and the Shareholders of JCC; or (iv) by KCSI or the
Shareholders of JCC, respectively, if a material representation or warranty
made herein for the benefit of KCSI or the Shareholders of JCC, respectively,
or in any certificate, schedule or document furnished to KCSI or the
Shareholders of JCC, respectively, pursuant to this Agreement is untrue in
any material respect, or KCSI or the Shareholders of JCC, respectively, shall
have defaulted in material respect in the performance of any material
obligations of this Agreement.
16.02 Upon termination of this Agreement pursuant to paragraph 16.01,
no party shall have any liability or obligation hereunder (except to observe
the confidentiality of information provisions hereof), and each party shall
bear the expenses incurred by it.
ARTICLE XVII
ESCROW AND INDEMNITY
17.01 William C. Mangus agrees to deposit in escrow with Investors
Fiduciary Trust Company, 1006 Baltimore Avenue, Kansas City, Missouri, the
sum of $250,000 to secure his obligations, if any, which may arise with
respect to the litigation referred to in paragraph 6.10, such escrow to be
pursuant to a written escrow agreement acceptable to William C. Mangus and
KCSI which is executed and delivered at the Closing Date.
17.02 The Shareholders of JCC hereby indemnify and hold harmless KCSI
from and against any and all liability, cost, loss and expense of any kind
whatsoever, including but not limited to liability for any taxes, incurred by
KCSI which it would not have incurred had KCSI not become a shareholder of
JMC or JCC prior to the merger of JMC into JCC. The provisions of this
paragraph 17.02 shall survive execution, delivery and performance of this
Stock Purchase Agreement.
17.03 JCC shall recommend to the Janus Fund that Janus Fund undertake
to make offers of rescission to all persons who purchased shares of the Janus
Fund prior to the date of this Agreement pursuant to offers made in states
where such shares were not registered for sale and the Closing shall not
occur prior to substantial completion of such rescission offers and
expiration of applicable waiting periods with respect thereto.
ARTICLE XVIII
MISCELLANEOUS
18.01 All notices and other communications required or permitted to be
given hereunder shall be in writing and shall be deemed to have been fully
given if delivered or mailed, first class, postage prepaid, to the following
addresses:
(a) If to KCSI:
Kansas City Southern Industries, Inc.
114 West Eleventh Street
Kansas City, Missouri 64105
cc: John F. Marvin, Esq.
Watson, Ess, Marshall & Enggas
15th Floor, 1006 Grand Avenue
Kansas City, Missouri 64106
(b) If to the Shareholders of JCC:
Janus Capital Corporation
100 Fillmore Street, Suite 300
Denver, Colorado 80206
cc: Lester R. Woodward, Esq.
Davis, Graham & Stubbs
2600 Colorado National Building
Post Office Box 185
Denver, Colorado 80201
or to any other address or addresses as may hereafter be specified by notice
given by any of the above for itself to the others.
18.02 Each party shall bear its own expenses and costs, including the
fees of any attorney retained by it, incurred in connection with the
preparation of this Agreement and the consummation of the transactions
contemplated hereby.
18.03 This Agreement shall not be assignable by any of the parties
hereto. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs and successors. Nothing in this
Agreement is intended to confer, expressly or by implication, upon any person
who is not a party or who does not become a party as permitted herein any
rights or remedies under or by reason of this Agreement.
18.04 This Agreement shall be governed by, and construed and enforced
in accordance with, the laws of the State of Colorado.
18.05 This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original.
18.06 KCSI and the Shareholders of JCC agree that the content and
timing of press releases and other announcements with respect to this
Agreement shall be subject to mutual agreement, provided, however, that such
agreement shall not prohibit either party from furnishing any information to
any governmental, regulatory or administrative agency or authority or from
making any other disclosure required by applicable law.
18.07 This Agreement, any exhibits hereto and the documents delivered
pursuant hereto or referred to herein contain the entire Agreement among the
parties with respect to the transactions contemplated among them and, except
as otherwise provided, supercede all previous negotiations, commitments and
writings.
18.08 No alteration, modification or change of this Agreement shall be
valid unless made in writing executed by the parties hereto. No failure or
delay by any party hereto in exercising any right, power or privilege
hereunder (and no course of dealing between or among any of the parties)
shall operate as a waiver of any right, power or privilege. No waiver of any
default on any one occasion shall constitute a waiver of any subsequent or
other default. No single or partial exercise of any right, power or privilege
shall preclude the further or full exercise thereof.
18.09 The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
KANSAS CITY SOUTHERN INDUSTRIES, INC.
By: /s/ Landon H. Rowland
--------------------------------
LANDON H. ROWLAND, PRESIDENT
/s/ Thomas H. Bailey
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THOMAS H. BAILEY
/s/ William C. Mangus
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WILLIAM C. MANGUS
/s/ Bernard E. Niedermeyer III
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BERNARD E. NIEDERMEYER III
/s/ Michael Stolper
-----------------------------------
MICHAEL STOLPER
/s/ Jack R. Thompson
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JACK R. THOMPSON