SECOND AMENDMENT TO
STOCK PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO STOCK PURCHASE AGREEMENT ("SECOND AMENDMENT")
is executed this 18th day of March, 1988, by and among KANSAS CITY SOUTHERN
INDUSTRIES, INC., a Delaware corporation ("KCSI"), THOMAS H. BAILEY, MICHAEL
STOLPER, and JACK R. THOMPSON, individually.
RECITALS:
A. The undersigned (with the addition of WILLIAM C. MANGUS and
BERNARD E. NIEDERMEYER III) are all parties to that certain Stock Purchase
Agreement, dated April 13, 1984, as amended by that certain First Amendment
to Stock Purchase Agreement, dated January 4, 1985 (the "STOCK PURCHASE
AGREEMENT");
B. The parties now desire to amend the Stock Purchase Agreement, as
provided for herein in order to more clearly set forth their respective
rights, duties, and obligations; and
C. The parties desire to set forth such amendments in writing.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein set forth, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree to hereby
amend the Stock Purchase Agreement as follows:
1. The parties hereby consent and agree to the deletion of Paragraph
9.07 from Article IX of the Stock Purchase Agreement, and the addition of the
following Paragraph 9.07 to Article IX of the Stock Purchase Agreement in
full substitution therefor:
9.07. If Thomas H. Bailey desires to sell or
otherwise dispose 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 the
greater of:
(a) 15 times the Net After-Tax Earnings per
Share of JCC for the fiscal year ended December 31,
1987; or
(b) 15 times the Net After-Tax Earnings per
Share of JCC for the fiscal year ended immediately
prior to the date of such notice.
2. The parties hereby consent and agree to the deletion of Paragraph
9.09 from Article IX of the Stock Purchase Agreement and the addition of the
following Paragraph 9.09 to Article IX of the Stock Purchase Agreement in
full substitution therefor:
9.09. If Michael Stolper dies, or become
disabled, or if Thomas H. Bailey disposes of all of
his JCC Shares, or if his employment by JCC is
terminated for any reason, Michael Stolper and Jack
R. Thompson shall thereupon be obligated to sell, and
KCSI shall be obligated to purchase all of the JCC
Shares owned by Michael Stolper and Jack R. Thompson
at a price equal to the greater of:
(a) 15 times the Net After-Tax Earnings per
Share of JCC for the fiscal year ended December 31,
1987; or
(b) 15 times the Net After-Tax Earnings per
Share of JCC for the fiscal year ended immediately
prior to the date of such death, disability,
disposition or termination.
3. The parties hereby consent and agree to delete the word "Adverse"
from the caption of Article X of the Stock Purchase Agreement, and hereby
further consent and agree to the deletion of Paragraph 10.01 from Article X
of the Stock Purchase Agreement and the addition of the following Paragraph
10.01 to Article X of the Stock Purchase Agreement in full substitution
therefor:
10.01. If there is a 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.
4. The parties hereby consent and agree to the deletion of Paragraph
10.02 from Article X of the Stock Purchase Agreement and the addition of the
following Paragraph 10.02 to Article X of the Stock Purchase Agreement in
full substitution therefor:
10.02. Any sale of JCC Shares which occurs pursuant to
this Article X shall be at a price per Share equal to:
(a) 15 times the Net After-Tax Earnings per
Share of JCC for the fiscal year ending immediately
after the Change in Ownership giving rise to such
sale; or
(b) as otherwise negotiated between the
parties.
5. The parties hereby consent and agree to the deletion of Paragraph
10.06 from Article X of the Stock Purchase Agreement and the addition of the
following Paragraph 10.06 to Article X of the Stock Purchase Agreement in
full substitution therefor:
10.06. For purposes of this Article X and elsewhere in
this Agreement, the term "CHANGE IN OWNERSHIP" shall mean the
earlier to occur of the following:
(a) less than 75% of the members of the Board
of Directors of KCSI shall be individuals who were
members of the Board on the date of this Amendment or
individuals whose election, or nomination for
election by KCSI's stockholders, was approved by a
vote of at least 75% of the members of the Board then
still in office who were members of the Board on the
date of this Amendment; or
(b) any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934 (the "EXCHANGE ACT")) shall have
become, without the prior approval of at least 75% of
the members of the Board of Directors of KCSI then
still in office who were members of such Board on the
date of this Amendment, the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act) of
securities of KCSI representing 25% or more
(calculated in accordance with Rule 13d-3) of the
combined voting power of KCSI's then outstanding
voting securities, and such person shall have filed a
proxy statement, or tender offer materials, or any
other statement or schedule with the Securities
Exchange Commission, indicating an intention to
acquire control of KCSI.
6. The parties hereby consent and agree to the addition of the
following Paragraph 12.02 to Article XII of the Stock Purchase Agreement.
12.02. Notwithstanding anything to the contrary in
Paragraph 12.01 of this Agreement, in the event that the
Shareholders of JCC, other than KCSI, exercise any provision of
this Agreement whereunder such persons' JCC Shares are acquired
by JCC or KCSI, KCSI shall cause JCC to distribute dividends to
the Shareholders of JCC, other than KCSI, in accordance with
Paragraph 12.01 of this Agreement, prorated to the date of the
acquisition of such persons' JCC's Shares (using the prior
year's dividend rate).
7. The parties hereby consent and agree to the deletion of Article
XIV from the Stock Purchase Agreement and the addition of the following
Article XIV to the Stock Purchase Agreement in full substitution therefor:
ARTICLE XIV
COMPENSATION UPON TERMINATION
14.01. The parties hereto agree that if the employment by
JCC of those persons listed in Paragraph 14.02, or any of them,
is terminated for any reason, such terminated employee shall
receive from JCC and/or by KCSI (KCSI hereby guaranteeing any
obligation of JCC) a payment equal to the amounts as set forth in
Paragraph 14.02 as of the date he received notice of his
termination. Such payment shall be made in a lump sum not later
than thirty (30) days after his receipt of notice of termination.
14.02. If any person listed in this Paragraph 14.02 is
terminated as provided in Paragraph 14.01, he shall be
compensated as follows:
(a) if Thomas H. Bailey, Thomas F. Marsico,
James P. Craig, III, Jack R. Thompson, or Michael E.
McGoldrick is such terminated employee, he shall
receive payment equal to 100% of his prior year's
current and deferred compensation, including salary,
bonuses and profit sharing contributions.
(b) if Susan R. Hughes or Kathleen A. Burns
is such terminated employee, she shall receive
payment equal to 50% of her prior year's current and
deferred compensation, including salary, bonuses and
profit sharing contributions.
(c) if Warren B. Lammert or Helen Y. Hayes is
such terminated employee, he or she shall receive
payment equal to 25% of his or her prior year's
current and deferred compensation, including salary,
bonuses and profit sharing contributions.
14.03. Notwithstanding Paragraphs 14.01 and 14.02, the
payments provided for in such Paragraphs 14.01 and 14.02 shall
only be made on the event of the following:
(a) a Change in Ownership;
(b) termination occurs within one (1) year
from the date of the Change in Ownership; and
(c) Thomas H. Bailey does not terminate such
person.
14.04. The Covenant of Non-Solicitation dated June 14,
1984, executed by Thomas H. Bailey, attached hereto as Exhibit A,
shall remain in full force and effect in accordance with its
terms, except that the provison in the second paragraph thereof
shall be deleted, as noted in Exhibit A.
8. The parties hereby consent and agree to the addition of the
following Paragraphs 18.10 and 18.11 to Article XVIII of the Stock Purchase
Agreement:
18.10. On or before the 10th day following any Change of
Ownership (as defined in Paragraph 10.06 of the Agreement), KCSI
shall deliver to Thomas H. Bailey as representative of the
Remaining Shareholders of JCC, other than KCSI, a clean
irrevocable Letter of Credit (in form and substance acceptable to
Thomas H. Bailey) drawn on a financial institution acceptable to
Thomas H. Bailey in the amount of 110% of the greatest of the
total amounts which would be due under this Agreement to Thomas
H. Bailey, any employee of JCC, and/or the Remaining Shareholders
of JCC, other than KCSI, if the provisions of this Agreement were
exercised by such persons, as applicable, in order to secure
payment to such persons under the applicable provisions of this
Agreement. Such Letter of Credit shall be maintained by KCSI at
its sole cost and expense for a period ending on the earlier to
occur of the following:
(a) the date that is one (1) year from the
date such Letter of Credit is delivered to Thomas H.
Bailey and is accepted by him in writing, which
acceptance will not be unreasonably withheld;
(b) the date that such Letter of Credit is
drawn; or
(c) the date that all payments due to Thomas
H. Bailey, those employees of JCC entitled to
payments, and all Remaining Shareholders of JCC,
other than KCSI, have been made in full under any
applicable provisions of this Agreement.
18.11. In the event that the Letter of Credit provided for
in Paragraph 18.10 of this Agreement is not timely delivered, and
subsequently KCSI defaults in its obligations to Thomas H.
Bailey, employees of JCC entitled to payments under this
Agreement, and the Remaining Shareholders of JCC, other than
KCSI, or any of them, KCSI shall be liable for and shall pay to
such persons as liquidated damages an amount equal to two (2)
times the amount determined to be owing to such persons under the
applicable provisions of this Agreement. The parties hereby
acknowledge that in the event of such default by KCSI, Thomas H.
Bailey, the employees of JCC, and the remaining Shareholders of
JCC, other than KCSI, will suffer substantial damages, the
amount of which cannot be reasonably ascertained. Therefore, the
parties agree that the amount of liquidated damages set forth
above is fair and equitable.
9. Except as expressly amended herein, the Stock Purchase Agreement
shall remain in full force and effect.
10. If any conflict shall arise between the terms and conditions of
this Second Amendment and the terms and conditions of the Stock Purchase
Agreement, this Second Amendment shall govern with respect to the matters
described herein.
IN WITNESS WHEREOF, the parties have executed this Second Amendment on
the date and year first above written.
"KCSI"
KANSAS CITY SOUTHERN INDUSTRIES, INC.,
a Delaware corporation
By: /s/ Landon H. Rowland
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LANDON H. ROWLAND, PRESIDENT
/s/ Thomas H. Bailey
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THOMAS H. BAILEY
/s/ Bernard E. Niedermeyer III
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BERNARD E. NIEDERMEYER III
/s/ Michael Stolper
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MICHAEL STOLPER
/s/ Jack R. Thompson
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JACK R. THOMPSON