FIRST AMENDMENT TO RIGHTS AGREEMENT
This First Amendment dated as of July 9, 1998, is to the Rights
Agreement (the "Agreement") dated as of October 6, 1995, between DST
Systems, Inc., a Delaware corporation (the "Company"), and State Street
Bank and Trust Company, a Massachusetts trust company (the "Rights Agent").
The First Amendment is pursuant to Section 26 of the Agreement and is being
made prior to the Distribution Date. The undersigned officer of the
Company, in his capacity as such, hereby certifies that this First
Amendment is in compliance with such Section 26. Capitalized and other
terms in this First Amendment shall have the meanings given them in the
Agreement unless defined herein.
The Company and the Rights Agent agree that Section 1(a) of the
Agreement shall be deleted in its entirety and replaced with the following.
(a) "Acquiring Person" shall mean any Person who, together with
all Affiliates or Associates of such Person, shall be the Beneficial
Owner of a Substantial Block, whether or not such Person continues to
be the Beneficial Owner of a Substantial Block, but shall not include:
(i) the Company; (ii) any subsidiary of the Company; (iii) any
employee benefit plan of the Company or of any subsidiary of the
Company, or any Person organized, appointed or established by the
Company or by any subsidiary of the Company for or pursuant to the
terms of any such plan; (iv) a Person who, together with all
Affiliates and Associates of such Person, would become an Acquiring
Person solely as a result of a reduction of the number of shares of
Common Stock of the Company outstanding, including repurchases of
outstanding shares of Common Stock of the Company by the Company,
which reduction increases the percentage of outstanding shares of
Common Stock of the Company beneficially owned by such Person until
such Person, Affiliate or Associate shall thereafter become the
Beneficial Owner of any additional shares of such Common Stock; (v)
Kansas City Southern Industries, Inc. a Delaware corporation, and its
successors ("KCSI"), but only until the date KCSI directly owns less
than twenty percent (20%) of the common stock of its subsidiary, FAM
Holdings, Inc., a Delaware corporation (the "FAM Spin-off"), or the
date prior to the FAM Spin-off of a change in control of KCSI (as
defined in this Section 1 (a)); and (vi) FAM Holdings, Inc. and its
successors ("FAM") and any corporation (other than Xxxxxx Associates,
Inc. and its successors, parents (other than FAM), and subsidiaries)
which is, as of the date of the FAM Spin-off and at all times
thereafter, a wholly-owned subsidiary of FAM, or part of an unbroken
chain of corporations beginning with FAM, in which one hundred percent
(100%) of the total combined voting power of each corporation (other
than FAM) in such unbroken chain is owned by one or more of the other
corporations in such chain, but only so long as there is not a change
in control of FAM (as defined in this Section 1 (a)). Following the
date of the FAM Spin-off or of a change in control of KCSI prior to
the FAM Spin-off, KCSI and its Affiliates and Associates shall not be
deemed an acquiring person until such time as KCSI or any such
Affiliate or Associate shall acquire any additional shares of Common
Stock and following such acquisition KCSI, together with its
Affiliates and Associates, shall be the Beneficial Owner of a
Substantial Block. Following a change in control of FAM, FAM and its
Affiliates and Associates shall not be deemed an acquiring person
until such time as FAM or any such Affiliate or Associate shall
acquire any additional shares of Common Stock and following such
acquisition FAM, together with its Affiliates and Associates, shall be
the Beneficial Owner of a Substantial Block.
For purposes of this Section 1(a), a "change in control of KCSI" shall
be deemed to have occurred if: (i) for any reason at any time, less than
fifty percent (50%) of the members of the Board of Directors of KCSI are
Continuing Directors of KCSI (as defined in this Section 1(a)); (ii) a
person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act), without the prior approval of the Board of Directors of KCSI, shall
become a Major Stockholder of KCSI (as defined in this Section 1(a)), or
(iii) the stockholders of KCSI shall have approved a Significant
Transaction (as defined in this Section 1(a)) involving KCSI or a Major
Stockholder shall have proposed any such transaction, unless such
Significant Transaction shall have been approved by at least fifty percent
(50%) of the members of the Board of Directors of KCSI who are Continuing
Directors of KCSI.
For purposes of this Section 1(a), a "change in control of FAM" shall
be deemed to have occurred if prior to the date of the FAM Spin-off there
is a change in control of KCSI or if subsequent to the date of the FAM
Spin-off: (i) for any reason at any time, less than fifty percent (50%) of
the members of the Board of Directors of FAM are Continuing Directors of
FAM (as defined in this Section 1(a)); (ii) a person (as such term is used
in Sections 13(d) and 14(d)(2) of the Exchange Act), without the prior
approval of the Board of Directors of FAM, shall become a Major Stockholder
of FAM; or (iii) the stockholders of FAM shall have approved a Significant
Transaction involving FAM or a Majority Stockholder shall have propose such
a transaction unless such Significant Transaction shall have been approved
by at least fifty percent (50%) of the members of the Board of Directors of
FAM who are Continuing Directors of FAM.
A "Continuing Director" for purposes of this Section 1(a) shall mean
an individual: (A) who was on the Board of Directors of KCSI on September
1, 1995 in the case of KCSI or was on the Board of Directors of FAM at the
time of the FAM Spin-off in the case of FAM (in either case, "Current
Director"); or (B) whose election by the board of directors or nomination
for election by stockholders was approved by a vote of at least fifty
percent (50%) of the Current Directors; or (C) whose election by the board
of directors or nomination for election by stockholders was approved by a
vote of at least fifty percent (50%) of the members of such board then
still in office who are Current Directors or were elected in the manner set
forth in (B).
A "Majority Stockholder" for purposes of this Section 1(a) shall mean
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act)
directly or indirectly of securities representing fifty percent (50%) or
more (calculated in accordance with Rule 13d-3) of the combined voting
power of KCSI's or FAM's, as the case may be, then outstanding voting
securities according to any public announcements or filings.
A "Significant Transaction" for purposes of this Section 1(a) shall
mean a merger, consolidation, dissolution or sale, lease, exchange or
disposition of all or substantially all of the assets of KCSI or FAM, as
the case may be.
Except as otherwise set forth in this First Amendment, the Agreement
has not been amended or otherwise modified in any respect and remains in
full force and effect in accordance with its terms. This First Amendment
may be executed in any number of counterparts and each such counterpart
shall for all purposes be deemed an original, and all such counterparts
shall together constitute but one and the same instrument.
Executed as of this 9th day of July, 1998.
DST SYSTEMS, INC.
By /s/ Xxxxxxx X. Xxxxx, Vice President,
Chief Financial Officer and Treasurer
STATE STREET BANK AND
TRUST COMPANY
By /s/ Xxxxxxx X. Xxxxx, Vice President
