STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT, dated September 2, 1998 (this
"Agreement") by Kansas City Southern Industries, Inc., a Delaware
corporation ("KCSI"), and DST Systems, Inc., a Delaware
corporation ("DST").
WHEREAS, DST, DST Acquisitions, Inc., a Delaware corporation
("DST Acquisitions") and a wholly-owned subsidiary of DST, and
USCS International, Inc., a Delaware corporation ("USCS") are
entering into an Agreement and Plan of Merger, dated as of
September 2, 1998 (the "Merger Agreement"), whereby, upon the
terms and subject to the conditions set forth in the Merger
Agreement, each issued and outstanding share of the Common Stock,
par value $.05 per share, of USCS ("USCS Common Stock") not owned
directly or indirectly by DST or USCS, will be converted into
shares of Common Stock, par value $.01 per share, of DST ("DST
Common Stock");
WHEREAS, KCSI currently owns 20,263,426 shares of DST Common
Stock (such shares of DST Common Stock, together with any other
shares of capital stock of DST acquired by KCSI after the date
hereof and during the term of this Agreement, being collectively
referred to herein as the "Subject Shares"); and
WHEREAS, as a condition to its willingness to enter into the
Merger Agreement, USCS has required that DST obtain this
Agreement from KCSI, and at the request of DST and in
consideration of DST and USCS entering into the Merger Agreement,
and in reliance on the facts that DST has conducted a due
diligence investigation of USCS and that DST is satisfied with
such investigation, KCSI has agreed to enter into this Agreement;
and
WHEREAS, KCSI intends to transfer the Subject Shares to its
wholly owned subsidiary, FAM Holdings, Inc. ("FAM"), and KCSI
contemplates spinning off FAM by distributing shares of FAM stock
to KCSI shareholders (the "Spin-off") and DST and KCSI do not
want the Spin-off to adversely affect the contemplated accounting
treatment of the Merger.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth herein, the parties
agree as follows:
1. DEFINITIONS. Capitalized terms used in this Agreement
and not otherwise defined herein shall have the following
meanings:
(a) "Closing Date" shall mean the day on which the
Merger takes place.
(b) "Merger" shall mean the merger of DST Acquisitions
into USCS pursuant to the terms and conditions of the Merger
Agreement.
2. COVENANTS OF KCSI. Until the termination of this
Agreement in accordance with Section 6 hereof, KCSI agrees that:
(a) at the stockholders meeting of DST (or at any
adjournment thereof) or in any other circumstances upon
which a stockholder vote, consent or other approval of the
Merger or the Merger Agreement is sought, KCSI shall vote
(or cause to be voted) all of the Subject Shares it then
owns in favor of the Merger, the adoption of the Merger
Agreement and the approval of the terms thereof;
(b) If, at any time which is more than 30 days prior
to the Closing Date, KCSI sells or otherwise transfers, in
one or a series of transactions, more than 4.5 million
shares of the Subject Shares to a single purchaser or
transferee, KCSI shall, as a condition to such transfer or
sale, require such purchaser or transferee to execute an
"Affiliate's Agreement" in the same form as other affiliates
of DST have signed as required by the Merger Agreement.
3. THE SUBJECT SHARES. KCSI represents and warrants to
DST that (i) KCSI is the record and beneficial owner of, and has
good and marketable title to, the Subject Shares, (ii) KCSI does
not own, of record or beneficially, any shares of capital stock
of DST other than the Subject Shares and (iii) KCSI has the sole
right to vote, and the sole power of disposition with respect to,
the Subject Shares, and none of the Subject Shares is subject to
any voting trust, proxy or other agreement, arrangement or
restriction with respect to the voting or disposition of such
Subject Shares, except as imposed by federal and state securities
laws and except as contemplated by this Agreement.
4. DISPOSITION OF SUBJECT SHARES AND SPIN-OFF.
(a) During the period beginning on the date that KCSI
receives written notice from DST that the Closing Date is
reasonably expected to occur 30 days from the date of such
notice, KCSI will not sell, transfer or otherwise dispose
of, or reduce any risk relative to (collectively "Restricted
Actions"), the Subject Shares which it then owns until after
the earlier of (i) such time as results covering at least 30
days of post-Closing Date operations of DST (including the
combined operations of USCS) have been published by DST in
any public filing or announcement which includes such
results of operations or (ii) 60 days from the Closing Date.
Restricted Actions shall include, but are not limited to,
the setting of a record date for the Spin-off that is within
the period described in the preceding sentence or
consummating the Spin-off.
(b) Notwithstanding the provisions of Section 4(a)
above, KCSI may consummate the Spin-off prior to the Closing
Date, and if KCSI does consummate the Spin-off prior to the
Closing Date, DST agrees that the Closing Date shall not
occur until at least 30 days following consummation of the
Spin-off. Section 4(a) shall continue to apply to any
actions of KCSI described in Section 4(a) other than the
Spin-off. However, if the Closing Date has not occurred,
and KCSI has not consummated the Spin-off, by November 20,
1998, and if DST has notified KCSI in writing on or within
two days prior to November 20, 1998 that DST reasonably
expects the Closing to occur by December 31, 1998, KCSI will
not consummate the Spin-off during the period of November
20, 1998 through January 1, 1999, KCSI shall continue to be
subject to the requirements of Section 4(a) above, and DST
will use its reasonable best efforts to cause the Closing
Date to occur as soon after November 20, 1998 as reasonably
possible. Notwithstanding the immediately preceding
sentence, if KCSI has set a record date prior to
November 20, 1998, it may consummate the Spin-off during the
period from November 20 to November 30, 1998 provided the
Closing has not occurred during such period and prior to the
Spin-off. If neither the Closing Date nor the Spin-off
occur during the period from November 20, 1998 through
December 31, 1998, KCSI shall continue to be subject to the
requirements of Section 4(a) after December 31, 1998 for the
term of this Agreement.
(c) For purposes of this Agreement, the Spin-off shall
be deemed to "occur" or to have been "consummated" on the
date which the shares of FAM are distributed to the KCSI
shareholders.
5. Notwithstanding any other provision of this Agreement
to the contrary, KCSI may prior to the Spin-off at any time sell
or transfer any part or all of the Subject Shares to FAM and/or
any other direct or indirect wholly-owned subsidiary of KCSI,
subject to FAM's written agreement to assume and to be bound by
this Agreement.
6. TERMINATION. The obligations of KCSI and DST hereunder
shall terminate upon the earlier of (a) the termination of the
Merger Agreement pursuant to its terms, or (b) 60 days following
the Closing Date, or (c) March 15, 1999.
7. SUCCESSORS AND ASSIGNS BOUND. Any successor or
assignee of KCSI shall be bound by the terms hereof, and KCSI
shall take any and all actions necessary to obtain the written
confirmation from such successor or assignee that it is bound by
the terms hereof.
8. DST represents and warrants to KCSI as follows:
(a) The exchange ratio under the Merger Agreement is
0.62 shares of DST Common Stock for each share of USCS
Common Stock;
(b) Not more than 15,518,000 shares of DST Common
Stock will be issued pursuant to the Merger Agreement in
exchange for USCS Common Stock (which number assumes that
all outstanding options on USCS Stock were exercised prior
to the Closing Date), and not more than 1,600,000 shares of
DST Common Stock will be substituted for USCS Common Stock
under USCS option agreements; and
(c) The principal stockholder of USCS (owning
approximate 33% of USCS Common Stock) will execute an
agreement making (x) a commitment substantially the same as
KCSI's commitments in Section 2 hereof and (y) agreeing to
restrict transactions involving USCS Common Stock
substantially similar to KCSI's commitments in Section 4(a)
hereof.
9. If KCSI determines that it desires for its Board of
Directors, within the period described in the first sentence of
Section 4(a) hereof (the "Restricted Period") to declare the
dividend to effectuate the Spin-off, it will notify DST at least
10 days in advance of such declaration. If, prior to such
declaration DST provides KCSI, from counsel reasonably acceptable
to KCSI, an opinion that states that there is a reasonable
likelihood that such declaration within the Restricted Period
would prevent accounting for the Merger as a pooling, KCSI agrees
that it will not make such declaration within the Restricted
Period.
10. SEVERABILITY. The invalidity or unenforceability of
any provision of this Agreement in any jurisdiction shall not
affect the validity or enforceability of any other provision of
this Agreement in such jurisdiction, or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
11. AMENDMENT. This Agreement may be amended only by means
of a written instrument executed and delivered by both KCSI and
DST.
12. GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of
Delaware, regardless of the laws that might otherwise govern
under applicable principles of conflicts of law thereof.
13. COUNTERPARTS. For the convenience of the parties, this
Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be signed by their respective officers thereunder duly
authorized all as of the date first written above.
KANSAS CITY SOUTHERN INDUSTRIES, INC.
By /s/ Xxxxxx X. Xxxxxxx
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Name:
Title
DST SYSTEMS, INC.
By /s/ Xxxxxxx X. Xxxxx
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Name:
Title
