EXHIBIT 2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is dated December 21,
1998 and is entered into by and among DST Systems, Inc., a Delaware corporation
("DST"), USCS International, Inc., a Delaware corporation ("USCS"), and each of
the stockholders of USCS listed on Exhibit A hereto (the "Affiliate
Stockholders," and each an "Affiliate Stockholder").
RECITALS
A. DST, DST Acquisitions, Inc., a Delaware corporation and wholly owned
subsidiary of DST ("Acquisition Sub"), and USCS have entered into that certain
Agreement and Plan of Merger, dated September 2, 1998 (the "Merger Agreement"),
pursuant to which Acquisition Sub will merge with and into USCS (the "Merger").
B. At the effective time of the Merger, the outstanding shares of capital
stock of USCS will be converted into shares of common stock of DST ("DST Common
Stock").
C. The Affiliate Stockholders may be deemed affiliates of USCS within the
meaning of Rule 145 ("Rule 145") promulgated under the Securities Act of 1933,
as amended (the "Securities Act"), although nothing contained herein shall be
construed as an admission of such status.
D. Each Affiliate Stockholder, if such stockholder were considered an
affiliate under Rule 145, would be subject to certain resale restrictions under
Rule 145(d), and, if applicable, Rule 144 ("Rule 144") promulgated under the
Securities Act, with respect to shares of DST Common Stock received by the
Affiliate Stockholder in the Merger.
E. As a material inducement for USCS to enter into the Merger Agreement
and consummate the Merger, DST is willing to grant each Affiliate Stockholder
the registration rights set forth in this Agreement.
F. USCS' obligation to consummate the Merger and the transactions
contemplated by the Merger Agreement is subject to the condition, among others,
that DST shall have executed and delivered this Agreement.
NOW, THEREFORE, in connection with the Merger Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. The following defined terms, when used in this Agreement,
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shall have the respective meanings set forth below (such definitions to be
equally applicable to both singular and plural forms of the terms defined):
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"Affiliate" shall mean any person directly or indirectly controlling,
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controlled by or under common control with such other Person.
"Business Day" means a day other than Saturday, Sunday or any day on
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which banks located in Kansas City, Missouri are authorized or obligated to
close.
"Commission" means the Securities and Exchange Commission.
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"DST Common Stock" has the meaning ascribed to it in the recitals
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hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
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and the rules and regulations of the Commission issued thereunder.
"Form S-3" means the registration statement form designated "Form S-3"
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under the rules and regulations promulgated by the Commission under the
Securities Act (or any successor form to Form S-3 regardless of its
designation).
"Form S-3 Registration" has the meaning ascribed to it in Section 2.1
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(a).
"KCSI" means Kansas City Southern Industries, Inc.
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"Merger" has the meaning ascribed to it in the recitals to this
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Agreement.
"Person" means any human being or any partnership, limited liability
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company, corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental entity or other entity.
"Risk Sharing Period" means the period of time during which each
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Affiliate Stockholder has agreed not to sell, transfer or otherwise dispose of,
or reduce any risk relative to, the shares of DST Common Stock received by the
Affiliate Stockholder in the Merger, pursuant to the terms and conditions of the
USCS Affiliate Agreement attached as an exhibit to the Merger Agreement and
executed and delivered by each Affiliate Stockholder prior to the effective time
of the Merger. The Risk Sharing Period will terminate on the date results
covering at least 30 days of operations of DST (including the combined
operations of USCS) have been published by DST in the form of a quarterly
earnings report, or an annual report on Form 10-K, if such 30-day period
includes the end of DST's fiscal year, an effective registration statement filed
with the Commission, a report to the Commission on Form 10-K, 10-Q, or 8-K, or
any other public filing or announcement which includes such results of
operations.
"Registration Expenses" means all out-of-pocket expenses incident to
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DST's performance of or compliance with this Agreement, including without
limitation the expenses and fees for listing securities on one or more
securities exchanges, all registration and filing fees and disbursements of
counsel in connection with blue sky qualifications of the Registrable
Securities, printing expenses, messenger and delivery expenses, and fees and
disbursements of
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counsel and all independent certified public accountants and other persons
retained by DST in connection with registration of the Registrable Securities.
"Registrable Securities" means, at any time, a block of shares of DST
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Common Stock issued to an Affiliate Stockholder pursuant to the Merger (or other
shares of DST Common Stock issued in respect thereof by way of stock split,
dividend or otherwise), which such Affiliate Stockholder cannot sell or transfer
in a single transaction without registration under the Securities Act as a
result of the resale restrictions contained in Rule 145 and/or the volume
restrictions in Rule 144(e), as such rules are applicable to the Affiliate
Stockholder at the time the request for a Form S-3 Registration has been
delivered to DST in accordance with Section 2.1 (a).
"Rule 144" has the meaning ascribed to it in the recitals to this
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Agreement.
"Rule 145" has the meaning ascribed to it in the recitals to this
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Agreement.
"Securities Act" has the meaning ascribed to it in the recitals of
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this Agreement.
ARTICLE 2
FORM S-3 REGISTRATIONS
2.1 Demand Registration.
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(a) Subject to the terms of this Agreement, in the event that DST
shall receive written notice from any Affiliate Stockholder at any time
following the Risk Sharing Period, requesting that DST effect a
Registration on Form S-3 (a "Form S-3 Registration") with respect to
Registrable Securities then held by such Affiliate Stockholder, which
notice shall specify the intended method of disposition thereof, DST shall
(i) promptly give written notice of the proposed registration to all other
Affiliate Stockholders, and (ii) use reasonable efforts to effect a Form S-
3 Registration of the Registrable Securities specified in such request,
together with any other Registrable Securities held by Affiliate
Stockholders joining in such request as are specified in a written request
delivered to DST within five (5) Business Days after receipt by such
Affiliate Stockholders of written notice from DST of the proposed Form S-3
Registration, to the extent necessary to permit the disposition (in
accordance with the intended method thereof); provided, however, that DST
shall not be required to effect such a Form S-3 Registration more than
twice, nor more than once in any twelve (12) month period under this
Section 2.1(a), and, provided further, that:
(x) DST shall not be obligated to file a registration statement
relating to a Form S-3 Registration request under this Article 2: (A)
within a period of six months after the effective date of any other
registration statement filed pursuant to this Section 2.1 (a), or in
connection with an acquisition by DST of another company (or the
financing thereof) and (B) unless the aggregate fair market value of
the Registrable Securities which DST has been so requested to register
by the Affiliate Stockholders constitutes, as of the date of DST's
receipt of the last of
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such timely requests, at least $15 million (based on the closing price
of the DST Common Stock on such date);
(y) with respect to any registration statement filed, or to be filed,
pursuant to this Section 2.1(a), if DST shall furnish to the Affiliate
Stockholders a certified resolution of the Board of Directors of DST
(the "Board") stating that in the Board's good faith judgment it would
(because of the existence of, or in anticipation of, any acquisition
or financing activity, or the unavailability for reasons beyond DST's
control of any required financial statements, or any other event or
condition of similar significance to DST) be significantly
disadvantageous (a "Disadvantageous Condition") to DST or its
shareholders for such a registration statement to be maintained
effective, or to be filed and become effective, and setting forth the
general reasons for such judgment, DST shall be entitled to cause the
Affiliate Stockholders to discontinue the use of such registration
statement or, in the event no registration statement has yet been
filed, shall be entitled not to file any such registration statement,
until such Disadvantageous Condition no longer exists (notice of which
DST shall promptly deliver to the Affiliate Stockholders) and upon
receipt of any such notice of a Disadvantageous Condition each
Affiliate Stockholder will forthwith discontinue use of the prospectus
contained in such registration statement and, if so directed by DST,
will deliver to DST all copies, other than permanent file copies then
in such Affiliate Stockholder's possession, of the prospectus then
covering such Registrable Securities current at the time of receipt of
such notice, and, in the event no registration statement has yet been
filed, all drafts of the prospectus covering such Registrable
Securities; provided, however, that the duration of any single
Disadvantageous Condition shall not exceed 90 days and DST may not
utilize the right set forth in this Section 2.1 (a)(y) more than once
in any twelve-month period; and
(z) Notwithstanding anything contained herein to the contrary, upon
receipt of written notice from DST of a proposed registration as set
forth in this Section 2.1(a), any Affiliate Stockholder (other than
the Affiliate Stockholder initially making the registration request
without revoking it) that does not request (or that subsequently
revokes its request) that Registrable Securities held by such
Affiliate Stockholder be included in such proposed registration shall
have no right to make a registration request under Section 2.1(a)
during the twelve-month period following the effectiveness of such
proposed registration.
(b) A registration requested by the Affiliate Stockholders pursuant to
Section 2.1(a) shall not be deemed to have been effected (and, therefore, not
requested for purposes of Section 2.1(a)), (i) unless the registration statement
filed in connection therewith has been declared effective by the Commission, or
(ii) if after it has been declared effective by the Commission such registration
is interfered with by any stop order, injunction or other order or requirement
of the Commission or other governmental agency or court solely due to the
actions or omissions to act of DST and, as a result thereof, less than ninety
percent (90%) of the Registrable Securities requested to be registered can be
completely distributed in accordance
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with the plan of distribution set forth in the related registration statement.
Any registration may, at any time prior to its effectiveness, be withdrawn by
the holders of 51 % or more of the Registrable Securities for which registration
was requested and, provided that the Affiliate Stockholders pay the Registration
Expenses in accordance with Section 2.1(h) hereof, shall not count as a demand
registration under Section 2.1 (a) hereof.
(c) If an Affiliate Stockholder intends to distribute the Registrable
Securities covered by his request by means of an underwriting, he shall so
advise DST as part of his request made pursuant to Section 2.1(a) and DST shall
include such information in the written notice referred to in Section 2.1(a). In
such event, the right of any Affiliate Stockholder to include its Registrable
Securities in such registration shall be conditioned upon such Affiliate
Stockholder's participation in such underwriting and the inclusion of such
Affiliate Stockholders Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the Affiliate
Stockholders and by the underwriter to the extent provided herein).
(d) All Affiliate Stockholders proposing to distribute their
securities through such underwriting (together with DST as provided in Section
4.1(h)), shall enter into an underwriting agreement in customary form with the
representative of the underwriter or underwriters selected for such underwriting
by a majority in interest of the Affiliate Stockholders participating in the
offering and reasonably acceptable to DST. Notwithstanding any other provisions
of this Article 2, if the underwriter advises the Affiliate Stockholders that
marketing factors require a limitation of the number of shares to be
underwritten, the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among all
participating Affiliate Stockholders pro rata based on the number of shares
requested to be included in the registration by all participating Affiliate
Stockholders. No Registrable Securities excluded from the underwriting by reason
of the underwriters' marketing limitation shall be included in such
registration. If any Affiliate Stockholder disapproves of the terms of the
underwriting, such Person may elect to withdraw therefrom by written notice to
DST, the underwriter and, unless otherwise provided, the participating Affiliate
Stockholders. The securities so withdrawn shall also be withdrawn from such
registration.
(e) DST shall have the right to cause the registration of additional
securities for the account of any Person (including DST) in any registration of
Registrable Securities under this Article 2; provided, however, that if the
underwriter advises the Affiliate Stockholders participating in such
registration that marketing or other factors require a limitation of the number
of shares to be underwritten, the Registrable Securities to be included in such
registration on behalf of the Affiliate Stockholders shall have priority,
without proration as between the Affiliate Stockholders and any other Person
(including DST), and any such additional securities to be registered shall be
limited to that amount which the underwriter advises would not have an adverse
effect on the underwritten offering.
(f) It shall be a condition precedent to the obligations of DST under
this Agreement that each Affiliate Stockholder that participates in any Form S-3
registration under Section 2.1(a) furnish to DST such information regarding such
Affiliate Stockholder as DST may reasonably request.
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(g) Any Affiliate Stockholder which requests or elects to participate
in a Form S-3 Registration may, at any time prior to the effective date of the
registration statement relating to such Form S-3 Registration, revoke such
request by providing written notice to DST; provided, however, that any
Affiliate Stockholder making such revocation shall be subject to the
prohibitions set forth in Section 2.1(a)(z) above.
(h) The Affiliate Stockholders shall pay all Registration Expenses,
on a pro rata basis, based on the number of shares of Registrable Securities
requested to be included in the registration by all participating Affiliate
Stockholders, provided that the Affiliate Stockholders shall not be obligated to
pay the incremental expenses (i.e., those expenses over and above the expenses
that would have been incurred without inclusion of additional securities
pursuant to Section 2.1(e)) of inclusion by DST of additional securities
pursuant to Section 2.1(e) of this Agreement in a registration pursuant to this
Article 2.
ARTICLE 3
PIGGY-BACK REGISTRATION
3.1 Piggy-Back Registration Rights. If, at any time during the term of
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this Agreement DST proposes to register (including for this purpose a
registration effected by DST for stockholders other than the Affiliate
Stockholders) any of its common equity securities under the Securities Act in
connection with the public offering of such securities solely for cash (other
than a registration form relating to: (a) a registration of a stock option,
stock purchase or compensation or incentive plan or of stock issued or issuable
pursuant to any such plan, or a dividend investment plan; (b) a registration of
securities proposed to be issued in exchange for securities or assets of or in
connection with a merger or consolidation with, another corporation; or (c) a
registration of securities proposed to be issued in exchange for other
securities of DST), DST shall each such time, promptly give each Affiliate
Stockholder written notice of such registration together with a list of the
jurisdictions in which DST intends to attempt to qualify such securities under
applicable state securities laws. Upon the written request of any Affiliate
Stockholder given within ten (10) days after written notice from DST (which
request shall specify the number of Registrable Securities intended to be
disposed of and the intended method of disposition thereof), DST shall effect,
in the manner set forth in Article 5, in connection with such registration, the
registration under the Securities Act of all of the Registrable Securities which
DST has been so requested to register, to the extent required to permit the
disposition (in accordance with the intended methods thereof) of the Registrable
Securities so requested to be registered, provided that if at any time after
giving written notice of its intention to register any securities and prior to
the effective date of such registration, DST shall determine for any reason not
to register or delay registration of such securities, DST may, at its election,
given written notice of such determination to the Affiliate Stockholders and,
thereupon, (A) in the case of a determination not to register, DST shall be
relieved of its obligation to register any Registrable Securities in connection
with such registration and (B) in the case of a determination to delay such
registration, DST shall be permitted to delay registration of any Registrable
Securities requested to be included in such registration for the same period as
the delay in registering such other securities.
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3.2 Underwriting Requirements. The rights of any Affiliate Stockholder to
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"piggy-back" in an underwritten public offering of DST's securities shall be
conditioned upon such Affiliate Stockholder's participation in such underwriting
and the inclusion of such Affiliate Stockholder's Registrable Securities in the
underwriting to the extent provided herein. All Affiliate Stockholders proposing
to distribute their Registrable Securities through such underwriting shall
(together with DST and any other stockholders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for underwriting by DST.
Notwithstanding any other provision of Article 3, if the underwriter determines
that marketing factors require a limitation of the number of shares to be
underwritten, shares to be included in any such registration shall be based on
the following priorities:
(i) In the case of an underwritten public offering for the account
of DST, the number of shares to be included shall be allocated, first, to DST;
second, to KCSI; third to the Affiliate Stockholders on a pro rata basis based
on the number of shares requested by the Affiliate Stockholders to be included
therein; and fourth to any other stockholder of DST on a pro rata basis based on
the number of shares requested to be included therein;
(ii) In the case of an underwritten public offering for the account
of KCSI, the number of shares to be included shall be allocated, first, to KCSI;
second, to the Affiliate Stockholders; and third, to any other stockholders of
DST on a pro rata basis based on the number of shares requested to be included
therein by such stockholders; and
(iii) In the case of an underwritten public offering for the account
of any other stockholder of DST, the number of shares to be included shall be
allocated pro rata among the stockholders of DST, including KCSI and the
Affiliate Stockholders, based on the number of shares requested to be included
therein.
If any Affiliate Stockholder disapproves of the terms of any such
underwriting, it may elect to withdraw therefrom by written notice to DST and
the underwriters. Any Registrable Securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
3.3 Expenses. With respect to an offering in which Registrable Securities
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are requested to be included pursuant to Article 3 hereof, the participating
Affiliate Stockholders shall pay the incremental Registration Expenses (i.e.,
those expenses over and above the expenses that would have been incurred without
inclusion of the Registrable Securities of the Affiliate Stockholders) of
including the Registrable Securities of the Affiliate Stockholders in such
offering, on a pro rata basis, based on the number of shares of Registrable
Securities requested to be included in the registration by all participating
Affiliate Stockholders.
ARTICLE 4
REGISTRATION PROCEDURES
4.1 Registration Procedures. Whenever the Affiliate Stockholders have
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requested that any Registrable Securities be registered in accordance with the
terms of this Agreement, DST
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shall use reasonable efforts to effect the registration of such Registrable
Securities in accordance with the intended method of disposition thereof and
pursuant thereto DST shall as expeditiously as possible:
(a) promptly prepare and file with the Commission a registration
statement (on Form S-3 with respect to registrations pursuant to Section 2.1(a))
with respect to such Registrable Securities and use reasonable efforts to cause
such registration statement to become effective, provided that as promptly as
practicable before filing a registration statement or prospectus or any
amendments or supplements thereto, DST shall (i) furnish copies of all such
documents proposed to be filed to one counsel selected by the Affiliate
Stockholders, and in each case DST shall not file such documents to which any
such counsel shall have reasonably objected on the grounds that such document
does not comply in all material respects with the requirements of the Securities
Act, (ii) notify each Affiliate Stockholder holding Registrable Securities
covered by such registration statement of (x) any request by the Commission to
amend such registration statement or amend or supplement any prospectus or (y)
any stop order issued or threatened by the Commission, and (iii) take all
reasonable actions required to prevent the entry of such stop order or to remove
it if entered;
(b) (i) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective at
all times during the period commencing on the effective date of such
registration statement and ending twelve months thereafter or, if earlier, on
the first date as of which all Registrable Securities covered by such
registration statement are sold in accordance with the intended plan of
distribution set forth in such registration statement and (ii) comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition set forth in such
registration statement;
(c) furnish without additional charge, to each underwriter and each
Affiliate Stockholder selling Registrable Securities covered by such
registration statement, such number of conformed copies of such registration
statement, each amendment and supplement thereto, of the prospectus included in
such registration (including each preliminary prospectus and, in each case,
including all exhibits thereto and documents incorporated by reference therein)
and such other documents as such underwriter or Affiliate Stockholder may
reasonably request in order to facilitate the disposition of the Registrable
Securities as part of the underwriting or being sold by such Affiliate
Stockholder;
(d) use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as any Affiliate Stockholder shall
reasonably request, to keep such registration or qualification in effect for so
long as such registration statement remains in effect and to do any and all
other acts and things which may be reasonably necessary or advisable (in light
of the intended plan of distribution) to enable such Affiliate Stockholder to
consummate the disposition in such jurisdictions of any such Registrable
Securities owned by such Affiliate Stockholder; provided, however, that DST
shall not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
clause (d), (ii) subject itself to
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taxation in any such jurisdiction or (iii) consent to general service of process
in any such jurisdiction;
(e) notify each seller of Registrable Securities covered by such
registration statement, at a time when a prospectus relating to such Registrable
Securities is required to be delivered under the Securities Act, of the
occurrence of any event known to DST as a result of which the prospectus
included in such registration statement, as then in effect, contains an untrue
statement of a material fact or omits to state any fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances under which they were made; and, at the request of any
Affiliate Stockholder selling Registrable Securities covered by such
registration statement, DST shall prepare and furnish such seller a reasonable
number of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not (with respect to information not furnished
by or on behalf of the Affiliate Stockholders) include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made;
(f) subject to other provisions hereof, use all reasonable efforts to
cause the Registrable Securities covered by such registration statement to be
registered with or approved by such governmental agencies or authorities or
self-regulatory organizations as may be necessary to enable the Affiliate
Stockholders to consummate the intended disposition of such Registrable
Securities under the registration statement;
(g) promptly notify the Affiliate Stockholder selling Registrable
Securities covered by such registration statement of the issuance of any stop
order by the Commission or the issuance by any state securities commission or
other regulatory authority of any order suspending the qualification or
exemption from qualification of any of the Registrable Securities under state
securities or "blue sky" laws, and use all reasonable efforts to obtain the
lifting at the earliest possible time of any stop order suspending the
effectiveness of such registration statement or of any order preventing or
suspending the use of any preliminary prospectus included therein;
(h) in the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement with terms and
provisions, including indemnity provisions and requirements to provide a "cold
comfort" letter from DST's accountants, reasonably satisfactory to the managing
underwriter of such offering. Each Affiliate Stockholder participating in such
underwriting shall also enter into and perform its obligations under such an
agreement; and
(i) during the period when the prospectus is required to be delivered
under the Securities Act, promptly file all documents required to be filed with
the Commission pursuant to Sections 12(a), 13(c), 14 or 15(d) of the Exchange
Act.
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ARTICLE 5
INDEMNIFICATION
5.1 Indemnification.
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(a) In the case of each offering of Registrable Securities made pursuant
to this Agreement, DST agrees to indemnify and hold harmless the Affiliate
Stockholders, and their officers and directors, each underwriter of Registrable
Securities so offered and each Person, if any, who controls any of the foregoing
persons within the meaning of the Securities Act (each an "Affiliate Indemnified
Party" and, collectively, the "Affiliate Indemnified Parties"), from and against
any and all claims, liabilities, losses, damages, expenses and judgments, joint
or several, to which they or any of them may become subject, under the
Securities Act or otherwise, including any amount paid in settlement of any
litigation commenced or threatened, and shall promptly reimburse them, as and
when incurred, for any reasonable legal or other expenses incurred by them in
connection with investigating any claims and defending any actions, insofar as
such losses, claims, damages, liabilities or actions shall arise out of, or
shall be based upon, any untrue statement or alleged untrue statement of a
material fact contained in the registration statement (or in any preliminary or
final prospectus included therein) or any amendment thereof or supplement
thereto, or in any document incorporated by reference therein, or any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that DST shall not be liable to any Affiliate Indemnified Party in any
such case to the extent that any such loss, claim, damage, liability or action
arises out of, or is based upon, any untrue statement or alleged untrue
statement, or any omission or alleged omission, if such statement or omission
shall have been made in reliance upon and in conformity with information
relating to an Affiliate Stockholder furnished to DST in writing by or on behalf
of an Affiliate Stockholder specifically for use in the preparation of the
registration statement (or in any preliminary or final prospectus included
therein) or any amendment thereof or supplement thereto. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of an Affiliate Stockholder and shall survive the transfer of such
securities. The foregoing indemnity agreement is in addition to any liability
which DST may otherwise have to the Affiliate Indemnified Parties; provided,
further, that this indemnity does not apply to any loss, liability, claim,
damage or expense arising out of or based upon any untrue statement or alleged
untrue statement or omission or alleged omission in any preliminary prospectus
if a copy of a prospectus was not sent or given to such Person asserting such
loss, claim, damage, liability or action at or prior to the written confirmation
of the sale of the Registrable Securities as required by the Securities Act and
such untrue statement or omission had been corrected in such prospectus.
(b) In the case of each offering made pursuant to this Agreement, the
Affiliate Stockholders, by exercising their registration rights hereunder, agree
to indemnify and hold harmless DST, its officers and directors, each underwriter
of Registrable Securities, and each Person, if any, who controls any of the
foregoing within the meaning of the Securities Act (each a "DST Indemnified
Party" and, collectively, the "DST Indemnified Parties"), from and against any
and all claims, liabilities, losses, damages, expenses and judgments, joint or
several, to which they or any of them may become subject, under the Securities
Act or otherwise, including any amount paid in settlement of any litigation
commenced or threatened, and shall promptly
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reimburse them, as and when incurred, for any legal or other expenses incurred
by them in connection with investigating any claims and defending any actions,
insofar as any such losses, claims, damages, liabilities or actions shall arise
out of, or shall be based upon, any untrue statement or alleged untrue statement
of a material fact contained in the registration statement (or in any
preliminary or final prospectus included therein) or any amendment thereof or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that such untrue
statement of a material fact is contained in, or such material fact is omitted
from, information relating to an Affiliate Stockholder furnished in writing to
DST by or on behalf of an Affiliate Stockholder specifically for use in the
preparation of such registration statement (or in any preliminary or final
prospectus included therein) or any amendment thereof or supplement thereto. The
foregoing indemnity is in addition to any liability which the Affiliate
Stockholders may otherwise have to DST Indemnified Parties; provided, however,
that, as to any underwriter or any Person controlling any underwriter, this
indemnity does not apply to any loss, liability, claim, damage or expense
arising out of or based upon any untrue statement or alleged untrue statement or
omission or alleged omission in any preliminary prospectus if a copy of a
prospectus was not sent or given by or on behalf of any underwriter to such
Person asserting such loss, claim, damage, liability or action at or prior to
the written confirmation of the sale of the Registrable Securities as required
by the Securities Act and such untrue statement or omission had been corrected
in such prospectus.
5.2 Indemnification Procedure. Within 10 days after receipt by an
-------------------------
indemnified party hereunder of written notice of the commencement of any action
or proceeding involving a claim referred to in Section 5.1, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such action;
provided, however, that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under Section 5.1 except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In any case any such action or
proceeding is brought against any indemnified party, the indemnifying party will
be entitled to participate in and to assume the defense thereof, jointly with
any other indemnifying party similarly notified, to the extent that it may wish,
with counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal fees and expenses subsequently incurred by the
latter in connection with the defense thereof, unless in such indemnified
party's reasonable judgment an actual or potential conflict of interest between
such indemnified and indemnifying parties may exist in respect of such claim, in
which case the indemnifying party shall not be liable for the fees and expenses
of (i) in the case of a claim referred to in Section 5.1(a), more than one
counsel (in addition to any local counsel) for all indemnified parties selected
by the Affiliate Stockholders holding a majority (by number of shares) of the
Registrable Securities held by such indemnified parties, or (ii) in the case of
a claim referred to in Section 5.1(b), more than one counsel (in addition to any
local counsel) for DST, in each case in connection with any one action or
separate but similar or related actions or proceedings. The indemnifying party
will not, without the prior written consent of each indemnified party, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit, investigation or proceeding in respect of which
indemnification may be sought hereunder (whether or not such indemnified party
or any Person who controls such indemnified party is a party to such claim,
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action, suit, investigation or proceeding). Whether or not the defense of any
claim or action is assumed by the indemnifying party, such indemnifying party
will not be subject to any liability for any settlement made without its
consent, which consent will not be unreasonably withheld. Notwithstanding
anything to the contrary set forth herein, and without limiting any of the
rights set forth above, in any event any indemnified party will have the right
to retain, at its own expense, counsel with respect to the defense of a claim.
5.3 Contribution. If the indemnification provided for in Section 5.1 is
------------
unavailable to hold harmless any indemnified party under such Section, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages, liabilities and
expenses referred to in Section 5.1 in such proportion as is appropriate to
reflect the relative fault of such indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations, including the relative benefits
received by each party from the offering of the securities covered by the
relevant registration statement, the parties' relative knowledge and access to
information concerning the matter with respect to which the relevant claim was
asserted and the parties' relative opportunities to correct and prevent any
relevant statement or omission. Without limiting the generality of the
foregoing, the parties' relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or the indemnified party and the
parties' relative intent, knowledge, access to relevant information and
opportunity to correct or prevent any such untrue statements or omission. In the
event of an offering of Registrable Securities pursuant to an effective
registration statement under this Agreement which is the subject of any loss,
claim, damage, liability or expense, no participating Affiliate Stockholder
would be required to contribute in excess of the amount of the net proceeds
received by such Affiliate Stockholder in connection with the sale of
Registrable Securities in such offering. The parties hereto agree that it would
not be just and equitable if contributions pursuant to this Section 5.3 were to
be determined by pro rata or per capita allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the first and second sentences of this Section 5.3. The amount paid by an
indemnified party as a result of the losses, claims, damages, liabilities or
expenses referred to in the first sentence of this Section 5.3 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending the relevant action or
proceeding and shall be limited as provided in Section 5.2 if the indemnifying
party has assumed the defense of the relevant action or proceeding in accordance
with the provisions of Section 5.2. Promptly after receipt by an indemnified
party under this Section 5.3 of notice of the commencement of any action or
proceeding against such party in respect of which a claim for contribution may
be made against an indemnifying party under this Section 5.3, such indemnified
party shall notify the indemnifying party in writing of the commencement thereof
if the notice specified in Section 5.2 has not been given with respect to such
action or proceeding; provided, however, that the omission to so notify the
indemnifying party shall not relieve the indemnifying party from any liability
which it may otherwise have to any indemnified party under this Section 5.3,
except to the extent that the indemnifying party is actually prejudiced by such
failure to give notice. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the
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Securities Act) shall be entitled to contribution from any Person who was not
guilty of fraudulent misrepresentation.
5.4 Periodic Payments. The indemnification required by this Article 5
-----------------
shall be made by periodic payments of the amount thereof during the course of
the relevant investigation or defense, as and when bills are received or
expenses, loss, damage or liability is incurred.
ARTICLE 6
MISCELLANEOUS
6.1 No Inconsistent Agreements. DST and each of the Affiliate
--------------------------
Stockholders represents and warrants that it is not currently a party to, and
covenants that it will not hereafter enter into, any agreement which is
inconsistent with, or would otherwise restrict the performance by it of, its
obligations hereunder. DST also represents and warrants that no conflict exists
between this Agreement and any other registration rights provided by it to
others existing as of the date hereof.
6.2 Form S-3 Eligibility. DST hereby represents to each Affiliate
--------------------
Stockholder that it is currently eligible to use a registration statement on
Form S-3 and it will use reasonable efforts to remain eligible to qualify for
the use of a registration statement on Form S-3.
6.3 Specific Performance. In the event of a breach by any party to this
--------------------
Agreement of its obligations under this Agreement, any party injured by such
breach, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The parties agree that the provisions of this
Agreement shall be specifically enforceable, it being agreed by the parties that
the remedy at law, including monetary damages, for breach of any such provision
will be inadequate compensation for any loss and that any defense in any action
for specific performance that a remedy at law would be adequate is waived.
6.4 Actions Taken; Amendments and Waivers. Except as otherwise provided
-------------------------------------
herein, no modification, amendment or waiver of any provision of this Agreement
will be effective against DST or any Affiliate Stockholder, unless such
modification, amendment or waiver is approved in writing by DST, and a majority
in interest of the Affiliate Stockholders (based on the number of shares then
owned by the Affiliate Stockholders). The failure of any party hereto to enforce
any of the provisions of this Agreement will in no way be construed as a waiver
of such provisions and will not affect the right of such party thereafter to
enforce each and every provision of this Agreement in accordance with its terms.
6.5 Non-Assignability of Registration Rights. The rights to cause DST,
----------------------------------------
or its successors or assigns to register Registrable Securities pursuant to this
Agreement are reserved solely for the use and benefit of the Affiliate
Stockholders and may not be assigned or transferred by him to any other person,
provided, however, that an Affiliate Stockholder may assign or transfer his
rights hereunder to an entity or trust controlled by the Affiliate Stockholder,
if such assignee or transferee agrees in writing to be bound by the terms of
this Agreement.
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6.6 Delay of Registration. No Affiliate Stockholder shall have any right
---------------------
to obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Agreement.
6.7 Reports Under Securities Exchange Act of 1934. With a view of making
---------------------------------------------
available to the Affiliate Stockholders the benefits of Rule 144 promulgated
under the Securities Act and any other rule or regulation of the Commission that
may at any time permit an Affiliate Stockholder to sell securities of DST to the
public without registration or pursuant to a registration on Form S-3, DST
agrees to:
(a) use reasonable efforts to make and keep public information
available, as those terms are understood and defined in Commission Rule 144 at
all times;
(b) use reasonable efforts to file with the Commission in a timely
manner all reports and other documents required of DST under the Securities Act
and the Exchange Act; and
(c) furnish to any Affiliate Stockholder so long as the Affiliate
Stockholder owns any Registrable Securities, forthwith upon request: (i) a
written statement by DST that it has complied with the reporting requirements of
Rule 144, the Securities Act and the Exchange Act or that it qualifies as a
Registrant where securities may be resold pursuant to Form S-3 (at any time
after it so qualifies); (ii) a copy of the most recent annual or quarterly
report of DST and all other reports and documents filed by DST with the
Commission; and (iii) such other non-confidential information as may be
reasonably requested in availing any Affiliate Stockholder of any rule or
regulation of the Commission which permits the selling of any such securities
without registration.
6.8 Notices. (a) All notices, requests and other communications hereunder
-------
must be in writing and will be deemed to have been duly given only if delivered
personally against written receipt or by facsimile transmission against
facsimile confirmation or mailed (by registered or certified mail, postage
prepaid, return receipt requested) or delivered by reputable overnight courier,
fee prepaid, to the parties at the following addresses or facsimile numbers:
If to DST, to:
DST Systems, Inc.
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attn: President
Facsimile: (000) 000-0000
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with a copy to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to an Affiliate Stockholder, as specified in (b):
with a copy to (in the case of notice to Xxxxxx Xxxxxxx as
an Affiliate Stockholder):
O'Melveny & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: J. Xxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
(a) All such notices, requests and other communications will (w) if
delivered personally to the address as provided in this Section 6.8 or, with
respect to the Affiliate Stockholders, the addresses specified under their
signatures hereto, be deemed given upon delivery, (x) if delivered by facsimile
transmission to the facsimile number as provided in this Section or, with
respect to the Affiliate Stockholders, the facsimile number specified under
their signatures hereto, be deemed given upon receipt by the sender of
confirmation of such transmission, and (y) if delivered by mail in the manner
described above to the address as provided in this Section 6.8 upon the earlier
of the third business day following mailing or upon receipt and (z) if delivered
by overnight courier to the address as provided in this Section 6.8, be deemed
given on the earlier of the first Business Day following the date sent by such
overnight courier or upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other Person to whom a
copy of such notice is to be delivered pursuant to this Section 6.8). Any party
hereto may from time to time change its address or other information for the
purpose of notices to such party by giving notice specifying such change to the
other parties hereto in accordance with Section 6.8(a).
6.9 Headings, Certain Conventions. The headings of the various Articles
-----------------------------
and Sections of this Agreement are for convenience of reference only and shall
not define, limit or otherwise affect any of the terms or provisions hereof.
Unless the context otherwise expressly requires, all references herein to
Articles, Sections and Exhibits are to Articles and Section of, and Exhibits to,
this Agreement. The words "herein," "hereunder" and "hereof" and words of
similar import refer to this Agreement as a whole and not to any particular
Section or provision. The words "include", "includes" and "including" shall be
deemed to be followed by the phrase "without limitation".
6.10 Invalid Provisions. If any provision of this Agreement is held to be
------------------
illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such
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provisions will be fully severable, (b) this Agreement will be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal, invalid
or unenforceable provision or by its severance herefrom and (d) in lieu of such
illegal, invalid or unenforceable provision, there will be added automatically
as a part of this Agreement a legal, valid and enforceable provisions as similar
in terms to such illegal, invalid or unenforceable provision as may be possible.
6.11 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the domestic laws of the State of Delaware applicable to a
contract executed and performed in such State and without giving effect to any
choice or conflict of law provision or rule (whether of the State of Delaware or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.
6.12 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
6.13 Entire Agreement. This Agreement supersedes all prior discussions
----------------
and agreements between the parties with respect to the subject matter hereof and
contains the sole and entire agreement among the parties hereto with respect to
the subject matter hereof.
6.14 Five-Year Term. This Agreement shall terminate and be of no further
--------------
force and effect, except with respect to Article 5, on that date which shall be
five years after the date hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
DST USCS
/s/ Xxxxxx X. XxXxxxxxx /s/ Xxxxx X. Xxxxxx
---------------------------- ----------------------------
Signature Signature
---------------------------- ----------------------------
Xxxxxx X. XxXxxxxxx, Chief Xxxxx X. Xxxxxx, Chief
Executive Officer and Director Executive Officer and Chairman of the
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Affiliate Stockholder
/s/ Xxxxxx X. Xxxxxxx, Xx.
--------------------------
Signature
--------------------------
Xxxxxx X. Xxxxxxx, Xx.
--------------------------
Address
--------------------------
--------------------------
Facsimile Number
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EXHIBIT A
USCS INTERNATIONAL, INC.
STOCKHOLDERS
Xxxxxx X. Xxxxxxx, Xx.
Xxxxxxx X. Xxxxxx
Xxxxxx X. Xxxxx
Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
Xxxx X. Xxxxx
Xxxxxx X. Page
Xxxxx X. Xxxxxx
X. Xxxxxxx Xxxxxxxx
Xxxxxxx X. XxXxxxx
Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxx
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