FORM S-8
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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DST SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 43-1581814
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(State of Incorporation) (I.R.S. Employer
Identification No.)
333 West 11th Street, 5th Floor
Kansas City, Missouri 64105-1594
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(Address of Principal Executive Offices)
DST SYSTEMS, INC. 2000 EMPLOYEE STOCK PURCHASE PLAN
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(Full title of the plan)
ROBERT C. CANFIELD, ESQ.
Senior Vice President, General Counsel, and Secretary
DST Systems, Inc.
333 West 11th Street, 5th Floor
Kansas City, Missouri 64105-1594
(816) 435-1000
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(Name, address and telephone number of agent for service)
CALCULATION OF REGISTRATION FEE
Title of Proposed Proposed
securities Amount maximum maximum Amount of
to be to be offering price aggregate Registration
registered registered per share offering price fee
- ---------- ---------- --------------- ----------------- -------------
Common Stock, 1,000,000 N/A $52,750,000(1) $14,665(1)
par value
$0.01 per share
Interests in the (2) N/A N/A (3)
Plan
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(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933 based on the
average of the high and low prices of a share of Common Stock of DST
Systems, Inc. reported for trading on the New York Stock Exchange on
October 19, 1999.
(2) To the extent that the interests in the Plan constitute securities,
pursuant to Rule 416(c), this Registration Statement shall be deemed to
register an indeterminate amount of interests in the Plan.
(3) Pursuant to Rule 457(h)(2), no registration fee is required with
respect to the interests in the Plan.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
EXPLANATORY NOTE
As permitted by the rules of the United States Securities and Exchange
Commission (the "Commission") under the Securities Act, and under the General
Instructions to Part I of Form S-8, this Registration Statement omits the
information specified in Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed or to be filed by DST Systems, Inc. (the
"Registrant") with the Commission are incorporated in and made a part of this
Registration Statement by reference, as of their respective dates:
(a) The Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998 dated March 29, 1999 (SEC File No. 001-
14036) and any amendments thereto (the "Annual Report");
(b) The following reports and any amendments thereto filed by
the Registrant with the Commission pursuant to Sections 13(a) or 15(d)
of the Securities Exchange Act of 1934, as amended, (the "Exchange
Act") since the Annual Report: (i) Quarterly Reports on Form 10-Q for
the quarterly periods ended March 31, 1999 and June 30, 1999; (ii)
Amendment on Form 10-Q/A dated May 18, 1999 to the Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended March 31,
1999; (iii) Current Reports on Form 8-K dated February 2, 1999,
February 16, 1999, April 23, 1999, July 23, 1999, August 20, 1999 and
October 22, 1999; (iv) Amendment on Form 8-K/A dated March 25, 1999 to
the Registrant's Current Report on Form 8-K dated March 15, 1996,
amended and restated April 13, 1998, and August 4, 1998.
(c) The description of the Registrant's Common Stock under the
headings "Description of Capital Stock" and "Dividend Policy" in the
Registrant's Registration Statement on Form S-1 dated September 1, 1995
(SEC File No. 33-96526), as amended, which is incorporated by reference
in the Registrant's Registration Statement on Form 8-A filed October
30, 1995 (SEC File No. 1-14036) ("The Rights 8-A");
(d) The description of the Preferred Stock Purchase Rights
contained in The Rights 8-A;
(e) The first amendment dated July 31, 1998 (the "July 8-A
Amendment") to The Rights 8-A (SEC File No. 1-14036);
(f) The second amendment dated September 27, 1999 (the
"September 8-A Amendment") to The Rights 8-A (SEC File No. 1-14036);
(g) The Rights Agreement dated as of October 6, 1995 (the
"Rights Agreement"), between the Registrant and State Street Bank and
Trust Company, as rights agent, which is attached as Exhibit 4.4 to the
Registrant's Registration Statement on Form S-1 dated September 1, 1995
(SEC File No. 33-96526);
(h) The first amendment dated as of July 9, 1998 to the Rights
Agreement, which is attached as Exhibit 99 to the July 8-A Amendment;
(i) The second amendment dated as of September 10, 1999 to the
Rights Agreement, which is attached as Exhibit 99 to the September 8-A
Amendment;
(j) All other reports subsequently filed by the Registrant with
the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act prior to the filing of a post-effective amendment to the
Registration Statement related to this Registration Statement, which
indicates that all securities registered thereunder have been sold or
which deregisters all of the securities offered then remaining unsold.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("DGCL") provides,
generally, that a corporation shall have the power to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding (except actions by or in the
right of the corporation) by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation against all expenses,
judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interest of the corporation,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his or her conduct was unlawful. A corporation may
similarly indemnify such person for expenses actually and reasonably incurred
by such person in connection with the defense or settlement of any action or
suit by or in the right of the corporation, provided such person acted in
good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the corporation, and, in the case of claims,
issues and matters as to which such person shall have been adjudged liable to
the corporation, provided that a court shall have determined, upon
application, that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses which such court shall deem proper.
Section 102(b)(7) of the DGCL provides, generally, that the certificate
of incorporation may contain a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such
provision may not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under section 174
of Title 8 of the DGCL, or (iv) for any transaction from which the director
may eliminate or limit the liability of a director for any act or omission
occurring prior to the date when such provision becomes effective.
The DST Certification of Incorporation provides that the directors and
officers of DST, or persons who are or were serving at the request of DST as
directors or officers of other corporations, shall be indemnified to the
maximum extent permitted by law against expenses incurred by such individuals
in defending a civil or criminal action, suit or proceeding brought against
such officers and directors in their capacities as such. Such expenses shall
be paid by DST in advance of the final disposition of such action, suit or
proceeding. As to directors and officers, the DST Certificate of
Incorporation requires receipt by DST of an undertaking by or on behalf of
the director or officer to repay such amount if it is ultimately determined
that the director or officer is not entitled to be indemnified by DST as
authorized by the DGCL. The foregoing right of indemnification and
advancement of expenses is not exclusive of any other rights of
indemnification and advancement of expenses to which any such individual may
be entitled by by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The Exhibits to this Registration Statement on Form S-8 are listed in
the Exhibit Index of this Registration Statement, which Exhibit Index is
incorporated herein by reference in response to this Item.
ITEM 9. UNDERTAKINGS.
(a) The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information
in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do
not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic
reports filed by the Registrant with the Commission pursuant to Section
13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof. Notwithstanding
the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
(230.424(b) of this chapter) if, in the aggregate, the changes in the
volume and price represent no more than 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the annual
report of the Registrant pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this Registration Statement shall be deemed to be
a new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
(Remainder of page intentionally left blank.)
<PAGE>
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in City of Kansas City, State of Missouri, on
October 25, 1999.
DST SYSTEMS, INC.
By
/s/ Thomas A. McDonnell
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Thomas A. McDonnell
President and Chief Executive Officer
Each person whose signature appears below hereby constitutes and
appoints each of the Company's Chief Executive Officer, General Counsel, and
Chief Financial Officer (currently Thomas A. McDonnell, Robert C. Canfield,
and Kenneth V. Hager respectively) as such person's true and lawful attorney-
in-fact and agent, each acting alone, with full power of substitution and
resubstitution, for and in such person's name, place and stead, in any and
all capacities, to sign any or all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and any exchange on which the Registrant's
stock registered hereunder is traded, granting unto such attorneys-in-fact
and agents, each acting alone, full power and authority to do and perform
each and every act and thing required and necessary to be done in and about
the premises, as fully to all intents and purposes as such person might or
could do in person, hereby ratifying and confirming all that such attorneys-
in-fact and agents, each acting alone, or such person' substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
Signature Title Date
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/s/ A. Edward Allinson Director October 25, 1999
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A. Edward Allinson
/s/ George L. Argyros Director October 25, 1999
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George L. Argyros
/s/ Michael G. Fitt Director October 25, 1999
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Michael G. Fitt
/s/ William C. Nelson Director October 25, 1999
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William C. Nelson
/s/ M. Jeannine Strandjord Director October 25, 1999
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M. Jeannine Strandjord
/s/ Thomas A. McDonnell President, Chief October 25, 1999
- ------------------------ Executive Officer
Thomas A. McDonnell (Principal Executive
Officer), and Director
/s/ Thomas A. McCullough Director October 25, 1999
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Thomas A. McCullough
/s/ James C. Castle Director October 25, 1999
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James C. Castle
/s/ Kenneth V. Hager Vice President, October 25, 1999
- ------------------------ Chief Financial
Kenneth V. Hager Officer, and Treasurer
(Principal Financial
Officer)
/s/ Gregg W. Givens Vice President and October 25, 1999
- ------------------------ Chief Accounting
Gregg W. Givens Officer
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
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4.1 DST Systems, Inc. 2000 Employee Stock Purchase Plan.
4.2 DST's Delaware Certificate of Incorporation, as restated,
which is attached as Exhibit 3.1 to DST's Registration
Statement on Form S-1 dated September 1, 1995 (SEC File No.
33-96526) (the "IPO Registration Statement"), is hereby
incorporated by reference as Exhibit 4.2.
4.3 Amended and Restated By-Laws of DST Systems, Inc., which are
attached as Exhibit 3.2 to DST's IPO Registration Statement,
are hereby incorporated by reference as Exhibit 4.3.
4.4.1 The Certificate of Designations dated October 16, 1995,
establishing the Series A Preferred Stock of the Company,
which is attached as Exhibit 4.3 to the Company's S-1
Registration Statement, is hereby incorporated by reference
as Exhibit 4.4.1.
4.4.2 The Summary of the Preferred Stock Purchase Rights set forth
in Form 8-A dated November 15, 1995 (SEC File No. 1-14036)
(the "The Rights 8-A") is hereby incorporated by reference
as Exhibit 4.4.2.
4.4.3 The first amendment dated July 30, 1998 (the "July 8-A
Amendment") to The Rights 8-A is hereby incorporated by
reference as Exhibit 4.4.3.
4.4.4 The second amendment dated September 27, 1999 (the
"September 8-A Amendment") to The Rights 8-A is hereby
incorporated by reference as Exhibit 4.4.4.
4.4.5 The Rights Agreement dated as of October 6, 1995 (the
"Rights Agreement"), between the Company and State Street
Bank and Trust Company, as rights agent, which is attached
as Exhibit 4.4 to the Company's IPO Registration Statement,
is hereby incorporated by reference as Exhibit 4.4.5.
4.4.6 The first amendment dated as of July 9, 1998 to the Rights
Agreement, which is attached as Exhibit 99 to the July 8-A
Amendment, is hereby incorporated by reference as Exhibit
4.4.6.
4.4.7 The second amendment dated as of September 10, 1999 to the
Rights Agreement, which is attached as Exhibit 99 to the
September 8-A Amendment, is hereby incorporated by reference
as Exhibit 4.4.7.
4.5 The description of the Company's Common Stock, set forth
under the headings "Description of Capital Stock" and
"Dividend Policy" in the IPO Registration Statement, is
hereby incorporated by reference as Exhibit 4.5.
5.1 Opinion of Sonnenschein Nath & Rosenthal, counsel to DST,
regarding legality (including consent).
23.1 Consent of Sonnenschein Nath & Rosenthal (included in
Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP, independent
accountants.
24 Power of Attorney (included on signature page).
DST SYSTEMS, INC.
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2000 EMPLOYEE STOCK PURCHASE PLAN
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<PAGE>
TABLE OF CONTENTS
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Page
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I. Purpose and Effective Date . . . . . . . . . . . . . . . . . . . 1
II. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
III. Administration . . . . . . . . . . . . . . . . . . . . . . . . . 3
IV. Number of Shares . . . . . . . . . . . . . . . . . . . . . . . . 4
V. Eligibility Requirements . . . . . . . . . . . . . . . . . . . . 5
VI. Enrollment . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
VII. Grant of Options on Enrollment . . . . . . . . . . . . . . . . . 6
VIII. Payroll Deductions . . . . . . . . . . . . . . . . . . . . . . . 6
IX. Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . 7
X. Withdrawal From the Plan; Termination of Employment and Leave
of Absence . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
XI. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . 10
<PAGE>
DST SYSTEMS, INC.
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EMPLOYEE STOCK PURCHASE PLAN
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I. Purpose and Effective Date
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1.1 The purpose of the DST Systems, Inc. 2000 Employee Stock Purchase
Plan is to provide an opportunity for eligible employees to acquire a
proprietary interest in DST Systems, Inc. through the purchase of shares of
common stock of the Company through accumulated payroll deductions. It is
the intent of the Company to have the Plan qualify as an "employee stock
purchase plan" under Section 423 of the Code. The provisions of the Plan
shall be construed to extend and limit participation in a manner consistent
with the requirements of Section 423 of the Code.
1.2 The Plan shall be effective on the Effective Date stated below,
subject to the approval of the Company's stockholders within one year before
or one year after the date the Plan is approved by the board of directors of
the Company. No option shall be granted under the Plan after the date as of
which the Plan is terminated by the Board in accordance with Section 11.7 of
the Plan.
II. Definitions
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The following words and phrases, when used in this Plan, unless their
context clearly indicates otherwise, shall have the following respective
meanings:
2.1 "Account" means a recordkeeping account maintained for a
Participant to which payroll deductions are credited in accordance with
Article VIII of the Plan.
2.2 "Article" means an Article of this Plan.
2.3 "Accumulation Period" means, as to the Company or a Participating
Subsidiary, a period of 12 calendar months commencing on each successive
January 1, beginning with the Effective Date. The Committee may modify or
suspend Accumulation Periods at any time and from time to time.
2.4 "Base Earnings" means base salary and wages payable by the Company
or a Participating Subsidiary to an Eligible Employee, prior to pre-tax
deductions for contributions to qualified or non-qualified (under the Code)
benefit plans or arrangements, and excluding bonuses, incentives and overtime
pay but including commissions.
2.5 "Board" means the Board of Directors of the Company.
2.6 "Code" means the Internal Revenue Code of 1986, as amended.
2.7 "Committee" means the committee of the Board described in Section
3.1 of the Plan.
2.8 "Common Stock" means the Company's common stock, $.01 par value.
2.9 "Company" means DST Systems, Inc., a Delaware corporation.
2.10 "Cut-Off Date" means the date established by the Committee from
time to time by which enrollment forms must be received prior to the
commencement of the Accumulation Period.
2.11 "Effective Date" means January 1, 2000.
2.12 "Eligible Employee" means an Employee eligible to participate in
the Plan in accordance with Article V.
2.13 "Employee" means an individual who performs services for the
Company or a Participating Subsidiary pursuant to an employment relationship
described in Treasury Regulations Section 31.3401(c)-1 or any successor
provision.
2.14 "Enrollment Date" means the first Trading Day of an Accumulation
Period, provided that, for the first Accumulation Period beginning with the
Effective Date, for purposes of determining grant date and number of shares
under Sections 7.1 and 7.3, and purchase price under Section 9.4, the
Enrollment Date shall be the date upon which the Company's stockholders
approve the Plan.
2.15 "Exchange Act" means the Securities Exchange Act of 1934.
2.16 "Fair Market Value" means, as of any applicable date:
(a) if the security is listed for trading on the New York Stock
Exchange, the closing price of the security as reported on the New York
Stock Exchange Composite Tape, or if no such reported sale of the
security shall have occurred on such date, on the latest preceding date
on which there was such a reported sale, or
(b) if the security is not so listed, but is listed on another
national securities exchange or authorized for quotation on the National
Association of Securities Dealers Inc.'s NASDAQ National Market
("NASDAQ/NMS"), the closing price, regular way, of the security on such
exchange or NASDAQ/NMS, as the case may be, or if no such reported sale
of the security shall have occurred on such date, on the latest
preceding date on which there was such a reported sale, or
(c) if the security is not listed for trading on a national
securities exchange or authorized for quotation on NASDAQ/NMS, the
average of the closing bid and asked prices as reported by the National
Association of Securities Dealers Automated Quotation System ("NASDAQ")
or, if no such prices shall have been so reported for such date, on the
latest preceding date for which such prices were so reported, or
(d) if the security is not listed for trading on a national
securities exchange or is not authorized for quotation on NASDAQ/NMS or
NASDAQ, the fair market value of the security as determined in good
faith by the Board.
2.17 "Participant" means an Eligible Employee who has enrolled in the
Plan pursuant to Article VI. A Participant shall remain a Participant until
the applicable date set forth in Section 10.2.
2.18 "Participating Subsidiary" means a Subsidiary incorporated under
the laws of any state in the United States, a territory of the United States,
Puerto Rico, or the District of Columbia, or such foreign Subsidiary approved
under Section 3.3, which has been designated by the Committee in accordance
with Section 3.3 of the Plan as covered by the Plan. As of the Effective
Date, DST Systems, Inc., DST Realty, Inc., DST Technologies, Inc., DST
International North America, Ltd., DST Portfolio Systems, Inc., DST Stock
Transfer, Inc., Argus Health Systems, Inc., DST Catalyst, Inc., Output
Technology Solutions, Inc., MGI Output Technology Solutions, Inc., Output
Technology Solutions Eastern Region, Inc., Output Technology Solutions of
California, Inc., Output Technology Solutions Western Region, Inc., Output
Technology Solutions of Illinois, Inc., Output Technology Solutions Graphic
Resources Group, Inc., Output Technology Solutions SRI Group, Inc., National
Financial Data Services, Inc., MC Real Estate Services, Inc., DBS Systems
Corporation, USCS International, Inc., and DST Innovis, Inc., are
Participating Subsidiaries of this Plan, subject to the requirements of
Section 423 of the Code.
2.19 "Plan" means the DST Systems, Inc. 2000 Employee Stock Purchase
Plan as set forth herein and as from time to time amended.
2.20 "Purchase Date" means the specific Trading Day during an
Accumulation Period on which shares of Common Stock are purchased under the
Plan in accordance with Article IX. For each Accumulation Period, the
Purchase Date shall be the last Trading Day occurring in such Accumulation
Period. The Committee may, in its discretion, designate a different Purchase
Date with respect to any Accumulation Period.
2.21 "Section" means a section of this Plan, unless indicated
otherwise.
2.22 "Securities Act" means the Securities Act of 1933, as amended.
2.23 "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company if, as of the applicable Enrollment
Date, each of the corporations other than the last corporation in the chain
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain.
2.24 "Trading Day" means a day on which the New York Stock Exchange is
open for trading.
III. Administration
--------------
3.1 The Plan shall be administered by a Committee appointed by the
Board, which shall consist of one or more Board members. If the Board does
not so appoint a Committee, the Compensation Committee of the Board shall
administer the Plan.
3.2 The Committee may select one of its members as chairman and may
appoint a secretary. The Committee shall make such rules and regulations for
the conduct of its business as it shall deem advisable; provided, however,
that all determinations of the Committee shall be made by a majority of its
members.
3.3 The Committee shall have the power, in addition to the powers set
forth elsewhere in the Plan, and subject to and within the limits of the
express provisions of the Plan, to construe and interpret the Plan and
options granted under it; to establish, amend and revoke rules and
regulations for administration of the Plan; to determine all questions of
policy and expediency that may arise in the administration of the Plan; and,
generally, to exercise such powers and perform such acts as the Committee
deems necessary or expedient to promote the best interests of the Company,
including, but not limited to, designating from time to time which
Subsidiaries of the Company shall be Participating Subsidiaries. The
Committee's determinations as to the interpretation and operation of this
Plan shall be final and conclusive.
In exercising the powers described in the foregoing paragraph, the
Committee may adopt special or different rules for the operation of the Plan
including, but not limited to, rules which allow employees of any foreign
Subsidiary to participate in, and enjoy the tax benefits offered by, the
Plan; provided that such rules shall not result in any grantees of options
having different rights and/or privileges under the Plan nor otherwise cause
the Plan to fail to satisfy the requirements of Section 423 of the Code and
the regulations thereunder.
3.4 This Article III relating to the administration of the Plan may be
amended by the Board from time to time as may be desirable to satisfy any
requirements of or under the federal securities and/or other applicable laws
of the United States, or to obtain any exemption under such laws.
IV. Number of Shares
----------------
4.1 One million (1,000,000) shares of the Company's Common Stock are
reserved for sales and authorized for issuance pursuant to the Plan. Shares
sold under the Plan may be newly-issued shares, outstanding shares reacquired
in private transactions or open market purchases, or any combination of the
foregoing. If any option granted under the Plan shall for any reason
terminate without having been exercised, the shares not purchased under such
option shall again become available for the Plan.
4.2 In the event of any reorganization, recapitalization, stock split,
reverse stock split, stock dividend, combination of shares, merger,
consolidation, acquisition of property or shares, separation, asset spin-off,
stock rights offering, liquidation or other similar change in the capital
structure of the Company, the Committee shall make such adjustment, if any,
as it deems appropriate in the number, kind and purchase price of the shares
available for purchase under the Plan. In the event that, at a time when
options are outstanding hereunder, there occurs a dissolution or liquidation
of the Company, except pursuant to a transaction to which Section 424(a) of
the Code applies, each option to purchase Common Stock of the Company shall
terminate, but the Participant holding such option shall have the right to
exercise his option prior to such termination of the option upon the
dissolution or liquidation. The Company reserves the right to reduce the
number of shares of the Company's Common Stock which Employees may purchase
pursuant to their enrollment in the Plan.
V. Eligibility Requirements
------------------------
5.1 Except as provided in Section 5.2, each individual who is an
Eligible Employee of the Company or a Participating Subsidiary on the
applicable Cut-Off Date shall become eligible to participate in the Plan in
accordance with Article VI as of the first Enrollment Date following the date
the individual becomes an Employee of the Company or a Participating
Subsidiary, provided that the individual remains an Eligible Employee on the
first day of the Accumulation Period associated with such Enrollment Date.
Participation in the Plan is entirely voluntary.
5.2 Employees meeting any of the following restrictions are not
eligible to participate in the Plan:
(a) Employees who, immediately upon enrollment in the Plan or
upon grant of an Option would own directly or indirectly, or hold
options or rights to acquire, an aggregate of 5% or more of the total
combined voting power or value of all outstanding shares of all classes
of stock of the Company or any Subsidiary (and for purposes of this
paragraph, the rules of Code Section 424(d) shall apply, and stock which
the Employee may purchase under outstanding options shall be treated as
stock owned by the Employee);
(b) Employees who are customarily employed by the Company or a
Participating Subsidiary for less than 20 hours per week; or
(c) Employees who are customarily employed by the Company or a
Participating Subsidiary for not more than five months in any calendar
year.
5.3 The Plan is intended to conform to the extent necessary with all
provisions of the Securities Act and the Exchange Act and any and all
regulations and rules promulgated by the Securities and Exchange Commission
thereunder. Notwithstanding anything herein to the contrary, the Plan shall
be administered, and the options shall be granted and may be exercised, only
in such a manner as to conform to such laws, rules and regulations. To the
extent permitted by applicable law, the Plan and the options granted
hereunder shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.
VI. Enrollment
----------
6.1 Any Eligible Employee may enroll in the Plan for an Accumulation
Period by completing and signing an enrollment form (which authorizes payroll
deductions during such Accumulation Period in accordance with Section 8.1)
and submitting such enrollment form to the Company on or before the Cut-Off
Date immediately preceding the commencement of the Accumulation Period. Such
enrollment form (and the authorization therein) shall be effective as of the
Enrollment Date occurring within the Accumulation Period to which the
enrollment form relates, and shall continue in effect until the earliest of:
(a) the end of the last payroll period with a payday in the
Accumulation Period;
(b) the date during the Accumulation Period as of which the
Employee elects to cease his or her enrollment in accordance with
Section 8.3; and
(c) the date during the Accumulation Period as of which the
Employee withdraws from the Plan or has a termination of employment in
accordance with Article X.
VII. Grant of Options on Enrollment
------------------------------
7.1 Enrollment by an Eligible Employee in the Plan as of an Enrollment
Date will constitute the grant as of such Enrollment Date by the Company to
such Participant of an option to purchase shares of Common Stock from the
Company pursuant to the Plan.
7.2 An option granted to a Participant pursuant to this Plan shall
expire, if not terminated earlier for any reason, on the earliest to occur of
(a) the end of the Purchase Date with respect to the Accumulation Period in
which such option was granted; (b) the completion of the purchase of Common
Stock under the option under Article IX; or (c) the date on which
participation of such Participant in the Plan terminates for any reason.
7.3 As of each Enrollment Date, each Participant shall be granted an
option to purchase, subject to the terms of the Plan, the number of whole
shares of Common Stock equal to the quotient of $25,000 divided by the Fair
Market Value of a share of Common Stock on the Enrollment Date.
Notwithstanding any other provision of this Plan, no Employee may be
granted an option which permits his or her rights to purchase shares of
Common Stock under the Plan and any other similar employee stock purchase
plan of the Company or any of its Subsidiaries or parent companies to accrue
(when the option first becomes exercisable) at a rate which exceeds $25,000
of Fair Market Value of such Common Stock (determined at the time such option
is granted) for each calendar year in which such option is outstanding at any
time.
VIII. Payroll Deductions
------------------
8.1 An Employee who files an enrollment form pursuant to Article VI
shall elect and authorize in such form to have deductions made from his or
her pay on each payday he or she receives a paycheck during the Accumulation
Period to which the enrollment form relates, and he or she shall designate in
such form the percentage (in whole percentages) of Base Earnings to be
deducted each payday during such Accumulation Period. The minimum an
Employee may elect and authorize to have deducted is 1% of his or her Base
Earnings paid per pay period in such Accumulation Period, and the maximum is
15% of his or her Base Earnings paid per pay period in such Accumulation
Period (or such larger or smaller percentage as the Committee may designate
from time to time).
8.2 Deductions from a Participant's Base Pay shall commence upon the
first payday on or after the commencement of the Accumulation Period, and
shall continue until the date on which such authorization ceases to be
effective in accordance with Article VI. The amount of each deduction made
for a Participant shall be credited to the Participant's Account. All
payroll deductions received or held by the Company or a Participating
Subsidiary may be used by the Company or Participating Subsidiary for any
corporate purpose, and the Company or Participating Subsidiary shall not be
obligated to segregate such payroll deductions.
8.3 As of the last day of any month, during an Accumulation Period, a
Participant may elect to cease (but not to increase or reduce) payroll
deductions made on his or her behalf for the remainder of such Accumulation
Period by filing the applicable election with the Company in such form and
manner and at such time as may be permitted by the Committee. A Participant
who has ceased payroll deductions may have the amount which was credited to
his or her Account prior to such cessation applied to the purchase of shares
of Company Common Stock as of the Purchase Date, in accordance with Section
9.1, and receive the balance of the Account with respect to which the
enrollment is ceased, if any, in cash. A Participant who has ceased payroll
deductions may also voluntarily withdraw from the Plan pursuant to Section
10.1. Any Participant who ceases payroll deductions for an Accumulation
Period may re-enroll in the Plan on the next subsequent Enrollment Date
following the cessation in accordance with the provisions of Article VI. A
Participant who ceases to be employed by the Company or a Participating
Subsidiary will cease to be a participant in accordance with Section 10.2.
8.4 A Participant may not make any separate or additional contributions
to his Account under the Plan. Neither the Company nor any Participating
Subsidiary shall make separate or additional contributions to any
Participant's Account under the Plan.
IX. Purchase of Shares
------------------
9.1 Subject to Section 9.2, any option held by the Participant which
was granted under this Plan and which remains outstanding as of a Purchase
Date shall be deemed to have been exercised on such Purchase Date for the
purchase of the number of whole shares of Common Stock which the funds
accumulated in his or her Account as of the Purchase Date will purchase at
the applicable purchase price (but not in excess of the number of shares for
which options have been granted to the Participant pursuant to Section 7.3).
9.2 A Participant who holds an outstanding option as of a Purchase Date
shall not be deemed to have exercised such option if the Participant elected
not to exercise the option by withdrawing from the Plan in accordance with
Section 10.1.
9.3 If, after a Participant's exercise of an option under Section 9.1,
an amount remains credited to the Participant's Account as of a Purchase
Date, then the remaining amount shall be distributed to the Participant in
cash as soon as administratively practical after such Purchase Date.
9.4 The purchase price for each share of Common Stock purchased under
any option shall be 85% of the lower of:
(a) the Fair Market Value of a share of Common Stock on the
Enrollment Date on which such option is granted; or
(b) the Fair Market Value of a share of Common Stock on the
Purchase Date.
9.5 If Common Stock is purchased by a Participant pursuant to Section
9.1, then such shares shall be held in non-certificated form at a bank or
other appropriate institution selected by the Company until the earlier of
the Participant's termination of employment or the time a Participant
requests delivery of certificates representing such shares. If any law or
applicable regulation of the Securities and Exchange Commission or other body
having jurisdiction shall require that the Company or the Participant take
any action in connection with the shares being purchased under the option,
delivery of the certificate or certificates for such shares shall be
postponed until the necessary action shall have been completed, which action
shall be taken by the Company at its own expense, without unreasonable delay.
Certificates delivered pursuant to this Section 9.5 shall be registered
in the name of the Participant or, if the Participant so elects, in the names
of the Participant and one or more such other persons as may be designated by
the Participant, as joint tenants with rights of survivorship or as tenants
by the entireties, to the extent permitted by law.
9.6 In the case of Participants employed by a Participating Subsidiary,
the Committee may provide for Common Stock to be sold through the Subsidiary
to such Participants, to the extent consistent with Section 423 of the Code.
9.7 If the total number of shares of Common Stock for which an option
is exercised on any Purchase Date in accordance with this Article IX, when
aggregated with all shares of Common Stock previously granted under this
Plan, exceeds the maximum number of shares reserved in Section 4.1, the
Committee shall make a pro rata allocation of the shares available for
delivery and distribution in as nearly a uniform manner as shall be
practicable and as it shall determine to be equitable, and the balance of the
cash amount credited to the Account of each Participant under the Plan shall
be returned to him or her as promptly as administratively practical.
9.8 If a Participant or former Participant sells, transfers, or
otherwise makes a disposition of Common Stock purchased pursuant to an option
granted under the Plan within two years after the date such option is granted
or within one year after the Purchase Date to which such option relates, and
if such Participant or former Participant is subject to U.S. federal income
tax, then such Participant or former Participant shall notify the Company or
Participating Subsidiary in writing of such sale, transfer or other
disposition within 10 days of the consummation of such sale, transfer or
other disposition, and shall remit to the Company or Participating Subsidiary
or authorize the Company or Participating Subsidiary to withhold from other
sources such amount as the Company may determine to be necessary to satisfy
any federal, state or local tax withholding obligations of the Company or
Participating Subsidiary. A Participant must reply to a written request,
within 10 days of the receipt of such written request, from the Company,
Participating Subsidiary, or Administrator regarding whether such a sale,
transfer or other disposition has occurred.
The Committee may from time to time establish rules and procedures
(including but not limited to postponing delivery of shares until the earlier
of the expiration of the two-year or one-year period or the disposition of
such shares by the Participant) to cause the withholding requirements to be
satisfied.
X. Withdrawal From the Plan; Termination of Employment and Leave of Absence
------------------------------------------------------------------------
10.1 Withdrawal from the Plan. A Participant may withdraw from the
Plan in full (but not in part) during any Accumulation Period by delivering a
notice of withdrawal to the Company (in a manner prescribed by the Committee)
at any time up to the December 1 occurring in such Accumulation Period, or at
such shorter time in advance of the Purchase Date as the Committee may
permit. If notice of withdrawal is timely received, all funds then
accumulated in the Participant's Account shall not be used to purchase Common
Stock, but shall instead be distributed to the Participant as soon as
administratively practical, and the Participant's payroll deductions shall
cease as soon as administratively practical. An Employee who has withdrawn
during an Accumulation Period may not return funds to the Company or a
Participating Subsidiary during the same Accumulation Period and require the
Company or Participating Subsidiary to apply those funds to the purchase of
Common Stock, nor may such Participant's payroll deductions continue, in
accordance with Article VI. Any Eligible Employee who has withdrawn from the
Plan may, however, re-enroll in the Plan on the next subsequent Enrollment
Date following withdrawal in accordance with the provisions of Article VI.
10.2 Termination of Employment. Participation in the Plan terminates
immediately when a Participant ceases to be employed by the Company or a
Participating Subsidiary for any reason whatsoever, including but not limited
to termination of employment, whether voluntary or involuntary, disability,
or retirement, but not including death. Participation in the Plan also
terminates immediately when a Participant ceases to be an Eligible Employee
under Article V or withdraws from the Plan. Upon termination of
participation such terminated Participant's outstanding options shall
thereupon terminate. As soon as administratively practical after termination
of participation, the Company or Participating Subsidiary shall pay to the
Participant or legal representative all amounts accumulated in the
Participant's Account at the time of termination of participation.
10.3 Leave of Absence. If a Participant takes a leave of absence
without terminating employment, such Participant will be deemed to have
discontinued contributions to the Plan in accordance with Section 8.3, but
will remain a Participant in the Plan through the balance of the Accumulation
Period in which his or her leave of absence begins, so long as such leave of
absence does not exceed 90 days. If a Participant takes a leave of absence
without terminating employment, such Participant will be deemed to have
withdrawn from the Plan in accordance with Section 10.1 if such leave of
absence exceeds 90 days.
10.4 Death. As soon as administratively feasible after the death of a
Participant, amounts accumulated in his or her Account shall be paid in cash
to the Participant's spouse if the Participant has a spouse, or, if the
Participant does not have a spouse, to the executor, administrator or other
legal representative of the Participant's estate. Such payment shall relieve
the Company of further liability with respect to the Plan on account of the
deceased Participant. If more than one beneficiary is designated, each
beneficiary shall receive an equal portion of the Account unless the
Participant has given express contrary instructions. None of the
Participant's spouse, executor, administrator or other legal representative
of the Participant's estate shall, prior to the death of the Participant by
whom he has been designated, acquire any interest in the amounts credited to
the Participant's Account under the Plan.
XI. Miscellaneous
-------------
11.1 Interest. Interest will not be paid on any Employee Accounts,
except that the Board, in its sole discretion or in the discretion of the
Committee should the Board so authorize the Committee, may elect to credit
Employee Accounts with interest at such per annum rate as it may from time to
time determine.
11.2 Restrictions on Transfer. The rights of a Participant under the
Plan shall not be assignable or transferable by such Participant, and an
option granted under the Plan may not be exercised during a Participant's
lifetime other than by the Participant. Any such attempt at assignment,
transfer, pledge or other disposition shall be without effect, except that
the Company may treat such act as an election to withdraw from the Plan in
accordance with Section 10.1.
11.3 Administrative Assistance. If the Committee in its discretion so
elects, it may retain a brokerage firm, bank, other financial institution or
other appropriate agent to assist in the purchase of shares, delivery of
reports or other administrative aspects of the Plan. If the Committee so
elects, each Participant shall (unless prohibited by applicable law) be
deemed upon enrollment in the Plan to have authorized the establishment of an
account on his behalf at such institution. Shares purchased by a Participant
under the Plan shall be held in the account in the Participant's name, or if
the Participant so indicates in the enrollment form, in the Participant's
name together with the name of one or more other persons, in joint tenancy
with right of survivorship or spousal community property, or in such forms of
trust as may be approved by the Committee.
11.4 Costs. All costs and expenses incurred in administering the Plan
shall be paid by the Company, including any brokerage fees on the purchased
shares; excepting that any stamp duties, transfer taxes and any brokerage
fees on the sale price applicable to participation in the Plan after the
initial purchase of the shares on the Purchase Date shall be charged to the
Account or brokerage account of such Participant by the Company.
11.5 Equal Rights and Privileges. All Eligible Employees shall have
equal rights and privileges with respect to the Plan so that the Plan
qualifies as an "employee stock purchase plan" within the meaning of
Section 423 or any successor provision of the Code and the related
regulations. Notwithstanding the express terms of the Plan, any provision of
the Plan which is inconsistent with Section 423 or any successor provision of
the Code shall without further act or amendment by the Company or the Board
be reformed to comply with the requirements of Code Section 423. This
Section 11.5 shall take precedence over all other provisions in the Plan.
11.6 Applicable Law. The Plan shall be governed by the substantive
laws (excluding the conflict of laws rules) of the State of Missouri.
11.7 Amendment and Termination. The Board may amend, alter or
terminate the Plan at any time; provided, however, that no amendment which
would amend or modify the Plan in a manner requiring stockholder approval
under Code Section 423 or the requirements of any securities exchange on
which the Common Stock is traded shall be effective unless, within one year
after it is adopted by the Board, it is approved by the holders of a majority
of the voting power of the Company's outstanding shares. In addition, the
Committee may amend the Plan as provided in Section 3.3, subject to the
conditions set forth therein and in this Section 11.7.
If the Plan is terminated, the Board may elect to terminate all
outstanding options either prior to their expiration or upon completion of
the purchase of shares on the next Purchase Date, or may elect to permit
options to expire in accordance with the terms of this Plan (and
participation to continue through such expiration dates). If the options are
terminated prior to expiration, all funds accumulated in Participants'
Accounts as of the date the options are terminated shall be returned to the
Participants as soon as administratively feasible.
11.8 No Right of Employment. Neither the grant nor the exercise of any
rights to purchase shares under this Plan nor anything in this Plan shall
impose upon the Company any obligation to employ or continue to employ any
employee. The right of the Company or Participating Subsidiary to terminate
any employee shall not be diminished or affected because any rights to
purchase shares have been granted to such employee.
11.9 Requirements of Law. The Company shall not be required to sell,
issue, or deliver any shares of Common Stock under this Plan if such sale,
issuance, or delivery might constitute a violation by the Company or the
Participant of any provision of law. Unless a registration statement under
the Securities Act is in effect with respect to the shares of Common Stock
proposed to be delivered under the Plan, the Company shall not be required to
issue such shares if, in the opinion of the Company or its counsel, such
issuance would violate the Securities Act. Regardless of whether such shares
of Common Stock have been registered under the Securities Act or registered
or qualified under the securities laws of any state, the Company may impose
restrictions upon the hypothecation or further sale or transfer of such
shares (including the placement of appropriate legends on stock certificates)
if, in the judgment of the Company or its counsel, such restrictions are
necessary or desirable to achieve compliance with the provisions of the
Securities Act, the securities laws of any state, or any other law or are
otherwise in the best interests of the Company. Any determination by the
Company or its counsel in connection with any of the foregoing shall be final
and binding on all parties.
If, in the opinion of the Company and its counsel, any legend placed on
a stock certificate representing shares of Common Stock issued under the Plan
is no longer required in order to comply with applicable securities or other
laws, the holder of such certificate shall be entitled to exchange such
certificate for a certificate representing a like number of shares lacking
such legend.
The Company may, but shall not be obligated to, register or qualify any
securities covered by the Plan. The Company shall not be obligated to take
any other affirmative action in order to cause the grant or exercise of any
right or the issuance, sale, or deliver of shares pursuant to the exercise of
any right to comply with any law.
11.10 Gender. When used herein, masculine terms shall be deemed to
include the feminine, except when the context indicates to the contrary.
11.11 Withholding of Taxes. The Company may withhold from any purchase
of Common Stock under this Plan or any sale, transfer or other disposition
thereof any local, state, federal or foreign taxes, employment taxes, or
other taxes at such times and from such other amounts as the Company deems
appropriate. The Company may require the Participant to remit any required
withholding amounts to the Company.
Executed this _____ day of ______________, 1999.
DST Systems, Inc.
By:
-------------------------------------
Title:
----------------------------------
Sonnenschein Nath & Rosenthal
4520 Main Street
Kansas City, Missouri 64111
October 25, 1999
DST Systems, Inc.
333 West 11th Street, 5th Floor
Kansas City, Missouri 64105-1594
Re: Registration Statement on Form S-8 in connection with the
registration of 1,000,000 shares (the "Shares") of common stock,
$0.01 par value (the "Common Stock") of DST Systems, Inc. to be
issued under the DST Systems, Inc. 2000 Employee Stock Purchase
Plan (the "Plan").
Ladies and Gentlemen:
In connection with the preparation of the above-referenced Registration
Statement (the "Registration Statement"), which is being filed on or about
the date of this letter on behalf of DST Systems, Inc., a Delaware
corporation (the "Corporation"), you have asked us to provide you this
opinion letter pursuant to Item 8 of Form S-8 and in accordance with
subsection (b)(5) of Item 601 of Regulation S-K promulgated by the Securities
and Exchange Commission.
In connection with this opinion, we have examined and relied upon,
without further investigation, the following in connection with rendering the
opinions expressed herein: (a) the Plan, including all amendments thereto;
(b) the Registration Statement, and (c) such other documents, certificates,
records, and oral statements of public officials and the officers of the
Corporation as we deemed necessary for the purpose of rendering the opinions
expressed herein.
In our examinations, we have assumed the genuineness of all signatures,
the legal capacity of all natural persons, the authenticity, accuracy and
completeness of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified, conformed,
or photostatic copies or by facsimile or electronic mail, and the
authenticity of the originals from which such copies, facsimiles, or
electronic transmissions were made. In our examination of documents executed
by persons, legal or natural, other than the Corporation, we have assumed
that such persons had the power, corporate or otherwise, to enter into and
perform all obligations thereunder and that such documents are valid and
binding.
Based upon and subject to our examination described herein and the
assumptions, exceptions, qualifications, and limitations set forth herein,
and subject to approval of the Plan by the Corporation's shareholders, we are
of the opinion that the Shares to be issued under the Plan will, when issued
pursuant to and in accordance with the Plan and upon receipt by the
Corporation of the consideration therefor, be validly issued, fully paid, and
non-assessable. The foregoing opinion is limited to shares that are
originally issued under the Plan.
This opinion letter is limited to the specific legal issues that it
expressly addresses, and no opinion may be inferred or implied beyond the
matters expressly set forth herein. We express no opinion as to the law of
any jurisdiction other than the General Corporation Law of the State of
Delaware, as amended. We are not admitted to the Delaware Bar. In
expressing our opinions set forth herein, we have reviewed and relied upon,
without further investigation, such laws as published in generally available
sources.
We consent to the filing of this opinion letter, or a reproduction
thereof, as an exhibit to the Registration Statement. In giving such
consent, however, we are not admitting that we are within the category of
persons whose consent is required under Section 7 of the Securities Act of
1933, as amended, or the rules or regulations promulgated by the Securities
and Exchange Commission thereunder.
This opinion letter is rendered on the date set forth above, and we have
no continuing obligation hereunder to inform you of changes in the applicable
law or the facts after such date or facts of which we have become aware after
the date hereof, even though such changes or facts could affect our opinions
expressed herein.
Very truly yours,
SONNENSCHEIN NATH & ROSENTHAL
/s/ John F. Marvin
By: John F. Marvin
Consent of Independent Accountants
----------------------------------
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated February 25, 1999 relating to the
financial statements of DST Systems, Inc., which appears in DST Systems,
Inc.'s Annual Report on Form 10-K for the year ended December 31, 1998.
/s/ PricewaterhouseCoopers LLP
Kansas City, Missouri
October 25, 1999
