EXCHANGE AGREEMENT

(Unrestricted Notes)

___________________ (including any other persons or entities exchanging Existing
Notes hereunder for whom the undersigned Holder holds contractual and investment
authority, the “Holder”) enters into this Exchange Agreement (the “Agreement”)
with DST Systems, Inc., a Delaware corporation, (the “Company”) on ___________,
2009 whereby the Holder will exchange (the “Exchange”) the Company’s 4.125 %
Series C Senior Convertible Debentures due August 12, 2023 (the “Existing
Notes”) for the Company’s new 4.125% Series A Senior Convertible Debentures due
August 12, 2023 (the “New Notes”) that will be issued pursuant to the provisions
of an Indenture dated as of October __, 2009 among the Company and The Bank of
New York Mellon Trust Company, N.A, as Trustee (the “Trustee”), as it may be
supplemented or amended from time to time (collectively, the “Indenture”).

On and subject to the terms hereof, the parties hereto agree as follows:

Article I: Exchange of the Existing Notes for New Notes

At the Closing (as defined herein), the Holder hereby agrees to exchange and
deliver to the Company the following Existing Notes, and in exchange therefor
the Company hereby agrees to issue to the Holder the principal amount of New
Notes described below and to pay in cash the following accrued but unpaid
interest on such Existing Notes:

 

Principal Amount of Existing Notes to be Exchanged:

$

 

 

 

 

(the “Exchanged Notes”).

 

 

 

 

Principal amount of New Notes to be issued in Exchange:

$

 

 

 

 

(the “Holder’s New Notes”).

 

 

 

 

Cash Payment of Accrued but Unpaid Interest on Exchanged Notes:

$

 

 

 

(the “Cash Payment”).

 

The closing of the Exchange (the “Closing”) shall occur no later than three
business days after the date of this Agreement. At the Closing, (a) the Holder
shall deliver or cause to be delivered to the Company all right, title and
interest in and to the Exchanged Notes free and clear of any mortgage, lien,
pledge, charge, security interest, encumbrance, title retention agreement,
option, equity or other adverse claim thereto (collectively, “Liens”), together
with any documents of conveyance or transfer that the Company may deem necessary
or desirable to transfer to and confirm in the Company all right, title and
interest in and to the Exchanged Notes free and clear of any Liens, and (b) the
Company shall issue to the Holder the Holder’s New Notes and shall deliver to
the Holder the Cash Payment; provided, however, that the parties acknowledge
that the issuance of the Holder’s New Notes to the Holder may be delayed due to
procedures and mechanics within the system of the Depository Trust Company and
that such delay will not be a default under this Agreement so long as (i) the
Company is using its reasonable best efforts to effect the issuance of one or
more global notes representing the New Notes, (ii) such delay is no longer than
three business days, and (iii) interest shall accrue on such New Notes from the
date of the Indenture. Simultaneously with or after the Closing, the Company may
issue New Notes to one or more other holders of outstanding Existing Notes,
subject to the terms of the Indenture.

Article II: Covenants, Representations and Warranties of the Holder

The Holder hereby covenants as follows, and makes the following representations
and warranties, each of which is and shall be true and correct on the date
hereof and at the Closing, to the Company, Lazard Frères &

 

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Co. LLC and Lazard Capital Markets LLC, and all such covenants, representations
and warranties shall survive the Exchange.

Section 2.1      Power and Authorization. The Holder is duly organized, validly
existing and in good standing, and has the power and authority to execute and
deliver this Agreement, to perform its obligations hereunder, and to consummate
the Exchange contemplated hereby. If the Holder that is signatory hereto is
executing this Agreement to effect the exchange of Exchanged Notes beneficially
owned by one or more other persons or entities (who are thus included in the
definition of “Holder” hereunder), (a) such signatory Holder has all requisite
discretionary and contractual authority to enter into this Agreement on behalf
of, and bind, each such other person or entity that is a beneficial owner of
Exchanged Notes, and (b) Exhibit A hereto is a true, correct and complete list
of (i) the name of each party delivering (as beneficial owner) Exchanged Notes
hereunder, (ii) the principal amount of such Holder’s Exchanged Notes, (iii) the
principal amount of Holder’s New Notes to be issued to such Holder in respect of
its Exchanged Notes, and (iv) the amount of the cash payment to be made to such
Holder in respect of the accrued interest on its Exchanged Notes.

Section 2.2      Valid and Enforceable Agreement; No Violations. This Agreement
has been duly executed and delivered by the Holder and constitutes a legal,
valid and binding obligation of the Holder, enforceable against the Holder in
accordance with its terms, except that such enforcement may be subject to
(a) bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors’ rights generally, and
(b) general principles of equity (the “Enforceability Exceptions”). This
Agreement and consummation of the Exchange will not violate, conflict with or
result in a breach of or default under (i) the Holder’s organizational
documents, (ii) any agreement or instrument to which the Holder is a party or by
which the Holder or any of its assets are bound, or (iii) any laws, regulations
or governmental or judicial decrees, injunctions or orders applicable to the
Holder.

Section 2.3      Title to the Exchanged Notes. The Holder is the sole legal and
beneficial owner of the Exchanged Notes. The Holder has good, valid and
marketable title to the Exchanged Notes, free and clear of any Liens (other than
pledges or security interests that the Holder may have created in favor of a
prime broker under and in accordance with its prime brokerage agreement with
such broker). The Holder has not, in whole or in part, except as described in
the preceding sentence, (a) assigned, transferred, hypothecated, pledged,
exchanged or otherwise disposed of any of the Exchanged Notes or its rights in
the Exchanged Notes, or (b) given any person or entity any transfer order, power
of attorney or other authority of any nature whatsoever with respect to the
Exchanged Notes. Upon the Holder’s delivery of the Exchanged Notes to the
Company pursuant to the Exchange, the Exchanged Notes shall be free and clear of
all Liens created by the Holder.

Section 2.4      Accredited Investor and Qualified Institutional Buyer. The
Holder is (i) an “accredited investor” within the meaning of Rule 501 of
Regulation D promulgated under the Securities Act of 1933, as amended (the
“Securities Act”), and (ii) a “qualified institutional buyer” within the meaning
of Rule 144A promulgated under the Securities Act.

Section 2.5      No Affiliate, Related Party or 5% Stockholder Status. The
Holder is not, and has not been during the consecutive three month period
preceding the date hereof, a director, officer “affiliate” within the meaning of
Rule 144 promulgated under the Securities Act (an “Affiliate”) of the Company.
The Holder did not acquire any of the Exchanged Notes, directly or indirectly,
from an Affiliate of the Company. The Holder and its Affiliates collectively
beneficially own and will beneficially own as of the date of the Closing (but
without giving effect to the Exchange) less than 5% of the outstanding common
stock, par value $0.01 per share, of the Company (the “Common Stock”). The
Holder is not a subsidiary, affiliate or, to its knowledge, otherwise
closely-related to any director or officer of the Company or beneficial owner of
5% or more of the outstanding Common Stock (each such director, officer or
beneficial owner, a “Related Party”). To its knowledge, no Related Party
beneficially owns 5% or more of the outstanding voting equity of the Holder. For
purposes of this

 

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Section 2.5, the term “beneficially own” or “beneficial owner” shall have the
meaning set forth in Rule 13d-3 under the Securities and Exchange Act of 1934,
as amended (“Exchange Act”).

Section 2.6      No Illegal Transactions. The Holder has not, directly or
indirectly, and no person acting on behalf of or pursuant to any understanding
with the Holder has, engaged in any transactions in the securities of the
Company (including, without limitation, any Short Sales (as defined below)
involving any of the Company’s securities) since the time that such Holder was
first contacted by either the Company, Lazard Frères & Co. LLC or Lazard Capital
Markets LLC or any other person regarding an investment in the New Notes or the
Company. Such Holder covenants that neither it nor any person acting on its
behalf or pursuant to any understanding with such Holder will engage, directly
or indirectly, in any transactions in the securities of the Company (including
Short Sales) prior to the time the transactions contemplated by this Agreement
are publicly disclosed. “Short Sales” include, without limitation, all “short
sales” as defined in Rule 200 of Regulation SHO promulgated under the Exchange
Act, and all types of direct and indirect stock pledges, forward sale contracts,
options, puts, calls, short sales, swaps, derivatives and similar arrangements
(including on a total return basis), and sales and other transactions through
non-U.S. broker-dealers or foreign regulated brokers. Solely for purposes of
this Section 2.6, subject to the Holder’s compliance with its obligations under
the U.S. federal securities laws and the Holder’s internal policies, “Holder”
shall not be deemed to include any subsidiaries or affiliates of the Holder that
are effectively walled off by appropriate “Chinese Wall” information barriers
approved by the Holder’s legal or compliance department (and thus have not been
privy to any information concerning the Exchange).

Section 2.7      Adequate Information; No Reliance. The Holder acknowledges and
agrees that (a) the Holder has been furnished with all materials it considers
relevant to making an investment decision to enter into the Exchange and has had
the opportunity to review the Company’s filings with the Securities and Exchange
Commission (the “SEC”), including, without limitation, all filings made pursuant
to the Exchange Act, (b) the Holder has had a full opportunity to ask questions
of the Company concerning the Company, its business, operations, financial
performance, financial condition and prospects, and the terms and conditions of
the Exchange, (c) the Holder has had the opportunity to consult with its
accounting, tax, financial and legal advisors to be able to evaluate the risks
involved in the exchange of the Existing Notes pursuant hereto and to make an
informed investment decision with respect to such Exchange and (d) the Holder is
not relying, and has not relied, upon any statement, advice (whether legal, tax,
financial, accounting or other), representation or warranty made by the Company
or any of its affiliates or representatives including, without limitation,
Lazard Frères & Co. LLC and Lazard Capital Markets LLC, except for (i) the
publicly available filings made by the Company with the SEC under the Exchange
Act and (ii) the representations and warranties made by the Company in this
Agreement.

Section 2.8      No Public Market. The Holder understands that no public market
exists for the New Notes, and that there is no assurance that a public market
will ever develop for the New Notes.

Article III: Covenants, Representations and Warranties of the Company

The Company hereby covenants as follows, and makes the following representations
and warranties, each of which is and shall be true and correct on the date
hereof and at the Closing, to the Holder, Lazard Frères & Co. LLC and Lazard
Capital Markets LLC, and all such covenants, representations and warranties
shall survive the Exchange.

Section 3.1      Power and Authorization. The Company is duly incorporated,
validly existing and in good standing under the laws of its state of
incorporation, and has the power and authority to execute and deliver this
Agreement and the Indenture, to perform its obligations hereunder and
thereunder, and to consummate the Exchange contemplated hereby.

 

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Section 3.2      Valid and Enforceable Agreements; No Violations. This Agreement
has been duly executed and delivered by the Company and constitutes a legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except that such enforcement may be subject to the
Enforceability Exceptions. At the Closing, the Indenture, substantially in the
form of Exhibit B hereto, will have been duly executed and delivered by the
Company and will govern the terms of the New Notes, and the Indenture will
constitute a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except that such enforcement
may be subject to the Enforceability Exceptions. This Agreement, the Indenture
and consummation of the Exchange will not violate, conflict with or result in a
breach of or default under (i) the charter, bylaws or other organizational
documents of the Company, (ii) any agreement or instrument to which the Company
is a party or by which the Company or any of its assets are bound, or (iii) any
laws, regulations or governmental or judicial decrees, injunctions or orders
applicable to the Company.

Section 3.3      Validity of the Holder’s New Notes. The Holder’s New Notes have
been duly authorized by the Company and, when executed and authenticated in
accordance with the provisions of the Indenture and delivered to the Holder
pursuant to the Exchange against delivery of the Exchanged Notes in accordance
with the terms of this Agreement, the Holder’s New Notes will be valid and
binding obligations of the Company, enforceable in accordance with their terms,
except that such enforcement may be subject to the Enforceability Exceptions,
and the Holder’s New Notes will not be subject to any preemptive, participation,
rights of first refusal and other similar rights. Assuming the accuracy of the
Holder’s representations and warranties hereunder, the Holder’s New Notes
(a) will be issued in the Exchange exempt from the registration requirements of
the Securities Act pursuant to Section 4(2) of the Securities Act, (b) will be
free of any restrictions on resale by the Holder pursuant to Rule 144
promulgated under the Securities Act, and (c) will be issued in compliance with
all applicable state and federal laws concerning the issuance of the Holder’s
New Notes.

Section 3.4      Validity of Underlying Common Stock. The Holder’s New Notes are
convertible into shares of Common Stock (the “Conversion Shares”) in accordance
with the terms of the Indenture. The Conversion Shares have been duly authorized
and reserved by the Company for issuance upon conversion of the Holder’s New
Notes and, when issued upon conversion of the Holder’s New Notes in accordance
with the terms of the Holder’s New Notes and the Indenture, will be validly
issued, fully paid and non-assessable, and the issuance of the Conversion Shares
will not be subject to any preemptive, participation, rights of first refusal
and other similar rights.

Section 3.5      Listing Approval. The Conversion Shares have been listed on the
New York Stock Exchange.

Section 3.6      Disclosure. On or before the first business day following the
date of this Agreement, the Company shall issue a publicly available press
release and/or file with the SEC a Current Report on Form 8-K disclosing all
material terms of the Exchange (to the extent not previously publicly
disclosed).

Article IV: Miscellaneous

Section 4.1      Entire Agreement. This Agreement and any documents and
agreements executed in connection with the Exchange embody the entire agreement
and understanding of the parties hereto with respect to the subject matter
hereof and supersede all prior and contemporaneous oral or written agreements,
representations, warranties, contracts, correspondence, conversations, memoranda
and understandings between or among the parties or any of their agents,
representatives or affiliates relative to such subject matter, including,
without limitation, any term sheets, emails or draft documents.

Section 4.2      Construction. References in the singular shall include the
plural, and vice versa, unless the context otherwise requires. References in the
masculine shall include the feminine and neuter, and vice

 

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versa, unless the context otherwise requires. Headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meanings of the provisions hereof. Neither party, nor its respective counsel,
shall be deemed the drafter of this Agreement for purposes of construing the
provisions of this Agreement, and all language in all parts of this Agreement
shall be construed in accordance with its fair meaning, and not strictly for or
against either party.

Section 4.3      Governing Law. This Agreement shall in all respects be
construed in accordance with and governed by the substantive laws of the State
of New York, without reference to its choice of law rules.

Section 4.4      Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument. Any counterpart or other signature
hereon delivered by facsimile shall be deemed for all purposes as constituting
good and valid execution and delivery of this Agreement by such party.

 

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed as of the date first above written.

 

“HOLDER”:

 

“COMPANY”:

 

 

 

 

 

DST SYSTEMS, INC.

 

 

 

By:

 

 

By:

 

 

 

 

 

 

Name:

 

 

Name:

 

 

 

 

 

 

Title:

 

 

Title:

 

 

 

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EXHIBIT A

Exchanging Beneficial Owners

 

Name of
Beneficial Owner

Principal Amount of Exchanged Notes

Principal Amount of Holder’s New Notes

Cash Interest Payment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT B

Indenture

 

 

7