Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS
AGREEMENT is made and
entered into the 31st day of December 2008, by
and between DST
Systems, Inc., a
Delaware corporation
("DST") and Kenneth
V.
Hager, an individual ("Executive").
WHEREAS, Executive is now employed by DST, and DST and Executive
desire for
DST to continue to employ Executive on the terms and conditions set forth in
this Agreement and to
provide an incentive to Executive to remain in the employ
of DST hereafter,
particularly in the event of any Change in Control of DST (as
herein defined), thereby establishing and preserving continuity of
management of
DST;
NOW,
THEREFORE,
in consideration of the mutual covenants and
agreements
herein contained, it is agreed by and between DST and Executive as
follows:
1.
Employment. DST hereby continues the employment of Executive as its
Vice
President, Chief
Financial Officer,
and Treasurer to serve
at the pleasure of
the Board of Directors of DST (the "DST Board") and to have such
duties, powers
and responsibilities
as may be prescribed or delegated from time to time by the
President or other
officer to whom
Executive reports, subject to the powers
vested in the
DST Board and in the stockholders of DST. Executive shall
faithfully perform his
duties under this
Agreement to the best
of his ability
and shall devote
substantially
all of his
working time and efforts to the
business and affairs of DST and its affiliates.
2.
Compensation.
(a) Base Compensation. DST shall pay Executive as compensation for
his
services hereunder
an annual base salary at the rate in effect
at the time of
execution of this
Agreement, subject to
adjustment from time to time as agreed
by the parties.
(b) Incentive
Compensation.
DST shall include Executive as a
participant in
any annual incentive program adopted by the Compensation
Committee of the DST Board under the DST Systems, Inc. 2005 Equity Incentive
Plan and any successor
thereto ("DST Annual Incentive Program"). DST reserves
the right to change, revoke or terminate such plan or program at
any time.
3.
Benefits. During the period of his employment hereunder, DST shall
provide Executive
with coverage under such benefit plans and
programs as are
made generally
available to executives serving on the Management
Committee of
DST, provided
(A) DST shall
have no obligation with respect to any plan or
program if Executive is not eligible for coverage thereunder,
and (B) Executive
acknowledges that stock options and other stock and equity
participation
awards
are granted in the
discretion of the DST
Board or Compensation
Committee and
that Executive
has no right to receive stock options or other equity
participation awards or any particular number or level of stock
options or other
awards. Executive
acknowledges that all rights and benefits under benefit plans
and programs shall be governed by the official text of each such
plan or program
and not by any summary or description thereof or any provision of
this Agreement
and that DST is under no obligation to continue in effect or to fund any
such
plan
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or program, except as provided in Paragraph 7 hereof. DST also
shall continue to
reimburse Executive
for ordinary and necessary travel and other business
expenses in accordance with policies and procedures established by
DST.
4.
Termination.
(a) Termination by
Executive. Executive
may terminate this Agreement
and his employment hereunder by at least thirty (30) days advance
written notice
to DST, except that in
the event of any
material breach of
this Agreement by
DST, Executive
may terminate this Agreement and his employment hereunder
immediately upon notice to DST; provided, however, that DST's obligation to
pay
severance benefits shall be subject to Paragraph 7(e).
(b) Death or
Disability. This
Agreement and
Executive's
employment
hereunder shall terminate automatically on the death or disability
of Executive.
For purposes of this
Agreement, Executive
shall be deemed to be disabled if he
is unable to engage in a significant portion of his normal duties for DST by
reason of any physical or mental impairment which can be expected to result
in
death or which has lasted or can be expected to last for a
continuous period
of
not less than six (6) months.
(c) Termination by DST For Cause. DST may terminate this Agreement
and
Executive's employment
"for cause"
immediately upon
notice to Executive.
For
purposes of this Agreement, termination "for cause" shall mean
termination based
upon any one or more of the following:
(i) Any material breach of this Agreement by Executive;
(ii) Executive's
dishonesty
involving DST or any
subsidiary of
DST;
(iii) Gross negligence
or willful misconduct
in the performance
of Executive's duties as determined in good faith by the DST
Board;
(iv) Willful
failure
by Executive to follow reasonable
instructions of the
President or other officer to whom Executive
reports concerning the operations or business of DST or any
subsidiary
of DST;
(v) Executive's fraud or criminal activity; or
(vi) Embezzlement or misappropriation by Executive.
(d) Termination by DST Other Than For Cause.
(i) DST may terminate this Agreement and Executive's employment
other than for cause immediately upon notice to Executive, and in
such
event, DST shall provide severance benefits to Executive in
accordance
with Paragraph 4(d)(ii) below.
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<PAGE>
(ii) In the event of termination of Executive's employment under
Paragraph 4(d)(i),
DST shall,
(A) within sixty (60)
days after such
termination, pay to
Executive as severance a lump sum amount equal to
twelve (12) months of the annual base salary referenced in Paragraph
2(a) above at the rate
in effect immediately
prior to termination,
and, (B) for a period of twelve (12) months following such
termination
(the "Period"),
reimburse Executive
for the cost (including federal,
state and local income taxes payable with respect to this
reimbursement) of obtaining coverage comparable to the health and
life
insurance provided
pursuant to this
Agreement, unless
Executive is
provided comparable coverage in connection with other employment.
The
foregoing obligations
of DST shall continue until the end of the said
twelve (12) month period notwithstanding the death or disability of
Executive during
said period (except, in the event of death,
the
obligation to reimburse Executive for the cost of life insurance
shall
not continue).
Executive shall
receive, on the payment due date as
provided in the DST Annual Incentive Program, any Annual Incentive
earned for the
performance
year in which Executive's employment
terminated; provided,
however, that such award shall be prorated
to
reflect only the
portion of such performance year that precedes
Executive's
termination. To the
extent required by Code Section 409A
and guidance
issued thereunder, such award shall be deferred in
accordance with any applicable deferral requirements and elections in
place with respect to
such award and, to the
extent deferred,
such
award
shall be paid pursuant
to the terms of deferral procedures in
effect with respect to the DST Annual Incentive Program from time to
time. Notwithstanding
the receipt during the Period of separation pay
as provided herein and
the benefits that are
generally available
to
executive employees of
DST during the Period, (a) Executive shall not
be entitled
to accrue or
receive such benefits during the Period
except as set forth
herein and (b) any
contributions
and benefits
under applicable plans
with respect to the year of termination shall
be based solely upon
compensation paid to Executive for periods prior
to termination.
In the year of termination, Executive shall be
entitled to
participate in the DST 401(k) Profit Sharing Plan and the
DST Employee Stock
Ownership Plan only if the Executive meets all
requirements of such plans for participation in such year.
5.
Non-Disclosure. During the term of this Agreement and at all times
after
any termination of
this Agreement,
Executive shall not, either directly or
indirectly, use or disclose any DST trade secret, except to the
extent necessary
for Executive to
perform his duties for DST while an employee. For purposes of
this Agreement, the term "DST trade secret" shall mean any
information regarding
the business or activities of DST or any subsidiary or affiliate,
including any
formula, pattern,
compilation,
program, device,
method, technique,
process,
customer list,
technical information or other confidential or proprietary
information, that (a)
derives independent
economic value, actual or potential,
from not being generally known to, and not being readily
ascertainable by proper
means by, other
persons who can obtain
economic value from
its disclosure or
use, and (b) is the
subject of efforts of DST or its subsidiary or affiliate
that are reasonable under the circumstance to maintain its secrecy.
In the event
of any breach
of this Paragraph 5 by Executive, DST shall be entitled to
terminate any and all remaining severance benefits under Paragraph 4(d)(ii)
above and shall be entitled to pursue such other legal and
equitable remedies as
may be available.
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6.
Duties Upon Termination; Survival.
(a) Duties. Upon termination of this Agreement by DST or Executive
for
any reason, Executive
shall immediately return to DST all DST trade
secrets
which exist in tangible form and shall sign such written
resignations
from all
positions as an officer, director or member of any committee or
board of DST and
all direct and indirect subsidiaries and affiliates of DST as may be
requested
by DST and shall sign such other documents and papers relating to Executive's
employment, benefits and benefit plans as DST may reasonably
request.
(b) Survival.
The provisions of Paragraphs 5 and 6(a) of this
Agreement shall
survive any
termination of this Agreement by DST or Executive,
and the provisions of Paragraph 4(d)(ii) shall survive any
termination of
this
Agreement by DST under Paragraph 4(d)(i).
7.
Continuation of Employment Upon Change in Control.
(a) Continuation of Employment. Subject to the terms and conditions
of
this Paragraph
7, in the event of a
Change in Control
of DST (as
defined in
Paragraph 7(c)) at any
time during the term of this Agreement, Executive will
remain in the employ of DST for a period of an additional three (3) years from
the date of such Change in Control of DST (the "Control
Change Date"). In the
event of a Change in Control of DST, subject to the terms and
conditions of this
Paragraph 7, DST shall, for the three (3)-year period (the
"Three-Year
Period")
immediately following
the Control Change Date, continue to employ Executive
at
not less than the executive capacity Executive held immediately prior to the
Change in Control of DST. During the Three-Year Period, DST shall continue to
pay Executive salary on the same basis, at the same intervals, and
at a rate not
less than that, paid to Executive at the Control Change Date.
(b) Benefits.
During the Three-Year Period, Executive shall be
entitled to participate, on the basis of his executive
position, in each of the
following plans
(together,
the "Specified Benefits") in existence, and in
accordance with the terms thereof, at the Control Change Date:
(i) any incentive compensation plan;
(ii) any benefit
plan, and trust fund associated therewith,
related to (A) life, health, dental, disability, or accidental death
and dismemberment
insurance, (B) profit
sharing, thrift or
deferred
savings (including
deferred compensation,
such as under Sec.
401(k)
plans), (C) retirement or pension benefits, (D) ERISA excess benefits
and (E) tax favored
employee stock ownership (such as under ESOP,
TRASOP, TCESO or PAYSOP programs); and
(iii) any other benefit plans hereafter made generally available
to executives
of Executive's level or to the employees of DST
generally;
or, in the
alternative, DST shall
provide other plans under which at least
equivalent
compensation and
benefits are available and in which Executive
continues to participate on a basis at least equivalent to his
participation in
the DST plans in
effect immediately prior to the
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<PAGE>
Control Change
Date. In addition, the change in control provisions of the
agreements and plans governing options, restricted shares, and other
equity or
incentive awards
granted to
Executive under the 2005 Plan or any other
award
plan of DST or its affiliates shall govern whether any such
outstanding
awards
become exercisable or payable or vest in connection with a change
in control, as
defined in the applicable agreement or plan.
(c) Change in Control of DST(d) . For purposes of this
Agreement,
a "Change in Control" shall be deemed to have occurred if:
(1) the Incumbent Directors cease for any reason to
consti
