Exhibit 10.1

 

GRAPHIC [g142131km01i001.jpg]

DST Systems, Inc.

333 West 11th Street

Kansas City, MO  64105

816.435.1000

www. dstsystems.com

 

 

 

May 31, 2013

 

Kenneth V. Hager

Vice President - Chief Financial Officer and Treasurer

DST Systems, Inc.

 

Dear Mr. Hager:

 

This retirement agreement (the “Retirement Agreement”) is entered into by and
between you and DST Systems, Inc. (the “Company”), and confirms the agreement
that has been reached with you in connection with your retirement. In
consideration of the promises and the mutual covenants set forth herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending to be legally bound, hereby agree as
follows:

 

1.             Transition.

 

(a)           You agree that you will retire as an employee of the Company on
the date set forth in a Company notice (the “Retirement Notice”) as the date the
Company is no longer in need of your full-time transition support with respect
to a successor Chief Financial Officer, which date shall not precede August 1,
2013, nor be after December 31, 2013.  Effective on the applicable date (the
“Retirement Date”), you shall resign, and by executing this Retirement Agreement
you shall be deemed to have resigned as an employee or officer of and from
service in any capacity, other than as a director, with each “DST Entity” or
“DST Plan.”  The Company will deliver the Retirement Notice to you at least ten
(10) days prior to the Retirement Date.  As and to the extent requested by the
Company, you shall also resign from your position as a director of one or more
DST Entities.  You hereby agree to execute any other documents and take all
other actions necessary to effectuate your resignations as a director of the DST
Entities as and when requested by the Company.

 

For purposes of this Agreement, (i) “DST Entity” means the Company, its
subsidiaries, joint ventures and affiliated entities, and (ii) “DST Plan” means
each of the DST Entities’ benefit plans, awards, trusts and funds, and each of
the foregoing defined terms also include the administrators, trustees,
fiduciaries and committees of and any person associated with any of the
foregoing, including without limitation any “DST Person” as defined in
Section 11, and the predecessors, successors and assigns of any of the
foregoing.

 

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(b)           From the Effective Date (as referenced in Section 3(b)) of this
Retirement Agreement through your Retirement Date, you shall continue to serve
as the Company’s Vice President - Chief Financial Officer and Treasurer and
perform such duties of that position as you performed before the Effective Date,
or, if a successor Chief Financial Officer has assumed such position, continue
to serve as an employee of the Company and perform such duties as requested by
the Chief Executive Officer in assisting with the transition of duties to such
successor and providing advice as to matters relating to DST Entities and DST
Plans of which you have knowledge arising from your current duties or from your
services for or positions with DST Entities and DST Plans (the “Services”).

 

2.             Payments and Benefits.  In consideration of your execution of
this Retirement Agreement and your compliance with its terms and conditions, the
Company agrees to pay or provide to you, subject to the terms and conditions set
forth in this Retirement Agreement, with the benefits described in this
Section 2.  You acknowledge and agree that the benefits below shall be in full
satisfaction of the Company’s obligations under the terms of your employment
agreement entered into with the Company on December 1, 2008 (the “Employment
Agreement”) and all applicable cash or equity incentive compensation plans and
agreements.

 

(a)           From the Effective Date through the Retirement Date, the Company
will provide you with all compensation, benefits, perquisites and reimbursements
provided to you immediately before your execution of this Retirement Agreement,
in accordance with the Company’s payroll practices and other applicable
policies. Effective as of the Retirement Date, you will be eligible for health
plan continuation coverage under the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended.  You may arrange for the portability of your life
insurance provided through the Company’s officer life benefit. Upon the
Retirement Date, the Company will transfer your Company cell phone and cell
phone number to you, and you will be responsible for all service and coverage
fees associated with such cell service after your Retirement Date.

 

(b)           The Company shall provide continued direct payment to your tax
advisors for professional services incurred by you in connection with income tax
planning and income tax return preparation for the taxable year ending
December 31, 2013 in an amount not to exceed $5,000.

 

(c)           Provided that you execute this Retirement Agreement and comply at
all times with its terms and conditions, the Company shall pay to you a special
retirement payment equal to $750,000, which shall be paid to you on the
Retirement Date.

 

(d)           Except as provided expressly herein, the Company shall provide you
with all vested benefits and payments to which you are entitled as of the
Retirement Date pursuant to (i) the DST Systems, Inc. 2005 Equity Incentive Plan
(the “Equity Plan”) and all outstanding equity awards thereunder, and (ii) the
Company’s 401(k) Profit Sharing Plan, the terminated Supplemental Executive
Retirement Plan, and the terminated Executive Plan, in each case in accordance
with the terms of such plans and applicable law.  Except as specifically set
forth herein, your participation in all Company plans shall remain subject to
the terms and conditions of such plans as in effect from time to time and you
agree that such terms and conditions are binding on you and the Company.

 

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(e)           The parties acknowledge and agree that you are a party to award
agreements (the “Award Agreements”) pursuant to the terms of the Equity Plan
under which you have been granted (i) stock options to purchase shares of common
stock of the Company (the “Options”), (ii) time vesting restricted stock units
(the “Time-RSUs”), (iii) performance vesting restricted stock units (the
“Performance-RSUs”), (iv) performance stock units (“PSUs”), (v) the Annual
Incentive Award for 2013 under the Equity Plan (the “2013 AIA”) and
(vi) deferred Cash (“Deferred Cash”).

 

(1)           The Company agrees that, in accordance with, and subject to, the
terms and conditions of the Options Award Agreements and the Equity Plan, you
shall be entitled to exercise all vested Options held by you as of the Effective
Date until the expiration date of the Options as set forth in the Option Award
Agreements.  As of the Effective Date, and assuming you do not exercise any
stock options between the date of this Retirement Agreement and that date, you
have: (i) 27,800 vested Options with a strike price at $43.825 and an expiration
date of 12/14/2019 and (ii) 5,089 vested Options with a strike price of $47.51
and an expiration date of 12/1/2021.  Regardless of whether your Retirement Date
is on or after December 1, 2013, you will not be eligible to exercise the
additional 10,121 unvested Options pursuant to that Option Award Agreement
having a strike price of $47.51 that have an expiration date of 12/1/2021. All
of these 10,121 Options will be forfeited on the effective date of this
Retirement Agreement and the Company will have no further obligation or
responsibility with respect thereto.

 

(2)           The Company agrees that, in accordance with, and subject to, the
terms and conditions of the Time-RSUs Award Agreements and the Plan, upon the
Retirement Date, you shall vest in:

 

(i)            a prorata portion of the 761 Time-RSUs that were granted in
February 2011 and that are scheduled to vest on March 14, 2014, as well as the
dividend Time-RSUs credited in respect of such Time-RSUs (collectively, the
“2011 Eligible RSUs”), calculated by dividing the number of 2011 Eligible RSUs
by 12 and then multiplying by the number of months (determined in accordance
with the Award Agreement) of your continued service with the Company from
March 14, 2013 to your Retirement Date; and

 

(ii)           a prorata portion of the 488 Time-RSUs that were granted in
February 2013 and that are scheduled to vest on March 14, 2014, as well as the
dividend Time-RSUs credited in respect of such Time-RSUs (collectively, the
“2013 Eligible RSUs”), calculated by dividing the number of 2013 Eligible RSUs
by 12 and then multiplying by the number of months (determined in accordance
with the Award Agreement) of your continued service with the Company from
March 14, 2013 to your Retirement Date.

 

The above described vested Time-RSUs shall be settled as soon as
administratively practical following your Retirement Date in accordance with the
Time-RSUs Award Agreements.  All unvested Time-RSUs will terminate on the
Retirement Date and the Company will have no further obligation or
responsibility with respect thereto.

 

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(3)           The Company agrees that, in accordance with and subject to, the
terms and conditions of the PSU Award Agreement and the Plan, you will be
eligible to vest in a level of the 4,963 target number of PSUs you were granted
on February 21, 2013.  The number vesting on March 11, 2016 will be determined
when the Compensation Committee of the Company’s Board of Directors (the
“Compensation Committee”) certifies goal achievement for the applicable
three-year performance period (2013-2015) and makes such automatic downward
adjustments as are referenced in the goal appendix for the award; provided,
however, that you will only vest in a prorated number of PSUs calculated by
dividing the number of eligible PSUs (the number that would have vested if you
were employed on March 11, 2016 plus dividend equivalents thereon and after all
adjustments have been made) by 36 and then multiplying by the number of months
(determined in accordance with the Award Agreement) that have elapsed from
January 1, 2013 (the commencement of the performance period) through your
Retirement Date. The PSUs shall be settled as soon as administratively practical
after the vesting date in March 2016 in accordance the PSUs Award Agreement.

 

(4)           The Company agrees that, in accordance with the 2013 AIA plan
document and your Employment Agreement, you will be eligible to receive a 2013
AIA.  The 2013 AIA shall be based on the blended payout ratio for achievement of
the two weighted corporate performance goals determined when the Compensation
Committee certifies the actual level of goal achievement for the 2013
performance year (that is, your 2013 base salary, multiplied by the bonus
opportunity level approved by the Compensation Committee) and makes such
discretionary reductions in the aggregate pool as it deems appropriate;
provided, however, that no discretionary reduction shall be made for individual
performance as no such reduction is permitted for participants in the
Section 162(m) pool, and provided, further, you will only receive a pro rata
portion of the 2013 AIA (after all adjustments have been made) based on the
number of days from January 1, 2013 to your Retirement Date.  Such pro rata
payment shall be paid as soon as administratively practical in March 2014
following certification of goal achievement for the 2013 performance year,
subject to any delay due to compliance with Code Section 409A or pursuant to any
permissible retirement installment election you may make.

 

(5)           The Company agrees that, in accordance with, and subject to, the
terms and conditions of the Deferred Cash Award Agreements and the Plan, you
shall be paid the full amount of your Deferred Cash award balances, adjusted as
provided in the Award Agreements and Equity Plan procedures for gains and losses
pursuant to your hypothetical investment choices, with payment to be made (or,
if subject to installment elections, shall commence) within sixty days of the
date that is six months following the Retirement Date.

 

(f)            A cash payment under the Company’s vacation payout plan for
accrued but unused vacation as of your Retirement Date on the Retirement Date.

 

(g)           The parties acknowledge and agree that you will be paid for any
unreimbursed business expenses (in accordance with usual Company policies and
practices, and in no event later than the calendar year following the year in
which the expenses are incurred), to the extent not theretofore paid.

 

(h)           The Company will make a contribution to the Greater Kansas City
Community Foundation of $50,000 in the Company’s name and in your honor, to be
donated by the Greater Kansas City Community Foundation to five (5) charities
designated by you, in the

 

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amount of $10,000 each and at those times selected by you, which in no event
will be later than December 31, 2013.  You will not be responsible for paying a
fee for the ability to direct this donation.

 

(i)            The Company shall pay for legal fees incurred by you in
connection with this Retirement Agreement directly to your legal counsel in an
amount not to exceed $15,000.

 

3.             Consideration; Effective Date.

 

(a)           You acknowledge that you have consulted with an attorney before
executing this Retirement Agreement.  You have carefully read and fully
understand all of the provisions of this Retirement Agreement.  You are entering
into this Retirement Agreement knowingly, freely and voluntarily in exchange for
good and valuable consideration to which you would otherwise not be entitled.

 

(b)           This Retirement Agreement shall become effective on the day upon
which you sign it (“Effective Date”).

 

4.             Continuing Obligations and Duties Upon Retirement.

 

(a)           You shall comply at all times with any non-compete,
non-solicitation, confidentiality and non-disclosure obligations to any of the
DST Entities, including, but not limited to (i) Section 5 (Non-Disclosure) of
the Employment Agreement; (ii) Section 5 (Violation of Non-compete, Nonuse and
Nondisclosure Provisions) of the Restricted Stock Unit Agreement of the DST
Systems, Inc. 2005 Equity Incentive Plan; (iii) Section 8 (Violation of
Non-compete, Nonuse and Nondisclosure Provisions) of the Stock Option Award
Agreement of the DST Systems, Inc. 2005 Equity Incentive Plan; (iv) Section 5
(Violation of Non-compete, Nonuse and Nondisclosure Provisions) of the
Performance Stock Unit Agreement of the DST Systems, Inc. 2005 Equity Incentive
Plan; and (v) Section 5 (Violation of Non-compete, Nonuse and Nondisclosure
Provisions) of the Deferred Cash Award Agreement of DST Systems Inc. 2005 Equity
Incentive Plan, all of which are expressly incorporated by reference as if fully
set forth in this Section 4.  The obligations set forth in this
Section 4(a) shall be the “Restrictive Covenants.”  For the avoidance of doubt,
your non-compete and non-solicitation obligations as set forth in the
above-listed Award Agreements shall be for the one-year period commencing on
your Retirement Date.

 

(b)           On the Retirement Date, (i) you shall fully comply with Section 6
(Duties Upon Termination) of the Employment Agreement, (ii) you shall return to
the Company all business equipment provided to you by the Company and the
originals and copies of business related files, documents, information and
materials, and (iii) you shall return to the Company all Company-supplied credit
cards, identification cards and equipment, except that, you will retain the cell
telephone issued by the Company to you, including its telephone number.

 

(c)           Until the Retirement Date, you agree to continue to abide by and
conform to the terms and conditions of all applicable policies of the Company
including without limitation the Company’s Business Ethics and Legal Compliance
Policy, Communications and Acceptable Use Policy, Anti-Corruption Policy, and
Insider Trading Prevention Policy (collectively, the “Ethics and HR Policies”)
and to comply with your duty of loyalty and other

 

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legal obligations.  Until the Retirement Date, you agree that you will continue
to act in the best interests of DST Entities and DST Plans to the exclusion of
your personal advantage, and will avoid and not engage in situations that
involve a conflict between your personal interests and the interests of DST
Entities and DST Plans.  You agree that you are solely responsible for
compliance with federal and state securities, antitrust and other laws regarding
your ownership of and transactions in the Company’s stock, including without
limitation your disgorgement of any short-swing profits, the continued reporting
on Forms 4 and 5 for the required time of your stock ownership and your
compliance with Rule 144.

 

(d)           You acknowledge and agree that the Restrictive Covenants are fair
and reasonable in view of the extent of your important client and vendor
contacts, and the extent of your knowledge of trade secrets and other
confidential information.

 

(e)           If the final judgment of a court or arbitrator with competent
jurisdiction declares that any term or provision of this Section 4 is invalid or
unenforceable, you agree that the court or arbitrator making the determination
of invalidity or unenforceability will have the power to reduce the scope,
duration, or geographic area of the applicable term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, and that the terms and provisions of this Section 4 will be
enforceable as so modified.  You further agree that if any part of this
Section 4 is held by a court or arbitrator with competent jurisdiction to be
invalid, illegal or incapable of being enforced in whole or in part by reason of
any rule of law or public policy, and cannot be modified in accordance with this
Section, such part shall be deemed to be severed from the remainder of this
Section 4 for the purpose only of the particular legal proceedings in question,
and all other covenants and provisions of this Retirement Agreement shall in
every other respect continue in full force and effect, and no covenant or
provision shall be deemed dependent upon any other covenant or provision.

 

5.             Cooperation.  You agree that you will cooperate to the fullest
extent possible with all DST Entities regarding any pending or future
litigation, claim, proceeding or other disputed issue involving any DST Entity,
the board of any DST Entity (each, a “DST-Related Board”), or any DST Plan that
relates to matters within your knowledge or relates to your responsibilities
while employed (“DST Service Matters”).  Cooperation, as used herein, means you
shall: (a) meet with DST Entity, DST-Related Board or DST Plan representatives
and attorneys at reasonable times and places to answer questions regarding facts
and other related issues (this includes travel to such locations as requested by
such representatives and attorneys); (b) appear and provide testimony if
requested by a DST Entity, DST-Related Board or DST Plan (this includes travel
to such locations as requested); (c) provide full, complete and truthful
testimony if you ever testify in deposition, trial or any other proceeding
involving any DST Entity, DST-Related Board or DST Plan; (d) notify the
Company’s General Counsel within three (3) business days if you are served with
a subpoena relating to any litigation, claim or proceeding involving a DST
Entity, DST-Related Board or DST Plan, or if you are contacted by any party
adverse to a DST Entity, DST-Related Board or DST Plan or by any representative
of such an adverse party; and (e) not engage in any discussions with or
otherwise assist any adverse party or any adverse party’s representatives
related to any claim against any DST Entity, DST-Related Board or any member
thereof, or DST Plan, except as may be required by law.  Following the

 

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Retirement Date, the Company agrees to reimburse you, as allowed by applicable
law, for reasonable expenses incurred with respect to your compliance with your
obligations under this Section 5, and to compensate you at the rate of $2,500
for each day or part of a day for which your services are required.

 

6.             Injunctive Relief; Clawback.  You and the Company agree that upon
a final determination by a court of competent jurisdiction of a material
violation of your obligations in Sections 4 and 5 of this Retirement Agreement,
such violation may cause irreparable injury to the relevant DST Entity or DST
Plan that is not adequately remediable in damages and may entitle the DST Entity
or DST Plan to temporary, preliminary and final injunctive relief against
further breach of such obligations.  You acknowledge and agree that your
compensation from the Company, including without limitation any payments or
awards pursuant to the DST Annual Incentive Program and to the Plan and this
Retirement Agreement, remain subject to any clawback policy in effect as of the
date hereof or as may be required by law, including but not limited to the DST
Systems, Inc. Compensation Recoupment Policy in effect as of the date hereof
(the “Recoupment Policy”).

 

7.             Release of Claims.

 

(a)           By signing this Retirement Agreement, you indicate that, except as
provided in Section 7(b), this agreement is satisfactory and that you will not
assert any claims against any DST Entity or DST Plan.  This means that, except
as provided in Section 7(b), upon execution of this Retirement Agreement you are
thereby forever releasing and waiving any and all claims and causes of action of
any kind or nature for money or anything else, whether such claims are known or
unknown, that you have or may have against any DST Entity or DST Plan, that
relate in any way to your employment, to the ending of your employment, or to
any DST Plan.  This release includes, but is not limited to, any and all claims
under any federal, state or local common law or under any federal, state or
local statute, regulation or ordinance, including, but not limited to, claims of
breach of an express or implied contract (including without limitation
employment, award, commission or incentive agreements), claims of breach of the
covenant of good faith and fair dealing, claims of defamation or other tort type
claims, and any and all claims of unlawful discrimination, harassment,
retaliation or other unlawful conduct under Title VII of the Civil Rights Act of
1964, 42 U.S.C. §2000e et seq.; Civil Rights Act of 1866, 42 U.S.C. §1981;
Americans With Disabilities Act, 42 U.S.C. §12101 et seq.; Age Discrimination in
Employment Act, 29 U.S.C. §621 et seq.; Family and Medical Leave Act, 29 U.S.C.
2601 et seq.; Employee Retirement Income Security Act, 29 U.S.C. §1001 et seq.;
Missouri Human Rights Act, 213.010 et seq.; or Civil Rights Ordinance of Kansas
City, Missouri (Ordinance #53581, Chapter 26, Article IX, 26.201-26.236); or
under any other federal, state or local law.  The intent of the parties is that
this release of claims is to be construed as broadly as is permissible by
applicable law.

 

(b)           This release of claims does not apply to any rights or claims
(i) as and to the extent provided for under this Retirement Agreement; and
(ii) under any DST Welfare Benefit Plan, or the DST 401(k) Profit Sharing Plan. 
All plan rights and claims under 7(b)(ii) are governed by the terms of each
plan.

 

(c)           You have up to twenty-one (21) days to consider this agreement and
release of claims.  If you sign this agreement and release of claims, you then
will have seven (7)

 

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calendar days to revoke the agreement and release if you change your mind.  The
agreement and release do not become effective or enforceable until expiration of
seven (7) calendar days and any revocation must be in writing and received by
the Company within seven (7) calendar days after you sign this agreement and
release of claims.  In order to be effective, the written revocation must be
mailed to the Company, care of Ms. Theresa Hursh, and postmarked within seven
(7) calendar days or delivered to Ms. Hursh through personal delivery or email
(tchursh@dstsystems.com) within seven (7) calendar days.  If you fail to sign
and return this agreement and release of claims on or before the expiration of
twenty-one (21) days after you receive the agreement and release of claims, or
if you sign and return this agreement but revoke the agreement and release
within seven (7) calendar days, the payments and benefits set forth in Sections
2(b), (c), (h) and (i) this agreement will no longer be available to you.

 

8.             Section 409A.  The intent of the parties is that payments and
benefits under this Retirement Agreement (and all other Company plans and
agreements) comply with Code Section 409A and, accordingly, to the maximum
extent permitted, this Retirement Agreement shall be interpreted to be in
compliance therewith.  Notwithstanding anything contained herein to the
contrary, you shall not be considered to have terminated employment with the
Company for purposes of any payments under this Retirement Agreement which are
subject to Code Section 409A until you have incurred a “separation from service”
from the Company within the meaning of Code Section 409A.  Each amount to be
paid or benefit to be provided under this Retirement Agreement shall be
construed as a separate identified payment for purposes of Code Section 409A. 
Without limiting the foregoing and notwithstanding anything contained herein to
the contrary, to the extent required in order to avoid an accelerated or
additional tax under Code Section 409A, amounts that would otherwise be payable
and benefits that would otherwise be provided pursuant to this Retirement
Agreement (or any plans or agreements referenced herein) during the six-month
period immediately following your separation from service shall instead be
paid as soon as administratively practical after the date that is six months
following your separation from service (or, if earlier, your date of death).  To
the extent required to avoid an accelerated or additional tax under Code
Section 409A, amounts reimbursable to you shall be paid to you on or before the
last day of the year following the year in which the expense was incurred and
the amount of expenses eligible for reimbursement (and in kind benefits provided
to you) during one year may not affect amounts reimbursable or provided in any
subsequent year. In no event whatsoever shall the Company be liable for any
additional tax, interest or penalty that may be imposed on you by Code
Section 409A or damages for failing to comply with Code Section 409A.

 

9.             Press Release.  Within four (4) business days following the date
that you execute this Retirement Agreement, the Company will issue a press
release in a mutually agreed format.

 

10.          Captions and Section Headings.  Captions and section headings used
here are for convenience and are not a part of this Agreement and will not be
used in its interpretation.

 

11.          Response to Subpoena, Court Order or Similar Legal Process. 
Nothing in this Retirement Agreement shall prohibit any DST Entity, DST Plan, or
any of the DST Entities’ or DST Plans’ shareholders, directors, officers,
managers, partners, employees, attorneys, advisors and agents (each, a “DST
Person”) or you from responding to a subpoena, court order or similar legal
process or from cooperating, as required by law, with any governmental
investigation; provided, however, that before making any disclosures required by
a subpoena or other court

 

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order, the Company or you shall provide the other party with written notice of
the subpoena, court order or similar legal process sufficiently in advance of
such disclosure to afford the other party a reasonable opportunity to challenge
the subpoena, court order or similar legal process.

 

12.          Successors and Assigns.  This Retirement Agreement shall inure to
the benefit of and be binding upon each of the DST Entities and DST Plans and
any successor organization which shall succeed to any of the DST Entities or DST
Plans by acquisition, merger, consolidation or operation of law, or by
acquisition of assets of any of the DST Entities or DST Plans and any assigns. 
If your employment terminates prior to your Retirement Date due to your death,
or disability as defined in your Employment Agreement, then you or your
successors and assigns as identified in the relevant beneficiary designation(s),
if any, or if none, your estate, shall be entitled to all benefits provided in
this Retirement Agreement.  In such event, all such benefits shall be provided
or paid in accordance with this Retirement Agreement, subject to any other
applicable benefit plan documents, award agreements or other governing documents
relating to such benefit(s) and the date your employment terminates shall be
your Retirement Date for purposes of this Retirement Agreement.  You may not
assign any of your obligations under this Retirement Agreement, but you may
assign your benefits under this Retirement Agreement, and such benefits shall
inure to the benefit of your successors and assigns, as hereinabove provided.

 

13.          Waiver.  The failure of the Company or you to enforce any provision
of this Retirement Agreement will not waive, in any way, that or any other
provision of this Retirement Agreement in connection with any future violation,
or prevent that party or any other party from thereafter enforcing every term of
this Retirement Agreement.

 

14.          Withholding; Authorized Deductions.  The Company shall be entitled
to withhold from amounts to be paid to you hereunder any federal, state or local
withholding or other taxes which it is from time to time required by law to
withhold and any deductions authorized by you.

 

15.          Each Party the Drafter.  This Retirement Agreement, and the
provisions contained in it, shall not be construed or interpreted for, or
against, any party to this Retirement Agreement because that party drafted or
caused that party’s legal representatives to draft any of its provisions.

 

16.          Counterparts.  This Retirement Agreement may be executed
simultaneously in counterparts, each of which shall be an original, but all of
which shall constitute but one and the same agreement.  A faxed or PDF signature
shall operate the same as an original signature.

 

17.          Governing Law. This Retirement Agreement will be governed by and
construed according to the laws of the State of Missouri without regard to the
application of any choice-of-law rules that would result in the application of
another state’s laws.

 

18.          Entire Agreement; No Admission of Wrongdoing.  This Retirement
Agreement sets forth the entire agreement between you and the Company and any
DST Entity or DST Plan and replaces or supersedes any other oral or written
agreement, proposals, negotiations or understandings between you and the Company
and any DST Entity or DST Plan, except as otherwise provided in the Retirement
Agreement with respect to continuing obligations under

 

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any existing noncompete, nonsolicitation, nondisclosure and intellectual
property protection obligations under the Employment Agreement and the Award
Agreements, the Recoupment Policy, obligations under the Ethics and HR Policies,
and obligations under the Arbitration Policy set forth on Addendum A
hereto.  The Company has made no representations, agreements or promises other
than the representations, agreements and promises specifically stated in this
Retirement Agreement.  Any disputes between you and any DST Entity or DST Plan
shall be resolved in accordance with the Arbitration policy set forth on
Addendum A thereto, subject to the right of either party to seek injunctions in
aid of arbitration.  This Retirement Agreement cannot be changed except by a
written agreement signed by you and a duly authorized representative of the
Company.  This Retirement Agreement and the consideration provided by the
Company are not, and shall not be construed as, an admission of any liability
whatsoever by any DST Entity, DST Plan or DST Person.

 

If you voluntarily agree to the terms of this Retirement Agreement, please sign
in the space provided below.

 

 

 

/s/ Randall D. Young

 

Randall D. Young

 

Vice President, General Counsel & Secretary

 

 

 

On Behalf of DST Systems, Inc.

 

KNOWING AND VOLUNTARY AGREEMENT

 

I have read and fully understand the terms of this Retirement Agreement (which
includes 14 pages including this signature page and Addendum A).  I knowingly
and voluntarily agree to the terms set forth in this Retirement Agreement.

 

 

Signature:

/s/ Kenneth V. Hager

 

Date:

May 31, 2013

 

Kenneth V. Hager

 

 

 

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ADDENDUM A

 

Arbitration Policy

 

For employment-related legal disputes not resolved through our Open Door Policy
or Equal Employment Opportunity (EEO) Policy, the Company has implemented the
following Arbitration Policy. We believe the Arbitration Policy provides a fair,
efficient, private, and accessible process to resolve employment disputes
relating to legal rights. If any employee, former employee, or applicant (all
referred to herein as “Associate”) is not satisfied with the result of a
complaint under the Open Door Policy and/or the Equal Employment Opportunity
Policy, or if an Associate for any reason fails to pursue a complaint under
those policies, any claim by the Associate related to legally-protected rights
shall be subject to independent and neutral arbitration under the terms of this
Arbitration Policy, unless the Associate has properly opted out of the policy by
the deadline explained on page 5. This Policy also applies to claims by the
Company against an Associate.

 

How Does the Arbitration Process Work?

 

The process will be administered by the American Arbitration Association (AAA)
and conducted under AAA’s National Rules for the Resolution of Employment
Related Legal Claims existing at the time proceedings are initiated, except as
modified by this policy.  The rules and information about AAA may be found at
www.adr.org. AAA is a not-for-profit public service organization. Over 4,000,000
workers are covered by various types of plans administered by the AAA.

 

The Company will pay the Arbitrator fees and the costs charged by AAA, except
that the Associate must pay an initial $125.00 fee to AAA if the Associate
initiates a claim. (If an Associate is indigent, he/she may file the claim
without a fee, pending a decision by the Arbitrator on a request for fee waiver
based on the law and applicable AAA Rules.)

 

The Arbitrator shall be an independent, neutral, and licensed attorney selected
from a list of all attorney members of the AAA Regional Employment Dispute
Resolution Roster or any successor comparable AAA Roster who are: (1) former
federal court judges and magistrates or former state court judges in appellate
courts or trial courts of general jurisdiction; or (2) lawyers who have
practiced law and/or served as Arbitrators in the field of employment law for at
least 15 years and are rated “AV” by Martindale-Hubbell. The AV rating is for
lawyers considered to have reached the height of professional excellence and
recognized for the highest levels of skill and integrity. If the AAA Regional
Roster for any reason does not provide the names of at least three Arbitrators
who meet the qualifications of this policy, then additional qualified
Arbitrators shall be added to the list from the AAA Regional Roster for the
region that is closest geographically to the Associate’s place of employment or
prospective employment.

 

The Company first and then the Associate shall in turn alternately strike one
name from the list until there is only one name remaining, who shall be the
Arbitrator. On the fourth business day after the day on which the striking is
completed, the Company and the Associate shall jointly inform AAA of the
Arbitrator selection; however, prior to the fourth day and based on review of
the importance and complexity of the case and/or the experience of the
Arbitrator, either the Company or the Associate unilaterally may expand the
number of Arbitrators from one to three by sending written notice to the other
party. If either party elects to expand to three the number of Arbitrators, the
additional two Arbitrators shall be the last two Arbitrators who were previously
struck by the parties from the list of Arbitrators. The party electing to add
two Arbitrators to the case shall be solely responsible for all fees and
expenses of the two additional Arbitrators. In a case with three Arbitrators,
the decision of the three Arbitrators must be unanimous. If only two of the
three Arbitrators agree on a decision, they shall issue a written advisory
decision which, if accepted in writing by both parties within ten calendar days,
shall become a final and binding decision. If there is no unanimous decision or
an advisory decision accepted in writing by both

 

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the Company and the Associate, the case shall be heard again before a new
Arbitrator or Arbitrators under the terms of this policy except that if either
the Associate or the Company elects to use three Arbitrators at the second
hearing, two Arbitrators shall have the authority to issue a decision. In any
case, the Associate and the Company also may agree on a mutually acceptable
Arbitrator, and bypass the AAA arbitration selection and administration process.

 

The Arbitrator shall have the exclusive authority to resolve all disputes
relating to the facts or the law, including the authority to grant summary
disposition of claims and the authority to grant all relief that a court of
competent jurisdiction could grant based on the claims asserted. The Arbitrator
shall decide the case in the same manner as a federal district court judge
hearing the case without a jury and shall apply the federal rules of evidence.
The Arbitrator shall issue a signed written decision stating the findings of all
material facts and conclusions of law that provide the basis for the decision.
The Federal Arbitration Act governs the enforcement of this Arbitration Policy
and proceedings under the policy, other than as modified by this policy. If the
Arbitration Policy is found not enforceable under the Federal Arbitration Act,
applicable state law shall apply. Other than as provided in this policy, the
substantive law applied to claims shall be the state or federal substantive law
that would be applied by a federal district court judge sitting at the place of
the Associate’s employment or prospective employment.

 

The arbitration hearing shall be held in the community of the Associate’s
principal place of employment or prospective employment, unless another location
is agreed to by the parties. Prior to the hearing, the parties shall be entitled
to reasonable discovery as determined by the Arbitrator consistent with the
objective of fairness, speed and economy, including at a minimum two
depositions, ten interrogatories and ten document requests by each party.
Associates at their expense may be represented by an attorney. The following
persons may be present at the hearing: the Arbitrator and any recorder of the
hearing; the Associate and his/her spouse, attorneys, experts, and witnesses;
and the Company’s attorneys, management, human resource personnel, experts, and
witnesses. No one else may be present without good cause determined by the
Arbitrator. The parties shall provide lists of the names and addresses of
witnesses and copies of exhibits to each other at least 30 days prior to the
hearing and may supplement this information up to 20 days prior to the hearing.
The Arbitrator may resolve all discovery disputes, issue protective orders, and
issue subpoenas pursuant to the law. Any party may arrange for a qualified court
reporter to make a stenographic record of the hearing. The parties shall be
entitled to file post-hearing briefs and proposed findings of fact and
conclusions of law. The Arbitrator shall set a briefing schedule under which the
party with the burden of proof files first, the opposing party files next, and
the burden of proof party may file a reply.

 

The Arbitration decision shall be binding on the Company and the Associate, and
it may be enforced by a court of competent jurisdiction, subject to available
legal grounds for vacating an arbitration award. However, any party also may:
(1) within 30 days after the decision file a reconsideration motion or other
motion with the Arbitrator or Arbitrators; or (2) within 60 days after the
decision or 30 days after a decision on a reconsideration motion or other
post-decision motion, serve written notice of an Arbitration Appeal. If a party
serves notice of an Arbitration Appeal, the selection of an Arbitrator or
Arbitrators to decide the appeal shall be under the procedure of this
Arbitration Policy. In an Arbitration Appeal, the Arbitrator or Arbitrators
shall apply the standard of review that a court of appeals would apply to the
decision of a trial judge sitting without a jury. The Arbitrator or Arbitrators
in an Arbitration Appeal shall issue a written decision after considering
written briefs and oral argument. If three Arbitrators are selected for an
Arbitration Appeal, two Arbitrators shall have the authority to issue a
decision. The Arbitration Appeal decision shall be subject to review by a court
of competent jurisdiction for error of law or any other available legal grounds
for vacating an arbitration award. If the Arbitration Appeal or court review
results in the direction of a new hearing or other further proceedings, any
party shall have the right to require that a new Arbitrator or Arbitrators be
selected under this Arbitration Policy to handle such new hearing or other
further proceedings.

 

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How to Assert a Claim

 

An Associate who wishes to assert a claim must submit a written request for
arbitration by Certified Mail/Return Receipt Requested to the Vice President of
Human Resources, 333 W. 11th Street, Kansas City, Missouri 64105, within 300
days, or within any longer time period established by the applicable statute of
limitations under the law, from the date of the alleged act giving rise to the
claim. The written request should include supporting documentation and a
thorough description of the facts, the nature of the claim, and the damages
and/or other remedies sought. If the Company wishes to assert a claim against an
Associate, it also must submit such a written request for arbitration with
supporting documentation to the Associate by Certified Mail/Return Receipt
requested within 300 days, or within any longer time period established by the
applicable statute of limitations under the law, from the date of the alleged
act giving rise to the claim. The claim is waived if the Associate or the
Company fails to submit a timely and proper written request for arbitration.
After a request for arbitration, the parties shall cooperate on a joint
submission of the claim to AAA, with the Company paying all fees above $125.00
and, if the Associate asserts indigent status, the Company advancing the initial
$125.00 fee on behalf of the Associate. The Associate does not need to pay the
$125.00 fee if only the Company asserts a claim.

 

All claims must be asserted, heard, and resolved on a single Associate basis,
unless otherwise agreed to by all parties. All related claims by a party must be
asserted in the same arbitration or the unasserted claims are waived. The
Company may not assert claims against multiple Associates in the same
arbitration. Claims by multiple Associates may not be joined together in the
same arbitration. An Associate may not assert claims on behalf of multiple
Associates or as a class action or collective action either in court or under
this Arbitration Policy, and an Associate may not have a claim asserted on his
or her behalf by another person as a class representative or otherwise. However,
if a final court decision holds this prohibition on class action, collective
action, and multiple Associate claims is invalid, the Arbitration Policy is
modified as follows for the subsequent resolution of a class or collective
action claim or a multiple Associate claim. If any Associate wishes to attempt
to assert such a claim after a final court decision holding the prohibition
invalid, the claim must first be filed in a court of competent jurisdiction.
Under all applicable laws, rules, and procedures, the court shall determine the
question of whether the claim should be certified to proceed as a class or
collective action or otherwise proceed on behalf of multiple Associates. After a
final judicial decision on certification or on multiple Associate status,
including all appeals of a trial court ruling, the court then shall refer the
claim to arbitration under this policy for a decision on the merits of the
claim.

 

Coverage of Arbitration Policy

 

This Arbitration Policy covers all legal claims arising out of or relating to
employment, application for employment, or termination of employment, except for
claims specifically excluded under the terms of the policy. The claims covered
by the policy include, but are not limited to, the following types of claims:
wrongful discharge under statutory law or common law; employment discrimination,
retaliation and sexual or other harassment based on federal, state or local
statute, ordinance or governmental regulations; retaliatory discharge or other
unlawful retaliatory action; overtime or other compensation disputes; leave of
absence disputes; tortuous conduct; defamation; violation of public policy;
breach of contract; and other statutory or common law claims. It includes claims
by an Associate against the Company and claims by an Associate against any
fellow employee, supervisor, or manager based on alleged conduct within the
scope of employment by the fellow employee, supervisor, or manager. It also
includes claims based on events that occurred prior to the effective date of
this policy or based on events that occur following the termination of
employment. This Arbitration Policy also applies to any claims by the Company
against an Associate.

 

The only claims excluded from this Arbitration Policy are claims by an Associate
for workers’ compensation benefits, unemployment compensation benefits, Employee
Retirement Income Security Act

 

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(ERISA) -related benefits provided under a Company sponsored benefit plan, or
claims filed with the National Labor Relations Board. Additionally, either the
Associate or the Company may file a court action seeking provisional equitable
remedies available under the law, including but not limited to temporary or
preliminary injunctive relief, either before the commencement of or during the
arbitration process, to preserve the status quo or otherwise prevent damage or
loss pending final resolution of the dispute pursuant to the terms of this
Arbitration Policy. Also, this Arbitration Policy does not prevent or discourage
an Associate from filing and pursuing an administrative proceeding before the
Equal Employment Opportunity Commission or a state or local administrative
agency; however, if an Associate chooses to pursue a legal claim in addition
to and/or following completion of such administrative proceedings, or if there
is some other legal proceeding related to the claim following completion of the
administrative proceedings, the claim then shall be subject to the terms of this
Arbitration Policy.

 

Agreeing to the Arbitration Policy

 

Effective March 12, 2007, the Company and each Associate who continues or starts
employment after March 12, 2007 agree as a term and condition of employment, and
as a binding contract, to resolve employment-related legal claims through this
Arbitration Policy and not through a lawsuit with a judge or jury trial, unless
the Associate timely exercises his or her right to voluntarily opt out of this
Arbitration Policy by sending a letter by Certified Mail/Return Receipt
Requested to the Vice President of Human Resources, DST Systems, Inc., 333 W.
11th Street, Kansas City, Missouri 64105, stating the desire to opt out of the
policy. The letter may simply state the following: “I wish to opt out of the
Company Arbitration Policy.” For any Associate employed as of March 12, 2007,
the opt out letter must be received by the Vice President of Human Resources on
or before April 11, 2007. For any Associate who starts employment after
March 12, 2007 or who is on leave of absence on March 12, 2007, the opt out
letter must be received by the Vice President of Human Resources on or before
the date 30 days after the Associate’s first day of employment or 30 days after
the Associate’s first day back to work following the leave of absence. There
will be no retaliation against any Associate for opting out of the Policy.
Associates may contact the Director of Employee Relations or the Vice President
of Human Resources at (816) 435-8695 to ask any questions or seek further
information regarding this Arbitration Policy. We also encourage Associates, if
they desire, to secure advice from an attorney regarding the voluntary opt out
option and the Arbitration Policy. Any Associate who does not provide a timely
opt out letter by Certified Mail/Return Receipt Requested by the deadline
established under this policy is automatically covered by this Arbitration
Policy and is required to arbitrate employment-related legal claims under the
terms of the Policy.

 

This Arbitration Policy creates a contract that binds the Company and each
Associate to arbitrate employment-related legal claims, unless an Associate
properly and timely opts out of the Policy. The Arbitration Policy does not in
any way modify the employment-at-will status of any.

 

The provisions of this Arbitration Policy are severable. That means that if any
provision is found invalid or unenforceable by a court, it shall not affect the
application and enforcement of the rest of this Arbitration Policy. Also,
whenever possible and consistent with the objective of this Arbitration Policy
to arbitrate all covered claims, any otherwise invalid term should be reformed
and enforced by a court.

 

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