Document:

EX-10.1

 Exhibit 10.1 

ENVIVIO, INC. 
 February 24, 2015

  

			
	Name:		 Mike LaJoie

	Address:		  

			  

			  

 Dear Mike: 
 1.
Board of Directors. Envivio, Inc. (the “Company”) is pleased to extend an offer to you to become a member of the Company’s Board of Directors (the “Board”). Your background and experience in our industry will be an
excellent complement to our existing Board, and I am personally very excited for you to join our leadership. This letter, once agreed to and accepted by you, shall constitute an agreement between you and the Company and contains all the terms and
conditions relating to the services you are to provide. Your services as a director shall be subject to and in accordance with Delaware law. You shall serve as a director until such time as you resign, are removed from office in accordance with
applicable law, the Certificate of Incorporation or Bylaws of the Company or you fail to be re-elected at a duly constituted meeting of the Company’s stockholders. Your formal appointment to the Board is subject to satisfactory completion of a
standard background check. We anticipate that this will be completed in the very near future. 
 You are being invited to join the Board
because of your reputation and experience in areas that relate to the Company’s business and strategy. The Company hopes that, as a member of the Board, you will continue to contribute to the success of the Company by participating in meetings
of the Board and providing the Company with advice and guidance consistent with your role as a member of the Board. Regular meetings of the Board are generally held quarterly, in addition to special meetings of the Board which are held from
time-to-time on an as-needed basis, and we would hope that your schedule permits you to attend all of the meetings. 
 The Board is
currently divided into three classes with staggered three-year terms. At each annual general meeting of stockholders, the successors to directors whose terms then expire will be nominated for election to serve from the time of election and
qualification until the third annual meeting following election. The Board has designated you as a Class II director, which means your current term will expire at the annual meeting of stockholders to be held in 2017. The classified board structure
may be changed in accordance with the Company’s Certificate of Incorporation and Bylaws. You may also be re-assigned a different class in the future. 

As a precautionary matter and to avoid any conflicts of interest, we ask that while you are a Board member that you do not provide advice to
or otherwise provide services to any competitor of the Company. In addition, we ask that you inform the Company of any potential, actual, direct or indirect conflict of interest that you think exists or may arise as a result of your relationship
with the Company, so that we may come to a quick and mutually agreeable resolution. 

  
 1 

 2. Committees of the Board. It is contemplated that you will serve on at least one of the
committees of the Board. Committee appointments are at the discretion of the Board. We look forward to discussing further with you on which committee or committees of the Board you feel comfortable serving. 

3. Indemnification. In connection with your services as a director of the Company, the Company agrees to indemnify you to the extent
permitted by applicable law and the Certificate of Incorporation of the Company, subject to the terms and conditions provided for in the Company’s form of Indemnification Agreement, attached hereto as Exhibit A (the “Indemnification
Agreement”). The Company agrees to enter into the Indemnification Agreement with you. 
 4. Initial Grant of Equity. As
consideration for your services on the Board and subject to approval by the Board, you will be granted either a nonstatutory stock option or restricted stock units to purchase a number of shares equal to the quotient of $100,000 (based on the fair
market value of the underlying shares on the date of grant) under the Company’s 2012 Stock Incentive Plan (the “Plan”). The award will be governed by the terms of the Plan and the applicable equity award agreement. The award shall
vest at a rate of 1/48th of the total number of shares subject to the award each month you continue to serve as a director after the vesting commencement date, which will be the date that you are
formally appointed to the Board. All of the shares subject to this award will immediately vest upon a change of control of the Company. 

5. Additional Compensation – Equity. As a non-employee director, you are also eligible to receive an automatic annual equity grant
under the Plan. On the first business day following each regular annual stockholder meeting, each non-employee director who was not elected to the Board for the first time at that meeting and who has served on the Board for at least twelve months as
of the date of the meeting, will receive an annual equity award equal to $50,000 based on the fair market value or Black-Scholes value of our common stock on the date of grant. The annual awards will automatically be granted in the form of
restricted stock units under the Plan after the business day following the annual stockholder meeting. The grant will vest in full on the first anniversary of the date of grant, or immediately prior to the next regular annual stockholder meeting
following the date of grant if the meeting occurs prior to the first anniversary date. Each award will become fully vested upon a change of control of the Company. The number of restricted stock units actually awarded will be determined by dividing
the cash value of the grant by the closing price of a share of the Company’s common stock on the date of the grant. Notwithstanding the foregoing, the Board or the Compensation Committee, in its discretion, may change and otherwise revise the
terms of the awards granted to non-employee directors, including the aggregate value or number of shares subject to the awards or the type of award to be granted. 

6. Additional Compensation – Cash. Each non-employee director receives cash compensation in accordance with the compensation
program set forth on Exhibit B hereto. 

  
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 7. Reimbursement of Expenses. You shall be reimbursed for reasonable travel and other out-of-pocket expenses incurred by you in fulfilling your obligations under this agreement in accordance with the Company’s standard business reimbursement policies
applicable to non-employee directors. 
 8. Not an Employee. Your relationship with the Company will not be that of an employee. You
will not be eligible for any employee benefits. 
 9. Term. This Agreement shall terminate upon your departure from the Board. 

I am excited about you joining our Board and look forward to working with you to help the Company achieve its goals. You may indicate your
agreement with these terms and accept this offer by signing and dating this letter agreement and returning it to me. 
  

											
	Very truly yours,				Agreed and Accepted:
			
	ENVIVIO, INC.				
				
	By		 /s/ Terry D. Kramer
				 /s/ Michael L. LaJoie

			Terry D. Kramer				Michael LaJoie
			Chairman of the Board				
	Date		 2/24/15
				Date		 2/24/15

			
	Attachments				

  
 3 

 Exhibit A 

Form of Indemnification Agreement 

  
 A-1 

 Exhibit B 

Non-employee Director Cash Compensation Program 
  

					
	 General Board Services
				
	 Annual Cash Retainer
		$	 20,000	  
	 Meeting Fee
		 	None	  
	 Committee Chair Services
				
	 Annual Cash Retainer
				
	 Audit
		$	25,000	  
	 Compensation
		$	15,000	  
	 Nominating / Governance
		$	5,000	  
	 Meeting Fees (all committees)
		 	None	  
	 Committee Member Services
				
	 Annual Cash Retainer
				
	 Audit
		$	5,000	  
	 Compensation
		$	3,000	  
	 Nominating / Governance
		$	1,500	  
	 Meeting Fees (all committees)
		 	None	  

  
 B-1DST EX 10.1 12.31.14

EXHIBIT 10.1

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 Randall D. Young, 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, General Counsel and Secretary 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 in DST management positions at a level comparable to Executive’s, 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 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 affiliate 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 affiliate 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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(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 pay 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 of 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 holds 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 or stock purchase (such as under ESOP, ESPP, 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 

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equivalent to his participation in the DST plans in effect immediately prior to the 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.  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 constitute at least seventy-five percent (75%) of the directors of DST then serving;

(2)    any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) other than DST or any majority-owned subsidiary of DST, or an employee benefit plan of DST or of any majority-owned subsidiary of DST shall have become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly, of securities of DST representing twenty percent (20%) or more (calculated in accordance with Rule 13d-3) of the combined voting power of DST’s then outstanding Voting Securities; provided, however, that a person’s becoming such a beneficial owner shall not constitute a Change in Control if such person is party to an agreement that limits the ability of such person and its affiliates (as defined in Rule 12b-2 under the Exchange Act) to obtain and exercise control over the management and policies of DST;

(3)    a Reorganization Transaction is consummated, other than a Reorganization Transaction which results in the Voting Securities of DST outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least sixty percent (60%) of the total voting power represented by the Voting Securities of such surviving entity outstanding immediately after the Reorganization Transaction, if the voting rights of each Voting Security relative to the other Voting Securities were not altered in the Reorganization Transaction; or

(4)    the stockholders of DST approve a plan of complete liquidation of DST, other than in connection with a Reorganization Transaction.

Notwithstanding the occurrence of any of the foregoing events, a Change in Control shall not occur with respect to Executive if, in advance of such event, Executive agrees in writing that such event shall not constitute a Change in Control.  

For purposes of this 7(c) and the definition of Change in Control, the following terms have the meaning set forth below:

(1)    “Incumbent Directors” means (i) an individual who was a member of the DST Board on May 10, 2005 (effective date of the 2005 Plan); or (ii) an individual whose election, or nomination for election by DST’s stockholders, was approved by a vote of at 

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least seventy-five percent (75%) of the members of the DST Board then still in office who were members of the DST Board on such effective date; or (iii) individuals whose election, or nomination for election by DST’s stockholders, was approved by a vote of at least seventy-five percent (75%) of the members of the DST Board then still in office who were elected in the manner described in (i) or (ii) above; provided that no director whose election was in connection with a proposed transaction which, if consummated, would be a Change in Control shall be an Incumbent Director.

(2)    “Related Party” means (i) a majority-owned subsidiary of DST; or (ii) an employee or group of employees of DST or of any majority-owned subsidiary of DST; or (iii) an employee benefit plan of DST or of any majority-owned subsidiary of DST; or (iv) a corporation owned directly or indirectly by the stockholders of DST in substantially the same proportion as their ownership of the voting power of Voting Securities of DST.

(3)    “Reorganization Transaction” means a merger, reorganization, consolidation, or similar transaction or a sale of all or substantially all of DST’s assets other than any such sale which would result in a Related Party owning or acquiring more than fifty percent (50%) of the assets owned by DST immediately prior to the sale.

(4)    “Voting Securities” of a corporation means securities of such corporation that are entitled to vote generally in the election of directors, but not including any other class of securities of such corporation that may have voting power by reason of the occurrence of a contingency.

(d)    Termination After Control Change Date.  Notwithstanding any other provision of this Paragraph 7, at any time after the Control Change Date, DST may, through its Board, terminate the employment of Executive (the “Termination”), but within five (5) days after the Termination it shall pay to Executive his full base salary through the Termination, to the extent not theretofore paid, plus a lump sum amount (the “Special Severance Payment”) equal to the product of his annual base salary specified in Paragraph 2(a) hereof multiplied by the number of years and any portion thereof remaining in the Three-Year Period (or if the balance of the Three-year Period after Termination is less than one year, for one year, [hereinafter called the “Extended Period”]).  Specified Benefits to which Executive was entitled immediately prior to Termination shall continue until the end of the Three-Year Period (or the Extended Period, if applicable); provided that: (a) if any plan pursuant to which Specified Benefits are provided immediately prior to Termination would not permit continued participation by Executive after Termination, then DST shall pay to Executive within five (5) days after Termination a lump sum payment equal to the amount of Specified Benefits Executive would have received if Executive had been fully vested and a continuing participant in such plan to the end of the Three-Year Period or the Extended Period, if applicable; (b) if Executive obtains new employment following Termination, then following any waiting period applicable to participation in any plan of the new employer, Executive shall continue to be entitled to receive benefits pursuant to this sentence only to the extent such benefits would exceed those available to Executive under comparable plans of the Executive’s new employer (but Executive shall not be required to repay any amounts then already received by him); and (c) Executive shall receive in a lump sum the aggregate amount of the Annual Incentives that would 

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have been payable if DST had met Target goals for each year of the Three-Year Period or, if applicable, the Extended Period (prorated for the final performance year if the Three-Year Period or the Extended Period, as the case may be, ends partially through such performance year); provided that the Annual Incentive for the performance period in which Executive’s employment terminated shall be paid on the payment due date as provided in the DST Annual Incentive Program.  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.

(e)    Resignation After Control Change Date.  In the event of a Change in Control of DST, thereafter, upon good reason (as defined below) Executive may, at any time during the Three-Year Period or the Extended Period, in his sole discretion, resign his employment with DST only if: (i) Executive provides written notice to the Secretary of DST within ninety (90) days after the initial occurrence of a good reason event describing in detail the event and stating that Executive’s employment will terminate upon a specified date in such notice (the “Good Reason Termination Date”), which date is not earlier than thirty (30) days after the date such notice is provided to DST (the “Notice Delivery Date”) and not later than ninety (90) days after the Notice Delivery Date, and (ii) DST does not remedy the event prior to the Good Reason Termination Date.  Within five (5) days after the Good Reason Termination Date, DST shall pay to Executive his full base salary through the Good Reason Termination Date, to the extent not theretofore paid, plus a lump sum amount equal to the Special Severance Payment (computed as provided in the first sentence of Paragraph 7(d), except that for purposes of such computation all references to “Termination” shall be deemed to be references to “Good Reason Termination Date”).  Upon the Good Reason Termination Date of Executive, Specified Benefits to which Executive was entitled immediately prior to the Good Reason Termination Date shall continue on the same terms and conditions as provided in Paragraph 7(d) in the case of Termination (including equivalent payments provided for therein).  For purposes of this Agreement, Executive shall have “good reason” if there occurs without his consent: (a) a material reduction in the character of the duties assigned to Executive or in Executive’s level of work responsibility or conditions; (b) a material reduction in Executive’s base salary as in effect immediately prior to the Control Change Date or as the same may have been increased thereafter; (c)  the material relocation of the principal executive offices of DST or its successor to a location outside the metropolitan area of Kansas City, Missouri or requiring Executive to be based anywhere other than DST’s principal executive office, except for required travel on DST’s business to an extent substantially consistent with Executive’s obligations immediately prior to the Control Change Date; or (d) any material breach by DST of this Agreement to the extent not previously specified; provided, however, that Executive shall not have “good reason” under this subparagraph (d) based on a breach of Paragraph 7(b) if participation in any plan of the type referred to in Paragraph 7(b) in effect as of the Control Change Date is immaterial or benefits to Executive from participation in such plans are not reduced by more than ten percent (10%) in the aggregate.

(f)    Termination for Cause After Control Change Date.  Notwithstanding any other provision of this Paragraph 7, at any time after the Control Change Date, Executive may be terminated by DST “for cause” without notice and without any payment hereunder only if such termination is for an act of dishonesty by Executive constituting a felony under the laws of the State 

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of Missouri which resulted or was intended to result in gain or personal enrichment of Executive at DST’s expense.

(g)    Gross-Up Provision.  If any portion of any payments received by Executive from DST on or after the Control Change Date (whether payable pursuant to the terms of this Agreement or any other plan, agreement or arrangement with DST, its successors or any person whose actions result in a Change of Control of DST), shall be subject to the tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, or any successor statutory provision (“Parachute Payments”), DST shall pay to Executive, within five (5) days after Executive’s Termination or Good Reason Termination Date such additional amounts as are necessary so that, after taking into account any tax imposed by such Section 4999 or any successor statutory provision on any such Parachute Payments (as well as any income tax or Section 4999 tax on payments made pursuant to this sentence), Executive is in the same after-tax position that Executive would have been in if such Section 4999 or any successor statutory provision did not apply and no payments were made pursuant to this sentence.

(h)    Mitigation and Expenses.

(i)    Other Employment.  After the Control Change Date, Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and except as expressly set forth herein no such other employment, if obtained, or compensation or benefits payable in connection therewith shall reduce any amounts or benefits to which Executive is entitled hereunder.

(ii)    Expenses.  If any dispute should arise under this Agreement after the Control Change Date involving an effort by Executive to protect, enforce or secure rights or benefits claimed by Executive hereunder, DST shall pay (promptly upon demand by Executive accompanied by reasonable evidence of incurrence) all reasonable expenses (including attorneys’ fees) incurred by Executive in connection with such dispute, without regard to whether Executive prevails in such dispute except that Executive shall repay DST any amounts so received if a court having jurisdiction shall make a final, nonappealable determination that Executive acted frivolously or in bad faith by such dispute.  To assure Executive that adequate funds will be made available to discharge DST’s obligations set forth in the preceding sentence, DST has established a trust and upon the occurrence of a Change in Control of DST shall promptly deliver to the trustee of such trust to hold in accordance with the terms and conditions thereof that sum which the Board shall have determined is reasonably sufficient for such purpose.

(i)    Successors in Interest.  The rights and obligations of Executive and DST under this Paragraph 7 shall inure to the benefit of and be binding in each and every respect upon the direct and indirect successors and assigns of DST and Executive, regardless of the manner in which such successors or assigns shall succeed to the interest of DST or Executive hereunder, and this Paragraph 7 shall not be terminated by the voluntary or involuntary dissolution of DST or any merger or consolidation or acquisition involving DST, or upon any transfer of all or substantially all of DST’s assets, or terminated otherwise than in accordance with its terms.  In the event of any 

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such merger or consolidation or transfer of assets, the provisions of this Paragraph 7 shall be binding upon and shall inure to the benefit of the surviving corporation or the corporation or other person to which such assets shall be transferred.

(j)    Prevailing Provisions.  On and after the Control Change Date, the provisions of this Paragraph 7 shall control and take precedence over any other provisions of this Agreement which are in conflict with or address the same or a similar subject matter as the provisions of this Paragraph 7.

8.    Notice.  Notices and all other communications to either party pursuant to this Agreement shall be in writing and shall be deemed to have been given when personally delivered, delivered by telecopy or deposited in the United States mail by certified or registered mail, postage prepaid, addressed, in the case of DST, to DST Systems, Inc., 333 West 11th Street, Kansas City, Missouri 64105, Attention:  President, or, in the case of the Executive, to him at 2501 West 102nd Street, Leawood, Kansas 66206, or to such other address as a party shall designate by notice to the other party.

9.    Amendment.  No provision of this Agreement may be amended, modified, waived or discharged unless such amendment, waiver, modification or discharge is agreed to in a writing signed by Executive and the Executive Vice President of DST.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the time or at any prior or subsequent time.

10.    Successors and Assigns; Assignment by Executive Prohibited.  The rights and obligations of DST under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of DST.  Except as provided in Paragraph 7(i), neither this Agreement nor any of the payments or benefits hereunder may be pledged, assigned or transferred by Executive either in whole or in part in any manner, without the prior written consent of DST.

11.    Severability.  The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted.

12.    Controlling Law and Jurisdiction.  The validity, interpretation and performance of this Agreement shall be subject to and construed under the laws of the State of Missouri, without regard to principles of conflicts of law.

13.    Entire Agreement.  This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof, except this Agreement does not superseded any Officer Indemnification Agreement between DST and Executive.

14.    Code Section 409A.  

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(a)     To extent that the Executive would otherwise be entitled to any payment or benefit under this Agreement or any plan or arrangement of DST or its affiliates, that constitutes “deferred compensation” subject to Section 409A of the Code (“Section 409A”) and that if paid during the six months beginning on the date of Executive’s termination of employment would be subject to additional taxes and penalties under Section 409A (“409A Penalties”) because the Executive is a “specified employee” (within the meaning of Section 409A and as determined from time to time by the Compensation Committee of DST), the payment will be paid to the Executive on the earliest of the six-month anniversary of the termination of employment, a change in ownership or effective control of DST (within the meaning of Section 409A) or the Executive’s death.  In addition, any payment or benefit due upon a termination of employment that represents a “deferral of compensation” within the meaning of Section 409A shall be paid or provided to the Executive only upon a “separation from service” as defined in Treas. Reg. 1.409A-1(h).  To the extent applicable, each severance payment made under this Agreement shall be deemed to be separate payments, and amounts payable under this Agreement shall be deemed not to be a “deferral of compensation” subject to Section 409A to the extent provided in the exceptions in Treas. Reg. 1.409A-1(b)(4) (“short-term deferrals”) and (b)(9) (“separation pay plans,” including the exception under subparagraph (iii)) and other applicable provisions of Treas. Reg. 1.409A-1 through 1.409A-6.

		
	(b)
	Except as otherwise expressly provided herein, to the extent any expense reimbursement or the provision of any in-kind benefit under this Agreement is determined to be subject to Section 409A, the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the expenses eligible for reimbursement in any other calendar year (except for any life-time or other aggregate limitation applicable to medical expenses), in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which the Executive incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.

IN WITNESS WHEREOF, the parties have executed this Amendment effective on the day and year first above written.
	
				
	 
	 
	DST SYSTEMS, INC.

	 
	 
	By:
	/s/ Thomas A. McDonnell

	 
	 
	 
	Thomas A. McDonnell
President and Chief Executive Officer

	 
	 
	 
	 

	 
	 
	By:
	/s/ Randall D. Young

	 
	 
	 
	Randall D. Young

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