Document:

Exhibit 10.5.2

 

2005-1
AMENDMENT

TO THE

DST
SYSTEMS, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

 

THIS
AMENDMENT is
hereby adopted by the Compensation Committee of the Board of Directors of DST
Systems, Inc. (the “Company”).

 

WHEREAS, the Company maintains the DST Systems,
Inc. Supplemental Executive Retirement Plan (the “Plan”);

 

WHEREAS, the Compensation Committee, pursuant to
Section 9.1 of the Plan, has authority to amend the Plan from time to time; and

 

WHEREAS, the Committee wishes to
amend the Plan to take advantage of certain transition rules provided under IRS
Notice 2005-1 and proposed Treasury regulations issued under Section 409A of
the Internal Revenue Code, and to make certain other changes in response to
Code Section 409A;

 

                NOW,
THEREFORE, the
Plan is hereby amended as follows, the same to be effective as provided herein:

 

                1.             In connection with the sale
of all of the outstanding stock of DST Innovis, Inc., DST Interactive, Inc. and
EquiServe, Inc. during 2005:

 

                (a)           the Accounts of any Participants
employed by such entities (or their subsidiaries) who remained employed with
such entities following the sale shall be fully vested as of the respective
closing dates of such sales; and

 

                (b)           the SERP participation of any
Participants employed by such entities (or their subsidiaries) who remained
employed with such entities following the sale shall be terminated in 2005 and
the Accounts of such Participants shall be distributed, and shall be included
in the Participants’ income, during calendar year 2005.

 

                2.             In connection with the Company’s execution of an Agreement and
Plan of Merger, by and among the Company, DST lock\line, Inc.,
Asurion Corporation, and Cardinal Corporation (“Transaction”):

 

                (a)           the Accounts of any Participants
employed by DST lock\line, Inc. (or its subsidiaries) shall be fully vested as
of the Effective Date (as defined in the Agreement and Plan of Merger) of such
Transaction; and

 

                (b)           the “last-day” requirement of Section
4.3(b) shall be waived, provided the Effective Date (as defined in the Agreement and Plan of Merger) of such
Transaction occurs on or before December 31, 2005.

 

3.             Effective
with respect to amounts deferred under the SERP before or after the date of
this amendment, except as otherwise provided in paragraph 4 below, the SERP is
amended to add the change in control of DST or any Affiliated Company as a new
payment event with respect to affected Participants, as permitted under Code
Section 409A and guidance issued thereunder. 
Upon a change in control, the vested portion of the affected Participant’s
benefit shall be distributed to the Participant in a lump sum cash payment as
soon as administratively practicable after the Valuation Date coinciding with
or immediately following such change in control.  The amount to be distributed to a Participant
pursuant to this paragraph shall be the value of the vested portion of the
Participant’s Account as of the Valuation Date coinciding with or immediately
following the change in control.  For
this purpose, “change in control” shall have the meaning provided in Code
Section 409A and guidance issued thereunder.

 

4.             In
no event shall the amendments set forth herein apply to amounts deferred and
vested under the Plan on or before December 31, 2004 (“grandfathered amounts”).  Such grandfathered amounts shall continue to
be subject to the terms of the Plan as it existed as of such date and this
amendment shall have no force or effect.

 

THIS
AMENDMENT has
been executed this 30th day of November, 2005.

 

 

	
   

  	
   

  	
   

  	
  DST
  SYSTEMS, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Kenneth V. Hager

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Kenneth V. Hager

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Vice President, Chief Financial Officer and
  TreasurerExhibit
10.10

 

 

EMPLOYMENT AGREEMENT

 

                                                THIS AGREEMENT,
made and entered into as of this 1st day of April, 1992, by and between DST
Systems, Inc., a Missouri corporation (“DST”), Kansas City Southern Industries,
Inc., a Delaware corporation (“KCSI”) and Kenneth V. Hager, an individual (“Executive”).

 

                                                WHEREAS,
Executive is now employed by DST, which is a wholly-owned subsidiary of KCSI, and DST, KCSI
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 KCSI (as herein defined), thereby establishing and
preserving continuity of management of DST;

 

                                                WHEREAS, simultaneously
herewith KCSI has granted Executive stock options to acquire shares of KCSI
common stock, and KCSI desires to encourage significant long-term ownership of
KCSI common stock by Executive through the grant of such options and the award
of Restricted Stock as provided herein; and

 

                                                WHEREAS,
Executive intends to retain ownership of a substantial portion of the shares of
KCSI common stock acquired as Restricted Stock or through exercise of stock
options granted on or after the date hereof, and KCSI intends to make future
awards under its equity participation programs to executives who have retained
ownership of a substantial portion of their shares of KCSI common stock.

 

 

1

 

                                                NOW, THEREFORE,
in consideration of the grant of stock options to Executive, the award of
Restricted Stock as provided herein and the mutual covenants and agreements
herein contained, it is agreed by and between DST, KCSI and Executive as
follows:

 

                                                1.                                       Employment.  DST hereby continues the employment of
Executive as its Vice President and Chief Financial Officer 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 stockholder 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.  During the
time that DST continues to be a wholly-owned subsidiary of KCSI, DST shall
include Executive as a participant in the KCSI Incentive Compensation
Plan under such terms as are determined from time to time by the Board of
Directors of KCSI (the “KCSI 

 

 

2

 

Board”)
or the Compensation Committee or other appropriate committee of the KCSI Board
(the “Compensation Committee”) and for such time as such plan shall continue in
existence. KCSI reserves the right to change, revoke or terminate such plan at
any time.

 

                                                                                                (c)                                  Restricted
Stock.  As additional compensation for
his services hereunder, Executive has been awarded, as of the date hereof, two
thousand five hundred (2,500) shares of common stock (the “Restricted Stock”)
of KCSI, without the payment of any further
consideration therefor by Executive. Commencing on the date hereof, Executive
shall have all of the rights of a
stockholder with respect to the Restricted Stock, including without limitation
rights to vote and to receive dividends and other distributions and adjustments
on such shares, and such shares shall be deemed to be outstanding, fully paid
and non-assessable shares subject to the following restrictions:

 

                                                                                                (i)  In the event Executive’s employment hereunder
is terminated for cause by DST (as defined in Paragraph 4(c) below), or
terminated voluntarily by Executive (other than upon material breach by DST
pursuant to Paragraph 4(a)) prior to the end of any period set forth below, all rights of Executive in and to the number
of shares of Restricted Stock set forth below corresponding to the first end of
period following such termination shall be thereupon forfeited and Executive
shall immediately upon such termination transfer all such shares (or an
equivalent number of other shares 

 

 

3

 

of
KCSI common stock) to KCSI without
any payment or other consideration to Executive:

 

	
  End of Period

  	
   

  	
  Number of Shares Forfeited

  	
   

  
	
  March 31, 1993

  	
   

  	
  2,500

  	
   

  
	
  March 31, 1994

  	
   

  	
  2,000

  	
   

  
	
  March 31, 1995

  	
   

  	
  1,500

  	
   

  
	
  March 31, 1996

  	
   

  	
  1,000

  	
   

  
	
  March 31, 1997

  	
   

  	
  500

  	
   

  

 

The
termination of Executive’s employment by reason of retirement with the consent
of the DST Board, death or disability shall not be considered a voluntary
termination of employment by Executive.

 

                                                                                                (ii)  Executive shall not transfer any of the
shares of Restricted Stock which remain subject to forfeiture hereunder, other
than to KCSI, except with the prior approval of the KCSI Board or Compensation
Committee. In the event of termination of Executive’s employment by DST other
than for cause or by reason of retirement with the consent of the DST Board,
death or disability, the Restricted Stock shall no longer be subject to
forfeiture hereunder.

 

                                                                                                (iii)  The issuance of the Restricted Stock to
Executive hereunder is subject to any required federal, state and local
withholding taxes, which shall be paid in cash by Executive, and has not been
registered under federal or state securities laws. Executive represents that he
is acquiring the Restricted Stock for investment and not with a view to distribution thereof.

 

4

 

                                                                                                (iv)  Until they
are no longer subject to forfeiture hereunder, each certificate for shares of
Restricted Stock issued to Executive hereunder shall bear a legend, to the
following effect:

 

“The shares represented hereby are subject to transfer restrictions and
forfeiture provisions under an Agreement dated April 1, 1992 on file at the
offices of the Company. These shares may not be offered, sold, pledged or
otherwise transferred other than to the Company, except in compliance with the
provisions of such Agreement.”

 

                                                If any shares
of Restricted Stock are transferred to KCSI to acquire other shares of KCSI
common stock, the foregoing legend shall apply to the number of shares acquired
as is equal to the number of shares of Restricted Stock transferred to KCSI and
shall be affixed to the appropriate stock certificate or certificates. KCSI
shall remove the foregoing legend at the Executive’s request with respect to
certificates for any shares of Restricted Stock which shall no longer be
subject to forfeiture hereunder.

 

                                                                                                (v)  Unless the shares of Restricted Stock are
registered under the Securities Act of 1933 and applicable state securities
laws (which registration may be performed by KCSI at its option), each
certificate for shares of Restricted Stock issued to Executive hereunder shall
bear a legend as follows:

 

5

 

“The
shares represented by this certificate have not been registered under the
Securities Act of 1933 or under any state securities law. These shares may not
be offered, sold, pledged or otherwise transferred, other than to the Company,
in the absence of said registration or the availability of an exemption
therefrom. No offer, sale, pledge or other transfer shall take place without
submitting to the Company evidence satisfactory to counsel for the Company to
the effect that such transaction does not violate the restrictions set forth
herein.”

 

                                                3.                                       Benefits.  During the period of his employment
hereunder, DST shall provide Executive with coverage under such benefit plans
and programs as are made generally available to executives serving on the
Management Committee of DST, provided (a) DST shall have no obligation with respect to any plan or
program if Executive is not eligible for coverage thereunder, and (b) Executive
acknowledges that stock options and other stock and equity participation awards
are granted in the discretion of the KCSI 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 

 

6

 

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.

 

                                                                                                (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:

 

7

 

(i) Any material breach
of this Agreement by Executive;

 

(ii) Executive’s
dishonesty involving DST, KCSI or any subsidiary of DST or KCSI;

 

(iii) Gross negligence or
willful misconduct in the performance of Executive’s duties as determined in
good faith by the DST Board;

 

(iv) Willful failure by
Executive to follow reasonable instructions of the President or other officer
to whom Executive reports concerning the operations or business of DST or any
subsidiary of DST; Executive’s fraud or criminal activity;

 

(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.

 

(ii) In the event
of termination of Executive’s employment under Paragraph 4 (d) (i), DST shall,
continue, for a period of twelve (12) months following such termination, (A) to
pay to Executive as severance pay a monthly amount equal to one-twelfth
(1/12th) of the annual base salary referenced in Paragraph 2(a) above at the
rate in effect immediately prior to

 

8

 

                                                termination,
and, (B) to reimburse Executive for the cost (including state and federal
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). After termination of
employment, Executive shall not be entitled to accrue or receive benefits under
the KCSI Executive Plan or the KCSI Incentive Compensation Plan with respect to
the severance pay provided herein, notwithstanding that benefits under such
plans then are still generally available to executive employees of DST;
contributions and benefits under such 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 KCSI Profit Sharing Plan and the KCSI
Employee Stock ownership Plan (if DST employees then still participate in such
plans) only if the Executive meets all requirements of such plans for
participation in such year.

 

9

 

                                                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.

 

                                                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 

 

10

 

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 KCSI (as defined in Paragraph 7(d)) at any time
during the term of this Agreement, Executive will remain in the employ of DST
for a period of an additional three years from the date of such Change in
Control of KCSI (the “Control Change Date”). In the event of a Change in
Control of KCSI, subject to the terms and conditions of this Paragraph 7, DST
shall, for the three-year period
(the “Three-Year Period”) immediately following the Control Change Date,
continue to employ Executive at not less than the executive capacity Executive
held immediately prior to the Change in Control of KCSI. 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. Notwithstanding any other provision of this Agreement to
the contrary, the provisions of this Paragraph 7 shall apply only if at least
eighty percent (80%) of 

 

11

 

the
issued and outstanding stock of all classes of DST is owned by KCSI on the
Control Change Date.

 

                                                                                        (b)  Benefits.  During the Three-Year Period, Executive shall
be entitled to participate, on the basis of his executive position, in each of
the following plans (together, the “Specified Benefits”) in existence, and in
accordance with the terms thereof, at the Control Change Date:

 

                                                                                                (i) any
incentive compensation plan;

 

                                                                                                (ii) any
benefit plan, and trust fund associated therewith, related to (A) life, health,
dental, disability, or accidental death and dismemberment insurance, (B) profit
sharing, thrift or deferred savings (including deferred compensation, such as
under Sec. 401(k) plans), (C) retirement or pension benefits, (D) ERISA excess
benefits and (E) tax favored
employee stock ownership (such as under ESOP, TRASOP, TCESO or PAYSOP
programs); and

 

                                                                                                (iii) any other
benefit plans hereafter made generally available to executives of Executive’s
level or to the employees of DST generally.

 

In
addition, all outstanding options held by Executive under any stock option plan
of KCSI or its affiliates shall become immediately exercisable, and all shares
of Restricted Stock shall no longer be subject to forfeiture under Paragraph
2(c)(i) above, on the Control Change Date.

 

12

 

                                                                                        (c)  Payment.  With respect to any plan or agreement under
which Executive would be entitled at the Control Change Date to receive
Specified Benefits as a general obligation of DST which has not been separately
funded (including specifically, but not limited to, those referred to under
Paragraphs 7(b)(i) and 7 (b) (ii) (D) above), Executive shall receive within
five (5) days after such date full payment in cash (discounted to then present
value on the basis of a rate of 7.5 percent per annum) of all amounts to which
he is then entitled thereunder.

 

                                                                                        (d)  Change in Control of KCSI. For purposes
of this Agreement, a “Change in Control of KCSI” shall be deemed to have
occurred if (a) for any reason at any time less than seventy-five percent (75%)
of the members of the KCSI Board shall be individuals who were members of the
KCSI Board on the date of this Agreement or individuals whose election, or
nomination for election by KCSI’s stockholders, was approved by a vote of at
least seventy-five percent (75%) of the members of the KCSI Board then still in
office who were members of the KCSI Board on the date of this Agreement, or (b)
any “person” (as such term is used in Sections 13(d) and 14(d) (2) of the
Securities Exchange Act of 1934 (the “Exchange Act”)) shall have become,
according to a public announcement or filing, without the prior approval of the
KCSI Board, the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of KCSI representing thirty percent
(30%) (forty percent (40%) with respect to Paragraph 7(c) hereof) or more
(calculated in accordance with Rule 13d-3) of the combined voting power of KCSI’s
then outstanding voting securities (such “person” hereafter referred to as a

 

13

 

“Major Stockholder”); or (c) the stockholders of KCSI shall have
approved a merger, consolidation or dissolution of KCSI or a sale, lease,
exchange or disposition of all or substantially all of KCSI’s assets, or a
Major Stockholder shall have proposed any such transaction, unless any such
merger, consolidation, dissolution, sale, lease, exchange or disposition shall
have been approved by a least seventy-five percent (75%) of the members of the
KCSI Board who were either (i) members of the KCSI Board on the date of this
Agreement or (ii) elected or nominated by at least seventy-five percent (75%)
of the members of the KCSI Board then still in office who were members of the
KCSI Board on the date of this Agreement.

 

                                                                        (e)  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 of 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
(discounted to then present value on the basis of a rate of 7.5% per annum) of
his annual base salary specified in Paragraph 7(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

 

14

 

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; and (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).

 

                                                                                                (f) Resignation After Control Change
Date. In the event of a Change in Control of KCSI, 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, on not less than thirty
(30) days’ written notice to the Secretary of DST and effective at the end of
such notice period, resign his employment with DST (the “Resignation”). Within
five (5) days of such a Resignation, DST shall pay to Executive his full base
salary through the effective date of such Resignation, to the extent not
theretofore paid, plus a lump sum amount equal to the Special Severance Payment
(computed as provided in the first 

 

15

 

sentence
of Paragraph 7(e), except that for purposes of such computation all references to “Termination” shall be
deemed to be references to “Resignation”). Upon Resignation of Executive,
Specified Benefits to which Executive was entitled immediately prior to
Resignation shall continue on the same terms and conditions as provided in
Paragraph 7(e) 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 reduction in the character of
the duties assigned to Executive or in Executive’s level of work responsibility
or conditions; (b) a 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) a failure by DST or its successor to (i) continue any
of the plans of the type referred to in Paragraph 7(b) which shall have been in
effect at the Control Change Date (including those providing for Specified
Benefits) or to continue Executive as a participant in any of such plans on at
least the basis in effect immediately prior to the Control Change Date; or (ii)
provide other plans under which at least equivalent compensation and benefits
are available and in which Executive continues to participate on a basis at
least equivalent to his participation in the DST plans in effect immediately prior
to the Control Change Date; or (iii) to make the payment required under
Paragraph 7(c); (d) the 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 

 

16

 

DST’s
business to an extent substantially consistent with Executive’s obligations
immediately prior to the Control Change Date; or (e) any breach by DST of this
Agreement to the extent not previously specified.

 

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

 

                                                                                                (h)  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 KCSI), 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 of Executive’s Termination or Resignation 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 

 

17

 

such
Section 4999 or any successor
statutory provision did not apply and no payments were made pursuant to this
sentence.

 

(i)  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 KCSI
shall promptly deliver to the trustee of such trust to hold in 

 

18

 

accordance with the terms and conditions thereof that sum which the
Board shall have determined is reasonably sufficient for such purpose.

 

                                                                                                (j)  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
by 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 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.

 

                                                                                                (k)  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 

 

19

 

of
DST, to DST, 114 West 11th Street, Kansas City, Missouri 64105, Attention:
Secretary, or, in the case of the Executive, to him at 11916 Cherokee Lane,
Leawood, Kansas 66209, 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
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(j), 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.

 

20

 

                                                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 supersede any Officer
Indemnification Agreement between DST and Executive.

 

                                                IN WITNESS
WHEREOF, the parties hereto have executed this-Agreement the day and year first
above written.

 

	
  DST SYSTEMS, INC.

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Thomas A. McDonnell,
  President

  
	
   

  	
   

  
	
  KANSAS CITY SOUTHERN
  INDUSTRIES, INC.

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Landon H. Rowland,
  President

  
	
   

  	
   

  
	
  /s/ Kenneth V. Hager

  
	
   

  	
   

  

 

 

 

21

 

AMENDMENT
TO

EMPLOYMENT AGREEMENT

 

 

                                                THIS AMENDMENT
dated this 9th day of October, 1995 among DST SYSTEMS, INC. (“DST”), KANSAS CITY SOUTHERN INDUSTRIES, INC. (“KCSI”)
and KENNETH V. HAGER (“Executive”).

 

                                                WHEREAS, DST, KCSI and Executive are parties to that certain Employment
Agreement dated as of April 1, 1992 (the “Agreement”); and

 

                                                WHEREAS, the parties desire to amend the Agreement.

 

                                                NOW, THEREFORE, in consideration of the premises, DST, KCSI, and the
Executive hereby agree to amend the Agreement as follows:

 

                                                1.                                       KCSI is hereby removed as, and shall no longer be a party to the
Agreement.

 

                                                2                                          Section 2(b) of the Agreement is hereby amended so as to read as follows:

 

                                                                                                                                                                                                “(b)  Incentive Compensation.
DST shall include Executive as a participant in the DST Incentive Compensation
Plan under such terms as are determined from time to time by the Board of
Directors of DST (the “DST Board”) or the Compensation Committee or other
appropriate committee of the DST Board (the “Compensation Committee”) and for such time as such
plan shall continue in existence. DST reserves the right to change, revoke or terminate such plan at any time.”

 

                                                3.                                       Section 2(c) of
the Agreement is hereby amended to add the following subsection:

 

                                                                                                                                                                                                “(vi) The
reduction of KCSI’s ownership of DST by reason of the Public Offering (as
defined below) (A) shall not affect the forfeiture schedule set forth in
Section 2(c)(i) and such schedule shall remain in effect according to the terms
of Section 2(c)(i) following the Public Offering and 

 

 

1

 

(B) shall not affect Executive’s obligation to return any forfeited
shares to KCSI.”

 

                                                4.                                       The first sentence of Section 3 of the Agreement is hereby amended to
read as follows:

 

                                                                                                                                        “During the period of his employment hereunder, DST shall provide
Executive with coverage under such benefit plans and programs as are made
generally available to executives serving on the Management Committee of DST,
provided (A) DST shall have no obligation with respect to any plan or program
if Executive is not eligible for coverage thereunder, and (B) Executive
acknowledges that stock options and other stock and equity participation awards
are granted in the discretion of the DST Board or Compensation Committee and
that Executive has no right to receive stock options or other equity
participation awards or any particular number or level of stock options or
other awards.”

 

                                                5.                                       The third and fourth sentences of Section 4(d)(ii) of the Agreement are
hereby amended to read as follows:

 

                                                                                                                                        “After
termination of employment, Executive shall not be entitled to accrue or receive
benefits under the DST Executive Plan or the DST Incentive Compensation Plan
with respect to the severance pay provided herein, notwithstanding that
benefits under such plans then are still generally available to executive
employees of DST; contributions and benefits under such 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 Profit

 

 

2

 

Sharing Plan and the KCSI Employee Stock Ownership Plan (if DST
employees then still participate in such plan) or any DST Employee Stock
Ownership Plan only if the Executive meets all requirements of such plans for
participation in such year.

 

                                                6.                                       Section 7(a) of the Agreement is hereby amended to read as follows:

 

                                                                                                                                                                                                “(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(d)) at any time during the term of this Agreement,
Executive will remain in the employ of DST for a period of an additional three
years from the date of such Change in Control of DST (the “Control Change Date”).
In the event of a Change in Control of DST, subject to the terms and conditions
of this Paragraph 7, DST shall, for the three year period
(the “Three-Year Period”) immediately following the Control Change Date, continue to employ Executive at not less than
the executive capacity Executive held immediately prior to the Change in
Control of DST. During the Three-Year Period, DST shall continue to pay
Executive salary on the same basis, at the same intervals, and at a rate not
less than that, paid to Executive at the Control Change Date.”

 

                                                7.                                       The last
sentence of Section 7(b) is hereby amended to read as follows:

 

                                                                                                                                        “In addition,
all outstanding options held by Executive under any stock option plan of KCSI
or DST or their affiliates shall become immediately exercisable except that no
stock option under any stock option plan of KCSI shall become exercisable
before the first anniversary date of the granting of the option, and all shares
of Restricted Stock shall no longer be subject to

 

 

3

 

forfeiture under Paragraph 2(c)(i) above, on the Control Change Date.”

 

                                                8.                                       Sections 7(d)
and 7(f) are hereby amended so that all references to “KCSI” and the “KCSI
Board” in such Sections shall be changed to “DST” and the “DST Board”
respectively.

 

                                                9.                                       All existing
stock option agreements between KCSI and Executive hereby are amended, as
necessary, to permit the options to become exercisable as provided in Section 7
of this Amendment and so that all references to “KCSI” in connection with a
change in control are changed to “DST” and all references to “Company” and “Board”
in connection with a change of control shall be references to DST and the DST
Board respectively.

 

                                                10.                                 The effective
date of this Amendment (the “Effective Date”) shall be the date of the public
offering of DST common stock pursuant to the Form S-1 Registration Statement
Number 33-96526 on file with the United States Securities and Exchange
Commission on the date hereof, as amended (the “Public Offering”).

 

                                                11.                                 The Agreement
shall remain in full force and effect, as amended by this Amendment.  Notwithstanding the fact that KCSI will no
longer be a party to the Agreement following
the Effective Date, it shall continue to be bound by and receive the benefits
of the provisions of Sections 2, 7 and 9 of the Agreement as amended hereby.

 

 

4

 

                                                IN WITNESS WHEREOF, the parties have executed this Amendment the day and
year first above written.

 

	
  DST SYSTEMS, INC.

  
	
   

  	
   

  
	
  By: 

  	
  /s/
  Thomas A. McDonnell

  
	
   

  	
   

  
	
  KANSAS CITY SOUTHERN INDUSTRIES, INC.

  
	
   

  	
   

  
	
  By: 

  	
  /s/
  L. H. Rowland

  
	
   

  	
   

  
	
  /s/ Kenneth V. Hager

  
	
   

  	
   

  

 

 

5

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