Exhibit 10.4
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into the 31st day of December
2008, between DST Technologies, Inc., a Missouri corporation ("Company") and
Xxxxxx Xxxxxxx ("Employee").
In consideration of the promises and mutual covenants contained herein and
intending to be legally bound hereby, the parties agree as follows:
1. EMPLOYMENT. This Agreement amends and restates the parties' prior
Employment Agreement entered into February 12, 2007 ("Effective Date"). Employee
expressly consents to be bound by the provisions of this Agreement for the
benefit of Company and of any subsidiary or affiliate of the Company or DST
Systems, Inc. ("DST") to whose employ Employee may be transferred, without the
necessity that this Agreement be resigned at the time of such transfer. Employee
shall serve as Group Chief Executive-DST International and have the duties,
authority and responsibilities as Company or DST International may from time to
time prescribe or request. From time to time, Company or DST International and
Employee may mutually agree that Employee shall serve in a role other than as
set forth above. Employee further agrees that while employed by Company, he will
devote substantially all of his working time and efforts to the business of the
Company, DST International and their respective affiliates. Except as otherwise
provided in this Agreement, Employee acknowledges and agrees that Employee has
no rights to separation pay.
2. TERM. Employee's employment shall continue under the terms of this
Agreement through February 1, 2010 unless earlier terminated as provided in
Paragraph 4. Such term shall automatically extend for additional one year terms
on each February 1st thereafter unless Company or Employee provides written
notice to the other that the term of the Agreement is not to be further extended
or the Agreement is terminated earlier than the next renewal date as provided in
Paragraph 4.
3. COMPENSATION AND BENEFITS.
3.1 Compensation. During the period of Employee's employment
hereunder, Company shall pay Employee for the performance of his duties under
this Agreement an annual base salary of Three Hundred Thousand and no/100's
dollars ($300,000) payable in accordance with Company's policies and subject to
normal withholdings and to adjustment from time to time as agreed by the parties
(the "Base Salary").
3.2 Incentive Plan. Employee shall be eligible to participate in a DST
annual incentive award program ("Program") beginning, on a prorata basis, with
the 2007 performance year of any such applicable Program, and under such terms,
as determined from time to time by the DST Board of Directors ("DST Board") or
the Compensation Committee or other appropriate committee of the DST Board (the
"DST Compensation Committee"). Payment to Employee of an annual bonus ("Annual
Incentive") may depend on achievement of DST International, DST or other goals
as the DST Compensation Committee determines, including without limitation a
combination of DST International, DST or other goals. Subject to the terms of
the Program, Employee's Threshold, Target and Maximum opportunity levels (if and
to the extent applicable
under the Program structure upon which Employee's Annual Incentive is based)
shall be the following percentages of Base Salary as of the beginning of each
year:
Threshold Target Maximum
--------- ------ -------
50% 100% 150%
Any payout upon goal achievement may consist of any combination of cash,
deferred cash or other award components selected by the DST Compensation
Committee. Employee understands that the Company's board, the DST Board or the
DST Compensation Committee may change, revoke or terminate a Program or
Employee's participation therein at any time; provided that, while the Program
is in effect, Employee's Threshold, Target and Maximum Annual Incentive
percentages (if and to the extent applicable under the Program structure upon
which Employee's Annual Incentive is based) will not be reduced below the
percentages shown above. The terms of Employee's participation in a Program are
established by the Company's board, the DST Board, or the DST Compensation
Committee and not by this Agreement. The actual amount of any Annual Incentive
earned will be based upon meeting specific corporate or business unit goals set
in accordance with the Program.
3.3 Employee Benefits.
3.3.1 Equity Plan Participation. Employee shall be entitled to
participate in the DST Systems, Inc. 2005 Equity Incentive Plan (the "2005
Plan") in accordance with the terms thereof, at a level consistent with DST's
practice regarding awards to senior executive officers excluding benefits unique
to DST contracts with the Chief Executive Officer and Chief Operating Officer
and taking into account Exhibit A hereto (Expatriate Assignment Detail). Awards
under the 2005 Plan are granted in the discretion of the DST Board or DST
Compensation Committee or other appropriate committee of the DST Board.
3.3.2 Incentive, Savings and Retirement Plans. In addition to
Base Salary and an Annual Incentive, Employee shall be entitled to participate
during his employment hereunder in all incentive, savings and retirement plans,
practices, policies and programs, whether or not qualified under Section 401(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), that are from
time to time applicable to other senior executives of DST in accordance with
their terms as in effect from time to time.
3.3.3 Welfare Benefits. During his employment, Employee and/or
his family, as the case may be, shall be eligible for participation in and shall
receive all benefits under welfare benefit plans, practices, policies and
programs provided by DST (including medical, prescription, dental, disability,
salary continuance, employee life, dependent life, accidental death and travel
accident insurance plans and programs) generally applicable to other senior
executives of DST in accordance with their terms (including limitations on
eligibility) as in effect from time to time. DST reserves the right to change,
revoke or terminate any welfare benefit plan, practice, policy or program at any
time.
3.3.4 Fringe Benefits. During his employment, Employee shall be
entitled to fringe benefits applicable to other senior executives of DST
excluding benefits unique
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to DST contracts with the Chief Executive Officer and Chief Operating Officer
and taking into account Exhibit B hereto (Expatriate Benefits).
3.3.5 Vacation. During his employment, Employee shall be entitled
to paid vacation time in accordance with DST International plans, practices,
policies, and programs, but in no event shall such vacation time be less than
four weeks per calendar year.
3.3.6 Expenses. During his employment, Employee shall be entitled
to receive prompt reimbursement for all ordinary and necessary business expenses
incurred by Employee, upon the receipt by Company of an accounting in accordance
with Company practices, policies and procedures.
3.3.7 The DST Systems, Inc. Expatriate Assignment Program shall
apply to Employee's assignment to work in the U.K. The assignment detail set
forth in Exhibit A shall govern the assignment.
4. TERMINATION.
4.1 Death. Employee's employment under this Agreement shall terminate
upon Employee's death and Employee's estate (or his beneficiary, as may be
appropriate) shall be entitled to receive (i) an amount equal to all Base Salary
earned and accrued to the date of Employees death, to the extent theretofore
unpaid; and (ii) any other benefits payable upon death under any applicable
employee benefit plan in which Employee participated at the date of his death.
Except as provided under this Agreement or under any applicable employee benefit
plan, all other obligations of Company under this Agreement shall terminate as
of the date of Employee's death during employment.
4.2 Disability. If Company determines that Employee is unable to
perform his duties under this Agreement because of his "disability" as defined
by or determined in accordance with the Rules and Procedures of the DST
Compensation Committee, Company may terminate Employee's employment. Such
termination shall be effective as of the date determined by Company pursuant to
Company procedures, and Employee shall be entitled to receive (i) an amount
equal to all Base Salary earned and accrued to the date of termination, to the
extent theretofore unpaid; and (ii) any other benefits payable upon such
disability under any applicable employee benefit plan in which Employee
participated at the time of termination. Except as provided under this Agreement
or under any applicable employee benefit plan, all other obligations of Company
under this Agreement shall terminate as of the date of such termination.
4.3 Voluntary. Employee's employment under this Agreement shall
terminate upon Employee's voluntary termination of employment. Company shall
have no further obligations under this Agreement, except Employee shall be
entitled to receive (i) within thirty (30) days after the date of termination,
an amount equal to all Base Salary earned and accrued to the date of
termination, to the extent theretofore unpaid, and (ii) such other benefits to
which Employee is entitled under any employee benefit plan in which Employee
participated at the time of termination. Except as provided under this Agreement
or under any applicable employee
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benefit plan, all other obligations of Company under this Agreement shall
terminate as of the date of such termination.
4.4 For Cause by Company. Company may terminate this Agreement and
Employee's employment "for cause" immediately upon notice to Employee. For
purposes of this Agreement, termination "for cause" shall mean termination based
upon any one or more of the following:
(a) Any material breach of this Agreement by Employee which is not,
or cannot be, cured (in each case in the sole judgment of the DST
Board) within thirty (30) days after written notice of such
breach to Employee;
(b) Employee's dishonesty involving Company, DST International or any
other DST affiliate;
(c) Gross negligence or willful misconduct in the performance of
Employee's duties as determined in good faith by the DST Board;
(d) Willful failure by Employee to follow reasonable instructions of
the DST Board or any officer to whom Employee reports concerning
the operations or business of Company, DST International or any
other DST affiliate;
(e) Employee's fraud or criminal activity; or
(f) Embezzlement or misappropriation by Employee.
4.5 Other Than for Cause by Company. Company may terminate Employee's
employment under this Agreement at any time without Cause by giving written
Notice of Termination to Employee. If Company terminates Employee's employment
without Cause, Company shall have the obligations set forth in this Paragraph
4.5; provided, however, that notwithstanding any other provision of this
Agreement, the obligations in this Paragraph shall not apply, unless Employee
executes a general release in favor of Company, its affiliates and subsidiaries.
Within seventy-five (75) days after termination as provided in this Paragraph
4.5, Company shall pay to Employee a lump sum amount equal to twenty-four (24)
months of the annual Base Salary at the rate in effect immediately prior to such
termination without Cause, which amount shall be separation pay. For twenty-four
(24) months following termination as provided in this Paragraph 4.5 (the
"Period"), if Employee elects continued group medical coverage for himself and
his eligible dependents pursuant to COBRA, Company shall pay for such continued
coverage for the lesser of the COBRA continuation period or the duration of the
Period, with the same deductible and out-of-pocket expenses as apply to active
employees (and their eligible dependents) from time to time during the COBRA
continuation coverage period, and monthly reimburse Employee for the cost of
premiums for health plan benefits comparable to such benefit plans provided to
Employee at the time of termination of active employment for the period
beginning on the expiration of COBRA continuation coverage and ending on the
last day of the Period. Upon termination without Cause, if Employee had
participated in DST's officer life insurance program, Company shall monthly
reimburse Employee for the cost of premiums for comparable life insurance
benefits ending on the last day of the Period. Notwithstanding the foregoing,
any life, health or other reimbursement obligation set forth in this
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subparagraph shall lapse as of the date comparable coverage in connection with
other employment is made available to Employee regardless of whether Employee
participates in such alternate coverage program. The Company shall reimburse
Employee for any federal, state and local income taxes due with respect to
amounts paid hereunder for COBRA continuation coverage or for the cost of health
or life insurance. The terms and conditions of this subparagraph shall continue
until the end of the Period notwithstanding the death or disability of Employee
during the Period. For avoidance of doubt, neither termination of employment for
disability nor assignment or deemed assignment of this Agreement to a subsidiary
or affiliate of Company or DST shall be treated as a termination without cause.
Employee 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
Employee's employment terminated; provided, however, that such award shall be
prorated to reflect only the portion of such performance year that precedes
Employee'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) Employee 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 Employee for periods prior to termination. In the year of termination,
Employee shall be entitled to participate in any qualified plan made available
to Company employees only if the Employee meets all requirements of such plans
for participation in such year.
4.6 Employee's Duties Upon Termination. Upon termination of this
Agreement by Company or Employee for any reason, Employee shall immediately
return to Company all Proprietary Information (as defined in Paragraph 6) which
exists in tangible form and shall sign such written resignations from all
positions as an officer, director or member of any committee or board of
Company, DST International, DST or DST subsidiary or affiliate as may be
requested by Company, DST international, DST or DST subsidiary or affiliate and
such other documents and papers relating to Employee's employment, benefits and
benefit plans as any such entity may reasonably request.
5. CONTINUATION OF EMPLOYMENT UPON CHANGE IN CONTROL.
5.1 Continuation Of Employment. Subject to the terms and conditions of
this Paragraph 5, in the event of a Change in Control of DST (as defined in
Paragraph 5.3) at any time during Employee's employment hereunder, Employee will
remain in the employ of the Company for a period of an additional three (3)
years from the date of such Change in Control of DST (the "Control Change
Date"). In the event of a Change in Control of DST, subject to the terms and
conditions of this Paragraph 5, Company shall, for the three (3)-year period
(the "Three-Year Period") immediately following the Control Change Date,
continue to employ Employee at not less than the executive capacity Employee
held immediately prior to the Change in Control of DST. During the Three-Year
Period, Company shall continue to pay Employee
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salary on the same basis, at the same intervals, and at a rate not less than
that, paid to Employee at the Control Change Date.
5.2 Benefits. During the Three-Year Period, Employee shall be entitled
to participate, on the basis of his Employee 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:
(a) any incentive compensation plan;
(b) any benefit plan, and trust fund associated therewith, related to
(i) life, health, dental, disability, or accidental death and
dismemberment insurance, (ii) profit sharing, thrift or deferred
savings (including deferred compensation, such as under Sec.
401(k) plans), (iii) retirement or pension benefits, (iv) ERISA
excess benefits, and (v) tax favored employee stock ownership
(such as under ESOP, TRASOP, TCESO or PAYSOP programs); and
(c) any other benefit plans hereafter made generally available to
employees at Employee's level or to the employees of Company
generally;
or, in the alternative, DST or Company shall provide other plans under which at
least equivalent compensation and benefits are available and in which Employee
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. In
addition, the change in control provisions of the agreements and plans governing
options, restricted shares, deferred cash and other equity or incentive awards
granted to Employee 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.
5.3 Change in Control of DST. For purposes of this Agreement, a
"Change in Control" shall be deemed to have occurred if:
(a) the Incumbent Directors cease for any reason to constitute at
least seventy-five percent (75%) of the directors of DST then
serving;
(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"))
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
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Rule 12b-2 under the Exchange Act) to obtain and exercise control
over the management and policies of DST;
(c) 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
(d) 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 Employee if, in advance of such event,
Employee agrees in writing that such event shall not constitute a Change in
Control.
For purposes of this definition, the following terms have the meaning set
forth below:
(a) "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 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.
(b) "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.
(c) "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.
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(d) "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.
5.4 Termination After Control Change Date. Notwithstanding any other
provision of this Paragraph 5, at any time after the Control Change Date,
Company may, with approval of the DST Board, terminate the employment of
Employee (the "Termination"), but within five (5) days after the Termination it
shall pay to Employee 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 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 a period of one year from the Control Change Date (the "Extended Period").
Specified Benefits to which Employee was entitled immediately prior to
Termination shall continue until the end of the Three-Year Period or if
applicable, the Extended Period; provided that: (a) if any plan pursuant to
which Specified Benefits are provided immediately prior to Termination would not
permit continued participation by Employee after Termination, then DST shall pay
to Employee within five (5) days after Termination a lump sum payment equal to
the amount of Specified Benefits Employee would have received if Employee had
been fully vested and had been a continuing participant in such plan to the end
of the Three-Year Period or, if applicable, the Extended Period (with the amount
for health insurance coverage calculated as provided in Paragraph 4.5 except
basing the calculation on the Three-Year Period or, if applicable, the Extended
Period); (b) if Employee obtains new employment following Termination, then
following any waiting period applicable to participation in any plan of the new
employer, Employee shall continue to be entitled to receive benefits pursuant to
this sentence only to the extent such benefits would exceed those available to
Employee under comparable plans of the Employee's new employer (but Employee
shall not be required to repay any amounts then already received by him), and
(c) Employee shall receive in a lump sum the aggregate amount of the annual
incentives that Employee would have received if Target goals had been met 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
Employee'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.
5.5 Resignation After Control Change Date. In the event of a Change in
Control of DST, thereafter, upon "good reason" (as defined below) Employee may,
at any time during the Three-Year Period or the Extended Period, in his sole
discretion, resign his employment with the Company only if: (i) Employee
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 Employee's employment will terminate upon a specified date in such
notice (the "Good Reason Termination Date"), which date is not earlier than
thirty (30)
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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 such a Good Reason Termination Date, Company shall pay to
Employee 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 Paragraph 5.4, 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 Employee, Specified Benefits to which Employee was entitled
immediately prior to the Good Reason Termination Date shall continue or be
reimbursed on the same terms and conditions as provided in Paragraph 5.4 in the
case of Termination (including equivalent payments provided for therein). For
purposes of this Agreement, Employee shall have "good reason" if there occurs
without his consent: (a) a material reduction in the character of the duties
assigned to Employee or in Employee's level of work responsibility or
conditions; (b) a material reduction in Employee'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 International or its successor to a location outside the
metropolitan area of London, England or requiring Employee to be based anywhere
other than the London metropolitan area, except for required travel on Company's
business to an extent substantially consistent with Employee's obligations
immediately prior to the Control Change Date; or (d) any material breach by
Company of this Agreement to the extent not previously specified; provided,
however, that Employee shall not have "good reason" under this Paragraph 5.5
based on a breach of Paragraph 5.2 if participation in any plan of the type
referred to in Paragraph 5.2 in effect as of the Control Change Date is
immaterial or benefits to Employee from participation in such plans are not
reduced by more than ten percent (10%) in the aggregate.
5.6 Termination For Cause After_ Control Change Date. Notwithstanding
any other provision of this Paragraph 5, at any time after the Control Change
Date, Employee may be terminated by Company "for cause" without notice and
without any payment hereunder only if such termination is for an act of
dishonesty by Employee constituting a felony under the laws of the State of
Missouri which resulted or was intended to result in gain or personal enrichment
of Employee at Company's expense.
5.7 Mitigation And Expenses.
5.7.1 Other Employment. After the Control Change Date, Employee
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
Employee is entitled hereunder.
5.7.2 Expenses. If any dispute should arise under this Agreement
after the Control Change Date involving an effort by Employee to protect,
enforce or secure rights or benefits claimed by Employee hereunder, Company
shall pay (promptly upon demand by Employee accompanied by reasonable evidence
of incurrence) all reasonable expenses (including attorneys' fees) incurred by
Employee in connection with such dispute, without regard to whether Employee
prevails in such dispute except that Employee shall repay Company any
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amounts so received if a court having jurisdiction shall make a final,
nonappealable determination that Employee acted frivolously or in bad faith by
such dispute. To assure Employee that adequate funds will be made available to
discharge Company's obligations set forth in the preceding sentence, DST has
established a trust and, upon the occurrence of a Change in Control, shall
promptly deliver to the trustee of such trust to hold in accordance with the
terms and conditions thereof that sum which the DST Board shall have determined
is reasonably sufficient for such purpose.
5.8 Successors in Interest. The rights and obligations of Employee and
Company under this Paragraph 5 shall inure to the benefit of and be binding in
each and every respect upon the direct and indirect successors and assigns of
Company and Employee, regardless of the manner in which such successors or
assigns shall succeed to the interest of Company or Employee hereunder, and this
Paragraph 5 shall not be terminated by the voluntary or involuntary dissolution
of Company or DST or any merger or consolidation or acquisition involving
Company or DST, or upon any transfer of all or substantially all of Company's or
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 5 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.
5.9 Prevailing Provisions. On and after the Control Change Date, the
provisions of this Paragraph 5 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 5.
5.10 Gross Up Provision.
5.10.1 If at any time or from time to time, it shall be
determined by tax counsel mutually agreeable to Company and Employee that any
payment or other benefit to Employee 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 Company ("Potential Parachute Payment"), is or
will be taken into account in determining the amount potentially subject to the
excise tax imposed by Section 4999 of the Code or any similar tax ("Excise
Taxes"), then Company shall, subject to the limitations below, pay or cause to
be paid a tax gross-up payment ("Gross-Up Payment"). The Gross-Up Payment is
intended to compensate Executive for all Excise Taxes payable by Executive with
respect to Potential Parachute Payments and all Taxes or Excise Taxes payable by
Executive with respect to the Gross-Up Payment, such payment to be made within 5
business days after determination of the amount thereof, and in no event later
than the date the Employee is required to remit the Excise Taxes to the
applicable tax authority. The Gross-Up Payment shall be an amount equal to the
product of (a) the amount of the Excise Taxes multiplied by (b) a fraction (the
"Gross-Up Multiple"), the numerator of which is one (1.0), and the denominator
of which is one (1.0) minus the lesser of (i) the sum, expressed as a decimal
fraction, of the effective marginal rates of any taxes and any Excise Taxes
applicable to the Gross-Up Payment or (ii) .80, it being intended that the
Gross-Up Multiple shall in no event exceed five (5.0). If different rates of tax
are applicable to various portions of a Gross-Up
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Payment, the weighted average of such rates shall be used. Excise Taxes and
other penalties under Section 409A of the Code shall not be "any similar tax"
for purposes of this Agreement.
5.10.2 To the extent possible, any payments or other benefits to
Employee pursuant to this Agreement shall be allocated as consideration for
Employee's entry into the covenants made by him in Paragraph 6.
5.10.3 Notwithstanding any other provisions of this Paragraph 5,
if the aggregate After-Tax Amount (as defined below) of the Potential Parachute
Payments and Gross-Up Payment that, but for this limitation, would be payable to
Employee, does not exceed 120% of After-Tax Floor Amount (as defined below),
then no Gross-Up Payment shall be made to Employee and the aggregate amount of
Potential Parachute Payments payable to Employee shall be reduced (but not below
the Floor Amount) to the largest amount which would both (a) not cause any
Excise Tax to be payable by Employee and (b) not cause any Potential Parachute
Payments to become nondeductible by Company by reason of Section 280G of the
Code (or any successor provision). For purposes of the preceding sentence,
Employee's highest effective after-tax marginal rate of taxes shall be applied.
For purposes of this Agreement:
(a) "After-Tax Amount" means the portion of a specified amount that
would remain after payment of all taxes paid or payable by
Employee in respect of such specified amount; and
(b) "Floor Amount" means the greatest pre-tax amount of Potential
Parachute Payments that could be paid to Employee without causing
Employee to become liable for any Excise Taxes in connection
therewith; and
(c) "After-Tax Floor Amount" means the After-Tax Amount of the Floor
Amount.
5.10.4 If for any reason tax counsel mutually agreeable to
Company and Employee later determine that the amount of Excise Taxes payable by
Employee is greater than the amount initially determined pursuant to the above
provisions of this Paragraph 5.10, then Company shall, subject to Paragraphs
5.10.5 and 5.10.6, pay Employee, within thirty (30) days of such determination,
or pay to the IRS as required by applicable law, an amount (which shall also be
deemed a Gross-Up Payment) equal to the product of (a) the sum of (i) such
additional Excise Taxes and (ii) any interest, penalties, expenses or other
costs incurred by Employee as a result of having taken a position in accordance
with a determination made pursuant to Paragraph 5.10.5 multiplied by (b) the
Gross-Up Multiple.
5.10.5 Employee shall immediately notify Company in writing (an
"Employee's Notice") of any claim by the IRS or other taxing authority (an "IRS
Claim") that, if successful, would require the payment by Employee of Excise
Taxes in respect of Potential Parachute Payments in an amount in excess of the
amount of such Excise Taxes determined in accordance with Paragraph 5.10.
Employee's Notice shall fully inform Company of all particulars of the IRS Claim
and the date on which such IRS Claim is due to be paid.
11
Company shall direct the Employee as to whether to pay all or part of the
IRS Claim or to contest the IRS Claim or to pursue a claim for a refund (a
"Refund Claim") of all or any portion of such Excise Taxes, other taxes,
interest or penalties as may be specified by Company in a written notice to
Employee. If Company directs Employee to pay all or part of the IRS Claim, the
amount of such payment shall also be deemed a Gross-Up Payment, which Company
shall pay to the Employee or the IRS, as appropriate. The Employee shall
cooperate fully with Company in good faith to contest such IRS Claim or pursue
such Refund Claim (including appeals) and shall permit DST to participate in any
proceedings relating to such IRS Claim or Refund Claim.
Company shall control all proceedings in connection with such IRS Claim
or Refund Claim (as applicable) and in its discretion may cause Employee to
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the Internal Revenue Service or other taxing authority.
Company shall pay directly all legal, accounting and other costs and
expenses (including additional interest and penalties) incurred by Company or
Employee in connection with any IRS Claim or Refund Claim, as applicable, and
shall indemnify Employee, on an after-tax basis, for any Excise Tax or income
tax, including related interest and penalties, imposed as a result of such
payment of costs or expenses.
5.10.6 If Employee receives any refund with respect to Excise
Taxes, Employee shall (subject to Company's complying with any applicable
requirements of Paragraph 5.10.5) promptly pay Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto). Any contest of a denial of refund shall be controlled by Paragraph
5.10.5.
6. NON-DISCLOSURE, INVENTION OWNERSHIP, NON-SOLICITATION AND
NON-COMPETITION. Only for purposes of this Paragraph 6, "Company" shall mean
Company, DST International, DST and their respective affiliates, including
without limitation joint ventures.
6.1 Ownership and Confidentiality of Proprietary Information.
6.1.1 Definition of Proprietary Information. All information and
know how, whether or not in writing or other tangible or electronic form,
concerning the business or financial affairs of Company, including but not
limited to all (i) inventions, discoveries, improvements and trade secrets, (ii)
products and services and all plans, service levels, specifications and concepts
for products and services, (iii) business plans, business and systems processes,
methods, techniques, specifications and formulas, (iv) research and development
projects and data, (v) financial and marketing data and information, (vi)
information about customers and prospective customers, including contractual
terms, customer specifications and the identity of and relationships with
customer employees, (vii) names and other data relating to Company employees,
consultants, suppliers and prospective employees, consultants and suppliers,
(viii) computer data, reports, computer programs, source codes, object codes,
manuals, tapes, listings, specifications, test results, programming sequences,
application programming interfaces, screen designs and formats and user
interfaces, algorithms, flow charts, program
12
formats, user documentation and operating processes, and (ix) trade names,
copyrights and other intellectual property rights, whether developed or invented
by Employee or others, and whether patentable, copyrightable or not, shall be
"Proprietary Information."
6.1.2 Ownership of Proprietary Information. All Proprietary
Information and all files, databases, letters, memoranda; reports, records,
data, sketches, drawings, research notebooks, program listings or other written,
photographic or other material containing Proprietary Information, whether
created by Employee or others, and whether in tangible, intangible, written or
electronic form, shall be and are the exclusive property of the Company to be
used by Employee only in the performance of Employee's duties for the Company.
All Proprietary Information and all records or copies thereof and all tangible
property of the Company in the custody or possession of Employee shall be
delivered to the Company upon the earlier of (i) a request by Company or (ii)
the termination of Employee's employment.
6.1.3 Nondisclosure. Employee shall not, either during or after
Employee's employment by Company, disclose any Proprietary Information to others
outside Company, or use the same for any purpose without prior written approval
by the President of DST other than to discharge Employee's duties assigned by
Company, unless and to the extent that any Proprietary Information becomes
generally known to and available for use by the public other than as a result of
the Employee's acts or omissions or that any Proprietary Information is required
to be disclosed by valid court order and Employee has given Company prompt
notice of the order in advance of the disclosure.
6.2 Invention Non-Disclosure and Ownership.
6.2.1 Disclosure of Developments to Company. Employee shall make
full and prompt disclosure to the Company of all inventions, designs, processes,
improvements, discoveries, methods, computer hardware and software and other
works of authorship, whether or not fully integrated, debugged or documented and
whether patentable, copyrightable or not, which are created, made, conceived or
reduced to practice by Employee or under Employee's direction or jointly with
others during Employee's employment by the Company and related in any way to the
business of Company, whether or not during normal working hours or on the
premises of the Company during Employee's employment by the Company (all of
which are collectively referred to as "Developments"). All of the Developments
shall be deemed to be Proprietary Information.
6.2.2 Assignment of Developments. All Developments will be the
property of Company, and to the extent necessary Employee hereby assigns to the
Company (or any person or entity designated by the Company) all Employee's
right, title and interest in and to all such Developments and all related
trademarks, patents, patent applications, copyrights and copyright applications.
In the event this Agreement shall be construed in accordance with the laws of
any state which precludes a requirement in an agreement to assign certain
classes of inventions made by an employee ("Non-Assignable Inventions"), this
Paragraph 6.2.2 shall not apply to any Non-Assignable Invention which, pursuant
to a final binding enforceable order of a court of competent jurisdiction, or
pursuant to an agreement of Company, falls within such classes. However, with
respect to any Non-Assignable Invention, Employee hereby grants to Company a
perpetual, royalty-free, non-exclusive license to make, use and sub-license such
13
Non-Assignable Invention, and to create derivative works therefrom, in
connection with the conduct of Company's business.
6.2.3 Further Assurances. Employee agrees to cooperate fully with
Company, both during and after Employee's employment with Company, with respect
to the procurement, maintenance and enforcement of trademarks, copyrights and
patents (in the United States and foreign countries) relating to Developments.
Employee agrees to sign all papers, including, without limitation, trademark
applications, copyright applications, patent applications, declarations, oaths,
formal assignments, assignments of priority rights and powers of attorney, which
Company may deem necessary or desirable in order to protect its rights and
interests in any Development.
6.3 Company's Right to Notify Subsequent Employers. The Company may do
all necessary things, and take all necessary action, in Company's discretion, to
protect its rights under this Agreement, including without limitation notifying
any subsequent employer, partner or business associate of Employee of the
existence of (and furnishing to any such person) the provisions of this
Paragraph 6.
6.4 Other Agreements. Employee hereby represents that Employee is not
bound by the terms of any agreement with any previous employer or other party to
refrain from using or disclosing any trade secret or confidential proprietary
information in the course of Employee's employment with Company or to refrain
from competing directly or indirectly with the business of such previous
employer or any other party. Employee further represents that Employee's
performance of all terms of any agreement between Employee and Company and as an
employee of Company or Group Chief Executive-DST International does not and will
not breach any agreement to keep in confidence proprietary information,
knowledge or data acquired by Employee in confidence or in trust prior to
Employee's employment with Company. Employee agrees not to disclose to Company
or induce Company to use any confidential proprietary information or material
belonging to any previous employers or others.
6.5 Non-Solicitation and Non-Competition.
6.5.1 Employee covenants and agrees that during the Restrictive
Period (as defined below) Employee will not:
(a) directly or indirectly employ or seek to employ any person
employed at that time by Company or otherwise encourage or entice
any such person to leave such employment.
(b) become employed by, enter into a consulting arrangement with or
otherwise agree to perform personal services for a Competitor (as
defined below);
(c) acquire an ownership interest in a Competitor, other than not
more than a two percent (2%) equity interest in a publicly-traded
Competitor; or
(d) solicit any customers or vendors of Company on behalf of or for
the benefit of a Competitor.
14
6.5.2 "Restrictive Period" means at a minimum the period of
Employee's employment. It also includes twenty-four (24) months from termination
of employment if Employee receives separation pay under Paragraph 4.5. Finally,
it includes any period following termination of employment during which unvested
awards received by Employee from Company or DST continue to vest.
6.5.3 "Competitor" means, unless the DST Board determines
otherwise, any person, entity or organization that sells goods or services in
the geographic area described below, which goods or services are the same or
similar to (or may be used as a substitute for) those sold by a business that
(i) is being conducted by Company in the geographic area at the time in question
and (ii) was being conducted by Company in the geographic area on the date of
Employee's termination of employment.
6.5.4 The "geographic area" referred to in this Paragraph 6 shall
mean the United States and any other country in which Company has, at the
termination of Employee's employment, offices or operations which accounted for
one percent (1%) or more of the annual revenues of DST or any of its
subsidiaries or joint ventures during the time in question.
6.6 Security Clearances. The Company may obtain contracts with the
United States of America or agencies or instrumentalities thereof or other
governmental agencies or business firms under the terms of which Company and its
employees will be required to comply with certain security regulations imposed
by the United States Government or an agency thereof or other governmental
agencies or business firms. In the event Company obtains any such contracts and
if under the terms of such contracts it is necessary for Employee to obtain
security clearances and abide by certain security regulations, Employee agrees
to promptly and diligently apply for any necessary security clearances, to
comply with any and all such regulations, and to make every reasonable effort to
maintain Employee's continued qualifications for all security clearances
appropriate or necessary to the performance of duties properly assigned to
Employee pursuant hereto.
6.7 Remedies. Employee agrees that the restrictions contained in this
Paragraph 6 are necessary for protection of the business of Company and that
unauthorized disclosure of any of the Proprietary Information or other violation
of this Paragraph 6 would cause irreparable injury to Company not adequately
remediable in damages. Employee agrees that any breach of his obligations under
this Paragraph 6 shall, in addition to any other relief to which Company may be
entitled, entitle Company to temporary, preliminary and final injunctive relief
against further breach of such obligations, without the posting of any bond. The
existence of any claim or cause of action on the part of Employee against
Company, its successors or assigns, whether arising an agreement between
Employee and Company or otherwise, shall in no way constitute a defense to the
enforcement of these provisions. The Restrictive Period shall be extended in an
amount which equals the time period during which Employee is in violation of any
of the provisions hereof.
7. CODE SECTION 409A.
7.1 To extent that the Employee would otherwise be entitled to any
payment or benefit under this Agreement or any plan or arrangement of the
Company or its affiliates, that
15
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
Employee's termination of employment would be subject to additional taxes and
penalties under Section 409A ("409A Penalties") because the Employee is a
"specified employee" (within the meaning of Section 409A and as determined from
time to time by the Compensation Committee of the Company), the payment will be
paid to the Employee on the earliest of the six-month anniversary of the
termination of employment, a change in ownership or effective control of the
Company (within the meaning of Section 409A) or the Employee'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 Employee 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.
7.2 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
Employee 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.
8. NOTICES. All notices and other communications provided for herein that
one party intends to give to the other party shall be in writing and shall be
considered given when mailed or couriered, return receipt requested, or
personally delivered, either to the party or at the addresses set forth below
(or to such other address as a party shall designate by notice hereunder):
If to Company:
Xxxxxx XxXxxxxxx, President
DST Technologies
000 X. 00xx, 0xx Xxxxx
Xxxxxx Xxxx, XX 00000
cc:
Xxxxxxx X. Xxxxx
General Counsel
DST Systems, Inc.
000 X. 00xx, 0xx Xxxxx
Xxxxxx Xxxx, XX 00000
16
If to Employee:
00 Xxxxxxxx Xxxxx
Xx. Xxxx'x Xxxx
Xxxxxx, XX XX00XX
9. AMENDMENTS. This Agreement may be amended, modified or superseded only
by a written instrument executed by both of the parties hereto.
10. BINDING EFFECT. This Agreement shall inure to the benefit of and shall
be binding upon Company and Employee and (other than the provisions of Paragraph
6) on their respective heirs, executors, personal representatives, successors
and permitted assigns.
11. ASSIGNABILITY. This Agreement shall not be assigned, in whole or in
part, by either party, without the prior written consent of the other party;
provided, however, that this Agreement shall be deemed assigned, with no consent
required, to any Company, DST International or DST subsidiary or affiliate to
whose employ Employee may be transferred.
12. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Missouri without regard to its conflicts of law principles.
13. ENTIRE AGREEMENT. This Agreement contains the entire Agreement between
the parties relative to its subject matter, superseding all prior agreements or
understandings of the parties relating hereto.
14. WAIVER. Any term or provision of this Agreement may be waived in
writing at any time by the party entitled to the benefit thereof. The failure of
either party at any time to require performance of any provision of this
Agreement shall not affect such party's right at a later time to enforce such
provision. No consent or waiver by either party to any default or to any breach
of a condition or term in this Agreement shall be deemed or construed to be a
consent or waiver to any other breach or default.
15. INVALIDITY OF PORTION OF AGREEMENT. If any provision of this Agreement
or the application thereof to either party shall be invalid or unenforceable to
any extent, the remainder of this Agreement shall not be affected thereby and
shall be enforceable to the fullest extent of the law.
16. SIGNING BONUS. Company shall pay Employee a one-time signing bonus of
Five Hundred Thousand and no/100's Dollars ($500,000) for commencing employment.
If within twenty-four (24) months of the Effective Date ("Signing Bonus
Period"), Company shall terminate Employee for Cause or Employee shall notify
Company that he will voluntarily terminate employment, Employee shall reimburse
Company for a prorata portion of the signing bonus based on the number of days
remaining in the Signing Bonus Period after the date of termination without
Cause or Employee's notice.
17. SURVIVAL. The parties acknowledge and agree that their obligations
under Paragraphs 4 through 17 of this Agreement survive the termination of this
Agreement and continue after the termination of the employment relationship
between Employee and Company;
17
provided, however, that for obligations set forth in any of such Paragraphs that
are limited in time, the time limitations shall apply.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
effective on the date stated above.
By: /s/ Xxxxxx Xxxxxxx
--------------------------------------
Xxxxxx Xxxxxxx
DST TECHNOLOGIES, INC.
By: /s/ Xxxxxx XxXxxxxxx
--------------------------------------
Xxxxxx XxXxxxxxx
President and Chief Executive Officer
EXHIBIT A
EXPATRIATE ASSIGNMENT DETAIL
Salary: Quarterly adjustments to salary be made at the end of each
quarter to Base Salary for all pay periods ending in the
subsequent quarter based on the U.S. dollars/pounds
conversion ration of the last day of the quarter.
Housing/Utility U.S. $240,000 per year. Company to review this allowance
Allowance: annually. Adjustments may be made based on U.S.
dollars/pounds conversion. If housing in place as of the
Effective Date becomes unavailable, or the rent rises
substantially, Employee and Company may renegotiate the
allowance in good faith or make other arrangements.
Education: Company to pay the American School in London for tuition
costs for Employee's three children.
Home Leave: Company to reimburse Employee for one business class
trip per annum for 5 people from London to New York City
and, for such trip, for transportation expenses between the
airports in London and New York and Employee residences in
those cities.
US Property: Company to reimburse Employee for renter's
insurance for reasonable coverage of possessions kept in
London residence.
Company to reimburse Employee for property oversight/storage
of personal goods in New York.
Tax Preparation: Company to pay PricewaterhouseCoopers to
prepare Employee's state and federal income tax returns. In
the event PricewaterhouseCoopers declines to prepare the
return, Company will arrange for tax preparation with a Big
4 accounting firm.
Goods and Services
Allowance: Employee to receive a Goods and Services Allowance to cover
the difference in the cost of goods and services between the
U.S. and the U.K. The initial Goods and Services allowance,
based on a family of five, will be $5,499 per month. The
Efficient Purchaser Index provided by Organizational
Resource Counselors is used to determine the monthly amount
that is allocated or not allocated due to a favorable
exchange rate or market. The ORC index compares costs in the
home country to costs in the assignment location.
The Goods and Services allowance will be reviewed annually.
If, upon review, the allowance is a difference of 5% or
greater (either up or down), Company will notify Employee of
the change in allowance. This review may result in the
increase of the allowance or the ceasing of the allowance
depending upon the cost-of-living index.
Reimbursements made pursuant to this Exhibit A shall be made no later than the
last day of the calendar year following the calendar year in which the expense
is incurred.
