EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of this lst day of April,
1992, by and between DST Systems, Inc., a Missouri corporation ("DST") ,
Kansas City Southern Industries, Inc., a Delaware corporation ("KCSI") and
Xxxxxxx X. Xxxxxxxxxx, an individual ("Executive").
WHEREAS, Executive is now employed by a subsidiary of 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.
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 the President of DST's subsidiary, Output Technologies, Inc., 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
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 with out 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 of KCSI common stock) to KCSI without any payment or other
consideration to Executive:
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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 Executivels
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.
(iv) Until they are no longer subject to forfeiture hereunder,
each certificate for shares of Restricted Stock
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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
Executivels 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:
"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 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 6 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 Executivels employment "for cause" immediately upon notice to
Executive. For purposes of this Agreement, termination "for cause" shall mean
termination based upon any one or more of the following:
(i) Any material breach of this Agreement by Executive;
(ii) Executive's dishonesty involving DST, 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;
(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 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.
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
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disclosure or use, and (b) is the subject of efforts of DST or its subsidiary or
affiliate that are reasonable under the circumstances 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 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
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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 Xxxxxxxxx 0, XXX 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 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, (E) profit sharing,
thrift or deferred savings
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(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.
(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
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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 "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.
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(e) Termination After Control Change Date. Notwithstand-
ing 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 7.50% 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
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
Te=ination, 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,
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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 Executivels 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, thereaf ter, 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 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
15
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 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
16
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 Executivels 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 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
17
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 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
18
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 of DST, to DST, 000 Xxxx 00xx Xxxxxx,
Xxxxxx Xxxx, Xxxxxxxx 00000, Attention: Secretary, or, in the case of the
Executive, to him at 6832 Linden,
00
Xxxxxxx Xxxxxxx, Xxxxxx 00000, 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.
12. Controlling Law and Jurisdiction. The validity, inter-
pretation and performance of this Agreement shall be subject to and
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construed under the laws of the State of Missouri, without regard to principles
of conflicts of law.
13. Entire Agreement. Addendum A attached to this Agreement
is incorporated herein and made a part hereof. This Agreement
(including Addendum A) 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 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/ Xxxxxx X. XxXxxxxxx, President
KANSAS CITY SOUTHERN INDUSTRIES, INC.
By
/s/ Xxxxxx X. Xxxxxxx, President
/s/ Xxxxxxx X. Xxxxxxxxxx
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ADDENDUM A
The provisions of this Addendum are incorporated into and made a part
of the Employment Agreement dated as of April 1, 1992 (the "Agreement") by and
between DST Systems, Inc.("DST"), Kansas City Southern Industries, Inc.("KCSI")
and Xxxxxxx X. Xxxxxxxxxx ("Executive"). In the event of any conflict between
the provisions of this Addendum and provisions of the Agreement, the provisions
of this Addendum shall govern.
1. Non-Compete. During the term of employment by DST or
by any successor or affiliate of DST, and for a period of three (3) years
following the termination of such employment, Executive will not, directly or
indirectly, as an employer, employee, principal, agent, partner, stockholder
or otherwise:
(a) Engage, in any geographic or market area then served by United
Micrographics Systems, Inc. ("UMSI"), Phoenix Litho, Inc. ("PLI"),
Network Graphics, Inc. ("NGI") or Support Resources, Inc. ("SRI"),
all of which are direct or indirect subsidiaries of DST, in the
business of (i) production of computer output microfilm, (ii) laser
printing, (iii) electronic publishing, (iv) commercial printing,
(v) graphics design, (vi) presorting or mailing of documents or
materials or (vii) sale or rental of equipment and supplies which
are then sold or used by UMSI, PLI, NGI or SRI or which, if sold to
a customer or potential customer, would enable it to perform any of
the foregoing services for itself, or otherwise compete with UMSI,
PLI, NGI or SRI in any business or activity in which UMSI, PLI, NGI
or SRI is engaged at such time in any geographic or market area
then served by UMSI, PLI, NGI or SRI;
(b) With respect to any business or activity of the type described in
(a) above, solicit business from UMSIL PLI, NGI or SRI customers'
offices, outlets or other facilities located in geographic or
market areas served by UMSI, PLI, NGI or SRI at the time of such
termination of employment, or from the offices, outlets or other
facilities of prospective customers of UMSI, PLI, NGI or SRI
located in geographic or market areas in which UMSI, PLI, NGI or
SRI has made a proposal to a potential customer to do business at
the time of such termination of employment; or
(c) Offer employment to any employee of UMSI, PLI, NGI or SRI or entice
any such employee to leave the employ of UMSI, PLI, NGI or SRI.
2. Enforcement. Executive hereby expressly agrees that the restrictions
set forth in paragraph 1 of this Addendum are necessary for the protection of
DST, UMSI, PLI, NGI and SRI against irreparable harm and loss of goodwill and
business, and therefor, DST and Executive intend and agree, that upon failure or
refusal of Executive to comply with the provisions of such paragraph, DST, UMSI,
PLI, NGI and/or SRI shall be entitled to specifically enforce such provisions by
an action in a court of proper jurisdiction to require Executive to perform in
accordance with this Addendum. Nothing herein shall be construed as prohibiting
DST, UMSI, PLI, NGI or SRI from pursuing any other remedies available to them
for such breach or threatened breach, including setoff against any payment owed
to Executive hereunder or recovery of damages from the Executive.
Dated as of this lst day of April, 1992.
DST SYSTEMS, INC.
By
/s/Xxxxxx X. XxXxxxxxx, President
KANSAS CITY SOUTHERN INDUSTRIES, INC.
By
/s/Xxxxxx X. Xxxxxxx, President
/s/Xxxxxxx X. Xxxxxxxxxx
-2-
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 XXXXXXX X.
XXXXXXXXXX ("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 (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 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
Xxxxxxxxx 0, XXX 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 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.
IN WITNESS WHEREOF, the parties have executed this Amendment the day
and year first above written.
DST SYSTEMS, INC.
By
KANSAS CITY SOUTHERN INDUSTRIES, INC.
By
/s/XXXXXXX X. XXXXXXXXXX
