Exhibit 10.3
THE WESTERN UNION COMPANY
2006 NON-EMPLOYEE DIRECTOR EQUITY COMPENSATION PLAN
NONQUALIFIED STOCK OPTION GRANT — TERMS AND CONDITIONS

1.   These Terms and Conditions form part of the Stock Option Agreement (the
“Agreement”) pursuant to which you have been granted a Nonqualified Stock Option
(“Stock Option”) under The Western Union Company 2006 Non-Employee Director
Equity Compensation Plan (the “Plan”). A copy of the Plan is enclosed for your
convenience. The terms of the Plan are hereby incorporated in this Agreement by
reference and made a part hereof. Any capitalized terms used in this Agreement
that are not defined herein shall have the meaning set forth in the Plan.   2.  
The number of common shares of The Western Union Company (the “Company”) subject
to the Stock Option, and the option exercise price, are specified in the
attached Award Notice (which forms part of the Agreement).   3.   Subject to the
other provisions of this Agreement and the terms of the Plan, at any time or
times on or after the Date of Grant specified in the attached Award Notice, but
not later than the tenth anniversary of such Date of Grant, you may exercise
this Stock Option as to the number of shares of common stock of the Company
(“Common Stock”) which, when added to the number of shares of Common Stock as to
which you have theretofore exercised under this Stock Option, if any, will not
exceed the total number of shares of Common Stock covered hereby. This Stock
Option may not be exercised for a fraction of a share of Common Stock of the
Company.   4.   This Stock Option may not be exercised unless the following
conditions are met:

  (a)   Legal counsel for the Company must be satisfied at the time of exercise
that the issuance of shares upon exercise will comply with applicable U.S.
federal, state, local and foreign laws.     (b)   You pay the exercise price as
follows: (i) by giving notice to the Company or its designee of the number of
whole shares of Common Stock to be purchased and by making payment therefor in
full (or arranging for such payment to the Company’s satisfaction) either (A) in
cash in U.S. dollars, (B) by delivery (either actual delivery or by attestation
procedures established by the Company) of previously owned whole shares of
Common Stock (which you have held for at least six months or which you have
purchased on the open market) having an aggregate Fair Market Value, determined
as of the date of exercise, equal to the aggregate purchase price payable by
reason of such exercise, (C) except as may be prohibited by applicable law, in
cash by a broker-dealer acceptable to the Company to whom you have submitted an
irrevocable notice of exercise (i.e., also known as “cashless exercise”) or
(D) by a combination of (A) and (B) and (ii) by executing such documents as the
Company may reasonably request.

5.   In the event that you cease to be a Non-Employee Director for any reason,
you will continue to have the right to exercise this Stock Option in accordance
with the other provisions of this Agreement and the applicable provisions of the
Plan until and including the tenth anniversary of the Date of Grant specified in
the attached Award Notice.   6.   As long as you continue service to the
Company, you may transfer Stock Options to a Family Member or Family Entity
without consideration; provided, however, in the case of a transfer of Stock
Options to a limited liability company or a partnership which is a Family
Entity, such transfer may be for consideration consisting solely of an entity
interest in the limited liability company or partnership to which the transfer
is made. Any transfer of Stock Options shall be in a form acceptable to the
Committee, shall be signed by you and shall be effective only upon written
acknowledgement by the

 

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    Committee of its receipt and acceptance of such notice. If a Stock Option is
transferred to a Family Member or Family Entity, the Stock Option may not
thereafter be sold, assigned, transferred, pledged, hypothecated or otherwise
disposed of by such Family Member or Family Entity except by will or the laws of
descent and distribution.   7.   Regardless of any action the Company takes with
respect to any or all income tax, social insurance, payroll tax, payment on
account or other tax-related items related to your participation in the Plan and
legally applicable to you (“Tax-Related Items”), you acknowledge that the
ultimate liability for all Tax-Related Items is and remains your responsibility
and may exceed the amount actually withheld by the Company. You further
acknowledge that the Company (i) makes no representations or undertakings
regarding the treatment of any Tax-Related Items in connection with any aspect
of the Stock Option, including but not limited to, the grant, vesting, exercise
of the Stock Option, the issuance of shares of Common Stock upon exercise, the
subsequent sale of shares of Common Stock acquired pursuant to the exercise of
the Stock Option and the receipt of any dividends; and (ii) do not commit to and
are under no obligation to structure the terms of the grant or any aspect of the
Stock Option to reduce or eliminate your liability for the Tax-Related Items or
achieve any particular tax result. Further, if you have become subject to tax in
more than one jurisdiction between the Grant Date and the date of any relevant
taxable or tax withholding event (“Tax Date”), as applicable, you acknowledge
that the Company may be required to withhold or account for Tax-Related Items in
more than one jurisdiction.       Prior to the Tax Date, you will pay or make
adequate arrangements satisfactory to the Company to satisfy all Tax-Related
Items. In this regard, you authorize the Company or its agent, at its
discretion, to satisfy the obligations with regard to all Tax-Related Items by
one or a combination of the following: (A) accept a cash payment in U.S. dollars
in the amount of Tax-Related Items, (B) withhold whole shares of Common Stock
which would otherwise be delivered to you having an aggregate Fair Market Value,
determined as of the Tax Date, or withhold an amount of cash from any cash
compensation which would otherwise be payable to you by the Company equal to the
amount necessary to satisfy the Tax-Related Items, or (C) withhold from proceeds
of the sale of shares of Common Stock acquired pursuant to the exercise of the
Stock Option either through a voluntary sale or through a mandatory sale
arranged by the Company (on your behalf pursuant to this authorization).      
To avoid any negative accounting treatment, the Company may withhold or account
for Tax-Related Items by considering applicable minimum statutory withholding
amounts or other applicable withholding rates. If the obligation for Tax-Related
Items is satisfied by withholding in shares of Common Stock, for tax purposes,
you are deemed to have been issued the full number of shares of Common Stock
subject to the exercised Stock Option, notwithstanding that a number of shares
of Common Stock are held back solely for the purpose of paying the Tax-Related
Items due as a result of any aspect of Director’s participation in the Plan.
Finally, you shall pay to the Company any amount of Tax-Related Items that the
Company may be required to withhold or account for as a result of your
participation in the Plan that cannot be satisfied by the means previously
described. The Company may refuse to issue or deliver the shares of Common Stock
or the proceeds of the sale of shares of Common Stock to the Director, if
Director fails to comply with his or her obligations in connection with the
Tax-Related Items.   8.   The Board or Committee may amend or terminate the Plan
and the Committee may amend (or its delegate may amend) these Terms and
Conditions. No amendment may impair your rights as an option holder without your
consent. The determination of such impairment shall be made by the Committee in
its sole discretion.

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9.   The Committee (or its delegate) administers the Plan and has discretion to
interpret the Plan and this Agreement. Any decision or interpretation rendered
by the Committee or its delegate shall be final, conclusive and binding on you
and all persons claiming under or through you. By accepting this grant or other
benefit under the Plan, you and each person claiming under or through you shall
be conclusively deemed to have indicated acceptance and ratification of, and
consent to, any action taken under the Plan by the Committee or its delegate.  
10.   This Award is discretionary, non-binding for future years and there is no
promise or guarantee that such grants will be offered to the Director in future
years.   11.   The Company is not providing any tax, legal or financial advice,
nor is the Company making any recommendations regarding your participation in
the Plan, or your acquisition or sale of the shares of Common Stock acquired
pursuant to the exercise of the Stock Option. You are hereby advised to consult
with your own personal tax, legal and financial advisors regarding your
participation in the Plan before taking any action related to the Plan.   12.  
You hereby explicitly and unambiguously consent to the collection, use and
transfer, in electronic or other form, of your personal data as described in
this Agreement and any other grant materials by and among, as applicable, the
Company and its Subsidiaries and Affiliates for the exclusive purpose of
implementing, administering and managing your participation in the Plan.      
You understand that the Company and its Subsidiaries and Affiliates may hold
certain personal information about you, including, but not limited to, your
name, home address and telephone number, date of birth, social insurance number
or other identification number, salary, nationality, job title, any shares of
stock or directorships held in the Company, details of all options or other
entitlement to shares of stock awarded, canceled, exercised, vested, unvested or
outstanding in your favor, for the exclusive purpose of implementing,
administering and managing the Plan (“Data”).       You understand that Data
will be transferred to Morgan Stanley Smith Barney or such other stock plan
service provider as may be selected by the Company in the future, which is
assisting the Company with the implementation, administration and management of
the Plan. You understand that the recipients of the Data may be located in the
United States or elsewhere, and that the recipient’s country (e.g., the United
States) may have different data privacy laws and protections than your country.
You understand that you may request a list with the names and addresses of any
potential recipients of the Data by contacting the Company. You authorize the
Company, Morgan Stanley Smith Barney, and any other possible recipients which
may assist the Company (presently or in the future) with implementing,
administering and managing the Plan to receive, possess, use, retain and
transfer the Data, in electronic or other form, for the sole purpose of
implementing, administering and managing your participation in the Plan. You
understand that Data will be held only as long as is necessary to implement,
administer and manage your participation in the Plan. You understand that you
may, at any time, view Data, request additional information about the storage
and processing of Data, require any necessary amendments to Data or withdraw the
consents herein, in any case without cost, by contacting the Company in writing.
You understand, however, that refusing or withdrawing your consent may affect
your ability to participate in the Plan. For more information on the
consequences of your refusal to consent or withdrawal of consent, you understand
that you may contact the Company.   13.   The validity, construction,
interpretation, administration and effect of the Plan and this Agreement and
rights relating to the Plan and to this Agreement, shall be governed by the
substantive laws, but not the choice of law rules, of the State of Delaware in
the United States of America, as provided in the Plan. For purposes of
litigating any dispute that arises directly or indirectly under the Stock

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    Option or the Agreement, the parties hereby submit to and consent to the
jurisdiction of the State of Colorado in the United States of America, and agree
that such litigation shall be conducted only in the courts of Arapahoe County in
the State of Colorado in the United States of America, or the federal courts for
the United States of America for the District of Colorado, and no other courts,
where this grant is made and/or to be performed.   14.   If you have received
this Agreement or any other document related to the Stock Option and/or the Plan
translated into a language other than English and if the meaning of the
translated version is different than the English version, the English version
will control.   15.   If one or more provisions of this Agreement shall be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby and the invalid, illegal or unenforceable provisions shall be
deemed null and void; however, to the extent permissible by law, any provisions
which could be deemed null and void shall first be construed, interpreted or
revised retroactively to permit this Agreement to be construed as to foster the
intent of this Agreement and the Plan.   16.   The Company may, in its sole
discretion, decide to deliver any documents related to current or future
participation in the Plan by electronic means. Director hereby consents to
receive such documents by electronic delivery and agrees to participate in the
Plan through an online or electronic system established and maintained by the
Company or a third party designated by the Company.   17.   The Company reserves
the right to impose other requirements on your participation in the Plan, on the
Stock Option and on any shares of Common Stock purchased upon exercise of the
Stock Option under the Plan, to the extent the Company determines it is
necessary or advisable in order to comply with local law or facilitate the
administration of the Plan, and to require you to sign any additional agreements
or undertakings that may be necessary to accomplish the foregoing.

NOTICE REGARDING EXCHANGE CONTROLS: If you are resident in Germany, you will
have certain exchange control obligations related to your participation in the
Plan. Specifically, as of March 2010, cross-border payments in excess of €12,500
must be reported monthly to the German Federal Bank. If you use a German bank to
transfer a cross-border payment in excess of €12,500 in connection with the
exercise of the Stock Option or the sale of shares of Common Stock acquired
under the Plan, the bank will make the report for you. In addition, you must
report any receivables, payables, or debts in foreign currency exceeding an
amount of €5,000,000 on a monthly basis. It is your responsibility to comply
with these exchange controls and they may change from time to time.

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