EXHIBIT 10.4

 

RESTRICTED STOCK UNIT AGREEMENT

 

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DST SYSTEMS, INC. 2005 EQUITY INCENTIVE PLAN

 

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(Time Vesting; Executive Officer)

 

THIS AGREEMENT is made and entered into as of the “Grant Date” (see Paragraph
1(a)), by and between DST SYSTEMS, INC. (“Company”) and recipient (“Employee”)
of an Award under the DST Systems, Inc. 2005 Equity Incentive Plan, as amended
and interpreted from time to time (the “Plan”).

 

WHEREAS, Awards under the Plan are administered by the Compensation Committee of
Company’s Board of Directors or other committee designated by the Board (the
“Committee”) or Company officer to which the Committee delegates authority as
provided in the Plan;

 

WHEREAS, the Committee wishes to grant to Employee rights (“Restricted Stock
Units” or “RSUs”) to receive shares of Company common stock (“Shares”) on or
after the time the RSUs “Vest,” which occurs with respect to all or a portion of
the RSUs on the “Vesting Dates” referenced in Paragraph 1(a) subject to the
other terms and provisions of this Agreement generally including without
limitation requirements for continued “Employment” (as defined in Paragraph
3(h)) and the risk of forfeiture as provided for in Paragraph 3(c); and

 

WHEREAS, Company, in its discretion, may allow Employee the potential tax
benefit of deferring the issuance of Shares beyond the RSU Vesting Dates as
provided in Paragraph 3(f), and, therefore, an RSU Vesting Date may not be the
same date as the issuance of one or more of the Shares underlying the Vested
RSUs.

 

The parties agree as follows:

 

1.                                      GRANT OF RSU.

 

a.                                      RSU Grant.  The Grant Date, the number
of RSUs granted in this Award, and the Vesting Dates are shown in the online or
other grant communication to which this Agreement is attached.  Vesting of each
RSU as provided in Section 3 entitles Employee to the issuance of one Share,
subject to the other terms and conditions of the Plan and this Agreement.  In
order for the grant to be effective, Employee must timely confirm acceptance of
the terms and conditions of this Agreement pursuant to the instructions in the
communication.

 

b.                                      Administration.  Company’s Chief
Financial Officer may adopt Administrative Procedures for RSUs and the Committee
may maintain rules for Awards issued under the Plan.  As amended from time to
time, such procedures and rules (collectively, the “Rules”) shall apply to all
actions taken with respect to this Agreement.  The Committee or its delegate may
take any

 

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action deemed necessary or appropriate to administer this Agreement and the
issuance of Shares attributable to Vested RSUs in accordance and consistent with
Internal Revenue Code (“Code”) Section 409A and regulations and guidance issued
thereunder (“409A”).

 

2.                                      RESTRICTIONS.

 

a.                                      Non-Transferability.  Except as may be
permitted under the Plan with respect to transfers to a Permitted Transferee,
the RSUs are not transferable during the “Original Delay Period” (as defined in
Paragraph 3(f)) and through any “Extended Issuance Date” (as defined in
Paragraph 3(f)), by sale, assignment, disposition, gift, exchange, pledge,
hypothecation, or otherwise, other than as provided in Paragraph 3(i) upon
Employee’s death.  Any attempted disposition of the RSUs, or the levy of any
execution, attachment or similar process upon the RSUs prior to issuance of the
Shares, shall be null and void and without effect.

 

b.                                      No Privilege of Stock Ownership;
Dividend Equivalents.  Holding RSUs does not give Employee the rights of a
shareholder (including without limitation the right to vote or receive dividends
or other distributions) with respect to any Shares that Company may issue under
the terms and conditions of this Agreement before the date such Shares are
issued pursuant to this Agreement.  Notwithstanding the foregoing, if Company
declares a dividend on Shares, then a “Dividend Equivalent” (as defined in the
Plan) in the form of additional RSUs (“Dividend Equivalent RSUs”) will be
credited and paid on the RSUs (including Dividend Equivalent RSUs) as follows:

 

(i)                                     The number of additional Dividend
Equivalent RSUs credited (which may include fractional RSUs) shall be the
quotient obtained by dividing the aggregate cash amount that would have been
paid as a dividend on the Shares underlying all RSUs (including any Dividend
Equivalent RSUs) then credited to Employee in this Award (whether or not such
RSUs have Vested) by the Fair Market Value of a Share on the date such dividend
payment is made to Company shareholders.

 

(ii)                                  All rights to any Dividend Equivalent RSUs
shall be subject to the restrictions on transferability described in Paragraph
2(a) and shall become null and void upon forfeiture of the RSUs under Paragraph
3(c). Dividend Equivalent RSUs shall be subject to the same risk of forfeiture
and the same Vesting terms and conditions as the original RSUs.  To the extent
that an Extended Issuance Delay (as defined in Paragraph 3(g)) is in effect with
respect to any Vested RSUs, Dividend Equivalent RSUs will be determined and
credited on such RSUs in accordance with the same rules set forth above. Any
Shares relating to Vested Dividend Equivalent RSUs credited to Employee pursuant
to this Agreement shall be issued at the same time as the Shares relating to the
original underlying RSUs (“Issuance Date”); provided, however, if Company
declares a dividend for which the dividend record date is prior to the Issuance
Date, but for which the dividend payment date is on or after the Issuance Date
(a “Straddle Dividend”), the Shares relating to such Dividend Equivalent RSUs
shall be issued within ten (10) business days of such Straddle Dividend payment
date, rather than on the Issuance Date.

 

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3.                                      VESTING, FORFEITURE, AND SHARE ISSUANCE.

 

a.                                      Vesting Date(s).  The RSUs shall become
Vested on the Vesting Date(s) as shown in the online or other grant
communication to which this Agreement is attached.

 

b.                                      Other Vesting.

 

(i)                                 Effect of Change in Control on Vesting. 
Subject to Section 6 of this Agreement and Section 14 of the Plan, upon a
“Termination Without Cause” or a termination of Employment in connection with a
“Resignation for Good Reason” (each as defined in Paragraph 3(h)), in each case
that occurs subsequent to the date of a Change in Control, all RSUs shall become
fully Vested.  Prior to any such event, the RSUs shall continue to Vest as
provided in Paragraph 2(a).

 

(ii)                                  Effect of Death and Disability on
Vesting.   In addition to any potential Vesting which may occur as provided in
this Section 3 and subject to the other terms and conditions of this Agreement,
Vesting shall occur in full as of the date of Employee’s “Disability” (as that
term is defined in the Rules) or death; provided, however, in no event shall
Vesting occur on account of Employee’s death or Disability if Employee’s
Employment has been terminated before the date of Employee’s death or
Disability.  Any death or Disability occurring after forfeiture of the RSUs
under Paragraph 3(c) of this Agreement shall not affect the forfeited status of
such RSUs.

 

(iii)                               Effect of a Reduction in Force, Business
Unit Divestiture, or Retirement on Vesting.  Upon either a “Reduction in Force,”
“Business Unit Divestiture” or “Retirement (each as defined in Paragraph
3(h) and an “Event”), a pro rata portion of the tranche of RSUs scheduled to
Vest on the next Vesting Date (the “Tranche”) shall Vest as set forth in
(iv) below; provided, however, that if the Event is a Business Unit Divestiture
or Reduction in Force and at least six months have not elapsed between the Grant
Date and the Event, no pro rata vesting of the Tranche shall occur and all of
the non-Vested RSUs shall be forfeited.  The RSUs that do not Vest under this
Paragraph 3(b)(iii) shall be forfeited as of the date of the Event.

 

(iv)                              Calculations.  To determine the pro rata
portion of the Tranche Vesting, divide the number of RSUs scheduled to Vest on
the next scheduled Vesting Date by 12 and multiply by the number of months from
one year prior to the upcoming Vesting Date (“Commencement Date”) to the Event. 
The pro rata calculations shall include the calendar month in which the
Commencement Date occurred only if the date is prior to the 16th day of such
month and shall include the calendar month in which the Event occurred only if
the date is subsequent to the 15th day of such month.  For any calculations in
this Agreement that require the number of RSUs to be divided or for a designated
percentage of the RSUs to Vest, if such number is not evenly divisible or an
applied percentage or formula would result in the issuance of a fractional
Share, any fractional Share shall, except as otherwise provided in Paragraph
3(d)(iv), be rounded up to the next whole number and the Corporate Secretary’s
office shall allocate the additional Shares(s), if

 

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applicable, to the Vesting tranche.  In no event shall Vesting occur with
respect to a number of RSUs that exceeds the original RSU grant amount, plus if
any, additional RSUs resulting from the crediting of Dividend Equivalents
pursuant to Paragraph 2(b).

 

c.                                       Forfeiture.  Forfeiture of RSUs shall
occur under the circumstances set forth below. Upon any such forfeiture, under
no circumstance will Company be obligated to make any payment to Employee, and
no Shares shall be issued, as a result of such forfeited RSUs.  In addition to
the forfeiture of all RSUs, upon forfeiture for “Cause” (as defined in Paragraph
3(h)) all Shares previously issued under this Agreement shall also be forfeited
and transferred to Company as provided in Section 5.

 

(i)                                     Subject to the other provisions of this
Section 3, all non-Vested RSUs shall be forfeited if Employee ceases Employment
during the Original Delay Period (even if a portion of the RSUs have Vested).

 

(ii)                                  Notwithstanding any other provision of
this Agreement, Cause shall result in forfeiture of the RSUs and all Shares
issued pursuant thereto.  Employee acknowledges and agrees that forfeiture for
Cause can occur during any Original Delay Period or Extended Delay Period, prior
or subsequent to any RSU Vesting or Share issuance and whether or not Employee
is eligible for a Retirement.

 

d.                                      Share Issuance.

 

(i)                                     Except as otherwise provided herein,
upon the Vesting of a specific number of RSUs as provided in Paragraphs 3(a) and
(b), Company shall issue a corresponding number of Shares to Employee as soon as
administratively practical after the Vesting Date; provided that tax withholding
obligations have been satisfied as provided in Section 4.  The preceding
sentence notwithstanding,

 

(A)                               if the Vesting event is Retirement, Reduction
in Force, Termination Without Cause, Resignation for Good Reason or Business
Unit Divestiture, no issuance of Shares is to occur with respect to such Vesting
event unless it is also a 409A Separation;

 

(B)                               if the Vesting event is Retirement, Reduction
in Force, Termination Without Cause, Resignation for Good Reason or Business
Unit Divestiture but such Vesting event is not a 409A Separation, issuance of
Shares shall not occur until Employee’s 409A Separation;

 

(C)                               if the Vesting event is a Change in Control
and the RSUs are subject to 409A, no issuance of Shares is to occur unless that
Change in Control is also a 409A Change in Control; and

 

(D)                               if the Vesting event is a Change in Control
but such Change in Control is not a 409A Change in Control, no issuance of
Shares is

 

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to occur until the first to occur of Employee’s 409A Separation or a 409A Change
in Control.

 

(ii)                                  Company will not issue Shares upon a
Vesting Date to the extent that either Employee has elected an “Extended
Issuance Delay” (as defined in Paragraph 3(f)) and/or the issuance of Shares is
subject to the six-month delay period required under Section 409A a “409A
Issuance Delay” (as defined in Paragraph 3(g)).  Employee acknowledges and
agrees that Company will not issue any Shares pursuant to this Agreement any
earlier than the first business day after the Vesting Date nor any later than
ninety days after such Vesting Date.  If one or both of an Extended Issuance
Delay or a 409A Issuance Delay applies, Company shall issue the Shares as soon
as administratively practical (but no earlier than one business day and no later
than ninety days) after expiration of the latest ending applicable period. 
Company’s transfer agent may issue Shares in certificate or book entry form as
determined by Company’s Corporate Secretary.

 

(iii)                               Upon issuance of the Shares, Employee shall
have all rights of a shareholder with respect thereto including the right to
vote and receive all dividends or other distributions made or paid with respect
to the Shares.  The number of Shares issuable in any circumstance shall be
reduced by the number of Shares withheld for taxes as provided in Section 4.

 

(iv)                              Except as otherwise expressly provided in this
Agreement, at any time a fractional Share would otherwise be issued pursuant to
this Agreement, such fraction shall be rounded up or down to the nearest whole
Share in accordance with the applicable rounding methodology set forth in the
Rules or other applicable rules or procedures.

 

e.                                       Limited Accelerated Issuance of Shares
for FICA Related Taxes.  Paragraph 4(b) governs the limited accelerated payment
of Shares underlying RSUs for the satisfaction of “FICA Related Taxes” (as
defined in Paragraph 4(b)) if those should occur for any reason prior to the
Vesting Date.

 

f.                                        Extended Issuance Delays.  The period
from the Grant Date to a Vesting Date is the “Original Delay Period.”  In
circumstances allowed by the Rules and where a valid and timely Section 409A
deferral election has been made (an “Extended Issuance Delay”), Shares that
Company would otherwise issue after the Original Delay Period may be issued on
the Extended Issuance Date timely elected by Employee.  The period from the
Vesting Date to the Extended Issuance Date is the “Extended Delay Period.”

 

g.                                       Section 409A Issuance Delays.  To the
extent that an RSU is or becomes subject to 409A and Employee is a “specified
employee” under Company’s Specified Employee Identification Procedures, then,
notwithstanding any other provision of this Agreement or the Rules and for the
avoidance of negative tax consequences to Employee, any issuance of Shares or
cash pursuant to this Agreement on account of Employee’s 409A Separation shall
be delayed until the first day after six-months following such 409A Separation,
as required for the avoidance of penalties and/or excise taxes under 409A (“409A
Issuance Delay”).

 

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h.                                      Definitions.  For purposes of this
Agreement, the following terms have the meanings set forth below:

 

(i)                                     A “409A Change in Control” is a Change
in Control that also qualifies as a change in control under 409A(a)(2)(A)(v).

 

(ii)                                  A “409A Separation” is Employee’s
separation from service with Company as determined under 409A(a)(2)(A)(i).  A
409A Separation may occur on account of any separation from service including
separation due to death, disability, resignation, or termination of employment
by Company with or without Cause.

 

(iii)                               A “Business Unit Divestiture” is Employee’s
termination of Employment in connection with the consummation of a merger,
reorganization, consolidation, or sale of assets, or stock or other transaction
that the Committee determines is a business unit divestiture event, that
involves a Subsidiary (as defined in Subparagraph 3(h)(v)(B)), joint venture,
division or other business unit, and that results in a group of employees of
such business unit being employed by an acquiring company and no longer having
employment with Company.

 

(iv)                              “Cause” means either a violation of Section 5
or termination of Employment for any act of dishonesty, willful misconduct,
gross negligence, intentional or conscious abandonment or neglect of duty,
criminal activity, fraud or embezzlement, any unauthorized disclosure or use of
material confidential information or trade secrets, or violation of any
noncompete or non-disclosure agreement to which Employee is subject.

 

(v)                                 “Employment” means Employee is regularly and
continuously employed, for more than fifty percent (50%) of the number of hours
designated for base salary purposes as full-time employment, by:

 

(A)                               Company;

 

(B)                               any corporation in an unbroken chain of
corporations beginning with Company or in an unbroken chain of corporations
ending with Company if, on the Grant Date, each corporation other than the last
corporation in the unbroken chain owns stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain or any entity in which Company has a direct or
indirect equity interest of at least fifty percent (50%) (“Subsidiary”);

 

(C)                               any individual or entity that directly or
through one or more intermediaries controls or is controlled by or under common
control with Company (“Affiliate”); or

 

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(D)                               any entity in which Company directly or
indirectly owns stock possessing such minimum percentage (at least twenty
percent (20%)) of the total combined voting power of all classes of stock or
owns such minimum percentage (at least twenty percent 20%)) of the capital
interests or profit interests as the Committee from time to time determines for
purposes of this Subparagraph 3(h)(v) (also an “Affiliate”).

 

Employee is not deemed to have terminated Employment through, and the RSUs shall
not be forfeited solely as a result of, any change in Employee’s duties or
position or Employee’s temporary leave of absence approved by Company.

 

(vi)                              The “Extended Issuance Date” is (a) if a
Retirement Installment applies, each date during an Extended Delay Period that
Employee shall receive an issuance of Shares in an installment, or if earlier,
the date of death following Retirement; or (b) if a Retirement Installment does
not apply, the earlier of (i) the Extended Issuance Date elected by Employee
pursuant to the Rules; or (ii) the date of a 409A Separation during the Extended
Delay Period.

 

(vii)                           A “Reduction in Force” means a termination of
Employee’s Employment with Company during the Original Delay Period as part of
Company’s termination of the employment of at least ten (10) employees within a
business unit in connection with a single plan of reduction to occur within a
rolling 90-day period or longer period incorporated into a specific plan of
reduction.

 

(viii)                        A “Resignation for Good Reason” means Employee’s
resignation for good reason (as defined below) subsequent to the date of a
Change in Control during the three-year period following such date if:
(x) Employee provides written notice to the Company Secretary 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) days after the date such notice is provided to Company
(the “Notice Delivery Date”) and not later than ninety (90) days after the
Notice Delivery Date, and (y) Company does not remedy the event prior to the
Good Reason Termination Date.  In no event shall there be a Resignation for Good
Reason unless such resignation also constitutes a 409A Separation.  For purposes
of this Agreement, Employee shall have “good reason” if there occurs without
Employee’s 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 Change in Control or as the same may have
been increased thereafter;

 

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(C)                               the material relocation of Employee’s
principal office to a location at least 35 miles outside of the metropolitan
area where such office was located at the time of the Change in Control, except
for required travel on Company business to an extent substantially consistent
with Employee’s obligations immediately prior to the Change in Control; or

 

(D)                               any material breach by Company of an
employment agreement between Company or its successor and Employee, provided,
however, that Employee shall not have “good reason” under this Subparagraph
(viii) on account of any alleged breach of an employment agreement based on a
material reduction in employee benefits as of a Change in Control that is
immaterial or where benefits to Employee from participation in such employee
benefit plans are not reduced by more than ten percent (10%) in the aggregate.

 

(ix)                              A “Retirement” means, notwithstanding the
definition of “Retirement” under the Plan, a termination of Employee’s
Employment (either by Employee voluntarily or by Company as a Termination
Without Cause) that meets either of the following criteria:  (i) termination is
at age 59 ½ or older with no less than 3 years of service, or (ii) termination
is at age 55 or older with no less than 20 years of service.

 

(x)                                 A “Termination Without Cause” means
Company’s termination of Employee’s Employment that is not for Cause.

 

(xi)                              A “Retirement Installment” is an election made
pursuant to the Rules to receive, after Retirement and prior to death, any Share
issuance amounts in incremental installments over the number of years elected by
Employee as allowed by the Rules.

 

i.                                          Payments to Third Party.  Upon death
of Employee followed by a valid written request for payment, the Shares shall be
issued as soon as administratively practical to Employee’s beneficiary named in
a written beneficiary designation filed with Company’s Corporate Secretary on a
form for the Plan or, if there is no such designated beneficiary, to Employee’s
executor or administrator or other personal representative acceptable to the
Corporate Secretary.  Any request to pay any person or persons other than
Employee shall be accompanied by such documentation as Company may reasonably
require, including without limitation, evidence satisfactory to Company of the
authority of such person or persons to receive the payment.

 

4.                                      TAXES.

 

a.                                      Tax Withholding; Valuation.  Employee
understands and agrees that, at the time any tax withholding obligation arises
in connection with (i) a Share issuance, (ii) Retirement-eligibility, or
(iii) an RSU Vesting, Company may withhold, in Shares if Company requires or a
valid election applies under this Section 4 or in cash from payroll or other
amounts Company owes or will owe Employee, any applicable withholding, payroll
and other required tax amounts

 

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due upon Vesting, issuance of Shares, Retirement-eligibility, or any other
applicable event.  Tax Withholding may be made by any means permitted under the
Plan, as approved by the Committee, and as permitted under the law.  The
valuation of the RSUs, and any Shares that Company may issue attributable to
Vested RSUs, for tax and other purposes shall be as set forth in the Rules and
in applicable laws and regulations (“Valuation Rules”).  In the absence of the
satisfaction of tax obligations, Company may refuse to issue the Shares.

 

b.                                      Acceleration of Share Issuance to Cover
Employment Tax Liabilities.  Employee understands and agrees that certain tax
withholding amounts may be due prior to an issuance of Shares.  For instance,
withholding amounts for the Federal Insurance Contributions Act tax imposed
under Code Sections 3101, 3121(a) or 3121(v)(2) (“FICA Tax”) may be due upon
Employee meeting Retirement-eligibility requirements during an Original Delay
Period subsequent to a Change in Control.  If Shares are issued on an
accelerated basis to satisfy the FICA Tax as provided in this Paragraph, then
Employee may have income tax at source on wages imposed under Code Section 3401
or the corresponding withholding provisions of applicable state, local, or
foreign tax laws (together with the FICA Tax, the “FICA Related Taxes”).  When
and in the manner permitted by the Committee or its delegate in their sole
discretion and unless otherwise prohibited by law, Company may satisfy (or may
allow Employee to elect to satisfy) the FICA Related Taxes through the
accelerated issuance of Shares (including the accelerated issuance of Shares for
which a Vesting Date may not have yet occurred but for which the underlying RSU
is no longer subject to substantial risk of forfeiture).  In no event, however,
may the value (determined under the Valuation Rules) of the total accelerated
Share issuance exceed the aggregate amount of the FICA Related Taxes.

 

c.                                       Satisfaction in Share Retention. 
Subject to the requirements of the Committee or its delegate in their sole
discretion and unless otherwise prohibited by law, Company may require Employee
to satisfy, or may allow Employee (or his or her guardian, legal representative
or successor) to irrevocably elect in writing on a Company designated form to
satisfy any income tax withholding obligation in connection with the RSUs
through the retention of whole Shares which would otherwise have been issued,
which Shares shall not belong to Employee upon such retention.

 

d.                                      Remedies.  If withholding is not
effected by Company for any reason at the time of the taxation event, then
Employee agrees to pay Company any withholding amounts due within the deadline
imposed by Company.  If, within the deadline imposed by Company, Employee has
not paid any withholding amounts due or, subject to compliance with Treasury
Regulations § 1.409A-3(j)(4), has not elected, if allowed by the Committee or
its delegate in their sole discretion, whether to have Shares retained for taxes
or to pay cash for the tax withholding, then Company may, at its sole discretion
(a) retain whole Shares which would otherwise have been issued (including
without limitation withdrawal of Shares that had previously been placed into
Employee’s book entry account), (b) deduct such amounts in cash from payroll or
other amounts Company owes or will owe Employee, or (c) effect some combination
of Share retention and cash deduction (collectively, “Remedies for Amounts
Owed”).

 

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5.                                      VIOLATION OF NONCOMPETE, NONUSE AND
NONDISCLOSURE PROVISIONS.  Employee acknowledges that Employee’s agreement to
this Section 5 is a key consideration for the grant of the RSUs.  Employee
hereby agrees with Company as follows:

 

a.                                      Non-Compete.  During the period that
Employee is employed by “Employer” (as defined in Paragraph 5(h)), and
thereafter during any period for which Employee is receiving, by agreement of
Employee and Employer, any separation payment(s) (whether made in lump sum or
installments), Employee agrees that, without consent of Employer, Employee will
not engage directly or indirectly within any country where Employee was employed
by or performed services for Employer, in any manner or capacity, as advisor,
consultant, principal, agent, partner, officer, director, employee or otherwise,
in any business or activity which is competitive with any business conducted by
Employer or by an “Applicable Company Entity” (as defined in Paragraph 5(h)),
provided, however, that the Committee may determine as provided in Section 6
hereof that such obligation shall not apply to any period after termination of
employment if such termination was on the date of a Change in Control or within
eighteen (18) months subsequent to such date.

 

b.                                      Non-Solicitation of Employees, Customers
and Prospective Customers.  Employee agrees that during the twelve (12) month
period subsequent to termination of employment with Employer, Employee will not
solicit any employee of Employer or of any Applicable Company Entity to leave
such employment to become employed by a competitor of Employer or of any
Applicable Company Entity.  Employee further agrees that, during the twelve (12)
month period subsequent to termination of employment with Employer, Employee
will not solicit or contact any person, business or entity which was a
“Customer” or “Prospective Customer” (each as defined in Paragraph 5(h)) for
purposes of selling goods or services of the type sold or rendered by Employer
or any Applicable Company Entity.

 

c.                                       Ownership of Confidential Information,
and Inventions and Works.  All “Confidential Information,”  “Inventions” and
“Works” (each as defined in Paragraph 5(h)) and documents and other materials
containing Confidential Information, Inventions and Works are the exclusive
property of Employer.  Employee shall make full and prompt disclosure to
Employer of all Inventions.  Employee assigns and agrees to assign to Employer
all of Employee’s right, title and interest in Inventions.  Employee
acknowledges and agrees that all Works are “works made for hire” under the
United States copyright laws and that all ownership rights vest exclusively in
Employer from the time each Work is created.  Should a court of competent
jurisdiction hold that a Work is not a “work made for hire,” Employee agrees to
assign and hereby assigns to Employer all of Employee’s right, title and
interest in the Work.  In the event any Invention or Work may be construed to be
non-assignable, Employee hereby grants to Employer a perpetual, royalty-free,
non-exclusive license to make, use, sell, have made, and/or sublicense such
non-assignable Invention or Work.  Employee agrees to assist Employer to obtain
and vest its title to all Inventions and Works, including any patent or
copyright applications or patents or copyrights in any country, by executing all
necessary or desirable documents, including applications for patent or copyright
and assignments thereof, during and after employment, without charge to
Employer, at the request and expense of Employer.

 

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d.                                      Recordkeeping and Return of Confidential
Information, Inventions and Works. Employee agrees to maintain regular records
of all Inventions and Works developed or written while employed with Employer. 
Employee agrees to comply with any procedures disseminated by Employer with
respect to such recordkeeping.  Employee agrees to provide such records to
Employer periodically and/or upon request by Employer.  Employee agrees to
return to Employer all Confidential Information, Inventions and Works in any
tangible form, and copies thereof in the custody or possession of Employee, and
all originals and copies of analyses, compilations, studies or documents
pertaining to any Confidential Information, Inventions and  Works, in whatever
form or medium, upon a request by Employer, or upon termination of employment.

 

e.                                       Nonuse and Nondisclosure.  Employee
shall not, either during or after Employee’s employment by Employer, disclose
any Confidential Information, Inventions or Works to any other person or entity
outside of his employment, or use any Confidential Information, Inventions or
Works for any purpose without the prior written approval of an officer of
Employer, except to the extent required to discharge Employee’s duties assigned
by Employer.

 

f.                                        Subsequent Employer Notice. During the
term of Employee’s employment with Employer and for the longer of one year
thereafter, or any period in which the non-compete or non-solicitation
obligation set forth herein applies (the “Identification Period”), Employee
agrees to identify to potential subsequent employer(s), partner(s) or business
associate(s) Employee’s obligations under this Agreement prior to committing to
a position with the employer(s), partner(s), or business associate(s).  Employee
agrees that Employer may, at its discretion, provide a copy of Section 5 of this
Agreement to any of Employee’s subsequent employer(s), partner(s), or business
associate(s), and may notify any or all of them of Employee’s obligations under
this Agreement.  During the Identification Period, Employee shall give written
notice to Employer’s Human Resources Department identifying any subsequent
employer(s), partner(s), or business associate(s) of Employee.

 

g.                                       Remedies.    Notwithstanding anything
to the contrary herein, if in Employer’s sole discretion an event has occurred
that constitutes Cause (including, without limitation, a violation of this
Section 5), whether prior to, on or after an RSU Vesting or Share issuance date
or during an Original Delay Period or Extended Delay Period, then, in addition
to all other remedies available to Company, the RSUs for which Share issuance
has not occurred shall be immediately forfeited to Company and any Shares that
have been issued pursuant the Vesting of underlying RSUs, if such issuance has
occurred, shall be immediately transferred by Employee to Company (with Employee
taking all steps necessary to effect the transfer and provided that, if the
Shares are no longer available for transfer, Employee shall reimburse to Company
the amount of Employee’s ordinary income from the Vesting of the RSUs);
provided, however, that no consideration shall be paid by Company to Employee
for any forfeiture, transfer or reimbursement pursuant to this Paragraph 5(g). 
Company may apply all or any of the Remedies for Amounts Owed, as described in
Paragraph 4(d).  Employee agrees that the provisions of Section 5 hereof are
necessary for protection of the business of Company and that violation of such
provisions is cause for termination of employment and would cause irreparable
injury to Company not adequately remediable in damages.  Employee agrees that
any breach of its obligations under Section 5 shall, in addition to any other
relief to which Company may be

 

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entitled, entitle Company to temporary, preliminary and final injunctive relief
against further breach of such obligations, along with attorneys’ fees and other
costs incurred by Company in connection with such action.  Employee agrees to
the waiver of any requirement for the posting of any bond as a condition to such
equitable relief.

 

h.                                      Section 5 Definitions.  For purposes of
Section 5, the following terms have the meanings set forth below:

 

(i)                                     “Applicable Company Entity”  means
Company, a Subsidiary (as defined in Paragraph 3(h)), or Affiliate (as defined
in Paragraph 3(h) and also as defined in Paragraph 5(h)(iv)) with which Employee
worked or was involved during the course of his employment with Employer or
about which Employee gained Confidential Information during the course of
Employee’s employment with Employer.

 

(ii)                                  “Confidential Information” means
non-public information about Company, its Subsidiaries and Affiliates, including
without limitation:

 

(A)                               inventions not disclosed to the public by
Company, its Subsidiary or Affiliate, products, designs, prototypes, data,
models, file formats, interface protocols, documentation, formulas,
improvements, discoveries, methods, computer hardware, firmware and software,
source code, object code, programming sequences, algorithms, flow charts, test
results, program formats and other works of authorship relating to or used in
the current or prospective business or operations of Company, Subsidiaries and
Affiliates, all of which is Confidential Information, whether or not patentable
or made on Employer premises or during normal working hours; and

 

(B)                               business strategies, trade secrets, pending
contracts, unannounced services and products, financial projections, customer
lists, information about real estate Company, its Subsidiary or Affiliate is
interested in acquiring, and non-public information about others obtained as a
consequence of employment by Employer, including without limitation information
about customers and their services and products, the account holders or
shareholders of customers of Company, Subsidiaries and Affiliates, and
associates, suppliers or competitors of Company, Subsidiaries and Affiliates.

 

(iii)                               “Customer” means any person, business or
entity that has done business with Employer or any Applicable Company Entity at
any time during the twelve (12) month period prior to the date of termination of
Employee’s employment.

 

(iv)                              “Employer” means any Company-related entity
that has employed Employee, whether it be Company, its Subsidiary (as defined in
Paragraph 3(h)), or Affiliate (as defined in Paragraph 3(h) and also for
purposes of this Section 5 including

 

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any entity in which Company has a direct or indirect equity interest of at least
twenty-five percent (25%)).

 

(v)                                 “Inventions” means all discoveries,
improvements, and inventions relating to or used in the current or prospective
business or operations of Company, Subsidiaries and Affiliates, whether or not
patentable, 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 Employer, whether or not during normal working hours or on the
premises of Employer.

 

(vi)                              “Prospective Customer” means any person,
business or entity to whom or to which Employer or any Applicable Company Entity
has made, at any time during the twelve (12) month period prior to the date of
termination of Employee’s employment, a proposal to do business.

 

(vii)                           “Works” mean all original works fixed in a
tangible medium of expression by Employee or under Employee’s direction or
jointly with others during Employee’s employment by Employer, whether or not
during normal working hours or on the premises of Employer, and related to or
used in the current or prospective business or operations of Employer.

 

i.                                          Survival.  Except as limited in time
in Paragraphs 5(a) and (b), Employee’s obligations in this Section 5 shall
survive and continue beyond the RSU Vesting or forfeiture dates, the Original
Delay Period or an Extended Delay Period, any issuance or transfer of Shares,
and any termination or expiration of the Agreement for any reason.

 

j.                                         Competing Obligations.  Employee may
have entered or may enter into an agreement that contains an obligation
protective of any Company-related entity that is similar to, but more or less
restrictive than, an obligation set forth in this Section 5 (“Competing
Obligation”).  By executing this Agreement, Employee agrees that if any
Competing Obligation applies, he shall be bound by the obligation (whether in
this Agreement or in a separate agreement) that is the most protective to the
Company-related entity.

 

k.                                      Enforceability.  If the final judgment
of a court or arbitrator with competent jurisdiction declares that any term or
provision of this Section 5 is invalid or unenforceable, Employee agrees that
the court or arbitrator making the determination of invalidity or
unenforceability will have the power to reduce the scope, duration, or
geographic area of the applicable term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
that the terms and provisions of this Section 5 will be enforceable as so
modified.  Employee further agrees that if any part of this Section 5 is held by
a court or arbitrator with competent jurisdiction to be invalid, illegal or
incapable of being enforced in whole or in part by reason of any rule of law or
public policy, and cannot be modified in accordance with this paragraph, such
part shall be deemed to be severed from the remainder of this Section 5 for the
purpose only of the particular legal proceedings in question, and all other
covenants and provisions of this

 

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Agreement shall in every other respect continue in full force and effect, and no
covenant or provision shall be deemed dependent upon any other covenant or
provision.

 

6.                                      CHANGE IN CONTROL.

 

a.                                      Committee Non-Competition
Determination.  Notwithstanding any provision of this Agreement to the contrary,
if Company is contemplating a transaction (whether or not Company is a party to
it) or monitoring an event that would cause Company to undergo a Change in
Control (as defined in Paragraph 6(b)), the Committee (as constituted before
such Change in Control) may determine that the noncompete obligation set forth
in Paragraph 5(a) shall not apply to any period after termination of employment
if such termination was on the date of a Change in Control or within eighteen
(18) months subsequent to such date.

 

b.                                      Definition of Change in Control.   For
purposes of this Agreement, a “Change in Control” shall have the same meaning as
the definition of such term in the Plan, as amended and interpreted from time to
time, as of the date of the event that may cause a Change in Control.

 

Notwithstanding the occurrence of a Change in Control under the applicable
definition, a Change in Control shall not occur with respect to Employee if, in
advance of such event, Employee agrees with Company in writing that such event
shall not constitute a Change in Control; provided, however, in no event shall
Employee’s agreement under this paragraph affect a payment subject to 409A from
being made where such payment event is a 409A Change in Control.

 

c.                                       Committee Action in Connection with
Change in Control.  The Committee (as constituted before such Change in Control)
has the authority to take the actions set forth in Section 14 of the Plan.  For
instance, by way of example and not limitation, the Committee (as constituted
before such Change in Control) may determine in its sole discretion that
Company, or any successor company in the applicable merger or sale agreement,
may pay cash to Employee in an amount equal to the amount (as determined by the
Committee) that could have been attained by Employee had the Award been
currently payable, in lieu of issuing Shares that would otherwise be issued in
connection with Vesting or the termination of an Extended Delay Period on or
after the Change in Control.

 

7.                                      GENERAL.

 

a.                                      No Employment Contract.  Except to the
extent the terms of any separate written employment contract between Employee
and Company may expressly provide otherwise, Company shall be under no
obligation to continue Employee’s employment with Company for any period of
specific duration and may terminate such employment at any time, for Cause or as
a Termination Without Cause.

 

b.                                      Compliance With Certain Laws and
Regulations.  If the Committee determines that the consent or approval of any
governmental regulatory body or that any action with respect to the RSUs is
necessary or desirable in connection with the granting of the RSUs or the
issuance of Shares, Employee shall supply Company with such representations and
information as

 

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Company may request and shall otherwise cooperate with Company in obtaining any
such approval or taking such action.

 

c.                                       Construction and No Waiver. 
Notwithstanding any provision of this Agreement, the granting of the RSUs and
the issuance of the Shares are subject to the provisions of the Plan and any
procedures or Rules promulgated thereunder by the Committee or its delegate. 
The failure of Company in any instance to exercise any of its rights granted
under this Agreement, the Plan or the Rules shall not constitute a waiver of any
other rights that may arise under this Agreement.

 

d.                                      Notices.  Any notice required to be
given or delivered to Company under the terms of this Agreement shall be in
writing and addressed to Company in care of its Corporate Secretary at its
corporate offices, and such notice shall be deemed given only upon actual
receipt by Company.  Any notice required to be given or delivered to Employee
shall be in writing and addressed to Employee at the address on file with
Company’s Human Resources Department or such other address specified in a
written notice given by Employee to Company, and all such notices shall be
deemed to have been given or delivered upon personal delivery or upon deposit in
the U.S. mail, postage prepaid and properly addressed to the party to be
notified.

 

e.                                       Governing Law.  This Agreement shall be
governed by and construed in accordance with the laws of Delaware without
reference to its principles of conflicts of law.

 

f.                                        Entire Agreement.  Subject to
Paragraph 5(j), this Agreement contains the entire agreement between the parties
with respect to the subject matter hereof, and supersedes all prior agreements
or understandings between the parties relating thereto.

 

g.                                       Amendment.  This Agreement may be
amended only in a manner approved by Company evidencing both parties’ agreement
to the amendment.  This Agreement may also be amended, without prior notice to
Employee and without Employee’s consent, (i) prior to any Change in Control by
the Committee if the Committee in good faith determines that the amendment does
not materially adversely affect any of Employee’s rights under this Agreement or
(ii) at any time if the Committee deems it necessary or appropriate to ensure
that the RSUs either remain exempt from, or compliant with, Internal Revenue
Code Section 409A.

 

h.                                      Acknowledgement.  The RSU grant and this
Agreement are subject to the terms and conditions of the Plan, the Rules, and
any other rules or procedures adopted by the Committee or its delegate. The Plan
is incorporated in this Agreement by reference and all capitalized terms used in
this Agreement have the meaning set forth in the Plan, unless this Agreement
specifies a different meaning.  Employee agrees to accept as binding, conclusive
and final all decisions and interpretations by the Committee of the Plan, this
Agreement, the Rules, and other applicable rules or procedures regarding any
issues arising thereunder, including without limitation all decisions and
interpretations related to 409A and regulations and guidance issued thereunder.

 

By accepting the terms and conditions of this Agreement, Employee accepts the
RSUs and acknowledges that the RSUs are subject to all the terms and provisions
of the Plan (including

 

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without limitation the powers of the Committee to make determinations and
adjustments as provided in Sections 3, 4.2, 5, 14.1 and 15.1 of the Plan), this
Agreement, the Rules, and other applicable rules or procedures.

 

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