exv10w3






EXHIBIT 10.3




Grant No.                                         




	 	 	 

	 

	 	o      Kerr’s Copy
	 
	 	 
	 

	 	o      Company’s Copy






Arbitron Inc.

2008 Equity Compensation Plan

Performance-Based Deferred Stock Unit Agreement



To William T. Kerr:




     Arbitron Inc. (the “Company”) has granted you (the “Grant”) deferred stock units as set forth
on Exhibit A to this Agreement (the “DSUs”) under its 2008 Equity Compensation Plan (the “Plan”),
subject to the Vesting Schedule and requirements specified on Exhibit A.



     The Grant is subject in all respects to the applicable provisions of the Plan. This Agreement
does not cover all of the rules that apply to the Grant under the Plan, and the Plan defines any
capitalized terms in this Agreement that this Agreement does not define.



     In addition to the Plan’s terms and restrictions, the following terms and restrictions apply:



	 	 	 

	Vesting Schedule

	 	The Grant becomes nonforfeitable (“Vested”) as to some or
all of the DSUs only as provided on Exhibit A.
	 
	 	 
	Distribution

	 	You will receive a distribution of shares (the “Shares”)
of Company common stock (“Common Stock”) equivalent to
your DSUs as follows:






	 	 	 

	 

	 	One-quarter of the initial DSUs within 45 days following each
anniversary of the Date of Grant, provided that (i) no DSUs will be
paid before they vest, (ii) no DSUs will be paid until 30 days after
you have a separation from service, except as the Plan may otherwise
require, and (iii) all DSUs will be distributed within 30 days after
and if your employment ends as a result of your death or Disability
(as the latter is defined in your employment agreement with the
Company dated February 11, 2010 (the “Employment Agreement”),
provided that the Disability will only accelerate the payment
schedule if it also satisfies the definition of Disability under
Section 409A of the Code.
	 
	 	 
	 

	 	Each date on which you receive a distribution of Shares pursuant to
the foregoing is referred to as a “Distribution Date.”






	 	 	 

	Limited Status

	 	You understand and agree that the Company will not consider you a shareholder for
any purpose with respect to the Shares, unless and until the Shares have been issued to you on
the Distribution Date(s). You will, however, receive dividend equivalents (“Dividend
Equivalent Rights”) with respect to the Vested DSUs, measured using the Shares they represent,
with the amounts convertible into full or fractional additional
















 






	 	 	 

	 

	 	Vested DSUs based on dividing
the dividends by the Fair Market Value
(as defined in the Plan) as of the date of dividend distribution and holding
the resulting additional Vested DSUs for distribution as provided for the
DSUs with respect to which they were issued.






	 	 	 

	Voting

	 	DSUs cannot be voted. You may not vote the Shares unless and until the Shares are distributed to you.
	 
	 	 
	Transfer
Restrictions
and
Forfeiture

	 	You may not sell, assign, pledge, encumber, or otherwise transfer any
interest (“Transfer”) in the Shares until the Shares are distributed to you.
Any attempted Transfer that precedes the Distribution Date for such
Shares is invalid.
	 
	 	 
	 

	 	Unless the Administrator determines otherwise at any time or Exhibit A
provides otherwise, if your service with the Company terminates for any
reason before all of your DSUs are Vested, then you will forfeit such
unvested DSUs (and the Shares to which they relate) to the extent that such
DSUs do not otherwise vest as a result of the termination. The forfeited
DSUs will then immediately revert to the Company. You will receive no
payment for DSUs that you forfeit.
	 
	 	 
	Additional 

Conditions

	 	The Company may postpone issuing and delivering any Shares for so
long as the Company determines to be advisable to satisfy the following:
	to Receipt
	 	 






	 	 	 

	 

	 	its completing or amending any securities registration or qualification of the Shares or its or your
satisfying any exemption from registration under any Federal or state law, rule, or regulation;
	 
	 	 
	 

	 	its receiving proof it considers satisfactory that a person or entity seeking to receive the Shares after
your death is entitled to do so;
	 
	 	 
	 

	 	your complying with any requests for representations under the Grant and the Plan; and
	 
	 	 
	 

	 	its or your complying with any federal, state, or local tax withholding obligations.






	 	 	 

	Taxes and
Withholding

	 	The DSUs provide tax deferral, meaning that they are not taxable to you
for income tax purposes until you actually receive Shares on or around each Distribution Date. You will then owe
taxes at ordinary income tax rates as of each Distribution Date at the Shares’ value.
	 
	 

	 	The Company is required to withhold (in cash from salary or other amounts
owed you) the applicable percentage of the value of the Shares on the
Distribution Date, regardless of whether you sell them. If the Company does
not choose to do so, you agree to arrange for payment of the withholding
taxes and/or confirm that the Company is arranging for appropriate
withholding. You will be subject to Social Security and






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	 	Medicare taxation
as you vest in the DSUs, and the preceding provisions will apply to those
taxes as though the vesting date were a Distribution Date.






	 	 	 

	Additional 

Representations
from You

	 	If you receive Shares at a time when the Company does not have a
current registration statement (generally on Form S-8) under the Act that
covers issuances of Shares to you, you must comply with the following before the Company will release the
Shares to you. You must:






	 	 	 

	 

	 	represent to the Company, in a manner satisfactory to the Company’s counsel, that you are acquiring the
Shares for your own account and not with a view to reselling or distributing the Shares; and
	 
	 	 
	 

	 	agree that you will not sell, transfer, or otherwise dispose of the Shares unless:






	 	 	 

	 

	 	a registration statement under the Act is effective at the time of disposition with respect to
the Shares you propose to sell, transfer, or otherwise dispose of; or
	 
	 	 
	 

	 	the Company has received an opinion of counsel or other information and representations it
considers satisfactory to the effect that, because of Rule 144 under the Act or otherwise, no registration
under the Act is required.






	 	 	 

	Additional 

Restriction

	 	You will not receive the Shares if issuing the Shares would violate any
applicable federal or state securities laws or other laws or regulations.
	 
	 	 
	No Effect on 

Employment 

or Other 

Relationship

	 	Nothing in this Agreement restricts the Company’s rights or those of any
of its affiliates to terminate your employment or other relationship at any
time, with or without cause. The termination of your relationship, whether
by the Company or any of its affiliates or otherwise, and regardless of the reason for such termination, has
the consequences provided for under the Plan and any applicable employment or severance agreement or plan.
	 
	 	 
	No Effect on 

Running Business

	 	You understand and agree that the existence of the DSU will not affect in
any way the right or power of the Company or its stockholders to make or authorize any adjustments,
recapitalizations, reorganizations, or other changes in the Company’s capital structure or its business, or
any merger or consolidation of the Company, or any issuance of bonds, debentures, preferred or other stock,
with preference ahead of or convertible into, or otherwise affecting the Company’s common stock or the rights
thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether or not of a similar character to those
described above.






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	Section 409A

	 	This Agreement is intended to comply with the requirements of Section 409A of the Internal Revenue Code and
must be construed consistently with that section. Notwithstanding anything in the Plan or this Agreement to
the contrary, if the Vested portion is increased in connection with your “separation from service” within the
meaning of
Section 409A, as determined by the Company), other than due to death, and if
(x) you are then a “specified employee” within the meaning of Section 409A
at the time of such separation from service (as determined by the Company,
by which determination you agree you are bound) and (y) the payment under
such accelerated DSUs will result in the imposition of additional tax under
Section 409A if paid to you within the six month period following your
separation from service, then the payment under such accelerated DSUs will
not be made until the earlier of (i) the date six months and one day
following the date of your separation from service or (ii) the
10th day after your date of death, and will be paid within 10
days thereafter. Neither the Company nor you shall have the right to
accelerate or defer the delivery of any such payments or benefits except to
the extent specifically permitted or required by Section 409A. In any
event, the Company makes no representations or warranty and shall have no
liability to you or any other person, if any provisions of or payments under
this Agreement are determined to constitute deferred compensation subject to
Code Section 409A but not to satisfy the conditions of that section.
	 
	 	 
	Unsecured 

Creditor

	 	This Agreement creates a contractual obligation on the part of the
Company to make payment under the DSUs credited to your account at the
time provided for in this Agreement. Neither you nor any other party claiming an
interest in deferred compensation hereunder shall have any interest whatsoever in
any specific assets of the Company. Your right to receive payments hereunder is
that of an unsecured general creditor of Company.
	 
	 	 
	Governing Law

	 	The laws of the State of Delaware will govern all matters relating
to this Agreement, without regard to the principles of conflict of laws.
	 
	 	 
	Notices

	 	Any notice you give to the Company must follow the procedures then in
effect. If no other procedures apply, you must send your notice in writing by
hand or by mail to the office of the Company’s Secretary. If mailed, you should
address it to the Company’s Secretary at the Company’s then corporate
headquarters, unless the Company directs participants to send notices to another
corporate department or to a third party administrator or specifies another
method of transmitting notice. The Company and the Administrator will address
any notices to you at your office or home address as reflected on the Company’s
personnel or other business records. You and the Company may change the address
for notice by like notice to the other, and the Company can also change the
address for notice by general announcements to participants.






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	Plan Governs

	 	Wherever a conflict may arise between the terms of this Agreement and
the terms of the Plan, the terms of the Plan will control.






	 	 	 	 	 
	 	Arbitron Inc.

 	 
	Date:                                                             	By:  	 	 
	 	 	 	 
	 	 	 	 



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ACKNOWLEDGMENT





     I acknowledge I received a copy of the Plan. I represent that I have read and am familiar
with the Plan’s terms. I accept the Grant subject to all of the terms and provisions of this
Agreement and of the Plan under which the Grant is made, as the Plan may be amended in accordance
with its terms. I agree to accept as binding, conclusive, and final all decisions or
interpretations of the Administrator concerning any questions arising under the Plan with respect
to the Grant.



	 	 	 	 	 
	Date:                                                             	

 	 
	 	William T. Kerr 	 
	 	 	 
	 	 	 
	 




     No one may sell, transfer, or distribute the securities covered by the Grant without an
effective registration statement relating thereto or an opinion of counsel satisfactory to the
Company or other information and representations satisfactory to the Company that such registration
is not required.




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Grant No.                     




Arbitron Inc.

2008 Equity Compensation Plan

Performance-Based Deferred Stock Unit




Exhibit A


Recipient Information:




	 	 	 	 	 	 	 	 	 	 	 	 	 

	Name:	 	 	 	William T. Kerr	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Signature: X	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Grant Information:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DSUs:

	 	 	 	 	 	Date of Grant:
	 	 	 	 	 	 
	 	 	 	 	 	 	 	 





Vesting Schedule




	 	 	 

	Performance Condition

	 	The Grant will expire without Vesting if the one-year
performance goal (the “Performance Goal”) is not satisfied by the first
anniversary of the Date of Grant. The Compensation Committee will have the
full and sole discretion to determine whether the Company has met the
Performance Goal and how each of its components is calculated. The Performance
Goal is specified on Schedule I to this Exhibit A.
	 
	 	 
	Service Condition

	 	If the Performance Goal is met, the Grant is
Vested as to one-fourth of the DSUs on each of the
four one year anniversaries of the Date of Grant
(each a “Vesting Date”), assuming you remain an
individual service provider to the Company through
those dates.






	 	 	 

	Special Acceleration

	 	If your employment with the Company and all
Subsidiaries ends by death or Disability, the DSUs
will vest in full.
	 
	 	 
	 

	 	If your employment ends on a termination without Cause or Retirement
(each as determined under Section 6(b) of the Employment Agreement
and as defined in Section 6(e) thereof) and the Performance Goal is
met, any unvested portions of the DSUs will be treated as fully
vested and will continue to be paid out according to the schedule in
Distributions in the Grant agreement.






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	 	If your employment ends with your resignation other than under a
Retirement, you will immediately forfeit any unvested DSUs and the
Shares to which they relate and any vested DSUs will continue
to be paid out according to the schedule in Distributions in the
Grant Agreement.
	 
	 	 
	 

	 	If your employment ends on a termination by the Company for Cause,
you will immediately forfeit all DSUs and the Shares to which they
relate.
	 
	 	 
	 

	 	Any acceleration of vesting under this Employment Termination section
is subject, as applicable, to Section 4(c)(iii)(e) of the Employment
Agreement and to the release requirement of Section 6(d) of the
Employment Agreement.
	 
	 	 
	Change in Control

	 	If a Change in Control Event (as defined in the Plan)
occurs before the first anniversary of the Date of
Grant, the Performance Goal will be deemed to have been met.
	 
	 	 
	 

	 	If a Change in Control Event (as defined in the Plan)
occurs before the final Distribution Date and the Change
in Control Event also would be an event described in
Treas. Reg. Section 1.409A-3(i)(5), any unvested DSUs
you then hold will fully Vest. A Change in Control
Event that does not comport with that regulation will
not cause full Vesting unless otherwise permitted by
Section 409A. The payment will be in cash (unless the
Board determines otherwise) equal to the value per share
of the consideration received in the Change in Control
Event multiplied by the number of DSUs, at which point
the DSUs will expire without further obligation to you.
The Board will have the authority to value any
consideration received in the Change in Control Event to
the extent neither cash nor readily marketable
securities.







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