Document:

Exhibit 10.31

 

RESTRICTED SHARES AWARD AGREEMENT

DST SYSTEMS, INC. 2005
EQUITY INCENTIVE PLAN

 

                                                THIS AGREEMENT, is made and entered into this 22nd day of February,
2008 (the “Grant Date”), by and between DST SYSTEMS, INC. (“Company”) and
STEVEN J. TOWLE (“Employee”).

 

                                                WHEREAS,  the Company maintains the 2005 Equity
Incentive Plan, as amended and interpreted from time to time (the “Plan”);

 

                                                WHEREAS, this
grant and agreement are in connection with the Annual Incentive Award Program
for DST Output established by the Compensation Committee of the Board of
Directors of the Company (“Board”), which is administered by the Compensation
Committee or other committee designated by the Board (the “Committee”) or
Company officer to which the Committee delegates authority as provided in the
Plan;

 

                                                The parties
agree as follows:

 

1.                                       Grant and Designation of Restricted Shares.  The Committee hereby grants
Employee, as of the Grant Date, Eleven Thousand Four Hundred (11,400) shares of
Company common stock (“Shares”) restricted as set forth herein.

 

2.                                       Restrictions and Privileges.

 

                                                a.                                       Scope of Restrictions.  Prior to the Release Date (as set forth in
Paragraph 3(a) hereof), the Shares shall not be transferable (by sale,
assignment, disposition, gift, exchange, pledge, hypothecation, or otherwise)
other than by will or the laws of descent and distribution or pursuant to
Employee’s written beneficiary designation filed with the Company’s Corporate
Secretary prior to Employee’s death.  However,
notwithstanding the foregoing, Employee may gift the Shares to a spouse, child,
step-child, grandchild, parent, sibling, or legal dependent of Employee or to a
trust of which the beneficiary or beneficiaries of the corpus and the income
shall be either such a person or Employee; provided that, the Shares gifted
shall remain subject to the restrictions, obligations and conditions described
herein.  Any attempted disposition of the Shares contrary to the provisions
hereof, and the levy of any execution, attachment or similar process upon the
Shares prior to the Release Date, shall be null and void and without effect.

 

                                                b.                                      Evidence of Restrictions.  The Company’s Corporate Secretary shall
determine whether the Shares shall be evidenced by a certificate or held in
book entry form with the Company’s transfer agent.  Any certificate for the Shares shall bear
such legend evidencing the restrictions as is determined by the Company’s
General Counsel, and any book entry account into which the Shares are issued
shall be marked as restricted.

 

 

                                                c.                                       Privilege of Stock Ownership.   As of the Grant Date, and except as provided
in Paragraph 2(a) hereof, Employee shall have all rights of a stockholder
with respect to the Shares including the right to vote and receive all
dividends or other distributions made or paid with respect to the Shares;
provided that (a) prior to the Release Date the Shares and any new,
additional or different securities Employee may become entitled to receive with
respect to the Shares by virtue of a stock split or stock dividend or any other
distribution for the Shares or change in the corporate structure of the Company
shall be subject to the restrictions described in Paragraph 2(a) hereof;
and (b) all such stockholder rights shall cease upon forfeiture of the
Shares under Paragraph 3(d) hereof.

 

3.                                       Release of Restrictions.

 

                                                a.                                       Release Date. Subject to the forfeiture
provisions in this Agreement including without limitation in Paragraph 3(d),
the Shares shall be free and clear of the restrictions set forth in Paragraph 2(a) hereof
on the date the Committee, at the first regular Committee meeting in 2009 or,
if necessary, in 2010 or 2011 (the applicable date, the “Release Date”),
certifies achievement of the “Margin Goal” (as defined in Paragraph 3(b)) for
DST Output for the preceding fiscal year; provided, however, that the Shares
shall be forfeited as of the first regular Committee meeting in 2011 if the
Margin Goal achievement has not been certified.

 

                                                b.                                      Margin Goal Certification.  At the first regular meeting of the Committee
in 2009 (or, if necessary, in 2010 or 2011), the Chief Financial Officer of
Company will present the “Operating Margin Percentage” (defined in Paragraph
3(c)) for the preceding fiscal year.  If
the results show that the Operating Margin Percentage is equal to or greater
than the percentage determined by the Committee on February 22, 2008 (the “Margin
Goal”) for any of calendar years 2008, 2009 or 2010, the Shares shall be free
and clear of the restrictions set forth in Paragraph 2(a) as of the date
of such Committee meeting, subject to the early lapsing and forfeiture
provisions outlined below.  Until
Committee certification of Margin Goal achievement (or forfeiture of the Shares
or early lapsing of restrictions as provided in this Paragraph 3), the Shares
shall be restricted as set forth in Paragraph 2(a).

 

                                                c.                                       Operating
Margin Percentage.  The
Operating Margin Percentage is the ratio of DST Output’s income from operations
to operating revenues.  “Income from
operations” is income from operations in accordance with GAAP, subject to the
adjustments determined by the Committee on February 22, 2008.

 

                                                d.                                      Forfeiture.  Prior to the Release Date for the Shares as
set forth in Paragraph 3(a), the Shares shall be immediately forfeited to
Company without payment by Company of any consideration to Employee if (a) Company
determines in its sole discretion that Employee has violated any provision of
Paragraph 5 hereof, or (b) except as provided in Paragraphs 3(e) or 3(f) Employee
is not continuously employed (as defined in Paragraph 3(j)) by DST Output from
the Grant Date through the Release Date. 
The Shares shall be immediately forfeited to Company without payment by
Company of any consideration to Employee as of the first regular Committee
meeting in 2011 if Margin Goal achievement has not been certified.

 

                                                e.                                       Delay of
Forfeiture Upon Resignation for Good Reason.  At the time of any Resignation for Good
Reason (as defined in Paragraph 3(h)) following a Change in Control of Company
(as defined in Paragraph 6(b)), restrictions are not released.  However, if the Margin Goal is achieved for
2008, 2009 or 2010, then at the time of the certification of goal achievement 

 

 

(at
the first Committee meeting in 2009, 2010 or 2011), restrictions shall lapse on
a pro rata number of Shares.  The pro rata number
of Shares is determined by dividing  the number of
shares set forth in Paragraph 1 by the number of months elapsed from the Grant
Date to December 31 of the year (2008, 2009, or 2010) for which the Margin
Goal was achieved, and then multiplying the quotient by the number of months
elapsed from the Grant Date to the date of the Resignation for Good Reason
following the Change in Control of Company. 
Paragraph 3(g) below further governs the pro rata
calculation.  If the Committee has not
certified the Margin Goal achievement by the date of the first regular
Committee meeting in 2011, then as of such date the Shares shall be immediately
forfeited to Company without payment by Company of any consideration to
Employee.

 

                                                f.                                         Disability or Death.  At the date of disability
(as defined from time to time by the Committee) or death, restrictions are not
released.  However, if the Margin Goal is
achieved for 2008, 2009 or 2010, then at the time of the certification of goal
achievement (at the first Committee meeting in 2009, 2010 or 2011),
restrictions shall lapse on a pro rata number
of Shares.  The pro rata number
of Shares is determined by dividing  the number of
shares set forth in Paragraph 1 by the number of months elapsed from the Grant
Date to December 31 of the year (2008, 2009, or 2010) for which the Margin
Goal was achieved, and then multiplying the quotient by the number of months
elapsed from the Grant Date to the date of disability or death.  Paragraph 3(g) below further governs the
pro rata calculation.  If the Committee has not certified the Margin
Goal achievement by the date of the first regular Committee meeting in 2011,
then as of such date the Shares shall be immediately forfeited to Company without
payment by Company of any consideration to Employee.

 

                                                g.                                      Pro Rata
Calculation.   The pro rata calculation
shall include (a) the calendar month of the Grant Date if such date is
prior to the 16th day of such month, (b) the calendar month of
the Release Date if such date is subsequent to the 15th day of such
month, and (c) the calendar month in which the triggering event occurred
if such event occurred subsequent to the 15th day of such month.

 

                                                h.                                      Resignation for
Good Reason. For purposes of this Agreement, Resignation for
Good Reason means
Employee’s resignation subsequent to a Change in Control on not less than
thirty (30) days written notice to the Company Secretary, effective at the end
of such notice period, and for any of the following reasons occurring without
Employee’s consent:

 

(a)  a change
in the character of Employee’s assigned duties or a reduction in the level of
Employee’s work or responsibility;

 

(b)  a
reduction in base salary or incentive bonus as in effect immediately prior to
the Change in Control or in effect as a result of an increase subsequent to the
Change in Control;

 

(c)  a
failure by Company or its successor either to continue in effect any benefit
plans made generally available to Company executives at Employee’s geographic
location prior to the Change in Control or to provide other plans under which
compensation and benefits are available in which Employee continues to
participate on a basis at least equivalent to his participation in the Company
plans immediately prior to the Change in Control;

 

 

(d)  a failure
by Company to timely make to Employee payment of any unfunded amounts due under
any Company benefit plan as a result of the Change in Control;

 

(e)  the
relocation of the principle office at which Employee worked immediately prior
to the Change in Control to a location outside of the metropolitan area where
such office was located but only if relocation requires Employee to be based
anywhere other than such metropolitan area (except for required travel on
Company business to an extent substantially consistent with Employee’s
obligations immediately prior to the Change in Control); or

 

(f)  any
breach of an employment agreement between Company or its successor and Employee.

 

                                                i.                                          How Released.  Provided Employee has satisfied tax
withholding obligations as referenced in Paragraph 4 hereof, Company shall at
Employee’s request on or after the Release Date have Company’s transfer agent
remove from any certificate evidencing the Shares the legend evidencing the
restrictions as referenced in Paragraph 2(b) or instruct the transfer
agent to note on the book entry account that such restrictions on the Shares
are removed.  Upon death of Employee
followed by a proper request for delivery of the Shares and proof of payment of
applicable payroll, income or other taxes, the Shares shall be delivered to
Employee’s beneficiary named in a written beneficiary designation filed with
the Company’s Corporate Secretary 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 release the Shares to 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 Shares.

 

                                                j.                                          Continuity of Employment.  For purposes of this Agreement, employment by
DST Output includes employment by: (i) DST Output, LLC or its successor; (ii) any
entity in which DST Output, LLC or its successor has a direct or indirect
equity interest of at least fifty percent (50%); or (iii) any individual
or entity in which DST Output, LLC or its successor directly or indirectly owns
stock possessing such minimum percentage of the total combined voting power of
all classes of stock or owns such minimum percentage of the capital interests
or profit interests as the Committee from time to time determines for purposes
of this Paragraph 3(j).  Employee is not
deemed to have terminated employment by, and the Shares 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 DST Output.  To be continuously employed for purposes of
this Agreement, Employee must be regularly and continuously employed by DST
Output for more than twenty (20) hours per week and more than five (5) months
per year.

 

4.                                       Taxes.  Company shall pay all original issue and
transfer taxes and all other fees and expenses necessarily incurred by Company
in connection with the issuance of the Shares and the release of restrictions
thereon; provided, however, that such issuance and release are subject to
payment on the Grant Date, Release Date or other date as determined by the
Company Chief Financial Officer of any required federal, state and local
withholding and payroll taxes, which shall be paid by Employee (or his or her
guardian, legal representative or successor). 
The valuation of the Shares for tax and other purposes shall be as set
forth in the rules and determinations of the Committee and in applicable
laws and regulations. When and in the manner permitted by the 

 

 

Committee and unless otherwise prohibited by law, Employee (or his or
her guardian, legal representative or successor) may irrevocably elect in
writing on a Company designated form to satisfy any income tax withholding
obligation in connection with the lapsing of restrictions on the Shares by
requesting Company to retain whole Shares which would otherwise have been released
from restriction, which Shares shall no longer belong to Employee.  Any such retention, and any use of additional
shares of common stock for tax withholding purposes (“Attested Shares”) as
allowed by the Committee, shall be governed by Committee rules and
determinations.  The Committee may
prescribe, among other things, that Attested Shares shall (i) be fully
paid and free and clear from all liens and encumbrances and (ii) have been
acquired on the open stock market or directly held for a designated time period
and not used for certain designated purposes prior to the attestation. If
authorized by the Committee, Attested Shares may be subject to contractual
restrictions imposed by Company or restrictions under federal or state
securities law.  If Shares have been
delivered or restrictions released prior to the time a withholding obligation
arises, Company shall have the right to require Employee (or his or her
guardian, legal representative or successor) to remit to Company amounts
sufficient to satisfy all federal, state and local withholding tax requirements
at the time such obligation arises and to withhold from other amounts payable
by Company to Employee, as necessary.  
If, within the deadline imposed by Company, Employee has not selected,
if allowed by the Committee, whether to have Shares retained for taxes or to
pay cash for the tax or tax withholding, or has failed to pay tax or tax
withholding amounts when due, then Company may (a) retain whole Shares
which would otherwise have been issued or released, (b) deduct such
amounts from payroll or other amounts Company owes or will owe Employee, or (c) effect
some combination of Share retention and deduction.

 

5.                                       Violation of Noncompete, Nonuse and Nondisclosure Provisions.

 

                                                Employee
acknowledges that Employee’s agreement to this Paragraph 5 is a key
consideration for the grant of the Shares.   
Employee hereby agrees with the Company as follows:

 

                                                a.                                       Noncompete.  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 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 the Company, a Company Subsidiary
(as defined in Paragraph 5(g)) or Affiliate (as defined in Paragraph 5(g));
provided, however, that the Committee may determine as provided in
Paragraph 6(a) 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 (as defined in Paragraph 6(b) hereof) or within
eighteen (18) months subsequent to such date. 
Employee further agrees that during the twelve month (12) period
subsequent to termination of employment with Employer, Employee will not
solicit any employee of Company, a Company Subsidiary or Affiliate to leave
such employment to become employed by a competitor of Company, a Company
Subsidiary or Affiliate or solicit or contact any person, business or entity
which was a customer of Company, a Company Subsidiary or Affiliate at the time
of such termination of employment, or any prospective customers of Company, a
Company Subsidiary or Affiliate to which Company, a Company Subsidiary or
Affiliate has made a proposal to do business within the twelve month (12)
period prior to the date of termination of employment, for purposes of selling
goods or services of 

 

 

the type sold or rendered by Company, a Company Subsidiary or Affiliate
at the time of termination of employment.

 

                                                b.                                      Ownership of
Confidential Information, Works and Inventions.  All Confidential Information, Works and
Inventions (each as defined in Paragraph 5(h)) and documents and other
materials containing Confidential Information, Works and Inventions 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, and 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.

 

                                                c.                                       Recordkeeping and
Return of Confidential Information, Works and Inventions. 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, Works and Inventions 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, Works and Inventions, in whatever form or
medium, upon a request by Employer, or upon termination of employment.

 

                                                d.                                      Nonuse and
Nondisclosure.  Employee shall
not, either during or after Employee’s employment by Employer, disclose any
Confidential Information, Works or Inventions to any other person or entity
outside of the Employer, or use any Confidential Information, Works or
Inventions 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.

 

                                                e.                                       Subsequent Employer
Notice. During the term of Employee’s employment with Employer, and for a
period of one year thereafter, 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 Paragraph 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.
For a period of one year after the term of Employee’s employment by Employer,
Employee agrees to give written notice to the Human Resources Department of
Employer of the identity of any subsequent employer(s), partner(s), or business
associate(s) of Employee.

 

 

                                                f.                                         Remedies.    Notwithstanding anything to the contrary
herein, if Employee violates any provisions of this Paragraph 5, whether
prior to, on or after the Release Date, then in addition to all other remedies
available to Company, the Shares if the Release Date has not occurred shall be
immediately forfeited to Company, or the Shares if the Release Date has
occurred shall be immediately transferred by Employee to Company (with Employee
taking all steps necessary to effect the transfer); provided, however, that no
consideration shall be paid by Company to Employee for the Shares and if
Employee no longer owns the Shares or the transfer cannot or does not occur for
any reason, Employee shall promptly pay to Company the fair market value of the
Shares on the Release Date as such value is determined by Committee rules.  Employee agrees that the provisions of
Paragraph 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 Paragraph 5 hereof shall, in addition to any other
relief to which Company may be entitled, entitle the 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.

 

                                                g.                                      Definition of Company Subsidiary and Affiliate.  For purposes of this Paragraph 5, a “Company
Subsidiary” is 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%), and an “Affiliate” is any individual
or entity that directly or through one or more intermediaries controls or is
controlled by or under common control with Company or any entity in which
Company directly or indirectly owns stock possessing such minimum percentage of
the total combined voting power of all classes of stock or owns such minimum
percentage of the capital interests or profit interests as the Committee from
time to time determines.

 

                                                h.                                      Other Paragraph 5
Definitions.   “Employer”
means any Company-related entity that has employed Employee, whether it be
Company, a Company Subsidiary (as defined in Paragraph 5(g)), or an
Affiliate (as defined in Paragraph 5(g) and also for purposes of this
Paragraph 5 including any entity in which Company has an direct or indirect
equity interest of at least twenty-five percent (25%)).  “Confidential Information” means non-public
information about Company, Company Subsidiaries and Affiliates, including
without limitation (a) inventions not disclosed to the public by Company,
a Company 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, 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, a Company 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, Company Subsidiaries and Affiliates, and associates, suppliers or
competitors of Company, Company Subsidiaries and Affiliates.  “Inventions” mean all 

 

 

discoveries, improvements, and inventions relating to or used in the
current or prospective business or operations of Company, 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.  “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 relating to or
used in the current or prospective business or operations of Employer.

 

                                                i.                                          Survival.  Employee’s obligations in this Paragraph 5
shall survive and continue beyond the Release Date, beyond any forfeiture or
transfer of the Shares, and beyond any termination or expiration of the
Agreement for any reason.

 

6.                                       Change in Control.

 

                                                a.                                       Committee
Action.  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) hereof),
the Committee (as constituted before such Change in Control) may determine that the non-compete obligation set forth in Paragraph 5(a) hereof
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 be the same 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.

 

                                                c.                                       Employee Agreements.  Notwithstanding the occurrence of a Change of
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.

 

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.

 

                                                b.                                      Compliance With Certain Laws and Regulations.  If the Committee determines
that the consent or approval of any governmental regulatory body, or that the
listing, registration or qualification of the Shares upon any securities
exchange or under any law or regulation, is necessary or desirable in
connection with the issuing of the Shares or the lapsing of restrictions
thereon, Employee shall supply Company with such certificates, representations
and information as Company may request and shall otherwise cooperate with
Company in obtaining any such listing, registration, qualification, consent or
approval.

 

 

                                                c.                                       Construction and No Waiver.  Notwithstanding any provision of
this Agreement, the issuance of and the release of restrictions on the Shares
are subject to the provisions of the Plan. 
The failure of Company in any instance to exercise any of its rights
granted under this Agreement 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 indicated
below Employee’s signature line on this Agreement 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.  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.                                      Amendments.  This Agreement may be amended in writing
executed by both parties.  This Agreement
shall also be amended, without prior notice to Employee and without Employee’s
consent, (i) automatically in the circumstance set forth in Paragraph
6(b), or (ii) by the Committee in the event the Committee deems it
necessary or appropriate to make such amendments for purposes of compliance
with the American Jobs Creation Act of 2004 or regulations issued pursuant
thereto.

 

                                                This Agreement will not be deemed to be binding or effective until
fully executed by both Employee and an authorized representative of Company as
reflected on both signature pages attached hereto.

 

                                                IN WITNESS WHEREOF, Employee executed this Agreement as of the
day and year first above written.

 

	
   

  	
   

  	
   

  	
  EMPLOYEE

  
	
   

  	
   

  	
   

  	
  /s/ Steven J. Towle

  

 

                                                IN WITNESS WHEREOF, DST Systems, Inc. has caused this
Agreement to be executed on its behalf by and through its duly authorized
officer as of the day and year first above written.

 

	
   

  	
   

  	
  DST SYSTEMS, INC.

  
	
   

  	
   

  	
  /s/ Randall D. Young

  
	
   

  	
   

  	
  Vice President, Corporate Secretary and General
  CounselFiled by Automated Filing Services Inc. (604) 609-0244 - Global Energy Inc. - Exhibit 10.1

IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

July 6, 2007

Worldwide Stock Transfer, LLC
885 Queen Anne
Road
Teaneck, NJ 07666

      RE: GLOBAL ENERGY,
INC.

Ladies and Gentlemen:

     Reference is made to that certain
Securities Purchase Agreement (the “Securities Purchase
Agreement”) of even date herewith by and between Global Energy, Inc., a
Nevada corporation (the “Company”), and Cornell Capital Partners, L.P.
(the “Buyer”). Pursuant to the Securities Purchase Agreement, the Company
shall issue and sell to the Buyer, an the Buyer shall purchase from the Company,
convertible debentures (collectively, the “Debentures”) which are
convertible into shares of the Company’s common stock, par value $.001 per share
(the “Common Stock”), at the Buyer’s discretion. The Company has also
issued to the Buyer warrants to purchase additional shares of Common Stock, at
the Buyer’s discretion (the “Warrant”). These instructions relate to the
following stock or proposed stock issuances or transfers:

	 	1. 	
      Shares of Common Stock to be issued to the Buyer upon
      conversion of the Debentures plus any shares of Common Stock to be issued
      to the Buyer upon conversion of accrued interest into Common Stock
      (collectively, the “Conversion Shares”).

	 	 	 
	 	2. 	
      Shares of Common Stock to be issued to the Buyer upon
      exercise of the Warrant (the “Warrant
Shares”).

     This letter shall serve as our
irrevocable authorization and direction to Computershare Investor Services Inc.
(the “Transfer Agent”) to do the following:

	 	1. 	
      Conversion Shares and Warrant Shares.

	 	 	 	 
	 		a. 	
      Instructions Applicable to Transfer Agent. With
      respect to the Conversion Shares and Warrant Shares, the Transfer Agent
      shall issue the Conversion Shares, and Warrant Shares to the Buyer from
      time to time upon delivery to the Transfer Agent of a properly completed
      and duly executed Conversion Notice (the “Conversion Notice”) in
      the form attached as Exhibit A to the Debentures, or a properly completed
      and duly executed Exercise Notice (the “Exercise Notice”) in the
      form attached as Exhibit A to the Warrant, delivered to the Transfer Agent
      by David Gonzalez, Esq. (the “Escrow Agent”) as agent acting on
      behalf of the Company. Upon receipt of a Conversion Notice or an Exercise
      Notice, the Transfer Agent shall within three (3) Trading Days thereafter
      (i) issue and surrender to a common carrier for overnight delivery to the
      address as specified in the Conversion Notice or the Exercise Notice, a
      certificate, registered in the name of the Buyer or its designees, for the
      number of shares of Common Stock to which the Buyer shall be entitled as
      set forth in the Conversion Notice or Exercise Notice or (ii) provided the
      Transfer Agent is participating in The Depository Trust Company
      (“DTC”) Fast Automated Securities Transfer Program, upon the
      request of the Buyers, credit such aggregate number of shares of Common
      Stock to which the Buyers shall be entitled to the Buyer’s or their
      designees’ balance account with DTC through its Deposit Withdrawal At
      Custodian (“DWAC”) system provided the Buyer causes its bank or
      broker to initiate the DWAC transaction. For purposes hereof “Trading
      Day” shall mean any day on which the Nasdaq Market is open for
      customary trading.

	 	 	 	 
	 		b. 	
      The Company hereby confirms to the Transfer Agent and the
      Buyer that certificates representing the Conversion Shares and the Warrant
      Shares shall not bear any legend restricting transfer and should not be
      subject to any stop- transfer restrictions and shall otherwise be freely
      transferable on the books and records of the Company; provided that
      counsel to the Company delivers (i) the Notice of Effectiveness set
      forth in Exhibit I attached hereto and (ii) an opinion of counsel
      in the form set forth in Exhibit II attached hereto, and that if
      the Conversion Shares or Warrant Shares are not registered for sale under
      the Securities Act of 1933, as amended, then the certificates for the
      Conversion Shares or Warrant Shares shall bear the following
  legend:

2

	 		
      “THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
      NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
      APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR
      INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
      IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
      SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE
      TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
      APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER
      SAID ACT.”

	 	 	 	 
	 		c. 	
      In the event that counsel to the Company fails or refuses
      to render an opinion as required to issue the Conversion Shares or Warrant
      Shares in accordance with the preceding paragraph (either with or without
      restrictive legends, as applicable), then the Company irrevocably and
      expressly authorizes counsel to the Buyer to render such opinion. The
      Transfer Agent shall accept and be entitled to rely on such opinion for
      the purposes of issuing the Conversion Shares or Warrant Shares.

	 	 	 	 
	 		d. 	
      Instructions Applicable to Escrow Agent. Upon the
      Escrow Agent’s receipt of a properly completed Conversion Notice or
      Exercise Notice and the Aggregate Exercise Price (as defined in the
      Warrant), the Escrow Agent shall, within one (1) Trading Day thereafter,
      send to the Transfer Agent the Conversion Notice or Exercise Notice as the
      case may be, which shall constitute an irrevocable instruction to the
      Transfer Agent to process such Conversion Notice or Exercise Notice in
      accordance with the terms of these instructions.

	 	 	 	 
	 	2. 	
      Other Agreements.

	 	 	 	 
	 		a. 	
      The Transfer Agent shall reserve for issuance to the
      Buyer a minimum of 6,000,000 Conversion Shares and 600,000 Warrant Shares.
      All such shares shall remain in reserve with the Transfer Agent until the
      Buyers provides the Transfer Agent instructions that the shares or any
      part of them shall be taken out of reserve and shall no longer be subject
      to the terms of these instructions.

	 	 	 	 
	 		b. 	
      The Company hereby irrevocably appoints the Escrow Agent
      as a duly authorized agent of the Company for the purposes of authorizing
      the Transfer Agent to process issuances and transfers specifically
      contemplated herein.

3

	 	c. 	
      The Transfer Agent shall rely exclusively on the
      Conversion Notice or the Exercise Notice and shall have no liability for
      relying on such instructions. Any Conversion Notice or Exercise Notice
      delivered hereunder shall constitute an irrevocable instruction to the
      Transfer Agent to process such notice or notices in accordance with the
      terms thereof. Such notice or notices may be transmitted to the Transfer
      Agent by facsimile or any commercially reasonable method.

	 	 	 
	 	d. 	
      The Company hereby confirms to the Transfer Agent and the
      Buyers that no instructions other than as contemplated herein will be
      given to Transfer Agent by the Company with respect to the matters
      referenced herein. The Company hereby authorizes the Transfer Agent, and
      the Transfer Agent shall be obligated, to disregard any contrary
      instructions received by or on behalf of the
Company.

     Certain Notice Regarding the
Escrow Agent. The Company and the Transfer Agent hereby acknowledge that the
Escrow Agent is general counsel to the Buyer, a partner of the general partner
of the Buyer and counsel to the Buyer in connection with the transactions
contemplated and referred herein. The Company and the Transfer Agent agree that
in the event of any dispute arising in connection with this Agreement or
otherwise in connection with any transaction or agreement contemplated and
referred herein, the Escrow Agent shall be permitted to continue to represent
the Buyer and neither the Company nor the Transfer Agent will seek to disqualify
such counsel.

     The Company hereby agrees that it
shall not replace the Transfer Agent as the Company’s transfer agent without the
prior written consent of the Buyer.

     Any attempt by Transfer Agent to
resign as the Company’s transfer agent hereunder shall not be effective until
such time as the Company provides to the Transfer Agent written notice that a
suitable replacement has agreed to serve as transfer agent and to be bound by
the terms and conditions of these Irrevocable Transfer Agent Instructions.

     The Company and the Transfer
Agent hereby acknowledge and confirm that complying with the terms of this
Agreement does not and shall not prohibit the Transfer Agent from satisfying any
and all fiduciary responsibilities and duties it may owe to the Company.

     The Company and the Transfer
Agent acknowledge that the Buyer is relying on the representations and covenants
made by the Company and the Transfer Agent hereunder and are a material
inducement to the Buyer purchasing convertible debentures under the Securities
Purchase Agreement. The Company and the Transfer Agent further acknowledge that
without such representations and covenants of the Company and the Transfer Agent
made hereunder, the Buyers would not purchase the Debentures.

4

     Each party hereto specifically
acknowledges and agrees that in the event of a breach or threatened breach by a
party hereto of any provision hereof, the Buyer will be irreparably damaged and
that damages at law would be an inadequate remedy if these Irrevocable Transfer
Agent Instructions were not specifically enforced. Therefore, in the event of a
breach or threatened breach by a party hereto, including, without limitation,
the attempted termination of the agency relationship created by this instrument,
the Buyer shall be entitled, in addition to all other rights or remedies, to an
injunction restraining such breach, without being required to show any actual
damage or to post any bond or other security, and/or to a decree for specific
performance of the provisions of these Irrevocable Transfer Agent
Instructions.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

5

     IN WITNESS WHEREOF, the
parties have caused this letter agreement regarding Irrevocable Transfer Agent
Instructions to be duly executed and delivered as of the date first written
above.

	COMPANY: 
	GLOBAL ENERGY,
      INC. 
	  	  
	By: 	 
    
	Name: 	Asi Shalgi 
	Title: 	Chief Executive Officer 
	  	  
	  	  
	ESCROW AGENT: 
	  	  
	  	  
	David Gonzalez, Esq. 
	  	  
	  	  
	BUYER: 
	CORNELL CAPITAL
      PARTNERS, L.P. 
	  	  
	By: 	Yorkville Advisors, LLC 
	Its: 	Investment Manager 
	  	  
	By: 	 
    
	Name: 	Mark Angelo 
	Title: 	Portfolio Manager 
	  	  
	  	  
	TRANSFER AGENT: 
	WORLDWIDE STOCK TRANSFER, LLC

	  	  
	By: 	 
    
	Name: 	   Yonah Kopstick 
	Title: 	   Vice President

6

EXHIBIT I

TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

FORM OF NOTICE OF EFFECTIVENESS OF REGISTRATION
STATEMENT

_________, 200_

________

Attention:

RE: GLOBAL ENERGY, INC.

Ladies and Gentlemen:

     We are counsel to Global Energy,
Inc., (the “Company”), and have represented the Company in connection
with that certain Securities Purchase Agreement, dated as of
____________________, 200_ (the “Securities Purchase Agreement”), entered
into by and among the Company and the Buyers set forth on Schedule I attached
thereto (collectively the “Buyers”) pursuant to which the Company has
agreed to sell to the Buyers secured convertible debentures, which shall be
convertible into shares (the “Conversion Shares”) of the Company’s common
stock, par value $.001 per share (the “Common Stock”), in accordance with
the terms of the Securities Purchase Agreement. Pursuant to the Securities
Purchase Agreement, the Company also has entered into a Registration Rights
Agreement, dated as of _________________, 200_, with the Buyers (the
“Investor Registration Rights Agreement”) pursuant to which the Company
agreed, among other things, to register the Conversion Shares under the
Securities Act of 1933, as amended (the “1933 Act”). In connection with
the Company’s obligations under the Securities Purchase Agreement and the
Registration Rights Agreement, on _______, 200_, the Company filed a
Registration Statement (File No. ___-_________) (the “Registration
Statement”) with the Securities and Exchange Commission (the
“SEC”) relating to the sale of the Conversion Shares.

     In connection with the foregoing,
we advise the Transfer Agent that a member of the SEC’s staff has advised us by
telephone that the SEC has entered an order declaring the Registration Statement
effective under the 1933 Act at ____ P.M. on __________, 200_ and we have no
knowledge, after telephonic inquiry of a member of the SEC’s staff, that any
stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and the
Conversion Shares are available for sale under the 1933 Act pursuant to the
Registration Statement.

EXHIBIT I-1

     The Buyers has confirmed it shall
comply with all securities laws and regulations applicable to it including
applicable prospectus delivery requirements upon sale of the Conversion
Shares.

Very truly yours, 

By: _____________________

 

EXHIBIT I-2

EXHIBIT II

TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

FORM OF OPINION

________________200_

VIA FACSIMILE AND REGULAR MAIL

________

Attention:

      RE: GLOBAL ENERGY,
INC.

Ladies and Gentlemen:

     We have acted as special counsel
to Global Energy, Inc. (the “Company”), in connection with the
registration of ___________shares (the “Shares”) of its common stock with
the Securities and Exchange Commission (the “SEC”). We have not acted as
your counsel. This opinion is given at the request and with the consent of the
Company.

     In rendering this opinion we have
relied on the accuracy of the Company’s Registration Statement on Form SB-2, as
amended (the “Registration Statement”), filed by the Company with the SEC
on ____________, 200_. The Company filed the Registration Statement on behalf of
certain selling stockholders (the “Selling Stockholders”). This opinion
relates solely to the Selling Shareholders listed on Exhibit “A”
hereto and number of Shares set forth opposite such Selling Stockholders’ names.
The SEC declared the Registration Statement effective on _____________,
200_.

     We understand that the Selling
Stockholders acquired the Shares in a private offering exempt from registration
under the Securities Act of 1933, as amended. Information regarding the Shares
to be sold by the Selling Shareholders is contained under the heading “Selling
Stockholders” in the Registration Statement, which information is incorporated
herein by reference. This opinion does not relate to the issuance of the Shares
to the Selling Stockholders. The opinions set forth herein relate solely to the
sale or transfer by the Selling Stockholders pursuant to the Registration
Statement under the Federal laws of the United States of America. We do not
express any opinion concerning any law of any state or other jurisdiction.

EXHIBIT II

In rendering this opinion we have relied upon the accuracy of
the foregoing statements.

     Based on the foregoing, it is our
opinion that the Shares have been registered with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, and that ________may
remove the restrictive legends contained on the Shares. This opinion relates
solely to the number of Shares set forth opposite the Selling
Stockholders listed on Exhibit “A” hereto.

     This opinion is furnished to
Transfer Agent specifically in connection with the sale or transfer of the
Shares, and solely for your information and benefit. This letter may not be
relied upon by Transfer Agent in any other connection, and it may not be relied
upon by any other person or entity for any purpose without our prior written
consent. This opinion may not be assigned, quoted or used without our prior
written consent. The opinions set forth herein are rendered as of the date
hereof and we will not supplement this opinion with respect to changes in the
law or factual matters subsequent to the date hereof.

Very truly yours,

 

EXHIBIT II-2

EXHIBIT A

(LIST OF SELLING STOCKHOLDERS)

	Name: 	 	No. of Shares: 

 

 

EXHIBIT A

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