Document:

Exhibit 10.2

 

DEFERRED CASH
AWARD AGREEMENT

 

 

DST SYSTEMS, INC.
2005 EQUITY INCENTIVE PLAN

 

 

THIS AGREEMENT is by and
between DST SYSTEMS, INC. (“Company”) and participant (“Employee”) in the DST
annual incentive award program (“Program”) under the DST Systems, Inc.
2005 Equity Incentive Plan (“Plan”), each as amended and interpreted from time
to time.

 

The parties agree as follows:

 

1.                                       Award.

 

a.                                       Award Grants. 
The Compensation Committee of Company’s Board of Directors (the “Committee”)
may from time to time authorize a Deferred Cash award under the Program.  Each date Deferred Cash is granted to
Employee shall be a “Grant Date.” 
Employee will be notified of each Deferred Cash grant via Company
e-mail.  In order to receive payment of
the grant, Employee must timely confirm acceptance of the terms and conditions
of this Agreement pursuant to the instructions in each e-mail notification of
each grant.

 

b.                                      Deferred Cash. 
Employee shall receive information under the heading “Your Award
Information” (“Personalized Information”) for each Grant Date as to the
principal amount of the award and the “Vesting Date” (as defined in Paragraph 3(a) hereof).  Each award amount (as provided in the
Personalized Information) is to be reflected in a notational account to be
adjusted for gains and losses pursuant to the terms of this Agreement, and, as
adjusted, shall be referred to as the “Deferred Cash.”  The Deferred Cash and the other rights set
forth in this Agreement shall be the “Award.”

 

c.                                       Administration. The Award is administered by the
Committee or by a Company officer to whom the Committee delegates authority as
allowed by the Plan.  Pursuant to such
authority, Company’s Chief Financial Officer (“CFO”) has adopted Administrative
Procedures for Annual Incentive Awards (“Procedures”), and, as amended from
time to time, such Procedures shall apply to each Award.  The Committee or its delegate may take any
action the Committee or delegate deems necessary or appropriate to administer
this Agreement and the Award in accordance and consistent with Internal Revenue
Code (“Code”) Section 409A and regulations and guidance issued thereunder.

 

2.                                       Restrictions. 
During the “Initial Deferral Period” (described in Paragraph 3(a) hereof)
for an Award and through any “Extended Deferral Date” (as defined in Paragraph
3(h) hereof) for an Award, the Award shall not be transferable (by sale,
assignment, disposition, gift, exchange, pledge, hypothecation, or otherwise)
other than as provided in Paragraph 3(f) upon Employee’s death.  Any attempted disposition of the Award, and
the levy of any execution, attachment or similar process upon the Award prior
to payment of Deferred Cash, shall be null and void and without effect.

 

 

3.                                       Deferral, Payment and Forfeiture.

 

a.                                       Deferral Period.  The “Initial Deferral Period” shall be from
the Grant Date to the earlier of the Vesting Date set forth in the Personalized
Information (the December 1 that is two years and eleven months from the
end of the performance year for which the Award was made) or the date (i) of
Employee’s death, (ii) of Employee’s “Disability” (as that term is defined
in Code Section 409A(a)(2)(C)), (iii) of Employee’s separation from
service with Company as determined under Code Section 409A(a)(2)(A)(i) (“409A
Separation”) on or after age 591⁄2, whether in a voluntary termination of
employment or in a termination without “Cause” (as defined in Paragraph 3(h) hereof)
(“Retirement”), (iv) Employee’s termination without Cause in connection
with a “Reduction in Force” or “Business Unit Divesture” (as defined in
Paragraph 3(h) hereof); or (v) either of the two termination of
employment circumstances set forth in Paragraph 3(d) hereof occurs
subsequent to a “Change in Control” (as defined in Paragraph 7 hereof).  Each of the events set forth in clauses (i) through
(v) above is an “Early Vesting Event”.

 

b.                                      Payment.  Subject to the forfeiture provisions in this
Paragraph 3, payment of Deferred Cash shall be made on or subsequent to the
last day of the “Deferral Period” within the time period provided in the
Procedures.  The Procedures govern the
timing of adjustments to the notational account for payout purposes.  The “Deferral Period” is the Initial Deferral
Period unless Employee has timely elected an “Extended Deferral Date” (as
defined in Paragraph 3(h)), in which case the Deferral Period is from the Grant
Date to the Extended Deferral Date. 
Notwithstanding the foregoing, if, under Company’s Specified Employee
Identification Procedures, Employee is determined to be a “specified employee”
as defined in Code Section 409A and payment is on account of a 409A
Separation, payment shall be delayed as required under Code Section 409A(a)(2)(B)(i) and
made following the six month anniversary of the Employee’s 409A Separation
(which will be the last day of the Deferral Period) as provided in the
Procedures.

 

c.                                       Forfeiture.  Subject to certain exceptions which are set
forth in Paragraph 3(d), the Deferred Cash and rights to the Award shall be
immediately forfeited to Company without payment by Company of any
consideration to Employee if, during the Initial Deferral Period, Employee, for
any other reason other than an Early Vesting Event, is not continuously
employed (as described in Paragraph 3(g) hereof).  Notwithstanding any other provision of this
Agreement, termination for Cause or violation of Paragraph 5 hereof will cause
forfeiture of the Deferred Cash and rights to the Award, and Employee
acknowledges and agrees that such forfeiture can occur prior or subsequent to
any Deferral Period and to payment of the Deferred Cash.

 

d.                                      Exceptions to
Forfeiture: Change in Control. 
Notwithstanding the forfeiture provisions of Paragraph 3(c), this
Paragraph 3(d) shall apply in the event of a Change in Control.  The occurrence of a Change in Control during
the Initial Deferral Period shall not cause vesting or forfeiture of the Award.
Employee’s “Termination Without Cause” or “Resignation for Good Reason” (each
as defined in Paragraph 3(h) hereof), subsequent to the Change in Control
and prior to the Vesting Date, shall not cause forfeiture of the Award and
shall be deemed an Early Vesting Event causing the Award to vest and trigger
payment under Paragraph 3(b).

 

e.                                       Deferred Cash Adjustment. 
The notational account balance reflecting the amount of Deferred Cash
shall be adjusted from time to time, as provided in the Procedures, to account
for increases or decreases in the value of hypothetical investment of the
Deferred Cash elected by Employee under the Procedures.

 

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f.                                         Payments to Third Party. 
Upon the death of Employee, followed by a valid written request for
payment, the Deferred Cash shall be paid under the Procedures 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 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.

 

g.                                      Continuity of Employment. 
For purposes of this Agreement, employment includes employment by:

 

i.                                          Company (or, for purposes of Paragraph
3(d)(i) the “Acquiring Entity”);

 

ii.                                       any corporation in an unbroken chain of
corporations beginning with Company (or Acquiring Entity if applicable) or in
an unbroken chain of corporations ending with Company (or Acquiring Entity if
applicable) if, on the Grant Date (or in the case of an Acquiring Entity on the
date of the Business Unit Divestiture), 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 (or Acquiring
Entity if applicable) has a direct or indirect equity interest of at least
fifty percent (50%) (“Subsidiary”);

 

iii.                                    any individual or entity that directly or
through one or more intermediaries controls or is controlled by or under common
control with Company (or Acquiring Entity if applicable) (“Affiliate”); or

 

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

 

Employee is not
deemed to have terminated employment by, and the Award 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 (or Acquiring Entity if
applicable).  To be continuously employed
for purposes of this Agreement, Employee must be regularly and continuously
employed by Company (or Acquiring Entity if applicable) for more than twenty
(20) hours per week and more than five (5) months per year.

 

h.                                      Paragraph 3 Definitions. 
For purposes of Paragraph 3, the following terms have the meanings set forth
below:

 

i.                                          A “Business Unit
Divestiture” is the consummation during the Initial Deferral Period 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 Paragraph 3(g)), joint venture,
division or other business unit and 

 

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results in a group of employees of such business
unit, such group including Employee being employed by the acquiring company (“Acquiring
Entity”) and, under Paragraph 3(g) hereof, 
no longer being employed by Company.

 

ii.                                       The “Extended
Deferral Date” is (a) if applicable, each date subsequent to
Retirement that Employee shall receive the payment of Deferred Cash in an
installment under a timely Retirement installment election made pursuant to the
Procedures; or (b) if Retirement installments are inapplicable, the
earlier of (i) the extended deferral date timely elected and fixed by
Employee pursuant to the Procedures; or (ii) the date of death,
Disability, or a 409A Separation. 
Employee acknowledges and agrees that the Deferral Period may terminate,
and deferred amounts may be paid, in the event of a 409A Separation even if
Employee remains employed by Company under Paragraph 3(g).  For instance, the Deferral Period may end,
any right to installments subsequent to Retirement may terminate, and payment
may be made under Paragraph 3(b) in the event of a Business Unit
Divestiture, Reduction in Force, or Employee’s transfer to an entity less than
fifty percent (50%) owned by Company.

 

iii.                                    A “Reduction in
Force” means a 409A Separation with Company during the Initial Deferral
Period in which the Company terminates 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.

 

iv.                                   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 (“Good Reason
Termination Date”), which date is not earlier than thirty (30) days after the
date such notice is provided to Company (“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.  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;

 

(C)                                the material
relocation of Employee’s principal office to a location at least thirty-five
(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

 

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(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 (iv) on account of any alleged breach of an
employment agreement based on a material reduction in employee benefits as a
result 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.

 

v.                                      Termination Without Cause and for Cause. 
A “Termination Without Cause” means a termination of Employee’s
employment under Paragraph 3(g) that is not for Cause. Termination of
employment for “Cause” includes termination 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 non-compete or non-disclosure agreement to which Employee is subject.

 

4.                                 Taxes.

 

a.                                       General.  Employee
understands and agrees that Company may withhold from payroll or other amounts
Company owes or will owe Employee any applicable withholding, payroll and other
required tax amounts due on the Vesting Date, the date of payment of Deferred
Cash or any other applicable date. 
Employee agrees to pay Company any such amounts within the deadline
imposed by Company if withholding is not effected by the Company for any
reason.  Employee understands and agrees
that certain tax withholding amounts may be due prior to payment of the
Deferred Cash.  For instance, withholding
amounts may be due upon (i) vesting even though payment of Deferred Cash
is delayed because an Extended Deferral Date has been elected, (ii) the
Grant Date if Employee is at least age fifty-nine and one-half (591⁄2) on such
date, (ii) Employee reaching age fifty-nine and one-half (591⁄2) during a
Deferral Period, or (iii) a Reduction in Force.  Employee acknowledges and agrees that Company
may deduct amounts due hereunder from payroll or other amounts Company owes or
will owe Employee.

 

b.                                      Acceleration of Extended Deferrals to
Cover Employment Tax Liabilities.  Employee
understands and agrees that certain tax withholding amounts may be due prior to
the payment of Deferred Cash.  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 either
during the Initial Deferral Period or through any Extended Deferral Date.  To satisfy any FICA Taxes, the Company may
accelerate the payment of amounts in Extended Deferral as necessary to satisfy
the FICA Tax obligations as provided in this Paragraph.  If such acceleration occurs, then the Company
may also accelerate the payment of additional amounts in Extended Deferral as
necessary to cover withholding tax liabilities arising under the income tax at
source on wages rules imposed under section 3401 or the corresponding
withholding provisions of applicable state, local, or foreign tax laws
(together with the FICA Tax, “FICA Related Taxes”).  In no event, however, may the amounts
accelerated exceed the aggregate amount of the FICA Related Taxes.

 

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5.                                       Violation of Non-compete, Nonuse and
Nondisclosure Provisions.  Employee acknowledges that
Employee’s agreement to this Paragraph 5 is a key consideration for the grant
of the Award.    Employee hereby agrees
with the Company as follows:

 

a.                                       Non-Compete. 
During the period that Employee is employed by “Employer” (as defined in
Paragraph 5(h)), and thereafter during or any period for which Employee is
receiving, by agreement of Employee and Employer, any separation payment(s) (whether
made in lump sum or installments) or in which a Deferred Cash vesting period
continues to apply, 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 Subsidiary (as defined in Paragraph 3(g)) or Affiliate (as defined
in Paragraph 5(h)); provided, however, that the Committee may determine as
provided in Paragraph 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. 
Employee further agrees that during the twelve (12) month period
subsequent to termination of employment with Employer, and thereafter in any
period in which a Deferred Cash vesting period continues to apply, Employee
will not solicit any employee of Company, a Subsidiary or Affiliate to leave
such employment to become employed by a competitor of Company, a Subsidiary or
Affiliate or solicit or contact any person, business or entity which was a
customer of Company, a Subsidiary or Affiliate at the time of such termination
of employment, or any prospective customers of Company, a Subsidiary or
Affiliate to which Company, a Subsidiary or Affiliate has made a proposal to do
business within the twelve (12) month 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 Subsidiary or Affiliate at the time of termination of
employment.

 

c.                                       Ownership of Confidential Information,
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, 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.

 

d.                                      Recordkeeping and Return of Confidential
Information, Inventions and Works. Employee agrees to maintain regular records of all
Inventions and Works developed or written

 

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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 Employer, 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 a period of one year thereafter or for any
period in which the non-compete or non-solicitation obligation set forth herein
applies, 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.

 

g.                                      Remedies. 
Notwithstanding anything to the contrary herein, if Employee violates
any provisions of this Paragraph 5, whether prior to, on or after the
Deferral Period, then in addition to all other remedies available to Company,
the Award shall be immediately forfeited to Company or, if payment of Deferred
Cash has been made, Employee shall promptly reimburse to Company the Deferred
Cash, provided, however, that no consideration shall be paid by Company to
Employee for the forfeiture of the Award or for the reimbursement.  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.

 

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

 

i.                                          “Employer” means any
Company-related entity that has employed Employee, whether it be Company, a
Subsidiary (as defined in Paragraph 3(g)), or an Affiliate (as defined in
Paragraph 3(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%)).

 

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

 

(a)                                  inventions not disclosed to the public by
Company, a 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, a 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.                                    “Inventions” mean 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.

 

iv.                                   “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 Deferral
Period, beyond any forfeiture of the Award, and beyond any termination or
expiration of the Agreement for any reason.

 

6.                                       Committee Action on Non-Compete
Obligation in View of Change in Control. 
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, 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.

 

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7.                                       Change in Control.  A
“Change in Control” shall be defined as set forth in the Plan, as amended 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.

 

8.                                       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 Award is necessary or desirable in connection with the granting of the
Award or the payment of the Deferred Cash, Employee shall supply Company with
such representations and information as 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
Award, the restrictions thereon, and the payment of the Deferred Cash are
subject to the provisions of the Plan and any procedures 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 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 the Company’s human resources
department, 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.                                      Amendment.  This Agreement
may be amended only in the manner provided by the Company evidencing both
parties’ agreement to the amendment. 
This Agreement may also be amended, without prior notice to Employee and
without Employee’s consent, by the Committee in

 

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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 or guidance issued pursuant thereto, including Code Section 409A.

 

h.                                      Acknowledgement. 
Each Award and this Agreement are subject to the terms and conditions of
the Plan, to the Procedures and to any other rules 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, or the Procedures or other applicable rules or
procedures regarding any issues arising thereunder, including without
limitation all decisions and interpretations related to Code Section 409A
and regulations and guidance issued thereunder.

 

By acknowledging
and agreeing to the terms and conditions of this Agreement each time an Award
is made hereunder, Employee accepts the Award and acknowledges that the Award
is subject to all the terms and provisions of the Plan, this Agreement and the
Procedures or other applicable rules or procedures.

 

10Exhibit 10.3

 

RESTRICTED STOCK UNIT AGREEMENT

 

 

DST SYSTEMS, INC. 2005 EQUITY INCENTIVE PLAN

 

 

(Performance 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 any date that the condition(s) required
for Company to issue all or a portion of the underlying Shares under Section 3
have been satisfied (“Vesting Date”);

 

WHEREAS, the RSUs may Vest (becoming “Vested RSUs”)
and the underlying Shares be issued on or after the satisfaction of certain
conditions generally including continued “Employment” (as defined in Paragraph
3(i)) and the satisfaction of preestablished performance goals, and subject to
the other provisions of this Agreement, all while remaining subject to a risk
of forfeiture as provided for in Paragraph 3(d); 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(g), 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 and the number of RSUs granted in this Award are shown in
the email communication to Employee to which this Agreement is attached.  Also attached to the email communication is
an Appendix to this Agreement which gives performance goal and performance
Vesting details, including potential Vesting dates, as further described in
Paragraphs 3(a) and (b) of this Agreement.  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.

 

1

 

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
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(g))
and through any “Extended Issuance Date” (as defined in Paragraph 3(g)), by
sale, assignment, disposition, gift, exchange, pledge, hypothecation, or
otherwise, other than as provided in Paragraph 3(j) 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 the Shares underlying
the RSUs that Company may issue under the terms and conditions of 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 will be
paid on the RSUs.  Dividend Equivalents
will be converted to additional RSUs on the date the actual dividend is paid to
Company shareholders.  The number of
additional RSUs credited shall be the quotient (rounded up to the next whole
Share) obtained by dividing the aggregate cash amount that would have been paid
as a dividend on the Shares underlying all RSUs 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.  Any additional RSUs credited to Employee’s
RSU Account which are attributable to Dividend Equivalents shall be subject to
the same risk of forfeiture and the same Vesting conditions, and result in the
issuance of Shares at the same time and same manner, as the original underlying
RSUs.  All rights to any Dividend
Equivalents 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(d).  To the extent
that Employee has elected an Extended Issuance Delay (as defined in Paragraph
3(h)), with respect to any RSUs, any additional RSUs credited to Employee’s RSU
Account attributable to Dividend Equivalents shall be distributed at the same
time as the original RSUs subject to the extended deferral election.

 

3.           VESTING,
FORFEITURE, AND SHARE ISSUANCE.

 

a.             Appendix A Performance Goals.  For purposes of Paragraph 3(b), the Committee
shall determine Company and/or business unit performance target(s) applicable
to the RSUs (collectively, the “Goal”). 
No later than the date required by the Plan for establishing the Goal,
the Goal will be established, set forth on an Appendix A to this Agreement and
communicated to Employee.  By accepting
the terms and conditions of this Agreement in accordance with Paragraph 1(a),
Employee shall be deemed to have consented to Appendix A, and at all times,
Appendix A, its Goal, terms and conditions are incorporated herein by
reference.  The Goal may relate to one or
more calendar years (each a “Performance Year”) including or following the
Grant Date year (each 

 

2

 

applicable period, a “Performance Period” and shown on Appendix
A).  For purposes of Paragraph 3(b),
Appendix A shall also set forth the “Scheduled Vesting Date(s)”, which may be
the date of, or a date following, a Committee meeting following a specified
Performance Period or Performance Year thereof, at which financial results are
determined for Award purposes (“Applicable Committee Meeting”).  At the Applicable Committee Meeting following each
measurement period until the RSUs are fully Vested or forfeited, the Committee
will determine whether Company has achieved the Goal for such period, and if
appropriate, shall certify Goal achievement (“Certification”).

 

b.             Performance Vesting.  The RSUs shall become Vested in connection with
Certification (all at once or over time, as provided in Appendix A, but no
earlier than any Scheduled Vesting Date). 
Vesting shall not occur as to any portion of the RSUs for which
Certification does not occur by the date of the Applicable Committee Meeting
following the final Performance Year (the “Deadline”), and if Certification
does not occur by the Deadline, all RSUs granted under this Agreement that have
not Vested shall be forfeited as of the Deadline.

 

c.             Other Vesting.

 

(i)                                     Effect
of Retirement or Reduction in Force on Vesting

 

(A)                              If Employee’s “Retirement”
or a “Reduction in Force” (each as defined in Paragraph 3(i) and each an “Event”)
occurs during a Performance Year (such Performance Year in which the Event
occurs, the “Event Year”), then neither Vesting nor forfeiture shall occur as
of the date of the Event with respect to RSUs that have not Vested prior to the
date of the Event (“Remaining RSUs”).  As
of the Applicable Meeting Date in the calendar year following the Event Year (“Post-Event
Year”), a determination shall be made, in accordance with the Subparagraphs
below, as to whether any Remaining RSUs shall Vest on the Scheduled Vesting
Date in the Post-Event Year.

 

(B)                                If
Certification occurs for the Event Year, a pro rata portion of RSUs that would
have Vested on the Scheduled Vesting Date in the Post-Event Year shall Vest on
such Scheduled Vesting Date.  The number
of Remaining RSUs pro rata Vesting shall be the total number of Remaining RSUs
that, but for the Event, would have Vested on such Scheduled Vesting Date based
on the Certification for the Event Year, divided by twelve, multiplied by the
number of calendar months between the first day of the Event Year and the date
of the Event, rounded up to the next whole number.  Any remaining RSUs shall be forfeited as of
the Scheduled Vesting Date in the Post-Event Year.

 

(C)                            If no RSUs
would have Vested in the Post-Event Year due to lack of Certification for the
Event Year, all Remaining RSUs shall be forfeited as of the Scheduled Vesting
Date in the Post-Event Year.

 

(D)                               A Reduction in
Force subsequent to a Change in Control is a Termination Without Cause for
which Vesting occurs as provided in 

 

3

 

Subparagraph 3(c)(ii)(B). 
Subparagraph 3(c)(ii)(C) governs a Retirement that occurs
subsequent to a Change in Control.

 

(ii)           Effect of Change in Control on
Vesting

 

(A)                              Subject to Section 6
of this Agreement and Section 14 of the Plan, if full Vesting of RSUs has
not occurred by the date of a “Change in Control” (as defined in Paragraph
6(b)), then the
Certification requirements set forth in Appendix A shall no longer apply.  The RSUs that have not Vested as of the date
of Change in Control (“Non-Vested CIC RSUs”) shall Vest, subject to continued
Employment and to all other terms and provisions of this Agreement other than
the Certification conditions set forth in Appendix A, in one-third (1/3)
increments over the immediately following three anniversary dates of the date
of the Change in Control.

 

(B)                                Notwithstanding the above, upon a “Termination
Without Cause” or a termination of Employment in connection with a “Resignation
for Good Reason” (each as defined in Paragraph 3(i)) following a Change in
Control, all RSUs that have not otherwise been forfeited under this Agreement
shall become fully Vested.

 

(C)                                A Retirement
that occurs after a Change in Control and is the result of a termination by the
Company that constitutes a Termination Without Cause shall cause full Vesting
as provided in Subparagraph 3(c)(ii)(B). 
A Retirement due to a voluntary resignation occurring after a Change in
Control shall only cause a pro rata portion of the number of RSUs that would
have Vested on the next anniversary date of the Change in Control to Vest as of
the date of such Retirement.  The pro
rata amount shall be the number of RSUs that would have Vested on such
anniversary date, divided by twelve, multiplied by the number of calendar
months between the preceding Change in Control anniversary date, or if none,
the Change in Control date, to the date of the Retirement, rounded up to the
next whole number.  The remaining RSUs
shall be forfeited as of such Retirement.

 

(iii)          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 regardless of any lack of Goal
achievement or Certification; 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(d) of this Agreement shall not
affect the forfeited status of such RSUs.

 

(iv)          Effect of a Business Unit
Divestiture on Vesting. If a “Business Unit Divestiture” (or “BUD,”
as defined in Paragraph 3(i)) occurs and (A) Certification occurs for any
Performance Year ending before the BUD, or (B) Certification occurs for
the 

 

4

 

Performance Year including the BUD, then RSUs that
have not Vested by the date of the BUD shall Vest pro rata based upon the
number of Performance Period months elapsed before the BUD.  If Certification occurs for any Performance
Year ending before the BUD, Vesting shall occur at the time of the BUD.  If no Certification occurs for any
Performance Year ending before the BUD, but Certification occurs for the
Performance Year including the BUD, Vesting shall occur on the Scheduled
Vesting Date in the year after the Performance Year including the BUD.  The number of RSUs pro rata Vesting (either
at the time of the BUD or the Scheduled Vesting Date in the year immediately
following the BUD) is the number of RSUs granted, less any RSUs for which
Vesting has already occurred prior to the BUD, divided by sixty (60),
multiplied by the number of months from the first day of the Performance Period
to the date of the BUD, rounded up to next whole number.  If Certification occurs before the BUD, any
remaining RSUs shall be forfeited as of the date of the BUD.  If Certification occurs after the BUD, any
remaining RSUs shall be forfeited on the Scheduled Vesting Date in the year
immediately following the BUD.  If no
Certification occurs, all RSUs shall be forfeited as of the date of the BUD.

 

(v)           Calculations.  The pro rata calculations set forth in this
Paragraph 3(c) shall include the calendar month in which the Vesting event
occurred only if the date of such event 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
would result in the issuance of a fractional Share, any fractional Share shall
be rounded up to the next whole number and the Corporate Secretary’s office
shall allocate the additional Shares(s) to the Vesting tranche.  In no event shall Vesting occur with respect
to a number of RSUs that exceeds the original RSU grant amount.

 

d.             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(i)) 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 either (A) Certification does not occur prior to or on the Deadline, or
(B) 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.

 

(iii)          If Vesting occurs
for a portion of the RSUs in connection with a Retirement before a Change in
Control as provided in Paragraph 3(c), the remaining RSUs shall be immediately
forfeited to Company as of the Scheduled Vesting Date in the Post-Event Year.

 

5

 

(iv)          If Vesting occurs
for a portion of the RSUs in connection with a Retirement after a Change in
Control as provided in Subparagraph 3(c)(ii)(C), the remaining RSUs shall be
immediately forfeited as of the Change in Control anniversary date on which pro
rata Vesting occurred.

 

e.                                       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, no issuance of Shares is to occur with respect to such
Retirement unless that Retirement is also a 409A Separation;

 

(B)                                if the Vesting
event is Retirement but such Retirement 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 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(g)) 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(h)).  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.

 

6

 

f.              Limited
Accelerated Issuance of Shares for FICA Related Taxes.  Paragraph 4(b) governs the limited
accelerated payment of Shares underlying RSUs for which a Vesting Date has not
yet occurred but which, due to Employee’s eligibility for Retirement after a
Change in Control may be no longer subject to a risk of forfeiture as provided
in Subparagraph 3(c)(ii)(C) (other than for Cause).  Such limited issuance may occur for the
satisfaction of “FICA Related Taxes.”

 

g.             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.”

 

h.             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”).

 

i.              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(i)(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:

 

7

 

(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

 

(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(i)(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 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 

 

8

 

Date.  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;

 

(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 Employment on
or after age 591⁄2 (either by Employee voluntarily or by Company as a Termination
Without Cause) and following a minimum of three (3) years of employment.

 

(x)            A
“Scheduled Vesting Date” shall mean
the second Friday in March following the Applicable Meeting Date.

 

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

 

(xii)          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.

 

j.            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 

 

9

 

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 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 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 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, Employee may irrevocably elect in writing on a Company
designated form 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.  Unless otherwise determined by the Committee
or its delegate in their sole discretion and unless otherwise prohibited by
law, Employee (or his or her guardian, legal representative or successor) may,
in the manner determined by the Committee or its delegate, irrevocably elect in
writing on a Company designated form to satisfy any income tax withholding
obligation in connection with the RSUs by requesting Company to retain 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 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 

 

10

 

other amounts Company owes or will owe Employee, or (c) effect
some combination of Share retention and cash deduction.

 

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.             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 Company, a Subsidiary (as defined in
Subparagraph 3(i)(v)(B)) or Affiliate (as defined in Paragraph 5(h)); provided,
however, that the Committee may determine as provided in Paragraph 6(a) 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.             Nonsolicitation.  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, its Subsidiary or Affiliate
to leave such employment to become employed by a competitor of Company, its
Subsidiary or Affiliate or solicit or contact any person, business or entity
which was a customer of Company, its Subsidiary or Affiliate at the time of
such termination of employment, or any prospective customers of Company, its
Subsidiary or Affiliate to which Company, its Subsidiary or Affiliate has made
a proposal to do business within the twelve (12) month period prior to the date
of termination of employment, for purposes of selling goods or services of the
type sold or rendered by Company, its Subsidiary or Affiliate at the time of
termination of employment.

 

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.

 

d.             Recordkeeping
and Return of Confidential Information, Inventions and Works. Employee
agrees to maintain regular records of all Inventions and Works developed or
written

 

11

 

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).  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 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.

 

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

 

(i)            “Employer”
means any Company-related entity that has employed Employee, whether it be
Company, its Subsidiary (as defined in Subparagraph 3(i)(v)(B)), 

 

12

 

or an Affiliate (either as defined in Subparagraph
3(i)(v)(C), and also for purposes of this Section 5, any entity in which
Company has a direct or indirect equity interest of at least twenty-five
percent (25%)).

 

(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)          “Inventions”
means all discoveries, improvements, and inventions relating to or used in the
current or prospective business or operations of Company, its 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.

 

(iv)          “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.

 

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.

 

13

 

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 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.

 

14

 

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.             Amendment.  This Agreement may be amended only in the
manner provided 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 acknowledging and agreeing to 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 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.

 

15

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