RESTRICTED STOCK UNIT AGREEMENT _____________________________ DST SYSTEMS, INC. 2005 EQUITY INCENTIVE PLAN _____________________ (Time Vesting; Executive Officer)

EXHIBIT 10.1

 

RESTRICTED STOCK UNIT AGREEMENT

_____________________________

 

DST SYSTEMS, INC. 2005 EQUITY INCENTIVE PLAN

_____________________

 

(Time Vesting; Executive Officer)

 

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

 

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

 

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

 

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

 

The parties agree as follows:

 

1.           GRANT OF RSU.

 

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

 

b.           Administration.  Company's Chief Financial Officer may adopt Administrative Procedures for RSUs and the Committee may maintain rules for Awards issued under the Plan.  As amended from time to time, such procedures and rules (collectively, the "Rules") shall apply to all actions taken with respect to this Agreement.  The Committee or its delegate may take any action deemed necessary or appropriate to administer this Agreement and the issuance of Shares attributable to Vested RSUs in accordance and consistent with Internal Revenue Code ("Code") Section 409A and regulations and guidance issued thereunder ("409A").

 

 

 

2.           RESTRICTIONS.

 

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

 

b.           No Privilege of Stock Ownership; Dividend Equivalents.  Holding RSUs does not give Employee the rights of a shareholder (including without limitation the right to vote or receive dividends or other distributions) with respect to 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 numbe r 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(c).  To the extent that Employee has elected an Extended Issuance Delay (as defined in Paragraph 3(g)), 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.           Vesting Date(s).  The RSUs shall become Vested on the Vesting Date(s) as shown in the email communication to which this Agreement is attached.

 

b.           Other Vesting.

 

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

 

(ii)           Effect of Death and Disability on Vesting.  In addition to any potential Vesting which may occur as provided in this Section 3 and subject to the other terms and conditions of this Agreement, Vesting shall occur in full as of the date of Employee's "Disability" (as that term is defined in the Rules) or death; provided, however, in no event

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

 

(iv)           Calculations.  To determine the pro rata portion of the Tranche Vesting, divide the number of RSUs scheduled to Vest on the next scheduled Vesting Date by 12 and multiply by the number of months from one year prior to the upcoming Vesting Date ("Commencement Date") to the Event.  The pro rata calculations shall include the calendar month in which the Commencement Date or Event occurred only if the date is subsequent to the 15th day of such month.  For any calculations in this Agreement that require the number of RSUs to be divided or for a designated percentage of the RSUs to Vest, if such number is not evenly divisible or an applied percentage or formula wou ld 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.

 

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

 

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

 

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

 

d.           Share Issuance.

 

(i)           Except as otherwise provided herein, upon the Vesting of a specific number of RSUs as provided in Paragraphs 3(a) and (b), Company shall issue a corresponding number of Shares to Employee as soon as administratively practical after

 

(ii)           Company will not issue Shares upon a Vesting Date to the extent that either Employee has elected an "Extended Issuance Delay" (as defined in Paragraph 3(f)) and/or the issuance of Shares is subject to the six-month delay period required under Section 409A a "409A Issuance Delay" (as defined in Paragraph 3(g)).  Employee acknowledges and agrees that Company will not issue any Shares pursuant to this Agreement any earlier than the first business day after the Vesting Date nor any later than ninety days after such Vesting Date.  If one or both of an Extended Issuance Delay or a 409A Issuance Delay applies, Company shall issue the Shares as soon as administratively practical (but no earlier than one business day and no later tha n 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.

 

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

 

f.           Extended Issuance Delays.  The period from the Grant Date to a Vesting Date is the "Original Delay Period."  In circumstances allowed by the Rules and where a valid and timely Section 409A deferral election has been made (an "Extended Issuance Delay"), Shares that

 

 

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

 

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 N otice 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:

 

(ix)           A "Retirement" means, notwithstanding the definition of "Retirement" under the Plan, a termination of Employment on or after age 59½ (either by Employee voluntarily or by Company as a Termination Without Cause) and following a minimum of three (3) years of employment.

 

(x)           A "Termination Without Cause" means Company's termination of Employee's Employment that is not for Cause.

 

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

 

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

 

 

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 corre sponding 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 Employ ee's book entry account), (b) deduct such amounts in cash from payroll or other amounts Company owes or will owe Employee, or (c) effect some combination of Share retention and cash deduction.

 

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

 

 

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 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 docum ents 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

 

 

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.