ARBITRON INC. Form of CEO Restricted Stock Unit Agreement Granted Under the 1999 Stock Incentive Plan
Exhibit 10.3
Form of
CEO Restricted Stock Unit Agreement
Granted Under the 1999 Stock Incentive Plan
Granted Under the 1999 Stock Incentive Plan
AGREEMENT made between Arbitron Inc., a Delaware corporation (the “Company”), and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ (the “Participant”).
For valuable consideration, receipt of which is acknowledged, the parties hereto agree as
follows:
1. Grant of RSUs.
On
20,
(the “Date of Grant”) and subject to the terms and conditions set forth
in this Agreement and in the Arbitron Inc. 1999 Stock Incentive Plan (the “Plan”), the Company
granted to the Participant Restricted Stock Units (“RSUs”) providing the
right to receive
( ) shares of common stock, $0.50 par value, of the
Company (the “Shares”).
2. Vesting and Forfeiture.
(a) While the Participant remains employed, the RSUs shall vest in three (3) equal
annual installments commencing on December 31, 2007, with an additional one third vesting on
each of December 31, 2008 and December 31, 2009, subject to earlier vesting under subsection
(b). The date upon which each installment vests shall be considered a “Vesting Date” for the
portion of the RSUs vesting on that date.
(b) The Vesting Date for all unvested RSUs shall be accelerated, if applicable, to the
earliest of:
(i) The death of the Participant;
(ii) The “Disability” of the Participant (within the meaning of Proposed
Treasury Regulation Section 1.409A-3(g)(4) or any successor regulation); and
(iii) A “Change in Control” consisting of a change in ownership or effective
control of the Company (within the meaning of Treasury Regulation Section
1.409A-3(g)(5) or any successor regulation).
(c) If the Participant ceases to be employed by the Company (and any applicable
Subsidiaries) for any reason or no reason (except for death or Disability), the Participant
shall immediately and automatically forfeit all rights to any of his RSUs that have Vesting
Dates after the date employment ends except as an applicable employment agreement or
executive retention agreement may provide to the contrary.
3. Issuance of Shares.
Subject to the terms and conditions of this Agreement (including any Withholding Tax
obligations), as soon as practicable after a Vesting Date, the Company shall issue one or more
certificates representing Fifty Percent (50%), rounded down to the next whole Share, of the newly
vested Shares (the “Initial Tranches”) to the Participant or his estate, or, as directed by the
Participant, a brokerage account, with the remaining Shares credited to the Participant’s account
as an equivalent number of “Deferred Stock Units.” The Company must, in any event, issue the
applicable Shares in respect of the Initial Tranches no later than the later of (i) December 31 of
the calendar year in which the applicable Vesting Date occurs and (ii) the fifteenth day of the
third calendar month following the Vesting Date. Until the Vesting Date, the Participant shall have
no rights to any Shares or any rights associated with such Shares, including without limitation
dividend or voting rights, and the Participant shall have no voting rights with respect to Deferred
Stock Units.
4. Acceleration/ Deferral.
(a) Acceleration. In no event may the Company deliver the Shares to the
Participant earlier than an applicable Vesting Date.
(b) Deferral. The Company shall issue Shares in payment of the Deferred Stock
Units as of or as soon as practicable after the first day of the seventh (7th) month (the
“Deferred Payment Date”) following the Participant’s separation from service, as a lump sum
in common stock of the Company (with any fractional share paid in cash). If the Participant
separates from service with the Company and all Subsidiaries on account of death or if the
Participant dies prior to payment under the preceding sentence, the Company shall make
payment as soon as reasonably practicable following the Participant’s death, in accordance
with the beneficiary designation form filed for this benefit (or, if none, according to the
beneficiary designation form filed by the Participant with respect to his 2006 award of
restricted stock) as the form may be updated from time to time (provided that a designation
specific to the Deferred Stock Units hereunder shall take precedence over a form filed for
the 2006 award). If there is a Change in Control, then upon consummation of the Change in
Control, but in no event more than 15 days following the Change in Control, the Company
shall provide the Participant a cash payment equal to the value per share of the
consideration received in the Change in Control multiplied by the number of Deferred Stock
Units then credited to the Participant under this Agreement. In no event may the Company or
the Participant defer the delivery of the Shares beyond the date specified in this Section
4(b), unless such deferral complies in all respects with Treasury Regulation Section
1.409A-2(b) related to subsequent changes in the time or form of payment of nonqualified
deferred compensation arrangements, or any successor regulation.
- 2 -
5. Dividend Equivalent Rights.
The Participant shall receive Dividend Equivalent Rights on the Shares between the applicable
Vesting Date and the date on which Shares are distributed. “Dividend Equivalent Rights” mean a
credit to the account of the Participant, based on the number of vested RSUs or Deferred Stock
Units then credited to the Participant under this Agreement, equivalent to the cash, stock or other
property dividends on shares of Common Stock. Dividend Equivalent credits shall be deemed
reinvested in additional RSUs or Deferred Stock Units, as applicable, (or fractions thereof) by
dividing the dollar amount of the Dividend Equivalent credit by the Fair Market Value of a share of
the Company’s common stock on the payment date of the dividend. The resulting number of Common
Stock equivalents shall be added to the number of RSUs or Deferred Stock Units (as applicable)
subject to this Agreement.
6. Restrictions Regarding Employment.
(a) The Participant agrees that he will not take any Adverse Actions (as defined below)
against the Company or any Subsidiary from the Date of Grant through the first anniversary
of the Participant’s termination of employment with the Company or any Subsidiary (the
“Restricted Period”). The Participant acknowledges that damages that may arise from a breach
of this Section 6 may be impossible to ascertain or prove with certainty. Notwithstanding
anything in this Agreement or the Plan to the contrary, if the Company determines in its
sole discretion that the Participant has taken Adverse Actions against the Company or any
Subsidiary at any time during the Restricted Period, in addition to other legal remedies
that may be available, (i) the Company will be entitled to an immediate injunction from a
court of competent jurisdiction to end such Adverse Action, without further proof of damage,
(ii) the Committee will have the authority in its sole discretion to terminate immediately
all rights of the Participant under the Plan and this Agreement without notice of any kind,
and (iii) the Committee will have the authority in its sole discretion to cause a forfeiture
of any Shares acquired by the Participant upon the vesting of the RSUs to the extent that
such vesting occurred within six months prior to the date the Participant first commences
any such Adverse Actions and require the Participant to disgorge any profits (however
defined by the Committee) realized by the Participant relating to such vested portion of the
Shares. Such disgorged profits paid to the Company must be made in cash (including check,
bank draft or money order) or, with the Committee’s consent, shares of Common Stock with a
Fair Market Value on the date of payment equal to the amount of such payment. The Company
will be entitled to withhold and deduct from future wages of the Participant (or from other
amounts that may be due and owing to the Participant from the Company or a Subsidiary) or
make other arrangements for the collection of all amounts necessary to satisfy such payment
obligation.
(b) For purposes of this Agreement, an “Adverse Action” will mean any of the following:
(i) engaging in any commercial activity in competition with any part of the business of the
Company or any Subsidiary as conducted during the Restricted Period for which the
Participant has or had access to trade secrets and/or confidential information;
(ii) diverting or attempting to divert from the Company or any Subsidiary any business
of any kind, including, without limitation, interference with any business relationships
with suppliers, customers, licensees, licensors, clients or contractors; (iii) participating
in the ownership, operation or control of, being employed by, or connected in any manner
with any person or entity that solicits, offers or provides any services or products similar
to those that the Company or any Subsidiary offers to its customers or prospective
customers, (iv) making, or causing or attempting to cause any other person or entity to
- 3 -
make, any statement, either written or oral, or conveying any information about the Company
or any Subsidiary that is disparaging or that in any way reflects negatively on the Company
or any Subsidiary; or (v) engaging in any other activity that is hostile, contrary or
harmful to the interests of the Company or any Subsidiary, including, without limitation,
influencing or advising any person who is employed by or in the service of the Company or
any Subsidiary to leave such employment or service with the Company or any Subsidiary or to
enter into the employment or service of any actual or prospective competitor of the Company
or any Subsidiary, influencing or advising any competitor of the Company or any Subsidiary
to employ to otherwise engage the services of any person who is employed by or in the
service of the Company or any Subsidiary, or improperly disclosing or otherwise misusing any
trade secrets or confidential information regarding the Company or any Subsidiary.
(c) Should any provision of this Section 6 of the Agreement be held invalid or illegal,
such illegality shall not invalidate the whole of this Section 6 of the Agreement, but,
rather, the Agreement shall be construed as if it did not contain the illegal part or
narrowed to permit its enforcement, and the rights and obligations of the parties shall be
construed and enforced accordingly. In furtherance of and not in limitation of the
foregoing, the Participant expressly agrees that should the duration of or business
activities covered by, any provision of this Agreement be in excess of that which is valid
or enforceable under applicable law, then such provision shall be construed to cover only
that duration, extent or activities that may validly or enforceably be covered. The
Participant acknowledges the uncertainty of the law in this respect and expressly stipulates
that this Agreement shall be construed in a manner that renders its provisions valid and
enforceable to the maximum extent (not exceeding its express terms) possible under
applicable law. This Section 6 of the Agreement does not replace and is in addition to any
other agreements the Participant may have with the Company or any of its Subsidiaries on the
matters addressed herein.
7. Transferability.
This Agreement may not be sold, assigned, transferred, pledged, hypothecated or otherwise
disposed of (whether by operation of law or otherwise) (collectively, a “transfer”), except that
this Agreement may be transferred by the laws of descent and distribution or as otherwise permitted
under the Plan. The Participant may only transfer the Shares that may be issued pursuant to this
Agreement following a Vesting Date (or, for Deferred Stock Units, the Deferred Payment Date) that
covers them.
8. Withholding Taxes.
(a) The Participant has reviewed with the Participant’s own tax advisors the federal,
state, local and foreign tax consequences of this investment and the transactions
contemplated by this Agreement. The Participant is relying solely on such advisors and not
on any statements or representations of the Company or any of its agents.
- 4 -
(b) The Company’s obligation to deliver Shares to the Participant upon the vesting of
the RSUs shall be subject to the satisfaction of all income tax (including federal, state
and local taxes), social insurance, payroll tax, payment on account or other tax related
withholding requirements (“Withholding Taxes”). FICA taxes will be withheld from other
compensation due to the Participant with respect to RSUs that become credited as Deferred
Stock Units.
(c) The Participant acknowledges and agrees that the Company has the right to deduct
from payments of any kind otherwise due to the Participant any Withholding Taxes to be
withheld with respect to the transactions contemplated by this Agreement, including the
vesting of the Shares.
9. Securities Laws.
Notwithstanding any other provision of the Plan or this Agreement, the Company will not be
required to issue, and the Executive may not sell, assign, transfer or otherwise dispose of, any
shares of Common Stock received as payment of the RSUs, unless (a) there is in effect with respect
to the shares of Common Stock received as payment of the RSUs a registration statement under the
Securities Act of 1933, as amended, and any applicable state or foreign securities laws or an
exemption from such registration, and (b) there has been obtained any other consent, approval or
permit from any other regulatory body that the Committee, in its sole discretion, deems necessary
or advisable. The Company may condition such issuance, sale or transfer upon the receipt of any
representations or agreements from the parties involved, and the placement of any legends on
certificates representing Common Stock received as payment of the RSUs, as may be deemed necessary
or advisable by the Company to comply with such securities law or other restrictions.
10. Adjustments.
In the event of any reorganization, merger, consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of shares, rights offering, divestiture
or extraordinary dividend (including a spin-off), or any other change in the corporate structure or
shares of the Company, the Committee (or, if the Company is not the surviving corporation in any
such transaction, the board of directors of the surviving corporation), in order to prevent
dilution or enlargement of the rights of the Grantee, shall make equitable adjustments (which
adjustments will be conclusive) as to the number and kind of securities or other property
(including cash) covered by this grant of RSUs and any related Deferred Stock Units.
11. Provisions of the Plan.
This Agreement is subject to the provisions of the Plan, a copy of which is furnished to the
Participant with this Agreement. Any undefined terms are defined in the Plan.
12. Miscellaneous.
(a) Section 409A. This Agreement is intended to comply with the requirements of
Section 409A of the Internal Revenue Code and shall be construed consistently therewith.
- 5 -
(b) Unsecured Creditor. This Agreement shall create a contractual obligation on
the part of Company to make payment of the RSUs and Deferred Stock Units credited to the
account of the Participant at the time provided for in this Agreement. Neither the
Participant nor any other party claiming an interest in deferred compensation hereunder
shall have any interest whatsoever in any specific assets of the Company. The Executive’s
right to receive payments hereunder shall be that of an unsecured general creditor of
Company.
(c) Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this
Agreement, and each other provision of this Agreement shall be severable and enforceable to
the extent permitted by law.
(d) Waiver. Any provision for the benefit of the Company contained in this
Agreement may be waived, either generally or in any particular instance, by the Board of
Directors of the Company or the Committee.
(e) Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Company and the Participant and their respective heirs, executors,
administrators, legal representatives, successors and assigns, subject to the restrictions
on transfer set forth in Section 7 of this Agreement.
(f) Notice. All notices required or permitted hereunder shall be in writing and
deemed effectively given upon personal delivery or five calendar days after deposit in the
United States Post Office, by registered or certified mail, postage prepaid, addressed to
the other party hereto at the address shown beneath his, her, or its respective signature to
this Agreement, or at such other address or addresses as either party shall designate to the
other in accordance with this Section 12(f).
(g) Entire Agreement. This Agreement and the Plan constitute the entire
agreement between the parties, and supersedes all prior agreements and understandings,
relating to the subject matter of this Agreement.
(h) Amendment. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Participant.
(i) Governing Law. This Agreement shall be construed, interpreted and enforced
in accordance with the internal laws of the State of Delaware without regard to any
applicable conflicts of laws.
(j) Electronic Delivery. The Company may, in its sole discretion, decide to
deliver any documents related to participation in the Plan, RSUs granted under the Plan or
future RSUs that may be granted under the Plan by electronic means or to request the
Participant’s consent to participate in the Plan by electronic means. The Participant hereby
consents to receive such documents by electronic delivery and, if requested, to
agree to participate in the Plan through an on-line or electronic system established
and maintained by the Company or another third party designated by the Company.
(k) Participant’s Acknowledgments. The Participant acknowledges that he: (i)
has read this Agreement; (ii) has been represented in the preparation, negotiation and
execution of this Agreement by legal counsel of the Participant’s own choice or has
voluntarily declined to seek such counsel; (iii) understands the terms and consequences of
this Agreement; (iv) is fully aware of the legal and binding effect of this Agreement; and
(v) understands that the law firm of ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ LLP is acting as
counsel to the Company in connection with the transactions contemplated by the Agreement,
and is not acting as counsel for the Participant.
- 6 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date last indicated
below.
| ARBITRON INC. |
||||
| Date: | By: | |||
| Name: | ||||
| Title: | ||||
| Date: | By: | |||
| ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||||
- 7 -