Exhibit 10.01

 

APPENDIX C

 

ENTERCOM EQUITY COMPENSATION PLAN

(As Amended through February 22, 2005)

 

The purpose of the Entercom Equity Compensation Plan (the “Plan”) is to provide
(i) designated employees of Entercom Communications Corp. (the “Company”) and
its subsidiaries, (ii) certain consultants and advisors who perform services for
the Company or its subsidiaries and (iii) non-employee members of the Board of
Directors of the Company (the “Board”) with the opportunity to receive grants of
incentive stock options, nonqualified stock options, stock appreciation rights
or restricted stock.  The Company believes that the Plan will enhance the
incentive for participants to contribute materially to the growth of the
Company, thereby benefiting the Company and the Company’s shareholders, and will
align the economic interests of the participants with those of the shareholders.

 

1.                                       ADMINISTRATION.

 

(A)                                  COMMITTEE.  THE PLAN SHALL BE ADMINISTERED
AND INTERPRETED BY A COMMITTEE APPOINTED BY THE BOARD (THE “COMMITTEE”). THE
COMMITTEE SHALL CONSIST OF TWO OR MORE PERSONS WHO MAY BE “OUTSIDE DIRECTORS” AS
DEFINED UNDER SECTION 162(M) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE “CODE”) AND RELATED TREASURY REGULATIONS AND “NON-EMPLOYEE DIRECTORS” AS
DEFINED UNDER RULE 16B-3 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
(THE “EXCHANGE ACT”).  HOWEVER, THE BOARD MAY RETAIN THE RIGHT TO RATIFY,
APPROVE OR AMEND ANY GRANTS AS IT DEEMS APPROPRIATE.  IF THE BOARD REQUIRES
RATIFICATION OR APPROVAL OF A GRANT AND THE GRANT IS NOT RATIFIED OR APPROVED BY
THE BOARD, SUCH GRANT SHALL NOT BE EFFECTIVE.  BEFORE AN INITIAL PUBLIC OFFERING
OF THE COMPANY’S STOCK AS DESCRIBED IN SECTION 20(B) (A “PUBLIC OFFERING”), THE
PLAN MAY BE ADMINISTERED BY THE BOARD.  IF THE BOARD ADMINISTERS THE PLAN DURING
A PERIOD PRIOR TO A PUBLIC OFFERING, REFERENCES IN THE PLAN TO THE “COMMITTEE”
SHALL BE DEEMED TO REFER TO THE BOARD DURING BUT ONLY FOR SUCH PERIOD.

 

(B)                                 COMMITTEE AUTHORITY.  SUBJECT TO
RATIFICATION OR APPROVAL BY THE BOARD IF THE BOARD RETAINS SUCH RIGHT PURSUANT
TO SUBSECTION (A) ABOVE, THE COMMITTEE SHALL HAVE THE SOLE AUTHORITY TO (I)
DETERMINE THE INDIVIDUALS TO WHOM GRANTS SHALL BE MADE UNDER THE PLAN, (II)
DETERMINE THE TYPE, SIZE AND TERMS OF THE GRANTS TO BE MADE TO EACH SUCH
INDIVIDUAL, (III) DETERMINE THE TIME WHEN GRANTS WILL BE MADE AND THE
COMMENCEMENT AND DURATION OF ANY APPLICABLE EXERCISE OR RESTRICTION PERIOD,
INCLUDING THE CRITERIA FOR EXERCISABILITY AND THE ACCELERATION OF EXERCISABILITY
AND (IV) DEAL WITH ANY OTHER MATTERS ARISING UNDER THE PLAN.

 

(C)                                  COMMITTEE DETERMINATIONS.  SUBJECT TO
RATIFICATION, APPROVAL OR AMENDMENT BY THE BOARD IF THE BOARD RETAINS SUCH RIGHT
PURSUANT TO SUBSECTION (A) ABOVE, THE COMMITTEE SHALL HAVE FULL POWER AND
AUTHORITY TO ADMINISTER AND INTERPRET THE PLAN, TO MAKE FACTUAL DETERMINATIONS
AND TO ADOPT OR AMEND SUCH RULES, REGULATIONS, AGREEMENTS AND INSTRUMENTS FOR
IMPLEMENTING THE PLAN AND FOR THE CONDUCT OF ITS BUSINESS AS IT DEEMS NECESSARY
OR ADVISABLE, IN ITS SOLE DISCRETION.  SUBJECT TO RATIFICATION, APPROVAL OR
AMENDMENT BY THE BOARD IF THE BOARD RETAINS SUCH RIGHT PURSUANT TO
SUBSECTION (A) ABOVE, THE COMMITTEE’S INTERPRETATIONS OF THE PLAN AND ALL
DETERMINATIONS MADE BY THE COMMITTEE PURSUANT TO THE POWERS VESTED IN IT
HEREUNDER SHALL BE CONCLUSIVE AND BINDING ON ALL PERSONS HAVING ANY INTEREST IN
THE PLAN OR IN ANY AWARDS GRANTED HEREUNDER.  ALL POWERS OF THE COMMITTEE SHALL
BE EXECUTED IN ITS SOLE DISCRETION, IN THE BEST INTEREST OF THE COMPANY, NOT AS
A FIDUCIARY, AND IN KEEPING WITH THE OBJECTIVES OF THE PLAN AND NEED NOT BE
UNIFORM AS TO SIMILARLY SITUATED INDIVIDUALS.

 

(D)                                 DELEGATION OF AUTHORITY.  NOTWITHSTANDING
THE FOREGOING, THE COMMITTEE MAY DELEGATE TO THE CHIEF EXECUTIVE OFFICER OF THE
COMPANY THE AUTHORITY TO MAKE GRANTS UNDER THE PLAN TO EMPLOYEES AND KEY
ADVISORS (AS DEFINED HEREIN) OF THE COMPANY AND ITS SUBSIDIARIES WHO ARE NOT
SUBJECT TO THE RESTRICTIONS OF SECTION 16(B) OF THE EXCHANGE ACT AND WHO ARE NOT
EXPECTED TO BE SUBJECT TO THE LIMITATIONS OF SECTION 162(M) OF THE CODE.  THE
GRANT OF AUTHORITY UNDER THIS SUBSECTION 1(D) SHALL BE SUBJECT TO SUCH
CONDITIONS AND LIMITATIONS AS MAY BE DETERMINED BY THE COMMITTEE, SUBJECT TO
RATIFICATION AND APPROVAL BY THE BOARD IF THE BOARD RETAINS SUCH RIGHT PURSUANT
TO SUBSECTION (A) ABOVE.  IF THE CHIEF EXECUTIVE OFFICER MAKES GRANTS PURSUANT
TO THE DELEGATED AUTHORITY UNDER THIS SUBSECTION (D), REFERENCES IN THE PLAN TO
THE “COMMITTEE,” AS THEY RELATE TO MAKING SUCH GRANTS (BUT NOT TO THE SUBSEQUENT
ADMINISTRATION OF SUCH GRANTS), SHALL BE DEEMED TO REFER TO THE CHIEF EXECUTIVE
OFFICER.

 

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2.                                       SHARES SUBJECT TO THE PLAN AND TYPES OF
GRANTS

 

Before a Public Offering, awards may be made under the Plan with respect to
shares of non-voting common stock of the Company, and after a Public Offering,
awards may be made with respect to shares of Class A common stock of the
Company.  The term “Company Stock” means, before a Public Offering, non-voting
common stock of the Company and, after a Public Offering, Class A common stock
of the Company.  Awards under the Plan may consist of grants of (a) incentive
stock options as described in Section 5 (“Incentive Stock Options”), (b)
nonqualified stock options as described in Section 5 (“Nonqualified Stock
Options”) (Incentive Stock Options and Nonqualified Stock Options are
collectively referred to as “Options”), (c) restricted stock as described in
Section 6 (“Restricted Stock”) and (d) stock appreciation rights as described in
Section 7 (“SARs”) (all such awards being hereinafter collectively referred to
as “Grants”).  All Grants shall be subject to the terms and conditions set forth
herein and to such other terms and conditions consistent with this Plan as the
Committee deems appropriate and as are specified in writing by the Committee to
the individual in a grant instrument or an amendment to the grant instrument
made in conformance with the Plan (the “Grant Instrument”).  The Committee shall
approve the form and provisions of each Grant Instrument.  Grants under a
particular Section of the Plan need not be uniform as among the Grantees (as
defined below) or among any class or grouping of Grantees.

 

3.                                       LIMITATIONS ON THE NUMBER OF SHARES
SUBJECT TO THE PLAN

 

(a)                                  Limitations.  The aggregate number of
shares of Company Stock that may be issued or transferred pursuant to Grants
under the Plan shall be 8,500,000 (1) subject to adjustment as described in
subsection (b) below.  In addition to the foregoing, subject to adjustment as
described in subsection (b) below, commencing on January 1, 2006 and each
anniversary thereafter during the term of the Plan, the number of shares of
Company Stock that may be issued or transferred pursuant to Grants under the
Plan shall be increased by (i) 1,500,000 shares of Company Stock or (ii) a
lesser amount determined by the Board.  As a further limitation, subject to
adjustment as described in subsection (b) below, the aggregate number of shares
of Company Stock that may be subject to Grants of Incentive Stock Options shall
not exceed 1,850,000 shares, and the aggregate number of shares of Company Stock
that may be subject to Restricted Stock Grants shall not exceed 2,000,000. 
Subject to adjustment as described in subsection (b) below, the aggregate number
of shares of Company Stock that may be subject to Grants made under the Plan to
any individual during any calendar year shall not exceed 925,000 shares.  The
shares may be authorized but unissued shares of Company Stock or reacquired
shares of Common Stock, including shares purchased by the Company on the open
market for purposes of the Plan.  If and to the extent Options or SARs granted
under the Plan terminate, expire or are canceled, forfeited, exchanged or
surrendered without having been exercised, or if any shares of Restricted Stock
are forfeited, the shares subject to such Grants shall again be available for
purposes of the Plan.

 

(B)                                 ADJUSTMENTS.  IF THERE IS ANY CHANGE IN THE
NUMBER OR KIND OF SHARES OF COMPANY STOCK OUTSTANDING (I) BY REASON OF A STOCK
DIVIDEND, SPINOFF, RECAPITALIZATION, STOCK SPLIT, OR COMBINATION OR EXCHANGE OF
SHARES, (II) BY REASON OF A MERGER, REORGANIZATION OR CONSOLIDATION IN WHICH THE
COMPANY IS THE SURVIVING CORPORATION, (III) BY REASON OF A RECLASSIFICATION OR
CHANGE IN PAR VALUE, OR (IV) BY REASON OF ANY OTHER EXTRAORDINARY OR UNUSUAL
EVENT AFFECTING THE OUTSTANDING COMPANY STOCK WITHOUT THE COMPANY’S RECEIPT OF
CONSIDERATION, OR IF THE VALUE OF OUTSTANDING SHARES OF COMPANY STOCK IS
SUBSTANTIALLY REDUCED AS A RESULT OF A SPINOFF OR THE COMPANY’S PAYMENT OF AN
EXTRAORDINARY DIVIDEND OR DISTRIBUTION, THE MAXIMUM NUMBER OF SHARES OF COMPANY
STOCK AVAILABLE FOR GRANTS, THE MAXIMUM NUMBER OF SHARES OF COMPANY STOCK THAT
ANY INDIVIDUAL PARTICIPATING IN THE PLAN MAY BE GRANTED IN ANY YEAR, THE NUMBER
OF SHARES COVERED BY OUTSTANDING GRANTS, THE KIND OF SHARES ISSUED UNDER THE
PLAN, AND THE PRICE PER SHARE OF SUCH GRANTS MAY BE APPROPRIATELY ADJUSTED BY
THE COMMITTEE TO REFLECT ANY INCREASE OR DECREASE IN THE NUMBER OF, OR CHANGE IN
THE KIND OR VALUE OF, ISSUED SHARES OF COMPANY STOCK TO PRECLUDE, TO THE EXTENT
PRACTICABLE, THE ENLARGEMENT OR DILUTION OF RIGHTS AND BENEFITS UNDER SUCH
GRANTS; PROVIDED, HOWEVER, THAT ANY FRACTIONAL SHARES RESULTING FROM SUCH
ADJUSTMENT SHALL BE ELIMINATED.  ANY ADJUSTMENTS DETERMINED BY THE COMMITTEE
SHALL BE FINAL, BINDING AND CONCLUSIVE.

 

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(1)          Increased by 1,135,011 shares, from 7,364,989 to 8,500,000 by
approval of the Board on February 22, 2005, subject to shareholder approval of
such increase being obtained on or before February 22, 2006.

 

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(C)                                  PROVISIONS APPLICABLE TO SECTION 162(M)
PARTICIPANTS

 

(I)                                     THE COMMITTEE, IN ITS DISCRETION, MAY
DETERMINE WHETHER A GRANT IS TO QUALIFY AS PERFORMANCE-BASED COMPENSATION AS
DESCRIBED IN SECTION 162(M)(4)(C) OF THE CODE.

 

(II)                                  NOTWITHSTANDING ANYTHING IN THE PLAN TO
THE CONTRARY, THE COMMITTEE (PROVIDED IT IS COMPRISED SOLELY OF TWO OR MORE
“OUTSIDE DIRECTORS” AS DEFINED UNDER SECTION 162(M) OF THE CODE) MAY AWARD ANY
GRANT TO A SECTION 162(M) PARTICIPANT, INCLUDING RESTRICTED STOCK THE
RESTRICTIONS WITH RESPECT TO WHICH LAPSE UPON THE ATTAINMENT OF PERFORMANCE
GOALS WHICH ARE RELATED TO ONE OR MORE OF THE PERFORMANCE CRITERIA.

 

(III)                               TO THE EXTENT NECESSARY TO COMPLY WITH THE
PERFORMANCE-BASED COMPENSATION REQUIREMENTS OF SECTION 162(M)(4)(C) OF THE CODE,
WITH RESPECT TO ANY RESTRICTED STOCK GRANTED UNDER THE PLAN TO ONE OR MORE
SECTION 162(M) PARTICIPANTS, NO LATER THAN NINETY (90) DAYS FOLLOWING THE
COMMENCEMENT OF ANY FISCAL YEAR IN QUESTION OR ANY OTHER DESIGNATED FISCAL
PERIOD OR PERIOD OF SERVICE (OR SUCH OTHER TIME AS MAY BE REQUIRED OR PERMITTED
BY SECTION 162(M) OF THE CODE), THE COMMITTEE SHALL, IN WRITING, (I) DESIGNATE
ONE OR MORE SECTION 162(M) PARTICIPANTS, (II) SELECT THE PERFORMANCE CRITERIA
APPLICABLE TO THE FISCAL YEAR OR OTHER DESIGNATED FISCAL PERIOD OR PERIOD OF
SERVICE, (III) ESTABLISH THE VARIOUS PERFORMANCE TARGETS, IN TERMS OF AN
OBJECTIVE FORMULA OR STANDARD, AND AMOUNTS OF SUCH RESTRICTED STOCK WHICH MAY BE
EARNED FOR SUCH FISCAL YEAR OR OTHER DESIGNATED FISCAL PERIOD OR PERIOD OF
SERVICE, AND (IV) SPECIFY THE RELATIONSHIP BETWEEN PERFORMANCE CRITERIA AND THE
PERFORMANCE TARGETS AND THE AMOUNTS OF RESTRICTED STOCK TO BE EARNED BY EACH
SECTION 162(M) PARTICIPANT FOR SUCH FISCAL YEAR OR OTHER DESIGNATED FISCAL
PERIOD OR PERIOD OF SERVICE.  FOLLOWING THE COMPLETION OF EACH FISCAL YEAR OR
OTHER DESIGNATED FISCAL PERIOD OR PERIOD OF SERVICE, THE COMMITTEE SHALL CERTIFY
IN WRITING WHETHER THE APPLICABLE PERFORMANCE TARGETS HAVE BEEN ACHIEVED FOR
SUCH FISCAL YEAR OR OTHER DESIGNATED FISCAL PERIOD OR PERIOD OF SERVICE.  IN
DETERMINING THE AMOUNT EARNED BY A SECTION 162(M) PARTICIPANT, THE COMMITTEE
SHALL HAVE THE RIGHT TO REDUCE (BUT NOT TO INCREASE) THE AMOUNT PAYABLE AT A
GIVEN LEVEL OF PERFORMANCE TO TAKE INTO ACCOUNT ADDITIONAL FACTORS THAT THE
COMMITTEE MAY DEEM RELEVANT TO THE ASSESSMENT OF INDIVIDUAL OR CORPORATE
PERFORMANCE FOR THE FISCAL YEAR OR OTHER DESIGNATED FISCAL PERIOD OR PERIOD OF
SERVICE.

 

(IV)                              FURTHERMORE, NOTWITHSTANDING ANY OTHER
PROVISION OF THE PLAN, ANY GRANT AWARDED TO A SECTION 162(M) PARTICIPANT AND
THAT IS INTENDED TO QUALIFY AS PERFORMANCE-BASED COMPENSATION AS DESCRIBED IN
SECTION 162(M)(4)(C) OF THE CODE SHALL BE SUBJECT TO ANY ADDITIONAL LIMITATIONS
SET FORTH IN SECTION 162(M) OF THE CODE (INCLUDING ANY AMENDMENT TO
SECTION 162(M) OF THE CODE) OR ANY REGULATIONS OR RULINGS ISSUED THEREUNDER THAT
ARE REQUIREMENTS FOR QUALIFICATION AS PERFORMANCE-BASED COMPENSATION AS
DESCRIBED IN SECTION 162(M)(4)(C) OF THE CODE, AND THE PLAN SHALL BE DEEMED
AMENDED TO THE EXTENT NECESSARY TO CONFORM TO SUCH REQUIREMENTS.

 

(V)                                 FOR PURPOSES OF THE PLAN,

 

(A)                              “PERFORMANCE CRITERIA” SHALL MEAN THE FOLLOWING
BUSINESS CRITERIA WITH RESPECT TO THE COMPANY, ANY SUBSIDIARY OR ANY DIVISION OR
OPERATING UNIT: (A) NET INCOME, (B) PRE-TAX INCOME, (C) OPERATING INCOME, (D)
CASH FLOW, (E) EARNINGS PER SHARE, (F) RETURN ON EQUITY, (G) RETURN ON INVESTED
CAPITAL OR ASSETS, (H) COST REDUCTIONS OR SAVINGS, (I) FUNDS FROM OPERATIONS,
(J) APPRECIATION IN THE FAIR MARKET VALUE OF COMPANY STOCK, AND (K) EARNINGS
BEFORE ANY ONE OR MORE OF THE FOLLOWING ITEMS: INTEREST, TAXES, DEPRECIATION OR
AMORTIZATION; EACH AS DETERMINED IN ACCORDANCE WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES OR SUBJECT TO SUCH ADJUSTMENTS AS MAY BE SPECIFIED BY THE
COMMITTEE.

 

(B)                                “SECTION 162(M) PARTICIPANT” SHALL MEAN ANY
KEY EMPLOYEE DESIGNATED BY THE COMMITTEE AS A KEY EMPLOYEE WHOSE COMPENSATION
FOR THE FISCAL YEAR IN WHICH THE KEY EMPLOYEE IS SO DESIGNATED OR A FUTURE
FISCAL YEAR MAY BE SUBJECT TO THE LIMIT ON DEDUCTIBLE COMPENSATION IMPOSED BY
SECTION 162(M) OF THE CODE.

 

4.                                       ELIGIBILITY FOR PARTICIPATION

 

(A)                                  ELIGIBLE PERSONS.  ALL EMPLOYEES OF THE
COMPANY AND ITS SUBSIDIARIES (“EMPLOYEES”), INCLUDING EMPLOYEES WHO ARE OFFICERS
OR MEMBERS OF THE BOARD, AND MEMBERS OF THE BOARD WHO ARE NOT EMPLOYEES
(“NON-EMPLOYEE

 

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DIRECTORS”) SHALL BE ELIGIBLE TO PARTICIPATE IN THE PLAN.  CONSULTANTS AND
ADVISORS WHO PERFORM SERVICES FOR THE COMPANY OR ANY OF ITS SUBSIDIARIES (“KEY
ADVISORS”) SHALL BE ELIGIBLE TO PARTICIPATE IN THE PLAN IF THE KEY ADVISORS ARE
NATURAL PERSONS RENDERING BONA FIDE SERVICES AND SUCH SERVICES ARE NOT IN
CONNECTION WITH THE OFFER OR SALE OF SECURITIES IN A CAPITAL-RAISING
TRANSACTION.

 

(B)                                 SELECTION OF GRANTEES.  THE COMMITTEE SHALL
SELECT THE EMPLOYEES, NON-EMPLOYEE DIRECTORS AND KEY ADVISORS TO RECEIVE GRANTS
AND SHALL DETERMINE THE NUMBER OF SHARES OF COMPANY STOCK SUBJECT TO A
PARTICULAR GRANT IN SUCH MANNER AS THE COMMITTEE DETERMINES.  EMPLOYEES, KEY
ADVISORS AND NON-EMPLOYEE DIRECTORS WHO RECEIVE GRANTS UNDER THIS PLAN SHALL
HEREINAFTER BE REFERRED TO AS “GRANTEES.”

 

5.                                       GRANTING OF OPTIONS

 

(A)                                  NUMBER OF SHARES.  THE COMMITTEE SHALL
DETERMINE THE NUMBER OF SHARES OF COMPANY STOCK THAT WILL BE SUBJECT TO EACH
GRANT OF OPTIONS TO EMPLOYEES, NON-EMPLOYEE DIRECTORS AND KEY ADVISORS.

 

(B)                                 TYPE OF OPTION AND PRICE.

 

(I)                                     THE COMMITTEE MAY GRANT INCENTIVE STOCK
OPTIONS WHICH ARE INTENDED TO QUALIFY AS “INCENTIVE STOCK OPTIONS” WITHIN THE
MEANING OF SECTION 422 OF THE CODE OR NONQUALIFIED STOCK OPTIONS WHICH ARE NOT
INTENDED SO TO QUALIFY OR ANY COMBINATION OF INCENTIVE STOCK OPTIONS AND
NONQUALIFIED STOCK OPTIONS, ALL IN ACCORDANCE WITH THE TERMS AND CONDITIONS SET
FORTH HEREIN.  INCENTIVE STOCK OPTIONS MAY BE GRANTED ONLY TO EMPLOYEES. 
NONQUALIFIED STOCK OPTIONS MAY BE GRANTED TO EMPLOYEES, NON-EMPLOYEE DIRECTORS
AND KEY ADVISORS.

 

(II)                                  THE PURCHASE PRICE (THE “EXERCISE PRICE”)
OF COMPANY STOCK SUBJECT TO AN OPTION SHALL BE DETERMINED BY THE COMMITTEE AND
MAY BE EQUAL TO, GREATER THAN, OR LESS THAN THE FAIR MARKET VALUE (AS DEFINED
BELOW) OF A SHARE OF COMPANY STOCK ON THE DATE THE OPTION IS GRANTED; PROVIDED,
HOWEVER, THAT (X) THE EXERCISE PRICE OF AN INCENTIVE STOCK OPTION SHALL BE EQUAL
TO, OR GREATER THAN, THE FAIR MARKET VALUE OF A SHARE OF COMPANY STOCK ON THE
DATE THE INCENTIVE STOCK OPTION IS GRANTED; (Y) AN INCENTIVE STOCK OPTION MAY
NOT BE GRANTED TO AN EMPLOYEE WHO, AT THE TIME OF GRANT, OWNS STOCK POSSESSING
MORE THAN 10% OF THE TOTAL COMBINED VOTING POWER OF ALL CLASSES OF STOCK OF THE
COMPANY OR ANY PARENT OR SUBSIDIARY OF THE COMPANY, UNLESS THE EXERCISE PRICE
PER SHARE IS NOT LESS THAN 110% OF THE FAIR MARKET VALUE OF COMPANY STOCK ON THE
DATE OF GRANT AND (Z) IN THE EVENT THAT THE EXERCISE PRICE OF AN OPTION IS BELOW
THE FAIR MARKET VALUE PER SHARE ON THE DATE OF GRANT, SUCH OPTION MAY ALSO
INCLUDE LIMITATIONS REGARDING THE EXERCISE OF SUCH OPTION AND MAY PROVIDE THAT
SUCH EXERCISE IS SUBJECT TO CERTAIN TERMS AND RESTRICTIONS, INCLUDING A PRIOR
ELECTION BY THE GRANTEE, TO THE EXTENT SUCH TERMS AND RESTRICTIONS ARE REQUIRED
SO AS NOT CAUSE THE OPTION OR THE SHARES OF COMPANY STOCK ISSUABLE PURSUANT TO
THE EXERCISE OF SUCH OPTION TO BE INCLUDABLE IN THE GROSS INCOME OF THE GRANTEE
UNDER SECTION 409A OF THE CODE PRIOR TO SUCH TIMES OR OCCURRENCE OF SUCH EVENTS,
AS PERMITTED BY THE CODE AND THE REGULATIONS AND OTHER GUIDANCE THEREUNDER
(INCLUDING, WITHOUT LIMITATION, SECTION 409A OF THE CODE, AND THE REGULATIONS
AND OTHER GUIDANCE ISSUED BY THE SECRETARY OF THE TREASURY THEREUNDER).

 

(III)                               IF THE COMPANY STOCK IS PUBLICLY TRADED,
THEN THE FAIR MARKET VALUE PER SHARE SHALL BE DETERMINED AS FOLLOWS: (X) IF THE
PRINCIPAL TRADING MARKET FOR THE COMPANY STOCK IS A NATIONAL SECURITIES EXCHANGE
OR THE NASDAQ NATIONAL MARKET, THE LAST REPORTED SALE PRICE THEREOF ON THE
RELEVANT DATE OR (IF THERE WERE NO TRADES ON THAT DATE OR IF THE COMMITTEE
DETERMINES OTHERWISE IN ITS DISCRETION) THE LATEST PRECEDING DATE UPON WHICH A
SALE WAS REPORTED, OR (Y) IF THE COMPANY STOCK IS NOT PRINCIPALLY TRADED ON SUCH
EXCHANGE OR MARKET, THE MEAN BETWEEN THE LAST REPORTED “BID” AND “ASKED” PRICES
OF COMPANY STOCK ON THE RELEVANT DATE, AS REPORTED ON NASDAQ OR, IF NOT SO
REPORTED, AS REPORTED BY THE NATIONAL DAILY QUOTATION BUREAU, INC. OR AS
REPORTED IN A CUSTOMARY FINANCIAL REPORTING SERVICE, AS APPLICABLE AND AS THE
COMMITTEE DETERMINES.  IF THE COMPANY STOCK IS NOT PUBLICLY TRADED OR, IF
PUBLICLY TRADED BUT NOT SUBJECT TO REPORTED TRANSACTIONS OR “BID” OR “ASKED”
QUOTATIONS AS SET FORTH ABOVE, THE FAIR MARKET VALUE PER SHARE SHALL BE AS
DETERMINED BY THE COMMITTEE.

 

(C)                                  OPTION TERM.  THE COMMITTEE SHALL DETERMINE
THE TERM OF EACH OPTION.  THE TERM OF ANY OPTION SHALL NOT EXCEED TEN YEARS FROM
THE DATE OF GRANT.  HOWEVER, AN INCENTIVE STOCK OPTION WHICH IS GRANTED TO AN

 

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EMPLOYEE WHO, AT THE TIME OF GRANT, OWNS STOCK POSSESSING MORE THAN 10% OF THE
TOTAL COMBINED VOTING POWER OF ALL CLASSES OF STOCK OF THE COMPANY, OR ANY
PARENT OR SUBSIDIARY OF THE COMPANY, MAY NOT HAVE A TERM THAT EXCEEDS FIVE YEARS
FROM THE DATE OF GRANT.

 

(D)                                 EXERCISABILITY OF OPTIONS.  OPTIONS SHALL
BECOME EXERCISABLE IN ACCORDANCE WITH SUCH TERMS AND CONDITIONS, CONSISTENT WITH
THE PLAN, AS MAY BE DETERMINED BY THE COMMITTEE AND SPECIFIED IN THE GRANT
INSTRUMENT.  THE COMMITTEE MAY ACCELERATE THE EXERCISABILITY OF ANY OR ALL
OUTSTANDING OPTIONS AT ANY TIME FOR ANY REASON, AND SUCH ACCELERATION NEED NOT
BE UNIFORM AS AMONG ANY CLASS OR GROUPING OF GRANTEES.  NOTWITHSTANDING THE
FOREGOING, A NONQUALIFIED STOCK OPTION INTENDED TO COMPLY WITH SECTION 409A OF
THE CODE PURSUANT TO SUBSECTION (B)(II) ABOVE SHALL BE EXERCISABLE AT SUCH TIMES
AS ARE PERMITTED UNDER SECTION 409A OF THE CODE AND SHALL NOT BE ACCELERATED TO
THE EXTENT SUCH ACCELERATION WOULD NOT COMPLY WITH SECTION 409A OF THE CODE.

 

(E)                                  TERMINATION OF EMPLOYMENT, DISABILITY OR
DEATH.

 

(I)                                     EXCEPT AS PROVIDED BELOW, AN OPTION MAY
ONLY BE EXERCISED WHILE THE GRANTEE IS EMPLOYED BY, OR PROVIDING SERVICE TO, THE
COMPANY AS AN EMPLOYEE, KEY ADVISOR OR MEMBER OF THE BOARD.  IN THE EVENT THAT A
GRANTEE CEASES TO BE EMPLOYED BY, OR PROVIDE SERVICE TO, THE COMPANY FOR ANY
REASON OTHER THAN A DISABILITY (AS DEFINED IN SUBSECTION (V) BELOW), DEATH, OR
TERMINATION FOR CAUSE (AS DEFINED IN SUBSECTION (V) BELOW), ANY OPTION WHICH IS
OTHERWISE EXERCISABLE BY THE GRANTEE SHALL TERMINATE UNLESS EXERCISED WITHIN 90
DAYS AFTER THE DATE ON WHICH THE GRANTEE CEASES TO BE EMPLOYED BY, OR PROVIDE
SERVICE TO, THE COMPANY (OR WITHIN SUCH OTHER PERIOD OF TIME AS MAY BE SPECIFIED
BY THE COMMITTEE), BUT IN ANY EVENT NO LATER THAN THE DATE OF EXPIRATION OF THE
OPTION TERM.  EXCEPT AS OTHERWISE PROVIDED BY THE COMMITTEE, ANY OF THE
GRANTEE’S OPTIONS WHICH ARE NOT OTHERWISE EXERCISABLE AS OF THE DATE ON WHICH
THE GRANTEE CEASES TO BE EMPLOYED BY, OR PROVIDE SERVICE TO, THE COMPANY SHALL
TERMINATE AS OF THE DATE SUCH EMPLOYMENT OR SERVICE CEASED.

 

(II)                                  IN THE EVENT THE GRANTEE CEASES TO BE
EMPLOYED BY, OR PROVIDE SERVICE TO, THE COMPANY ON ACCOUNT OF A TERMINATION FOR
CAUSE BY THE COMPANY, ANY OPTION HELD BY THE GRANTEE SHALL TERMINATE AS OF THE
DATE AND TIME THE GRANTEE CEASES TO BE EMPLOYED BY, OR PROVIDE SERVICE TO, THE
COMPANY.  IN ADDITION, NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS SECTION 5,
IF THE GRANTEE HAS ENGAGED IN CONDUCT THAT CONSTITUTES CAUSE AT ANY TIME WHILE
THE GRANTEE IS EMPLOYED BY, OR PROVIDING SERVICE TO, THE COMPANY OR AFTER THE
GRANTEE’S TERMINATION OF EMPLOYMENT OR SERVICE, ANY OPTION HELD BY THE GRANTEE
SHALL IMMEDIATELY TERMINATE.  IN THE EVENT THE GRANTEE HAS ENGAGED IN CONDUCT
THAT CONSTITUTES CAUSE, IN ADDITION TO THE IMMEDIATE TERMINATION OF ALL GRANTS,
THE GRANTEE SHALL AUTOMATICALLY FORFEIT ALL SHARES UNDERLYING ANY EXERCISED
PORTION OF AN OPTION FOR WHICH THE COMPANY HAS NOT YET DELIVERED THE SHARE
CERTIFICATES, UPON REFUND BY THE COMPANY OF THE EXERCISE PRICE PAID BY THE
GRANTEE FOR SUCH SHARES (SUBJECT TO ANY RIGHT OF SETOFF BY THE COMPANY).

 

(III)                               IN THE EVENT THE GRANTEE CEASES TO BE
EMPLOYED BY, OR PROVIDE SERVICE TO, THE COMPANY BECAUSE THE GRANTEE IS DISABLED,
ANY OPTION WHICH IS OTHERWISE EXERCISABLE BY THE GRANTEE SHALL TERMINATE UNLESS
EXERCISED WITHIN ONE YEAR AFTER THE DATE ON WHICH THE GRANTEE CEASES TO BE
EMPLOYED BY, OR PROVIDE SERVICE TO, THE COMPANY (OR WITHIN SUCH OTHER PERIOD OF
TIME AS MAY BE SPECIFIED BY THE COMMITTEE), BUT IN ANY EVENT NO LATER THAN THE
DATE OF EXPIRATION OF THE OPTION TERM.  EXCEPT AS OTHERWISE PROVIDED BY THE
COMMITTEE, ANY OF THE GRANTEE’S OPTIONS WHICH ARE NOT OTHERWISE EXERCISABLE AS
OF THE DATE ON WHICH THE GRANTEE CEASES TO BE EMPLOYED BY, OR PROVIDE SERVICE
TO, THE COMPANY SHALL TERMINATE AS OF THE DATE SUCH EMPLOYMENT OR SERVICE
CEASED.

 

(IV)                              IF THE GRANTEE DIES WHILE EMPLOYED BY, OR
PROVIDING SERVICE TO, THE COMPANY OR WITHIN 90 DAYS AFTER THE DATE ON WHICH THE
GRANTEE CEASES TO BE EMPLOYED OR PROVIDE SERVICE ON ACCOUNT OF A TERMINATION
SPECIFIED IN SECTION 5(E)(I) ABOVE (OR WITHIN SUCH OTHER PERIOD OF TIME AS MAY
BE SPECIFIED BY THE COMMITTEE), ANY OPTION WHICH IS OTHERWISE EXERCISABLE BY THE
GRANTEE AS OF THE DATE OF HIS OR HER DEATH SHALL TERMINATE UNLESS EXERCISED
WITHIN ONE YEAR AFTER THE DATE ON WHICH THE GRANTEE CEASES TO BE EMPLOYED BY, OR
PROVIDE SERVICE TO, THE COMPANY (OR WITHIN SUCH OTHER PERIOD OF TIME AS MAY BE
SPECIFIED BY THE COMMITTEE), BUT IN ANY EVENT NO LATER THAN THE DATE OF
EXPIRATION OF THE OPTION TERM.  EXCEPT AS OTHERWISE PROVIDED BY THE COMMITTEE,
ANY OF THE GRANTEE’S OPTIONS WHICH ARE NOT OTHERWISE EXERCISABLE AS OF THE DATE
ON WHICH THE GRANTEE CEASES TO BE EMPLOYED BY, OR PROVIDE SERVICE TO, THE
COMPANY SHALL TERMINATE AS OF THE DATE SUCH EMPLOYMENT OR SERVICE CEASED.

 

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(V)                                 FOR PURPOSES OF THIS SECTION 5(E) AND
SECTION 6:

 

(A)                              THE TERM “COMPANY” SHALL MEAN THE COMPANY AND
ITS PARENT AND SUBSIDIARY CORPORATIONS.

 

(B)                                “EMPLOYED BY, OR PROVIDE SERVICE TO, THE
COMPANY” SHALL MEAN EMPLOYMENT OR SERVICE AS AN EMPLOYEE, KEY ADVISOR OR MEMBER
OF THE BOARD (SO THAT, FOR PURPOSES OF EXERCISING OPTIONS AND SARS AND
SATISFYING CONDITIONS WITH RESPECT TO RESTRICTED STOCK, A GRANTEE SHALL NOT BE
CONSIDERED TO HAVE TERMINATED EMPLOYMENT OR SERVICE UNTIL THE GRANTEE CEASES TO
BE AN EMPLOYEE, KEY ADVISOR OR MEMBER OF THE BOARD), UNLESS THE COMMITTEE
DETERMINES OTHERWISE IN THE GRANT INSTRUMENT.

 

(C)                                “DISABILITY” OR “DISABLED” SHALL MEAN A
GRANTEE’S BECOMING DISABLED WITHIN THE MEANING OF SECTION 22(E)(3) OF THE CODE.

 

(D)                               “CAUSE” SHALL MEAN, EXCEPT TO THE EXTENT
SPECIFIED OTHERWISE BY THE COMMITTEE OR SEPARATELY DEFINED IN A WRITTEN
EMPLOYMENT OR SIMILAR AGREEMENT BETWEEN A GRANTEE AND THE COMPANY, A FINDING BY
THE COMMITTEE THAT, BEFORE OR AFTER TERMINATION OF EMPLOYMENT OR SERVICE, THE
GRANTEE (I) HAS ENGAGED IN FRAUD, EMBEZZLEMENT, THEFT, COMMISSION OF A FELONY OR
PROVEN DISHONESTY IN THE COURSE OF HIS OR HER EMPLOYMENT OR SERVICE, (II) HAS
BREACHED ANY PROVISION OF HIS OR HER EMPLOYMENT OR SERVICE CONTRACT WITH THE
COMPANY, INCLUDING, WITHOUT LIMITATION, ANY COVENANT AGAINST COMPETITION AND/OR
RAIDING OF THE COMPANY’S EMPLOYEES, NON-EMPLOYEE DIRECTORS OR KEY ADVISORS, OR
(III) HAS DISCLOSED TRADE SECRETS OR CONFIDENTIAL INFORMATION OF THE COMPANY TO
PERSONS NOT ENTITLED TO RECEIVE SUCH INFORMATION.

 

(F)                                    EXERCISE OF OPTIONS.  A GRANTEE MAY
EXERCISE AN OPTION WHICH HAS BECOME EXERCISABLE, IN WHOLE OR IN PART, BY
DELIVERING A NOTICE OF EXERCISE TO THE COMPANY WITH PAYMENT OF THE EXERCISE
PRICE.  THE GRANTEE SHALL PAY THE EXERCISE PRICE FOR AN OPTION AS SPECIFIED BY
THE COMMITTEE (X) IN CASH, (Y) WITH THE APPROVAL OF THE COMMITTEE, SUBJECT TO
SUCH RESTRICTIONS AS THE COMMITTEE DEEMS APPROPRIATE, BY DELIVERING SHARES OF
COMPANY STOCK OWNED BY THE GRANTEE (INCLUDING COMPANY STOCK ACQUIRED IN
CONNECTION WITH THE EXERCISE OF AN OPTION) AND HAVING A FAIR MARKET VALUE ON THE
DATE OF EXERCISE EQUAL TO THE EXERCISE PRICE OR (Z) BY SUCH OTHER METHOD AS THE
COMMITTEE MAY APPROVE, INCLUDING, AFTER A PUBLIC OFFERING, PAYMENT THROUGH A
BROKER IN ACCORDANCE WITH PROCEDURES PERMITTED BY REGULATION T OF THE FEDERAL
RESERVE BOARD.  SHARES OF COMPANY STOCK USED TO EXERCISE AN OPTION MUST, UNLESS
OTHERWISE DETERMINED BY THE COMMITTEE, HAVE BEEN HELD BY THE GRANTEE FOR THE
REQUISITE PERIOD OF TIME TO AVOID ADVERSE ACCOUNTING OR TAX CONSEQUENCES TO THE
COMPANY WITH RESPECT TO THE OPTION.  THE GRANTEE SHALL PAY THE EXERCISE PRICE
AND THE AMOUNT OF ANY WITHHOLDING TAX DUE (PURSUANT TO SECTION 8) AT THE TIME OF
EXERCISE.

 

(G)                                 LIMITS ON INCENTIVE STOCK OPTIONS.  EACH
INCENTIVE STOCK OPTION SHALL PROVIDE THAT IF THE AGGREGATE FAIR MARKET VALUE OF
THE STOCK WITH RESPECT TO WHICH INCENTIVE STOCK OPTIONS ARE EXERCISABLE FOR THE
FIRST TIME DURING ANY CALENDAR YEAR BY A GRANTEE EXCEEDS $100,000, THEN THE
OPTION, AS TO THE EXCESS, SHALL BE TREATED AS A NONQUALIFIED STOCK OPTION.  FOR
THIS PURPOSE, THE FAIR MARKET VALUE OF THE STOCK SHALL BE MEASURED ON THE DATE
OF GRANT OF THE OPTION.  ALL INCENTIVE STOCK OPTIONS GRANTED TO THE GRANTEE
UNDER THE PLAN OR ANY OTHER STOCK OPTION PLAN OF THE COMPANY OR A PARENT OR
SUBSIDIARY CORPORATION SHALL BE TAKEN INTO CONSIDERATION IN DETERMINING WHETHER
THE FOREGOING LIMIT HAS BEEN MET.  AN INCENTIVE STOCK OPTION SHALL NOT BE
GRANTED TO ANY PERSON WHO IS NOT AN EMPLOYEE OF THE COMPANY OR A PARENT OR
SUBSIDIARY (WITHIN THE MEANING OF SECTION 424(F) OF THE CODE) AT THE TIME OF THE
GRANT.

 

6.                                       RESTRICTED STOCK GRANTS

 

The Committee may issue or transfer shares of Company Stock to an Employee,
Non-Employee Director or Key Advisor under a Grant of Restricted Stock, upon
such terms as the Committee deems appropriate.  The following provisions are
applicable to Restricted Stock:

 

(A)                                  GENERAL REQUIREMENTS.  SHARES OF COMPANY
STOCK ISSUED OR TRANSFERRED PURSUANT TO RESTRICTED STOCK GRANTS MAY BE ISSUED OR
TRANSFERRED FOR CONSIDERATION OR FOR NO CONSIDERATION, AS DETERMINED BY THE

 

6

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COMMITTEE.  THE COMMITTEE MAY ESTABLISH CONDITIONS UNDER WHICH RESTRICTIONS ON
SHARES OF RESTRICTED STOCK SHALL LAPSE OVER A PERIOD OF TIME OR ACCORDING TO
SUCH OTHER CRITERIA AS THE COMMITTEE DEEMS APPROPRIATE.  THE PERIOD OF TIME
DURING WHICH THE RESTRICTED STOCK WILL REMAIN SUBJECT TO RESTRICTIONS WILL BE
DESIGNATED IN THE GRANT INSTRUMENT AS THE “RESTRICTION PERIOD.”

 

(B)                                 NUMBER OF SHARES.  THE COMMITTEE SHALL
DETERMINE THE NUMBER OF SHARES OF COMPANY STOCK TO BE ISSUED OR TRANSFERRED
PURSUANT TO A RESTRICTED STOCK GRANT AND THE RESTRICTIONS APPLICABLE TO SUCH
SHARES.

 

(C)                                  REQUIREMENT OF EMPLOYMENT OR SERVICE.  IF
THE GRANTEE CEASES TO BE EMPLOYED BY, OR PROVIDE SERVICE TO, THE COMPANY (AS
DEFINED IN SECTION 5(E)) DURING A PERIOD DESIGNATED IN THE GRANT INSTRUMENT AS
THE RESTRICTION PERIOD, OR IF OTHER SPECIFIED CONDITIONS ARE NOT MET, THE
RESTRICTED STOCK GRANT SHALL TERMINATE AS TO ALL SHARES COVERED BY THE GRANT AS
TO WHICH THE RESTRICTIONS HAVE NOT LAPSED, AND THOSE SHARES OF COMPANY STOCK
MUST BE IMMEDIATELY RETURNED TO THE COMPANY.  THE COMMITTEE MAY, HOWEVER,
PROVIDE FOR COMPLETE OR PARTIAL EXCEPTIONS TO THIS REQUIREMENT AS IT DEEMS
APPROPRIATE.

 

(D)                                 RESTRICTIONS ON TRANSFER AND LEGEND ON STOCK
CERTIFICATE.  DURING THE RESTRICTION PERIOD, A GRANTEE MAY NOT SELL, ASSIGN,
TRANSFER, PLEDGE OR OTHERWISE DISPOSE OF THE SHARES OF RESTRICTED STOCK EXCEPT
TO A SUCCESSOR GRANTEE UNDER SECTION 9(A).  EACH CERTIFICATE FOR A SHARE OF
RESTRICTED STOCK SHALL CONTAIN A LEGEND GIVING APPROPRIATE NOTICE OF THE
RESTRICTIONS IN THE GRANT.  THE GRANTEE SHALL BE ENTITLED TO HAVE THE LEGEND
REMOVED FROM THE STOCK CERTIFICATE COVERING THE SHARES SUBJECT TO RESTRICTIONS
WHEN ALL RESTRICTIONS ON SUCH SHARES HAVE LAPSED.  THE COMMITTEE MAY DETERMINE
THAT THE COMPANY WILL NOT ISSUE CERTIFICATES FOR SHARES OF RESTRICTED STOCK
UNTIL ALL RESTRICTIONS ON SUCH SHARES HAVE LAPSED, OR THAT THE COMPANY WILL
RETAIN POSSESSION OF CERTIFICATES FOR SHARES OF RESTRICTED STOCK UNTIL ALL
RESTRICTIONS ON SUCH SHARES HAVE LAPSED.

 

(E)                                  RIGHT TO VOTE AND TO RECEIVE DIVIDENDS. 
UNLESS THE COMMITTEE DETERMINES OTHERWISE, DURING THE RESTRICTION PERIOD, THE
GRANTEE SHALL HAVE THE RIGHT TO VOTE SHARES OF RESTRICTED STOCK AND TO RECEIVE
ANY DIVIDENDS OR OTHER DISTRIBUTIONS PAID ON SUCH SHARES, SUBJECT TO ANY
RESTRICTIONS DEEMED APPROPRIATE BY THE COMMITTEE.

 

(F)                                    LAPSE OF RESTRICTIONS.  ALL RESTRICTIONS
IMPOSED ON RESTRICTED STOCK SHALL LAPSE UPON THE EXPIRATION OF THE APPLICABLE
RESTRICTION PERIOD AND THE SATISFACTION OF ALL CONDITIONS IMPOSED BY THE
COMMITTEE.  THE COMMITTEE MAY WAIVE ANY OR ALL RESTRICTIONS AND CONDITIONS OF A
RESTRICTED STOCK GRANT.  [UNLESS OTHERWISE DETERMINED BY THE COMMITTEE IN THE
GRANT INSTRUMENT, ALL RESTRICTIONS IMPOSED ON RESTRICTED STOCK SHALL LAPSE UPON
THE GRANTEE’S DEATH.]

 

(G)                                 DEFERRAL ELECTIONS BY GRANTEES.  THE
COMMITTEE MAY PERMIT A GRANTEE TO ELECT TO DEFER THE RECEIPT OF ALL OR A
PERCENTAGE OF THE SHARES OF RESTRICTED STOCK THAT WOULD OTHERWISE BE TRANSFERRED
TO THE GRANTEE ON THE FUTURE VESTING OF SUCH SHARES (THE “DEFERRED SHARES”). 
SUCH ELECTION SHALL BE MADE ON THE FORM ATTACHED HERETO AS EXHIBIT “A” (THE
“ELECTION FORM”) AND SHALL BE FILED WITH THE COMMITTEE AT ANY TIME ON OR BEFORE
THE DECEMBER 31ST OF THE YEAR PRIOR TO THE YEAR IN WHICH SUCH GRANTEE IS
SCHEDULED TO BECOME VESTED IN HIS OR HER DEFERRED SHARES OR SUCH EARLIER DATE AS
MAY BE REQUIRED TO COMPLY WITH SECTION 409A OF THE CODE, AND THE REGULATIONS AND
OTHER GUIDANCE ISSUED BY THE SECRETARY OF THE TREASURY THEREUNDER.  ALL SUCH
DEFERRAL ELECTIONS SHALL BE SUBJECT TO THE FOLLOWING RULES AND PROCEDURES:

 

(I)                                     RECORDKEEPING.  THE COMMITTEE SHALL
ESTABLISH AND MAINTAIN AN INDIVIDUAL ACCOUNT IN THE NAME OF EACH GRANTEE WHO
FILES AN ELECTION FORM AND SHALL CREDIT TO SUCH ACCOUNT CASH DIVIDENDS, IF ANY,
THAT ARE PAID ON THE DEFERRED SHARES AFTER THE RESTRICTIONS ON THE DEFERRED
SHARES HAVE LAPSED.  ON THE LAST DAY OF EACH FISCAL YEAR OF THE COMPANY, THE
COMMITTEE SHALL CREDIT EARNINGS TO THE BALANCE OF THE GRANTEE’S ACCOUNT AT A
RATE OF INTEREST AS DETERMINED FROM TIME TO TIME BY THE COMMITTEE IN ITS SOLE
DISCRETION.

 

(II)                                  DISTRIBUTIONS OF DEFERRED SHARES.  THE
COMMITTEE SHALL DISTRIBUTE THE GRANTEE’S DEFERRED SHARES, AND EARNINGS THEREON,
IN ACCORDANCE WITH THE PARTICIPANT’S ELECTION FORM AND THE TERMS OF THE PLAN. 
ALL DISTRIBUTIONS MADE BY THE COMMITTEE PURSUANT TO ELECTIONS MADE BY THE
GRANTEE HEREUNDER SHALL BE SUBJECT TO APPLICABLE FEDERAL, STATE AND LOCAL TAX
WITHHOLDING AND TO SUCH OTHER DEDUCTIONS AS SHALL AT THE TIME OF SUCH PAYMENT BE
REQUIRED UNDER ANY INCOME TAX OR OTHER LAW, WHETHER OF THE UNITED STATES OR ANY
OTHER JURISDICTION, AND, IN THE

 

7

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CASE OF PAYMENTS TO A BENEFICIARY, THE DELIVERY TO THE COMMITTEE OF ALL
NECESSARY DOCUMENTATION AS MAY BE REQUIRED BY THE COMMITTEE.  WITHIN TWO AND ONE
HALF MONTHS AFTER RECEIVING NOTICE OF A GRANTEE’S DEATH OR QUALIFIED DISABILITY,
THE COMMITTEE SHALL DISTRIBUTE ANY BALANCE OF THE GRANTEE’S DEFERRED SHARES, AND
EARNINGS THEREON, TO THE GRANTEE’S DESIGNATED BENEFICIARY, IF LIVING, OR IF SUCH
DESIGNATED BENEFICIARY IS DECEASED OR THE GRANTEE FAILS TO DESIGNATE A
BENEFICIARY, TO THE GRANTEE’S ESTATE.  IF THE GRANTEE CEASES TO PROVIDE SERVICE
TO THE COMPANY FOR A REASON OTHER THAN THE GRANTEE’S DEATH OR QUALIFIED
DISABILITY, THE GRANTEE’S DEFERRED SHARES (TO THE EXTENT VESTED) AND EARNINGS
THEREON SHALL BE DISTRIBUTED TO THE GRANTEE IN A LUMP SUM AT SUCH TIME AS
ELECTED BY THE GRANTEE IN HIS OR HER ELECTION FORM WHICH TIMES SHALL BE LIMITED
TO THE FOLLOWING EVENTS:

 

(a)                                  a date specified in such election,

 

(b)                                 the termination of a Grantee,

 

(c)                                  an Unforeseeable Emergency of such Grantee;
or

 

(d)                                 a Change in Control

 

(III)                               THE DISTRIBUTION PROVISIONS OF A GRANTEE’S
ELECTION FORM MAY BE CHANGED BY THE GRANTEE AT ANY TIME PROVIDED THE CHANGE IS
MADE AT LEAST TWELVE MONTHS PRIOR TO THE DATE ON WHICH THE DEFERRED SHARES, AND
THE EARNINGS THEREON, ARE DISTRIBUTABLE TO THE GRANTEE AND PROVIDED FURTHER THAT
ANY SUCH CHANGE RESULTS IN THE EARLIEST DISTRIBUTION OF THE DEFERRED SHARES, AND
ANY EARNINGS, OCCURRING NOT EARLIER THAN FIVE YEARS FOLLOWING THE ORIGINAL
SCHEDULED DISTRIBUTION DATE OR OTHERWISE COMPLIES WITH SECTION 409A OF THE CODE,
AND THE REGULATIONS AND OTHER GUIDANCE ISSUED BY THE SECRETARY OF THE TREASURY
THEREUNDER.

 

(IV)                              RIGHTS TO DEFERRED SHARES AND EARNINGS.  A
GRANTEE MAY NOT ASSIGN HIS OR HER CLAIM TO DEFERRED SHARES, AND THE EARNINGS
THEREON, DURING HIS OR HER LIFETIME, EXCEPT IN ACCORDANCE WITH SECTION 9 OF THE
PLAN.  A GRANTEE’S RIGHT TO DEFERRED SHARES AND EARNINGS THEREON SHALL AT ALL
TIMES CONSTITUTE AN UNSECURED PROMISE OF THE COMPANY TO PAY BENEFITS AS THEY
COME DUE.  THE RIGHT OF THE GRANTEE OR HIS OR HER BENEFICIARY TO RECEIVE
BENEFITS HEREUNDER SHALL BE SOLELY AN UNSECURED CLAIM AGAINST THE GENERAL ASSETS
OF THE COMPANY.  NEITHER THE GRANTEE NOR HIS OR HER BENEFICIARY SHALL HAVE ANY
CLAIM AGAINST OR RIGHTS IN ANY SPECIFIC ASSETS OR OTHER FUND OF THE COMPANY.

 

(V)                                 ISSUANCE OF AND VOTING OF DEFERRED SHARES. 
IN NO EVENT SHALL THE COMPANY ISSUE CERTIFICATES FOR DEFERRED SHARES UNTIL SUCH
SHARES ARE DISTRIBUTED TO THE GRANTEE (OR HIS OR HER DESIGNATED BENEFICIARY). 
IN NO EVENT SHALL A GRANTEE HAVE THE RIGHT TO VOTE DEFERRED SHARES UNTIL SUCH
SHARES ARE DISTRIBUTED TO THE GRANTEE.

 

(H)                                 DEFINITIONS.  FOR PURPOSES OF THIS SECTION 6
AND SECTION 7, THE “UNFORESEEABLE EMERGENCY” OF A GRANTEE SHALL MEAN A SEVERE
FINANCIAL HARDSHIP TO SUCH GRANTEE RESULTING FROM:  (I) AN ILLNESS OR ACCIDENT
OF SUCH GRANTEE, OR THE SPOUSE OR A DEPENDENT (AS DEFINED IN SECTION 152(A) OF
THE CODE) OF SUCH GRANTEE, (II) THE LOSS OF SUCH GRANTEE’S PROPERTY DUE TO
CASUALTY, OR (III) OTHER SIMILAR EXTRAORDINARY AND UNFORESEEABLE CIRCUMSTANCES
ARISING AS A RESULT OF EVENTS BEYOND THE CONTROL OF SUCH GRANTEE.  FOR PURPOSES
OF THIS SECTION 6 AND SECTION 7, “QUALIFIED DISABILITY” SHALL MEAN THE GRANTEE
IS “DISABLED,” AS SUCH TERM IS DEFINED IN SECTION 409A OF THE CODE, AND THE
REGULATIONS AND OTHER GUIDANCE ISSUED BY THE SECRETARY OF THE TREASURY
THEREUNDER.  FOR PURPOSES OF THIS SECTION 6 AND SECTION 7, “CHANGE IN CONTROL”
SHALL MEAN A CHANGE IN CONTROL AS DEFINED AS IN SECTION 409A OF THE CODE, AND
THE REGULATIONS AND OTHER GUIDANCE ISSUED BY THE SECRETARY OF THE TREASURY
THEREUNDER.

 

7.                                       STOCK APPRECIATION RIGHTS

 

(A)                                  GENERAL REQUIREMENTS.  THE COMMITTEE MAY
GRANT SARS TO AN EMPLOYEE, NON-EMPLOYEE DIRECTOR OR KEY ADVISOR SEPARATELY OR IN
TANDEM WITH ANY OPTION (FOR ALL OR A PORTION OF THE APPLICABLE OPTION).  TANDEM
SARS MAY BE GRANTED EITHER AT THE TIME THE OPTION IS GRANTED OR AT ANY TIME
THEREAFTER WHILE THE OPTION REMAINS OUTSTANDING; PROVIDED, HOWEVER, THAT, IN THE
CASE OF AN INCENTIVE STOCK OPTION, SARS MAY BE GRANTED ONLY AT THE TIME OF THE
GRANT OF THE INCENTIVE STOCK OPTION.  THE COMMITTEE SHALL ESTABLISH THE BASE
AMOUNT OF THE SAR AT THE TIME THE SAR IS GRANTED.  THE BASE AMOUNT OF EACH SAR
SHALL BE EQUAL TO THE PER SHARE EXERCISE PRICE OF THE RELATED

 

8

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OPTION OR, IF THERE IS NO RELATED OPTION, THE FAIR MARKET VALUE OF A SHARE OF
COMPANY STOCK AS OF THE DATE OF GRANT OF THE SAR.

 

(B)                                 TANDEM SARS.  IN THE CASE OF TANDEM SARS,
THE NUMBER OF SARS GRANTED TO A GRANTEE THAT SHALL BE EXERCISABLE DURING A
SPECIFIED PERIOD SHALL NOT EXCEED THE NUMBER OF SHARES OF COMPANY STOCK THAT THE
GRANTEE MAY PURCHASE UPON THE EXERCISE OF THE RELATED OPTION DURING SUCH
PERIOD.  UPON THE EXERCISE OF AN OPTION, THE SARS RELATING TO THE COMPANY STOCK
COVERED BY SUCH OPTION SHALL TERMINATE.  UPON THE EXERCISE OF SARS, THE RELATED
OPTION SHALL TERMINATE TO THE EXTENT OF AN EQUAL NUMBER OF SHARES OF COMPANY
STOCK.

 

(C)                                  EXERCISABILITY.  AN SAR SHALL BE
EXERCISABLE DURING THE PERIOD SPECIFIED BY THE COMMITTEE IN THE GRANT INSTRUMENT
AND SHALL BE SUBJECT TO SUCH VESTING AND OTHER RESTRICTIONS AS MAY BE SPECIFIED
IN THE GRANT INSTRUMENT.  THE COMMITTEE MAY ACCELERATE THE EXERCISABILITY OF ANY
OR ALL OUTSTANDING SARS AT ANY TIME FOR ANY REASON, AND SUCH ACCELERATION NEED
NOT BE UNIFORM AS AMONG ANY CLASS OR GROUPING OF GRANTEES; PROVIDED HOWEVER,
THAT THE TERMS REGARDING THE ISSUANCE OF PAYMENTS PURSUANT TO AN SAR FOR CASH
SHALL NOT BE AMENDED, MODIFIED OR TERMINATED IN ANY MANNER WHICH PERMITS THE
ACCELERATION OF THE TIME OR SCHEDULE OF SUCH ISSUANCE OF CASH.  SARS MAY ONLY BE
EXERCISED WHILE THE GRANTEE IS EMPLOYED BY, OR PROVIDING SERVICE TO, THE COMPANY
OR DURING THE APPLICABLE PERIOD AFTER TERMINATION OF EMPLOYMENT OR SERVICE AS
DESCRIBED IN SECTION 5(E) WITH RESPECT TO OPTIONS, AND SUCH EXERCISE SHALL BE
UNDER AND SUBJECT TO ALL OF THE LIMITATIONS AND TERMINATION AND FORFEITURE
PROVISIONS APPLICABLE TO OPTIONS UNDER SECTION 5(E), INCLUDING WITHOUT
LIMITATION FORFEITURE OF ANY SARS AND THE RELEASE OF ANY OBLIGATIONS OF THE
COMPANY TO RESPOND TO THE EXERCISE OF ANY SARS UNDER THE CIRCUMSTANCES SET FORTH
IN SECTION 5(E)(II).  A TANDEM SAR SHALL BE EXERCISABLE ONLY DURING THE PERIOD
WHEN THE OPTION TO WHICH IT IS RELATED IS ALSO EXERCISABLE.

 

(D)                                 VALUE OF SARS AND TIME OF DISTRIBUTION. 
WHEN A GRANTEE EXERCISES SARS, THE GRANTEE SHALL RECEIVE IN SETTLEMENT OF SUCH
SARS AN AMOUNT EQUAL TO THE VALUE OF THE STOCK APPRECIATION FOR THE NUMBER OF
SARS EXERCISED, PAYABLE IN CASH, COMPANY STOCK OR A COMBINATION THEREOF;
PROVIDED, THAT THE RECIPIENT OF ANY SAR THAT IS PAYABLE IN OTHER THAN COMPANY
STOCK MAY ELECT TO RECEIVE CASH ISSUABLE PURSUANT TO SUCH SAR ONLY UPON ONE OR
MORE OF THE FOLLOWING EVENTS:

 

(i)                                     a date specified in such election,

 

(ii)                                  the termination of a Grantee,

 

(iii)                               an Unforeseeable Emergency of such Grantee;

 

(iv)                              a Change in Control;

 

(v)                                 death; or

 

(vi)                              Qualified Disability;

 

(E)                                  PROVIDED, HOWEVER, IN THE CASE OF A GRANTEE
WHO IS A “KEY EMPLOYEE” AS DEFINED IN CODE SECTION 416(I) (DETERMINED WITHOUT
REGARD TO PARAGRAPH (5) THEREOF) OF THE COMPANY, THE PAYMENT ISSUABLE PURSUANT
TO SUCH GRANTEE’S TERMINATION SHALL NOT BE MADE BEFORE THE DATE WHICH IS SIX (6)
MONTHS AFTER THE DATE OF SUCH TERMINATION.

 

(F)                                    STOCK APPRECIATION AMOUNT.  THE STOCK
APPRECIATION FOR AN SAR IS THE AMOUNT BY WHICH THE FAIR MARKET VALUE OF THE
UNDERLYING COMPANY STOCK ON THE DATE OF EXERCISE OF THE SAR EXCEEDS THE BASE
AMOUNT OF THE SAR AS DESCRIBED IN SUBSECTION (A).

 

(G)                                 FORM OF PAYMENT.  THE COMMITTEE SHALL
DETERMINE WHETHER THE APPRECIATION IN AN SAR SHALL BE PAID IN THE FORM OF CASH,
SHARES OF COMPANY STOCK, OR A COMBINATION OF THE TWO, IN SUCH PROPORTION AS THE
COMMITTEE DEEMS APPROPRIATE; PROVIDED, THAT ANY SAR THAT IS PAYABLE IN OTHER
THAN COMPANY STOCK SHALL CONTAIN SUCH TERMS AND PROVISIONS AS ARE NECESSARY TO
COMPLY WITH SECTION 409A OF THE CODE.  FOR PURPOSES OF CALCULATING THE NUMBER OF
SHARES OF COMPANY STOCK TO BE RECEIVED, SHARES OF COMPANY STOCK SHALL BE VALUED
AT THEIR FAIR

 

9

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MARKET VALUE ON THE DATE OF EXERCISE OF THE SAR.  IF SHARES OF COMPANY STOCK ARE
TO BE RECEIVED UPON EXERCISE OF AN SAR, ONLY WHOLE SHARES OF COMPANY STOCK
(ROUNDED DOWN TO THE NEAREST WHOLE SHARE) SHALL BE ISSUED.

 

8.                                       WITHHOLDING OF TAXES

 

(A)                                  REQUIRED WITHHOLDING.  ALL GRANTS UNDER THE
PLAN SHALL BE SUBJECT TO APPLICABLE FEDERAL (INCLUDING FICA), STATE AND LOCAL
TAX WITHHOLDING REQUIREMENTS.  THE COMPANY MAY REQUIRE THAT THE GRANTEE OR OTHER
PERSON RECEIVING OR EXERCISING GRANTS PAY TO THE COMPANY THE AMOUNT OF ANY
FEDERAL, STATE OR LOCAL TAXES THAT THE COMPANY IS REQUIRED TO WITHHOLD WITH
RESPECT TO SUCH GRANTS AND MAY REQUIRE SUCH PAYMENT AS A PRECONDITION FOR
AWARDING OR EXERCISING SUCH GRANT, OR THE COMPANY MAY DEDUCT FROM OTHER WAGES
PAID BY THE COMPANY THE AMOUNT OF ANY WITHHOLDING TAXES DUE WITH RESPECT TO SUCH
GRANTS.

 

(B)                                 ELECTION TO WITHHOLD SHARES.  IF THE
COMMITTEE SO PERMITS, A GRANTEE MAY ELECT TO SATISFY THE COMPANY’S INCOME TAX
WITHHOLDING OBLIGATION WITH RESPECT TO AN OPTION, SAR OR RESTRICTED STOCK BY
HAVING THE COMPANY WITHHOLD THAT NUMBER OF SHARES HAVING A FAIR MARKET VALUE
EQUAL TO THE MINIMUM AMOUNT REQUIRED TO BE WITHHELD BASED ON THE STATUTORY
WITHHOLDING RATES FOR FEDERAL AND STATE TAX PURPOSES THAT APPLY TO SUPPLEMENTAL
TAXABLE INCOME.  THE FAIR MARKET VALUE OF THE SHARES TO BE WITHHELD SHALL BE
DETERMINED ON THE DATE THAT THE AMOUNT OF TAX TO BE WITHHELD IS TO BE
DETERMINED.  THE ELECTION MUST BE IN A FORM AND MANNER PRESCRIBED BY THE
COMMITTEE AND SHALL BE SUBJECT TO THE PRIOR APPROVAL OF THE COMMITTEE.

 

9.                                       TRANSFERABILITY OF GRANTS

 

(A)                                  NONTRANSFERABILITY OF GRANTS.  EXCEPT AS
PROVIDED BELOW, ONLY THE GRANTEE MAY EXERCISE RIGHTS UNDER A GRANT DURING THE
GRANTEE’S LIFETIME.  A GRANTEE MAY NOT TRANSFER THOSE RIGHTS EXCEPT BY WILL OR
BY THE LAWS OF DESCENT AND DISTRIBUTION OR, WITH RESPECT TO GRANTS OTHER THAN
INCENTIVE STOCK OPTIONS, IF PERMITTED IN ANY SPECIFIC CASE BY THE COMMITTEE,
PURSUANT TO A DOMESTIC RELATIONS ORDER (AS DEFINED UNDER THE CODE OR TITLE I OF
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE
REGULATIONS THEREUNDER).  WHEN A GRANTEE OR PERMITTED TRANSFEREE DIES, THE
PERSONAL REPRESENTATIVE OR OTHER PERSON ENTITLED TO SUCCEED TO THE RIGHTS OF THE
GRANTEE OR PERMITTED TRANSFEREE (“SUCCESSOR GRANTEE”) MAY EXERCISE SUCH RIGHTS. 
A SUCCESSOR GRANTEE MUST FURNISH PROOF SATISFACTORY TO THE COMPANY OF HIS OR HER
RIGHT TO RECEIVE THE GRANT UNDER THE GRANTEE’S WILL OR UNDER THE APPLICABLE LAWS
OF DESCENT AND DISTRIBUTION.

 

(B)                                 TRANSFER OF NONQUALIFIED STOCK OPTIONS.
NOTWITHSTANDING THE FOREGOING, THE COMMITTEE MAY PROVIDE, IN A GRANT INSTRUMENT,
THAT A GRANTEE MAY TRANSFER AS A GIFT NONQUALIFIED STOCK OPTIONS TO FAMILY
MEMBERS, ONE OR MORE TRUSTS FOR THE BENEFIT OF FAMILY MEMBERS, OR ONE OR MORE
PARTNERSHIPS OF WHICH FAMILY MEMBERS ARE THE ONLY PARTNERS, ACCORDING TO SUCH
TERMS AS THE COMMITTEE MAY DETERMINE; PROVIDED THAT THE GRANTEE RECEIVES NO
CONSIDERATION FOR THE TRANSFER OF AN OPTION AND THE TRANSFERRED OPTION SHALL
CONTINUE TO BE SUBJECT TO THE SAME TERMS AND CONDITIONS AS WERE APPLICABLE TO
THE OPTION IMMEDIATELY BEFORE THE TRANSFER.

 

10.                                 SHAREHOLDER AGREEMENT

 

Prior to a Public Offering, the Committee shall, as a condition to any Grant,
require that a Grantee become a party to a shareholder agreement with respect to
any Grants and any Company Stock that may be obtained pursuant thereto.  Such
shareholder agreement shall contain the terms of any then existing shareholder
agreement and/or any terms which the Committee deems appropriate.

 

11.                                 CHANGE OF CONTROL OF THE COMPANY

 

As used herein, a “Change of Control” shall be deemed to have occurred if:

 

(A)                                  ANY “PERSON” (AS SUCH TERM IS USED IN
SECTIONS 13(D) AND 14(D) OF THE EXCHANGE ACT) (OTHER THAN PERSONS WHO ARE
SHAREHOLDERS OF THE COMPANY ON THE DATE THE PLAN IS ADOPTED) BECOMES A
“BENEFICIAL OWNER” (AS DEFINED IN RULE 13D-3 UNDER THE EXCHANGE ACT), DIRECTLY
OR INDIRECTLY, OF SECURITIES OF THE COMPANY REPRESENTING

 

10

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MORE THAN 50% OF ALL VOTES REQUIRED TO ELECT A MAJORITY OF THE BOARD, PROVIDED
THAT A CHANGE OF CONTROL SHALL NOT BE DEEMED TO OCCUR AS A RESULT OF A CHANGE OF
OWNERSHIP RESULTING FROM THE DEATH OF A SHAREHOLDER;

 

(B)                                 THE CONSUMMATION BY THE COMPANY OF (I) A
MERGER OR CONSOLIDATION OF THE COMPANY WITH ANOTHER CORPORATION WHERE THE
SHAREHOLDERS OF THE COMPANY, IMMEDIATELY PRIOR TO THE MERGER OR CONSOLIDATION,
WILL NOT BENEFICIALLY OWN, IMMEDIATELY AFTER THE MERGER OR CONSOLIDATION, SHARES
ENTITLING SUCH SHAREHOLDERS TO MORE THAN 50% OF ALL VOTES REQUIRED TO ELECT A
MAJORITY OF THE BOARD OF DIRECTORS OF THE SURVIVING CORPORATION OR (II) THE
CONSUMMATION OF AN AGREEMENT (OR AGREEMENTS) PROVIDING FOR THE SALE OR
DISPOSITION BY THE COMPANY OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE
COMPANY;

 

(C)                                  THE SHAREHOLDERS OF THE COMPANY APPROVE AN
AGREEMENT PROVIDING FOR A LIQUIDATION OR DISSOLUTION OF THE COMPANY; OR

 

(D)                                 AFTER A PUBLIC OFFERING, ANY PERSON HAS
COMPLETED A TENDER OFFER OR EXCHANGE OFFER FOR SHARES REPRESENTING MORE THAN 50%
OF ALL VOTES REQUIRED TO ELECT A MAJORITY OF THE BOARD.

 

12.                                 CONSEQUENCES OF A CHANGE OF CONTROL

 

(A)                                  NOTICE AND ACCELERATION.  UPON A CHANGE OF
CONTROL, UNLESS THE COMMITTEE DETERMINES OTHERWISE, (I) THE COMPANY SHALL
PROVIDE EACH GRANTEE WITH OUTSTANDING GRANTS WRITTEN NOTICE OF SUCH CHANGE OF
CONTROL, (II) ALL OUTSTANDING OPTIONS AND SARS SHALL AUTOMATICALLY ACCELERATE
AND BECOME FULLY EXERCISABLE AND (III) THE RESTRICTIONS AND CONDITIONS ON ALL
OUTSTANDING RESTRICTED STOCK SHALL IMMEDIATELY LAPSE.

 

(B)                                 ASSUMPTION OF GRANTS.  UPON A CHANGE OF
CONTROL WHERE THE COMPANY IS NOT THE SURVIVING CORPORATION (OR SURVIVES ONLY AS
A SUBSIDIARY OF ANOTHER CORPORATION), UNLESS THE COMMITTEE DETERMINES OTHERWISE,
ALL OUTSTANDING OPTIONS AND SARS THAT ARE NOT EXERCISED SHALL BE ASSUMED BY, OR
REPLACED WITH COMPARABLE OPTIONS AND RIGHTS BY, THE SURVIVING CORPORATION.

 

(C)                                  OTHER ALTERNATIVES.  NOTWITHSTANDING THE
FOREGOING, SUBJECT TO SUBSECTION (D) BELOW, IN THE EVENT OF A CHANGE OF CONTROL,
THE COMMITTEE MAY TAKE ONE OR BOTH OF THE FOLLOWING ACTIONS: THE COMMITTEE MAY
(I) REQUIRE THAT GRANTEES SURRENDER THEIR OUTSTANDING OPTIONS AND SARS IN
EXCHANGE FOR A PAYMENT BY THE COMPANY, IN CASH OR COMPANY STOCK AS DETERMINED BY
THE COMMITTEE, IN AN AMOUNT EQUAL TO THE AMOUNT BY WHICH THE THEN FAIR MARKET
VALUE OF THE SHARES OF COMPANY STOCK SUBJECT TO THE GRANTEE’S UNEXERCISED
OPTIONS AND SARS EXCEEDS THE EXERCISE PRICE OF THE OPTIONS OR THE BASE AMOUNT OF
THE SARS, AS APPLICABLE, OR (II) AFTER GIVING GRANTEES AN OPPORTUNITY TO
EXERCISE THEIR OUTSTANDING OPTIONS AND SARS, TERMINATE ANY OR ALL UNEXERCISED
OPTIONS AND SARS AT SUCH TIME AS THE COMMITTEE DEEMS APPROPRIATE.  SUCH
SURRENDER OR TERMINATION SHALL TAKE PLACE AS OF THE DATE OF THE CHANGE OF
CONTROL OR SUCH OTHER DATE AS THE COMMITTEE MAY SPECIFY.

 

(D)                                 COMMITTEE.  THE COMMITTEE MAKING THE
DETERMINATIONS UNDER THIS SECTION 12 FOLLOWING A CHANGE OF CONTROL MUST BE
COMPRISED OF THE SAME MEMBERS AS THOSE ON THE COMMITTEE IMMEDIATELY BEFORE THE
CHANGE OF CONTROL.  IF THE COMMITTEE MEMBERS DO NOT MEET THIS REQUIREMENT, THE
AUTOMATIC PROVISIONS OF SUBSECTIONS (A) AND (B) SHALL APPLY, AND THE COMMITTEE
SHALL NOT HAVE DISCRETION TO VARY THEM (EXCEPT TO THE EXTENT GRANTS ARE
RESCINDED PURSUANT TO SUBSECTION (E) BELOW).

 

(E)                                  LIMITATIONS.  NOTWITHSTANDING ANYTHING IN
THE PLAN TO THE CONTRARY, IN THE EVENT OF A CHANGE OF CONTROL, (I) THE COMMITTEE
(INCLUDING THE COMMITTEE IN PLACE BEFORE A CHANGE OF CONTROL AND ANY COMMITTEE
CONVENED AFTER A CHANGE OF CONTROL) SHALL NOT HAVE THE RIGHT TO TAKE ANY ACTIONS
DESCRIBED IN THE PLAN (INCLUDING WITHOUT LIMITATION ACTIONS DESCRIBED IN
SUBSECTION (C) ABOVE) THAT WOULD MAKE THE CHANGE OF CONTROL INELIGIBLE FOR
POOLING OF INTERESTS ACCOUNTING TREATMENT OR THAT WOULD MAKE THE CHANGE OF
CONTROL INELIGIBLE FOR DESIRED TAX TREATMENT IF, IN THE ABSENCE OF SUCH RIGHT,
THE CHANGE OF CONTROL WOULD QUALIFY FOR SUCH TREATMENT AND THE COMPANY (OR, IF
APPLICABLE, THE SUCCESSOR ENTITY) INTENDS TO USE SUCH TREATMENT WITH RESPECT TO
THE CHANGE OF CONTROL, AND (II) WITHOUT LIMITING THE FOREGOING, IN SUCH EVENT,
THE COMMITTEE MAY RESCIND ANY GRANTS (WHETHER OR NOT VESTED OR EXERCISABLE) THAT
WOULD IMPAIR THE USE OF POOLING OF INTERESTS ACCOUNTING TREATMENT, AS DETERMINED
BY THE COMPANY’S CERTIFIED PUBLIC ACCOUNTANTS.

 

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13.                                 LIMITATIONS ON ISSUANCE OR TRANSFER OF
SHARES

 

No Company Stock shall be issued or transferred in connection with any Grant
hereunder unless and until all legal and contractual restrictions applicable to
the issuance or transfer of such Company Stock have been complied with to the
satisfaction of the Committee.  The Committee shall have the right to condition
any Grant made to any Grantee hereunder on such Grantee’s undertaking in writing
to comply with such restrictions on his or her subsequent disposition of such
shares of Company Stock as the Committee shall deem necessary or advisable as a
result of (i) any applicable law, regulation or official interpretation thereof,
or (ii) the provisions of any stockholder agreement concerning Company Stock,
and certificates representing such shares shall be legended to reflect any such
restrictions.  Certificates representing shares of Company Stock issued or
transferred under the Plan will be subject to such stop-transfer orders and
other restrictions as may be required by applicable laws, regulations and
interpretations, including any requirement that a legend be placed thereon.

 

14.                                 AMENDMENT AND TERMINATION OF THE PLAN

 

(A)                                  AMENDMENT.  THE BOARD MAY AMEND OR
TERMINATE THE PLAN AT ANY TIME; PROVIDED, HOWEVER, THAT THE BOARD SHALL NOT
AMEND THE PLAN WITHOUT SHAREHOLDER APPROVAL IF SUCH APPROVAL IS REQUIRED IN
ORDER FOR INCENTIVE STOCK OPTIONS GRANTED OR TO BE GRANTED UNDER THE PLAN TO
MEET THE REQUIREMENTS OF SECTION 422 OF THE CODE OR IF, AFTER A PUBLIC OFFERING,
SUCH APPROVAL IS REQUIRED IN ORDER TO EXEMPT COMPENSATION UNDER THE PLAN FROM
THE DEDUCTION LIMIT UNDER SECTION 162(M) OF THE CODE.

 

(B)                                 TERMINATION OF PLAN.  NO ADDITIONAL GRANTS
SHALL BE MADE UNDER THE PLAN AFTER JANUARY 20, 2015 OR SUCH EARLIER DATE AS MAY
BE DETERMINED BY THE BOARD.  THE PLAN MAY BE EXTENDED BY THE BOARD WITH THE
APPROVAL OF THE SHAREHOLDERS.

 

(C)                                  TERMINATION AND AMENDMENT OF OUTSTANDING
GRANTS.  A TERMINATION OR AMENDMENT OF THE PLAN THAT OCCURS AFTER A GRANT IS
MADE SHALL NOT MATERIALLY IMPAIR THE RIGHTS OF A GRANTEE UNLESS THE GRANTEE
CONSENTS OR UNLESS THE COMMITTEE ACTS UNDER SECTION 20(B).  THE TERMINATION OF
THE PLAN SHALL NOT IMPAIR THE POWER AND AUTHORITY OF THE COMMITTEE WITH RESPECT
TO AN OUTSTANDING GRANT.  WHETHER OR NOT THE PLAN HAS TERMINATED, AN OUTSTANDING
GRANT MAY BE TERMINATED OR AMENDED UNDER SECTION 20(B) OR MAY BE AMENDED BY
AGREEMENT OF THE COMPANY AND THE GRANTEE CONSISTENT WITH THE PLAN.

 

(D)                                 GOVERNING DOCUMENT.  THE PLAN SHALL BE THE
CONTROLLING DOCUMENT.  NO OTHER STATEMENTS, REPRESENTATIONS, EXPLANATORY
MATERIALS OR EXAMPLES, ORAL OR WRITTEN, MAY AMEND THE PLAN IN ANY MANNER.  THE
PLAN SHALL BE BINDING UPON AND ENFORCEABLE AGAINST THE COMPANY AND ITS
SUCCESSORS AND ASSIGNS.

 

15.                                 SAVINGS CLAUSE.

 

(A)                                  NOTWITHSTANDING ANYTHING TO THE CONTRARY IN
THE PLAN OR ANY GRANT, IF AND TO THE EXTENT THE COMMITTEE SHALL DETERMINE THAT
THE TERMS OF ANY GRANT MAY RESULT IN THE FAILURE OF THE SUCH GRANT TO COMPLY
WITH THE REQUIREMENTS OF SECTION 409A OF THE CODE, OR ANY APPLICABLE REGULATIONS
OR GUIDANCE PROMULGATED BY THE SECRETARY OF THE TREASURY IN CONNECTION
THEREWITH, THE COMMITTEE SHALL HAVE AUTHORITY TO TAKE SUCH ACTION TO AMEND,
MODIFY, CANCEL OR TERMINATE THE PLAN OR ANY GRANT AS IT DEEMS NECESSARY OR
ADVISABLE, INCLUDING WITHOUT LIMITATION:

 

(I)                                     AMENDMENT OR MODIFICATION OF THE PLAN OR
ANY GRANT TO CONFORM THE PLAN OR SUCH GRANT TO THE REQUIREMENTS OF SECTION 409A
OF THE CODE OR ANY REGULATIONS OR OTHER GUIDANCE THEREUNDER (INCLUDING, WITHOUT
LIMITATION, ANY AMENDMENT OR MODIFICATION OF THE TERMS OF ANY GRANT REGARDING
VESTING, EXERCISE, OR THE TIMING OR FORM OF PAYMENT).

 

(II)                                  CANCELLATION OR TERMINATION OF ANY
UNVESTED GRANT, OR PORTION THEREOF, WITHOUT ANY PAYMENT TO THE GRANTEE HOLDING
SUCH GRANT.

 

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(III)                               CANCELLATION OR TERMINATION OF ANY VESTED
GRANT, OR PORTION THEREOF, WITH IMMEDIATE PAYMENT TO THE GRANTEE HOLDING SUCH
GRANT OF THE AMOUNT OTHERWISE PAYABLE UPON THE IMMEDIATE EXERCISE OF ANY SUCH
GRANT, OR VESTED PORTION THEREOF, BY SUCH GRANTEE.

 

(B)                                 ANY SUCH AMENDMENT, MODIFICATION,
CANCELLATION, OR TERMINATION OF THE PLAN OR ANY GRANT MAY ADVERSELY AFFECT THE
RIGHTS OF A GRANTEE WITH RESPECT TO SUCH GRANT WITHOUT THE GRANTEE’S CONSENT

 

16.                                 FUNDING OF THE PLAN

 

This Plan shall be unfunded and is not intended to be subject to the Employee
Retirement Income Security Act of 1974, as amended.  No provision contained
herein shall be construed to require that (i) the Company be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Grants under this Plan, or (ii) interest be
paid or accrued on any Grant or on any subsequent distribution of Company Stock,
payment of cash, release or lapse of any restrictions on Company Stock, or any
other distribution or payment of property or cash pursuant to the exercise of
any rights provided by any Grants.

 

17.                                 RIGHTS OF PARTICIPANTS

 

Nothing in this Plan shall entitle any Employee, Key Advisor, Non-Employee
Director or other person to any claim or right to be awarded a Grant under this
Plan.  Neither this Plan nor any action taken hereunder shall be construed as
giving any individual any rights to be retained by or in the employ of the
Company or any other employment rights.

 

18.                                 NO FRACTIONAL SHARES

 

No fractional shares of Company Stock shall be issued or delivered pursuant to
the Plan or any Grant.  The Committee shall determine whether cash, other awards
or other property shall be issued or paid in lieu of such fractional shares or
whether such fractional shares or any rights thereto shall be disregarded or
otherwise eliminated.

 

19.                                 HEADINGS

 

Section headings are for reference only.  In the event of a conflict between a
title and the content of a Section, the content of the Section shall control.

 

20.                                 EFFECTIVE DATE OF THE PLAN

 

(A)                                  EFFECTIVE DATE.  SUBJECT TO APPROVAL BY THE
COMPANY’S SHAREHOLDERS, THE PLAN WAS ORIGINALLY EFFECTIVE ON JUNE 24, 1998.
 EFFECTIVE JANUARY 21, 2005, BUT SUBJECT TO THE APPROVAL OF THE SHAREHOLDERS,
THE PLAN WAS AMENDED AND RESTATED AND EXTENDED UNTIL JANUARY 20, 2015.

 

(B)                                 PUBLIC OFFERING.  THE PROVISIONS OF THE PLAN
THAT REFER TO A PUBLIC OFFERING, OR THAT REFER TO, OR ARE APPLICABLE TO PERSONS
SUBJECT TO, SECTION 16 OF THE EXCHANGE ACT OR SECTION 162(M) OF THE CODE, SHALL
BE EFFECTIVE, IF AT ALL, UPON THE EFFECTIVE DATE OF THE INITIAL REGISTRATION OF
THE COMPANY STOCK UNDER SECTION 12(G) OF THE EXCHANGE ACT.

 

21.                                 MISCELLANEOUS

 

(A)                                  GRANTS IN CONNECTION WITH CORPORATE
TRANSACTIONS AND OTHERWISE.  NOTHING CONTAINED IN THIS PLAN SHALL BE CONSTRUED
TO (I) LIMIT THE RIGHT OF THE COMMITTEE TO MAKE GRANTS UNDER THIS PLAN IN
CONNECTION WITH THE ACQUISITION, BY PURCHASE, LEASE, MERGER, CONSOLIDATION OR
OTHERWISE, OF THE BUSINESS OR ASSETS OF ANY CORPORATION, FIRM OR ASSOCIATION,
INCLUDING GRANTS TO EMPLOYEES THEREOF WHO BECOME EMPLOYEES OF THE COMPANY, OR
FOR OTHER PROPER CORPORATE PURPOSES, OR (II) LIMIT THE RIGHT OF THE COMPANY TO
GRANT STOCK OPTIONS OR MAKE OTHER AWARDS OUTSIDE OF THIS PLAN.  WITHOUT LIMITING
THE FOREGOING, THE COMMITTEE MAY MAKE A GRANT TO AN EMPLOYEE OF ANOTHER
CORPORATION WHO

 

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BECOMES AN EMPLOYEE BY REASON OF A CORPORATE MERGER, CONSOLIDATION, ACQUISITION
OF STOCK OR PROPERTY, REORGANIZATION OR LIQUIDATION INVOLVING THE COMPANY OR ANY
OF ITS SUBSIDIARIES IN SUBSTITUTION FOR A STOCK OPTION OR RESTRICTED STOCK GRANT
MADE BY SUCH CORPORATION.  THE TERMS AND CONDITIONS OF THE SUBSTITUTE GRANTS MAY
VARY FROM THE TERMS AND CONDITIONS REQUIRED BY THE PLAN AND FROM THOSE OF THE
SUBSTITUTED STOCK INCENTIVES.  THE COMMITTEE SHALL PRESCRIBE THE PROVISIONS OF
THE SUBSTITUTE GRANTS.

 

(B)                                 COMPLIANCE WITH LAW.  THE PLAN, THE EXERCISE
OF OPTIONS AND SARS AND THE OBLIGATIONS OF THE COMPANY TO ISSUE OR TRANSFER
SHARES OF COMPANY STOCK UNDER GRANTS SHALL BE SUBJECT TO ALL APPLICABLE LAWS AND
TO APPROVALS BY ANY GOVERNMENTAL OR REGULATORY AGENCY AS MAY BE REQUIRED.  IT IS
THE INTENT OF THE COMPANY THAT THE PLAN AND APPLICABLE GRANTS UNDER THE PLAN
COMPLY WITH THE APPLICABLE PROVISIONS OF SECTION 162(M) OF THE CODE (AFTER A
PUBLIC OFFERING), SECTION 422 OF THE CODE (WITH RESPECT TO INCENTIVE STOCK
OPTIONS) AND SECTION 409A OF THE CODE (WITH RESPECT TO GRANTS SUBJECT TO
SECTION 409A OF THE CODE).  AFTER A PUBLIC OFFERING IT IS THE INTENT OF THE
COMPANY, WITH RESPECT TO PERSONS SUBJECT TO SECTION 16 OF THE EXCHANGE ACT, THAT
THE PLAN AND ALL TRANSACTIONS UNDER THE PLAN COMPLY WITH ALL APPLICABLE
PROVISIONS OF RULE 16B-3 OR ITS SUCCESSORS UNDER THE EXCHANGE ACT. TO THE EXTENT
THAT ANY LEGAL REQUIREMENT OF SECTION 162(M), 409A OR 422 OF THE CODE OR OF
SECTION 16 OF THE EXCHANGE ACT CEASES TO BE REQUIRED BY LAW OR THAT THE
RESTRICTIONS THEREOF ARE LIBERALIZED, THE COMMITTEE MAY PROVIDE, IN ITS SOLE
DISCRETION, THAT PLAN PROVISIONS AND RESTRICTIONS RELATING TO SUCH LEGAL
REQUIREMENTS SHALL CEASE TO APPLY OR BE LIBERALIZED, AS APPROPRIATE.  THE
COMMITTEE MAY REVOKE ANY GRANT IF IT IS CONTRARY TO LAW OR MODIFY A GRANT TO
BRING IT INTO COMPLIANCE WITH ANY VALID AND MANDATORY GOVERNMENT REGULATION. 
THE COMMITTEE MAY ALSO ADOPT RULES REGARDING THE WITHHOLDING OF TAXES ON
PAYMENTS TO GRANTEES.  THE COMMITTEE MAY, IN ITS SOLE DISCRETION, AGREE TO LIMIT
ITS AUTHORITY UNDER THIS SECTION.

 

(C)                                  COMMUNICATIONS LAWS.  NOTWITHSTANDING ANY
OTHER PROVISION IN THE PLAN TO THE CONTRARY, IF PRIOR CONSENT TO THE ISSUANCE OR
EXERCISE OF ANY GRANT HEREUNDER IS REQUIRED FOR ANY REASON UNDER THE
COMMUNICATIONS ACT OF 1934, AS AMENDED, AND/OR THE RULES, REGULATIONS OR
POLICIES OF THE FEDERAL COMMUNICATIONS COMMISSION (THE “FCC”) OR ANY SUCCESSOR
GOVERNMENTAL AGENCY (THE “COMMUNICATIONS LAWS”) IN EFFECT AT THE TIME, WHETHER
AS A CONSEQUENCE OF THE EXTENT OF THE CURRENT AND PROPOSED HOLDINGS OF THE
GRANTEE, THE CITIZENSHIP OR LEGAL QUALIFICATIONS OF THE GRANTEE OR FOR ANY OTHER
REASON UNDER THE COMMUNICATIONS LAWS, THEN NO GRANT SHALL BE ISSUED, BECOME
EFFECTIVE OR BE EXERCISED WITHOUT THE GRANTEE FIRST OBTAINING SUCH PRIOR WRITTEN
CONSENT OF THE FCC OR ANY SUCCESSOR GOVERNMENTAL AGENCY.

 

(D)                                 GOVERNING LAW.  THE VALIDITY, CONSTRUCTION,
INTERPRETATION AND EFFECT OF THE PLAN AND GRANT INSTRUMENTS ISSUED UNDER THE
PLAN SHALL BE GOVERNED AND CONSTRUED BY AND DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE COMMONWEALTH OF PENNSYLVANIA, WITHOUT GIVING EFFECT TO THE CONFLICT
OF LAWS PROVISIONS THEREOF.

 

 

ENTERCOM COMMUNICATIONS CORP.

 

 

 

By:

 

 

 

 

 

Name & Title:

 

 

 

 

 

 

 

Date:

 

 

 

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