Document:

exv10w1

Exhibit 10.1

FEDERAL DEPOSIT INSURANCE CORPORATION

WASHINGTON, D.C.

	 	 	 	 	 	 	 	 	 
	 

	 	 	)	 	 	 
	 	 
	In the Matter of

	 	 	)	 	 	 	 	 
	 

	 	 	)	 	 	 	 	 
	WESTERNBANK PUERTO RICO

	 	 	)	 	 	ORDER TO CEASE AND DESIST	 	 
	MAYAGUEZ, PUERTO RICO

	 	 	)	 	 	 	 	 
	 

	 	 	)	 	 	FDIC-08-275b	 	 
	(INSURED STATE NONMEMBER BANK)

	 	 	)	 	 	 	 	 
	 

	 	 	)	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

     Westernbank Puerto Rico, Mayaguez, Puerto Rico (“Bank”), having been advised of its right to a
Notice of Charges and of Hearing detailing the unsafe or unsound banking practices and violations
of law and regulation alleged to have been committed by the Bank and of its right to a hearing on
the alleged charges under section 8(b)(1) of the Federal Deposit Insurance Act (“Act”), 12 U.S.C. §
1818(b)(1), and having waived those rights, entered into a STIPULATION AND CONSENT TO THE ISSUANCE
OF AN ORDER TO CEASE AND DESIST (“CONSENT AGREEMENT”) with counsel for the Federal Deposit
Insurance Corporation (“FDIC”), dated April 16, 2009, whereby solely for the purpose of this
proceeding and without admitting or denying the alleged charges of unsafe or unsound banking
practices and violations of law and regulation, the Bank consented to the issuance of an ORDER TO
CEASE AND DESIST (“ORDER”) by the FDIC.

     The FDIC considered the matter and the results of the
September 29, 2008 examination performed jointly by the FDIC and

 

 

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the Office of the Commissioner (“Commissioner”) of Financial
Institutions of the Commonwealth of Puerto Rico (“2008 Joint Examination”) and determined that it
had reason to believe that the Bank had engaged in unsafe or unsound banking practices and had
committed violations of law and regulation. The FDIC, therefore, accepted the CONSENT AGREEMENT and
issues the following:

ORDER TO CEASE AND DESIST

     IT IS HEREBY ORDERED that the Bank, its directors, officers, employees, agents, and other
institution-affiliated parties (as that term is defined in Section 3(u) of the Act, 12 U.S.C. §
1813(u)), and its successors and assigns cease and desist from engaging in the following unsafe or
unsound banking practices and violations of law and regulation:

          (a) Operating with inadequate management supervision
and oversight by the board of directors of the Bank (“Board”) to
prevent unsafe or unsound practices and violations of law and
regulation;

          (b) Operating in violation of section 323.3(a)(7) of
the FDIC’s Rules and Regulations, 12 C.F.R. § 323.3(a)(7) and in
contravention of the Interagency Appraisal and Evaluation
Guidelines (FIL-74-94, issued November 11, 1994);

          (c) Operating in violation of section 363.4(a) of the
FDIC’s Rules and Regulations, 12 C.F.R. § 363.4(a);

 

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          (d) Operating in violation of section 103.27(a) of the
regulations promulgated by the United States Treasury, 31 C.F.R.
§ 103.27(a);

          (e) Operating in violation of section 17 of the
Banking Law of Puerto Rico, Act No. 55, and chapter VIII of
Regulation 5793, adopted pursuant to the Puerto Rico Banking Act;

          (f) Operating in contravention of
Appendix A of Part 365 of the FDIC’s Rules and Regulations, 12 C.F.R. Part 365;

          (g) Operating in
contravention of the Interagency Policy Statement on the Allowance for Loan and Lease Losses,
December 13, 2006, and the Policy Statement on Allowance for Loan
and Lease Losses Methodologies and Documentation for Banks and Savings Associations (July 6, 2001);

          (h) Engaging in unsatisfactory lending and lax underwriting and credit administration, including
operating
without an effective loan review system and internal loan grading
system;

          (i) Operating with an excessive level of adversely classified loans and/or delinquent loans;

          (j) Operating with capital levels that are not commensurate with the nature and extent of the risk
to the Bank,
given the volume of adversely classified assets and high concentration in commercial real estate;

          (k) Operating in such a manner as to produce insufficient earnings; and

          (l) Operating with
excessive reliance on non-core funding.

 

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     IT IS FURTHER ORDERED that the Bank, its institution-
affiliated parties, and its successors and assigns, shall take
affirmative action, as follows:

BOARD OF DIRECTORS’ OVERSIGHT

     1. Upon the effective date of this ORDER, the Board shall assume full responsibility for the
approval of sound policies and objectives for compliance with this ORDER and shall monitor the
steps taken by the Bank to ensure that the Bank eliminates and/or corrects the violations of laws,
rules and regulations identified in the 2008 Joint
Examination or identified internally. The Board shall record the status of the corrective
actions taken by the Bank in the Board minutes, which shall be retained for supervisory review.

     2. Within 60 days of the effective date of this ORDER, the Board shall submit a plan to
increase the number of independent, outside directors that is acceptable to the Regional Director
of the FDIC’s New York Regional Office (“Regional Director”).

MANAGEMENT

     3. Within 60 days of the effective date of this ORDER, the Board shall submit a written plan
acceptable to the Regional Director that describes the specific actions that the Board has taken
and proposes to take to strengthen the Bank’s management and ensure that the Bank eliminates and/or
corrects the violations of law and/or regulation identified in the Joint 2008

 

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Examination, and ensure that the Bank is operating with
management that is acceptable to the Regional Director.

CAPITAL ADEQUACY

     4. (a) Within 90 days of the effective date of this
ORDER, the Bank shall submit to the Regional Director an acceptable revised written plan to achieve
and maintain sufficient capital at the Bank. The revised plan shall, at a minimum, address and
consider:

               (i) the Bank’s current and future capital requirements;

               (ii) any planned growth in the
Bank’s assets;

               (iii) the Bank’s level of concentrations of credit;

               (iv) the volume of the Bank’s
adversely classified assets;

               (v) the Bank’s anticipated level of retained earnings; and

               (vi) the
source and timing of additional funds to fulfill the future capital needs of the Bank.

          (b) Beginning on the effective date of this ORDER, the Bank shall maintain its Tier 1 leverage
ratio at a level of no less than 5.5 percent.

 

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          (c) Beginning on September 30, 2009, the Bank shall maintain its Tier 1 leverage ratio at a
level of no less than 5.75 percent.

          (d) Beginning on March 31, 2010, the Bank shall maintain its Tier 1 leverage ratio at a level
of no less than 6 percent.

          (e) The Bank shall not declare or pay any dividends without the prior written approval of the
Regional Director. Requests for approval shall be received at least 30 days prior to the proposed
date for the declaration of dividends and shall contain, but not be limited to, information on
consolidated earnings for the most recent annual period and the last quarter.

          (d) Within 90 days of the effective date of this ORDER, the Bank shall develop and submit a
written plan to the Regional Director for systematically reducing and monitoring the Bank’s
portfolio of loans, securities, or other extensions of credit advanced or committed, directly or
indirectly, to or for the benefit of any borrowers in Commercial Real Estate and Acquisition,
Development and Construction, as identified in the 2008 Joint Examination and in the FDIC’s Report
of Examination dated September 29, 2008 (“2008 ROE”), to an amount which is commensurate with the
Bank’s business strategy, management expertise, size, and location. At a minimum, the plan shall
include: the dollar levels and percent of capital to which the Bank shall reduce each
concentration; timeframes for achieving the reduction in dollar levels identified; and provisions
for the

 

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submission of monthly written progress reports to the Board for
review and notation in minutes of the meetings of the Board.

REDUCTION OF CLASSIFIED ASSETS

     5. (a) Within 30 days of the effective date of this
ORDER, the Bank shall eliminate from its books, by collection or charge-off, all items or portions
of items classified “Loss” as a result of the 2008 Joint Examination, which have not previously
been charged off or collected. In addition, the Bank shall, within 30 days
from the receipt of any subsequent report of examination from the FDIC, eliminate from its books,
by collection or charge-off, all items or portions of items classified “Loss” in that report of
examination. Elimination of these items through the use of the proceeds of loans or other
extensions of credit made by the Bank will not constitute collection for purposes of this
paragraph.

          (b) Within 90 days from the effective date of this ORDER, the Bank shall formulate a written
plan to reduce the Bank’s risk exposure in each asset classified “Substandard” or “Doubtful” in the
2008 ROE. For purposes of this provision, “reduce” means to collect, charge off, or improve the
quality of an asset so as to warrant its removal from adverse classification by the FDIC. In
developing the plan mandated by this paragraph, the Bank shall, at a minimum, and with respect to
each adversely classified loan or lease, review, analyze and

 

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document the financial position of the borrower, including source of repayment, repayment ability
and alternative repayment sources, as well as the value and accessibility of any pledged or
assigned collateral and any possible actions to improve the Bank’s collateral position.

          (c) The plan mandated by this provision shall also include, but not be limited to, provisions
which:

               (i) prohibit the extension of credit for the payment of interest or fees;

               (ii) include a
schedule for reducing the outstanding dollar amount of each adversely classified asset, including
timeframes for achieving the reduced dollar amounts (at a minimum, the schedule for each adversely
classified asset must show its expected dollar balance on a quarterly basis);

               (iii) include
specific action plans intended to reduce the Bank’s risk exposure in each classified asset;

               (iv)
provide for the Bank’s submission of monthly written progress reports to the Board; and

               (v) provide
for mandating Board review of the progress reports, with a notation of the review recorded in the
minutes of the meeting of the Board.

          (d) The Bank shall submit the plan to the Regional Director for review and comment. Within 30
days from receipt of any comment from the Regional Director, and after due

 

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consideration of any recommended changes, the Bank shall approve the plan, which approval shall be
recorded in the minutes of the meeting of the Board. Thereafter, the Bank shall implement and fully
comply with the plan.

RESTRICTIONS ON ADVANCES TO ADVERSELY CLASSIFIED BORROWERS

     6. (a) While this ORDER is in effect, the Bank shall not extend, directly or indirectly, any
additional credit to, or for the benefit of, any borrower who has a loan or other extension of
credit or obligation with the Bank that has been, in whole or in part, charged off or classified
“Loss” and is uncollected.

          (b) While this ORDER is in effect, the Bank shall not extend, directly or indirectly, any
additional credit to, or for the benefit of, any borrower who has a loan or other extension of
credit or obligation with the Bank that has been, in whole or in part, classified “Substandard”,
“Doubtful” or is listed as Special Mention and is uncollected, unless the Board has adopted, prior
to such extensions of credit, a detailed written statement giving the reasons why such extensions
of credit are in the best interests of the Bank. A copy of the statement shall be placed in the
appropriate loan file and shall be incorporated in the minutes of the applicable Board meeting. The
requirements of this sub-paragraph shall not prohibit the Bank from renewing, after collecting in
cash all interest and fees due from a borrower, any credit already extended to the
borrower.

 

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LOAN POLICIES AND PROCEDURES

     7. Within 90 days of the effective date of this ORDER, the
Bank shall submit to the Regional Director written loan policies
and procedures that have been approved by the Board, which shall,
at a minimum, address, consider, and include the following:

          (a) underwriting standards for loans;

          (b) the monitoring and reporting of past due loans; and

          (c) controlling and monitoring
concentrations of credit, including: (i) establishing concentrations of credit
limits by industries and types of loans; and (ii) managing the
risk associated with asset concentrations.

LENDING AND CREDIT ADMINISTRATION

     8. The Bank shall not grant, extend, renew, alter, or restructure any loan or other extension
of credit without first
obtaining and analyzing all relevant credit information, as well as taking all necessary steps to
properly value and perfect its interest in collateral, where applicable, and the Bank shall also
take the following measures:

          (a) Adequate and effective loan review procedures
shall be designed to identify and categorize problem credits and
to assess the overall quality of the Bank’s loan portfolio. These reviews shall be performed
periodically to identify problem assets and shall be reported to the Board along with the action
taken by management to improve the Bank’s position on each loan adversely graded. Within 60 days of
the effective date of this

 

 

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ORDER, the Bank shall ensure that the internal audit department’s
risk assessment program is expanded to include the assessment of
the Bank’s loan review function.

          (b) Management shall enhance loan documentation
procedures and correct any deficiencies identified either
internally, by auditors or consultants, or during an examination process, including, but not
limited to, technical exceptions related to obtaining accurate and current income and cash flow
information, financial statements, and appraisals.

          (c) Reduce the level of classified and delinquent
loans through aggressive workout of problem credits, and maintain
strict adherence to prudent underwriting standards for new
extensions of credit.

          (d) Refrain from capitalizing loan interest to bring
delinquent loans current without the benefit of repayment from
the borrower, thereby distorting the borrower’s ability to repay
the loan, and distorting the bank’s delinquency ratios.

ALLOWANCE FOR LOAN AND LEASE LOSSES

     9. The Bank shall maintain, through charges to current operating income, an adequate allowance
for loan and lease
losses. The adequacy of the allowance for loan and lease losses shall be determined in light of the
volume of criticized loans, the current level of past due and nonperforming loans, past loan loss
experience, evaluation of the potential for loan losses in the Bank’s portfolio, current economic
conditions, and any criticisms as contained in the Bank’s most recent report of

 

 

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examination. The Bank shall conduct, at a minimum, a quarterly assessment of its allowance for loan
and lease losses and shall maintain a written record, for supervisory
review, indicating the methodology used in determining the amount of the allowance needed. The Bank
shall ensure that the methodology utilized to determine the appropriateness of the ALLL has been
periodically evaluated by an independent party.

FUNDS MANAGEMENT AND LIQUIDITY

     10. Within 60 days of the effective date of this Order, the
Bank shall submit in writing to the Regional Director an
acceptable, comprehensive liquidity contingency plan. The plan shall address the means by which the
Bank will seek to reduce its reliance on non-core funding and high cost rate-sensitive deposits.
The plan shall also assess possible liquidity events that the Bank may encounter and identify
responses to the potential impact of such events on the Bank’s short-term, intermediate-term and
long-term liquidity profile.

APPRAISAL COMPLIANCE PROGRAM

     11. Within 30 days of the effective date of this ORDER, the
Bank shall establish an adequate and effective appraisal
compliance program, including enhancing the Bank’s appraisal policy to capture risk management and
internal controls that ensure that appraisals are obtained in a timely manner when required by law
or regulation and that appraisals contain appropriate valuation approaches to support assigned
values. Within 90 days of the effective date of this ORDER, the Bank shall ensure that adequate
training is provided to account

 

 

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managers who are responsible for obtaining and reviewing appraisals to ensure that they include all
necessary information, employ correct methodology, include reasonable assumptions and adequately
support assigned values.

PROFIT AND BUDGET PLAN

     12. Within 30 days from the end of each calendar month
following the effective date of this ORDER, the Board shall
evaluate the Bank’s performance in relation to the Profit Plan and record the results of the
evaluation, and any actions taken by the Bank, in the minutes of the Board meeting during which
such evaluation is undertaken. The Board shall ensure that the Bank is in compliance with specific
goals set by the Board to improve and sustain earnings, given the level of adversely classified
assets, the Bank’s financial condition and economic and other factors and shall revise the Profit
Plan, as necessary, to accomplish these goals. In the event the Board determines that the Profit
Plan should be revised in any manner, the Profit Plan shall be revised and submitted to the
Regional Director for review and comment within 25 days after such revisions have been approved by
the Board. Within 30 days of receipt of any comments from the Regional Director, and after
consideration of all such comments, the Board shall approve the revised Profit Plan, which approval
shall be recorded in the minutes of the Board meeting in which it is approved.

COMPLIANCE WITH LAWS AND REGULATIONS

     13. (a) Within 60 days from the effective date of this
ORDER, the Bank shall take steps necessary, consistent with

 

 

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sound banking practices, to eliminate and/or correct the violations of laws, rules and regulations
identified in the 2008 Joint Examination or identified internally. In addition, the Bank shall take
all steps necessary to ensure future compliance with all applicable laws, rules, and regulations.

          (b) The Bank shall immediately initiate an affirmative
compliance program in order to ensure compliance with the
provisions of all applicable laws, rules, and regulations.

PLANS, POLICIES, PROCEDURE, AND PROGRAMS 

     14. (a) Acceptable plans, policies, procedures, and
programs shall be submitted to the Regional Director within the time periods set forth in this
ORDER. Where applicable, the Bank shall adopt all Board approved plans, policies, procedures, and
programs, and then shall fully comply with them. During the term of this ORDER, the Bank shall not
amend or rescind any plans, policies, procedures, and programs submitted pursuant to this ORDER
without the prior written approval of the Regional Director.

          (b) The Board shall review all plans, policies,
procedures, and programs annually.

EXTENSIONS

     15. Notwithstanding any provision of this ORDER to the
contrary, at the Regional Director’s discretion, the Regional
Director may grant a written extension of time to the Bank to
comply with any provision of this ORDER.

 

 

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SHAREHOLDERS

     16. Following the effective date of this ORDER, the Bank shall send to its parent holding
company the ORDER or otherwise furnish a description of the ORDER in conjunction with the Bank’s
next communication with such parent holding company. The description shall fully describe the ORDER
in all material aspects.

OTHER ACTIONS

     17. It is expressly and clearly understood that if, at any
time, the Regional Director shall deem it appropriate in
fulfilling the responsibilities placed upon him under applicable
law to undertake any further action affecting the Bank, nothing
in this ORDER shall in any way inhibit, estop, bar, or otherwise
prevent him from doing so.

     18. It is expressly and clearly understood that nothing herein shall preclude any proceedings
brought by the Regional Director to enforce the terms of this ORDER, and that nothing herein
constitutes, nor shall the Bank contend that it constitutes, a waiver of any right, power, or
authority of any other representatives of the United States, departments or agencies thereof,
Department of Justice, or any other representatives of the Commonwealth of Puerto Rico or any other
departments or agencies thereof, including any prosecutorial agency, to bring other actions deemed
appropriate.

 

 

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ORDER EFFECTIVE

     19. The effective date of this ORDER shall be the date of
issuance.

     20. The provisions of this ORDER shall be binding upon the Bank, its directors, officers,
employees, agents, successors, assigns, and other institution-affiliated parties of the Bank.

     21. The provisions of this ORDER shall remain effective and enforceable except to the extent
that, and until such time as, any provisions of this ORDER have been modified, terminated,
suspended or set aside by the FDIC.

     Pursuant to delegated authority

     Dated:      , 2009.

	 	 	 	 	 
	 

	 	 

James C. Watkins
	 	 
	 

	 	Deputy Regional Director	 	 

 

 

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ADOPTION AND APPROVAL BY THE COMMISSIONER

OF FINANCIAL INSTITUTIONS

     The Commissioner of Financial Institutions for the
Commonwealth of Puerto Rico (the “Commissioner”), in the exercise of his powers under the Puerto
Rico Banking Act and under the Financial Institutions Commissioner’s Office Act, hereby adopts and
approves the foregoing ORDER.

     The Commissioner and Westernbank Puerto Rico, Mayaguez, Puerto Rico (the “Bank”), agree that
upon issuance of the said ORDER by the Federal Deposit Insurance Corporation such ORDER shall be
binding as between the Bank and the Commissioner with the same legal effect and to the same degree
that such ORDER would be binding on the Bank if the Commissioner had issued a separate ORDER,
pursuant to the provisions of Section 28 of the Banking Act, Title 7 of the Laws of Puerto Rico
Annotated Section 151, that included and incorporated all of the provisions of the foregoing ORDER.

     The Commissioner and the Bank further agree that the provisions of this ORDER shall remain
effective and enforceable by the Commissioner against the Bank except to the extent that, and until
such time as, any provisions of this ORDER shall have been modified, terminated, suspended, or set
aside by the Commissioner.

 

 

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          In San Juan, Puerto Rico, on      , 2009.

	 	 	 
	 

Alfredo Padilla

	 	 
	Commissioner of Financial Institutions
	 	 
	 
	 	 
	Acknowledged:
	 	 
	Westernbank Puerto Rico
	 	 

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Titleexv10w1

LAMAR ADVERTISING COMPANY

1996 EQUITY INCENTIVE PLAN

(as amended and restated in February 2009)

1. Purpose

     The purpose of the Lamar Advertising Company 1996 Equity Incentive Plan (the “Plan”) is to
attract and retain directors, key employees and consultants of the Company and its Affiliates, to
provide an incentive for them to achieve long-range performance goals, and to enable them to
participate in the long-term growth of the Company by granting Awards with respect to the Company’s
Class A Common Stock (the “Common Stock”). Certain capitalized terms used herein are defined in
Section 9 below.

2. Administration

     The Plan shall be administered by the Committee. The Committee shall select the Participants
to receive Awards and shall determine the terms and conditions of the Awards. The Committee shall
have authority to adopt, alter and repeal such administrative rules, guidelines and practices
governing the operation of the Plan as it shall from time to time consider advisable, and to
interpret the provisions of the Plan. The Committee’s decisions shall be final and binding. To
the extent permitted by applicable law, the Committee may delegate to one or more executive
officers of the Company the power to make Awards to Participants who are not Reporting Persons or
Covered Employees and all determinations under the Plan with respect thereto, provided that the
Committee shall fix the maximum amount of such Awards for all such Participants and a maximum for
any one Participant. In its absolute discretion, the Board may at any time and from time to time
exercise any and all rights and duties of the Committee under this Plan except with respect to
matters which under Rule 16b-3 or Section 162(m) of the Internal Revenue Code (the “Code”), or any
regulations or rules issued thereunder, are required to be determined in the sole discretion of the
Committee. In this regard, to the extent that the guidelines pursuant to Section 162(m) are
applicable, not only will the Committee consist solely of two or more outside directors but said
Committee shall be required to certify that any Performance Goals and/or other material terms
associated with any Award have been satisfied prior to the payment of any Award.

3. Eligibility

     All directors, employees and consultants of the Company or any Affiliate capable of
contributing significantly to the successful performance of the Company, other than a person who
has irrevocably elected not to be eligible, are eligible to be Participants in the Plan. Incentive
Stock Options may be granted only to persons eligible to receive such Options under the Code.

 

 

4. Stock/Cash Available for Awards

     (a) Amount. Subject to adjustment under subsection (b), Awards may be made under the Plan for
up to 13,000,000 shares of Common Stock or cash bonuses up to $10,000,000. If any Award expires or
is terminated unexercised or is forfeited or settled in a manner that results in fewer shares
outstanding than were awarded, the shares subject to such Award, to the extent of such expiration,
termination, forfeiture or decrease, shall again be available for award under the Plan. To the
extent required by Section 162(m) of the Code if, after grant of an Option, the price of shares
subject to such Option is reduced, the transaction shall be treated as a cancellation of the Option
and a grant of a new Option. Common Stock issued through the assumption or substitution of
outstanding grants from an acquired company shall not reduce the shares available for Awards under
the Plan. Shares issued under the Plan may consist in whole or in part of authorized but unissued
shares or treasury shares.

     (b) Adjustment. In the event that the Committee determines that any stock dividend,
extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up,
spin-off, combination, exchange of shares or other transaction affects the Common Stock such that
an adjustment is required in order to preserve the benefits intended to be provided by the Plan,
then the Committee (subject in the case of Incentive Stock Options to any limitation required under
the Code) shall equitably adjust any or all of (i) the number and kind of shares in respect of
which Awards may be made under the Plan, (ii) the number and kind of shares subject to outstanding
Awards and (iii) the exercise price with respect to any of the foregoing, and if considered
appropriate, the Committee may make provision for a cash bonus with respect to an outstanding
Award, provided that the number of shares subject to any Award shall always be a whole number.

     (c) Limit on Individual Grants. The maximum number of shares of Common Stock subject to
Options and Stock Appreciation Rights that may be granted to any Participant in the aggregate in
any calendar year shall not exceed 350,000 shares and the maximum number of shares of Common Stock
that may be granted as Restricted Stock, Unrestricted Stock Awards, Restricted Stock Units with
respect to which Performance Goals apply under Section 7 below, to any Participant in the aggregate
in any calendar year shall not exceed 350,000, subject to adjustment under subsection (b). The
maximum cash Award that may be issued to any Participant in any calendar year shall be $2,000,000.

5. Stock Options

     (a) Grant of Options. Subject to the provisions of the Plan, the Committee may grant options
(“Options”) to purchase shares of Common Stock (i) complying with the requirements of Section 422
of the Code or any successor provision and any regulations thereunder (“Incentive Stock Options” or
“ISOs”) and (ii) not intended to comply with such requirements (“Nonstatutory Stock Options” or
“NSOs”). The Committee shall determine the number of shares subject to each Option and the
exercise price therefor, which shall not be less than 100% of the Fair Market Value of the Common
Stock on the date of grant. No Incentive Stock Options may be granted hereunder more than ten
years after the last date on which the Plan was approved for purposes of Section 422 of the Code.

2

 

     (b) Terms and Conditions. Each Option shall be exercisable at such times and subject to such
terms and conditions as the Committee may specify in the applicable grant or thereafter. The
Committee may impose such conditions with respect to the exercise of Options, including conditions
relating to applicable federal or state securities laws, as it considers necessary or advisable.
To the extent required by Section 162(m) of the Code if, after grant of an Option, the price of
shares subject to such Option is reduced, the transaction shall be treated as a cancellation of the
Option and a grant of a new Option.

     (c) Payment. No shares shall be delivered pursuant to any exercise of an Option until payment
in full of the exercise price therefor is received by the Company. Such payment may be made in
whole or in part in cash or, to the extent permitted by the Committee at or after the grant of the
Option, by delivery of a note or other commitment satisfactory to the Committee or shares of Common
Stock owned by the optionee, including Restricted Stock, Restricted Stock Units or by retaining
shares otherwise issuable pursuant to the Option, in each case valued at their Fair Market Value on
the date of delivery or retention, or such other lawful consideration as the Committee may
determine.

     (d) Unexercised Options and Other Rights. To the extent that (i) a Stock Option expires or is
otherwise terminated without being exercised, or (ii) any shares of Stock subject to any other
Award granted hereunder are forfeited, such shares shall again be available for issuance in
connection with future awards under the Plan. If any shares of Stock have been pledged as
collateral for indebtedness incurred by a Participant in connection with the exercise of a Stock
Option and such shares are returned to the Company in satisfaction of such indebtedness, such
shares shall again be available for issuance in connection with future awards under the Plan. To
the extent that a share is subject to an outstanding Option, Stock Appreciation Right or other
stock-based Award, such share shall reduce the share authorization by one share of stock.
Notwithstanding the foregoing, Awards that are expired, cancelled, forfeited or otherwise returned
to the Company cannot be recounted for purposes of Section 162(m) of the Code and the Committee
shall consider such limitation when regranting such Awards.

     (e) Annual Limit on Incentive Stock Options. Each eligible employee may be granted Options
treated as ISOs only to the extent that, in the aggregate under this Plan and all incentive stock
option plans of the Company, ISOs do not become exercisable for the first time by such employee
during any calendar year with respect to stock having a fair market value (determined at the time
the ISOs were granted) in excess of $100,000. The Company intends to designate any Options granted
in excess of such limitation as NSOs

6. Stock Appreciation Rights

     (a) Grant of SARs. Subject to the provisions of the Plan, the Committee may grant rights to
receive any excess in value of shares of Common Stock over the exercise price (“Stock
Appreciation Rights” or “SARs”) in tandem with an Option (at or after the award of the
Option), or alone and unrelated to an Option. SARs in tandem with an Option shall terminate to the
extent that the related Option is exercised, and the related Option shall terminate to the extent
that the tandem SARs are exercised. The Committee shall determine at the time of grant or
thereafter whether SARs are settled in cash, Common Stock or other securities of the Company,

3

 

Awards or other property, and may define the manner of determining the excess in value of the
shares of Common Stock.

     (b) Exercise Price. The Committee shall fix the exercise price of each SAR or specify the
manner in which the price shall be determined. An SAR granted in tandem with an Option shall have
an exercise price not less than the exercise price of the related Option. SARs granted alone and
unrelated to an Option may be granted at such exercise prices as the Committee may determine, but
no less than Fair Market Value.

     (c) Treatment of Dividend Rights. No SAR shall include a right to dividends between the date
of grant and date of exercise in the absence of a separate agreement in compliance with the
requirements of Section 409A of the Code.

7. Stock Awards

     (a) Grant of Restricted or Unrestricted Stock. Subject to the provisions of the Plan, the
Committee may grant shares of Common Stock subject to forfeiture (“Restricted Stock”) and determine
the duration of the period (the “Restricted Period”) during which, and the conditions under which,
the shares may be forfeited to the Company and the other terms and conditions of such Awards.
Shares of Restricted Stock may be issued for no cash consideration, such minimum consideration as
may be required by applicable law or such other consideration as the Committee may determine.
Shares of Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered,
except as permitted by the Committee or the applicable Restricted Stock Agreement during the
Restricted Period. Shares of Restricted Stock shall be evidenced in such manner as the Committee
may determine. Any certificates issued in respect of shares of Restricted Stock shall be
registered in the name of the Participant and unless otherwise determined by the Committee,
deposited by the Participant, together with a stock power endorsed in blank, with the Company. At
the expiration of the Restricted Period, the Company shall deliver such certificates to the
Participant or if the Participant has died, to the Participant’s Designated Beneficiary. The
Committee also may make Awards of shares of Common Stock that are not subject to restrictions or
forfeiture, on such terms and conditions as the Committee may determine from time to time
(“Unrestricted Stock”).

     (b) Performance Awards. The Committee may grant Performance Awards to eligible individuals.
The value of such Performance Awards may be linked to the market value, book value, net profits or
other measure of the value of Common Stock or other specific performance criteria determined
appropriate by the Committee, or may be based upon the appreciation in the market value, book
value, net profits or other measure of the value of a specified number of shares of Common Stock
over a fixed period or periods determined by the Committee.

     (c) Performance-Based Compensation. The Committee may establish Performance Goals for the
granting of Restricted Stock, Unrestricted Stock, Restricted Stock Unit Awards, the lapse of risk
of forfeiture of Restricted Stock, cash incentives or other Performance Award. The achievement of
the Performance Goals shall be determined by the Committee. Shares of Restricted Stock or
Unrestricted Stock may be issued for no cash consideration, such minimum consideration as may be
required by applicable law or such other consideration as the Committee

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may determine. If the
Committee determines at the time an Award is granted to a Participant that such Participant is, or
may be as of the end of the tax year for which the Company would claim a tax deduction in
connection with such Award, a Covered Employee, then the Committee may provide that the
Participant’s right to receive cash, shares, or other property pursuant to such Award shall be
subject to the satisfaction of Performance Goals during a performance period, which for these
purposes means the period of service designated by the Committee applicable to an Award.
Notwithstanding the attainment of Performance Goals by a Covered Employee, 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. The Committee shall
have the power to impose such other restrictions on Awards as it deems necessary or appropriate to
ensure that such Awards satisfy all requirements for “performance-based compensation” within the
meaning of Section 162(m) of the Code. In this regard, any performance criterion based on
performance over time will be determined by reference to a period of at least one year.

     (d) Other Stock Based Awards. The Committee shall have the right to grant such Awards based
upon the Common Stock having terms and conditions as the Board may determine, including, without
limitation, the grant of shares based upon certain conditions, the grant of securities convertible
into Common Stock, the grant of warrants to purchase Common Stock or grant Restricted Stock Units.

8. General Provisions Applicable to Awards

     (a) Documentation. Each Award under the Plan shall be evidenced by a writing delivered to the
Participant or agreement executed by the Participant specifying the terms and conditions thereof
and containing such other terms and conditions not inconsistent with the provisions of the Plan as
the Committee considers necessary or advisable to achieve the purposes of the Plan or to comply
with applicable tax and regulatory laws and accounting principles.

     (b) Committee Discretion. Each type of Award may be made alone, in addition to or in relation
to any other Award. The terms of each type of Award need not be identical, and the Committee need
not treat Participants uniformly. Except as otherwise provided by the Plan or a particular Award,
any determination with respect to an Award may be made by the Committee at the time of grant or at
any time thereafter.

     (c) Dividends and Cash Awards. In the discretion of the Committee, any Award under the Plan
may provide the Participant with (i) dividends or dividend equivalents payable (in cash or in the
form of Awards under the Plan) currently or deferred with or without interest and (ii) cash
payments in lieu of or in addition to an Award.

     (d) Termination of Employment. The Committee shall determine the effect on an Award of the
disability, death, retirement or other termination of employment of a Participant and the extent to
which, and the period during which, the Participant’s legal representative, guardian or Designated
Beneficiary may receive payment of an Award or exercise rights thereunder.

5

 

     (e) Change in Control. In order to preserve a Participant’s rights under an Award in the
event of a change in control of the Company (as defined by the Committee), the Committee in its
discretion may, at the time an Award is made or at any time thereafter, take one or more of the
following actions: (i) provide for the acceleration of any time period relating to the exercise or
payment of the Award, (ii) provide for payment to the Participant of cash or other property with a
Fair Market Value equal to the amount that would have been received upon the exercise or payment of
the Award had the Award been exercised or paid upon the change in control, (iii) adjust the terms
of the Award in a manner determined by the Committee to reflect the change in control, (iv) cause
the Award to be assumed, or new rights substituted therefor, by another entity, or (v) make such
other provision as the Committee may consider equitable to Participants and in the best interests
of the Company.

     (f) Transferability. In the discretion of the Committee, any Award may be made transferable
upon such terms and conditions and to such extent as the Committee determines, provided that
Incentive Stock Options may be transferable only to the extent permitted by the Code. The
Committee may in its discretion waive any restriction on transferability.

     (g) Loans. The Committee may authorize the making of loans or cash payments to Participants
in connection with the grant or exercise any Award under the Plan, which loans may be secured by
any security, including Common Stock, underlying or related to such Award (provided that the loan
shall not exceed the Fair Market Value of the security subject to such Award), and which may be
forgiven upon such terms and conditions as the Committee may establish at the time of such loan or
at any time thereafter.

     (h) Withholding Taxes. The Participant shall pay to the Company, or make provision
satisfactory to the Committee for payment of, any taxes required by law to be withheld in respect
of Awards under the Plan no later than the date of the event creating the tax liability. The
Company and its Affiliates may, to the extent permitted by law, deduct any such tax obligations
from any payment of any kind otherwise due to the Participant hereunder or otherwise. In the
Committee’s discretion, the minimum tax obligations required by law to be withheld in respect of
Awards may be paid in whole or in part in shares of Common Stock, including shares retained from
the Award creating the tax obligation, valued at their Fair Market Value on the date of delivery.

     (i) Foreign Nationals. Awards may be made to Participants who are foreign nationals or
employed outside the United States on such terms and conditions different from those specified in
the Plan as the Committee considers necessary or advisable to achieve the purposes of the Plan or
to comply with applicable laws.

     (j) Amendment of Award. The Committee may amend, modify or terminate any outstanding Award,
including substituting therefor another Award of the same or a different
type, changing the date of exercise or realization and converting an Incentive Stock Option to
a Nonstatutory Stock Option and enter into and execute any repricing transaction including but not
limited to reducing the exercise price of such Award. Any such action shall require the
Participant’s consent unless:

6

 

     (i) In the case of a termination of, or a reduction in the number of shares issuable
under, an Option, any time period relating to the exercise of such Option or the eliminated
portion, as the case may be, is waived or accelerated before such termination or reduction
(and in such case the Committee may provide for the Participant to receive cash or other
property equal to the net value that would have been received upon exercise of the
terminated Option or the eliminated portion, as the case may be); or

     (ii) In any other case, the Committee determines that the action, taking into account
any related action, would not materially and adversely affect the Participant.

     (k) Limitations Applicable to Section 16 Persons and Performance-Based Compensation.
Notwithstanding any other provision of this Plan, any Option, Performance Award or other Award or
Restricted Stock or Restricted Stock Unit granted to a Reporting Person who is subject to Section
16 of the Exchange Act shall be subject to any additional limitations set forth in any applicable
exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the
Exchange Act) that are requirements for the application of such exemptive rule, and this Plan shall
be deemed amended to the extent necessary to conform to such limitations. Furthermore,
notwithstanding any other provision of this Plan, any Option or other Awards 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 Treasury 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 this Plan shall be deemed amended to the extent necessary to conform
to such requirements.

     (l) Approval of Plan by Stockholders. This Plan will be submitted for the approval of the
Company’s stockholders within twelve months after the date of the Board’s initial adoption of this
Plan. All Options, Awards, Restricted Stock and Restricted Units granted under the Plan prior to
this restatement, which was approved by Shareholders, shall not be effected by the following
sentence. Options or other Awards may be granted and Restricted Stock or Restricted Stock Units
may be awarded prior to such stockholder approval, provided that such Options or other Awards shall
not be exercisable and such Restricted Stock or Restricted Stock Units shall not vest prior to the
time when this Plan is approved by the stockholders, and provided further that if such approval has
not been obtained at the end of said twelve (12) month period, all Options previously granted shall
be deemed Non-Qualified Options.

9. Certain Definitions

     “Affiliate” means any business entity in which the Company owns directly or indirectly 50% or
more of the total voting power or has a significant financial interest as determined by the
Committee.

     “Award” means any cash bonus, Option, Stock Appreciation Right, Restricted Stock, Unrestricted
Stock, Restricted Stock Unit or other Performance Awards granted under the Plan.

     “Board” means the Board of Directors of the Company.

7

 

     “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor
law.

     “Committee” means one or more committees each comprised of not less than two members of the
Board appointed by the Board to administer the Plan or a specified portion thereof. Unless
otherwise determined by the Board, if a Committee is authorized to grant Awards to a Reporting
Person or a Covered Employee, each member shall be a “non-employee director” or the equivalent
within the meaning of applicable Rule 16b-3 under the Exchange Act or an “outside director” within
the meaning of Section 162(m) of the Code, respectively.

     “Common Stock” or “Stock” means the Class A Common Stock, $0.001 par value, of the Company.

     “Company” means Lamar Advertising Company, a Delaware corporation.

     “Covered Employee” means a “covered employee” within the meaning of Section 162(m) of the
Code.

     “Designated Beneficiary” means the beneficiary designated by a Participant, in a manner
determined by the Committee, to receive amounts due or exercise rights of the Participant in the
event of the Participant’s death. In the absence of an effective designation by a Participant,
“Designated Beneficiary” means the Participant’s estate.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any
successor law.

     “Fair Market Value” means, with respect to a share of Common Stock as of any date of
determination, in the discretion of the Committee, (i) the closing price (on that date) of the
Common Stock on the NASDAQ Stock Market, or any other principal national securities exchange the
Common Stock is traded on; or (ii) the closing bid price (or average of bid prices) last quoted (on
that date) by an established quotation service for over-the-counter securities, if the Common Stock
is not reported on the NASDAQ Stock Market or another national securities exchange; or (iii) if
shares of Common Stock are not publicly traded, the fair market value of such a share as determined
by the Board in good faith after taking into consideration all facts which it deems appropriate and
in accordance with applicable statutory and regulatory guidelines.

     “Participant” means a person selected by the Committee to receive an Award under the Plan.

     “Performance Award” means a cash bonus, stock bonus or other performance or incentive award
that is paid in cash, Common Stock or a combination of both.

     “Performance Goals” means with respect to any designated performance period, one or more
Performance Measures established by the Committee prior to the beginning of such performance period
or within such period after the beginning of the performance period as shall meet the requirements
to be considered “pre-established objective performance goals” for purposes of the regulations
issued under Section 162(m) of the Code. Such Performance Goals

8

 

may be particular to a Participant
or may be based, in whole or in part, on the performance of the division, department, line of
business, subsidiary, or other business unit, whether or not legally constituted, in which the
Participant works or on the performance of the Company generally.

     “Performance Measures” shall include, but not be limited to (measured either absolutely or by
reference to an index or indices and determined either on a consolidated basis or, as the context
permits, on a divisional, subsidiary, line of business, project or geographical basis or in
combinations thereof): sales; revenues; assets; expenses; earnings before or after deduction for
all or any portion of interest, taxes, depreciation, or amortization, whether or not on a
continuing operations or an aggregate or per share basis; return on equity, investment, capital or
assets; one or more operating ratios; borrowing levels, leverage ratios or credit rating; market
share; capital expenditures; cash flow; stock price; stockholder return; sales of particular
products or services; customer acquisition or retention; acquisitions and divestitures (in whole or
in part); joint ventures and strategic alliances; spin-offs, split-ups and the like;
reorganizations; or recapitalizations, restructurings, financings (issuance of debt or equity) or
refinancings.

     “Reporting Person” means a person subject to Section 16 of the Exchange Act.

10. Miscellaneous

     (a) No Right to Employment. No person shall have any claim or right to be granted an Award.
Neither the adoption, maintenance, nor operation of the Plan nor any Award hereunder shall confer
upon any employee or consultant of the Company or of any Affiliate any right with respect to the
continuance of his/her employment by or other service with the Company or any such Affiliate nor
shall they interfere with the rights of the Company (or Affiliate) to terminate any employee at any
time or otherwise change the terms of employment, including, without limitation, the right to
promote, demote or otherwise re-assign any employee from one position to another within the Company
or any Affiliate.

     (b) No Rights As Stockholder. Subject to the provisions of the applicable Award, no
Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any
shares of Common Stock to be distributed under the Plan until he or she becomes the holder thereof.
A Participant to whom Restricted Stock, Unrestricted Stock or Restricted Stock Unit is
awarded shall be considered a stockholder of the Company at the time of the Award except as
otherwise provided in the applicable Award.

     (c) Effective Date. Subject to the approval of the stockholders of the Company, the Plan, as
amended, shall be effective on February 19, 2009.

     (d) Amendment of Plan. The Board may amend, suspend or terminate the Plan or any portion
thereof at any time, subject to such stockholder approval as the Board determines to be necessary
or advisable.

     (e) Governing Law. The provisions of the Plan shall be governed by and interpreted in
accordance with the laws of Delaware.

9

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