ARBITRON INC.
2008 EQUITY COMPENSATION PLAN
(Effective as of May 13, 2008)
The purpose of
this 2008 Equity Compensation Plan (the “Plan”) of
Arbitron Inc., a Delaware corporation (the “Company”),
is to advance the interests of the Company’s stockholders by
enhancing the Company’s ability to attract, retain and
motivate persons who are expected to make important contributions
to the Company and by providing such persons with equity ownership
opportunities and performance-based incentives that are intended to
better align the interests of such persons with those of the
Company’s stockholders. Except where the context otherwise
requires, the term “Company” includes any of the
Company’s present or future parent or subsidiary corporations
as defined in Sections 424(e) or (f) of the Internal Revenue
Code of 1986, as amended, and any regulations issued thereunder
(the “Code”) and any other business venture (including,
without limitation, joint venture or limited liability company) in
which the Company has a controlling interest, as determined by the
Board of Directors of the Company (the
“Board”).
All of the
Company’s employees, officers, and directors are eligible to
be granted options, stock appreciation rights (“SARs”),
restricted stock, restricted stock units (“RSUs”),
deferred stock units (“DSUs”) and other stock-based
awards (each, an “Award”) under the Plan. Each person
who receives an Award under the Plan is deemed a
“Participant.”
3.
Administration and Delegation
(a)
Administration by Board of Directors . The Plan will
be administered by the Board. The Board has the authority to grant
Awards and to adopt, amend and repeal such administrative rules,
guidelines and practices relating to the Plan as it considers
advisable. The Board may construe and interpret the terms of the
Plan and any Award agreements entered into under the Plan. The
Board may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the
extent it considers expedient to carry the Plan into effect and
will be the sole and final judge of such expediency. All decisions
by the Board may be made in the Board’s sole discretion and
will be final and binding on all persons having or claiming any
interest in the Plan or in any Award. No director or person acting
pursuant to the authority delegated by the Board shall be liable
for any action or determination relating to or under the Plan made
in good faith.
(b)
Appointment of Committees . To the extent permitted
by applicable law, the Board may delegate any or all of its powers
under the Plan to one or more committees or subcommittees of the
Board (a “Committee”). All references in the Plan to
the “Board” mean the Board or a Committee of the Board
or the officers referred to in Section 3(c) to the extent that the
Board’s powers or authority under the Plan have been
delegated to such Committee or officers.
(c)
Delegation to Officers . To the extent permitted by
applicable law, the Board may delegate to one or more officers of
the Company the power to grant Awards (subject to any limitations
under the Plan) to employees or officers of the Company or any of
its present or future subsidiary corporations and to exercise such
other powers under the Plan as the Board may determine, provided
that the Board must fix the terms of the Awards to be granted by
such officers (including the exercise price of such Awards, which
may include a formula by which the exercise price will be
determined) and the maximum number of shares subject to Awards that
the officers may grant; provided further, however, that no officer
will be authorized to grant Awards to any “executive
officer” of the Company (as defined by Rule 3b-7 under
the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) or to any “officer” of the
Company (as defined by Rule 16a-1 under the Exchange
Act).
(d)
Awards to Non-Employee Directors. Discretionary
Awards to non-employee directors will only be granted and
administered by a Committee, all of the members of which are
independent as defined by Section 303A.02 of the New York
Stock Exchange Listed Company Manual.
4. Stock
Available for Awards
(a)
Number of Shares; Share Counting .
(1)
Authorized Number of Shares. Subject to adjustment
under Section 9, Awards may be made under the Plan for up to
2,500,000 shares of common stock, $0.50 par value per share, of the
Company (the “Common Stock”). Shares issued under the
Plan may consist in whole or in part of authorized but unissued
shares or treasury shares.
(2)
Share Counting. For purposes of counting the number
of shares available for the grant of Awards under the Plan and
under the sublimits contained in Sections 4(b)(2), 4(b)(3),
4(b)(4), and 7(b)(1) with respect to vesting of Restricted Stock
Awards, (i) all shares of Common Stock covered by independent
SARs must be counted against the number of shares available for the
grant of Awards; (ii) if any Award (A) expires or is
terminated, surrendered or canceled without having been fully
exercised or is forfeited in whole or in part or (B) results
in any Common Stock not being issued, the unused Common Stock
covered by such Award will again be available for the grant of
Awards; provided, however, in the case of Incentive Stock Options,
the foregoing will be subject to any limitations under the Code;
and provided further, in the case of independent SARs, that the
full number of shares subject to any stock-settled SAR will be
counted against the shares available under the Plan and against the
sublimits listed in the first clause of this Section regardless of
the number of shares actually used to settle such SAR upon
exercise; (iii) shares of Common Stock delivered (either by
actual delivery or attestation) to the Company by a Participant to
(A) purchase shares of Common Stock upon the exercise of an
Award or (B) satisfy tax withholding obligations (including
shares retained from the Award creating the tax obligation) will
not be added back to the number of shares available for the future
grant of Awards; and (iv) shares of Common Stock repurchased
by the Company on the open market using the proceeds from the
exercise of an Award cannot increase the number of shares available
for future grant of Awards.
(b)
Sub-limits. Subject to adjustment under
Section 9, the following sub-limits on the number of shares
subject to Awards will apply:
(1)
Section 162(m) Per-Participant Limit. The
maximum number of shares of Common Stock with respect to which
Awards may be granted to any Participant under the Plan will be
700,000 in the aggregate during any period of three consecutive
fiscal years of the Company. For purposes of the foregoing limit,
the combination of an Option in tandem with a SAR (as each is
hereafter defined) will be treated as a single Award. The per
Participant limit described in this Section 4(b)(1) will be
construed and applied consistently with Section 162(m) of the Code
or any successor provision thereto, and the regulations thereunder
(“Section 162(m)”).
(2)
Limit on Incentive Stock Options. The maximum number
of shares with respect to which Incentive Stock Options may be
granted is 2,500,000.
(3)
Limit on Awards other than Options and SARS. The
maximum number of shares with respect to which Awards other than
Options and SARs may be granted will be 25% of the maximum number
of authorized shares set forth in Section 4(a)(1).
(4)
Limit on Awards to Directors. The maximum number of
shares with respect to which Awards may be granted to directors who
are not employees of the Company at the time of grant will be 25%
of the maximum number of authorized shares set forth in
Section 4(a)(1).
(c)
Substitute Awards. In connection with a merger or
consolidation of an entity with the Company or the acquisition by
the Company of property or stock of an entity, the Board may grant
Awards in substitution for any options or other stock or
stock-based awards granted by such entity or an affiliate thereof.
Substitute Awards may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations
on Awards contained in the Plan. Substitute Awards do not count
against the overall share limit set forth in Section 4(a)(1)
or any sublimits contained in the Plan, except as may be required
by reason of Section 422 and related provisions of the
Code.
(a)
General. The Board may grant options to purchase
Common Stock (each, an “Option”) and determine the
number of shares of Common Stock to be covered by each Option, the
exercise price of each Option and the conditions and limitations
applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it
considers necessary or advisable. An Option that is not intended to
be an Incentive Stock Option (as hereinafter defined) will be
designated a “Non-statutory Stock Option.”
(b)
Incentive Stock Options. An Option that the Board
intends to be an “incentive stock option” as defined in
Section 422 of the Code (an “Incentive Stock
Option”) will only be granted to employees of Arbitron Inc.,
any of Arbitron Inc.’s present or future parent or subsidiary
corporations as defined in Sections 424(e) or (f) of the Code,
and any other entities the employees of which are eligible to
receive Incentive Stock Options under the Code, and will be subject
to and will be construed consistently with the requirements of
Section 422 of the Code. The Company shall have no liability
to a Participant, or any other party, if an Option (or any part
thereof) that is intended to be an Incentive Stock Option is not an
Incentive Stock Option or for any action taken by the Board,
including without limitation the conversion of an Incentive Stock
Option to a Nonstatutory Stock Option.
(c)
Exercise Price. The Board will establish the exercise
price of each Option and specify the exercise price in the
applicable option agreement. The exercise price will be not less
than 100% of the Fair Market Value (as defined below) on the date
the Option is granted; provided that if the Board approves the
grant of an Option with an exercise price to be determined on a
future date, the exercise price will be not less than 100% of the
Fair Market Value on such future date.
“Fair
Market Value” of a share of Common Stock for purposes of
the Plan will be determined as follows:
(1) if the
Common Stock trades on a national securities exchange, the closing
sale price (for the primary trading session) on the date of grant;
or
(2) if the
Common Stock does not trade on any such exchange, the average of
the closing bid and asked prices as reported by an authorized OTCBB
market data vendor as listed on the OTCBB website (otcbb.com) on
the date of grant; or
(3) if the
Common Stock is not publicly traded, the Board will determine the
Fair Market Value for purposes of the Plan using any measure of
value it determines to be appropriate (including, as it considers
appropriate, relying on appraisals) in a manner consistent with the
valuation principles under Code Section 409A, except as the
Board or Committee may expressly determine otherwise.
For any date that
is not a trading day, the Fair Market Value of a share of Common
Stock for such date will be determined by using the closing sale
price or average of the bid and asked prices, as appropriate, for
the immediately preceding trading day and with the timing in the
clauses above adjusted accordingly. The Board can substitute a
particular time of day or other measure of “closing sale
price” or “bid and asked prices” if appropriate
because of exchange or market procedures or can, in its sole
discretion, use weighted averages either on a daily basis or such
longer period as complies with Code Section 409A.
The Board has sole
discretion to determine the Fair Market Value for purposes of this
Plan, and all Awards are conditioned on the participants’
agreement that the Administrator’s determination is
conclusive and binding even though others might make a different
determination.
(d)
Duration of Options. Each Option will be exercisable
at such times and subject to such terms and conditions as the Board
may specify in the applicable option agreement; provided, however,
that no Option will be granted with a term in excess of
10 years.
(e)
Exercise of Option. Options may be exercised by
delivery to the Company of a written notice of exercise signed by
the proper person or by any other form of notice (including
electronic notice) approved by the Board, together with payment in
full as specified in Section 5(f) for the number of shares for
which the Option is exercised. Shares of Common Stock subject to
the Option will be delivered by the Company as soon as practicable
following exercise.
(f)
Payment Upon Exercise. Common Stock purchased upon
the exercise of an Option granted under the Plan will be paid for
as follows:
(1) in cash
or by check, payable to the order of the Company;
(2) except as
may otherwise be provided in the applicable option agreement, by
(i) delivery of an irrevocable and unconditional undertaking
by a creditworthy broker to deliver promptly to the Company
sufficient funds to pay the exercise price and any required tax
withholding or (ii) delivery by the Participant to the Company
of a copy of irrevocable and unconditional instructions to a
creditworthy broker to deliver promptly to the Company cash or a
check sufficient to pay the exercise price and any required tax
withholding;
(3) to the
extent provided for in the applicable option agreement or approved
by the Board, in its sole discretion, by delivery (either by actual
delivery or attestation) of shares of Common Stock owned by the
Participant valued at their Fair Market Value, provided
(i) such method of payment is then permitted under applicable
law, (ii) such Common Stock, if acquired directly from the
Company, was owned by the Participant for such minimum period of
time, if any, as may be established by the Board in its discretion
and (iii) such Common Stock is not subject to any repurchase,
forfeiture, unfulfilled vesting or other similar
requirements;
(4) to the
extent permitted by applicable law and provided for in the
applicable option agreement or approved by the Board, in its sole
discretion, by payment of such other lawful consideration as the
Board may determine; or
(5) by any
combination of the above permitted forms of payment.
(g)
Limitation on Repricing. Unless such action is
approved by the Company’s stockholders: (1) no
outstanding Option granted under the Plan may be amended to provide
an exercise price per share that is lower than the then-current
exercise price per share of such outstanding Option (other than
adjustments pursuant to Section 9) and (2) the Board may
not cancel any outstanding option (whether or not granted under the
Plan) and grant in substitution therefor new Awards under the Plan
covering the same or a different number of shares of Common Stock
and having an exercise price per share lower than the then-current
exercise price per share of the cancelled option.
(h) No
Reload Options. No Option granted under the Plan will
contain any provision entitling the Participant to the automatic
grant of additional Options in connection with any exercise of the
original Option.
(i) No
Dividend Equivalents. No option will provide for the
payment or accrual of the right to receive an amount equal to any
dividends or other distributions declared and paid on an equal
number of outstanding shares of Common Stock (“Dividend
Equivalents”).
6. Stock
Appreciation Rights.
(a)
General. The Board may grant Awards consisting of
SARs entitling the holder, upon exercise, to receive an amount of
Common Stock determined in whole or in part by reference to
appreciation, from and after the date of grant, in the Fair Market
Value of a share of Common Stock over the measurement price
established pursuant to Section 6(c). The date as of which
such appreciation is determined will be the exercise
date.
(b)
Grants. SARs may be granted in tandem with, or
independently of, Options granted under the Plan.
(c)
Measurement Price. The Board will establish the
measurement price of each SAR and specify it in the applicable SAR
agreement. The measurement price must not be less than 100% of the
Fair Market Value on the date the SAR is granted; provided that if
the Board approves the grant of a SAR with an exercise price to be
determined on a future date, the exercise price must be not less
than 100% of the Fair Market Value on such future date.
(d)
Duration of SARs. Each SAR will be exercisable at
such times and subject to such terms and conditions as the Board
may specify in the applicable SAR agreement; provided, however,
that no SAR will be granted with a term in excess of
10 years.
(e)
Exercise of SARs. SARs may be exercised by delivery
to the Company of a written notice of exercise signed by the proper
person or by any other form of notice (including electronic notice)
approved by the Board, together with any other documents required
by the Board.
(f)
Limitation on Repricing. Unless such action is
approved by the Company’s stockholders: (1) no
outstanding SAR granted under the Plan may be amended to provide an
exercise price per share that is lower than the then-current
exercise price per share of such outstanding SAR (other than
adjustments pursuant to Section 9) and (2) the Board may
not cancel any outstanding SAR (whether or not granted under the
Plan) and grant in substitution therefor new Awards under the Plan
covering the same or a different number of shares of Common Stock
and having an exercise price per share lower than the then-current
exercise price per share of the cancelled SAR.
(g)
Dividend Equivalents. No SAR will provide for the
payment or accrual of Dividend Equivalents.
7.
Restricted Stock; Restricted Stock Units.
(a)
General. The Board may grant Awards entitling
recipients to acquire shares of Common Stock (“Restricted
Stock”), subject to the right of the Company to repurchase
all or part of such shares at their issue price or other stated or
formula price (or to require forfeiture of such shares if issued at
no cost) from the recipient if conditions specified by the Board in
the applicable Award are not satisfied before the end of the
applicable restriction period or periods established by the Board
for such Award. Instead of granting Awards for Restricted Stock,
the Board may grant Awards entitling the recipient to receive
shares of Common Stock or cash to be delivered at the time such
Award vests (“Restricted Stock Units”) or at a future
date (“Deferred Stock Units”) (Restricted Stock,
Restricted Stock Units, and Deferred Stock Units are each referred
to herein as a “Restricted Stock Award”).
(b)
Limitations on Vesting .
(1) Restricted
Stock Awards that vest solely based on the passage of time will be
zero percent vested before the first anniversary of the date of
grant (or, in the case of Awards to non-employee directors, if
earlier, the date of the first annual meeting held after the date
of grant), no more than one-third vested before the second
anniversary of the date of grant (or, in the case of Awards to
non-employee directors, if earlier, the date of the second annual
meeting held after the date of grant), and no more than two-thirds
vested before the third anniversary of the date of grant (or, in
the case of Awards to non-employee directors, if earlier, the date
of the third annual meeting held after the date of grant).
Restricted Stock Awards that do not vest solely based on the
passage of time will not vest before the first anniversary of the
date of grant (or, in the case of Awards to non-employee directors,
if earlier, the date of the first annual meeting held after the
date of grant). The two foregoing sentences will not apply to
(y) Performance Awards granted pursuant to Section 10(i) or
(z) Restricted Stock Awards granted, in the aggregate, for up
to 20% of the maximum number of authorized shares set forth in
Section 4(a)(1).
(2) Notwithstanding
any other provision of this Plan (other than Section 10(i), if
applicable), the Board may, in its discretion, either at the time a
Restricted Stock Award is made or at any time thereafter, waive its
right to repurchase shares of Common Stock (or waive the forfeiture
thereof) or remove or modify any part or all of the restrictions
applicable to the Restricted Stock Award, provided that the Board
may only exercise such rights in extraordinary circumstances, which
will include, without
|
