Kerr Initial Grant
THIS AGREEMENT evidences the grant by Arbitron Inc. (the Company) on February 11, 2010
(the Date of Grant) to William T. Kerr
(the Optionee) of an option to purchase shares of the
Companys common stock.
A. The Company has adopted the Arbitron Inc. 2008 Equity Compensation Plan (as may be amended
or supplemented, the Plan) authorizing the Board of Directors of the Company, or a committee as
provided for in the Plan (the Board or such a committee to be referred to as the Committee), to
grant stock options to employees of the Company and its Subsidiaries (as defined in the Plan).
B. The Company desires to give the Optionee an inducement to acquire a proprietary interest in
the Company and an added incentive to advance the interests of the Company by granting to the
Optionee an option to purchase shares of common stock of the Company pursuant to the Plan.
Accordingly, the parties agree as follows:
1. Grant of Option.
The Company has granted to the Optionee the right, privilege and option (the Option) to
purchase 45,254 shares (the Option Shares) of the Companys common stock, $0.50 par value (the
Common Stock), according to the terms and subject to the conditions hereinafter set forth and as
set forth in the Plan. The Option is not intended to be an incentive stock option within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the Code).
2. Option Exercise Price.
The per share price to be paid by Optionee in the event of an exercise of the Option will be
3. Duration of Option and Time of Exercise.
3.1 Initial Period of Exercisability. Except as provided in Sections 3.2 and 3.3
hereof, the Option shall become exercisable with respect to one-third of the Option Shares on each
of the first, second and third anniversaries of the Date of Grant, assuming the Optionees
continued employment. The foregoing rights to exercise the Option will be cumulative with respect
to the Option Shares becoming exercisable on each such date, but in no event will the Option be
exercisable after, and the Option will become void and expire as to all unexercised Option Shares
at, 5:00 p.m. (Eastern Standard Time) on the tenth anniversary of the Date of Grant (the Time of
3.2 Termination of Employment.
(a) Termination Due to Death or Disability. In the event the Optionees
employment with the Company and all Subsidiaries is terminated by reason of death or
Disability (as the latter is defined in the Optionees employment agreement with the
Company dated February 11,
2010 (the Employment Agreement), the Option will become immediately exercisable in full
and remain exercisable until the earlier of the first anniversary of such employment
termination or the Time of Option Termination.
(b) Termination by the Company without Cause or by Optionee as Retirement. In
the event the Optionees employment with the Company and all Subsidiaries is terminated by
the Company without Cause or through the Optionees Retirement (each as determined
under Section 6(b) of the Employment Agreement and as defined in Section 6(e) thereof), the
Option will become continue to vest as though the Optionee remained employed and will remain
exercisable as of and after such vesting until the earlier of the third anniversary of such
employment termination or the Time of Option Termination.
(c) Termination for Voluntary Resignation other than on Retirement. In the
event that the Optionees employment with the Company and all Subsidiaries is ends with his
resignation other than on a Retirement, any unvested portions of the Option will expire on
employment termination and the vested portions of the Option will remain exercisable as of
and after such vesting until the earlier of the 90th day following such
resignation or the Time of Option Termination.
(d) Termination by the Company for Cause. In the event that the Optionees
employment with the Company and all Subsidiaries is terminated by the Company for Cause, any
vested or unvested portions of the Option will immediately expire and be forfeited.
(e) 280G; Release Requirement. Any acceleration, vesting, or extension under
this Section 3.2 is subject, as applicable, to Section 4(c)(iii)(e) of the Employment
Agreement with the Company and to the release requirement of Section 6(d) of the Employment
3.3 Change in Control.
(a) Impact of Change in Control. If a Change in Control Event of the Company
occurs, the Committee, in its sole discretion and without the consent of the Optionee, may
determine that the Optionee will receive, with respect to some or all of the Option Shares,
as of the effective date of any such Change in Control Event of the Company, cash in an
amount equal to the excess of the Fair Market Value (as defined in the Plan) of such Option
Shares as determined by taking into account such Change in Control Event of the Company over
the option exercise price per share of the Option. Change in Control Event will have the
meaning set forth in the Plan plus such other event or transaction as the Board shall
determine constitutes a Change in Control, or such other meaning as may be adopted by the
Committee from time to time in its sole discretion.
(b) Authority to Modify Change in Control Provisions. Prior to a Change in
Control Event, the Optionee will have no rights under this Section 3.3, and the Committee
will have the authority, in its sole discretion, to rescind, modify, or amend this
Section 3.3 without the consent of the Optionee.
4. Manner of Option Exercise.
4.1 Notice. This Option may be exercised by the Optionee in whole or in part from
time to time, subject to the conditions contained in the Plan and in this Agreement, by delivery,
in person, by facsimile or electronic transmission or through the mail, to the Company at its
principal executive office
in Columbia, Maryland
(Attention: Corporate Secretary), of a written notice of exercise. Such
notice must be in a form satisfactory to the Committee, must identify the Option, must specify the
number of Option Shares with respect to which the Option is being exercised, and must be signed by
the person or persons so exercising the Option. In the event that the Option is being exercised,
as provided by the Plan and Section 3.2 of this Agreement, by any person or persons other than the
Optionee, the notice must be accompanied by appropriate proof of right of such person or persons to
exercise the Option. If the Optionee retains the Option Shares purchased, as soon as practicable
after the effective exercise of the Option, the Optionee will be recorded on the stock transfer
books of the Company as the owner of the Option Shares purchased.
4.2 Payment. At the time of exercise of the Option, the Optionee must pay the total
exercise price of the Option Shares to be purchased entirely in cash (including a check, bank draft
or money order, payable to the order of the Company), though a cashless exercise as described in
Section 5(f)(2) of the Plan, by such other method approved by the Committee, or by a combination
of such methods.
5. Rights and Restrictions of Optionee; Transferability.
5.1 Employment. Nothing in this Agreement will interfere with or limit in any way the
right of the Company or any Subsidiary to terminate the employment of the Optionee at any time, nor
confer upon the Optionee any right to continue in the employ of the Company or any Subsidiary at
any particular position or rate of pay or for any particular period of time.
5.2 Rights as a Stockholder; Effect on Running the Business. The Optionee will have
no rights as a stockholder unless and until all conditions to the effective exercise of the Option
(including, without limitation, the conditions set forth in Sections 4 and 6 of this Agreement)
have been satisfied and the Optionee has become the holder of record of such shares. No adjustment
will be made for dividends or distributions with respect to the Option Shares as to which there is
a record date preceding the date the Optionee becomes the holder of record of such Option Shares,
except as may otherwise be provided in the Plan or determined by the Committee in its sole
discretion. The Optionee understands and agrees that the existence of an Option will not affect in
any way the right or power of the Company or its stockholders to make or authorize any adjustments,
recapitalizations, reorganizations, or other changes in the Companys capital structure or its
business, or any merger or consolidation of the Company, or any issuance of bonds, debentures,
preferred or other stock, with preference ahead of or convertible into, or otherwise affecting the
Companys common stock or the rights thereof, or the dissolution or liquidation of the Company, or
any sale or transfer of all or any part of its assets or business, or any other corporate act or
proceeding, whether or not of a similar character to those described above.
5.3 Restrictions on Transfer. Except pursuant to testamentary will or the laws of
descent and distribution or as otherwise expressly permitted by the Plan, no right or interest of
the Optionee in the Option prior to exercise may be assigned or transferred, or subjected to any
lien, during the lifetime of the Optionee, either voluntarily or involuntarily, directly or
indirectly, by operation of law or otherwise. The Optionee will, however, subject to applicable
laws be entitled to designate a beneficiary to receive the Option upon such Optionees death in the
manner provided by the Plan, and, in the event of the Optionees death, exercise of the Option (to
the extent permitted pursuant to Section 3.2(a) of this Agreement) may be made by the Optionees
5.4 Restrictions Regarding Employment.
(a) The Optionee agrees that he or she will not take any Adverse Actions (as defined
below) against the Company or any Subsidiary at any time during the period that the Option
is or may yet become exercisable in whole or in part or at any time before one year
Optionees termination of employment with the Company or any Subsidiary, whichever is later
(the Restricted Period). The Optionee acknowledges that damages which may arise from a
breach of this Section 5.4 may be impossible to ascertain or prove with certainty.
Notwithstanding anything in this Agreement or the Plan to the contrary, in the event that
the Company determines in its sole discretion that the Optionee has taken Adverse Actions
against the Company or any Subsidiary at any time during the Restricted Period, in addition
to other legal remedies which may be available, (i) the Company will be entitled to an
immediate injunction from a court of competent jurisdiction to end such Adverse Action,
without further proof of damage, (ii) the Committee will have the authority in its sole
discretion to terminate immediately all rights of the Optionee under the Plan and this
Agreement without notice of any kind, and (iii) the Committee will have the authority in its
sole discretion to rescind the exercise of all or any portion of the Option to the extent
that such exercise occurred within six months prior to the date the Optionee first commences
any such Adverse Actions and require the Optionee to disgorge any profits (however defined
by the Committee) realized by the Optionee relating to such exercised portion of the Option
or any Option Shares issued or issuable upon such exercise. Such disgorged profits paid to
the Company must be made in cash (including check, bank draft or money order) or, with the
Committees consent, shares of Common Stock with a Fair Market Value on the date of payment
equal to the amount of such payment. The Company will be entitled to withhold and deduct
from future wages of the Optionee (or from other amounts that may be due and owing to the
Optionee from the Company or a Subsidiary) or make other arrangements for the collection of
all amounts necessary to satisfy such payment obligation.
(b) For purposes of this Agreement, an Adverse Action will mean any of the following:
(i) engaging in any commercial activity in competition with any part of the business of the
Company or any Subsidiary as conducted during the Restricted Period for which the Optionee
has or had access to trade secrets and/or confidential information; (ii) diverting or
attempting to divert from the Company or any Subsidiary any business of any kind, including,
without limitation, interference with any business relationships with suppliers, customers,
licensees, licensors, clients or contractors; (iii) participating in the ownership,
operation or control of, or being employed by, or connected in any manner with any person or
entity which solicits, offers or provides any services or products similar to those which
the Company or any Subsidiary offers to its customers or prospective customers, (iv) making,
or causing or attempting to cause any other person or entity to make, any statement, either
written or oral, or convey any information about the Company or any Subsidiary that is
disparaging or that in any way reflects negatively on the Company or any Subsidiary; or (v)
engaging in any other activity that is hostile, contrary or harmful to the interests of the
Company or any Subsidiary, including, without limitation, influencing or advising any person
who is employed by or in the service of the Company or any Subsidiary to leave such
employment or service to compete with the Company or any Subsidiary or to enter into the
employment or service of any actual or prospective competitor of the Company or any
Subsidiary, influencing or advising any competitor of the Company or any Subsidiary to
employ to otherwise engage the services of any person who is employed by or in the service
of the Company or any Subsidiary, or improperly disclosing or otherwise misusing any trade
secrets or confidential information regarding the Company or any Subsidiary.
(c) Should any provision of this Section 5.4 of the Agreement be held invalid or
illegal, such illegality shall not invalidate the whole of this Section 5.4 of the
Agreement, but, rather, the Agreement shall be construed as if it did not contain the
illegal part or narrowed to permit its enforcement, and the rights and obligations of the
parties shall be construed and enforced accordingly. In furtherance of and not in limitation
of the foregoing, the Optionee expressly agrees that should the duration of or business
activities covered by, any provision of this
Agreement be in excess of that which is valid or enforceable under applicable law, then such
provision shall be construed to cover only that duration, extent or activities that may
validly or enforceably be covered. The Optionee acknowledges the uncertainty of the law in
this respect and expressly stipulates that this Agreement shall be construed in a manner
that renders its provisions valid and enforceable to the maximum extent (not exceeding its
express terms) possible under applicable law. This Section 5.4 of the Agreement does not
replace and is in addition to any other agreements the Optionee may have with the Company or
any of its Subsidiaries on the matters addressed herein.
6. Securities Law and Other Restrictions.
Notwithstanding any other provision of the Plan or this Agreement, the Company will not be
required to issue, and the Optionee may not sell, assign, transfer or otherwise dispose of, any
Option Shares, unless (a) there is in effect with respect to the Option Shares a registration
statement under the Securities Act of 1933, as amended, and any applicable state or foreign
securities laws or an exemption from such registration, and (b) there has been obtained any other
consent, approval or permit from any other regulatory body which the Committee, in its sole
discretion, deems necessary or advisable. The Company may condition such issuance, sale or
transfer upon the receipt of any representations or agreements from the parties involved, and the
placement of any legends on certificates representing Option Shares, as may be deemed necessary or
advisable by the Company in order to comply with such securities law or other restrictions.
7. Withholding Taxes.
The Company is entitled to (a) withhold and deduct from future wages of the Optionee (or from
other amounts that may be due and owing to the Optionee from the Company), or make other
arrangements for the collection of, all legally required amounts necessary to satisfy any federal
or provincial withholding tax requirements attributable to the Option, or (b) require the Optionee
promptly to remit the amount of such withholding to the Company before acting on the Optionees
notice of exercise of the Option. In the event that the Company is unable to withhold such
amounts, for whatever reason, the Optionee agrees to pay to the Company an amount equal to the
amount the Company would otherwise be required to withhold under federal, state or local law.
8. Subject to Plan.
The Option and the Option Shares granted and issued pursuant to this Agreement have been
granted and issued under, and are subject to the terms of, the Plan. The terms of the Plan are
incorporated by reference in this Agreement in their entirety, and the Optionee, by execution of
this Agreement, acknowledges having received a copy of the Plan. The provisions of this Agreement
will be interpreted in a manner consistent with the Plan, and any ambiguities in this Agreement
will be interpreted by reference to the Plan. In the event that any provision of this Agreement is
inconsistent with the terms of the Plan, the terms of the Plan will prevail.
9.1 Binding Effect. This Agreement will be binding upon the heirs, executors,
administrators and successors of the parties to this Agreement.
9.2 Governing Law
. This Agreement and all rights and obligations under this Agreement
will be construed in accordance with the Plan and governed by the laws of the State of Delaware
regard to conflicts or choice of law rule or principle that might otherwise refer construction or
interpretation of this Agreement to the substantive laws of another jurisdiction.
9.3 Entire Agreement. This Agreement and the Plan set forth the entire agreement and
understanding of the parties to this Agreement with respect to the grant and exercise of the Option
and the administration of the Plan and supersede all prior agreements, arrangements, plans and
understandings relating to the grant and exercise of the Option and the administration of the Plan.
9.4 Amendment and Waiver. Other than as provided in the Plan, this Agreement may be
amended, waived, modified or canceled only by a written instrument executed by the parties to this
Agreement or, in the case of a waiver, by the party waiving compliance.
IN WITNESS WHEREOF, the Company has caused this option to be executed under its corporate seal
by its duly authorized officer. This option shall take effect as a sealed instrument.
The undersigned hereby accepts the foregoing option and agrees to the terms and conditions
thereof. The undersigned hereby acknowledges receipt of a copy of the Plan.