Federal Income Tax Consequences

The following is a summary of the principal current federal income tax consequences to us and to an award recipient of the issuance and exercise of options under the 2009 Incentive Plan.  This summary does not describe all federal tax consequences under the 2009 Incentive Plan, nor does it describe state, local or foreign tax consequences.

Incentive Stock Options.  No taxable income is realized by the award recipient upon the grant or exercise of an incentive stock option.  However, the exercise of an incentive stock option may result in alternative minimum tax liability for the award recipient.  If the award recipient does not dispose of the shares received upon exercise of an incentive stock option within two years from the date of grant and within one year after the transfer of such shares to the award recipient, then upon sale of such shares, any amount realized in excess of the exercise price will be taxed to the award recipient as a long-term capital gain and any loss sustained will be a long-term capital loss.  In that case, we will not be allowed any deduction for federal income tax purposes.

If the shares of Class A Common Stock acquired upon the exercise of an incentive stock option are disposed of prior to the expiration of the two-year or one-year holding periods described above, generally the award recipient will realize ordinary income in the year of disposition.  The ordinary income will equal the amount of the excess (if any) of the fair market value of the shares at exercise (or, if less, the amount realized on an arms’-length sale of such shares) over the exercise price thereof, and we will be entitled to deduct such amount.  Any further gain realized will be taxed as short-term or long-term capital gain and will not result in any deduction by us.  Special rules may apply where all or a portion of the exercise price of the incentive stock option is paid by tendering shares of Class A Common Stock.

If an incentive stock option is exercised at a time when it does not qualify for the tax treatment described above, the option is treated as a nonqualified stock option.  Generally, an incentive stock option will not be eligible for the tax treatment described above if it is exercised more than three months following termination of employment (one year following termination of employment by reason of permanent and total disability), except in certain cases where the incentive stock option is exercised after the death of an employee.

Nonqualified Options.  No income is realized by the award recipient at the time a nonqualified stock option is granted under the 2009 Incentive Plan.  Generally, upon exercise, ordinary income is realized by the award recipient in an amount equal to the difference between the option price and the fair market value of the shares on the date of exercise, and we receive a tax deduction for the same amount.  At disposition, appreciation or depreciation after the date of exercise is treated as either short-term or long-term capital gain or loss, depending on how long the shares have been held.

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At the meeting, the approval of the 2009 Incentive Plan requires the affirmative vote of a majority of the total votes cast on the proposal.  In determining whether the proposal has received a majority, abstentions and broker non-votes will not be considered as votes cast and therefore will have no effect on the vote.

Federal Income Tax Consequences

The following is a summary of the principal current federal income tax consequences of transactions under the Incentive Plan. This summary does not describe all federal tax consequences under the Incentive Plan, nor does it describe state, local or foreign tax consequences.