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COMMONWEALTH TELEPHONE ENTERPRISES, INC.
1997 Non-Management Directors' Stock Compensation Plan
(As Amended and Restated)
1. Purpose. The purpose of the Commonwealth Telephone Enterprises, Inc. 1997
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Non-Management Directors' Stock Compensation Plan (as Amended and Restated)
(the "Plan") is to encourage Non-Management Directors (as defined below) to
have a personal financial stake in Commonwealth Telephone Enterprises, Inc.
(the "Company") through an ownership interest in the Company's common stock,
par value $1.00 per share ("Common Stock"), thereby aligning the interests
of Non-Management Directors with that of the Company's shareholders by
awarding shares of Common Stock in lieu of the annual retainer and meeting
fees (collectively, the "Fees") payable to Non-Management Directors and by
granting such Non-Management Directors options to purchase shares of Common
Stock.
2. Administration. The Plan shall be administered by the Board of Directors
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of the Company or a committee composed of Non-Employee Directors, as such
term is defined in Rule 16b-3(b)(3)(i) promulgated pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (The Board
of Directors or such committee may be referred to herein as the
"Committee"). Subject to the provisions of the Plan, the Committee is
authorized to interpret the Plan, to establish, amend and rescind any rules
and regulations relating to the Plan, and to make all other determinations
necessary or advisable for the administration of the Plan. The Committee's
interpretation of the Plan, and all actions taken and determinations made by
the Committee pursuant to the powers vested in it hereunder, is conclusive
and binding upon all parties concerned including the Company, its
shareholders and persons granted awards under the Plan.
3. Shares Subject to the Plan. The shares issued or issuable under the Plan
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shall not exceed 125,000 shares of Common Stock. Such shares may be
authorized and unissued shares or treasury shares.
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4. Adjustment of and Changes in Shares. In the event of a stock split,
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stock dividend, extraordinary cash dividend, subdivision or combination of
the shares or other change in corporate structure affecting the shares, the
number of shares authorized by the Plan shall be increased or decreased
proportionately, as the case may be, and the number of shares subject to
any outstanding option shall be increased or decreased proportionately, as
the case may be, with appropriate corresponding adjustment in the purchase
price per share thereunder.
5. Participants. All members of the Company's Board of Directors who are
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not, as of the date of any award, employees of the Company or any of its
"subsidiary corporations" (as such term is defined in Section 424 of the
Internal Revenue Code of 1986, as amended (the "Code")) ("Non-Management
Directors") are, except as may be otherwise provided herein, required to
participate in the Plan. Any holder of an option or shares of Common Stock
granted hereunder shall hereinafter be referred to as a "Participant".
6. Grant, Terms and Conditions of Options.
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a. Upon approval of the Plan by the Company's Board of Directors, each
Non-Management Director on the date of such approval will be granted on
such date an option to purchase 2,000 shares of Common Stock.
b. Each Non-Management Director will be granted an option to purchase
2,000 shares of Common Stock on the date of the Company's Annual
Shareholders Meeting.
c. The options granted will be nonstatutory stock options not intended to
qualify under Section 422 of the Code and shall have the following
terms and conditions:
(i) Price. The purchase price per share of Common Stock deliverable
upon the exercise of each option shall be 100% of the fair market
value per share of Common Stock on the date the option is
granted. For purposes of this Section 6, "Fair Market Value"
shall be the average closing price of the shares as reported on
the principal market or
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exchange ("Exchange") on which the shares are traded or listed
during the 10 trading days immediately preceding such date.
(ii) Payment. Options may be exercised only upon payment of the purchase
price thereof in full. Such payment shall be made in cash.
(iii) Exercisability and Term of Options. Options shall be immediately
exercisable and shall remain exercisable until the earlier of ten
years from the date of grant and the expiration of the one-year
period provided in paragraph (iv) below.
(iv) Termination of Service as Non-Management Director. Upon termination
of a Participant's service as a Non-Management Director of the
Company for any reason, all outstanding options held by such Non-
Management Director shall be exercisable in whole or in part for a
period of one year from the date upon which the Participant ceases
to be a Non-Management Director, provided that in no event shall the
options be exercisable beyond the period provided for in paragraph
(iii) above.
(v) Nontransferability of Options. No option may be assigned, alienated,
pledged, attached, sold or otherwise transferred or encumbered by a
Participant otherwise than by will or the laws of descent and
distribution, and during the lifetime of the Participant to whom an
option is granted, it may be exercised only by the Participant or
the Participant's guardian or legal representative. Notwithstanding
the foregoing, (x) options may be transferred pursuant to a
qualified domestic relations order; and (y) the board may, in its
sole discretion and subject to such conditions as it may establish,
allow for transfer of options granted under the Plan to other
persons or entities.
(vi) Option Agreement. Each option granted hereunder shall be evidenced
by an agreement with the Company
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which shall contain the terms and provisions set forth herein
and shall otherwise be consistent with the provisions of the
Plan.
7. Grant of Shares.
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a. Grant Dates and Formula for Retainer Fees. Shares of Common Stock
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shall be automatically granted to each Non-Management Director on
January 1 of each Plan year (each such date is hereinafter referred to
as the "Annual Grant Date") commencing February 1, 1997; provided,
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however, that for the year ending December 31, 1997, the Annual Grant
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Date shall be February 12, 1997 (the "Initial Grant Date"). The total
number of shares granted to each Non-Management Director pursuant to
this Section 7(a) shall equal the quotient obtained by dividing the
annual retainer fee then in effect by the fair market value of a share
of Common Stock on the Annual Grant Date (or the Initial Grant Date,
as the case may be) determined in accordance with Section 7(b) hereof;
provided, however, that for the year ending December 31, 1997, the
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total number of shares granted to each Non-Management Director shall
be equal to the quotient obtained by dividing (i) the product obtained
by multiplying (x) eleven-twelfths (11/12ths) by (y) the annual
retainer fee in effect on February 12, 1997 by (ii) the fair market
value of a share of Common Stock determined in accordance with Section
7(b) hereof. In the event a person becomes a director between
applicable Annual Grant Dates, such person shall, on the thirtieth
(30th) day following such appointment, receive the number of shares of
Common Stock equal to the product obtained by multiplying a (i)
fraction, the (I) numerator of which is the number of months remaining
in such year and the (II) denominator of which is twelve (12) by a
(ii) fraction, the (I) numerator of which is the annual retainer fee
in effect on the most recent Annual Grant Date, as the case may be,
and the (II) denominator of which was the fair market value of a share
of Common Stock for such Annual Grant Date or Initial Grant Date, as
the case may be, based upon the average of the closing price for the
ten (10) trading days immediately preceding said appointment.
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b. Fair Market Value. For purposes of this Section 7, the fair market
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value per share of Common Stock shall be, for the purposes of the
Annual Grant Date, the average closing price of the Common Stock as
reported on the Exchange for the ten (10) trading days ending on the
trading date immediately preceding the Annual Grant Date and, for
purposes of the Initial Grant Date, shall be the average of the
closing prices of the Common Stock as reported on the Exchange for the
ten (10) trading days commencing February 13, 1997. Fractional shares
will be rounded to the next highest share. The shares or rights to
which a Participant is entitled under Section 7(a) shall be in lieu of
the payment in cash of 100% of the retainer fee.
8. Certificates: Effectiveness of Registration Statement. Each stock
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certificate issued in respect of shares acquired upon the exercise of an
option granted under Section 6 or awarded to a Participant under Section 7
may bear an appropriate legend disclosing the restrictions on
transferability imposed on such shares by the Plan or by law.
Notwithstanding anything to the contrary herein, no shares of Common Stock
will be issued until (i) a Registration Statement on Form S-8 with respect
to the shares of Common Stock has been filed with and declared effective by
the United States Securities and Exchange Commission and (ii) the related
prospectus has been distributed to the Non-Management Directors.
9. Withholding. Whenever the Company issues shares of Common Stock under the
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Plan, the Company shall have the right to withhold from sums due the
recipient, or to require the recipient to remit to the Company, any amount
sufficient to satisfy any federal, state and/or local withholding tax
requirements prior to the delivery of any certificate for such share.
10. Hardship. The Committee may, in lieu of the issuance of shares of Common
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Stock under Section 7, pay a Director the Fees in cash on account of his
hardship; provided, however, that with respect to Fees payable for the year
ending December 31, 1997, such determination shall be made prior to
issuance of the Initial Grant of Director Shares; and provided further,
that for each year ending thereafter, such determination shall be made not
later than fifteen
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(15) days before the commencement of such year (or, in the case of a
Director first appointed between Annual Grant Dates, not later than twenty
(20) days following such appointment). For purposes of this Plan, the
"Hardship" of a Participant shall be determined by the Committee in its
sole and absolute discretion.
11. Section 83(b) Election. Participants shall have the right to make an
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election under Section 83(b) of the Code, if applicable, with regard to the
taxation of awards under the Plan.
12. Amendment. The Committee may terminate, modify or amend the Plan in such
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respect as it shall deem advisable. No termination, modification or
amendment of the Plan may, without the consent of a Participant, adversely
affect a Participant's rights under an award granted prior thereto.
13. Duration of the Plan. The Plan shall remain in effect through December 31,
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2003.
14. Expenses of the Plan. The expenses of administering the Plan shall be borne
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by the Company.
15. Effective Date. The Plan will become effective as of February 12, 1997, as
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amended, the date the Board of Directors of the Company approved the Plan.
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