TELEWEST GLOBAL, INC.
LONG-TERM INCENTIVE PLAN
1. Purpose. The purpose of the Telewest Global, Inc. Long-Term
Incentive Plan (the "Plan") is to enhance the ability of the Company to
attract, motivate, reward, and retain key employees, to strengthen their
commitment to the success of the Company and to align their interests with
those of the Company's shareholders by providing additional compensation to
designated key employees of the Company and its subsidiaries based on the
achievement of Performance Objectives. To this end, the Plan provides a
means of rewarding Participants based on the performance of the Company
during the Performance Period.
2. Administration. The Plan shall be administered by the Committee.
The Committee shall have full authority:
(i) to establish the rules and regulations relating to the Plan;
(ii) to interpret the Plan and those rules and regulations;
(iii) to select Participants in the Plan;
(iv) to determine the Performance Objectives;
(v) to calculate the total amount of the bonus pool and the amounts
to be received by Participants in the Plan (rounding such
amounts as it deems appropriate);
(vi) to decide the facts in any case arising under the Plan; and
(vii) to make all other determinations and to take all other actions
necessary or appropriate for the proper administration of the
Plan, including the delegation of such authority or power,
where appropriate.
The Committee's administration of the Plan, including all such rules
and regulations, interpretations, selections, determinations, approvals,
decisions, delegations, amendments, terminations and other actions, shall
be final, binding and conclusive on the Company, its stockholders and all
persons having or claiming an interest under the Plan. No member of the
Committee shall be liable for any action, failure to act, determination or
interpretation made with respect to the Plan or any transaction hereunder,
and the Company hereby agrees to indemnify each member of the Committee, to
the maximum extent permitted by applicable law, for any such action,
failure to act, determination or interpretation.
3. Eligible Employees. Participation in the Plan shall be limited to
those key management employees of the Company and its subsidiaries selected
by the Committee to participate in the Plan. The Committee may designate
any of such employees to participate in the Plan at the Effective Date and
from time to time thereafter, and, upon such designation, an employee so
designated shall become a Participant.
4. Determination of Performance Objectives. The Committee shall
establish the Performance Objectives not later than the Effective Date.
5. Payments Pursuant to the Bonus Pool.
(a) Creation of Bonus Pool. The satisfaction of the Performance
Objectives shall result in the creation of a bonus pool. The Committee
shall establish minimum criteria below which no bonus pool shall be created
and may (but shall not be obligated to) establish a maximum bonus pool.
(b) Entitlement to Payment; Effect of Termination of Employment.
Unless the Committee determines otherwise, (i) in order to receive any
payment under the Plan, a Participant must remain continuously employed by
the Company or one or more of its subsidiaries from the date on which he or
she becomes a Participant in the Plan through the Payment Date, and (ii)
upon termination of a Participant's employment, the Participant shall cease
to be a Participant in the Plan.
(c) Timing of Payment. As soon as practicable after December 31,
2007, the Committee shall review the Company's performance and certify in
writing the extent to which the Performance Objectives have been achieved
and the total amount of the bonus pool. Payments under the Plan, less
applicable withholding taxes, shall be made as soon as practicable
following the Committee's certification described in the preceding sentence
but in no event later than March 15, 2008 (the "Payment Date").
(d) Amount of Payment. The amount of the payment to each
Participant entitled to receive payment under the Plan shall be determined
as follows:
Step 1: The amount of a full share of the bonus pool (each such
share, a "Full Bonus Pool Share") shall be determined by
dividing the total amount of the bonus pool by the total
number of employees who have ever been designated as
Participants in the Plan (determined without regard to the
actual number of Participants in the Plan as of the Payment
Date).
Step 2: Each Participant in the Plan who remains a Participant from
the Effective Date through the Payment Date shall be
entitled to receive a Full Bonus Pool Share.
Step 3: Each Participant in the Plan who becomes a Participant in
the Plan after the Effective Date and who remains a
Participant from the date of commencement of participation
through the Payment Date shall be entitled to receive a Pro
Rata Bonus Pool Share; provided, that the Committee may, in
its sole and absolute discretion, elect to pay any such
Participant a Full Bonus Pool Share rather than a Pro Rata
Bonus Pool Share. The amount of any such Participant's "Pro
Rata Bonus Pool Share" shall be determined by multiplying
the amount of a Full Bonus Pool Share by a fraction, the
numerator of which is the total number of days from the
Participant's commencement of participation in the Plan
through December 31, 2007, and the denominator of which is
1,095 (such fraction, the "Pro-Ration Factor").
Step 4: The excess of the amount of a Full Bonus Pool Share over the
amount of each Pro Rata Bonus Pool Share shall be calculated
separately and then aggregated (such aggregate excess
amount, the "Aggregate Excess Amount"), and each Participant
who is entitled to receive a Full Bonus Pool Share or a Pro
Rata Bonus Pool Share shall also be entitled to receive a
portion of the Aggregate Excess Amount determined by
multiplying the Aggregate Excess Amount by a fraction, (x)
the numerator of which is (A) in the case of a Participant
who receives a Full Bonus Pool Share, one, and (B) in the
case of a Participant who receives a Pro Rata Bonus Pool
Share, the Pro-Ration Factor used to determine his or her
Pro Rata Bonus Pool Share, and (y) the denominator of which
is the sum of (A) the total number of Participants entitled
to receive a Full Bonus Pool Share and (B) the Pro-Ration
Factors determined pursuant to Step 3 with respect to each
Participant who is entitled to receive a Pro Rata Bonus Pool
Share.
Step 5: Any amount of the bonus pool in excess of the aggregate
amount payable to the Participants pursuant to Steps 2, 3
and 4 shall not be paid under the Plan but shall instead be
forfeited to the Company.
An example of a calculation pursuant to this Section 5(d) is attached to
the Plan for illustrative purposes only (and based on the assumptions
contained therein).
(e) Form of Payment. Payments under the Plan shall be paid in the
form of cash or Common Stock, or a combination thereof, in the discretion
of the Committee. If payments under the Plan are to be paid in the form of
Common Stock, then the number of such shares shall be determined by
dividing the portion of the payment to be so paid by the arithmetic mean of
the Fair Market Value of a share of Common Stock for the trading days in
December, 2007. A maximum of 1,000,000 shares of Common Stock may be issued
under the Plan, and, in the event that the number of shares of Common Stock
authorized to be issued hereunder is insufficient to make payments under
the bonus pool in full, any amount of the bonus pool not satisfied in
shares of Common Stock shall be satisfied in cash. Prior to the issuance of
any shares of Common Stock under the Plan, the Company shall obtain the
approval of the share issuance by the stockholders of the Company.
6. Effect of Acceleration Event. The Committee shall have the sole and
absolute discretion to determine the effect of an Acceleration Event under
the Plan. Such effect may include, but shall not be limited to, (i)
termination of the Plan without making any payments hereunder, (ii)
establishment of, and payment under, a bonus pool based on the satisfaction
of the Performance Objectives through the date of the Acceleration Event
(using such assumptions and approximations as the Committee shall select),
(iii) adjustment of the Performance Objectives pursuant to Section 7 and
continuation of the Plan following the Acceleration Event, (iv) limitation
on the number of Participants who may be added to the Plan after the
Acceleration Event and (v) modifying the provisions of the Plan relating to
termination of employment. For avoidance of doubt, the Committee may
terminate the Plan without making any payments hereunder even if the
Performance Objectives have been satisfied in whole or in part as of the
date of the Acceleration Event. Any action taken pursuant to this Section 6
shall be taken prior to the consummation of the Acceleration Event and
shall be final, binding and conclusive on all persons having or claiming an
interest under the Plan.
7. Adjustments. The Committee may provide for the manner in which
performance will be measured against the Performance Objectives to reflect
the impact of specified corporate transactions (such as (i) a stock split
or stock dividend or other change in capitalization or (ii) the acquisition
or disposition of one or more business units), special charges, accounting
or tax law changes, restatements or other extraordinary or nonrecurring
events. Such provision may be made at any time prior to the final
determination as to whether the Performance Objectives have been satisfied.
8. Amendment or Termination. The Committee may amend or terminate the
Plan at any time in its discretion; provided, however, that, (i) except as
set forth in Section 6, no amendment or termination of the Plan may affect
the rights of any Participant in the Plan as of the date of such action and
(ii) any increase in the number of shares of Common Stock authorized to be
issued hereunder, and any other amendment of the Plan for which stockholder
approval is required, shall be subject to the approval of the stockholders
of the Company.
9. Miscellaneous Provisions
(a) This Plan shall inure to the benefit of and be binding upon
the Company and all Participants and their respective heirs, executors,
personal representatives, estates, successors (including, without
limitation, by way of merger) and permitted assigns. The rights of
Participants under the Plan shall not be sold, transferred or otherwise
disposed of other than by will or by the laws of descent and distribution.
(b) The Plan shall be unfunded. The Company shall not be required
to establish any special or separate fund, or to make any other segregation
of assets, to assure payment hereunder.
(c) The Company shall have the right to deduct from payments
hereunder any taxes or other amounts required by law to be withheld. Each
Participant entitled to any payment hereunder shall make arrangements
satisfactory to the Company to pay all tax liabilities arising hereunder.
(d) Nothing contained in the Plan shall limit or affect in any
manner or degree the normal and usual powers of management, exercised by
the officers and the Board or committees thereof, to change the duties or
the character of employment of any employee of the Company or any of its
subsidiaries or to remove the individual from the employment of the Company
or any of its subsidiaries at any time, all of which rights and powers are
expressly reserved.
(e) Nothing in the Plan shall be interpreted or construed to
confer upon a Participant any right with respect to continuance of
employment by the Company or any of its subsidiaries, nor shall the Plan
interfere in any way with the right of the Company or any of its
subsidiaries to terminate a Participant's employment at any time. The
transfer of a Participant's employment from the Company to a subsidiary of
the Company (or vice versa) shall not constitute a termination of
employment for purpose of the Plan and shall have no effect on the rights
and obligations of the Company and any Participant under the Plan.
(f) Except as to matters of federal law, the Plan and the rights
of all persons claiming hereunder shall be construed and determined in
accordance with the laws of the State of Delaware without giving effect to
conflicts of laws principles thereof.
10. Definitions.
(a) "Acceleration Event" shall have the meaning set forth in the
Company's 2004 Stock Incentive Plan.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Committee" shall mean the Compensation Committee of the
Board or such other committee appointed by the Board from time to time to
administer the Plan and to perform the functions set forth herein.
(d) "Common Stock" shall mean the common stock, par value $0.01
per share, of the Company, and any other securities into which such shares
are changed or for which such shares are exchanged.
(e) "Company" shall mean Telewest Global, Inc. and any successor
to Telewest Global, Inc. by merger, consolidation or otherwise.
(f) "Effective Date" shall mean February 3, 2005.
(g) "Fair Market Value" shall have the meaning set forth in the
Company's 2004 Stock Incentive Plan.
(h) "Participant" shall mean a key management employee of the
Company or any of its subsidiaries selected by the Committee to participate
in the Plan.
(i) "Payment Date" shall have the meaning set forth in Section
5(c).
(j) "Performance Objectives" shall mean those performance
criteria in respect of the Performance Period as established by the
Committee.
(k) "Performance Period" shall mean the three-year period
commencing on January 1, 2005 and ending on December 31, 2007.
In addition, the following terms have the meaning set forth in Section
5(d): "Aggregate Excess Amount," "Full Bonus Pool Share," "Pro Rata Bonus
Pool Share," and "Pro-Ration Factor."
Example under the Telewest Global, Inc. Long-Term Incentive Plan
Assumptions:
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o Eight employees are designated as Participants on the Effective
Date, and, of these eight Participants, the employment of two
Participants is terminated prior to the Payment Date. The
remaining six Participants are employed on the Payment Date.
o One employee is added as a Participant after the Effective Date
but his or her employment is terminated prior to the Payment
Date.
o One employee ("Employee 10") is added as a Participant on January
1, 2006, and another employee ("Employee 11") is added as a
Participant on July 1, 2007. Both of these Participants are
employed on the Payment Date.
o The total amount of the bonus pool is (pound)1.5 million.
Calculations:
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Based on the foregoing assumptions, payments of the bonus pool would be
calculated as follows:
Step1: A Full Bonus Pool Share is equal to (pound)136,363
(determined by dividing (pound)1 million by 11).
Step2: Each of the six Participants who remain employed from the
Effective Date through the Payment Date would be entitled to
receive (pound)136,363, the amount of a Full Bonus Pool
Share.
Step3: The amount of the Pro Rata Bonus Pool Share with respect to
Employee 10 would be (pound)90,909 ((pound)136,363
multiplied by a Pro-Ration Factor of 0.666667 (730/1095)).
The amount of the Pro Rata Bonus Pool Share with respect to
Employee 11 would be (pound)22,914 ((pound)136,363
multiplied by a Pro-Ration Factor of 0.168037 (184/1095)).
Step4: (pound)158,903, the sum of the excess of the amount of a
Full Bonus Pool Share over the amount of each of the Pro
Rata Bonus Pool Shares payable to Employee 10 and Employee
11, would be reallocated as follows:
(pound)23,249 to each of the six Participants who
received Full Bonus Pool Shares ((pound)158,903
multiplied by (1 divided by 6.834704)) (6.834704 being
the sum of 6, 0.666667, and 0.168037);
(pound)15,500 to Employee 10 ((pound)158,903 multiplied
by (0.666667 divided by 6.834704)); and
(pound)3,907 to Employee 11 ((pound)158,903 multiplied
by (0.168037 divided by 6.834704)).
Step5: (pound)409,096, the excess of the total bonus pool over the
amounts pursuant to the Steps 2, 3 and 4, would be forfeited
to the Company.
(Note: The foregoing calculations do not take into
account reductions for payment of all applicable
withholding taxes.)