APPENDIX C
BROADWING INC.
SHORT TERM INCENTIVE PLAN
(As amended and restated effective as of January 1, 2000)
1. PURPOSE.
1.1 The purpose of this plan, which shall be named the Broadwing Inc.
Short Term Incentive Plan (the "Plan") and the sponsor of which is the
Company (as defined in subsection 1.2 below), is to provide key executives of
the Company and its Subsidiaries (as defined in subsection 1.2 below) with
incentive compensation based upon the achievement of specific short term
performance goals.
1.2 For purposes of the Plan, "Company" refers to Cincinnati Bell Inc.
(doing business as Broadwing Inc.) or, if applicable, any corporate successor
to Cincinnati Bell Inc. that results from a merger or similar transaction.
Also, for purposes of the Plan, a "Subsidiary" refers to any corporation
which is part of an unbroken chain of corporations that begins with the
Company and in which each corporation in such chain, other than the Company,
has at least 80% of the total combined voting power of all classes of its
stock owned by the Company or one of the other corporations in such chain. In
addition, for purposes of the Plan, the Company's "Subsidiaries" refers to
each and every Subsidiary in the aggregate.
1.3 This document amends and restates the plan that was named the
Cincinnati Bell Inc. 1997 Short Term Incentive Plan (the "Prior Plan")
effective as of January 1, 2000 (the "Effective Amendment Date") and does not
affect any awards granted under the Prior Plan prior to such date. For all
purposes hereof, however, where the context permits, any reference to the
Plan contained herein refers to the Plan both as amended and restated by this
document and to the Prior Plan as it was in effect prior to the Effective
Amendment Date.
1.4 Further, this document makes certain technical, administrative, and
clarifying changes to the terms of the Plan document that both was signed
prior to the date this document is signed and indicated by its terms that it
amended and restated the Prior Plan as of January 1, 2000 (the "Initial
January 1, 2000 Amended Plan"), and hence this document constitutes an
amendment and restatement of the Initial January 1, 2000 Amended Plan and
shall for all purposes be deemed to be substituted for (and as if it had
always been) the Initial January 1, 2000 Amended Plan.
1.5 Notwithstanding any other provision of the Plan to the contrary, no
amount may be paid by reason of any award granted under the Plan on or after
the Effective Amendment Date unless and until the Plan, as amended and
restated effective as of January 1, 2000, has been approved by the favorable
vote of a majority of the outstanding stock of the Company present, or
represented, and entitled to vote at a meeting duly held in accordance with
the laws of the state in which the Company is incorporated (including
abstentions to the extent abstentions are counted as voting under the
applicable state law).
2. ADMINISTRATION.
2.1 The Plan shall be administered by the Compensation Committee (the
"Committee") of the Company's Board of Directors (the "Board"). The Committee
shall consist of at least three members of the Board (a) who are neither
officers nor employees of the Company and (b) who are "outside directors"
within the meaning of Section 162(m)(4)(C) (as in effect on the Effective
Amendment Date or as it may thereafter be amended or renumbered) of the
Internal Revenue Code of 1986, as amended (the "Code").
2.2 Subject to the limitations and other provisions of the Plan, the
Committee shall have the sole and complete authority (a) to select, from the
employees of the Company and its Subsidiaries who are part of the class of
employees eligible for awards under the Plan, those employees who shall
participate in the Plan (the "Participants"), (b) to make awards to each and
any Participant in such amounts as it shall determine and to cancel, suspend,
or amend any such awards (except that it may not amend any award that without
such amendment would not be subject to the deduction limits of Section
162(m)(1) (as in effect on the Effective Amendment Date or as it may
thereafter be amended or renumbered) of the Code if such amendment would
cause such award to be subject to such deduction limits), (c) to impose such
limitations,
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restrictions, and conditions upon awards as it shall deem appropriate, (d) to
interpret the Plan and to adopt, amend, and rescind administrative guidelines
and other rules and regulations relating to the Plan, (e) to appoint certain
employees of the Company and the Subsidiaries to act on its behalf as its
representatives (including for purposes of signing agreements which reflect
awards granted under the Plan), and (f) to make all other determinations and
to take all other actions necessary or advisable for the proper
administration of the Plan. The Committee's determinations on any matter
within its authority shall be conclusive and binding on the Company, its
Subsidiaries, all Participants, and all other parties.
2.3 Notwithstanding any other provision of the Plan which may be read to
the contrary, the Committee may set different terms and conditions applicable
to each and any award granted under the Plan, and there is no obligation that
the awards made with respect to any calendar year must contain the same terms
and conditions for all Participants or any group of Participants.
3. CLASS OF EMPLOYEES ELIGIBLE FOR PLAN.
Awards may be granted under the Plan with respect to any calendar year
to, and only to, key executives. For purposes of the Plan, a "key executive"
refers, with respect to any calendar year, to any person who during such year
is employed and classified as an employee by the Company or a Subsidiary of
the Company and whose regular and incentive compensation for such year is
principally established by the Committee under the policies of the Company
and its Subsidiaries. A key executive may but is not required to be a member
of the Board or the board of directors of any Subsidiary of the Company. As
is indicated in Section 2 above, the specific key executives to whom awards
will be granted under the Plan, and who thereby will be considered
Participants under the Plan, shall be chosen by the Committee in its sole
discretion.
4. AWARDS.
4.1 Any award granted under the Plan to a Participant shall be made with
respect to a specific calendar year (the award's "Award Year") and shall, if
certain performance goals that are made applicable to the award by the
Committee are met, provide for the payment to the Participant of a lump sum
cash amount in the first quarter of the next following calendar year (the
award's "Payment Year"). No more than one award may be granted to a
Participant under the Plan with respect to any calendar year. Also, the grant
of any award to a Participant under the Plan with respect to any calendar
year shall not entitle the Participant to an award for any subsequent
calendar year.
4.2 Subject to the other provisions of this Section 4, any award granted
under the Plan to a Participant shall specify a standard payment amount (the
award's "Standard Award Level") if certain but not all (or a certain level
but not the highest level) of the performance goals applicable to the award
are met and will also specify payment amounts more or less than the Standard
Award Level if additional or fewer (or if a higher or lower level) of the
performance goals applicable to the award are met. In no event may the amount
of the award exceed 200% of the award's Standard Award Level (or, if less,
$3,000,000).
4.3 The performance goals to be set by the Committee with respect to any
award granted under the Plan to a Participant may be based on, and only on,
one or more of the following criteria applicable to the Company and its
Subsidiaries: earnings before interest, taxes, depreciation, and
amortization; earnings per share; operating income; total shareholder
returns; cash generation targets; profit targets; revenue targets;
profitability targets as measured by return ratios; net income; return on
sales; return on assets; return on equity; and corporate performance
indicators (indices based on the level of certain services provided to
customers). The performance criteria that shall apply to any award granted
under the Plan to a Participant shall be criteria that will be able to be
objectively determined by the Committee, shall be measured or determined on
the basis of the award's Award Year, and shall be set by the Committee either
prior to the start of the award's Award Year or within the first 90 days of
the award's Award Year. In addition, any such performance criteria (a) may be
measured or determined for the Company, for any Subsidiary of the Company,
for the Company and all of the Company's Subsidiaries in the aggregate, or
for any group of
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corporations that are included in the entire group of the Company and its
Subsidiaries and (b) may be measured and determined in an absolute sense
and/or in comparison to the analogous performance criteria of other
publicly-traded companies (that are selected for such comparison purposes by
the Committee).
4.4 The Committee shall verify that the performance goals that must be
met for any specific payment to be made under an award granted under the Plan
have been met before such payment is permitted.
4.5 Notwithstanding the foregoing subsections of this Section 4 and
principally in order to permit the Committee to take into account, before the
amount otherwise payable under any award granted under the Plan is finalized,
its determination as to whether the Participant has met certain individual
goals that may have been set for him or her by the Committee or his or her
managers and its determination as to whether any extraordinary or
nonrecurring events in the operations of the Company and its Subsidiaries
have unduly affected the performance goals applicable to the award, the
Committee may, in its sole and unrestricted discretion, reduce the amount
payable under any award granted under the Plan below the amount that would
otherwise be payable under the award based solely on the performance goals
that are set by the Committee for the award pursuant to the provisions of
subsections 4.2 and 4.3 above. The discretion granted the Committee under
this subsection 4.5 shall not, however, allow the Committee to increase the
amount that would otherwise be payable under any award granted under the Plan
based solely on the performance goals that are set by the Committee for the
award pursuant to the provisions of subsections 4.2 and 4.3 above.
4.6 In addition, and notwithstanding the foregoing subsections of this
Section 4, if a situation that is described in any of the following
paragraphs of this subsection 4.6 applies to a Participant to whom an award
is granted under the Plan, then the amount that is payable under the award
shall be deemed to be equal to the product obtained by multiplying (a) the
amount that would otherwise be payable under the award based on all of the
foregoing subsections of this Section 4 (without regard to the provisions of
this subsection 4.6) by (b) a fraction, the numerator of which is equal to
the difference between the total number of days in the award's Award Year and
the number of days that are to be excluded from such fraction's numerator
pursuant to whichever of the following paragraphs of this subsection 4.6 are
applicable to the Participant and the denominator of which is the total
number of days in such Award Year.
(a) If the Participant becomes a key executive during but after the
first day of the award's Award Year, and/or if the Participant ceases to be a
key executive during but prior to the last day of the award's Award Year
because of his or her retirement or death, then the numerator of the fraction
referred to above shall exclude the number of the days in such Award Year
on which the Participant is not a key executive. For purposes of the Plan, a
Participant's "retirement" shall be deemed to have occurred only if the
Participant ceases to be an employee of the Company and its Subsidiaries
after either (a) both attaining age 60 and completing at least ten years of
continuous service as an employee with the Company and its Subsidiaries or
(b) completing at least 30 years of continuous service as an employee with
the Company and its Subsidiaries.
(b) If the Participant receives disability benefits under the
Company's Sickness and Accident Disability Benefits Plan, or any similar type
of disability plan of a Subsidiary of the Company, for more than three months
of the award's Award Year, the numerator of the fraction referred to above
shall exclude the number of the days in the period of such Award Year for
which benefits are payable to the Participant under such plan.
(c) If the Participant is on a leave of absence (approved by the
Companyor a Subsidiary of the Company) for more than three months of the
award's Award Year, the numerator of the fraction referred to above shall
exclude the number of the days in such Award Year on which the Participant is
on such leave of absence.
4.7 Further, and notwithstanding the foregoing subsections of this
Section 4, a Participant to whom an award has been granted under the Plan
shall not in any event be entitled to receive any amount by reason of the
award unless he or she both: (a) either (i) is an employee of the Company or
a Subsidiary of the Company on the last day of the award's Award Year or (ii)
terminated his or her employment with the Company and its Subsidiaries
because of his or her disability (for which the Participant will be entitled
to
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receive or has received disability benefits under the Company's Sickness and
Accident Disability Benefits Plan or any similar type of disability plan of a
Subsidiary of the Company), his or her retirement (as defined in subsection
4.6 above), or his or her death; and (b) has had at least three months of
active service for the Company and its Subsidiaries during the award's Award
Year (not including any time the Participant was absent from active service
during such Award Year by reason of any leave of absence or for any other
reason, including an absence on account of disability).
4.8 As is noted in subsection 4.2 above and notwithstanding any other
provision of the Plan to the contrary, the amount to be received by a
Participant by reason of any award that is granted to the Participant under
the Plan with respect to any calendar year shall not in any event exceed
$3,000,000.
4.9 Each award granted under the Plan shall be evidenced by a written
agreement, notice, or similar document that is provided in any manner by the
Committee or a representative thereof (including, if the Committee so
determines in its discretion, by a commonly accepted electronic notice),
which agreement, notice, or other document shall contain the terms and
conditions of such award (as set by the Committee).
4.10 If a Participant is entitled to receive a payment under any award
granted to him or her under the Plan by reason of the foregoing subsections
of this Section 4, but he or she dies before such payment is made to him or
her, then such payment shall be made to the Participant's beneficiary (as
determined under the provisions of subsection 4.11 below) at the same time as
such payment would be made if the Participant had not died. No beneficiary of
a Participant shall be entitled to any amount under the Plan that is greater
than the amount to which the Participant is entitled under the foregoing
subsections of this Section 4.
4.11 For purposes of the Plan, a Participant's "beneficiary" shall mean
the person(s), trust(s), and/or other entity(ies) which the Participant
designates as his or her beneficiary for the purposes of the Plan in any
writing or form which is signed by the Participant and acceptable to the
Committee, provided that such writing or form is filed with the Committee
prior to the Participant's death. The determination of a Participant's
beneficiary under the Plan shall also be subject to the following paragraphs
of this subsection 4.11:
(a) If the Participant names more than one person, trust, and/or
other entity as part of his or her beneficiary with respect to the Plan, each
person, trust, and other entity designated as part of the Participant's
beneficiary shall be entitled to an equal share of any amount payable to the
Participant's beneficiary under any award granted under the Plan (unless the
Participant otherwise designates in the writing or form by which he or she
names his or her beneficiary for purposes of the Plan).
(b) The Participant may revoke or change his or her beneficiary
designation by signing and filing with the Committee at any time prior to
his or her death a new writing or form acceptable to the Committee.
(c) Notwithstanding the foregoing provisions of this subsection 4.11,
if no beneficiary designation of the Participant has been filed with the
Committee prior to his or her death, or if the Committee in good faith
determines either that any beneficiary designation made by the Participant
prior to his or her death is for any reason not valid or enforceable under
applicable law or that there is a valid question as to the legal right of
the designated beneficiary to receive the applicable payment, then the
applicable payment shall be paid to the estate of the Participant (in which
case none of the Company, any of its Subsidiaries, the Committee, or any of
their personnel, agents, or representatives shall have any further liability
to anyone with respect to such payment).
5. NONASSIGNABILITY OF AWARDS.
Except as may be required by applicable law, no award granted under the
Plan may be assigned, transferred, pledged, or otherwise encumbered by a
Participant otherwise than by designation of a beneficiary under the
provisions of subsections 4.10 and 4.11 above.
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6. DEFERRALS OF AWARD PAYMENTS.
The Committee may, in its discretion, permit Participants to elect to
defer the payment otherwise required under any award granted under the Plan
in accordance with such terms and conditions as the Committee shall establish.
7. PROVISIONS UPON CHANGE IN CONTROL.
In the event of a Change in Control (as defined in subsection 7.2 below)
occurring on or after the Effective Amendment Date, the provisions of this
Section 7 shall supersede any conflicting provisions of the Plan.
7.1 In the event of a Change in Control, the amount payable under any
award that was granted under the Plan with respect to the calendar year that
immediately precedes the calendar year in which the Change in Control occurs
shall, if such amount has not yet been paid (or if such amount has not been
determined by the Committee) by the date of the Change in Control, be paid
within five business days after the date of such Change in Control (and, if
the amount of such award has not yet been determined by the Committee by the
date of the Change in Control, its amount shall be deemed to be equal to the
award's Standard Award Level). Further, in the event of a Change in Control,
a pro rata portion of any award granted under the Plan with respect to the
calendar year in which the Change in Control occurs shall be paid within five
business days after the date of the Change in Control, with the pro rata
portion of such award being deemed to be equal to the full present value of
such award's Standard Award Level (determined as of the date of payment under
such interest rate and other actuarial assumptions as are reasonably adopted
by the Committee) multiplied by a fraction, the numerator of which shall
equal the number of full and partial months (including the month in which the
Change in Control occurs) since the first day of the calendar year in which
the Change in Control occurs and the denominator of which shall equal twelve.
7.2 For the purpose of this Section 7, a "Change in Control" of the
Company means and shall be deemed to have occurred if, on or after the
Effective Amendment Date:
(a) A tender offer shall be made and consummated for the ownership of
30% or more of the outstanding voting securities of the Company;
(b) The Company shall be merged or consolidated with another
corporation and as a result of such merger or consolidation less than 75% of
the outstanding voting securities of the surviving or resulting corporation
shall be owned in the aggregate by the former shareholders of the Company,
other than affiliates (within the meaning of the Securities Exchange Act of
1934, as amended (the "1934 Act")) of any party to such merger or
consolidation, as the same shall have existed immediately prior to such
merger or consolidation;
(c) The Company shall sell substantially all of its assets to another
corporation which is not a Subsidiary whose stock is wholly owned by the
Company;
(d) A person within the meaning of Section 3(a)(9) or of Section
13(d)(3) (as in effect on the Effective Amendment Date) of the 1934 Act shall
acquire 20% or more of the outstanding voting securities of the Company
(whether directly, indirectly, beneficially, or of record), or a person
within the meaning of Section 3(a)(9) or Section 13(d)(3) (as in effect on
the Effective Amendment Date) of the 1934 Act controls in any manner the
election of a majority of the directors of the Company; or
(e) Within any period of two consecutive years ending on or after the
Effective Amendment Date, individuals who at the beginning of such period
constitute the Board cease for any reason to constitute at least a majority
thereof, unless the election of each director on the Board who was not a
director on the Board at the beginning of such period has been approved in
advance by directors on the Board representing at least two-thirds of the
directors on the Board then in office who were directors on the Board at the
beginning of such period.
For purposes hereof, ownership of voting securities shall take into account
and shall include ownership as determined by applying the provisions of Rule
13d-3(d)(1)(i) (as in effect on the Effective Amendment Date) issued pursuant
to the 1934 Act.
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7.3 The provisions of this Section 7 may not be amended with respect to
any award granted to a Participant on or subsequent to the date such award is
granted if such amendment would be materially adverse to any Participant
without the consent of such Participant; provided, however, the Board may
still then make, without the Participant's consent, minor or administrative
changes to this Section 7 or changes to this Section 7 to conform to
applicable legal requirements that will apply to such award.
8. ADJUSTMENTS.
The Committee shall be authorized to correct any defect, supply any
omission, or reconcile any inconsistency in the Plan or any award granted
under the Plan in the manner and to the extent it shall determine is needed
to reflect the intended provisions of the Plan or that award or to meet any
law that is applicable to the Plan.
9. RIGHTS OF BOARD OF DIRECTORS.
9.1 Notwithstanding any other provision hereof to the contrary, the
Board may amend, alter, or discontinue the Plan or any portion or provision
thereof at any time, provided that no such action shall materially impair the
rights of a Participant with respect to a previously granted Plan award
without the Participant's consent. Notwithstanding the foregoing, the Board
may not in any event, without the approval of the Company's shareholders,
adopt an amendment to the Plan which shall: (a) change the class of persons
eligible to become Participants under the Plan; (b) make any change in the
Plan that is required by Section 162(m) (as in effect on the Effective
Amendment Date or as it may thereafter be amended or renumbered) of the Code
to be approved by the Company's shareholders in order to permit the Committee
the ability to have the amounts payable pursuant to any awards granted by it
under the Plan not be subject to the deduction limits of Section 162(m)(1)
(as in effect on the Effective Amendment Date or as it may thereafter be
amended or renumbered) of the Code by reason of Section 162(m)(4)(C) (as in
effect on the Effective Amendment Date or as it may thereafter be amended or
renumbered) of the Code; or (c) make any other change in the Plan that is
required by applicable law to be approved by the Company's shareholders in
order to be effective.
9.2 If approval of the Company's shareholders is required to a Plan
amendment pursuant to the provisions of subsection 9.1 above, then such
approval must be by the favorable vote of a majority of the outstanding stock
of the Company present, or represented, and entitled to vote at a meeting
duly held in accordance with the laws of the state in which the Company is
incorporated (or, to the extent applicable law requires a greater degree or
level of approval by the Company's shareholders in order for such amendment
to become effective, such approval must comply with such required degree or
level of approval).
10. WITHHOLDING.
The Company shall retain from the payment of any award granted under the
Plan a sufficient amount of cash applicable to the award to satisfy all
withholding tax obligations that apply to the payment.
11. MISCELLANEOUS.
11.1 Nothing contained in the Plan or any award granted under the Plan
shall confer on any Participant any right to be continued in the employment
of the Company or any Subsidiary of the Company or interfere in any way with
the right of the Company or any Subsidiary to terminate the Participant's
employment at any time and in the same manner as though the Plan and any
awards granted under the Plan were not in effect.
11.2 All payments required to be made under awards granted under the
Plan shall be made by the Company out of its general assets. In this regard,
the Plan shall not be funded, and the Company shall not be required to
segregate any assets to reflect any awards granted under the Plan. Any
liability of the Company to any person with respect to any award granted
under the Plan shall be based solely upon the contractual obligations that
apply to such award, and no such liability shall be deemed to be secured by
any pledge of or other lien or encumbrance on any property of the Company.
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11.3 Any payments or other benefits provided to a Participant with
respect to an award granted under the Plan shall not be deemed a part of the
Participant's compensation for purposes of any termination or severance pay
plan, or any other pension, profit sharing, or other benefit plan, of the
Company or any Subsidiary of the Company unless such plan expressly or
clearly indicates that the payments or other benefits provided under an award
granted under the Plan shall be considered part of the Participant's
compensation for purposes of such plan or unless applicable law otherwise
requires.
11.4 The Plan shall be subject to and construed in accordance with the
laws of the State of Ohio.
IN ORDER TO EFFECT THE PROVISIONS OF THIS PLAN DOCUMENT, Cincinnati Bell
Inc. (doing business as Broadwing Inc.), the sponsor of the Plan, has caused
its name to be subscribed to this Plan document this day of, 2000, to be
effective as of January 1, 2000.
CINCINNATI BELL INC.
(DOING BUSINESS AS BROADWING INC.)
By:
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Title:
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