BROADWING INC.
SHORT TERM INCENTIVE PLAN
(As amended and restated effective as of July 24, 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 Broadwing Inc.
(which, prior to April 20, 2000, was named Cincinnati Bell Inc.) or, if
applicable, any corporate successor to Broadwing 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
Broadwing Inc. 1997 Short Term Incentive Plan and all predecessor versions of
such plan (the "Prior Plan") effective as of July 24, 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 from time to time prior to the Effective Amendment Date.
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, 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
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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 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
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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 Company or 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 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.
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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).
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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.
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" means
the occurrence of any one of the following events:
(a) a majority of the Board as of any date is not composed
of Incumbent Directors. For purposes hereof, as of any date, the term
"Incumbent Director" means any individual who is a director of the Company as
of such date and either: (1) who was a director of the Company at the
beginning of the 24 consecutive month period ending on such date; or (2) who
became a director subsequent to the beginning of such 24 consecutive month
period and whose appointment, election, or nomination for election was
approved by a vote of at least two-thirds of the directors who were, as of
the date of such vote, Incumbent Directors (either by a
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specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director). It is PROVIDED, HOWEVER,
that no individual initially appointed, elected, or nominated as a director
of the Company as a result of an actual or threatened election contest with
respect to directors or as a result of any other actual or threatened
solicitation of proxies or consents by or on behalf of any person other than
the Board shall ever be deemed to be an Incumbent Director;
(b) any "person" (as such term is defined in Section
3(a)(9) of the 1934 Act) and as used in Sections 13(d)(3) and 14(d)(2) of the
1934 Act is or becomes a "beneficial owner" (as defined in Rule 13d-3 under
the 1934 Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities eligible to vote for the election of the Board (the
"Company Voting Securities"); PROVIDED, HOWEVER, that the event described in
this paragraph (b) shall not be deemed to be a Change in Control if such
event results from any of the following: (1) the acquisition of any Company
Voting Securities by the Company or any Subsidiary, (2) the acquisition of
any Company Voting Securities by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any Subsidiary, (3) the acquisition
of any Company Voting Securities by any underwriter temporarily holding
securities pursuant to an offering of such securities, or (4) a
Non-Qualifying Transaction (as defined in paragraph (c) of this subsection
7.2);
(c) the consummation of a merger, consolidation, statutory
share exchange, or similar form of corporate transaction involving the
Company or any Subsidiary (a "Reorganization") or sale or other disposition
of all or substantially all of the assets of the Company to an entity that is
not an affiliate of the Company (a "Sale"), that in each case requires the
approval of the Company's shareholders under the law of the Company's
jurisdiction of organization, whether for such Reorganization or Sale (or the
issuance of securities of the Company in such Reorganization or Sale), unless
immediately following such Reorganization or Sale: (1) more than 60% of the
total voting power (in respect of the election of directors, or similar
officials in the case of an entity other than a corporation) of (x) the
entity resulting from such Reorganization or the entity which has acquired
all or substantially all of the assets of the Company (in either case, the
"Surviving Entity"), or (y) if applicable, the ultimate parent entity that
directly or indirectly has beneficial ownership of more than 50% of the total
voting power (in respect of the election of directors, or similar officials
in the case of an entity other than a corporation) of the Surviving Entity
(the "Parent Entity"), is represented by Company Voting Securities that were
outstanding immediately prior to such Reorganization or Sale (or, if
applicable, is represented by shares into which such Company Voting
Securities were converted pursuant to such Reorganization or Sale), and such
voting power among the holders thereof is in substantially the same
proportion as the voting power of such Company Voting Securities among the
holders thereof immediately prior to the Reorganization or Sale, (2) no
person (other than any employee benefit plan (or related trust) sponsored or
maintained by the Surviving Entity or the Parent Entity) is or becomes the
beneficial owner, directly or indirectly, of 20% or more of the total voting
power (in respect of the election of directors, or similar officials in the
case of an
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entity other than a corporation) of the outstanding voting securities of the
Parent Entity (or, if there is no Parent Entity, the Surviving Entity), and
(3) at least a majority of the members of the board of directors (or similar
officials in the case of an entity other than a corporation) of the Parent
Entity (or, if there is no Parent Entity, the Surviving Entity) following the
consummation of the Reorganization or Sale were, at the time of the approval
by the Board of the execution of the initial agreement providing for such
Reorganization or Sale, Incumbent Directors (any Reorganization or Sale which
satisfies all of the criteria specified in (1), (2), and (3) of this
paragraph (c) being deemed to be a "Non-Qualifying Transaction"); or
(d) the shareholders of the Company approve a plan of
complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any person acquires beneficial ownership of
more than 20% of the Company Voting Securities as a result of the acquisition
of Company Voting Securities by the Company which reduces the number of
Company Voting Securities outstanding; PROVIDED THAT, if after such
acquisition by the Company such person becomes the beneficial owner of
additional Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such person, a
Change in Control shall then occur.
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
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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.
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.
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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, Broadwing
Inc., the sponsor of the Plan, has caused its name to be subscribed to this
Plan document this 9th day of August, 2000, to be effective as of July 24,
2000.
BROADWING INC.
By:___________________________________________
Richard G. Ellenberger
President and Chief Executive Officer
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