CINCINNATI BELL INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
(As amended and restated effective January 1, 1998)
SECTION 1
NAME AND PURPOSE OF PLAN
1.1 NAME. The plan set forth herein shall be known as the Cincinnati
Bell Inc. Executive Deferred Compensation Plan (the "Plan").
1.2 PURPOSE. The purpose of the Plan is to provide deferred
compensation for a select group of officers and highly compensated employees
of Cincinnati Bell Inc. and its affiliates.
SECTION 2
GENERAL DEFINITIONS; GENDER AND NUMBER
2.1 GENERAL DEFINITIONS. For purposes of the Plan, the following terms
shall have the meanings hereinafter set forth unless the context otherwise
requires:
2.1.1 "Accounts" means, collectively, all outstanding Cash
Deferral Accounts, Share Deferral Accounts, Restricted Stock Accounts and
Company Matching Accounts maintained for a Key Employee.
2.1.2 "Beneficiary" means the person or entity designated by a
Key Employee, on forms furnished and in the manner prescribed by the
Committee, to receive any benefit payable under the Plan after the Key
Employee's death. If a Key Employee fails to designate a beneficiary or if,
for any reason, such designation is not effective, his "Beneficiary" shall be
his surviving spouse or, if none, his estate.
2.1.3 "CBI" means Cincinnati Bell Inc.
2.1.4 "CBI Shares" means common shares of CBI.
2.1.5 "Company" means CBI, each corporation which is a member
of a controlled group of corporations (within the meaning of section 414(b)
of the Code, as modified by section 415(h) of the Code) which includes CBI,
each trade or business (whether or not incorporated) which is under common
control (within the meaning of section 414(c) of the Code as modified by
section 415(h) of the Code) with CBI, each
member of an affiliated service group (within the meaning of section 414(m)
of the Code) which includes CBI and each other entity required to be
aggregated with CBI under section 414(o) of the Code.
2.1.5 "Code" means the Internal Revenue Code of 1986 as such
Code now exists or is hereafter amended.
2.1.6 "Committee" means Compensation Committee of the Board of
Directors of CBI.
2.1.7 "Employee" means any person who is an employee of a
Company.
2.1.8 "Key Employee" means, with respect to any calendar year
("Subject Year"), an Employee whose base pay and target bonus for the
calendar year immediately preceding the Subject Year total at least $150,000
(or, in the case of an Employee hired during the Subject Year, whose
annualized rate of base pay and annualized target bonus for the Subject Year
total at least $150,000) and who has been designated by the Employee's
Company as a "Key Employee" for the Subject Year.
2.2 GENDER AND NUMBER. For purposes of the Plan, words used in any
gender shall include all other genders, words used in the singular form shall
include the plural form, and words used in the plural form shall include the
singular form, as the context may require.
SECTION 3
DEFERRALS; COMPANY MATCH
3.1 ELECTION OF DEFERRALS.
3.1.1 Subject to such rules as the Committee may prescribe, a
Key Employee may elect to defer up to 75% of his Basic Salary for any
calendar year (or such larger percentage of his Basic Salary as may be
prescribed by the Committee) by completing a deferral form and filing such
form with the Committee prior to January 1 of such calendar year (or such
earlier date as may be prescribed by the Committee). Notwithstanding the
foregoing, if an Employee first becomes a Key Employee after the first day of
a calendar year, such Key Employee may elect to defer a permissible
percentage of his Basic Salary for the remainder of the calendar year by
completing and signing a deferral form provided by the Committee and filing
such form with the Committee within 30 days of the date which he first
becomes a Key Employee. Any election under the preceding sentence shall be
effective as of the first payroll period beginning after the date the
election is filed. For purposes of the Plan, "Basic Salary" means the basic
salary payable to a Key Employee by a Company.
2
3.1.2 Subject to such rules as the Committee may prescribe, a
Key Employee may elect to defer up to 100% or a specific dollar amount (not
less than $1,000) of any Cash Award otherwise payable during the calendar
year by completing a deferral form and filing such form with the Committee
prior to January 1 of such calendar year (or such earlier date as may be
prescribed by the Committee). For purposes of the Plan, "Cash Award" means
an award or bonus payable in cash to a Key Employee by a Company, including a
cash award under CBI's 1988 Long Term Incentive Plan, 1997 Long Term
Incentive Plan or Short Term Incentive Plan.
3.1.3 Subject to such rules as the Committee may prescribe, a
Key Employee may elect to defer up to 100% of any Share Award otherwise
payable during a calendar year by completing a deferral form and filing such
form with the Committee prior to January 1 of such calendar year (or such
earlier date as maybe prescribed by the Committee). For purposes of the
Plan, "Share Award" means an award under CBI's 1988 Long Term Incentive Plan
or 1997 Long Term Incentive Plan which is payable in the form of CBI Shares,
provided that stock option awards and awards of restricted stock shall not be
considered "Share Awards" for purposes of the Plan.
3.1.4. Subject to such rules as the Committee may prescribe, a
Key Employee who has received a Restricted Stock Award may elect to surrender
any of the restricted CBI Shares as of any date permitted by the Committee
(not later than six months prior to the date on which the restrictions
otherwise applicable to such shares would lapse). For purposes of the Plan,
"Restricted Stock Award" means an award of CBI Shares under CBI's 1988 Long
Term Incentive Plan or 1997 Long Term Incentive Plan which is in the form of
restricted stock.
3.2 CHANGING DEFERRALS. Subject to such rules as the Committee may
prescribe, a Key Employee who has elected to defer a portion of his Basic
Salary, Cash Award, or Share Award may change the amount of his deferral from
one permissible amount to another, effective as of any January 1, by
completing and signing a new deferral form and filing such form with the
Committee prior to such January 1 (or such earlier date as may be prescribed
by the Committee).
3.3 SUSPENDING DEFERRALS.
3.3.1 Subject to such rules as the Committee may prescribe, a
Key Employee who has elected to defer a portion of his Basic Salary may
suspend such election, as of the first day of any payroll period, by
completing and signing a form provided by the Committee and filing such form
with the Committee prior to the first day of such payroll period. A Key
Employee who has suspended his election for deferrals in accordance with this
Section 3.3.1 may again elect to defer a portion of his Basic Salary,
effective as of any January 1 following the six month period beginning on the
effective date of the suspension, by completing and signing a new deferral
form and filing such form with the Committee prior to such January 1 (or such
earlier date as may be prescribed by the Committee).
3
3.3.2 A Key Employee's election to defer a portion of a Cash
Award or Share Award or to surrender any portion of a Restricted Stock Award
may not be revoked during the calendar year.
3.4 COMPANY MATCH. As of each day on which Basic Salary or Cash Award
deferrals are credited, under Section 4.1, to the Cash Deferral Account of a
Key Employee who is not a Class 1 Senior Manager under the Cincinnati Bell
Inc. Pension Program ("Deferral Date"), there shall also be credited to such
Key Employee's Company Matching Account under Section 4.3, an amount computed
in accordance with the provisions of this Section 3.4
3.4.1 To the extent that the Key Employee's aggregate
non-deferred Basic Salary and Cash Awards for the calendar year through the
Deferral Date are not in excess the maximum dollar amount permitted for such
year under section of 401(a)(17) of the Code, the Company match to be
credited to such Key Employee's Company Matching Account on the Deferral Date
shall be 4% (or such lesser percentage as may be prescribed by the Committee)
of the Basic Salary and Cash Award deferred on the Deferral Date.
3.4.2 To the extent that the Key Employee's aggregate
non-deferred Basic Salary and Cash Awards for the calendar year through the
Deferral Date exceed the maximum dollar amount permitted for such year under
section 401(a)(17) of the Code, the Company match to be credited to such Key
Employee's Company Matching Account on the Deferral Date shall be the lesser
of (a) 66-2/3% (or such lesser percentage as may be prescribed by the
Committee) of the Basic Salary and Cash Award deferred on the Deferral Date
or (b) 4% (or such lesser percentage as may be prescribed by the Committee)
of the sum of (i) that portion of the Basic Salary and Cash Award deferred on
the Deferral Date plus (ii) that portion of the Key Employee's Basic Salary
and Cash Award paid on the Deferral Date.
For purposes of this Section 3.4, the term "Cash Award" shall not include any
amounts payable under CBI's 1988 Long Term Incentive Plan or 1997 Long Term
Incentive Plan or any other long term incentive plan maintained by a Company
and such amounts shall not be eligible for a Company match under this Section
3.4
SECTION 4
MAINTENANCE AND VALUATION OF ACCOUNTS
4.1 CASH DEFERRAL ACCOUNTS. There shall be established for each Key
Employee who has elected to defer a portion of his Basic Salary or Cash Award
under Section 3.1.1 or 3.1.2 a separate Account, called a Cash Deferral
Account, which shall reflect the amounts deferred by the Key
4
Employee and the assumed investment thereof. Subject to such rules as the
Committee may prescribe, any amount deferred by a Key Employee under Section
3.1.1 or 3.1.2 shall be credited to the Key Employee's Cash Deferral Account
as of the day on which such deferred amount would have otherwise been paid to
the Key Employee and shall be assumed to have been invested in the
investments designated by the Key Employee on a form provided by and filed
with the Committee.
4.2 SHARE DEFERRAL ACCOUNTS. There shall be established for each Key
Employee who has elected to defer all or a portion of a Share Award under
Section 3.1.3 a separate Account, called a Share Deferral Account, which
shall reflect the amounts deferred by the Key Employee under Section 3.1.3
and the assumed investment thereof. Subject to such rules as the Committee
may prescribe, the amounted deferred by a Key Employee under Section 3.1.3
shall be credited to the Key Employee's Share Deferral Account as of the day
on which such amount would have otherwise been paid to the Key Employee.
Amounts credited to the Key Employee's Share Deferral Account shall be
assumed to have been invested exclusively in CBI Shares.
4.3 RESTRICTED STOCK ACCOUNTS. There shall be established for each Key
Employee who has elected to surrender all or a portion of a Restricted Stock
Award under Section 3.1.4 a separate Account, called a Restricted Stock
Account, which shall reflect the value of the CBI Shares surrendered by the
Key Employee under Section 3.1.4 and the assumed investment thereof. Subject
to such rules as the Committee may prescribe, an amount equal to the value of
the CBI Shares surrendered by the Key Employee under Section 3.1.4 shall be
credited to the Key Employee's Restricted Stock Account as of the day on
which the CBI Shares are surrendered to CBI. Amounts credited to the Key
Employee's Restricted Stock Account shall be assumed to have been invested
exclusively in CBI Shares until six months after the Applicable Lapse Date
for the surrendered CBI Shares. Thereafter, such amounts shall be assumed to
have been invested in the investments designated by the Key Employee on a
form provided by and filed with the Committee. For purposes of the Plan,
"Applicable Lapse Date" means, with respect to any Restricted Stock Award,
the date on which the restrictions would have lapsed if the restricted CBI
Shares had not been surrendered.
4.4 COMPANY MATCHING ACCOUNTS. There shall be established for each Key
Employee who is entitled to a Company match under Section 3.4 a separate
Account called a Company Matching Account, which shall reflect the Company
match to be credited on behalf of the Key Employee under Section 3.4 and the
assumed investment thereof. The amount of the Company's match shall be
credited to the Key Employee's Company Matching Account as of the day on
which the deferred Basic Salary or Cash Award to which the Company match
relates would have otherwise been paid to the Key Employee. Amounts credited
to the Key Employee's Company Matching Account shall be assumed to have been
invested in the investments designed by the Key Employee on a form provided
by and filed with the Committee.
5
4.5 VALUATION. As soon as practical following the end of each calendar
year, each Key Employee or, in the event of his death, his Beneficiary, shall
be furnished a statement as of December 31 showing the balance of the Key
Employee's Accounts, the total credits to such Accounts during the preceding
calendar year, and, if amounts credited to any such Accounts are assumed to
have been invested in securities, a description of such securities including
the number of shares assumed to have been purchased by the amounts credited
to such Accounts.
4.6 CBI SHARES. To the extent Key Employee's Accounts are assumed to
have been invested in CBI Shares:
4.6.1. Whenever any cash dividends are paid with respect to CBI
Shares, additional amounts shall be credited to the Key Employee's Accounts
as of the dividend payment date. The additional amount to be credited to
each account shall be determined by multiplying the per share cash dividend
paid with respect to the CBI Shares on the dividend payment date by the
number of assumed CBI Shares credited to the Key Employee's Accounts on the
day preceding the dividend payment date. Such additional amount credited to
the Key Employee's Account shall be assumed to have been invested in
additional CBI Shares on the day on which such dividends are paid.
4.6.2. If there is any change in CBI Shares through the
declaration of a stock dividend or a stock split or through a
recapitalization resulting in a stock split, or a combination or a change in
shares, the number of shares assumed to have been purchased for each Account
shall be appropriately adjusted.
4.6.3 Whenever CBI Shares are to be valued for purposes of the
Plan, the value of each such share shall be the average of the high and low
price per share as reported on the composite tape on the last business day
preceding the date as of which the distribution is made or, if no sales were
made on that date, on the next preceding day on which sales were made.
4.6.4 Effective on or about December 31, 1998, CBI will
distribute to its shareholders one common share of Convergys Corporation
("Convergys Share") for each CBI Share owned by its shareholders on the
record date for the distribution. Upon such distribution, the Accounts of
each Key Employee shall be credited with an assumed investment in one
Convergys Share for each CBI Share then assumed to be credited to the
Accounts. Thereafter, each Key Employee shall have the option of either
retaining such assumed investment into in Convergys Shares or converting part
or all of such assumed investment into an assumed investment in additional
CBI Shares or any other assumed investment permitted under the Plan;
provided, however, that any Convergys Shares shares credited to a Restricted
Account shall be subject to the same restrictions (including restrictions on
switching to alternate assumed investments) as apply to the CBI Shares
credited to that Account to which the Convergys Shares Relate.
6
SECTION 5
DISTRIBUTION
5.1 GENERAL. Except as otherwise provided in Section 5.5, no amount
shall be paid with respect to a Key Employee's Accounts while he remains an
Employee. Unless the Committee otherwise provides, all payments with respect
to a Key Employee's Accounts shall be made by the Company which otherwise
would have paid the Basic Salary, Cash Award, Share Award or Restricted Stock
Award deferred by the Key Employee.
5.2 TERMINATION OF EMPLOYMENT. A Key Employee may elect to receive the
amounts credited to his Accounts in up to ten annual installment payments,
commencing on the first business day of March of the calendar year following
the calendar year in which he ceases to be an Employee. If a Key Employee
fails to make such election, the amounts credited to the Key Employee's
Account shall be paid to the Key Employee in two annual installments with the
first installment being made on the first business day of March of the
calendar year following the calendar year in which the Key Employee ceases to
be an Employee.
5.2.1. The amount of each annual installment payable under this
Section 5.2 shall be, at the election of the Key Employee, either (1) a
specific dollar amount specified by the Key Employee (not less than $50,000
or more than $1,000,000), or (2) a fraction of the amounts credited to the
Key Employee's Accounts as of the installment payment date, the numerator of
which is 1 and the denominator of which is equal to the total number of
installments remaining to be paid (including the installment to be paid on
the subject installment payment date). If a Key Employee elects (2) above
and the amount of any annual installment is less than $50,000 or more than
$1,000,000, it shall be increased to $50,000 or reduced to $1,000,000, as the
case may be; provided that if the remaining amount credited to the Accounts
on any annual installment date is less than $50,000, the payment shall be the
amount necessary to reduce the amount credited to the Account to $0.
5.2.2. Any election under this Section 5.2 must be made prior to
the effective date of the Key Employee's termination and within the time
prescribed by the Key Employee's Company but in no event later than four
months prior to the effective date of the Key Employee's termination. With
the consent of the Committee, and subject to such rules as the Committee may
prescribe, a Key Employee may elect (a) to receive the amounts credited to
his Accounts in up to 120 monthly installments and (b) to accelerate the time
at which any payment may be made (to a date not earlier than the date on
which he ceases to be an Employee).
5.2.3. In its discretion, the Committee may condition the right
to receive payments with respect to a portion of all of a Key Employee's
Company Matching
7
Account on the Key Employee's completing a minimum period of service prior to
the date on which he ceases to be an Employee. To the extent that a Key
Employee has not satisfied any applicable service requirements prior to the
date on which he ceases to be an Employee (other than by reason of his
death), he shall not be entitled to receive any payment with respect to his
Company Matching Account.
5.2.4. In the case of a Restricted Stock Account, amounts
credited to such Account under Section 4.3 shall be subject to forfeiture at
the same time and to the same extent that the CBI Shares surrendered under
Section 3.1.4 would have been if such CBI Shares had not been surrendered.
The provisions of this Section 5.2.4 shall not apply to amounts credited to
the Restricted Stock Account under Section 4.6.1
5.3 DEATH. Except as provided in Section 5.2.4, if a Key Employee
ceases to be a Employee by reason of his death, or if a Key Employee dies
after ceasing to be an Employee but before the amounts credited to his
Accounts have been paid, the amounts credited to the Key Employee's Accounts
shall be paid to the Key Employee's Beneficiary in one lump sum as of the
first business day of the third quarter following the date of the Key
Employee's death; provided, however, that if the Key Employee has elected to
have his Accounts distributed in installments and if he dies after
distribution has commenced, the remaining installments shall be paid to the
Beneficiary as they become due.
5.4 FORM OF PAYMENT. Payments with respect to assumed investments
other than CBI Shares shall be made in cash. Payments with respect to
assumed investments in CBI Shares shall be made in CBI Shares or cash, in the
discretion of the Committee.
5.5 CHANGE IN CONTROL. If a Change in Control of CBI occurs, each Key
Employee's Plan Accounts shall be paid to him in one lump sum as of the day
next following the date on which such Change in Control occurred. A "Change
in Control of CBI" shall be deemed to have occurred if (i) a tender offer
shall be made and consummated for the ownership of 30% or more of the
outstanding voting securities of CBI; (ii) CBI 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 CBI, other than affiliates (within the meaning of the
Securities Exchange Act of 1934) of any party to such merger or
consolidation, as the same shall have existed immediately prior to such
merger or consolidation; (iii) CBI shall sell substantially all of its assets
to another corporation which is not a wholly owned subsidiary; (iv) a person
within the meaning of Section 3 (a)(9) or of Section 13(d)(3) (as in effect
on January 1, 1994) of the Securities Exchange Act of 1923, shall acquire 20%
or more of the outstanding voting securities of CBI (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 January 1, 1994) of the
Securities Exchange Act of 1934 controls in any manner the election of a
majority of the directors of CBI; or (v) within any period of two consecutive
years after January 1, 1994, individuals who at the beginning of such period
8
constitute CBI's Board of Directors cease for any reason to constitute at
least a majority thereof, unless the election of each director who was not a
director at the beginning of such period has been approved in advance by
directors representing at least two-thirds of the directors then in office
who were directors at the beginning of the 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 January 1, 1994) pursuant to the Exchange Act of 1934.
5.6 TRANSFER TO THE CONVERGYS CORPORATION EXECUTIVE DEFERRED
COMPENSATION COMPENSATION PLAN. Effective as of the date on which Convergys
Corporation ceases to be a subsidiary of CBI, the accrued benefit of each Key
Employee who thereupon ceases to be an Employee shall not be distributed or
forfeited by reason of such termination of service as an Employee but shall
be transferred to and assumed by the Convergys Corporation Executive Deferred
Compensation Plan. From and after such transfer and assumption, neither CBI
nor the Key Employee shall have any further rights or obligations under this
Plan; provided, however, that to the extent that CBI has elected to purchase
any assets to fund its obligations under this Plan for such Key Employees,
such assets shall be transferred to Convergys Corporation.
SECTION 6
ADMINISTRATION OF THE PLAN
6.1 GENERAL. The general administration of the Plan and the
responsibility for carrying out its provisions shall be placed in the
Committee.
6.2 EXPENSES. Expenses of administering the Plan shall be shared by
each Company participating in this Plan in such proportions as may be
determined by CBI.
6.3 COMPENSATION OF COMMITTEE. The members of the Committee shall not
receive compensation for their services as such, and, except as required by
law, no bond or other security need be required of them in such capacity in
any jurisdiction.
6.4 RULES OF PLAN. Subject to the limitations of the Plan, the
Committee may, from time to time, establish rules for the administration of
the Plan and the transaction of its business. The Committee may correct
errors, however arising, and as far as possible, adjust any benefit payments
accordingly. The determination of the Committee as to the interpretation of
the provisions of the Plan or any disputed question shall be conclusive upon
all interested parties.
6.5 AGENTS AND EMPLOYEES. The Committee may authorize one or more
agents to execute or deliver any instrument. The Committee may appoint or
employ such agents, counsel (including counsel of any Company), auditors
(including auditors of any
9
Company), physicians, clerical help and actuaries as in the Committee's
judgment may seem reasonable or necessary for the proper administration of
the Plan.
6.6 INDEMNIFICATION. Each Company participating in the Plan shall
indemnify each member of the Committee for all expenses and liabilities
(including reasonable attorney's fees) arising out of the administration of
the Plan, other than any expenses of liabilities resulting from the
Committee's own gross negligence or willful misconduct. The foregoing right
of indemnification shall be in addition to any other rights to which the
members of the Committee may be entitled as a matter of law.
SECTION 7
FUNDING OBLIGATION
No Company shall have any obligation to fund, either by the purchase of
CBI Shares or the investment in any account or by any other means, its
obligation to Key Employees hereunder. If, however, a Company does elect to
allocate assets to provide for any such obligation, the assets allocated for
such purpose shall be assets of the Company subject to claims against the
Company, including claims of the Company's creditors, to the same extent as
are other corporate assets, and the Key Employee shall have no right or claim
against the assets so allocated, other than as general creditors of the
Company.
SECTION 8
AMENDMENT AND TERMINATION
The Committee or CBI may, without the consent of any Key Employee or
Beneficiary, amend or terminate the Plan at any time; provided that no
amendment shall be made or act of termination taken which divests any Key
Employee of the right to receive payments under the plan with respect to
amount heretofore credited to the Key Employee's Accounts.
SECTION 9
NON-ALIENATION OF BENEFITS
No Key Employee or Beneficiary shall alienate, commute, anticipate,
assign, pledge, encumber or dispose of the right to receive the payments
required to be made by any Company hereunder, which payments and the right to
receive them are expressly declared to be nonassignable and nontransferable.
In the event of any attempt to assign or transfer any such payment or the
right to receive them, no Company shall have any further obligation to make
any payments otherwise required of it hereunder.
10
SECTION 10
MISCELLANEOUS
10.1 DELEGATION. The Committee may delegate to any Company, person or
committee certain of its rights and duties hereunder. Any such delegation
shall be valid and binding on all persons and the person or committee to whom
or which authority is delegated shall have full power to act in all matters
so delegated until the authority expires by its terms or is revoked by the
Committee, as the case may be. Unless the Committee otherwise provides, each
Company shall have and may exercise, with respect to its Key Employee, the
powers reserved to the Committee in Sections 3, 4, 5.1 and 5.2.
10.2 APPLICABLE LAW. The Plan shall be governed by applicable federal
law and, to the extent not preempted by applicable federal law, the laws of
the State of Ohio.
10.3 SEPARABILITY OF PROVISIONS. If any provision of the Plan is held
invalid or unenforceable, such invalidity or unenforceabilty shall not affect
any other provisions hereof, and the Plan shall be construed and enforced as
if such provisions had not been included.
10.4 HEADINGS. Headings used throughout the Plan are for convenience
only and shall not be given legal significance.
10.5 COUNTERPARTS. The Plan may be executed in any number of
counterparts, each of which shall be deemed an original. All counterparts
shall constitute one and the same instrument, which shall be sufficiently
evidenced by any one thereof.
IN WITNESS WHEREOF, Cincinnati Bell Inc. has caused its name to be
subscribed on the _____ day of_______________, 199___.
CINCINNATI BELL INC.
By
----------------------------------
11