Each shareholder participating in the electronic delivery of materials will, however, continue to receive a separate Notice, proxy card or voting instruction card.
Shareholder Communications with the Board of Directors
Shareholders or other interested parties may communicate with the Board, any individual director, the non-management directors as a group, or the director who presides at meetings of the non-management directors. The Company has established procedures for such shareholder communications. Shareholders and other interested parties should send any communications to Connie M. Vogt, Corporate Secretary, Cincinnati Bell Inc., 221 East Fourth Street, Cincinnati, Ohio 45202, and identify the intended recipient or recipients. All communications addressed to the Board or any identified director or directors will be forwarded to the identified person or persons.
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| | By Order of the Board of Directors |
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| | Connie M. Vogt |
| | Corporate Secretary |
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March 24, 2017August 11, 2020 | | |
Schedule 1 - Telecommunications Peer GroupCincinnati Bell Inc.
General Industry Peer Group
The companies comprising the General Industry Peer Group in the CD&A are set forth below:
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| | |
A.O. Smith | Cloud Peak Energy | Harsco |
Aaron's | Columbia Sportswear | Herman Miller |
Acuity Brands | Convergys | Hexcel |
Advanced Drainage Systems | Cooper Standard Automotive | HNI |
Alexion Pharmaceuticals | Covance | HNTB |
Allegion | Cubic | Houghton Mifflin Harcourt Publishing |
American Crystal Sugar | Curtiss-Wright | Husky Injection Molding Systems* |
Americas Styrenics | Cytec Industries | ICF International |
Ansell | Day & Zimmermann | IDEX Corporation |
Arby's Restaurant Group | Deluxe | IDEXX Laboratories |
Arcadis* | Dematic Corporation* | IMS Health |
Armstrong World Industries | Dentsply | Intelsat |
Arup USA* | Donaldson | Intercontinental Hotels Group* |
Avintiv | DST Systems | International Flavors & Fragrances |
Blount International | E.W. Scripps | International Game Technology |
BMC Software | Eastman Kodak | Irvine |
Bob Evans Farms | Edwards Lifesciences | ITT Corporation |
Brady | Endo | Jack in the Box |
Brembo* | Equifax | K. Hovnanian Companies |
Brickman Group | Equity Office Properties | Kate Spade & Company |
Broadridge Financial Solutions | ESCO | KB Home |
C.R. Bard | Esterline Technologies | Kennametal |
Capsugel | FOCUS Brands | Keysight Technologies |
Carmeuse North America Group* | G&K Services | Lincoln Electric |
Carpenter Technology | GAF Materials | LinkedIn |
Catalent Pharma Solutions | General Atomics | Magellan Midstream Partners |
CDK Global | Graco | Martin Marietta Materials |
Chemtura | Granite Construction | Matthews International |
Children's Place | H.B. Fuller | Navigant Consulting |
Clearwater Paper Corporation | Halyard Health | NBTY |
Nortek | Select Comfort | Tupperware Brands |
Nu Skin Enterprises | ServiceMaster Company | UBM* |
Nuance Communications | Sigma-Aldrich | Underwriters Laboratories |
Outerwall | Solenis | Unisys |
PAREXEL | Spirit Airlines | United Launch Alliance |
Parsons | Steelcase | Vectrus |
Plexus | SunCoke Energy | Ventura Foods |
Rackspace | SunGard Data Systems | Verint Systems |
Rayonier Advanced Materials | TeleTech | Vesuvius* |
Recreational Equipment | Tempur Sealy | Vulcan Materials |
Regal-Beloit | Teradata | Walter Energy |
Revlon | Timken | Wendy's Group |
Rowan Companies | TimkenSteel | West Pharmaceutical Services |
SAS Institute | Toro | WhiteWave Foods |
Scholastic | Total System Services (TSYS) | Wilsonart |
Schwan Food Company | Tribune Media | YP |
Scotts Miracle-Gro | Tribune Publishing | |
Scripps Networks Interactive | Tronox | |
*Subsidiary
Cincinnati Bell Inc.
Telecommunications Peer Group
The companies comprising the Telecommunications Peer Group are listed below:
ATN International, Inc. | ORBCOMM Inc. |
CenturyLink, Inc. | SBA Communications Corp. |
Cogent Communications Holdings, Inc. | Shenandoah Telecommunications Company |
Consolidated Communications Holdings, Inc. | Spok Holdings, Inc. |
Endurance International Group Holdings, Inc. | Telephone and Data Systems, Inc. |
Frontier Communications Corporation | United States Cellular Corporation |
General Communications Inc. | Vonage Holdings Corp. |
GTT Communications, Inc. | Windstream Holdings, Inc. |
IDT Corporation | Zayo Group Holdings, Inc. |
Iridium Communications, Inc. | |
| |
ATN International, Inc. | Shenandoah Telecommunications |
Centurylink, Inc. | Spok Holdings, Inc. |
Consolidated Communications Holdings, Inc. | Telephone & Data Systems Inc. |
EarthLink Holdings Corp. | Time Warner Inc. |
Fairpoint Communications, Inc. | T-Mobile US, Inc. |
Frontier Communications Corporation | United States Cellular Corp. |
General Communications Inc. | Vonage Holdings Corp. |
IDT Corporation | Windstream Corp. |
Level 3 Communications Inc. | Zayo Group Holdings, Inc. |
SBA Communications Corp. | |
CINCINNATI BELL INC.
2017 LONG-TERM INCENTIVE PLAN
SECTION 1
INTRODUCTION
1.1Effectiveness. As of the Effective Date (as defined below), the Cincinnati Bell, Inc. 2017 Long-Term Incentive Plan (the “Plan”) is hereby established.
1.2Purpose. The purposes of this Plan are to (i) further the long-term growth of the Company by offering competitive incentive compensation related to long term performance goals to those Employees (as defined below) of Cincinnati Bell Inc. (the “Company”) and its subsidiaries who will be responsible for planning and directing such growth, (ii) reinforce a commonality of interest between Company shareholders and the Employees who participate in the Plan, and (iii) aid the Company in attracting and retaining Employees of outstanding abilities and specialized skills.
1.3Effective Date and Duration of Plan. The Plan is effective on the Effective Date, as described in Section 2.11, and shall remain in effect until the earliest of (i) the date on which the Plan is terminated in accordance with Section 19.1, (ii) the date on which the maximum number of shares of Company Stock which may be issued or transferred under the Plan (as determined under Section 5 of the Plan) have been issued or transferred or (iii) May 3, 2027. After termination of the Plan, no Awards may be granted under the Plan but any Award granted under the Plan prior to the Plan’s termination shall remain outstanding in accordance with the terms of the Plan and the terms of the Award Agreement.
SECTION 2
DEFINITIONS
As used in the Plan, the following terms will have the respective meanings set forth below:
2.1“Award” means an Option, Stock Unit, Stock Award, SAR, Other Stock-Based Award or Nonstock-Based Award granted under the Plan.
2.2“Award Agreement” means the written instrument (which may be in electronic form) that sets forth the terms and conditions of an Award, including all amendments thereto.
2.3“Board” means the Company’s Board of Directors.
2.4A “Change in Control” shall be deemed to have taken place for purposes of the Plan if:
(a)a majority of the Board of the Company 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: (A) who was a director of the Company at the beginning of the 24 consecutive month period ending on such date or (B) 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 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 Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d‑3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% 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: (A) the acquisition of any Company Voting Securities by the Company or any of its subsidiaries, (B) the acquisition of any Company Voting Securities by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries, (C) the acquisition of any Company Voting Securities by any underwriter temporarily holding securities pursuant to an offering of such securities, or (D) a Non‑Qualifying Transaction (as defined in paragraph (c) of this Section 2.4);
(c)the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its subsidiaries (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 stockholders 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: (A) 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 (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, (B) 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 30% or more 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 outstanding voting securities of the Parent Entity (or, if there is no Parent Entity, the Surviving Entity) and (C) 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 (A), (B) and (C) above 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 and the Company consummates such liquidation or dissolution.
Notwithstanding the foregoing, a Change in Control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 30% 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 of the Company shall then occur.
Also notwithstanding the foregoing, for any Awards subject to the requirements of Code Section 409A that will become payable on a Change in Control, the transaction constituting a “Change in Control” must also constitute a “change in control event” for purposes of Code Section 409A(a)(2)(A)(v).
2.5“Code” means the Internal Revenue Code of 1986, as amended, as interpreted in Treasury Regulations or other guidance.
2.6“Committee” means the Compensation Committee of the Board or another committee appointed by the Board to administer the Plan. The Committee shall, in any event, consist of at least three members of the Board (i) who are neither officers nor Employees of the Company, (ii) who are non-employee directors within the meaning of Rule 16b-3, and (iii) who are outside directors within the meaning of Section 162(m) and related Treasury Regulations.
2.7“Company” means Cincinnati Bell Inc.
2.8“Company Stock” means the common stock of the Company, par value $0.01 per share, or any stock or other securities of the Company hereafter issued or issuable in substitution or exchange for the common stock.
2.9“Disability” or “Disabled” means, with respect to a Participant, that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months; provided, however when used in association with an ISO, the Participant must also be disabled within the meaning of Code Section 22(e)(3). The Participant’s Disability shall be determined under procedures established by the Committee. Further, if a Participant fails to reasonably cooperate with the Committee’s attempt to determine whether he or she is disabled, then, notwithstanding any other evidence of disability that exists, the Committee shall have the right to determine that no condition of Disability exists as to the Participant.
2.10“Dividend Equivalent” means an amount calculated with respect to a Stock Unit, which is determined by multiplying the number of shares of Company Stock subject to the Stock Unit by the per-share cash dividend, or the per-share fair market value (as determined by the Committee) of any dividend in consideration other than cash, paid by the Company on its Company Stock. If interest is credited on accumulated dividend equivalents, the term “Dividend Equivalent” shall include the accrued interest.
2.11“Effective Date” of the Plan means May 4, 2017, provided that the Plan is approved by the shareholders of the Company on that date.
2.12“Employee” means an employee of the Employer (including an officer or director who is also an employee), but excluding any person who is classified by the Employer as a “contractor” or “consultant,” no matter how characterized by the Internal Revenue Service, other governmental agency or a court.
2.13“Employer” means the (i) Company and each other corporation that is part of a controlled group of corporations (within the meaning of Code Section 1563(a), but determined without regard to Code Section 1563(a)(4) and (e)(3)(C)) that includes the Company, and (ii) each other organization (a partnership, sole proprietorship, etc.) that is under common control (within the meaning of Code Section 414(b)) with the Company.
2.14“Exchange Act” means the Securities Exchange Act of 1934, as amended.
2.15“Exercise Price” means the per share price at which shares of Company Stock may be purchased under an Option, as designated by the Committee.
2.16“Fair Market Value” of Company Stock means, (i) if the principal trading market for the Company Stock is a national securities exchange, the last reported sale price of Company Stock during regular trading hours on the relevant date or (if there were no trades on that date) the last reported sale price of Company Stock during regular trading hours on the next following date upon which a sale is reported, (ii) if the Company Stock is not principally traded on such exchange, the mean between the last reported “bid” and “asked” prices of Company Stock on the relevant date, as reported on the over the counter market, or (iii) if the Company Stock is not publicly traded or, if publicly traded, is not so reported, the Fair Market Value per share shall be as determined by the Committee.
2.17“Incentive Stock Option” or “ISO” means an Option that is intended to meet the requirements of an incentive stock option under Code Section 422.
2.18“Nonqualified Stock Option” means an Option that is not intended to be taxed as an incentive stock option under Code Section 422.
2.19“Nonstock-Based Award” means an Award granted under Section 12 of the Plan that by its terms provides for compensation (upon, if applicable, its exercise or the meeting of certain performance goals or other criteria or conditions) based on a dollar amount, regardless of whether the Award’s compensation may be payable in cash, Company Stock or other property, or a combination thereof.
2.20 “Option” means an option to purchase shares of Company Stock, as described in Section 7.
2.21“Other Stock-Based Award” means any Award based on, measured by or payable in Company Stock (other than an Option, Stock Unit, Stock Award or SAR), as described in Section 11.
2.22“Participant” means an Employee designated by the Committee to participate in the Plan.
2.23“Qualified Performance-Based Compensation” means “qualified performance-based compensation” within the meaning of Code Section 162(m) and the Treasury Regulations issued thereunder.
2.24“Plan” means this Cincinnati Bell Inc. 2017 Long-Term Incentive Plan, as may be amended from time to time.
2.25“SAR” means a stock appreciation right as described in Section 10.
2.26“Stock Award” means an Award of Company Stock as described in Section 9.
2.27“Stock Unit” means an Award of a phantom unit representing one share of Company Stock, as described in Section 8, which may include but not be limited to a Restricted Stock Unit (“RSU”) or Performance Stock Unit (“PSU”), both as described in Section 8.
2.28“Treasury Regulations” means regulations issued by the Secretary of the Treasury under the Code.
SECTION 3
ADMINISTRATION
3.1Committee. The Plan shall be administered and interpreted by the Committee. Ministerial functions may be performed by an administrative committee comprised of Company employees appointed by the Committee.
3.2Committee Authority. The Committee shall have the sole authority to (i) determine the Participants to whom Awards shall be made under the Plan, (ii) determine the type, size and terms and conditions of the Awards to be made to each such Participant, (iii) determine the time when the Awards will be made and the duration of any applicable exercise or restriction period, including the criteria for exercisability and the acceleration of exercisability, (iv) amend the terms and conditions of any previously issued Award, subject to the provisions of Section 19, and (v) deal with any other matters arising under the Plan.
3.3Committee Determinations. The Committee shall have full power and express discretionary authority to administer and interpret the Plan, to make factual determinations and to adopt or amend such rules, regulations, agreements and instruments for implementing the Plan and for the conduct of its business as it deems necessary or advisable, in its sole discretion. Without limiting the generality of the preceding sentence, the Committee shall have the exclusive right to: (i) interpret the Plan and the Award Agreements executed hereunder; (ii) decide all questions concerning eligibility for, and the amount of, Awards granted under the Plan; (iii) construe any ambiguous provision of the Plan or any Award Agreement; (iv) prescribe the form of Award Agreements; (v) correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award Agreement; (vi) issue administrative guidelines as an aid to administering the Plan and make changes in such guidelines as the Committee from time to time deems proper; (vii) make regulations for carrying out the Plan and make changes in such regulations as the Committee from time to time deems proper; (viii) determine whether Awards should be granted singly or in combination; (ix) to the extent permitted under the Plan, grant waivers of Plan terms, conditions, restrictions and limitations; (x) to the extent permitted under the Plan, accelerate the exercise, vesting or payment of an Award when such action or actions would be in the best interests of the Company; (xi) require Participants to hold a stated number or percentage of shares of Company Stock acquired pursuant to an Award for a stated period; and (xii) take any and all other actions the Committee deems necessary or advisable for the proper operation or administration of the Plan. The decisions of the Committee and its actions with respect to the Plan shall be final, conclusive and binding on all persons having or claiming to have any right or interest in or under the Plan.
3.4Delegation of Committee’s Authority for Certain Awards. The Committee may delegate to the Company’s Chief Executive Officer its right to make Awards to Employees who (i) are not otherwise considered by the Committee to be subject to the requirements of Section 16 of the Exchange Act, and (ii) are not expected by the Committee to become “covered employees” within the meaning of Code Section 162(m)(3). To the extent the Committee’s right to make Awards to any Employees is delegated to the Company’s Chief Executive Officer, any reference to the Committee in the other provisions of the Plan that concern the making of Awards to such Employees, the terms of such Awards, and the verification that all conditions applicable to the payment under or the exercise of such Awards have been met shall be read to refer to the Company’s Chief Executive Officer as if such person was the Committee.
3.5Liability; Indemnification. No member of the Committee, nor any person to whom it has delegated authority, shall be personally liable for any action, interpretation or determination made in good faith with respect to the Plan or Awards granted hereunder, and each member of the Committee (or delegate of the Committee) shall be fully indemnified and protected by the Company with respect to any liability the member may incur with respect to any such action, interpretation or determination, to the maximum extent permitted by applicable law.
SECTION 4
AWARDS; MINIMUM VESTING
Awards under the Plan may consist of Options, Stock Units, Stock Awards, SARs, Other Stock-Based Awards and Nonstock-Based Awards. All Awards shall be subject to such terms and conditions as the Committee deems appropriate and as are specified in writing by the Committee to the Participant in the Award Agreement. By acceptance of the Award, a Participant acknowledges that all decisions and determinations of the Committee shall be final and binding on the Participant, his or her beneficiaries and any other person having or claiming an interest under such Award. Awards under a particular Section of the Plan need not be uniform as among the Participants.
Notwithstanding the Committee’s discretion granted under the Plan to determine the vesting provisions applicable to an Award, the vesting provisions shall, in all events, be subject to the provisions of this Section 4. Subject to the immediately following sentence, the vesting period of any Award shall be a minimum of one year; incremental vesting of portions of the Award over the vesting period is permitted, provided that incremental vesting shall not result in any Award vesting before the first anniversary of the date of grant. Notwithstanding the foregoing, (i) the Award Agreement may provide (at grant or by amendment) for vesting to occur upon the Participant’s death, Disability, or, subject to the limitations contained herein, in the event of a Change in Control and (ii) subject to all other limits and provisions of the Plan, up to but not in excess of 5% of the total aggregate shares of Company Stock that may be issued or transferred under the Plan (in accordance with Section 5.1 below) may be issued or transferred under Awards with a vesting period (at grant or by amendment) of less than one year (for example, in the case where the Award Agreement provides for immediate vesting or for vesting to occur upon the Participant’s retirement).
SECTION 5
SHARES SUBJECT TO PLAN
5.1Shares Authorized. Subject to adjustment as described below in Section 5.5, the total aggregate number of shares of Company Stock that may be issued or transferred under the Plan shall be 2,700,000. The maximum aggregate number of shares of Company Stock with respect to which all Awards of Incentive Stock Options may be made under the Plan shall be 2,000,000 shares, subject to adjustment as described below in Section 5.5.
5.2Share Counting. Upon grant of an Award, the shares of Company Stock reserved for issuance under this Plan pursuant to Section 5.1 shall be debited for the maximum number of shares of Company Stock that might be issuable under an Award. If and to the extent Options or SARs granted under the Plan terminate, expire, or are canceled, forfeited, exchanged or surrendered without having been exercised, and if and to the extent that any Stock Awards, Stock Units, or Other Stock-Based Awards are forfeited or terminated, or otherwise are not paid in full, the shares to that extent that are reserved for such Awards shall again be available for purposes of the Plan. If shares of Company Stock otherwise issuable under the Plan are surrendered in payment of the Exercise Price of an Option, then the number of shares of Company Stock available for issuance under the Plan shall be permanently reduced by the gross number of shares as to which such Option is exercised. Upon the exercise of a SAR, then both for purposes of calculating the number of shares of Company Stock remaining available for issuance under the Plan and the number of shares of Company Stock remaining available for exercise under such SAR, the number of such shares shall be permanently reduced by the number of shares with respect to which the SAR is exercised, and without regard to the actual shares issued or paid upon settlement of a SAR. Example, SARs for 100 shares, with an Exercise Price of $10 are exercised when Company Stock is worth $20, so 50 shares are issued upon exercise, but the full 100 shares are permanently debited from those reserved under the Plan. If shares of Company Stock otherwise issuable under the Plan are withheld by the Company in satisfaction of the withholding taxes incurred in connection with the issuance, vesting or exercise of any Award or the issuance of Company Stock thereunder, then the number of shares of Company Stock available for issuance under the Plan shall be permanently reduced by the number of shares used to cover the tax withholding. Example: 100 shares are issuable, but 40 of them are withheld to pay income taxes; the number of shares issuable under the Plan remain permanently reduced by 100 shares. To the extent that any Awards are payable only in cash, and not in shares of Company Stock, such Awards shall not count against the share limits in Section 5.1.
5.3Source of Shares. Shares issued or transferred under the Plan may be authorized but unissued shares of Company Stock or reacquired shares of Company Stock, including shares purchased by the Company on the open market for purposes of the Plan.
5.4Individual Limits. All Awards under the Plan except Nonstock-Based Awards shall be expressed in shares of Company Stock. The maximum aggregate number of shares of Company Stock with respect to which all Awards may be made under the Plan to any Participant in a calendar year shall be 2,000,000 shares, 2,000,000 shares via Options and SARs and 2,000,000 shares via Stock Awards, Stock Units, or Other Stock-Based Awards, in each case subject to adjustment as described in Section 5.5 below. The individual limits of this Section 5.4 shall apply without regard to whether the Awards are to be paid in Company Stock or cash. All cash payments (other than with respect to Dividend Equivalents) shall equal the Fair Market Value of the shares of Company Stock to which the cash payments relate. The maximum dollar value of all Nonstock-Based Awards granted under the Plan to any Participant in any calendar year shall be $5,000,000. The maximum dollar value of any Nonstock-Based Award granted to a Participant shall be deemed to be the maximum dollar amount of cash (or other property) that ultimately could, in the event any and all performance goals and other criteria or conditions applicable to the Award are met, be paid to the Participant under the Award, regardless of (i) whether or not the actual payment under such Award ends up being a lesser dollar amount at the time of payment, or (ii) whether or not the Award or portion thereof is forfeited, expires, or in any other manner terminates without the payment of any compensation.
5.5Adjustments. If there is any change in the number or kind of shares of Company Stock outstanding (i) by reason of a stock dividend, spinoff, recapitalization, stock split, or combination or exchange of shares, (ii) by reason of a merger, reorganization or consolidation, (iii) by reason of a reclassification or change in par value, or (iv) by reason of any other extraordinary or unusual event affecting the outstanding Company Stock as a class without the Company’s receipt of consideration, or if the value of outstanding shares of Company Stock is substantially reduced as a result of a spinoff or the Company’s payment of an extraordinary dividend or distribution, the maximum number of shares of Company Stock available for issuance under the Plan, the maximum number of shares of Company Stock for which any individual may receive Awards in any year, the kind and number of shares covered by outstanding Awards, any per-share performance criteria established for vesting of an Award, or the kind and number of shares issued or transferred and to be issued or transferred under the Plan, and the price per share or the applicable market value of such Awards shall be equitably adjusted by the Committee, in such manner as the Committee deems appropriate, to reflect any increase or decrease in the number of, or change in the kind or value of, the issued shares of Company Stock to preclude, to the extent practicable, the enlargement or dilution of rights and benefits under the Plan and such outstanding Awards; provided, however, that any fractional shares resulting from such adjustment shall be rounded down to the nearest whole share. In addition, in the event of a Change in Control of the Company, the provisions of Section 17 of the Plan shall apply. Any adjustments to outstanding Awards shall be consistent with Code Section 409A or 424, to the extent applicable. Any adjustments determined by the Committee shall be final, binding and conclusive.
5.6Effect of Assumption of Awards in Acquisition. If any corporation is acquired by the Company and the Company assumes certain stock-based awards previously granted by such acquired corporation or issues new awards in substitution for such previously-granted awards of the acquired corporation, then, except to the extent expressly provided by action of the Board, the awards so assumed or issued by the Company shall not be deemed to be granted under the Plan and any Company Stock that is the basis of such assumed or substituted awards shall not affect the number of shares of Company Stock that can be issued or paid under the Plan or the number of shares upon which Company Stock Awards granted under the Plan can be based.
SECTION 6
ELIGIBILITY FOR PARTICIPATION
6.1Eligible Persons. All Employees shall be eligible to participate in the Plan.
6.2Selection of Participants. The Committee shall select the Employees to receive Awards and shall determine the number of shares of Company Stock subject to each Award.
SECTION 7
OPTIONS
7.1General Requirements. The Committee may grant Options to an Employee upon such terms and conditions as the Committee deems appropriate under this Section 7. The Committee shall determine the number of shares of Company Stock that will be subject to each Award of Options.
7.2Type of Option, Price and Term.
(a)The Committee may grant Incentive Stock Options or Nonqualified Stock Options or any combination of the two, all in accordance with the terms and conditions set forth herein.
(b)The Exercise Price of Company Stock subject to an Option shall be determined by the Committee and shall be equal to or greater than the Fair Market Value of a share of Company Stock on the date the Option is granted. However, an Incentive Stock Option may not be granted to an Employee who, at the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary, as defined in Code Section 424, unless the Exercise Price per share is not less than 110% of the Fair Market Value of the Company Stock on the date of grant.
(c)The Committee shall determine the term of each Option, which shall not exceed ten years from the date of grant. However, an Incentive Stock Option that is granted to an Employee who, at the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary, as defined in Code Section 424, may not have a term that exceeds five years from the date of grant.
7.3Exercisability of Options.
(a)Options shall become exercisable in accordance with such terms and conditions as may be determined by the Committee and specified in the Award Agreement. The Committee may grant Options that are subject to achievement of performance goals or other conditions. The Committee may accelerate the exercisability of any or all outstanding Options at any time for any reason.
(b)The Committee may provide in an Award Agreement that the Participant may elect to exercise part or all of an Option before it otherwise has become exercisable. Any shares so purchased shall be restricted shares and shall be subject to a repurchase right in favor of the Company during a specified restriction period, with the repurchase price equal to the lesser of (A) the Exercise Price or (B) the Fair Market Value of such shares at the time of repurchase, or such other restrictions as the Committee deems appropriate.
(c)Options granted to persons who are non-exempt employees under the Fair Labor Standards Act of 1938, as amended, may not be exercisable for at least six months after the date of grant (except that such Options may become exercisable, as determined by the Committee, upon the Participant’s death, Disability or retirement, or upon a Change in Control or other circumstances permitted by applicable regulations).
7.4Termination of Employment. Except as provided in the Award Agreement, an Option may only be exercised while the Participant is still an Employee. The Committee shall determine in the Award Agreement under what circumstances and during what time periods a Participant may exercise an Option after termination of employment; provided, however, that an ISO may not be exercisable later than (i) at the expiration of one year in the event of termination of employment due to Disability; (ii) at the expiration of one year after the Participant’s death, if the termination of employment occurs by reason of death; or (iii) three months following termination of employment for any other reason, unless the Award by its terms provides that, the Option is exercisable longer in certain events and acknowledges that if so exercised later, it will be then converted into a Nonqualified Stock Option
7.5Exercise of Options. A Participant may exercise an Option that has become exercisable, in whole or in part, by delivering a notice of exercise to the Company. The Participant shall pay the Exercise Price for the Option by one or a combination of the following methods: (i) in cash, (ii) by delivering shares of Company Stock owned by the Participant and having a Fair Market Value on the date of exercise equal to the Exercise Price or by attestation to ownership of shares of Company Stock having an aggregate Fair Market Value on the date of exercise equal to the Exercise Price, (iii) by payment through a broker in accordance with procedures permitted by the Committee, (iv) unless the Award Agreement provides to the contrary, by net exercise of all or any part of the vested shares of Company Stock for which the Option is exercisable by the Company retaining Company Stock that would otherwise be issued on exercise equal to the dollar amount by which the then Fair Market Value of the shares of Company Stock subject to the surrendered portion exceeds the aggregate Exercise Price payable for those shares, or (v) by such other method as the Committee may approve, to the extent permitted by applicable law. Shares of Company Stock used to exercise an Option shall have been held by the Participant for the requisite period of time to avoid adverse accounting consequences to the Company with respect to the Option. Payment for the shares pursuant to the Option, and any required withholding taxes, must be received by the time specified by the Committee depending on the type of payment being made, but in all cases prior to the issuance of the Company Stock for such exercise.
7.6Limits on Incentive Stock Options. Each Incentive Stock Option shall provide that, if the aggregate Fair Market Value of the stock on the date of the grant with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year, under the Plan or any other stock option plan of the Company or a parent or subsidiary, as defined in Code Section 424, exceeds $100,000, then the Option, as to the excess, shall be treated as a Nonqualified Stock Option. An Incentive Stock Option shall not be granted to any person who is not an Employee of the Company or a parent or subsidiary, as defined in Code Section 424.
SECTION 8
STOCK UNITS
8.1General Requirements. The Committee may grant Stock Units upon such terms and conditions as the Committee deems appropriate under this Section 8. Each Stock Unit shall represent the right of the Participant to receive a share of Company Stock or an amount based on the value of a share of Company Stock. All Stock Units shall be credited to bookkeeping accounts on the Company’s records for purposes of the Plan.
8.2Terms of Stock Units. The Committee may grant Stock Units that are payable on terms and conditions determined by the Committee, which may include payment based on achievement of performance goals (a type of Award commonly referred to as “Performance Stock Units” or “PSUs”) or after a specified additional period of employment for vesting (a type of Award commonly referred to a “Restricted Stock Units,” or “RSUs”). Stock Units may be paid at the end of a specified time for vesting or performance period, or payment may be deferred to a date authorized by the Committee. The Committee shall determine the number of Stock Units to be granted and the requirements applicable to such Stock Units.
8.3Payment With Respect to Stock Units. Payment with respect to Stock Units shall be made in cash, in Company Stock, or in a combination of the two, as determined by the Committee. The Award Agreement shall specify the maximum number of shares that can be issued under the Stock Units.
8.4Requirement of Employment. The Committee shall determine in the Award Agreement under what circumstances a Participant may retain Stock Units after termination of the Participant’s employment and the circumstances under which Stock Units may be forfeited.
8.5Dividend Equivalents. The Committee may grant Dividend Equivalents in connection with Stock Units, under such terms and conditions as the Committee deems appropriate, provided that no Dividend Equivalent shall be paid before any vesting or performance condition that applies to Stock Unit to which the Dividend Equivalent relates is satisfied. Until paid, all Dividend Equivalents shall be credited to bookkeeping accounts on the Company’s records for purposes of the Plan. Dividend Equivalents may be accrued as a cash obligation, or may be converted to additional Stock Units for the Participant, and Dividend Equivalents may accrue interest, all as determined by the Committee. The Committee may also provide that Dividend Equivalents shall be payable only based on the achievement of additional specific performance goals. Dividend Equivalents may be payable in cash or shares of Company Stock or in a combination of the two, as determined by the Committee.
SECTION 9
STOCK AWARDS
9.1General Requirements. The Committee may issue shares of Company Stock to an Employee under a Stock Award, upon such terms and conditions as the Committee deems appropriate under this Section 9. Shares of Company Stock issued pursuant to Stock Awards may be issued for cash consideration or for no cash consideration, and subject to restrictions or no restrictions, as determined by the Committee. The Committee may establish conditions under which restrictions on Stock Awards shall lapse over a period of time or according to such other criteria as the Committee deems appropriate, including restrictions based upon the achievement of specific performance goals. The Committee shall determine the number of shares of Company Stock to be issued pursuant to a Stock Award.
9.2Requirement of Employment or Service. The Committee shall determine in the Award Agreement under what circumstances a Participant may retain Stock Awards after termination of the Participant’s employment or service and the circumstances under which Stock Awards may be forfeited.
9.3Restrictions on Transfer. For any period when Stock Awards are subject to restrictions, a Participant may not sell, assign, transfer, pledge or otherwise dispose of the shares of a Stock Award except upon death as described in Section 16.1. If certificates are issued, each certificate for a share of a Stock Award shall contain a legend giving appropriate notice of the restrictions in the Award. Shares of a Stock Award that are held at the Company's transfer agent in book-entry form shall contain the appropriate restrictions related to the transfer of such shares. When all restrictions on a share of a Stock Award have lapsed, either the Company shall remove the legend from the issued certificate or the transfer agent shall remove the restrictions from the book-entry, as applicable. The Company may retain possession of any certificates for Stock Awards until all restrictions on such shares have lapsed.
9.4Right to Vote and to Receive Dividends. The Committee shall determine to what extent, and under what conditions, the Participant shall have the right to vote shares of Stock Awards and to receive any dividends or other distributions paid on such shares during the restriction period. Any dividends on Stock Awards shall be withheld while the Stock Awards are subject to restrictions and the dividends shall be payable only upon the lapse of the restrictions on the Stock Awards and subject to such other additional terms and conditions as the Committee determines. Until paid, dividends shall be credited to bookkeeping accounts on the Company’s records for purposes of the Plan. Accumulated dividends may accrue interest, as determined by the Committee, and shall be paid in cash, shares of Company Stock, or in such other form as dividends are paid on Company Stock, as determined by the Committee.
SECTION 10
STOCK APPRECIATION RIGHTS
10.1General Requirements. The Committee may grant SARs to an Employee separately or in tandem with an Option. The Committee shall establish the number of shares, the terms and the base amount of the SAR at the time the SAR is granted. The base amount of each SAR shall be not less than the Fair Market Value of a share of Company Stock as of the date of grant of the SAR.
10.2Tandem SARs. The Committee may grant tandem SARs either at the time the Option is granted or at any time thereafter while the Option remains outstanding; provided, however, that, in the case of an Incentive Stock Option, SARs may be granted only at the date of the grant of the Incentive Stock Option. In the case of tandem SARs, the number of SARs granted to a Participant that shall be exercisable during a specified period shall not exceed the number of shares of Company Stock that the Participant may purchase upon the exercise of the related Option during such period. Upon the exercise of an Option with respect to which a SAR is granted in tandem, the SARs shall terminate; upon the exercise of a SAR, the related Option shall terminate to the extent of an equal number of shares of Company Stock. In the case of a tandem SAR, only the Option to which it relates (and not the tandem SAR itself) shall be counted for purposes of the limits of Section 5.1.
10.3Exercisability; Term. A SAR shall become exercisable in accordance with such terms and conditions as may be specified in an Award Agreement. The Committee may grant SARs that are subject to achievement of performance goals or other conditions. The Committee shall determine in the Award Agreement under what circumstances and during what periods a Participant may exercise a SAR after termination of employment or service. A tandem SAR shall be exercisable only while the Option to which it is related is exercisable. The Committee shall determine the term of each SAR, which shall not exceed ten years from the date of grant.
10.4Awards to Non-Exempt Employees. SARs granted to persons who are non-exempt employees under the Fair Labor Standards Act of 1938, as amended, may not be exercisable for at least six months after the date of grant (except that such SARs may become exercisable, as determined by the Committee, upon the Participant’s death, Disability or retirement, or upon a Change in Control or other circumstances permitted by applicable regulations).
10.5Exercise of SARs. When a Participant exercises SARs, the Participant shall receive in settlement of such SARs an amount equal to the value of the stock appreciation for the number of SARs exercised. The stock appreciation for a SAR is the amount by which the Fair Market Value of the underlying Company Stock on the date of exercise of the SAR exceeds the base amount of the SAR as specified in the Award Agreement.
10.6Deemed Exercise. If, on the date on which an SAR would otherwise terminate or expire, the SAR by its terms remains exercisable and would if exercised, result in payment to its holder, then, immediately prior to such termination or expiration, it shall be deemed exercised.
10.7Form of Payment. The Committee shall determine whether the stock appreciation for a SAR shall be paid in the form of shares of Company Stock, cash or a combination of the two. For purposes of calculating the number of shares of Company Stock to be received, shares of Company Stock shall be valued at their Fair Market Value on the date of exercise of the SAR. If shares of Company Stock are to be received upon exercise of a SAR, cash shall be delivered in lieu of any fractional share.
SECTION 11
OTHER STOCK-BASED AWARDS
The Committee may grant other Awards not specified in Sections 7, 8, 9 or 10 above that are based on or measured by Company Stock, on such terms and conditions as the Committee deems appropriate. Other Stock-Based Awards may be granted subject to achievement of performance goals or other conditions and may be payable in Company Stock or cash, or in a combination of the two, as determined by the Committee in the Award Agreement.
SECTION 12
NONSTOCK-BASED AWARDS
The Committee may grant Nonstock-Based Awards that grant Participants a right to receive an amount that is equal to a dollar value, or not more than a maximum dollar value, or a percentage of the Participant’s compensation, if and when certain conditions are met, such as the achievement of performance goals or continued employment conditions, as determined by the Committee in the Award Agreement.
SECTION 13
QUALIFIED PERFORMANCE-BASED COMPENSATION
13.1Designation as Qualified Performance-Based Compensation. The Committee may determine that Awards (other than Options or SARs) granted to an Employee are desired to be considered Qualified Performance-Based Compensation in which case the provisions of this Section 13 shall apply. For the avoidance of doubt, the Plan also allows the Committee to grant Awards that are not intended to be exempt from Code Section 162(m) as Qualified Performance-Based Compensation; such Awards may have performance criteria similar to that set out in this Section, and the Committee may use similar procedures with respect to such Awards, but shall not be constrained by the terms of Section 162(m) or its requirements as set out in this Section with respect to Awards that it either does not desire to issue within the confines of Section 162(m), either because it wishes to retain more discretion, or the Award will not apply to a “covered employee” as defined in Code Section 162(m) or otherwise. In accordance with the terms of the Plan and applicable Treasury Regulations, Options and SARs shall be deemed to be Qualified Performance-Based Compensation without regard to this Section 13, provided they are awarded by the Committee itself and not its delegate under Section 3.4.
13.2Performance Criteria. When Awards are made under this Section 13, the Committee shall establish in writing (i) the objective Performance Criteria that must be met, (ii) the period during which performance will be measured, (iii) the maximum amounts that may be paid if the Performance Criteria are met, and (iv) any other conditions that the Committee deems appropriate and consistent with the requirements of Code Section 162(m) for Qualified Performance-Based Compensation. The Performance Criteria shall satisfy the requirements for Qualified Performance-Based Compensation, including the requirement that the achievement of the goals be substantially uncertain at the time they are established and that the performance goals be established in such a way that a third party with knowledge of the relevant facts could determine whether and to what extent the performance goals have been met. The Committee shall not have discretion to increase the amount of compensation that is payable, but may reduce the amount of compensation that is payable, pursuant to Awards identified by the Committee as Qualified Performance-Based Compensation.
13.3Objective Performance Criteria. The Committee shall use objectively determinable performance goals based on one or more of the following criteria for the Company or any subsidiary, business unit, division, department or any combination of these and may be applied on an absolute basis and/or relative to one or more peer group companies or indices, or any combination thereof, as the Committee shall determine (together, the “Performance Criteria”):
(i)earnings or earnings per share (whether on a pre-tax, after-tax, operational or other basis, diluted or undiluted, and before or after adjustments for extraordinary items and business combination or acquisition and restructuring costs or interest, taxes, depreciation, and amortization);
(ii)return on equity;
(iii)return on invested capital;
(iv)return on sales;
(v)net or gross profit;
(vi)net or gross revenues or revenue growth over prior year or as compared to budget;
(vii)expenses or expense levels;
(viii)one or more operating ratios;
(ix)stock price (including, but not limited to, growth measures and total shareholder return);
(x)shareholder return;
(xi)the accomplishment of mergers, acquisitions, dispositions, public offerings or similar extraordinary business transactions;
(xii)economic value added;
(xiii)net or gross income or income growth over prior year or as compared to budget, which, if determined for a subsidiary, department or business unit, may be determined solely with reference to direct costs of that subsidiary, department or business unit;
(xiv)free cash flow (defined as cash generated by operating activities, minus capital expenditures and other investing activities, restructuring and severance-related payments, dividend payments and proceeds from the issuance of equity securities, and proceeds from the sale of assets); and
(xv)corporate performance indicators (indices based on the level of certain services provided to customers).
Such performance goals may also be based on the achievement of specified levels of Company performance (or performance of an applicable affiliate, subsidiary, division or business unit of the Company) under one or more of the Performance Criteria described above relative to the Company’s past performance or performance of other corporations. Such performance goals shall be set by the Committee over a specified performance period that shall not be shorter than one year and otherwise within the time period prescribed by, and shall otherwise comply with the requirements of, Code Section 162(m), or any successor provision thereto, and the regulations thereunder. The Committee may also provide that, in determining whether any Performance Criteria has been attained, certain special or technical factors shall be ignored or, conversely, taken into account, in whole or in part, including but not limited to any one or more of the following factors:
(i)a gain, loss, income, or expense resulting from changes in generally accepted accounting principles that become effective during the applicable performance period or any previous period;
(ii)a gain, loss, income, or expense that is extraordinary in nature;
(iii)an impact of other specified nonrecurring events;
(iv)a gain or loss resulting from, and the direct expense incurred in connection with, the disposition of a business, in whole or in part, the sale of investments or non-core assets, or discontinued operations, categories, or segments of businesses;
(v)a gain or loss from claims and/or litigation and insurance recoveries relating to claims or litigation;
(vi)an impact of impairment of tangible or intangible assets;
(vii)an impact of restructuring activities, including, without limitation, reductions in force;
(viii)an impact of investments or acquisitions made during the applicable performance period or any prior period;
(ix)a loss from political and legal changes that impact operations, as a consequence of war, insurrection, riot, terrorism, confiscation, expropriation, nationalization, deprivation, seizure, business interruption, or regulatory requirements;
(x)retained and uninsured losses from natural catastrophes;
(xi)currency fluctuations;
(xii)an expense relating to the issuance of stock options and/or other stock-based compensation;
(xiii)an expense relating to the early retirement of debt; and/or
(xiv)an impact of the conversion of convertible debt securities.
Each of the adjustments described above shall be determined in accordance with generally accepted accounting principles and standards in effect at the time the Award is made (without regard to changes thereafter), unless another objective method of measurement is designated by the Committee.
13.4Timing of Establishment of Criteria. Performance Criteria must be pre-established by the Committee. A Performance Criteria is considered pre-established if it is established in writing not later than 90 days after the commencement of the period of service to which the Performance Criteria relates, provided that the outcome is substantially uncertain at the time the Committee actually established the goal. However, in no event will a performance goal be considered pre-established if it is established after 25% of the period of service (as scheduled in good faith at the time the goal is established) has elapsed.
13.5Certification of Results. The Committee shall certify the performance results for the performance period specified in the Award Agreement after the performance period ends. The Committee shall determine the amount, if any, to be paid pursuant to each Award based on the achievement of the performance goals and the satisfaction of all other terms of the Award Agreement.
13.6Death, Disability or Other Circumstances. The Committee may provide in the Award Agreement that Awards under this Section 13 shall be payable, in whole or in part, in the event of the Participant’s death or Disability, a Change in Control or under other circumstances consistent with the Code Section 162(m) and Treasury Regulations thereunder.
SECTION 14
DEFERRALS
The Committee may permit or require a Participant to defer receipt of the payment of cash or the delivery of shares that would otherwise be due to the Participant in connection with any Award. The Committee shall establish rules and procedures for any such deferrals, consistent with applicable requirements of Code Section 409A.
SECTION 15
WITHHOLDING OF TAXES
15.1Required Withholding. All Awards under the Plan shall be subject to applicable federal (including FICA/Medicare), state and local tax withholding requirements. The Company may require that the Participant or other person receiving or exercising Awards pay to the Company the amount of any federal, state or local taxes that the Company is required to withhold with respect to such Awards, or the Company may deduct from other wages paid by the Company the amount of any withholding taxes due with respect to such Awards.
15.2Election to Withhold Shares. Unless the Committee otherwise prescribes in the Award Agreement, shares of Company Stock may be withheld to satisfy the Company’s tax withholding obligation with respect to Awards paid in Company Stock at the time such Awards become taxable, up to an amount that does not cause adverse accounting consequences or cost to the Company for federal (including FICA/Medicare), state and local tax liabilities.
15.3Default Withholding Procedures. Unless the Committee otherwise prescribes in the Award Agreement,any Participant or beneficiary may satisfy the withholding requirements that apply to such Award by using any one or more of the following methods or any combination of the following methods:
(a)by making a payment to the Company of an amount in cash (which shall be deemed to include payment in U.S. currency or by certified check, bank draft, cashier’s check, or money order) equal to the amount of such withholding requirements;
(b)by making a payment to the Company in shares of Company Stock which are previously owned by the Participant (or such other person) and that have a Fair Market Value on the date of payment equal to the amount of such withholding requirements;
(c)by having the Company retain shares of Company Stock which are otherwise being purchased or paid under the Award and have a Fair Market Value on the date of payment equal to the amount of such withholding requirements;
(d)by having the Company retain an amount of cash that is payable under the Award and equal to the amount of such withholding requirements; and/or
(e)by having the Company retain an amount of cash that is payable under any other compensation applicable to the Participant (or such other person) and equal to the amount of such withholding requirements.
15.4Right of Company To Retain Amounts To Meet Withholding Requirements. If any Participant (or other person) who is responsible for satisfying any payment/withholding requirements that apply to an Award fails to satisfy such payment/withholding requirements by making or electing a form of payment prior to exercise (in the case of an Option or SAR) or the date an Award is due to be paid, the Company shall have the right to retain from such Award or the payment thereof (or from any other amount that is payable as compensation to the Participant or such other person), as appropriate, a sufficient number of shares of Company Stock or cash otherwise applicable to the Award (or otherwise applicable to such other compensation amount) in order to satisfy such payment/withholding requirements.
SECTION 16
TRANSFERABILITY OF AWARDS
16.1Restrictions on Transfer. Except as described in Section 16.2 below, only the Participant may exercise rights under an Award during the Participant’s lifetime, and a Participant may not transfer those rights except by will or by the laws of descent and distribution. When a Participant dies, the personal representative or other person entitled to succeed to the rights of the Participant may exercise such rights. Any such successor must furnish proof satisfactory to the Company of his or her right to receive the Award under the Participant’s will or under the applicable laws of descent and distribution.
16.2Transfer of Nonqualified Stock Options to or for Family Members. Notwithstanding the foregoing, the Committee may provide in an Award Agreement that a Participant may transfer Nonqualified Stock Options to family members, or one or more trusts or other entities for the benefit of or owned by family members, consistent with applicable securities laws, according to such terms as the Committee may determine; provided that the Participant receives no consideration for the transfer of a Nonqualified Stock Option and the transferred Nonqualified Stock Option shall continue to be subject to the same terms and conditions as were applicable to the Nonqualified Stock Option immediately before the transfer.
SECTION 17
CONSEQUENCES OF A CHANGE IN CONTROL
17.1Disposition of Awards in Connection with Change in Control. In the event of a Change in Control, the Company may continue, assume, or provide substitution for outstanding Awards in a manner that provides to Participants rights and economic value substantially proportionate to the rights and economic value of such Awards immediately before the Change in Control; provided, however, that no assumption or substitution shall be made to any Award unless, after such assumption or substitution, the assumed or substituted Award continues to be exempt from or in compliance with the requirements of Code Section 409A.
17.2Effect of Involuntary Termination of Employment within Twenty-Four Months Following Change in Control. If Awards granted under the Plan are continued or assumed or Awards are made in substitution (“Plan Awards”), and a Participant experiences an Involuntary Termination of Employment within 24 months following such Change in Control, then, with respect to Plan Awards that are still outstanding as of the date of such Participant’s termination of employment: (i) such Plan Awards that are Options or SARs shall become fully exercisable upon the date of the Participant’s termination of employment, (ii) the restrictions still then in force and applicable to restricted Company Stock under Plan Awards shall immediately lapse upon the date of the Participant’s termination of employment, (iii) the restrictions still then in force and applicable to Plan Awards that are time-vested Stock Units and Other Stock-Based Awards shall immediately lapse upon the date of the Participant’s termination of employment, and (iv) any outstanding Plan Awards that are Stock Unit, Other Stock-Based Award or Nonstock-Based Award that vests based on achievement of certain performance, shall be paid as of the date of the Participant’s termination of employment at the payment amount that was attainable (and not previously paid) under such Award if all performance goals and other criteria or conditions applicable to the Award were satisfied at 100% (but not more than 100%) of the “target” performance goal.
17.3Involuntary TerminationDefined. For purposes of this Section, a Participant shall be considered to have experienced an “Involuntary Termination of Employment” if and as of the date that (i) the Company terminates the Participant’s employment (when the Participant is willing and able to continue his or her employment with the Company) for any reason other than the Participant’s death, Disability, explicit or implicit request, fraud, misappropriation, embezzlement, or misconduct constituting serious criminal activity on the part of the Participant or (ii) the Participant terminates his or her employment with the Company because, without the Participant’s consent, there is (i) a material reduction by the Company in the Participant’s authority, reporting relationship, or responsibilities, (ii) there is a material reduction by the Company in the Participant’s compensation, or (iii) there is a material change in the Participant’s work location.
17.4Vesting in Awards not Assumed, Continued or Substituted. If and to the extent that Awards granted under the Plan are not continued, assumed, or substituted as provided in Section 17.1 in the event of a Change in Control, then (i) outstanding Options and SARs shall immediately become exercisable in full upon the date of the Change in Control, (ii) the restrictions still then in force and applicable to any Company Stock awarded as restricted stock under the Plan to a Participant shall immediately lapse upon the date of the Change in Control, (iii) the time-based vesting conditions that are required to be met before the Participant vests in all of Stock Units, Other Stock-Based Award or Nonstock-Based Award that have not yet forfeited shall immediately be deemed satisfied upon the date of the Change in Control, and (iv) any outstanding Stock Unit, Other Stock-Based Award or Nonstock-Based Award that vests based on achievement of certain performance, and shall be distributable or payable as of the date of the Change in Control at the payment amount that was attainable (and not previously paid) under such Award if all performance goals and other criteria or conditions applicable to the Award were satisfied at 100% (but not more than 100%) of the “target” performance goal. With respect to any Awards which become vested and payable at Change in Control pursuant to this Section, the Company shall, within the 60-day period that begins on the date of the Change in Control, distribute to the Participant (or, in the event of his or her death before the payment, the executor, administrator, or other personal representative of his or her estate) the stock or cash issuable thereunder (but subject to the tax withholding requirements first being satisfied).
17.5Alternatively, Committee May Cash Out Awards. In addition, notwithstanding the provisions of subsection 17.1, in the event of a Change in Control, the Committee shall have discretion to cause a cash payment to be made to a person who then holds an Option or SAR, in lieu of the right to exercise such Option or SAR or any portion thereof, and thereby to cause such Option or SAR to be canceled and terminated. In the event the Committee exercises its discretion to cause such cash payment to be made, the amount of such cash payment shall be equal to the amount (if any) by which (i) the aggregate Fair Market Value on the date of the Change in Control of the Company Stock that is subject to the Option or SAR exceeds (ii) the aggregate Exercise Price under such Option or SAR. If the aggregate Fair Market Value on the date of the Change in Control of the Company Stock that is subject to an Option or SAR is less than the aggregate Exercise Price, the Option or SAR shall be deemed to have been paid in full in lieu of the right to exercise such Option or SAR and the Option or SAR shall be canceled and terminated. Further, in the event of a Change in Control and with respect to any Stock Unit, Other Stock-Based Award that, as of the date of such Change in Control, would otherwise be payable in Company Stock, the Committee shall have discretion to cause the payment of such Award to be made in cash instead. In the event the Committee exercises its discretion to cause such cash payment to be made, the amount of such cash payment shall be equal to the aggregate Fair Market Value, on the date of the Change in Control, of the Company Stock that would otherwise then be payable under such Award.
17.6Terms Related to Change in Control. Notwithstanding any other provision of the Plan, the terms of any Award granted under the Plan shall not provide for the waiver of any employment condition, performance goal, or any otherwise applicable limitation, condition, or restriction (together for purposes of this Section, an “Award restriction”) due in whole or in part to a Change in Control, except to the extent provided under this Section 17. In this regard, the Committee may prescribe in terms of an applicable Award the specific manner in which the provisions of this Section 17 apply to the applicable Award, for instance by providing administrative rules related to payment in the event that the provisions of this Section 17 are put into effect, but the Committee shall not prescribe in the terms of an applicable Award any additional or alternative circumstances under which any Award restriction is waived due in whole or in part to the occurrence of a Change in Control.
SECTION 18
REQUIREMENTS FOR ISSUANCE OF SHARES
No Company Stock shall be issued in connection with any Award hereunder unless and until all legal requirements applicable to the issuance of such Company Stock have been complied with to the satisfaction of the Committee. The Committee shall have the right to condition any Award made to any Participant hereunder on such Participant’s undertaking in writing to comply with such restrictions on his or her subsequent disposition of such shares of Company Stock as the Committee shall deem necessary or advisable. Any certificates issued representing such shares may be legended to reflect any such restrictions and any such shares held by the Company's transfer agent in book-entry form may reflect such restrictions. Shares of Company Stock issued under the Plan will be subject to such stop-transfer orders and other restrictions as may be required by applicable laws, regulations and interpretations, including any requirement that a legend be placed on any certificate issued thereon. No Participant shall have any right as a shareholder with respect to Company Stock covered by an Award until shares have been issued to the Participant.
SECTION 19
AMENDMENT OF THE PLAN
19.1Amendment. The Board may amend or terminate the Plan at any time; provided, however, that the Board shall not amend the Plan without approval of the shareholders of the Company if shareholder approval is required in order to comply with the Code or applicable laws or to comply with applicable stock exchange requirements. No amendment or termination of this Plan shall, without the consent of the Participant, materially impair any rights or obligations under any Award previously made to the Participant under the Plan, unless such right has been reserved in the Plan or the Award Agreement or except as provided in Section 20.2 below. Notwithstanding anything in the Plan to the contrary, the Board may amend the Plan in such manner as it deems appropriate in the event of a change in applicable law or regulations.
19.2No Repricing Without Shareholder Approval. Notwithstanding anything in the Plan to the contrary, except as authorized by Section 5.5, the terms of outstanding Awards may not be amended to reduce the exercise price of outstanding Options or SARs or cancel outstanding Options or SARs in exchange for cash, other awards of Options or SARs with an exercise price that is less than the exercise price of the original Options or SARs, without shareholder approval.
19.3Shareholder Approval for Qualified Performance-Based Compensation. If Awards are made under Section 13 above, the Performance Criteria must be reapproved by the Company’s shareholders no later than the first shareholders’ meeting that occurs in the fifth year following the year in which the shareholders previously approved the provisions of Section 13, if additional Awards are to be made under Section 13 and if required by Code Section 162(m) or Treasury Regulations thereunder.
SECTION 20
MISCELLANEOUS
20.1Effective Date. The Plan shall be effective as of the Effective Date, if approved by the Company’s shareholders on such date.
20.2Awards in Connection with Corporate Transactions and Otherwise. Nothing contained in this Plan shall be construed to (i) limit the right of the Committee to make Awards under this Plan in connection with the acquisition, by purchase, lease, merger, consolidation or otherwise, of the business or assets of any corporation, firm or association, including Awards to employees thereof who become Employees, or for other proper corporate purposes, or (ii) limit the right of the Company to grant stock options or make other stock-based awards outside of this Plan. Without limiting the foregoing, the Committee may make an Award to an employee of another corporation who becomes an Employee by reason of a corporate merger, consolidation, acquisition of stock or property, reorganization or liquidation involving the Company in substitution for a grant made by such corporation. The terms and conditions of the Awards may vary from the terms and conditions required by the Plan and from those of the substituted stock incentives, as determined by the Committee.
20.3Compliance with Law.
(a)The Plan, the exercise of Options and the obligations of the Company to issue or transfer shares of Company Stock under Awards shall be subject to all applicable laws and to approvals by any governmental or regulatory agency as may be required. With respect to persons subject to Section 16 of the Exchange Act, it is the intent of the Company that the Plan and all transactions under the Plan comply with all applicable provisions of Rule 16b-3 or its successors under the Exchange Act. In addition, it is the intent of the Company that Incentive Stock Options comply with the applicable provisions of Code Section 422, and Awards of Qualified Performance-Based Compensation comply with the applicable provisions of Code Section 162(m). To the extent that any legal requirement of Section 16 of the Exchange Act or Code Sections 422 or 162(m) as set forth in the Plan ceases to be required under Section 16 of the Exchange Act or Code Section 422 or 162(m), that Plan provision shall cease to apply. The Committee may revoke any Award if it is contrary to law or modify an Award to bring it into compliance with any valid and mandatory government regulation. The Committee may also adopt rules regarding the withholding of taxes on payments to Participants. The Committee may, in its sole discretion, agree to limit its authority under this Section.
(b)The Plan is intended to comply with the requirements of Code Section 409A such that Awards hereunder will be exempt therefrom, or, if not so exempt, will comply with that section so as not to impose taxes on Participants prior to the receipt of value hereunder. Each Award shall be construed and administered such that the Award either (A) qualifies for an exemption from the requirements of Code Section 409A or (B) satisfies the requirements of Code Section 409A. If an Award is subject to Code Section 409A, (i) distributions shall only be made in a manner and upon an event permitted under Code Section 409A, (ii) payments to be made upon a termination of employment shall only be made upon a “separation from service” under Code Section 409A, (iii) unless the Award specifies otherwise, each installment payment shall be treated as a separate payment for purposes of Code Section 409A, and (iv) in no event shall a Participant, directly or indirectly, designate the calendar year in which a distribution is made except in accordance with Code Section 409A.
(c)Any Award that is subject to Code Section 409A and that is to be distributed to a Key Employee (as described below) upon separation from service shall be administered so that any distribution with respect to such Award shall be postponed for six months following the date of the Participant’s separation from service, if required by Code Section 409A. If a distribution is delayed pursuant to Code Section 409A, the distribution shall be paid within 15 days after the end of the six-month period. If the Participant dies during such six-month period, any postponed amounts shall be paid within 90 days of the Participant’s death. The determination of Key Employees, including the number and identity of persons considered Key Employees and the identification date, shall be made by the Committee or its delegate each year in accordance with Code Section 416(i) and the “specified employee” requirements of Code Section 409A and consistent with other plans and programs of the Company to which such terms apply.
(d)Notwithstanding anything in the Plan or any Award Agreement to the contrary, each Participant shall be solely responsible for the tax consequences of Awards under the Plan, and in no event shall the Company have any responsibility or liability if an Award does not meet any applicable requirements of Code Section 409A. Although the Company intends to administer the Plan to prevent adverse tax consequences under Code Section 409A, the Company does not represent or warrant that the Plan or any Award complies with any provision of federal, state, local or other tax law.
20.4Enforceability. The Plan shall be binding upon and enforceable against the Company and its successors and assigns.
20.5Funding of the Plan; Limitation on Rights. This 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 the payment of any Awards under this Plan. Nothing contained in the Plan and no action taken pursuant hereto shall create or be construed to create a fiduciary relationship between the Company and any Participant or any other person. No Participant or any other person shall under any circumstances acquire any property interest in any specific assets of the Company. To the extent that any person acquires a right to receive payment from the Company hereunder, such right shall be no greater than the right of any unsecured general creditor of the Company.
20.6Rights of Participants. Nothing in this Plan shall entitle any Employee or other person to any claim or right to receive an Award under this Plan. Neither this Plan nor any action taken hereunder shall be construed as giving any individual any rights to be retained by or in the employment of the Employer.
20.7No Fractional Shares. No fractional shares of Company Stock shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, other awards or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.
20.8Clawback Rights. All Awards under the Plan will be subject to any compensation, clawback and recoupment policies that may be applicable to the employees of the Company, as in effect from time to time and as approved by the Board or Committee, whether or not approved before or after the Effective Date.
20.9Governing Law. The validity, construction, interpretation and effect of the Plan and Award Agreements issued under the Plan shall be governed and construed by and determined in accordance with the laws of the State of Ohio, without giving effect to the conflict of law provisions thereof.
IN WITNESS WHEREOF, this Plan has been adopted as of the Effective Date.
CINCINNATI BELL INC.
CINCINNATI BELL INC.
2017 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
SECTION 1
INTRODUCTION
1.1 Effectiveness. As of the Effective Date (as defined below), the Cincinnati Bell Inc. 2017 Stock Plan for Non-Employee Directors (the “Plan”) is hereby established.
1.2 Purpose. The purposes of this Plan are to (i) attract and retain the services of experienced and knowledgeable persons to serve as independent directors of Cincinnati Bell Inc. (the “Company”) for the benefit of the Company and its shareholders, and (ii) to provide additional incentive for such directors to continue to work for the best interests of the Company and its shareholders.
1.3 Effective Date and Duration of Plan. The Plan is effective on the Effective Date, as described in Section 2.10, and shall remain in effect until the earliest of (i) the date on which the Plan is terminated in accordance with Section 14.1, (ii) the date on which the maximum number of shares of Company Stock which may be issued or transferred under the Plan (as determined under Section 5 of the Plan) have been issued or transferred or (iii) May 3, 2027. After termination of the Plan, no Awards may be granted under the Plan but any Award granted under the Plan prior to the Plan’s termination shall remain outstanding in accordance with the terms of the Plan and the terms of the Award Agreement.
SECTION 2
DEFINITIONS
As used in the Plan, the following terms will have the respective meanings set forth below:
2.1 “Award” means an Option, Stock Unit or Stock Award granted under the Plan.
2.2 “Award Agreement” means the written instrument (which may be in electronic form) that sets forth the terms and conditions of an Award, including all amendments thereto.
2.3 “Board” means the Company’s Board of Directors.
2.4 A “Change in Control” shall be deemed to have taken place for purposes of the Plan if
(a)a majority of the Board of the Company 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: (A) who was a director of the Company at the beginning of the 24 consecutive month period ending on such date or (B) 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 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 Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d‑3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% 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: (A) the acquisition of any Company Voting Securities by the Company or any of its subsidiaries, (B) the acquisition of any Company Voting Securities by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries, (C) the acquisition of any Company Voting Securities by any underwriter temporarily holding securities pursuant to an offering of such securities, or (D) a Non‑Qualifying Transaction (as defined in paragraph (c) of this Section 2.4);
(c)the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its subsidiaries (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 stockholders 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: (A) 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 (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, (B) 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 30% or more 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 outstanding voting securities of the Parent Entity (or, if there is no Parent Entity, the Surviving Entity) and (C) 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 (A), (B) and (C) above 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 and the Company consummates such liquidation or dissolution.
Notwithstanding the foregoing, a Change in Control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 30% 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 of the Company shall then occur.
Also notwithstanding the foregoing, for any Awards subject to the requirements of Code Section 409A that will become payable on a Change in Control, the transaction constituting a “Change in Control” must also constitute a “change in control event” for purposes of Code Section 409A(a)(2)(A)(v).
2.5 “Code” means the Internal Revenue Code of 1986, as amended, as interpreted in Treasury Regulations or other guidance.
2.6 “Company” means Cincinnati Bell Inc.
2.7 “Company Stock” means the common stock of the Company, par value $0.01 per share, or any stock or other securities of the Company hereafter issued or issuable in substitution or exchange for the common stock.
2.8 “Disability” or “Disabled” means, with respect to an Outside Director, that the Outside Director is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months. The Outside Director’s Disability shall be determined under procedures established by the Board. Further, if an Outside Director fails to reasonably cooperate with the Board’s attempt to determine whether he or she is disabled, then, notwithstanding any other evidence of disability that exists, the Board shall have the right to determine that no condition of Disability exists as to the Outside Director.
2.9 “Dividend Equivalent” means an amount calculated with respect to a Stock Unit, which is determined by multiplying the number of shares of Company Stock subject to the Stock Unit by the per-share cash dividend, or the per-share fair market value (as determined by the Board) of any dividend in consideration other than cash, paid by the Company on its Company Stock. If interest is credited on accumulated dividend equivalents, the term “Dividend Equivalent” shall include the accrued interest.
2.10 “Effective Date” of the Plan means May 4, 2017, provided that the Plan is approved by the shareholders of the Company on that date.
2.11 “Exchange Act” means the Securities Exchange Act of 1934, as amended.
2.12 “Exercise Price” means the per share price at which shares of Company Stock may be purchased under an Option, as designated by the Board.
2.13 “Fair Market Value” of Company Stock means, (i) if the principal trading market for the Company Stock is a national securities exchange, the last reported sale price of Company Stock during regular trading hours on the relevant date or, if there were no trades on that date, the last reported sale price of Company Stock during regular trading hours on the next following date upon which a sale is reported, (ii) if the Company Stock is not principally traded on such exchange, the mean between the last reported “bid” and “asked” prices of Company Stock on the relevant date, as reported on the over the counter market, or (iii) if the Company Stock is not publicly traded or, if publicly traded, is not so reported, the Fair Market Value per share shall be as determined by the Board.
2.14 “Nonqualified Stock Option” means an Option that is not intended to be taxed as an incentive stock option under Code Section 422.
2.15 “Option” means an option to purchase shares of Company Stock, as described in Section 6.
2.16 “Outside Director”means any member of the Board who is not an employee (on an employee payroll) of the Company.
2.17 “Plan” means this Cincinnati Bell Inc. 2017 Stock Plan for Non-Employee Directors, as may be amended from time to time.
2.18“Retirement” means, with respect to any Outside Director, the Outside Director's ceasing to be an Outside Director after he or she has attained at least age 68.
2.19 “Stock Award” means an Award of Company Stock as described in Section 8.
2.20 “Stock Unit” means an Award of a phantom unit representing one share of Company Stock, as described in Section 7, which may include but not be limited to a Restricted Stock Unit (“RSU”), as described in Section 7.
2.21 “Treasury Regulations” means regulations issued by the Secretary of the Treasury under the Code.
SECTION 3
ADMINISTRATION
3.1 Board of Directors. The Plan shall be administered and interpreted by the Board.
3.2 Board Authority. The Board shall have the sole and complete authority to grant awards to Outside Directors in accordance with the provisions of Section 4 hereof and, subject to the limitations and other provisions of the Plan, to interpret the Plan, to adopt, amend, and rescind administrative guidelines and other rules and regulations relating to the Plan, and to make all other determinations and to take all other actions it deems necessary or advisable for the proper administration of the Plan.
3.3 Board Determinations. Except to the extent otherwise required by applicable law, the Board’s determinations on any matter within its authority shall be conclusive and binding on the Company, all Outside Directors, and all other parties.
3.4 Liability; Indemnification. No member of the Board shall be personally liable for any action, interpretation or determination made in good faith with respect to the Plan or Awards granted hereunder, and each member of the Board shall be fully indemnified and protected by the Company with respect to any liability the Board member may incur with respect to any such action, interpretation or determination, to the maximum extent permitted by applicable law.
SECTION 4
AWARDS; MINIMUM VESTING
The Board may, in its discretion, grant under the Plan Options, Stock Units and Stock Awards to any Outside Director on the first date of such individual's first term of office as an Outside Director and/or on the date of any annual meeting of the shareholders of the Company. The Board shall exercise its discretion when determining whether to grant any such Awards as of any such date with the intent that the Awards that are granted to Outside Directors under the Plan, together with other compensation that is either paid in the form of Company Stock or has its value determined in relation to the value of Company Stock (such awards and such other compensation referred to in this Section 4 as “equity-based compensation”) and taking into account the Fair Market Value of Company Stock when granting or providing such equity-based compensation, provide equity-based compensation for Outside Directors that each year is approximately equal to the median level of the value of equity-based compensation provided by a group of comparable peer group companies to their non-employee directors.
All Awards shall be subject to such terms and conditions as the Board deems appropriate and as are specified in writing by the Board to the Outside Director in the Award Agreement. By acceptance of the Award, an Outside Director acknowledges that all decisions and determinations of the Board shall be final and binding on the Outside Director, his or her beneficiaries and any other person having or claiming an interest under such Award.
Notwithstanding the Board’s discretion granted under the Plan to determine the vesting provisions applicable to an Award, the vesting provisions shall, in all events, be subject to the provisions of this Section 4. Subject to the immediately following sentence, the vesting period of any Award shall be a minimum of one year from the date of grant (or, if earlier, the first annual meeting of Company shareholders after the date on which the Award is granted, provided that such date is no more than two weeks before the one year anniversary of the date of grant). Notwithstanding the foregoing, (i) the Award Agreement may provide for vesting to occur upon the Participant’s death, Disability, Retirement or, subject to the limitations contained herein, in the event of a Change in Control.
SECTION 5
SHARES SUBJECT TO PLAN; AWARD LIMITS
5.1 Shares Authorized. Subject to adjustment as described below in Section 5.4, the total aggregate number of shares of Company Stock that may be issued or transferred under the Plan shall be 350,000.
5.2 Share Counting. Upon grant of an Award, the shares of Company Stock reserved for issuance under this Plan pursuant to Section 5.1 shall be debited for the maximum number of shares of Company Stock that might be issuable under an Award. If and to the extent Options granted under the Plan terminate, expire, or are canceled, forfeited, exchanged or surrendered without having been exercised, and if and to the extent that any Stock Awards or Stock Units are forfeited or terminated, or otherwise are not paid in full, the shares to that extent that are reserved for such Awards shall again be available for purposes of the Plan. If shares of Company Stock otherwise issuable under the Plan are surrendered in payment of the Exercise Price of an Option, then the number of shares of Company Stock available for issuance under the Plan shall be permanently reduced by the gross number of shares as to which such Option is exercised. If shares of Company Stock otherwise issuable under the Plan are withheld by the Company in satisfaction of the withholding taxes incurred in connection with the issuance, vesting or exercise of any Award or the issuance of Company Stock thereunder, then the number of shares of Company Stock available for issuance under the Plan shall be permanently reduced by the number of shares used to cover the tax withholding. Example: 100 shares are issuable, but 40 of them are withheld to pay income taxes; the number of shares issuable under the Plan remain permanently reduced by 100 shares. To the extent that any Awards are payable only in cash, and not in shares of Company Stock, such Awards shall not count against the share limits in Section 5.1.
5.3 Source of Shares. Shares issued or transferred under the Plan may be authorized but unissued shares of Company Stock or reacquired shares of Company Stock, including shares purchased by the Company on the open market for purposes of the Plan.
5.4 Adjustments. If there is any change in the number or kind of shares of Company Stock outstanding (i) by reason of a stock dividend, spinoff, recapitalization, stock split, or combination or exchange of shares, (ii) by reason of a merger, reorganization or consolidation, (iii) by reason of a reclassification or change in par value, or (iv) by reason of any other extraordinary or unusual event affecting the outstanding Company Stock as a class without the Company’s receipt of consideration, or if the value of outstanding shares of Company Stock is substantially reduced as a result of a spinoff or the Company’s payment of an extraordinary dividend or distribution, the maximum number of shares of Company Stock available for issuance under the Plan, the maximum number of shares of Company Stock for which any individual may receive Awards in any year, the kind and number of shares covered by outstanding Awards, or the kind and number of shares issued or transferred and to be issued or transferred under the Plan, and the price per share or the applicable market value of such Awards shall be equitably adjusted by the Board, in such manner as the Board deems appropriate, to reflect any increase or decrease in the number of, or change in the kind or value of, the issued shares of Company Stock to preclude, to the extent practicable, the enlargement or dilution of rights and benefits under the Plan and such outstanding Awards; provided, however, that any fractional shares resulting from such adjustment shall be rounded down to the nearest whole share. In addition, in the event of a Change in Control of the Company, the provisions of Section 12 of the Plan shall apply. Any adjustments to outstanding Awards shall be consistent with Code Section 409A or 424, to the extent applicable. Any adjustments determined by the Board shall be final, binding and conclusive.
5.5 Limitation on Awards in Any Calendar Year. Notwithstanding any other provision of the Plan, the aggregate grant date fair value (determined in accordance with applicable financial accounting rules) of all Awards granted under the Plan to any Outside Director in any calendar year shall not exceed $300,000.
SECTION 6
OPTIONS
6.1 General Requirements. The Board may grant Options to an Outside Director upon such terms and conditions as the Board deems appropriate under this Section 6. The Board shall determine the number of shares of Company Stock that will be subject to each Award of Options.
6.2 Type of Option, Price and Term.
(a) The Board may grant Nonqualified Stock Options, in accordance with the terms and conditions set forth herein.
(b) The Exercise Price of Company Stock subject to an Option shall be determined by the Board and shall be equal to or greater than the Fair Market Value of a share of Company Stock on the date the Option is granted.
(c) The Board shall determine the term of each Option, which shall not exceed ten years from the date of grant.
6.3 Exercisability of Options.
(a) Options shall become exercisable in accordance with such terms and conditions as may be determined by the Board and specified in the Award Agreement. The Board may accelerate the exercisability of any or all outstanding Options at any time for any reason.
(b) The Board may provide in an Award Agreement that the Outside Director may elect to exercise part or all of an Option before it otherwise has become exercisable. Any shares so purchased shall be restricted shares and shall be subject to a repurchase right in favor of the Company during a specified restriction period, with the repurchase price equal to the lesser of (i) the Exercise Price or (ii) the Fair Market Value of such shares at the time of repurchase, or such other restrictions as the Board deems appropriate.
6.4 Termination of Service. Except as provided in the Award Agreement, an Option may only be exercised while the Outside Director is still an Outside Director. The Board shall determine in the Award Agreement under what circumstances and during what time periods an Outside Director may exercise an Option after termination of service as an Outside Director.
6.5 Exercise of Options. An Outside Director may exercise an Option that has become exercisable, in whole or in part, by delivering a notice of exercise to the Company. The Outside Director shall pay the Exercise Price for the Option by one or a combination of the following methods: (i) in cash, (ii) by delivering shares of Company Stock owned by the Outside Director and having a Fair Market Value on the date of exercise equal to the Exercise Price or by attestation to ownership of shares of Company Stock having an aggregate Fair Market Value on the date of exercise equal to the Exercise Price, (iii) by payment through a broker in accordance with procedures permitted by the Board, (iv) unless the Award Agreement provides to the contrary, by net exercise of all or any part of the vested shares of Company Stock for which the Option is exercisable by the Company retaining Company Stock that would otherwise be issued on exercise equal to the dollar amount by which the then Fair Market Value of the shares of Company Stock subject to the surrendered portion exceeds the aggregate Exercise Price payable for those shares, or (v) by such other method as the Board may approve, to the extent permitted by applicable law. Shares of Company Stock used to exercise an Option shall have been held by the Outside Director for the requisite period of time to avoid adverse accounting consequences to the Company with respect to the Option. Payment for the shares pursuant to the Option, and any required withholding taxes, must be received by the time specified by the Board depending on the type of payment being made, but in all cases prior to the issuance of the Company Stock for such exercise.
SECTION 7
STOCK UNITS
7.1 General Requirements. The Board may grant Stock Units upon such terms and conditions as the Board deems appropriate under this Section 7. Each Stock Unit shall represent the right of the Outside Director to receive a share of Company Stock or an amount based on the value of a share of Company Stock. All Stock Units shall be credited to bookkeeping accounts on the Company’s records for purposes of the Plan.
7.2 Terms of Stock Units. The Board may grant Stock Units that are payable on terms and conditions determined by the Board, which may include payment after a specified additional period of service as an Outside Director for vesting (a type of Award commonly referred to a “Restricted Stock Units,” or “RSUs”). Stock Units may be paid at the end of a specified time for vesting, or payment may be deferred to a date authorized by the Board. The Board shall determine the number of Stock Units to be granted and the requirements applicable to such Stock Units.
7.3 Payment With Respect to Stock Units. Payment with respect to Stock Units shall be made in cash, in Company Stock, or in a combination of the two, as determined by the Board. The Award Agreement shall specify the maximum number of shares that can be issued under the Stock Units.
7.4 Requirement of Service. The Board shall determine in the Award Agreement under what circumstances an Outside Director may retain Stock Units after termination of the Outside Director’s service as an Outside Director and the circumstances under which Stock Units may be forfeited.
7.5 Dividend Equivalents. The Board may grant Dividend Equivalents in connection with Stock Units, under such terms and conditions as the Board deems appropriate. Dividend Equivalents may be paid to Outside Directors currently or may be deferred. All Dividend Equivalents that are not paid currently shall be credited to bookkeeping accounts on the Company’s records for purposes of the Plan. Dividend Equivalents may be accrued as a cash obligation, or may be converted to additional Stock Units for the Outside Director, and deferred Dividend Equivalents may accrue interest, all as determined by the Board. Dividend Equivalents may be payable in cash or shares of Company Stock or in a combination of the two, as determined by the Board.
SECTION 8
STOCK AWARDS
8.1 General Requirements. The Board may issue shares of Company Stock to an Outside Director under a Stock Award, upon such terms and conditions as the Board deems appropriate under this Section 8. Shares of Company Stock issued pursuant to Stock Awards may be issued for cash consideration or for no cash consideration, and subject to restrictions or no restrictions, as determined by the Board. The Board may establish conditions under which restrictions on Stock Awards shall lapse over a period of time or according to such other criteria as the Board deems appropriate. The Board shall determine the number of shares of Company Stock to be issued pursuant to a Stock Award.
8.2 Requirement of Service. The Board shall determine in the Award Agreement under what circumstances an Outside Director may retain Stock Awards after termination of the Outside Director’s service as an Outside Director and the circumstances under which Stock Awards may be forfeited.
8.3 Restrictions on Transfer. For any period when Stock Awards are subject to restrictions, an Outside Director may not sell, assign, transfer, pledge or otherwise dispose of the shares of a Stock Award except upon death as described in Section 11.1. If certificates are issued, each certificate for a share of a Stock Award shall contain a legend giving appropriate notice of the restrictions in the Award. Shares of a Stock Award that are held at the Company's transfer agent in book-entry form shall contain the appropriate restrictions related to the transfer of such shares. When all restrictions on a share of a Stock Award have lapsed, either the Company shall remove the legend from the issued certificate or the transfer agent shall remove the restrictions from the book-entry, as applicable. The Company may retain possession of any certificates for Stock Awards until all restrictions on such shares have lapsed.
8.4 Right to Vote and to Receive Dividends. The Board shall determine to what extent, and under what conditions, the Outside Director shall have the right to vote shares of Stock Awards and to receive any dividends or other distributions paid on such shares during the restriction period. The Board may determine that dividends on Stock Awards shall be withheld while the Stock Awards are subject to restrictions and that the dividends shall be payable only upon the lapse of the restrictions on the Stock Awards, or on such other terms as the Board determines. Dividends that are not paid currently shall be credited to bookkeeping accounts on the Company’s records for purposes of the Plan. Accumulated dividends may accrue interest, as determined by the Board, and shall be paid in cash, shares of Company Stock, or in such other form as dividends are paid on Company Stock, as determined by the Board.
SECTION 9
DEFERRALS
The Board may permit or require an Outside Director to defer receipt of the payment of cash or the delivery of shares that would otherwise be due to the Outside Director in connection with any Award. The Board shall establish rules and procedures for any such deferrals, consistent with applicable requirements of Code Section 409A.
SECTION 10
WITHHOLDING OF TAXES
10.1 Required Withholding. All Awards under the Plan shall be subject to applicable federal state and local tax withholding requirements. The Company may require that the Outside Director or other person receiving or exercising Awards pay to the Company the amount of any federal, state or local taxes that the Company is required to withhold with respect to such Awards, or the Company may deduct from other wages paid by the Company the amount of any withholding taxes due with respect to such Awards.
10.2 Election to Withhold Shares. Unless the Board otherwise prescribes in the Award Agreement, shares of Company Stock may be withheld to satisfy the Company’s tax withholding obligation with respect to Awards paid in Company Stock at the time such Awards become taxable, up to an amount that does not cause adverse accounting consequences or cost to the Company for federal, state and local tax liabilities.
10.3 Default Withholding Procedures. Unless the Board otherwise prescribes in the Award Agreement,any Outside Director or beneficiary may satisfy the withholding requirements that apply to such Award by using any one or more of the following methods or any combination of the following methods:
(a) by making a payment to the Company of an amount in cash (which shall be deemed to include payment in U.S. currency or by certified check, bank draft, cashier’s check, or money order) equal to the amount of such withholding requirements;
(b) by making a payment to the Company in shares of Company Stock which are previously owned by the Outside Director (or such other person) and that have a Fair Market Value on the date of payment equal to the amount of such withholding requirements;
(c) by having the Company retain shares of Company Stock which are otherwise being purchased or paid under the Award and have a Fair Market Value on the date of payment equal to the amount of such withholding requirements;
(d) by having the Company retain an amount of cash that is payable under the Award and equal to the amount of such withholding requirements; and/or
(e)by having the Company retain an amount of cash that is payable under any other compensation applicable to the Outside Director (or such other person) and equal to the amount of such withholding requirements.
10.4 Right of Company To Retain Amounts To Meet Withholding Requirements. If any Outside Director (or other person) who is responsible for satisfying any payment/withholding requirements that apply to an Award fails to satisfy such payment/withholding requirements by making or electing a form of payment prior to exercise (in the case of an Option) or the date an Award is due to be paid, the Company shall have the right to retain from such Award or the payment thereof (or from any other amount that is payable as compensation to the Outside Director or such other person), as appropriate, a sufficient number of shares of Company Stock or cash otherwise applicable to the Award (or otherwise applicable to such other compensation amount) in order to satisfy such payment/withholding requirements.
SECTION 11
TRANSFERABILITY OF AWARDS
11.1 Restrictions on Transfer. Except as described in Section 11.2 below, only the Outside Director may exercise rights under an Award during the Outside Director’s lifetime, and an Outside Director may not transfer those rights except by will or by the laws of descent and distribution. When an Outside Director dies, the personal representative or other person entitled to succeed to the rights of the Outside Director may exercise such rights. Any such successor must furnish proof satisfactory to the Company of his or her right to receive the Award under the Outside Director’s will or under the applicable laws of descent and distribution.
11.2 Transfer of Nonqualified Stock Options to or for Family Members. Notwithstanding the foregoing, the Board may provide in an Award Agreement that an Outside Director may transfer Nonqualified Stock Options to family members, or one or more trusts or other entities for the benefit of or owned by family members, consistent with applicable securities laws, according to such terms as the Board may determine; provided that the Outside Director receives no consideration for the transfer of a Nonqualified Stock Option and the transferred Nonqualified Stock Option shall continue to be subject to the same terms and conditions as were applicable to the Nonqualified Stock Option immediately before the transfer.
SECTION 12
CONSEQUENCES OF A CHANGE IN CONTROL
12.1 Disposition of Awards in Connection with Change in Control. In the event of a Change in Control, the Company may continue, assume, or provide substitution for outstanding Awards in a manner that provides to Outside Directors rights and economic value substantially proportionate to the rights and economic value of such Awards immediately before the Change in Control; provided, however, that no assumption or substitution shall be made to any Award unless, after such assumption or substitution, the assumed or substituted Award continues to be exempt from or in compliance with the requirements of Code Section 409A.
12.2 Vesting in Awards not Assumed, Continued or Substituted. If and to the extent that Awards granted under the Plan are not continued, assumed, or substituted as provided in Section 12.1 in the event of a Change in Control, then (i) outstanding Options shall immediately become exercisable in full upon the date of the Change in Control, (ii) the restrictions still then in force and applicable to any Company Stock awarded as restricted stock under the Plan to an Outside Director shall immediately lapse upon the date of the Change in Control, and (iii) the time-based vesting conditions that are required to be met before the Outside Director vests in all of Stock Units that have not yet forfeited shall immediately be deemed satisfied upon the date of the Change in Control. With respect to any Awards which become vested and payable at a Change in Control pursuant to this Section, the Company shall, within the 60-day period that begins on the date of the Change in Control, distribute to the Outside Director (or, in the event of his or her death before the payment, the executor, administrator, or other personal representative of his or her estate) the stock or cash issuable thereunder (but subject to the tax withholding requirements first being satisfied).
12.3 Alternatively, Board May Cash Out Awards. In addition, notwithstanding the provisions of subsection 12.1, in the event of a Change in Control, the Board shall have discretion to cause a cash payment to be made to a person who then holds an Option, in lieu of the right to exercise such Option or any portion thereof, and thereby to cause such Option to be canceled and terminated. In the event the Board exercises its discretion to cause such cash payment to be made, the amount of such cash payment shall be equal to the amount (if any) by which (i) the aggregate Fair Market Value on the date of the Change in Control of the Company Stock that is subject to the Option exceeds (ii) the aggregate Exercise Price under such Option. If the aggregate Fair Market Value on the date of the Change in Control of the Company Stock that is subject to an Option is less than the aggregate Exercise Price, the Option shall be deemed to have been paid in full in lieu of the right to exercise such Option and the Option shall be canceled and terminated. Further, in the event of a Change in Control and with respect to any Stock Unit Award that, as of the date of such Change in Control, would otherwise be payable in Company Stock, the Board shall have discretion to cause the payment of such Award to be made in cash instead. In the event the Board exercises its discretion to cause such cash payment to be made, the amount of such cash payment shall be equal to the aggregate Fair Market Value, on the date of the Change in Control, of the Company Stock that would otherwise then be payable under such Award.
12.4 Terms Related to Change in Control. Notwithstanding any other provision of the Plan, the terms of any Award granted under the Plan shall not provide for the waiver of any otherwise applicable limitation, condition, or restriction (together for purposes of this Section, an “Award Restriction”) due in whole or in part to a Change in Control, except to the extent provided under this Section 12. In this regard, the Board may prescribe in terms of an applicable Award the specific manner in which the provisions of this Section 12 apply to the applicable Award, for instance by providing administrative rules related to payment in the event that the provisions of this Section 12 are put into effect, but the Board shall not prescribe in the terms of an applicable Award any additional or alternative circumstances under which any Award restriction is waived due in whole or in part to the occurrence of a Change in Control.
SECTION 13
REQUIREMENTS FOR ISSUANCE OF SHARES
No Company Stock shall be issued in connection with any Award hereunder unless and until all legal requirements applicable to the issuance of such Company Stock have been complied with to the satisfaction of the Board. The Board shall have the right to condition any Award made to any Outside Director hereunder on such Outside Director’s undertaking in writing to comply with such restrictions on his or her subsequent disposition of such shares of Company Stock as the Board shall deem necessary or advisable. Any certificates issued representing such shares may be legended to reflect any such restrictions and such shares held by the Company's transfer agent in book-entry form may reflect such restrictions. Shares of Company Stock issued under the Plan will be subject to such stop-transfer orders and other restrictions as may be required by applicable laws, regulations and interpretations, including any requirement that a legend be placed on any certificate issued thereon. No Outside Director shall have any right as a shareholder with respect to Company Stock covered by an Award until shares have been issued to the Outside Director.
SECTION 14
AMENDMENT OF THE PLAN
14.1 Amendment. The Board may amend or terminate the Plan at any time; provided, however, that the Board shall not amend the Plan without approval of the shareholders of the Company if shareholder approval is required in order to comply with the Code or applicable laws or to comply with applicable stock exchange requirements. No amendment or termination of this Plan shall, without the consent of the Outside Director, materially impair any rights or obligations under any Award previously made to the Outside Director under the Plan, unless such right has been reserved in the Plan or the Award Agreement. Notwithstanding anything in the Plan to the contrary, the Board may amend the Plan in such manner as it deems appropriate in the event of a change in applicable law or regulations.
14.2 No Repricing Without Shareholder Approval. Notwithstanding anything in the Plan to the contrary, except as authorized by Section 5.4, the terms of outstanding Awards may not be amended to reduce the exercise price of outstanding Options or cancel outstanding Options in exchange for cash, or other awards of Options with an exercise price that is less than the exercise price of the original Options, without shareholder approval.
SECTION 15
MISCELLANEOUS
15.1 Effective Date. The Plan shall be effective as of the Effective Date, if approved by the Company’s shareholders on such date.
15.2 Compliance with Law.
(a) The Plan, the exercise of Options and the obligations of the Company to issue or transfer shares of Company Stock under Awards shall be subject to all applicable laws and to approvals by any governmental or regulatory agency as may be required. With respect to persons subject to Section 16 of the Exchange Act, it is the intent of the Company that the Plan and all transactions under the Plan comply with all applicable provisions of Rule 16b-3 or its successors under the Exchange Act. To the extent that any legal requirement of Section 16 of the Exchange Act cease to be required under Section 16 of the Exchange Act, that Plan provision shall cease to apply. The Board may revoke any Award if it is contrary to law or modify an Award to bring it into compliance with any valid and mandatory government regulation. The Board may also adopt rules regarding the withholding of taxes on payments to Outside Directors. The Board may, in its sole discretion, agree to limit its authority under this Section.
(b) The Plan is intended to comply with the requirements of Code Section 409A such that Awards hereunder will be exempt therefrom, or, if not so exempt, will comply with that section so as not to impose taxes on Outside Directors prior to the receipt of value hereunder. Each Award shall be construed and administered such that the Award either (i) qualifies for an exemption from the requirements of Code Section 409A or (ii) satisfies the requirements of Code Section 409A. If an Award is subject to Code Section 409A, (i) distributions shall only be made in a manner and upon an event permitted under Code Section 409A, (ii) payments to be made upon a termination of service shall only be made upon a “separation from service” under Code Section 409A, (iii) unless the Award specifies otherwise, each installment payment shall be treated as a separate payment for purposes of Code Section 409A, and (iv) in no event shall an Outside Director, directly or indirectly, designate the calendar year in which a distribution is made except in accordance with Code Section 409A.
(c) Notwithstanding anything in the Plan or any Award Agreement to the contrary, each Outside Director shall be solely responsible for the tax consequences of Awards under the Plan, and in no event shall the Company have any responsibility or liability if an Award does not meet any applicable requirements of Code Section 409A. Although the Company intends to administer the Plan to prevent adverse tax consequences under Code Section 409A, the Company does not represent or warrant that the Plan or any Award complies with any provision of federal, state, local or other tax law.
15.3 Enforceability. The Plan shall be binding upon and enforceable against the Company and its successors and assigns.
15.4 Funding of the Plan; Limitation on Rights. This 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 the payment of any Awards under this Plan. Nothing contained in the Plan and no action taken pursuant hereto shall create or be construed to create a fiduciary relationship between the Company and any Outside Director or any other person. No Outside Director or any other person shall under any circumstances acquire any property interest in any specific assets of the Company. To the extent that any person acquires a right to receive payment from the Company hereunder, such right shall be no greater than the right of any unsecured general creditor of the Company.
15.5 Rights of Outside Directors. Nothing in this Plan shall entitle any Outside Director or other person to any claim or right to receive an Award under this Plan. Neither this Plan nor any action taken hereunder shall be construed as giving any individual any rights to continued service as an Outside Director.
15.6 No Fractional Shares. No fractional shares of Company Stock shall be issued or delivered pursuant to the Plan or any Award. The Board shall determine whether cash, other awards or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.
15.7 Clawback Rights. All Awards under the Plan will be subject to any compensation, clawback and recoupment policies that may be applicable to the employees or directors of the Company, as in effect from time to time and as approved by the Board, whether or not approved before or after the Effective Date.
15.8 Governing Law. The validity, construction, interpretation and effect of the Plan and Award Agreements issued under the Plan shall be governed and construed by and determined in accordance with the laws of the State of Ohio, without giving effect to the conflict of law provisions thereof.
IN WITNESS WHEREOF, this Plan has been adopted as of the Effective Date.
CINCINNATI BELL INC.
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