As filed with the Securities and Exchange Commission on October 17, 1997
Registration No. 33-
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\
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
CABLE MICHIGAN, INC.
(Exact name of issuer as specified in its charter)
Pennsylvania 23-2566891
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
105 Carnagie Center
Princeton, NJ 08540-6215
609-734-3700
(Address of principal executive offices)
_______________
CABLE MICHIGAN, INC. 1997 EQUITY INCENTIVE PLAN
CABLE MICHIGAN, INC. 1997 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
CABLE MICHIGAN, INC. EXECUTIVE STOCK PURCHASE PLAN
(Full title of the Plans)
_______________
John D. Filipowicz, Esq.
Senior Vice President, Assistant General Counsel
and Assistant Secretary
105 Carnagie Center
Princeton, NJ 08540-6215
(Name and address of agent for service)
Telephone number, including area code, of agent for service: (609) 734-3700
_______________
Copy to:
William L. Taylor, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
(212) 450-4000
_______________
<TABLE>
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CALCULATION OF REGISTRATION FEE
Proposed
Maximum
Amount Offering Proposed Amount of
Title of to be Price Maximum Aggregate Registration
Securities to be Registered Registered(1) per Share(2) Offering Price Fee
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock (par value $1.00 per
share)............................... 430,000 $21.00 $9,030,000 $2,737
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</TABLE>
(1) Plus an indeterminate number of additional shares which may be offered and
issued to prevent dilution resulting from stock splits, stock dividends or
similar transactions.
(2) Estimated pursuant to Rule 457(C) under the Securities Act of 1933, as
amended, solely for the purpose of computing the registration fee, based
upon the closing price of the securities being registered hereby on NASDAQ
on October 13, 1997.
This Registration Statement Includes a Total of 43 Pages.
Exhibit Index on Page 9.
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PART I
The following documents listed under this Part I and the
documents incorporated by reference under Item 3 of Part II to this Form S-8,
taken together, constitute a prospectus that meets the requirements of Section
10(a) of the Securities Act of 1933, as amended (the "1933 Act"), and are
incorporated herein by reference.
ITEM 1. PLAN INFORMATION
This information required to be provided to participants
pursuant to this Item is set forth in the relevant Prospectus for the Cable
Michigan, Inc. 1997 Equity Incentive Plan, the Cable Michigan, Inc. 1997 Stock
Plan for Non-Employee Directors, and the Cable Michigan, Inc. Executive Stock
Purchase Plan (collectively, the "Plans"), respectively, attached to the
relevant Prospectus as Exhibit A thereto.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
The written statement required to be provided to participants
pursuant to this Item is set forth in the relevant Prospectus referenced in
Item 1 above.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Cable Michigan, Inc. (the "Registrant") hereby files this
Registration Statement with the Securities Exchange Commission (the
"Commission") on Form S-8 to register 430,000 shares of the Registrant's
Common Stock, par value $1.00 per share ("Common Stock"), for issuance
pursuant to the Plans and such indeterminate number of additional shares which
may be offered and issued to prevent dilution resulting from stock splits,
stock dividends or similar transactions pursuant to the Plans.
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission pursuant to
the Securities Exchange Act of 1934, as amended (the "1934 Act"),
(Commission 1934 Act File Number 0-22821), are incorporated by reference
herein:
(1) The Registrant's 1934 Act Registration Statement on Form 10,
filed with the Commission on July 9, 1997, as amended from time to time (the
"Form 10").
(2) All other reports filed with the Commission by the
Registrant pursuant to Section 13(a), 13(c), 14 and 15(d) of the 1934 Act
subsequent to the date hereof and prior to the filing of a post-effective
amendment which indicates that all securities offered herein have been sold or
which deregisters all securities then remaining unsold.
(3) The description of the Registrant's Common Stock contained
in the Registrant's Form 10, including any amendment thereto or report filed
for the purpose of updating such description.
Any statement contained herein or made in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Registration Statement to
the extent that a statement contained herein or in any other subsequently
filed document which is also incorporated or deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable, see Item 3(3) above.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Raymond B. Ostroski, Esq., holds options to purchase shares of
Common Stock and/or holds, directly or indirectly, shares of Common Stock, the
aggregate value of which such holdings exceeds $50,000.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Reference is made to Sections 1741 and 1742 of the 1988
Business Corporation Law of the Commonwealth of Pennsylvania, which provide
for indemnification of directors and officers in certain circumstances. In
addition, Article IV of the By-laws of the Registrant provides that, except as
prohibited by law, any director officer of the Registrant is entitled to be
indemnified in any action or proceeding in which he or she may be involved by
virtue of holding such position. In addition, the Registrant maintains a
directors' and officers' liability insurance policy.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
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<S> <C>
Exhibit
Number Exhibit
- -------- -------
4.01 Form of Amended and Restated Certificate of Incorporation of the Registrant. (Incorporated
herein by reference to Exhibit 3.1 to the Form 10).*
4.02 Form of Amended and Restated Bylaws of the Registrant. (Incorporated herein by reference
to Exhibit 3.2 to the Form 10).*
5.01 Opinion of Raymond B. Ostroski, Esq.
23.01 Consent of Independent Public Accountants--Coopers & Lybrand L.L.P.
23.02 Consent of Raymond B. Ostroski, Esq. (included in his opinion filed as Exhibit 5.01).
24.01 Powers of Attorney (included on the signature page of this registration statement).
99.01 Form of the Cable Michigan, Inc. 1997 Equity Incentive Plan.
99.02 Form of the Cable Michigan, Inc. 1997 Stock Plan for Non-Employee Directors.
99.03 Form of the Cable Michigan, Inc. Executive Stock Purchase Plan.
</TABLE>
- ---------------
* Incorporated by reference
ITEM 9. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers
or sales are being made, a post-effective amendment to
this Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the 1933 Act;
(ii) To reflect in the prospectus any
facts or events arising after the effective date
of this Registration Statement (or the most
recent post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth
in this Registration Statement. Notwithstanding
the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value
of securities offered would not exceed that which
was registered) and any deviation from the low or
high and of the estimated maximum offering range
may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price
represent no more than 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in this
Registration Statement; and
(iii) To include any material information
with respect to the plan of distribution not
previously disclosed in this Registration
Statement or any material change to such
information in this Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the registration statement is on Form S-3, Form S-8
or Form F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by
the Registrant pursuant to Section 13 or Section 15(d) of the
1934 Act that are incorporated by reference into this
Registration Statement;
(2) That for the purpose of determining any
liability under the 1933 Act, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and
the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the 1933 Act, each
filing of the Registrant's Annual Report pursuant to Section 13(a)
or Section 15(d) of the 1934 Act (and where applicable, each
filing of the Plan's annual report pursuant to Section 15(d) of
the 1934 Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under
the 1933 Act may be permitted to directors, officers or controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of
the Commission such indemnification is against public policy as
expressed in the 1933 Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of
the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
EXPERTS
The financial statements incorporated in this Form S-8 by
reference to the Form 10 as of December 31, 1996 and 1995 and for the years
ended December 31, 1996, 1995 and 1994 have been so incorporated in reliance
on the report of Coopers & Lybrand L.L.P., independent accountants, given on
the authority of said firm as experts in auditing and accounting.
LEGAL MATTERS
The validity of the Common Stock offered hereunder has been
passed upon by Raymond B. Ostroski, Esq., Princeton, New Jersey.
SIGNATURES
THE REGISTRANT. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES
ACT OF 1933, THE REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO
BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-8 AND HAS
DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF PRINCETON, STATE OF NEW
JERSEY, ON THIS 17th DAY OF OCTOBER 1997.
CABLE MICHIGAN, INC.
By: /s/ John Filipowicz
---------------------------
John Filipowicz
Vice President, Assistant
General Counsel
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, THAT EACH PERSON WHOSE
SIGNATURE APPEARS BELOW, CONSTITUTES AND APPOINTS DAVID C. MCCOURT, TIMOTHY J.
STOKLOSA AND MARK R. HAVERKATE AND EACH OF THEM, OUR TRUE AND LAWFUL
ATTORNEYS-IN-FACT AND AGENTS, WITH FULL POWER OF SUBSTITUTION AND
RESUBSTITUTION, TO DO ANY AND ALL ACTS AND THINGS AND EXECUTE, IN THE NAME OF
THE UNDERSIGNED, ANY AND ALL INSTRUMENTS WHICH SAID ATTORNEYS-IN-FACT AND
AGENTS MAY DEEM NECESSARY OR ADVISABLE IN ORDER TO ENABLE CABLE MICHIGAN, INC.
TO COMPLY WITH THE SECURITIES ACT OF 1933 AND ANY REQUIREMENTS OF THE
SECURITIES AND EXCHANGE COMMISSION IN RESPECT THEREOF, IN CONNECTION WITH THE
FILING WITH THE SECURITIES AND EXCHANGE COMMISSION OF THE REGISTRATION
STATEMENT ON FORM S-8 UNDER THE SECURITIES ACT OF 1933, INCLUDING SPECIFICALLY
BUT WITHOUT LIMITATION, POWER AND AUTHORITY TO SIGN THE NAME OF THE
UNDERSIGNED TO SUCH REGISTRATION STATEMENT, AND ANY AMENDMENTS TO SUCH
REGISTRATION STATEMENT (INCLUDING POST-EFFECTIVE AMENDMENTS), AND TO FILE THE
SAME WITH ALL EXHIBITS THERETO AND OTHER DOCUMENTS IN CONNECTION THEREWITH,
WITH THE SECURITIES AND EXCHANGE COMMISSION, TO SIGN ANY AND ALL APPLICATIONS,
REGISTRATION STATEMENTS, NOTICES OR OTHER DOCUMENTS NECESSARY OR ADVISABLE TO
COMPLY WITH APPLICABLE STATE SECURITIES LAWS, AND TO FILE THE SAME, TOGETHER
WITH OTHER DOCUMENTS IN CONNECTION THEREWITH WITH THE APPROPRIATE STATE
SECURITIES AUTHORITIES, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND AGENTS, AND
EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND TO PERFORM EACH AND EVERY ACT
AND THING REQUISITE OR NECESSARY TO BE DONE IN AND ABOUT THE PREMISES, AS
FULLY AND TO ALL INTENTS AND PURPOSES AS THE UNDERSIGNED MIGHT OR COULD DO IN
PERSON, HEREBY RATIFYING AND CONFIRMING ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, AND ANY OF THEM, OR THEIR SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO BE
DONE BY VIRTUE HEREOF.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATE INDICATED.
Signature Title Date
- --------- ----- ----
/s/ David C. McCourt
- ------------------------ Chief Executive Officer (Principal October 17, 1997
David C. McCourt Executive Officer); Chairman of
the Board
/s/ Timothy J. Stoklosa
- ------------------------ Executive Vice President and Chief October 17, 1997
Timothy J. Stoklosa Financial Officer, Director
(Principal Financial Officer and
Principal Accounting Officer)
- ------------------------ President and Chief Operating October 17, 1997
Mark Haverkate Officer, Director
/s/ Bruce C. Godfrey
- ------------------------ Director October 17, 1997
Bruce C. Godfrey
/s/ Raymond B. Ostroski
- ----------------------- Director October 17, 1997
Raymond B. Ostroski
/s/ David C. Mitchell
- ----------------------- Director October 8, 1997
David C. Mitchell
/s/ Daniel Knowles
- ----------------------- Director October 17, 1997
Daniel Knowles
/s/ Frank Henry
- ----------------------- Director October 17, 1997
Frank Henry
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Exhibit Page
- ------- ------------------------------------------------------- ------------
4.01 Form of Certificate of Incorporation of the Registrant. *
(Incorporated herein by reference to Exhibit 3.1 to the
Registrant's 1934 Act Registration Statement on Form 10
1934 Act File No. 0-22821 (the "Form 10")).*
4.02 Form of Amended and Restated Bylaws of the Registrant. *
(Incorporated herein by reference to Exhibit 3.2 to the
Form 10).*
5.01 Opinion of Raymond B. Ostroski, Esq.
23.01 Consent of Independent Public Accountants -- Coopers &
Lybrand L.L.P.
23.02 Consent of Raymond B. Ostroski, Esq. (included in his
opinion filed as Exhibit 5.01).
24.01 Powers of Attorney (included on the signature page of
this registration statement).
99.01 Form of the Cable Michigan, Inc. 1997 Equity Incentive
Plan.
99.02 Form of the Cable Michigan, Inc. 1997 Stock Plan for Non-
Employee Directors.
99.03 Form of the Cable Michigan, Inc. Executive Stock Purchase
Plan.
- ---------------
* Incorporated by reference.
Exhibit 5.01
C-TEC CORPORATION
105 Carnegie Center
Princeton, NJ 08540
- - - - - - - - - -
(609) 734-3803
Facsimile (609) 734-3830
October 14, 1997
C-TEC Corporation
105 Carnegie Center, 3rd Floor
Princeton, New Jersey 08540
Gentlemen:
I am the Executive Vice President and General Counsel of C-TEC
Corporation, a Pennsylvania corporation (the "Company"), and as such, I have
acted as counsel for the Company in connection with the proposed issuance by
the Company of up to 5,350,000 shares of Common Stock, par value of $1.00 per
share (the "Shares"), pursuant to the Company's 1997 Equity Incentive Plan,
1997 Stock Plan for Non-Associate Directors and Executive Stock Purchase Plan
(the "Plans") and the registration of the Shares pursuant to the Registration
Statement on Form S-8 (together with all exhibits thereto, the "Registration
Statement"), filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended and the rules and
regulations promulgated thereunder (the "Act").
This opinion is delivered in accordance with the requirements
of Item 601(b) of Regulation S-K under the Act.
I have examined originals or copies, certified or otherwise
identified to my satisfaction, of such documents, corporate certificates of
public officials, certificates of officers or representatives of the Company
and others, as I have deemed necessary or appropriate for the purpose of
rendering this opinion.
I am a member of the Bar of the Commonwealth of Pennsylvania
and the opinion expressed herein is limited to the law of the Commonwealth of
Pennsylvania, the General Corporation Law of the State of Delaware and Federal
law of the United States of America.
Based upon and subject to the foregoing, I am of the opinion
that the Shares have been duly and validly authorized for issuance and, when
and to the extent issued pursuant to the Plans and upon receipt by the Company
of adequate consideration therefor, will be validly issued, fully paid and
nonassessable.
I consent to the filing of this opinion with the Commission as
Exhibit 5.01 to the Registration Statement. In giving such consent, I do not
thereby admit that I come within the category of persons whose consent is
required by the Act.
Very truly yours,
/s/ Raymond B. Ostroski
----------------------------
Raymond B. Ostroski, Esq.
Exhibit 23.01
We consent to the incorporation by reference in this
registration statement of Cable Michigan, Inc. on Form S-8 of our report dated
June 30, 1997, on our audits of the consolidated financial statements of Cable
Michigan, Inc. as of December 31, 1996 and 1995, and for the years ended
December 31, 1996, 1995, and 1994, which report is included in Cable Michigan,
Inc.'s Registration Statement on Form 10. We also consent to the reference to
our Firm under the caption "Experts".
Coopers & Lybrand LLP
October 14, 1997
EXHIBIT 99.01
CABLE MICHIGAN, INC.
1997 EQUITY INCENTIVE PLAN
1. Purpose
The purpose of the Plan is to provide a means through which the
Company may attract able persons to enter and remain in the employ of the
Company and its Subsidiaries and to provide a means whereby they can acquire
and maintain Common Stock ownership, or be paid incentive compensation
measured by reference to the value of Common Stock, thereby strengthening
their commitment to the welfare of the Company and promoting an identity of
interest between stockholders of the Company and these employees, directors
and consultants.
So that the appropriate incentive can be provided, the Plan
provides for granting Incentive Stock Options, Nonqualified Stock Options,
Outperformance Options, Stock Appreciation Rights, Restricted Stock Awards,
Phantom Stock Unit Awards, Performance Stock Unit Awards and other
Stock-based awards, or any combination of the foregoing.
2. Definitions
The following definitions shall be applicable throughout the
Plan.
(a) "Award" means, individually or collectively, any Incentive
Stock Option, Nonqualified Stock Option, Outperformance Option, Stock
Appreciation Right, Restricted Stock Award, Phantom Stock Unit Award,
Performance Share Unit Award or any other Stock-based award under the Plan.
(b) "Award Agreement" means the agreement between the Company and
a Participant who has been granted an Award which defines the rights and
obligations of the parties with respect to such Award.
(c) "Award Period" means a period of time within which
performance is measured for the purpose of determining whether an Award of
Performance Share Units has been earned.
(d) "Board" means the Board of Directors of the Company.
(e) "Cause" means the Company or a Subsidiary (as the case may
be) having cause to terminate a Participant's employment or service in
accordance with the provisions of any existing employment, consulting or any
other agreement between the Participant and the Company or a Subsidiary (as
the case may be) or, in the absence of such an employment, consulting or other
agreement, upon (i) the determination by the Company or a Subsidiary (as the
case may be) that the Participant has ceased to perform his duties to the
Company or a Subsidiary (as the case may be) (other than as a result of his
incapacity due to physical or mental illness or injury), which failure amounts
to intentional and extended neglect of his duties, (ii) the Committee's
determination that the Participant has engaged in conduct materially injurious
to the Company, or (iii) the Participant having pled no contest to a charge of
a felony or having been convicted of a felony.
(f) A "Change in Control" shall be deemed to occur, unless the
Board otherwise directs by prior resolution, in the event that:
(i) Except as provided in subparagraph (v) of this
definition, any person, entity or group (within the meaning of Section
13(d)(3) of the Exchange Act, other than Peter Kiewit & Sons, Inc.
and its affiliates, becomes directly or indirectly, in a single
transaction or in a related series of transactions by way of merger,
consolidation or other business combination or otherwise, the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act)
of the capital stock of the Company entitled to more than 40% of the
aggregate votes represented by the capital stock of all classes of
common stock of the Company entitled to vote generally in the election
of directors ("Outstanding Voting Securities"); provided, however,
that the following acquisitions will not constitute a Change of
Control: (A) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any Subsidiary or (B)
any acquisition by any corporation pursuant to a reorganization,
merger or consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (A) and (B) of
clause (iii) of this definition are satisfied; or
(ii) Individuals who, as of the effective date of the
Plan, constitute the Board of Directors of the Company (the "Incumbent
Board") cease for any reason to constitute at least a majority of the
Company's Board of Directors; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders was approved by
a vote of at least a majority of the directors then comprising the
Incumbent Board will be considered as though such individual were a
member of the Incumbent Board; or
(iii) The occurrence of a reorganization, merger or
consolidation, in each case, unless, following such reorganization,
merger or consolidation, (A) more than 50% of, respectively, the then
outstanding shares of common stock of the corporation resulting from
such reorganization, merger or consolidation and the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Voting Securities immediately prior
to such reorganization, merger or consolidation in substantially the
same proportions as their ownership, immediately prior to such
reorganization, merger or consolidation, of the Outstanding Voting
Securities, and (B) at least a majority of the members of the board of
directors of the corporation resulting from such reorganization,
merger or consolidation were members of the Incumbent Board at the
time of the execution of the initial agreement providing for such
reorganization, merger or consolidation; or
(iv) Approval by the shareholders of the Company of (A) a
complete liquidation or dissolution of the Company, as applicable, or
(B) the sale or other disposition of all or substantially all of the
assets of the Company, other than to a corporation, with respect to
which following such sale or other disposition, (1) more than 50% of,
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively of the
outstanding Voting Securities immediately prior to such sale or other
disposition, in substantially the same proportion as their ownership
immediately prior to such sale or other disposition, of the
Outstanding Voting Securities and (2) at least a majority of the
members of the board of directors of such corporation were members of
the Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such sale or other
disposition of assets of the Company; provided, however, that no
transaction resulting in the disposition of one or more Subsidiaries
or other business units of the Company will be treated as
substantially all of the assets of the Company unless the assets so
disposed of comprise more than 90% of all corporate assets.
(v) If Peter Kiewit & Sons, Inc. and its affiliates
reduce their direct or indirect ownership interest of the Outstanding
Voting Securities of the Company (the "Kiewit Interest"), below the
percentage of ownership of such securities on the Effective Date, then
there shall be substituted, for the reference to "50%" appearing in
the text of subparagraph (i) of this definition, a percentage equal to
50% minus the number of whole percentage points by which the Kiewit
Interest was reduced below 50%, but the substituted percentage shall
in no event be less than 40%.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
Reference in the Plan to any section of the Code shall be deemed to include
any amendments or successor provisions to such section and any regulations
under such section.
(h) "Committee" means the Compensation Committee appointed by
the Board to administer the Plan.
(i) "Common Stock" means the common stock, par value $1.00 per
share, of the Company.
(j) "Company" means Cable Michigan, Inc., a Pennsylvania
corporation.
(k) "Date of Grant" means the date on which the granting of an
Award authorized or such other date as may be specified in such authorization.
(l) "Disability" means that the Participant has been determined
to meet the requirements for payment of long-term disability benefits be
reason of total disability in accordance with the provisions of the Company's
Long-Term Disability Plan.
(m) "Eligible Person" means any (i) person regularly employed by
the Company or a Parent or Subsidiary; provided, however, that no such
employee covered by a collective bargaining agreement shall be an Eligible
Person unless and to the extent that such eligibility is set forth in such
collective bargaining agreement or in an agreement or instrument relating
thereto; (ii) director of the Company; (iii) consultant to the Company or a
Subsidiary; or (iv) employee of RCN Corporation ("RCN") or C-TEC Corporation
("C-TEC") or any successor thereto who is or may be granted options to
purchase shares of Common Stock in connection with a distribution by C-TEC to
its stockholders of shares of Common Stock.
(n) "Exchange Act" means the Security Exchange Act of 1934.
(o) "Fair Market Value" on a given date means (i) if the Stock
is listed on a national securities exchange, the average between the highest
and lowest sale prices reported as having occurred on the primary exchange
with which the Stock is listed and traded on the date prior to such date, or,
if there is no such sale on that date, then on the last preceding date on
which such a sale was reported; (ii) if the Stock is not listed on any
national securities exchange but is quoted in the National Market System of
the National Association of Securities Dealers Automated Quotation System on a
last sale basis, the average between the highest and lowest sale reported on
the date prior to such date, or, if there is no such sale on that date, then
on the last preceding date on which a sale was reported; or (iii) if the Stock
is not listed on a national securities exchange nor quoted in the National
Market System of the National Association of Securities Dealers Automated
Quotation System on a last sale basis, the amount determined by the Committee
to be the fair market value based upon a good faith attempt to value the Stock
accurately.
(p) "Holder" means a Participant who has been granted an Award.
(q) "Incentive Stock Option" means an Option granted by the
Committee to a Participant under the Plan which is designated by the Committee
as an "incentive stock option" within the meaning of Section 422 of the Code.
(r) "Non-Employee Director" means a "non-employee director"
within the meaning of Rule 16b-3 of the Exchange Act or any successor rule or
regulation.
(s) "Nonqualified Stock Option" means an Option granted under
the Plan which is not designated as an Incentive Stock Option.
(t) "Normal Termination" means termination of employment or
service with the Company or a Subsidiary, C-TEC or RCN, as the case may be.
(i) Upon retirement pursuant to the retirement plan of the
Company or a subsidiary (as the case may be), as may be applicable at
the time to the Participant in question;
(ii) On account of Disability; or
(iii) By the Company without Cause.
(u) "Option" means an Incentive Stock Option or a Nonqualified
Stock Option.
(v) "Option Period" means the Period of time set by the
Committee after which time an Option, OSO or SAR will expire.
(w) "Option Price" means the exercise price set for an Option
described in Section 7(a).
(x) "Outperformance Option" or "OSO" means an Award granted
under Section 8.
(y) "Outside Director" means a member of the Board who is not
also an employee of the Company.
(z) "Participant" means an Eligible Person who has been selected
by the Committee to participate in the Plan and to receive an Award.
(aa) "Performance Goals" means the performance objective of the
Company during an Award Period, Restricted Period or other period, with
respect to Performance Share Units, Restricted Stock, Phantom Stock Units or
other Awards, respectively, established for the purpose of determining
whether, and to what extent, such Awards will be earned for such period.
Performance goals intended to comply with Section 162(m) of the Code shall be
based on the business criteria available to set performance goals under the
Company's 1997 Bonus Plan.
(bb) "Performance Share Unit" means a hypothetical investment
equivalent equal to one share of Stock granted in connection with an Award
made under Section 10.
(cc) "Phantom Stock Unit" means a hypothetical investment
equivalent equal to one share of Stock granted in connection with an Award
made under Section 11.
(dd) "Plan" means the Company's 1997 Equity Incentive Plan.
(ee) "Qualified Committee" means a committee composed of at least
two Qualified Directors.
(ff) "Qualified Director" means a person who is (i) a
Non-Employee Director and (ii) an "outside director" within the meaning of
Section 162(m) of the Code.
(gg) "Restricted Period" means, with respect to any share of
Restricted Stock or any Phantom Stock Unit, the period of time determined by
the Committee during which such Award is subject to the restrictions set forth
in Section 11.
(hh) "Restricted Stock" means shares of Stock issued or
transferred to a Participant subject to forfeiture and the other restrictions
set forth in Section 11.
(ii) "Restricted Stock Award" means an Award of Restricted Stock
granted under Section 11.
(jj) "Securities Act" means the Securities Act of 1933, as
amended.
(kk) "Stock" means the Common Stock or such other authorized
shares of stock of the Company as from time to time may be authorized for use
under the Plan.
(ll) "Stock Appreciation Right" or "SAR" means an Award granted
under Section 9.
(mm) "Subsidiary" means a corporation which is a "subsidiary
corporation" of the Company or the Parent as defined in Section 424 of the
Code.
(nn) "Adjusted Price" shall have the meaning ascribed thereto in
subsection 8(c).
(oo) "Annualized Percentage Cable Michigan Stock Price Change"
shall have the meaning ascribed thereto in subsection 8(g).
(pp) "Annualized Percentage S&P Change" shall have the meaning
ascribed thereto in subsection 8(g).
(qq) "Annualized Percentage S&P Performance" shall have the
meaning ascribed thereto in subsection 8(c).
(rr) "Cable Michigan Period" shall have the meaning ascribed
thereto in subsection 8(g).
(ss) "Dividend Equivalents" shall have the meaning ascribed
thereto in subsection 11(a)(iv).
(tt) "Initial Price" shall have the meaning ascribed thereto in
subsection 8(b).
(uu) "Multiplier" shall have the meaning ascribed thereto in
subsection 8(f).
(vv) "Outperformance Percentage" shall have the meaning ascribed
thereto in subsection 8(h).
(ww) "S&P Period" shall have the meaning ascribed thereto in
subsection 8(c).
(xx) "Substituted Index" shall have the meaning ascribed thereto
in subsection 8(j).
(yy) "Parent" means a corporation which is a "parent corporation"
of the Company as defined in Section 424 of the Code.
3. Effective Date, Duration and Shareholder Approval
The Plan is effective as of October 1, 1997, the date of
adoption of the Plan by the Board. The effectiveness of the Plan and the
validity of any and all Awards granted pursuant to the Plan is contingent upon
approval of the Plan by the stockholders of the Company in a manner which
complies with (i) Section 422(b)(1) and Section 162(m) of the Code and (ii)
the requirements of the primary national securities exchange with which the
Common Stock is listed, if so listed, and/or the National Market System of the
National Association of Securities Dealers Automated Quotation System, if the
Common Stock is quoted thereon. Unless and until the stockholders approve the
Plan in compliance with the applicable requirements, no Award granted under
the Plan shall be effective.
The expiration date of the Plan, after which no Awards may be
granted hereunder, shall be September 30, 2007; provided, however, that the
administration of the Plan shall continue in effect until all matters relating
to the payment of Awards previously granted have been settled.
4. Administration
The Committee shall administer the Plan. The majority of the
members of the Committee shall constitute a quorum. The acts of majority of
the members present at any meeting at which a quorum is present or acts
approved in writing by a majority of the Committee shall be deemed the acts of
the Committee.
Subject to the provisions of the Plan, the Committee shall have
exclusive power to:
(a) Select the Eligible Persons to participate in the Plan;
(b) Determine the nature and extent of the Awards to be made to
each Participant;
(c) Determine the time or times when Awards will be made to
Eligible Persons;
(d) Determine the duration of each Award Period and Restricted
Period;
(e) Determine the conditions to which the payment of Awards may
be subject;
(f) Establish the Performance Goals, if any, for each Award;
(g) Prescribe the form of Award Agreement or other form or forms
evidencing Awards;
(h) Cause records to be established in which there shall be
entered, from time to time as Awards are made to Eligible Persons, the date of
each Award, the number of Incentive Stock Options, Nonqualified Stock Options,
OSOs, SARs, Phantom Stock Units, Performance Share Units, shares of Restricted
Stock and any other Awards granted by the Committee to each Eligible Person,
the expiration date and the duration of any applicable Award Period or
Restricted Period and the number of shares of Stock underlying each Award; and
(i) At any time prior to or in connection with any termination of
employment or service of a Holder with the Company or its subsidiaries,
provide for a longer post-termination exercise or survival period with respect
to any Award (not to exceed three years) or modify any such forfeiture
provisions with respect to any Award; except to the extent that the ability to
so modify an Award shall cause an Award intended to qualify as
"performance-based" under Section 162(m) to not so qualify.
The Committee shall have the authority, subject to the
provisions of the Plan, to establish, adopt, or revise such rules and
regulations and to make all such determinations relating to the Plan as it may
deem necessary or advisable for the administration of the Plan. The
Committee's interpretation of the Plan or any documents evidencing Awards
granted pursuant thereto and all decisions and determinations by the Committee
with respect to the Plan shall be final, binding, and conclusive on all
parties unless otherwise determined by the Board.
5. Grant of Awards; Shares Subject to the Plan
The Committee may, from time to time, grant Awards of Options,
OSOs, Stock Appreciation Rights, Restricted Stock, Phantom Stock Units,
Performance Share Units and/or any other Award authorized under the Plan to
one or more Eligible Persons; provided, however, that:
(a) Subject to Section 15, the aggregate number of shares of
Stock made subject to all Awards may not exceed 300,000.
(b) Such shares shall be deemed to have been used in payment of
Awards whether they are actually delivered or the Fair Market Value equivalent
of such shares is paid in cash. In the event any Option, OSO, SAR not attached
to an Option, Restricted Stock Award, Phantom Stock Unit, Performance Share
Unit shall be surrendered, terminate, expire, or be forfeited or any other
Award, the number of shares of Stock no longer subject thereto shall thereupon
be released and shall thereafter be available for new Awards under the Plan;
(c) Stock delivered by the Company in settlement of Awards under
the Plan may be authorized and unissued Stock or Stock held in the treasury of
the Company or may be purchased on the open market or by private purchase;
(d) No Participant may receive Awards under the Plan with respect
to more than 50,000 shares of Stock in any one year; and
(e) The Committee may, in its sole discretion, require a
Participant to pay consideration for an Award in an amount and in a manner as
the Committee deems appropriate.
6. Eligibility
Participation shall be limited to Eligible Persons who have
received written notification from the committee, or from a person designated
by the Committee, that they have been selected to participate in the Plan.
7. Stock Options
The Committee is authorized to grant one or more Incentive
Stock Options or Nonqualified Stock Options to any Eligible Person; provided,
however, that no Incentive Stock Options shall be granted to any Eligible
Person who is not an employee of the Company. Each Option so granted shall be
subject to the following conditions, or to such other conditions as may be
reflected in the applicable Award Agreement.
(a) Option price. The Option Price per share of Stock for each
Option shall be set by the Committee at the time of grant but, with respect to
Incentive Stock Options, shall not be less than the Fair Market Value of a
share of Stock at the Date of Grant.
(b) Manner of exercise and form of payment. Options which have
become exercisable may be exercised by delivery of written notice of exercise
to the Committee accompanied by payment of the Option Price. The Option Price
shall be payable in cash or, in the discretion of the Committee, either (i) in
shares of Stock valued at the Fair Market Value at the time the Option is
exercised, (ii) in other property having a fair market value on the date of
exercise equal to the Option Price, or (iii) by delivering to the Committee a
copy of irrevocable instructions to a stockbroker to deliver promptly to the
Company an amount of sale or loan proceeds sufficient to pay the Option Price.
(i) Option Period and Vesting. Options shall vest and become
exercisable in such manner and on such date or dates as shall be
determined by the Committee. The Committee shall also establish an
Option Period which shall not exceed ten years. Notwithstanding any
dates set by the Committee for vesting and exercisability, the
Committee may in its sole discretion accelerate the vesting and
exercisability of any Option. If an Option is exercisable in
installments, exercise of one installment shall not effect the
Holder's ability to exercise unexercised installments in accordance
with the terms of the Plan and the applicable Award Agreement. The
Option shall expire upon a Holder's termination of employment with the
Company or a Subsidiary at such times as are set forth in Section 13.
(c) Other Terms and Conditions. Each Option granted under the
Plan shall be evidenced by an Award Agreement, which shall contain such
provisions as may be determined by the Committee and, except as may be
specifically stated otherwise in such Award Agreement, be subject to the
following terms and conditions:
(i) Each Option or portion thereof that is exercisable
shall be exercisable for the full amount or for any part thereof.
(ii) Each share of Stock purchased through the exercise
of an Option shall be paid for in full at the time of the exercise.
Each Option shall cease to be exercisable, as to any share of Stock,
when the Holder purchases the share or exercises a related SAR or when
the Option expires.
(iii) Subject to Section 14(k), Options shall not be
transferable by the Holder except by will or the laws of descent and
distribution and shall be exercisable during the Holder's lifetime
only by the Holder.
(iv) Each Option shall vest and become exercisable by the
Holder in accordance with the vesting schedule established by the
Committee and set forth in the Award Agreement.
(v) Each Award Agreement may contain a provision that,
upon demand by the Committee for such a representation, the Holder
shall deliver to the Committee at the time of the exercise of an
Option a written representation that the shares to be acquired upon
such exercise are to be acquired for investment and not for resale or
with a view to the distribution thereof. Upon such demand, delivery
of such representation prior to the delivery of any shares issued upon
exercise of an Option shall be a condition precedent to the right of
the Holder or such other person to purchase any shares. In the event
certificates for Stock are delivered under the Plan with respect to
which such investment representation has been obtained, the Committee
may cause a legend or legends to be placed on such certificates to
make appropriate reference to such representation and to restrict
transfer in the absence of compliance with applicable federal or state
securities laws.
(vi) Each Incentive Stock Option Award Agreement shall
contain a provision requiring the Holder to notify the Company in
writing immediately after the Holder makes a disqualifying disposition
of any Stock acquired pursuant to the exercise of such Incentive Stock
Option. A disqualifying disposition is any disposition (including any
sale) of such Stock before the later of (a) two years after the Date
of Grant of the Incentive Stock Option or (b) one year after the date
the Holder acquired the Stock by exercising the Incentive Stock
Option.
(d) Incentive Stock Option Grants to 10% Stockholders.
Notwithstanding anything to the contrary in this Section 7, if an Incentive
Stock Option is granted to a Holder who owns stock representing more than ten
percent of the voting power of all classes of stock of the Company or of a
Subsidiary, the Option Period shall not exceed five years from the Date of
Grant of such Option and the Option Price shall be at least 110 percent of the
Fair Market Value (on the Date of Grant) of the Stock subject to the Option.
(e) $100,000 Per Year Limitation for Incentive Stock Options.
To the extent the aggregate Fair Market Value (determined as of the Date of
Grant) of Stock for which Incentive Stock Options are exercisable for the
first time by any Participant during any calendar year (under all plans of the
Company, its Parent and its Subsidiaries) exceeds $100,000, the portion of the
Option under which such excess arises shall be treated as Nonqualified Stock
Option.
(f) Voluntary Surrender. The Committee may permit the voluntary
surrender of all or any portion of any Nonqualified Stock Option issued
pursuant to this Section 7 and its corresponding SAR, if any, granted under the
Plan to be conditioned upon the granting to the Holder of a new Option for the
same or a different number of shares as the Option surrendered or require such
voluntary surrender as a condition precedent to a grant of a new Option to
such Participant. Such new Option shall be exercisable at an Option Price,
during an Option Period, and in accordance with any other terms or conditions
specified by the Committee at the time the new Option is granted, all
determined in accordance with the provisions of the Plan without regard to the
Option Price, Option Period, or any other terms and conditions of the
Nonqualified Stock Option surrendered.
8. Outperformance Options
The Committee may from time to time at its discretion, subject
to the provisions of the Plan, grant one or more Outperformance Options to any
Eligible Person. At the time of each grant, the Committee shall determine the
number of shares subject to such Outperformance Options and, subject to the
provisions of the Plan, any other terms or conditions affecting the
Outperformance Options. Each such Outperformance Option shall be evidenced by
an Award Agreement containing terms and conditions established by the
Committee not inconsistent with the provisions of the Plan. Such agreements
need not be identical with respect to Participants.
Subject to subsections 8(i) and 8(j) below, the terms of the
Outperformance Options granted pursuant to this Plan shall include the
following:
(a) Each Outperformance Option shall relate to a number of shares
of Stock.
(b) The initial per-share exercise price of an Outperformance
Option (the "Initial Share") shall be equal to the Fair Market Value per share
of Stock on the trading day immediately preceding the Date of Grant.
(c) The Initial Price shall be adjusted upward or downward as of
the date of exercise of such Outperformance Option (the "Adjusted Price"), by
a percentage equal to the annualized percentage increase or decrease in the
Standard & Poor's 500 Index (the "Annualized Percentage S&P Performance") over
the period (the "S&P Period") beginning on the date of grant and ending on the
trading day immediately preceding the date of exercise; provided, however,
that the Adjusted Price may never be less than the Initial Price unless the
closing price of stock on the trading day immediately preceding the date of
exercise is equal to or greater than the Initial Price. For purposes of
determining the Annualized Percentage S&P Performance with respect to any S&P
Period, the Standard & Poor's 500 Index as of the last day of the S&P Period
shall be deemed to equal the average closing value of such index over the
ten-consecutive-trading day period ending on the last day of such S&P Period.
(d) The Option Period of each Outperformance Option shall be ten
(10) years from the date of grant or such shorter period as determined by the
Committee.
(e) Each Outperformance Option shall become vested and
exercisable in accordance with the terms and conditions established by the
Committee and reflected in the written Award Agreement.
(f) Upon receipt by the Committee of a Holder's notice of intent
to exercise an Outperformance Option, the Committee shall deliver to the
Participant with respect to and in cancellation of the portion of the
Outperformance Option being exercised (i) a number of whole shares of Stock
with a fair market value equal to the product of (a) the closing price of a
share of Stock on the trading day immediately preceding the date of exercise,
less the Adjusted Price, multiplied by (B) the multiplication factor to be
applied to the Outperformance Option (the "Multiplier"), plus (ii) cash in
lieu of fractional shares, unless the Committee determines, in its discretion,
to elect any one or more of the following methods of payment with respect to
and in cancellation of the Outperformance Option: (1) the Committee may, upon
the receipt from the Participant of an amount with respect to the portion of
the Outperformance Option being exercised equal to the Adjusted Price
multiplied by the Multiplier, deliver to such Participant a number of shares
of Stock equal to the product of the number of shares relating to the
Outperformance Option being exercised and the Multiplier; or (2) the Committee
may provide to a Participant any other form of benefit or arrangement
(including, without limitation, shares of Common Stock, cash or a combination
thereof) which, in the Committee's judgment after considering all relevant
factors, provides substantially equivalent economic benefit to such
Participant.
(g) The Multiplier shall be determined on the date of exercise
based on the extent to which the annualized percentage change (expressed as a
whole percentage point followed by two decimal places) in the fair market
value per share of Stock (the "Annualized Percentage Cable Michigan Stock
Price Change") over the period (the "Cable Michigan Period") beginning on the
date of grant and ending on the trading day immediately preceding the date of
exercise exceeds the annualized percentage change (expressed as a whole
percentage point followed by two decimal places) in the Standard and Poor's
500 Index (the "Annualized Percentage S&P Change") over the corresponding S&P
Period (determined in a manner consistent with the determination of the
Annualized Percentage S&P Performance under paragraph (c) above.
(h) The Multiplier shall be based on a range of factors each
corresponding to a percentage (the "Outperformance Percentage") by which the
Annualized Percentage Cable Michigan Stock Price Change exceeds the Annualized
Percentage S&P Change. The range of factors and their relationship to the
Outperformance Percentage shall be established by the Committee, at the sole
discretion of the Committee (based on whatever information it deems
appropriate), at the time of grant of the OSO, which factors and
Outperformance Percentage may vary from Award to Award; provided, however,
that, subject to adjustment as provided in Section 15 below, the Multiplier
may not exceed eight (8).
(i) Notwithstanding the foregoing provisions of this Section 8,
the Committee may provide in the Award Agreement that the Multiplier shall be
reduced by a percentage or percentages, with respect to any portion of the OSO
exercised during one or more years following the Date of Grant. For purposes
of determining the Annualized Percentage Cable Michigan Stock Price Change
with respect to any Cable Michigan Period, the Fair Market Value of a share of
Company Stock as of the last day of any Cable Michigan Period shall be deemed
to equal the average of the closing prices of such share of stock over the ten-
consecutive-trading-day period ending on the last day of such Cable Michigan
Period.
(j) Notwithstanding the foregoing provisions of this Section 8,
the Committee may substitute, with respect to one or more tranches of grants,
any other nationally recognized broad-based index of stock prices established
and maintained by an independent third party (a "Substituted Index") for the
Standard & Poor's 500 Index. Any such substitution may only be made at the
time of the grant. If any such index is substituted for the Standard & Poor's
Index, all defined terms used in the calculation of amounts due in respect of
Outperformance Options which take their meaning by reference for the Standard
& Poor's 500 Index shall instead take their meaning by reference to the
Substituted Index.
9. Stock Appreciation Rights
Any Option granted under the Plan may include SARs, either at
the Date of Grant or, except in the case of an Incentive Stock Option, by
subsequent amendment. The Committee also may award SARs to Eligible Persons
independent of any Option. An SAR shall confer on the Holder thereof the
right to receive in shares of Stock, cash or a combination thereof the value
equal to the excess of the Fair Market Value of one share of Stock on the date
of exercise over the exercise price for the SAR, with respect to every share
of Stock for which the SAR is granted. An SAR shall be subject to such terms
and conditions not inconsistent with the Plan as the Committee shall impose,
including, but not limited to, the following:
(a) Vesting. SARS granted in connection with an Option shall
become exercisable, be transferable and shall expire according to the same
vesting schedule, transferability rules and expiration provisions as the
corresponding Option. An SAR granted independent of an Option shall become
exercisable, be transferable and shall have an Option Period in accordance
with a vesting schedule, transferability rules and expiration provisions as
established by the Committee and reflected in an Award Agreement.
(b) Automatic exercise. If on the last day of the Option Period,
the Fair Market Value of the Stock exceeds the Option Price (or in the case of
an SAR granted independent of an Option, the Fair Market Value of the Stock on
the Date of Grant), the Holder has not exercised the SAR or the corresponding
Option, and neither the SAR nor the corresponding Option has expired, such SAR
shall be deemed to have been exercised by the Holder on such last day and the
Company shall make the appropriate payment therefor.
(c) Payment. Upon the exercise of an SAR, the Company shall pay
to the Holder an amount equal to the number of shares subject to the SAR
multiplied by the excess, if any, of the Fair Market Value of one share of
Stock on the exercise date over the Option Price, in the case of an SAR
granted in connection with an Option, or the Fair Market Value of one share of
Stock on the Date of Grant, in the case of an SAR granted independent of an
Option. The Company shall pay such excess in cash, in shares of Stock valued
at Fair Market Value, or any combination thereof, as determined by the
Committee. Fractional shares shall be settled in cash.
(d) Method of exercise. A Holder may exercise an SAR after such
time as the SAR vests by filing an irrevocable written notice with the
Committee or its designee, specifying the number of SARs to be exercised, and
the date on which such SARs were awarded.
(e) Expiration. Each SAR shall cease to be exercisable, as to
any share of Stock, when the Holder exercises the SAR or exercises a related
Option, with respect to such shares of Stock. In the case of an SAR granted
independent of an Option, the Option Period shall be set by the Committee on
the Date of Grant and shall not exceed ten years.
10. Performance Shares
(a) Award grants. The Committee is authorized to establish
Performance Share programs to be effective over designated Award Periods
determined by the Committee. The Committee may grant Awards of Performance
Share Units to Eligible Persons in accordance with such Performance Share
programs. Before or within 90 days after the beginning of each Award Period,
the Committee will establish written Performance Goals based upon financial
objectives for the Company for such Award Period and a schedule relating the
accomplishment of the Performance Goals to the Awards to be earned by Holders.
The Committee shall determine the number of Performance Share Units to be
awarded, if any, to each Eligible Person who is selected to receive such an
Award. The Committee may add new Participants to a Performance Share program
after its commencement by making pro rata grants.
(b) Determination of Award. At the completion of a Performance
Share Award Period (provided the Holder is still in the employ or service of
the Company or a Subsidiary), or at other times as specified by the Committee,
the Committee shall calculate the number of shares of Stock earned with
respect to each Holder's Performance Share Unit Award by multiplying the
number of Performance Share Units granted to the Participant by a performance
factor representing the degree of attainment of the Performance Goals. To the
degree that the Performance Goals are not achieved at the end of the
Performance Share Award Period, the Award shall expire.
(c) Partial Awards. A Participant for less than a full Award
Period, by reason of commencement of employment after the beginning of an
Award Period, shall receive such portion of an Award, if any, for that Award
Period as the Committee shall determine.
(d) Payment of Performance Share Unit Awards. Performance Share
Unit Awards shall be payable in that number of shares of Stock determined in
accordance with Section 9(b); provided, however, that, at its discretion, the
Committee may make payment to any Participant in the form of cash upon the
specific request of such Participant. The amount of any payment made in cash
shall be based upon the Fair Market Value of the Stock on the day prior to
payment. Payments of Performance Share Unit Awards shall be made as soon as
practicable after the completion of an Award Period.
(e) Adjustment of Performance Goals. The Committee may, during
the Award Period, make such adjustments to Performance Goals as it may deem
appropriate, to compensate for, or reflect, (i) extraordinary or non-
recurring events experienced during an Award Period by the Company or by any
other corporation whose performance is relevant to the determination of
whether Performance Goals have been attained; (ii) any significant changes
that may have occurred during such Award Period in applicable accounting rules
or principles or changes in the Company's method of accounting or in that of
any other corporation whose performance is relevant to the determination of
whether an Award has been earned or (iii) any significant changes that may
have occurred during such Award Period in tax laws or other laws or
regulations that alter or affect the computation of the measures of
Performance Goals used for the calculation of Awards; provided, however, that,
with respect to such Awards intended to qualify as "performance-based
compensation" under Section 162(m) of the Code, such adjustment shall be made
only to the extent that the Committee determines that such adjustments may be
made without a loss of deductibility of the compensation includible with
respect to such Award under Section 162(m) of the Code.
11. Restricted Stock Awards and Phantom Stock Units
(a) Award of Restricted Stock and Phantom Stock Units.
(i) The Committee shall have the authority (1) to grant
Restricted Stock and Phantom Stock Unit Awards, (2) to issue or transfer
Restricted Stock to Eligible Persons, and (3) to establish terms,
conditions and restrictions applicable to such Restricted Stock and
Phantom Stock Units, including the Restricted Period, which may differ
with respect to each grantee, the time or times at which Restricted
Stock or Phantom Stock Units shall be granted or become vested and the
number of shares or units to be covered by each grant.
(ii) The Holder of a Restricted Stock Award shall execute and
deliver to the Company an Award Agreement with respect to the
Restricted Stock setting forth the restrictions applicable to such
Restricted Stock. If the Committee determines that the Restricted
Stock shall be held in escrow rather than delivered to the Holder
pending the release of the applicable restrictions, the Holder
additionally shall execute and deliver to the Company (i) an escrow
agreement satisfactory to the Committee, and (ii) the appropriate
blank stock powers with respect to the Restricted Stock covered by
such agreements. If a Holder shall fail to execute a Restricted Stock
Award Agreement and, if applicable, an escrow agreement and stock
powers, the Award shall be null and void. Subject to the restrictions
set forth in Section 10(b), the Holder shall generally have the rights
and privileges of a stockholder as to such Restricted Stock, including
the right to vote such Restricted Stock. At the discretion of the
Committee, cash dividends and stock dividends with respect to the
Restricted Stock may be either currently paid to the Holder or
withheld by the Company for the Holder's account, and interest may be
paid on the amount of cash dividends withheld at a rate and subject to
such terms as determined by the Committee. Cash dividends or stock
dividends so withheld by the Committee shall not be subject to
forfeiture.
(iii) Upon the Award of Restricted Stock, the Committee
shall cause a stock certificate registered in the name of the Holder
to be issued and, if it so determines, deposited together with the
stock powers with an escrow agent designated by the Committee. If an
escrow arrangement is used, the Committee shall cause the escrow agent
to issue to the Holder a receipt evidencing any stock certificate held
by it registered in the name of the Holder.
(iv) The terms and conditions of a grant of Phantom Stock
Units shall be reflected in a written Award Agreement. No shares of
Stock shall be issued at the time a Phantom Stock Unit Award is made,
and the Company will not be required to set aside a fund for the
payment of any such Award. Holders of Phantom Stock Units shall
receive an amount equal to the cash dividends paid by the Company upon
one share of Stock for each Phantom Stock Unit then credited to such
Holder's account ("Dividend Equivalents"). The Committee shall, in
its sole discretion, determine whether to credit to the account of, or
to currently pay to, each Holder of an Award of Phantom Stock Units
such Dividend Equivalents. Dividend Equivalents credited to a
Holder's account shall be subject to forfeiture on the same basis as
the related Phantom Stock Units, and may bear interest at a rate and
subject to such terms as are determined by the Committee.
(b) Restrictions
(i) Restricted Stock awarded to a Participant shall be
subject to the following restrictions until the expiration of the
Restricted Period, and to such other terms and conditions as may be
set forth in the applicable Award Agreement: (1) if an escrow
arrangement is used, the Holder shall not be entitled to delivery of
the stock certificate; (2) the shares shall be subject to the
restrictions on transferability set forth in the Award agreement; (3)
the shares shall be subject to forfeiture until the expiration of the
Restricted Period, upon the termination of employment or service with
the Company or a Subsidiary, to the extent provided in Section 13 and
the Award Agreement and, to the extent such shares are forfeited, the
stock certificates shall be returned to the Company, and all rights of
the Holder to such shares and as a shareholder shall terminate without
further obligation on the part of the Company.
(ii) Phantom Stock Units awarded to any Participant shall
be subject to (1) forfeiture until the expiration of the Restricted
Period, upon the termination of employment or service with the Company
or a Subsidiary, to the extent provided in Section 13 and the Award
Agreement, and to the extent such Awards are forfeited, all rights of
the Holder to such Awards shall terminate without further obligation
on the part of the Company and (2) such other terms and conditions as
may be set forth in the applicable Award Agreement.
(iii) The Committee shall have the authority to remove any
or all of the restrictions on the Restricted Stock and Phantom Stock
Units whenever it may determine that, by reason of changes in
applicable laws or other changes in circumstances arising after the
date of the Restricted Stock Award or Phantom Stock Award, such action
is appropriate.
(c) Restricted Period. The Restricted Period of Restricted
Stock or Phantom Stock Units shall commence on the Date of Grant and shall
expire from time to time as to that part of the Restricted Stock or Phantom
Stock Units indicated in a schedule established by the Committee and set forth
in a written Award Agreement.
(d) Delivery of Restricted Stock and Settlement of Phantom Stock
Units. Upon the expiration of the Restricted Period with respect to any
shares of Stock covered by a Restricted Stock Award, the restrictions set forth
in Section 11(b) and the Award Agreement shall be of no further force or
effect with respect to shares of Restricted Stock which have not then been
forfeited. If an escrow arrangement is used, upon such expiration, the Company
shall deliver to the Holder, or his beneficiary, without charge, the Stock
Certificate evidencing the shares of Restricted Stock which have not then been
forfeited and with respect to which the Restricted Period has expired (to the
nearest full share) and any cash dividends or stock dividends credited to the
Holder's account with respect to such Restricted Stock and the interest
thereon, if any.
Upon the expiration of the Restricted Period with respect to
any Phantom Stock Units covered by a Phantom Stock Unit Award, the Company
shall deliver to the Holder, or his beneficiary, without charge, one share of
Stock for each Phantom Stock Unit which has not then been forfeited and with
respect to which the Restricted Period has expired and cash equal to any
Dividend Equivalents credited with respect to each such Phantom Stock Unit and
the interest thereon, if any; provided, however, that, if so noted in the
applicable Award Agreement, the Committee may, in its sole discretion, elect
to pay cash or part cash and part Stock in lieu of delivering only Stock for
Vested Units. If cash payment is made in lieu of delivering Stock, the amount
of such payment shall be equal to the Fair Market Value of the Stock as of the
date on which the Restricted Period lapsed with respect to such Phantom Stock
Unit.
(e) Stock Restrictions. Each certificate representing
Restricted Stock awarded under the Plan shall bear the following legend until
the end of the Restricted Period with respect to such Stock:
"Transfer of this certificate and the shares represented hereby is
restricted pursuant to the terms of a Restricted Stock Agreement, dated
as of ___________________, between Cable Michigan, Inc. and ___________
________________________________. A copy of such Agreement is on file
at the offices of the Company at ___________________________________."
Stop transfer orders shall be entered with the Company's transfer agent and
registrar against the transfer of legended securities.
12. Other Awards
The Committee may issue unrestricted Stock or any other
Stock-based award, including performance-based Options, under the Plan to
Eligible Persons, alone or in tandem with other Awards, in such amounts and
subject to such terms and conditions as the Committee shall from time to time
in its sole discretion determine. Stock bonus awards under the Plan may be
granted as, or in payment of, a bonus, or to provide incentives or recognize
special achievements or contributions.
13. Expiration of Award upon Termination of Employment
Except as otherwise determined by the Committee and set forth
in an Award Agreement, the following provisions will apply to Awards upon a
Holder's termination of employment with the Company or a Subsidiary, C-TEC
or RCN, as the case may be.
(a) Options, OSOs and SARs
(i) If prior to the end of the Option Period (with
respect to any Option, OSO or SAR), the Holder shall undergo a Normal
Termination, all unvested Options, OSOs and SARs then held by such
holder shall expire on the date of Normal Termination and all vested
options, OSOs and SARs then held by such Holder shall expire on the
earlier of the last day of the respective Option Period or the Date
that is three months after the date of such Normal Termination. All
vesting with respect to Options, OSOs and SARs shall cease on the date
of Normal termination and all Options, OSOs and SARs which are vested
as of such date shall remain exercisable by the Holder until their
expiration as provided above.
(ii) If the Holder dies prior to the end of the Option
Period (with respect to any Option, OSO or SAR) and while still in the
employ or service of the Company or a Subsidiary, C-TEC or RCN, as the
case may be, or within three months of Normal Termination, all
unvested Options, OSOs and SARs then held by such Holder shall expire
on the date of death and all other Options, OSOs and SARs then held by
such Holder shall expire on the earlier of the last day of the
respective Option Period or the date that is one year after the date
of the death of the Holder. All vesting with respect to Options, OSOs
and SARs shall cease on the earlier of the date of Normal termination
or the date of death and all such Options, OSOs and SARs which are
vested as of such date shall remain exercisable by the person or
persons to whom the Holder's rights under the Options, OSOs and SARs
pass by will or the applicable laws of descent and distribution until
their expiration as provided above.
(b) Restricted Stock, Phantom Stock Units and Phantom Share Units
(i) Upon a Normal termination prior to the end of any
Restricted Period, all Restricted Stock and Phantom Stock Units shall
be forfeited with respect to the portion of such Awards for which
restrictions have not lapsed at the time of such termination. Upon a
Normal Termination prior to the end of any Award Period, all
Performance Share Units which have not theretofore become vested and
earned shall expire; provided, however, that the Committee may, in its
sole discretion, award a pro rata portion of any Performance Share
Unit Award representing the degree of attainment of the Performance
Goals related thereto over the period prior to termination.
(ii) Upon a Holder's death prior to the end of any
restricted Period, all restricted Stock and Phantom Stock Units shall
be forfeited with respect to the portion of such Awards for which
restrictions have not lapsed at the time of such death. Upon a
Holder's death prior to the end of any Award Period, all Performance
Share Units which have not theretofore become vested and earned shall
expire; provided, however, that the Committee may, in its sole
discretion, award a pro rata portion of any Performance Share Unit
Award representing the degree of attainment of the Performance Goals
related thereto over the period prior to death.
(c) Termination for Reasons Other Than Normal termination or
Death
(i) If a Holder ceases employment or service with the
Company or Subsidiary, C-TEC or RCN, as the case may be, for any
reason other than Normal Termination or death, all Options, OSOs,
SARs, Restricted Stock (with respect to which restrictions have not
lapsed), Phantom Stock Units (with respect to which restrictions have
not lapsed) and Performance Share Units then held by such Holder shall
expire immediately upon such cessation of employment or service.
14. General
(a) Additional Provisions of an Award. Awards under the Plan
also may be subject to such other provisions (whether or not applicable to the
benefit awarded to any other Participant) as the Committee determines
appropriate including, without limitation, provisions to assist the
Participant in financing the purchase of Stock upon the exercise of Options,
provisions for the forfeiture of or restrictions on resale or other
disposition of shares of Stock acquired under any Award, provisions giving the
Company the right to repurchase shares of Stock acquired under any Award in
the event the Participant elects to dispose of such shares, and provisions to
comply with Federal and state securities laws and Federal and state tax
withholding requirements. Any such provisions shall be reflected in the
applicable Award agreement.
(b) Privileges of Stock Ownership. Except as otherwise
specifically provided in the Plan, no person shall be entitled to the
privileges of stock ownership in respect of shares of Stock which are subject
to Awards hereunder until such shares have been issued to that person.
(c) Government and other Regulations. The obligation of the
Company to make payment of Awards in Stock or otherwise shall be subject to
all applicable laws, rules and regulations, and to such approvals by
governmental agencies as may be required. Notwithstanding any terms or
conditions of any Award to the contrary, the Company shall be under no
obligation to offer to sell or to sell and shall be prohibited from offering
to sell or selling any shares of Stock pursuant to an Award unless such shares
have been properly registered for sale pursuant to the Securities Act with the
Securities and Exchange Commission or unless the Company have received an
opinion of counsel, satisfactory to the Company, that such shares may be
offered or sold without such registration pursuant to an available exemption
therefrom and the terms and conditions of such exemption have been fully
complied with. The Company shall be under no obligation to register for sale
under the Securities Act any of the shares of Stock to be offered or sold
under the Plan. If the shares of Stock to be offered or sold under the Plan
are offered or sold pursuant to an exemption from registration under the
Securities Act, the Company may restrict the transfer of such shares and may
legend the Stock certificates representing such shares in such manner as it
deems advisable to ensure the availability of any such exemption.
(d) Tax Withholding. Notwithstanding any other provision of the
Plan, the Company or a Subsidiary, as appropriate, shall have the right to
deduct from all Awards cash and/or Stock, valued at Fair Market Value on the
date of payment, in an amount necessary to satisfy all Federal, state or local
taxes as required by law to be withheld with respect to such Awards and, in
the case of Awards paid in Stock, the Holder or other person receiving such
Stock may be required to pay to the Company prior to delivery of such Stock,
the amount of any such taxes which the Company is required to withhold, if
any, with respect to such Stock. Subject in particular cases to the
disapproval of the Committee, the Company may accept shares of Stock of
equivalent Fair Market Value in payment of such withholding tax obligations if
the Holder of the Award elects to make payment in such manner.
(e) Claim to Awards and Employment Rights. No employee or other
person shall have any claim or right to be granted an Award under the Plan or,
having been selected for the grant of an Award, to be selected for a grant of
any other Award. Neither the Plan nor any action taken hereunder shall be
construed as giving any participant any right to be retained in the employ or
service of the Company or any Subsidiary.
(f) Designation and Change of Beneficiary. Each Participant may
file with the Committee a written designation of one or more persons as the
beneficiary who shall be entitled to receive the rights or amounts payable
with respect to an Award due under the Plan upon his death. A Participant
may, from time to time, revoke or change his beneficiary designation without
the consent of any prior beneficiary by filing a new designation with the
Committee. The last such designation received by the Committee shall be
controlling; provided however, that no designation, or change or revocation
thereof, shall be effective unless received by the Committee prior to the
Participant's death, and in no event shall it be effective as of a date prior
to such receipt. If no beneficiary designation is filed by the Participant,
the beneficiary shall be deemed to be his or her spouse or, if the Participant
is unmarried at the time of death, his or her estate.
(g) Payment to Persons Other Than Participants. If the Committee
shall find that any person to whom any amount is payable under the Plan is
unable to care for his affairs because of illness or accident, or is a minor,
or has died, then any payment due to such person or his estate (unless a prior
claim therefor has been made by a duly appointed legal representative) may, if
the Committee so directs the Company, be paid to his spouse, child, relative,
an institution maintaining or having custody of such person, or any other
person deemed by the Committee to be a proper recipient on behalf of such
person otherwise entitled to payment. Any such payment shall be a complete
discharge of the liability of the Committee and the Company therefor.
(h) No Liability of Committee Members. No member of the
Committee shall be personally liable by reason of any contract or other
instrument executed by such member or on his behalf in his capacity as a
member of the Committee nor for any mistake of judgment made in good faith,
and the Company shall indemnify and hold harmless each member of the Committee
and each other employee, officer or director of the Company to whom any duty
or power relating to the administration or interpretation of the Plan may be
allocated or delegated, against any cost or expense (including counsel fees)
or liability (including any sum paid in settlement of a claim) arising out of
any act or omission to act in connection with the Plan unless arising out of
such person's own fraud or willful bad faith; provided, however, that approval
of the Board shall be required for the payment of any amount in settlement of
a claim against any such person. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled under the Company's Articles of Incorporation or By-Laws, as a
matter of law, or otherwise, or any power that the Company have to indemnify
them or hold them harmless.
(i) Governing law. The Plan shall be governed by and construed
in accordance with the internal laws of the Commonwealth of Pennsylvania
applicable to contracts made and performed within such state, without regard to
principles of conflicts of law thereof, except as such laws may be supplanted
by the federal laws of the United States of America, which laws shall then
govern its effect and its construction to the extent they supplant
Pennsylvania law.
(j) Funding. No provision of the Plan shall require the Company,
for the purposes of satisfying any obligations under the Plan, to purchase
assets or place any assets in a trust or other entity to which contributions
are made or otherwise to segregate any assets, nor shall the Company maintain
separate bank accounts, books, records or other evidence of the existence of a
segregated or separately maintained or administered fund for such purposes.
Holders shall have no rights under the Plan other than as unsecured general
creditors of the Company, except that insofar as they may have become entitled
to payment of additional compensation by performance of services, they shall
have the same rights as other employees under general law.
(k) Nontransferability. A person's rights and interest under the
Plan, including amounts payable, may not be sold, assigned, donated, or
transferred or otherwise disposed of, mortgaged, pledged or encumbered except,
in the event of a Holder's death, to a designated beneficiary to the extent
permitted by the Pan, or in the absence of such designation, by will or the
laws of descent and distribution; provided, however, the Committee may, in its
sole discretion and subject to such conditions as it may establish, allow for
transfer of Awards other than Incentive Stock Options to other persons or
entities.
(l) Reliance on Reports. Each member of the Committee and each
member of the Board shall be fully justified in relying, acting or failing to
act, and shall not be liable for having so relied, acted or failed to act in
good faith, upon any report made by the independent public accountant of the
Company and its Subsidiaries and upon any other information furnished in
connection with the Plan by any person or persons other than himself.
(m) Relationship to Other Benefits. No payment under the Plan
shall be taken into account in determining any benefits under any pension,
retirement, profit sharing, group insurance or other benefit plan of the
Company except as otherwise specifically provided in such other plan.
(n) Expenses. The expenses of administering the Plan shall be
borne by the Company.
(o) Pronouns. Masculine pronouns and other words of masculine
gender shall refer to both men and women.
(p) Titles and Headings. The titles and headings of the sections
in the Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings shall
control.
15. Changes in Capital Structure
Awards granted under the Plan and any agreements evidencing
such Awards shall be subject to equitable adjustment or substitution, as
determined by the Committee in its sole discretion, as to the number of
shares, the Multiplier (with respect to OJOs), the exercise price, the price
or kind of a share of Stock or other consideration subject to such Awards (i)
in the event of changes in the outstanding Common Stock or in the capital
structure of the Company by reason of stock dividends, stock splits, reverse
stock splits, recapitalizations, reorganizations, mergers, consolidations,
combinations, exchanges, spinoffs, split-ups or other relevant changes in
capitalization occurring after the Date of Grant of any such Award, (ii) in
the event of any change in applicable laws or any change in circumstances
which results or would result in any substantial dilution or enlargement of
the rights granted to, or available for, Participants in the Plan, or (iii)
upon the occurrence of any other event which otherwise warrants equitable
adjustment because it interferes with the intended operation of the Plan. In
addition, upon any such event, the aggregate number of shares of Stock
available under the Plan and the maximum number of shares of Stock with
respect to which any one person may be granted in connection with Awards,
during any year shall be appropriately adjusted by the Committee, whose
determination shall be conclusive. With respect to Awards intended to qualify
as "performance-based compensation" under Section 162(m) of the Code, such
adjustments or substitutions shall be made only to the extent that the
Committee determines that such adjustments or substitutions may be made
without a loss of deductibility for such Awards under Section 162(m) of the
Code. The Company shall give each Participant notice of an adjustment
hereunder and, upon notice, such adjustment shall be conclusive and binding
for all purposes.
Notwithstanding the above, in the event of any of the following:
(a) The Company is merged or consolidated with another
corporation or entity and, in connection therewith, consideration is received
by shareholders of the Company in a form other than stock or other equity
interests of the surviving entity;
(b) All or substantially all of the assets of the Company are
acquired by another person;
(c) The reorganization or liquidation of the Company; or
(d) The Company shall enter into a written agreement to undergo
an event described in clauses (a), (b) or (c) above,
then the Committee may, in its sole discretion and upon at
least 10 days advance notice to the affected persons, cancel any outstanding
Awards and pay to the Holders thereof, in cash, the value of such Awards and
pay to the Holders thereof, in cash, the value of such Awards based upon the
price per share of Stock received or to be received by other shareholders of
the Company in the event. The terms of this Section 15 may be varied by the
Committee in any particular Award agreement.
16. Change in Control
Upon the occurrence of a Change in Control (i) all outstanding
Options, OSOs and freestanding SARs shall be come immediately exercisable in
full, (ii) all restrictions with respect to outstanding shares of Restricted
Stock shall lapse, (iii) all outstanding Phantom Stock Units will be
immediately converted into shares of Stock, or cash equivalents at the
discretion of the Committee, and paid out to such Holders, (iv) the Committee
will make a determination on the degree of achievement of all Performance
Goals with respect to outstanding Performance Share Units and shall make such
payments with respect thereto as it deems appropriate and (v) all other Awards
shall accelerate and become payable as determined by the Committee.
17. Nonexclusivity of the Plan
Neither the adoption of the Plan by the Board nor the
submission of this Plan to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the Board to adopt
such other incentive arrangements as it may deem desirable, including, without
limitations, the granting of stock options otherwise than under this Plan, and
such arrangements may be either applicable generally or only in specific cases.
18. Amendments and Termination
The Board may at any time terminate the Plan. With the express
written consent of an individual Participant, the Board or the Committee may
cancel or reduce or otherwise alter outstanding Awards if, in its judgment,
the tax, accounting, or other effects of the plan or potential payout
thereunder would not be in the best interest of the Company. The Board or the
Committee may, at any time, or from time to time, amend or suspend and, if
suspended, reinstate, the plan in whole or in part; provided, however, that no
amendment which requires stockholder approval in order for the plan to
continue to comply with Section 162(m) of the Code shall be effective unless
the same shall be approved by the requisite vote of the stockholders of the
Company.
* * *
As adopted by the Board of Directors of
Cable Michigan, Inc. as of
[________], 1997
By:________________________________
[Name, Title]
EXHIBIT 99.02
Cable Michigan, Inc.
1997 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
1. Purpose.
The purpose of the Cable Michigan, Inc. 1997 Stock Plan for
Non-Employee Directors (the "Plan") is to promote the interests of the Cable
Michigan, Inc. (the "Company") and its stockholders by increasing the
proprietary interest of non-employee directors in the growth and performance
of the Company by granting such directors options to purchase shares of common
stock (par value $1.00 per share) (the "Shares") of the Company and by
awarding Shares to such directors in respect of a portion of the annual
retainer and meeting fees payable to such directors.
2. Administration.
The Plan shall be administered by the Company's Board of
Directors (the "Board"). Subject to the provisions of the Plan, the Board
shall be authorized to interpret the Plan, to establish, amend, and rescind
any rules and regulations relating to the Plan and to make all other
determinations necessary or advisable for the administration of the Plan;
provided, however, that the Board shall have no discretion with respect to the
selection of directors to receive options, the number of Shares subject to any
such options, the purchase price thereunder or the timing of grants of options
under the Plan. The determinations of the Board in the administration of the
Plan, as described herein, shall be final and conclusive. The Secretary and
Assistant Secretary of the Company shall be authorized to implement the Plan
in accordance with its terms and to take such actions of a ministerial nature
as shall be necessary to effectuate the intent and purposes thereof. The
validity, construction and effect of the Plan and any rules and regulations
relating to the Plan shall be determined in accordance with the laws of the
Commonwealth of Pennsylvania.
3. Eligibility.
The class of individuals eligible to receive grants of options
and awards of Shares in respect of the Retainer under the Plan shall be
directors of the Company who are not employees of the Company or its
affiliates ("Eligible Directors"). Any holder of an option or Shares granted
hereunder shall hereinafter be referred to as a "Participant".
4. Shares Subject to the Plan.
Subject to adjustment as provided in Section 7, an aggregate of
100,000 Shares shall be available for issuance under the Plan. The Shares
deliverable upon the exercise of options or in respect of the Retainer may be
made available from authorized but unissued Shares or treasury Shares. If any
option granted under the Plan shall terminate for any reason without having
been exercised, the Shares subject to, but not delivered under, such option
shall be available for issuance under the Plan.
5. Grant, Terms and Conditions of Options.
(a) Subject to the approval by the Company's
shareholders of this Plan, each Eligible Director on the
date of such approval will be granted on such date an option
to purchase 2,000 Shares.
(b) Each Eligible Director on the first
business day of a fiscal year of the Company beginning
thereafter, will be granted on such a day an option to
purchase 2,000 Shares.
(c) The options granted will be nonstatutory
stock options not intended to qualify under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code")
and shall have the following terms and conditions:
(i) Price. The purchase price
per Share deliverable upon the exercise of each
option shall be 100% of the Fair Market Value
per Share on the date the option is granted.
For purposes of the Plan, "Fair Market Value"
shall be the closing price of the Shares as
reported on the principal market or exchange on
which the shares are traded or listed for the
date in question, or if there were no sales on
such date, the most recent prior date on which
there were sales.
(ii) Payment. Options may be
exercised only upon payment of the purchase
price thereof in full. Such payment shall be
made in cash.
(iii) Exercisability and Term of
Options. Options shall become exercisable in
four equal annual installments commencing on
the first anniversary of the date of grant,
provided the holder of such Option is an
Eligible Director on such anniversary, and
shall be exercisable until the earlier of ten
years from the date of grant and the expiration
of the one year period provided in paragraph
(iv) below.
(iv) Termination of Service as
Eligible Director. Upon termination of a
Participant's service as a director of the
Company for any reason, all outstanding options
held by such Eligible Director, to the extent
then exercisable, shall be exercisable in whole
or in part for a period of one year from the
date upon which the Participant ceases to be a
Director, provided that in no event shall the
options be exercisable beyond the period
provided for in paragraph (iii) above.
(v) Nontransferability of
Options. No option may be assigned, alienated,
pledged, attached, sold or otherwise
transferred or encumbered by a Participant
otherwise than by will or the laws of descent
and distribution, and during the lifetime of
the Participant to whom an option is granted it
may be exercised only by the Participant or by
the Participant's guardian or legal
representative. Notwithstanding the foregoing,
options may be transferred pursuant to a
qualified domestic relations order.
(vi) Option Agreement. Each
option granted hereunder shall be evidenced by
an agreement with the Company which shall
contain the terms and provisions set forth
herein and shall otherwise be consistent with
the provisions of the Plan.
6. Grant of Shares.
(a) Grant Dates and Formula for Annual
Retainer. Shares shall be automatically granted to each
Eligible Director on January 1 of each Plan year (each such
date is hereinafter referred to as the "Annual Grant Date")
commencing October 1, 1997; provided, however, that for the
year ending December 31, 1997, the Annual Grant Date shall be
October 1, 1997 (the "Initial Grant Date"). The total number
of Shares granted to each Eligible Director pursuant to this
Section 6(a) shall equal the quotient obtained by dividing
the annual retainer, as determined from time to time, subject
to Section 9 hereof ("Annual Retainer"), then in effect by
the Fair Market Value of a Share on the Annual Grant Date (or
the Initial Grant Date, as the case may be) determined in
accordance with Section 6(b) hereof; provided, however, that
for the year ending December 31, 1997, the total number of
Shares granted to each Eligible Director shall be equal to
the quotient obtained by dividing (i) the product obtained by
multiplying (x) three-twelfths (3/12) by (y) the Annual
Retainer as in effect on October 1, 1997 by (ii) the fair
market value of a Share determined in accordance with Section
6(b) hereof. In the event a person becomes an Eligible
Director between applicable Annual Grant Dates, such person
shall, on the thirtieth (30th) day following such
appointment, receive the number of Shares equal to the
product obtained by multiplying a (i) fraction, the (I)
numerator of which is the number of months remaining in such
year and the (II) denominator of which is twelve (12) by a
(ii) fraction, the (I) numerator of which is the Annual
Retainer in effect on the most recent Annual Grant Date and
the denominator of which is the average of the high and low
prices of a Share on the Exchange (as defined below) as
reported for the trading day immediately prior to such person
becoming an Eligible Director.
(b) Fair Market Value. The fair market value
of a Share shall for the purposes of the Annual Grant Date,
be the average of the high and low prices of a Share on the
last trading day prior to the applicable Grant Date as its
reported on the principal securities exchange (which term
shall include the Nasdaq Stock Markets) on which Shares are
listed (the "Exchange"), provided, however, with respect to
the Initial Grant Date, it shall be the average of the high
and low prices of a Share as reported on the Exchange for
October 1, 1997. Fractional shares will be rounded to the
next highest share. The shares or rights to which an
Eligible Director is entitled under Section 5(b) shall be in
lieu of the payment in cash of the 100% of the Annual
Retainer.
7. Adjustment of and Changes in Shares.
In the event of a stock split, stock dividend, extraordinary
cash dividend, subdivision or combination of the Shares or other change in
corporate structure affecting the Shares, the number of Shares authorized by
the Plan shall be increased or decreased proportionately, as the case may be,
and the number of Shares subject to any outstanding option shall be increased
or decreased proportionately, as the case may be, with appropriate
corresponding adjustment in the purchase price per Share thereunder.
8. No Rights of Shareholders.
Neither a Participant nor a Participant's legal representative
shall be, or have any of the rights and privileges of, a shareholder of the
Company in respect of any Shares purchasable upon the exercise of any option,
in whole or in part, unless and until certificates for such Shares shall have
been issued.
9. Plan Amendments.
The Plan may be amended by the Board as it shall deem advisable
or to conform to any change in any law or regulation applicable thereto;
provided, that the Board may not, without the authorization and approval of
shareholders of the Company: (i) increase the number of Shares which may be
purchased pursuant to options hereunder, either individually or in the
aggregate, except as permitted by Section 7, (ii) change the requirement of
Section 5(c) that option grants be priced at Fair Market Value, except as
permitted by Section 7, (iii) modify in any respect the class of individuals
who constitute Eligible Directors or (iv) materially increase the benefits
accruing to Participants hereunder. The provisions of Sections 3, 5 and/or 6
may not be amended more often than once every six months, other than to
comport with changes in the Code, the Employee Retirement Income Security Act
of 1974, as amended, or the rules under either such statute.
10. Listing and Registration.
Each Share shall be subject to the requirement that if at any
time the Board shall determine, in its discretion, that the listing,
registration or qualification of the Shares upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such Shares, no such Share may be disposed of unless
such listing, registration, qualification, consent or approval shall have been
effected or obtained free of any condition not acceptable to the Board.
11. Effective Date and Duration of Plan.
The Plan shall become effective on October 1, 1997. The Plan
shall terminate the day following the tenth Annual Shareholders Meeting at
which Directors are elected succeeding such date, unless the Plan is extended
or terminated at an earlier date by Shareholders or is terminated by
exhaustion of the Shares available for issuance hereunder.
EXHIBIT 99.03
CABLE MICHIGAN, INC.
EXECUTIVE
STOCK PURCHASE PLAN
1. Purpose. The purpose of the Cable Michigan, Inc. Executive Stock
Purchase Plan is to strengthen the mutuality of interests between executives
and shareholders. The Plan offers certain executives of Cable Michigan, Inc.
and its affiliated companies the opportunity to defer the receipt of a portion
of their compensation on a pre-tax basis and to have the deferred amounts
reflect the value of the common stock of Cable Michigan, Inc.. Further, Cable
Michigan, Inc. will make a "matching contribution" equal to 100% of the
executive deferrals. Subject to certain limitations as described herein,
matching contributions will be in the form of Common Stock of Cable Michigan,
Inc. which will be held in an escrow account and will be distributed to the
executive if he or she remains employed for three years following the
purchase.
2. Definitions. Unless the context otherwise requires, the following
words as used herein shall have the following meanings:
"Administrator" means the Company or any person or entity to
which the Board delegates this function under Section 9.
"Affiliated Company" means each corporation, 100% of the stock
of which is owned, directly or indirectly, by the Company.
"Annual Compensation" shall mean, with respect to any Eligible
Employee in any calendar year, the sum of (i) such Eligible Employee's annual
base salary for such year plus (ii) the short term bonus received by such
Eligible Employee in respect of Company performance during such year. The
Administrator shall have the sole discretion to determine an Eligible
Employee's Annual Compensation as of any relevant time in accordance with the
provisions of the Plan.
"Applicable Dividends" means, with respect to a Share Unit, the
aggregate number of Share Units credited to a Participant's Account under
Section 5.3 (or to a Participant's Matching Account under Section 6.4, as
applicable) as the result of a dividend paid by the Company in respect of
Shares.
"Applicable Election Date" means the following:
(a) except as provided in (b), with respect to the deferral of base
compensation earned during any payroll period, December 31 of the calendar
year immediately preceding the commencement of such payroll period;
(b) with respect to the deferral of base compensation earned during any
payroll period in the first calendar year for which an Employee is an Eligible
Employee, the first day of the first calendar quarter following his or her
becoming an Eligible Employee, provided that the Applicable Election Date with
respect to the deferral of such base compensation earned by an Employee who is
an Eligible Employee as of the Effective Date shall be the Effective Date; and
(c) with respect to any short term bonus, December 31 of the calendar
year immediately preceding the calendar year in which the bonus is payable.
"Board" means the board of directors of the Company.
"Change in Control" means, with respect to the Company, (a) the
acquisition by any person, entity or "group," within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), other than Kiewit and any affiliate of Kiewit, of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of more than 50% of either (i) the then outstanding Shares or (ii) the
combined voting power of the Company's then outstanding voting securities, (b)
effective upon the consummation of any such transaction, approval by the
shareholders of the Company of a reorganization, merger or consolidation, in
each case, with respect to which persons who were the shareholders of the
Company immediately prior to such reorganization, merger or consolidation, do
not, immediately thereafter, own more than 50% of the combined voting power
entitled to vote generally in the election of directors of the reorganized,
merged or consolidated company's then outstanding voting securities, or a
liquidation or dissolution of the Company or the sale of all or substantially
all of the assets of the Company, or (c) the replacement of more than 50% of
the members of the Board with persons who were not nominated or otherwise
designated by the remaining members of the Board.
"CMI" means Cable Michigan, Inc., a Pennsylvania corporation.
"Company" means Cable Michigan, Inc., a Delaware corporation.
"C-TEC" means C-TEC Corporation, a Pennsylvania corporation.
"Deferral Account" means the bookkeeping account established by
the Administrator for each Participant to reflect the Share Units credited
with respect to such Participant pursuant to Section 5.
"Disability" means a disability with respect to which a
Participant is eligible for and receiving benefits under a long-term
disability program sponsored by the Company or an Affiliated Company.
"Deferral Date" means the date or dates on which base
compensation or short term bonus to which any Election Form relates would
otherwise have been paid.
"Dividend Payment Date" means the date on which a dividend is
paid by the Company with respect to Shares.
"Effective Date" means December 1, 1995.
"Election Form" means the election form described in Section
5.5.
"Eligible Employee" means an Employee who is designated by the
Board as eligible to participate in the Plan and who has completed one full
calendar quarter of employment with the Company or an Affiliated Company,
provided, however, that the Board may, in its sole discretion, designate as
Eligible Employees and Participants, persons who were active participants in
the C-TEC Corporation Executive Stock Purchase and who in respect of such
participation were granted Share Units hereunder in connection with the
distribution by C-TEC Corporation to its stockholders of Shares (the
"Distribution").
"Employee" means an employee of the Company or an Affiliated
Company.
"Entry Date" means, for any Eligible Employee, the first day of
the first calendar quarter following his or her becoming an Eligible Employee,
provided that the Entry Date of any Employee who is an Eligible Employee as of
the Effective Date shall be the Effective Date.
"Fair Market Value" of a Share on any given day means (a) the
closing price per Share on the national securities exchange on which the
Shares are principally traded on the next preceding date on which there was a
sale of Shares on such exchange, or (b) if the Shares are not listed or
admitted to trading on any such exchange, the closing price per Share on the
Nasdaq National Market on the next preceding date on which there was a sale
of Shares, or if such closing price is not available, the average of the
highest reported bid and lowest reported asked prices per Share as reported by
NASDAQ on the next preceding date on which such bid and asked prices were
reported, or (c) if the Shares are not then listed on any securities exchange
or prices therefor are not then quoted in NASDAQ, the value determined by the
Administrator in good faith.
"Fund" means the fund maintained under the Trust Agreement.
"Kiewit" means Kiewit Diversified Group, Inc.
"Matching Account" means the bookkeeping account established by
the Administrator for each Participant to reflect Share Units credited
pursuant to Section 6.4.
"Participant" means any Eligible Employee or former Eligible
Employee who has elected to participate in the Plan as described in Section 4,
or who has an undistributed amount credited to a Deferral Account or a
Matching Account or who was issued Share Units hereunder in connection with
the Distribution.
"Plan" means Cable Michigan, Inc. Executive Stock Purchase
Plan, as set forth herein, and as amended from time to time.
"Pre-Tax Contribution" means the amount of a Participant's
contribution to the Plan as determined under Section 5.1, reduced by any
applicable employment taxes.
"Purchase Date" means, with respect to a Deferral Date or a
Dividend Payment Date, the date or dates on which the Trustee purchases Shares
to reflect the Pre-Tax Contributions made on such Deferral Date or the
dividends paid on such Dividend Payment Date. The Trustee may purchase Shares
from the Company or on the open market. Prior to approval of the Plan by
shareholders of the Company, either (i) the Trustee shall purchase Shares from
the Company or (ii) the Company shall credit Deferral Accounts in accordance
with Sections 5.2 and 5.3.1.1 as if such Shares had been purchased from the
Company.
"RCN" means RCN Corporation, a Delaware corporation.
"Share Units" means units credited to a Participant's Deferral
Account under Sections 5.2 and 5.3 and units credited to a Participant's
Matching Account under Section 6.4.
"Shares" means Common Stock of the Company, par value $1.00 per
share.
"Trust Agreement" means the agreement of trust entered into
between the Company and the Trustee for purposes of the Plan.
"Trustee" means the individual(s) or corporate trustee
appointed as trustee under the Trust Agreement.
"Unforeseeable Emergency" means an unanticipated emergency that
is caused by an event beyond the control of the Participant and that would
result in severe financial hardship to the Participant if early withdrawal
were not permitted.
3. Shares. Not more than 30,000 Shares and Share Units in aggregate,
without duplication, may be issued under the Plan, subject to adjustment as
provided in Section 12.2.
4. Eligibility to Participate. Any Eligible Employee shall be eligible to
participate in the Plan. An Eligible Employee shall become a Participant by
delivering to the Administrator an executed Election Form and such other forms
as may be required by the Administrator.
5. Pre-Tax Contributions.
5.1 Election to Participate.
5.1.1 Deferral of Base Compensation. An Eligible Employee may elect
to defer receipt of all or a portion (in whole percentages) of his or
her base compensation payable by the Company or an Affiliated Company
attributable to any payroll period beginning on or after the Entry Date
by executing an Election Form and filing it with the Administrator on or
before the Applicable Election Date. Deferrals by any Eligible Employee
pursuant to this Section 5.1.1 shall not exceed 20% of such Eligible
Employee's projected base compensation for the year in question, as
determined by the Administrator from time to time. Subject to the
foregoing, each Eligible Employee shall specify on such Election Form
the schedule of Deferral Dates on which such aggregate amount is to be
withheld and contributed to the Plan.
5.1.2 Deferral of Bonus. Subject to Section 5.1.3, an Eligible
Employee may elect to defer receipt of all or a portion (in whole
percentages) of his or her short term bonus payable by the Company or an
Affiliated Company on or after the Entry Date by executing an Election
Form and filing it with the Administrator on or before the Applicable
Election Date.
5.1.3 Limitations on Pre-Tax Contributions. An Eligible Employee's
Pre-Tax Contribution under Sections 5.1.1 and 5.1.2 for any calendar
year shall not exceed 20% of such Eligible Employee's Annual
Compensation for such year. The Administrator shall adjust the Eligible
Employee's Pre-Tax Contributions as it determines necessary to meet the
requirements of this Section 5.1.3.
5.2 Crediting Accounts. On any Purchase Date, but as of the applicable
Deferral Date, the Company shall credit each Participant's Deferral Account
with a number of Share Units, rounded to the nearest 0.0001 of a Share,
determined as follows:
5.2.1 an amount, rounded down to the next lowest whole number,
obtained by dividing
5.2.1.1 the amount of all Participants' Pre-Tax Contributions
attributable to such Deferral Date that is invested on such Purchase
Date; by
5.2.1.2 the average per Share cost paid by the Trustee on such
Purchase Date with respect to such Deferral Date; provided, however,
that if the Trustee purchases (or notionally purchases) the Shares
from the Company, the Trustee's average per Share cost, for purposes
of this Section, shall be the Fair Market Value per Share on such
Deferral Date;
5.2.2 multiplied by a fraction:
5.2.2.1 the numerator of which is the Participant's Pre-Tax
Contribution attributable to such Deferral Date; and
5.2.2.2 the denominator of which is all Participants' Pre-Tax
Contributions attributable to such Deferral Date.
5.3 Crediting of Dividends to Accounts.
5.3.1 Cash Dividends. If the Company pays a cash dividend with
respect to Shares, then as of the Dividend Payment Date, the Company
shall credit each Participant's Deferral Account with a number of Share
Units determined as follows:
5.3.1.1 an amount, rounded to the nearest 0.0001 of a Share,
obtained by dividing
5.3.1.1.1 the amount of the dividend paid on such Dividend
Payment Date with respect to a Share multiplied by the number of
Share Units credited to all Participants' Accounts on the record date
for such Dividend; by
5.3.1.1.2 the average per Share cost paid by the Trustee on
the Purchase Date with respect to such Dividend Payment Date;
provided, however, that if the Trustee purchases (or notionally
purchases) the Shares from the Company, the Trustee's average per
Share cost, for purposes of this Section, shall be the Fair Market
Value per Share on such Dividend Payment Date;
5.3.1.2 multiplied by a fraction:
5.3.1.2.1 the numerator of which is the number of Share Units
credited to the Participant's Deferral Account on the record date for
such Dividend; and
5.3.1.2.2 the denominator of which is the number of Share
Units credited to all Participants' Accounts on the record date for
such Dividend.
5.3.2 Share Dividends. If the Company pays a dividend with respect
to Shares in the form of additional Shares, then as of the Dividend
Payment Date, the Company shall credit each Participant's Deferral
Account with a number of Share Units equal to the product of:
5.3.2.1 the Share Units credited to the Participant's Deferral
Account on the record date for such Dividend; and
5.3.2.2 the number of Shares payable as a dividend for each
outstanding Share.
5.3.3 Extraordinary Dividends. Except as set forth in Sections
5.3.1 and 5.3.2, dividends and distributions in respect of Shares shall
be treated in accordance with Section 12.2.
5.4 Treatment of Excess Cash. An amount representing the amount
received by the Trustee under Section 5.6.1 and not used to purchase Shares
shall be allocated in any reasonable manner by the Administrator, including,
but not limited to, allocating such amounts as of the next Deferral Date among
Participants' Deferral Accounts pro-rata or in proportion to Participant's
Pre-Tax Contributions attributable to such Deferral Date. Amounts shall be
allocated to the purchase of Shares in the order in which received by the
Trustee.
5.5 Election Form. Each Election Form shall be in form and substance
satisfactory to the Administrator, and shall set forth:
5.5.1 the amount of base compensation and/or short term bonus to be
deferred and the Deferral Date(s) on which such deferrals are to be
effected, subject to Section 5.1.3;
5.5.2 the date on which distributions shall commence under Section
5.8;
5.5.3 if distributions are to commence under Section 5.8.2, whether
such distributions will be a single sum or in installments; and
5.5.4 the beneficiary or beneficiaries to whom benefits should be
paid in the event of the Participant's death.
An Election Form providing for the deferral of all or a portion
of base compensation or short term bonus shall remain in effect until revoked
or replaced by a new Election Form. Except for changes in beneficiary
designation as provided in Section 5.11, the revocation of an Election Form or
the replacement of an Election Form shall be effective only with respect to
(i) base compensation earned in the calendar year after the Election Form is
accepted by the Administrator and (ii) short term bonus payable in the
calendar year after the Election Form is accepted by the Administrator.
5.6 Funding.
5.6.1 On or as soon as administratively practicable following each
Deferral Date, an amount equal to the amount deferred by all
Participants shall be paid by the Company to the Trustee, and shall
thereafter be held by the Trustee in accordance with the terms of the
Trust Agreement. Notwithstanding the foregoing, prior to approval of
the Plan by shareholders of the Company, the Company may elect not to
pay deferred amounts to the Trustee, but in such event shall treat such
deferred amount as having been notionally transferred to the Trustee and
notionally used to purchase Shares from the Company.
5.6.2 Amounts contributed to the Trustee under the Trust Agreement
and assets purchased with such amounts shall be subject to the claims of
the Company's creditors and creditors of Affiliated Companies.
5.6.3 To the extent that any benefits provided under the Plan are
actually paid from the Fund, the Company shall have no further
obligation with respect to such benefits.
5.6.4 Except as provided in Section 5.6.1, neither the Company nor
any Affiliated Company shall be required to segregate or physically to
set aside any funds or assets to satisfy any right to payment of amounts
credited to any Deferral Account. Neither a Participant, nor any
beneficiary nor any other person shall be deemed to have any property
interest, legal or equitable, in any specific asset of the Company or
any Affiliated Company or of the Fund with respect to any right to
payment of any amount pursuant Section 5. To the extent that any person
acquires any right to receive payments under the Plan of an amount
credited to an Account, such right to payment shall be no greater than,
nor shall it have any preference or priority over, the rights of any
unsecured general creditor of the Company or any Affiliated Company.
5.7 Voting Rights. Share Units represent a hypothetical number of
Shares, for bookkeeping purposes only. Accordingly, Participants shall have
no voting rights or any other rights of a shareholder with respect to such
Share Units.
5.8 Commencement and Form of Distribution. Amounts representing Share
Units credited to a Participant's Deferral Account as of any Deferral Date
(and Applicable Dividends with respect to such Share Units) shall be
distributed as described in Section 5.8.1 or Section 5.8.2 as elected by the
Participant in the applicable Election Form.
5.8.1 Except as provided in Sections 5.8.3, 5.8.4 and 5.13, as soon
as administratively practicable following the earlier of (i) the
Participant's termination of employment with the Company and all
Affiliated Companies or with C-TEC or RCN, as the case may be, or (ii)
the elapse of 12 consecutive full calendar quarters following any
Deferral Date, the Company shall issue or pay to the Participant:
5.8.1.1 a number of Shares equal to the number of whole Share
Units credited to the Participant's Deferral Account with respect to
such Deferral Date; and
5.8.1.2 a number of Shares equal to the number of whole Share
Units comprising the Applicable Dividend with respect to the Share
Units referred to in Section 5.8.1.1; and
5.8.1.3 Any fractional Share Units attributable to such Deferral
Date or comprising the Applicable Dividend shall be added to the
Shares available for distribution on the next subsequent distribution
date. Cash shall be paid in lieu of fractional Share Units if no
subsequent distribution dates are anticipated.
5.8.2 Subject to Sections 5.8.3, 5.8.4 and 5.13, as soon as
administratively practicable following the earlier of (i) the
Participant's termination of employment with the Company and all
Affiliated Companies, C-TEC or RCN, as the case may be, or (ii) the date
designated by the Participant in his or her Election Form (not earlier
than following the elapse of 12 consecutive full calendar quarters
following the applicable Deferral Date), the Company shall commence to
issue or pay to the Participant:
5.8.2.1 a number of Shares equal to the number of whole Share
Units credited to the Participant's Deferral Account as of such
Deferral Date; and
5.8.2.2 a number of Shares equal to the number of whole Share
Units comprising the Applicable Dividend with respect to the Share
Units referred to in Section 5.8.2.1.
5.8.2.3 Any fractional Share Units attributable to such Deferral
Date or comprising the Applicable Dividend shall be added to the
Shares available for distribution on the next subsequent distribution
date. Cash shall be paid in lieu of fractional Share Units if no
subsequent distribution dates are anticipated.
Cash shall be paid in a single sum payment and Shares shall be
issued, as elected by the Participant in the applicable Election Form, in a
single payment or in substantially equal quarterly installments over ten
years. The Administrator may accelerate any such installment for any reason,
in its sole discretion.
5.8.3 Subject to Section 5.8.4 and notwithstanding the election made
by the Participant under Section 5.8.1 or 5.8.2, as soon as
administratively practicable following the death of a Participant, the
Company shall issue to the Participant's beneficiary or beneficiaries
(as designated in accordance with Section 5.11), a number of Shares
equal to the number of Share Units credited to the Participant's
Deferral Account and cash in lieu of fractional Share Units plus the
amount of cash, if any, allocated to such Deferral Account at the time
of such distribution.
5.8.4 Notwithstanding anything in this Section 5 to the contrary, a
Participant or a beneficiary who is otherwise entitled to a distribution
under this Section 5 prior to the approval of the Plan by the
shareholders of the Company shall receive in lieu thereof a payment in
cash equal to the product of (i) the number of Share Units (including
Applicable Dividends) in respect of which such Participant is entitled
to a distribution under this Section 5 multiplied by (ii) the Fair
Market Value per Share.
5.9 Unforeseeable Emergency. In the event of an Unforeseeable Emergency
as determined by the Administrator, a Participant may receive a lump sum
payment in an amount necessary to meet the emergency. Such amount shall be
paid in Shares, and the Participant's Account shall be debited accordingly.
5.10 Shares Subject to Distribution. The Shares distributed under
this Section 5 may be unissued shares or treasury shares, including Shares
held in the Fund and Shares bought on the open market. Shares distributed
under this Section shall be validly issued, fully paid and non-assessable.
5.11 Beneficiary Designation. Each Participant shall designate on his
or her Election Form the beneficiary or beneficiaries who shall receive
payments of Shares under Section 5.8.3 upon the Participant's death. A
Participant may amend any beneficiary designation by filing a written
amendment thereof with the Administrator. If the Participant has not made an
effective beneficiary designation, or if the designated beneficiary
predeceases the Participant, the Participant's beneficiary shall be the
Participant's estate.
5.12 Cash Entitlement Only. Any provision of this Plan to the
contrary notwithstanding, unless and until such time as the Plan is approved
by the shareholders of the Company, a Share Unit credited under this Section 5
shall represent only the right to be paid in cash the Fair Market Value of a
Share at the time otherwise herein provided for such payment.
5.13 Non Pro Rata Deferrals. Notwithstanding any other provision of
this Section 5, with respect to the payment under Section 5.8 of any Excess
Share Units, as hereinafter defined, the Administrator in its sole discretion
may distribute, in lieu of one Share or the Fair Market Value thereof, an
amount in cash equal to the value per Share used for purposes of Sections
5.2.1.2 and 5.3.1.1.2 in crediting such Excess Share Unit to the applicable
Deferral Account. For purposes of this Section, "Excess Share Units" shall
mean that number of Share Units credited to such Deferral Account in excess of
the number of Share Units that would have been so credited had the Participant
elected a "Pro Rata Deferral"; and a "Pro Rata Deferral" shall mean a deferral
on any Deferral Date of a percentage of base compensation not in excess of 20%.
6. Matching Contributions.
6.1 Issuance of Restricted Stock. As soon as administratively
practicable following any Deferral Date and subject to Sections 6.3 and 6.4,
the Company shall issue, in the name of each Participant, Shares equal to the
number of whole Share Units standing to the credit of such Participant's
Deferral Account under Section 5.2 as of such Deferral Date (less any Share
Units in respect of which Shares have previously been issued under this
Section 6.1). All Shares issued under this Section shall be subject to
forfeiture as provided in Section 6.2.
6.2 Terms of Restricted Stock. Shares issued under Section 6.1 (and
Section 6.4) shall be subject to the following terms:
6.2.1 The issuance of Shares shall be subject to the Participant's
execution of an escrow agreement, in form and substance satisfactory to
the Company, which provides that the stock certificate or stock
certificates representing the Shares will be held in escrow by the
Trustee (or such other escrow agent as may be designated by the
Company). If the Participant terminates employment with the Company and
all Affiliated Companies, C-TEC or RCN, as the case may be, prior to the
elapse of 12 consecutive full calendar quarters following the issuance
of such Shares under Section 6.1, other than due to death or Disability,
the Participant shall forfeit all rights to the Shares and the Shares
shall be released from escrow and returned to the Company. Subject to
Section 6.2.3, if the Participant remains employed by the Company or any
Affiliated Company, C-TEC or RCN, as the case may be, until the elapse
of 12 consecutive full calendar quarters following the issuance of such
Shares under Section 6.1, or if earlier, upon (i) a Change in Control or
(ii) the Participant's termination of employment with the Company and
all Affiliated Companies, C-TEC or RCN, as the case may be, due to death
or Disability, the Shares shall be released from escrow as soon as
administratively practicable thereafter and distributed to the
Participant or beneficiary.
6.2.2 The Participant shall be deemed to be the holder of, and may
exercise all of the rights of a record owner of the Shares issued to him
or her under this Section 6 while such Shares are held in escrow (other
than the right to transfer, convey, alienate or encumber the Shares)
including, without limitation, the right to vote such Shares and the
right to receive all cash dividends on such Shares.
6.3 Shares Subject to Matching Contribution. The Shares issued under
this Section 6 may be unissued shares or treasury shares, including Shares
bought on the open market. Shares issued pursuant to the Plan shall be
validly issued, fully paid and nonassessable. On any Deferral Date on or as
of which the Company's obligations under Section 6.1 cannot be satisfied as a
result of the limitation expressed in the previous sentence, Shares available
for issuance shall be allocated pro rata among all Participants making Pre-Tax
Contributions on such Deferral Date.
6.4 Matching Account Payments. As soon as administratively practicable
following the elapse of 12 consecutive full calendar quarters following a
Deferral Date or, if earlier, upon (i) a Change in Control or (ii) the
Participant's termination of employment due to death or Disability, the
Company shall pay to the Participant an amount in cash determined as follows:
6.4.1 the number of Share Units credited to the Participant's
Matching Account as of such Deferral Date, plus the Applicable Dividend;
multiplied by
6.4.2 the Fair Market Value per Share on the last day of the
calendar quarter immediately preceding such payment.
6.5 Matching Account Forfeitures. If a Participant terminates
employment with the Company and all Affiliated Companies, C-TEC or RCN, as the
case may be, prior to the elapse of 12 consecutive full calendar quarters
following a Deferral Date, other than due to death or Disability, the
Participant shall forfeit the Share Units credited to his or her Matching
Account with respect to such Deferral Date as well as the Share Units
representing the Applicable Dividend.
7. Nonassignment. The rights and privileges conferred under this Plan and
any Shares issued under Section 6.1 for so long as such Shares remain subject
to forfeiture pursuant to the terms of Section 6.2 shall not be transferred,
assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar
process. Any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of such right or privilege or Shares (which Shares are subject to
forfeiture) contrary to the provisions hereof, including the levy of any
attachment or similar process thereon, shall be without effect.
8. Incapacity of Recipient. Any Shares or cash payable under the Plan,
including Shares distributable from escrow under Section 6.2, to a person who
is under a legal disability may be made to or for the benefit of such person
in such of the following ways as the Administrator shall determine:
8.1 to such person;
8.2 to the legal representative of such person;
8.3 to a near relative of such person to be used for such person's
benefit; or
8.4 to pay the expenses of support, maintenance or education of such
person.
The Administrator shall not be required to see to the
application by any third party of payments made pursuant to this Section.
9. Administration. The Plan shall be administered by the Company or by
any person or entity to which the Board delegates administrative
responsibilities under the Plan. The Administrator shall be responsible for
and shall have sole discretion with respect to:
9.1 the maintenance of any records necessary in connection with the
operation of the Plan;
9.2 calculating amounts to be credited to Participants' Deferral
Accounts and Matching Accounts, and the amount of payments due to Participants
and beneficiaries from such Accounts;
9.3 interpreting the provisions of the Plan;
9.4 directing the Trustee to pay benefits out of the Fund; and
9.5 otherwise administering the Plan in accordance with its terms.
10. Claims Procedures. At any time that the Administrator makes a
determination adverse to a Participant or beneficiary with respect to a claim
for benefits or participation under the Plan, the Administrator shall notify
the claimant in writing of such determination, setting forth:
10.1 the specific reason for such determination;
10.2 a reference to the specific provision or provisions of the Plan on
which such determination is based;
10.3 a description of any additional material or information necessary
to perfect the claim, and an explanation of the reason that such material is
required; and
10.4 an explanation of the rights and procedures set forth in this
Section 10.
A person who receives notice of an adverse determination by the
Administrator with respect to a claim may request, within 60 days of
receipt of such notice, that the Administrator review the previous
determination. This request may be made on behalf of a claimant by a duly
authorized representative. The claimant or representative may review
pertinent documents and submit issues and comments with respect to the
controversy to the Administrator. The Administrator shall render a
decision within 60 days of receipt of a request for review, which decision
shall be in writing and shall set forth the specific reasons for the
decision reached and the specific provisions of the Plan on which the
decision is based. A copy of the ruling shall be forwarded to the
claimant.
11. Employee Benefit Plans. The Plan shall not in any way affect a
Participant's right to participate in any pension, profit-sharing, incentive,
thrift, group insurance, death benefit, stock option, termination pay or
similar plans of the Company or any Affiliated Company, which are now in
effect or may hereafter be adopted, to the extent that the Participant is
entitled to participate under the applicable terms and provisions of such
plans. Contributions and benefits under the Plan shall not be included in
determining a Participant's benefits under any retirement plan qualified under
section 401(a) of the Internal Revenue Code of 1986, as amended, in which such
Participant may participate, except as may otherwise be provided in such other
plan.
12. Amendment and Termination.
12.1 The Plan shall remain in effect until terminated by the Board.
The Board shall have the power to amend or terminate the Plan at any time, and
to freeze or suspend contributions to the Plan at any time, provided that the
amendment or termination of the Plan shall not impair the rights of any
Participant with respect to any amount credited to an Account at the time of
amendment or termination without the Participant's consent. The Board may
submit certain amendments to the shareholders for their approval in order to
comply with Rule 16b-3, or for any other reason.
12.2 With the exception of the events described in Sections 5.3.1 and
5.3.2, in the event that the Board determines that any dividend or other
distribution (whether in the form of cash, Shares, other securities, or other
property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase, or
exchange of Shares or other securities of the Company, issuance of warrants or
other rights to purchase Shares or other securities of the Company, or other
similar corporate transaction or event affects the Shares such that an
adjustment is determined by the Board to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Board may, in such manner as it may
deem equitable, make such adjustments and take such actions in respect of
Shares and Share Units hereunder as it deems appropriate, desirable or
necessary.
13. Miscellaneous.
13.1 The existence of the Plan and the execution of an Election Form,
and any actions undertaken thereunder, shall not confer upon the Participant
any right to continued employment by the Company or any Affiliated Company,
C-TEC or RCN, as the case may be.
13.2 The Plan shall be administered under and in accordance with the
laws of Delaware.
13.3 The terms of the Plan and the Election Forms and the decisions of
the Administrator shall be binding upon the Company and all Affiliated
Companies, their successors and assigns, and each Participant and his or her
heirs and legal representatives.
13.4 Prior to any distribution of Shares to the Participant hereunder,
the Participant and the Company shall enter into a mutually satisfactory
arrangement to satisfy applicable federal, state, local or other tax
withholding requirements with respect to the distribution.
Any taxes imposed on a Participant shall be the sole responsibility of
the Participant. Without limiting the generality of the foregoing, if any
contribution or payment under the Plan obligates the Company or an
Affiliated Company, C-TEC or RCN, as the case may be, to deduct or withhold
an amount for purposes of federal, state, local or other taxes, such
obligation may be satisfied by (1) deducting such taxes from any
contributions or payments made pursuant to the Plan or any cash
compensation payable with respect to the Participant or (2) the remittance
by the Participant of an amount equal to the amount required to be deducted
or withheld prior to such contribution or payment, as determined by the
Company or the Affiliated Company, C-TEC or RCN, as the case may be, in its
sole discretion.
13.5 Effect of Denial of Tax Treatment. Pre-tax Contributions under
Section 5 and issuances of Shares under Section 6 are intended to be taxable
to Participants no earlier than the time that Shares or other amounts are
distributed by the Trustee or the escrow agent, as the case may be. If, in
the sole determination of the Administrator, taxation of any such amount to
Participants is accelerated to any earlier time, the Administrator shall cause
that number of Shares or other amounts to be distributed to Participants equal
in value to the accelerated income.
13.6 Section 16. The Administrator may issue special rules relating to
participation by Employees who are subject to Section 16 of the Securities
Exchange Act of 1934, as amended from time to time.
CABLE MICHIGAN, INC.
By: ____________________
Date: __________________
