As filed with the Securities and Exchange Commission on October 17 , 1997
Registration No. 33-
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------
RCN CORPORATION
(Exact name of issuer as specified in its charter)
Delaware 22-3498533
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
105 Carnegie Center
Princeton, NJ 08540-6215
609-734-3700
(Address of principal executive offices)
------------------------
RCN CORPORATION 1997 EQUITY INCENTIVE PLAN
RCN CORPORATION 1997 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
RCN CORPORATION EXECUTIVE STOCK PURCHASE PLAN
(Full title of the Plans)
------------------------
John D. Filipowicz, Esq.
Senior Vice President, Assistant General Counsel
and Assistant Secretary
105 Carnegie 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>
CALCULATION OF REGISTRATION FEE
<CAPTION>
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)............................... 5,350,000 $42.25 $226,037,500 $68,497
</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 41 Pages.
Exhibit Index on Page 10.
===========================================================================
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 RCN
Corporation 1997 Equity Incentive Plan, the RCN Corporation 1997 Stock Plan
for Non-Employee Directors, and the RCN Corporation 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
RCN Corporation (the "Registrant") hereby files this
Registration Statement with the Securities and Exchange Commission (the
"Commission") on Form S-8 to register 5,350,000 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 0-22825), 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 section 102(b)(7) of the Delaware
General Corporation Law (the "DGCL"), which enables a corporation in its
certificate of incorporation to eliminate or limit the personal liability
of a director for violations of the director's fiduciary duty, except (i)
for breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to
section 174 of the DGCL (providing for liability of directors for unlawful
payment of dividends or unlawful stock purchases or redemptions) or (iv)
for any transaction from which a director derived an improper personal
benefit. The Registrant's certificate of incorporation eliminates the
liability of directors to the fullest extent permitted by Delaware law.
Reference is made to section 145 of the DGCL which provides
that a corporation may indemnify directors and officers as well as other
employees and agents against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement in connection with
specified actions, suits or proceedings, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation (a "derivative action")) if they act in good faith and in a
manner they reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful.
A similar standard is applicable in the case of derivative actions, except
that indemnification only extends to expenses (including attorney's fees)
incurred in connection with defense or settlement of such action, and the
statute requires court approval before there can be indemnification that
may be granted by a corporation's charter, by-laws, disinterested director
vote, stockholder vote, agreement or otherwise. The Registrant's
certificate of incorporation provides for the indemnification of its
directors, officers, employees and agents to the fullest extent permitted
by Delaware Law.
In addition, the Registrant has purchased and maintains
directors' and officers' liability insurance.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------- -------
<S> <C>
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 their 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 RCN Corporation 1997 Equity Incentive Plan.
99.02 Form of the RCN Corporation 1997 Stock Plan for Non-Employee Directors.
99.03 Form of the RCN Corporation Executive Stock Purchase Plan.
</TABLE>
- ------------
[FN]
* 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.
RCN CORPORATION
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, BRUCE
C. GODFREY AND MICHAEL J. MAHONEY 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 RCN
CORPORATION 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 October 17, 1997
David C. McCourt (Principal Executive Officer);
Chairman of the Board
/s/ Bruce C. Godfrey
- -------------------------- Executive Vice President and October 17, 1997
Bruce C. Godfrey Chief Financial Officer,
Director (Principal Financial
Officer and Principal Accounting
Officer)
/s/ Michael J. Mahoney
- -------------------------- President and Chief Operating October 17, 1997
Michael J. Mahoney Officer, Director
/s/ James Q. Crowe
- -------------------------- Director October 17, 1997
James Q. Crowe
/s/ Thomas May
- -------------------------- Director October 17, 1997
Thomas May
/s/ Walter Scott, Jr.
- -------------------------- Director October 17, 1997
Walter Scott, Jr.
/s/ Michael B. Yanney
- -------------------------- Director October 17, 1997
Michael B. Yanney
- -------------------------- Director October 17, 1997
Alfred Fasola
/s/ Thomas P. O'Neill, III
- -------------------------- Director October 8, 1997
Thomas P. O'Neill, III
- -------------------------- Director October 17, 1997
Richard R. Jaros
/s/ Eugene Roth
- -------------------------- Director October 17, 1997
Eugene Roth
/s/ Stuart Graham
- -------------------------- Director October 8, 1997
Stuart Graham
INDEX TO EXHIBITS
<TABLE>
<CAPTION> Sequentially
Exhibit Number Exhibit Numbered Page
- -------------- ------- -------------
<S> <C> <C>
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. 0-22825 (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 RCN Corporation 1997 Equity Incentive Plan.
99.02 Form of the RCN Corporation 1997 Stock Plan for
Non-Employee Directors.
99.03 Form of the RCN Corporation Executive Stock Purchase Plan.
</TABLE>
- ------------
[FN]
* Incorporated by reference.
Exhibit 5.01
RCN CORPORATION
105 Carnegie Center
Princeton, NJ 08540
- - - - - - - - - -
(609) 734-3803
Facsimile (609) 734-3830
October 14, 1997
RCN 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 RCN Corporation on Form S-8 of our report dated June 30, 1997, on our
audits of the consolidated financial statements of RCN Corporation as of
December 31, 1996 and 1995, and for the years ended December 31, 1996,
1995, and 1994, which report is included in RCN Corporation's Registration
Statement on Form 10. We also consent to the reference to our Firm under
the caption "Experts".
COOPERS & LYBRAND L.L.P.
Philadelphia, Pennsylvania
October 14, 1997
Exhibit 99.01
RCN CORPORATION
1997 EQUITY INCENTIVE PLAN
1. Definitions
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 RCN Corporation, a Delaware 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 Parent or a 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 Cable Michigan, Inc. ("CMI")
or C-TEC Corporation ("C-TEC") or any successors thereto who is or may be
granted options to purchase shares of Common Stock in connection with a
distribution by C-TEC to its shareholders 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 CMI, 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 RCN 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) "RCN 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 5,000,000.
(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 1,000,000 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, its
Parent 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 RCN Stock Price
Change") over the period (the "RCN 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&O 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 RCN 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 RCN Stock Price Change with respect to any RCN
Period, the Fair Market Value of a share of Company Stock as
of the last day of any RCN 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 RCN 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 RCN Corporation 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 CMI, 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 CMI, C-TEC or CMI, 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 CMI, C-TEC or CMI,
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 State of Delaware
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 Delaware 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
RCN Corporation as of
[________], 1997
By:________________________________
[Name, Title]
EXHIBIT 99.02
RCN Corporation
1997 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
1. Purpose.
The purpose of the RCN Corporation 1997 Stock Plan for
Non-Employee Directors (the "Plan") is to promote the interests of the RCN
Corporation (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
RCN CORPORATION
EXECUTIVE
STOCK PURCHASE PLAN
1. Purpose. The purpose of the RCN Corporation Executive
Stock Purchase Plan is to strengthen the mutuality of interests between
executives and shareholders. The Plan offers certain executives of RCN
Corporation 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 RCN
Corporation. Further, RCN Corporation 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 RCN Corporation 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 RCN Corporation, 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 RCN Corporation 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.
"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 250,000 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 CMI, 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 CMI, 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 CMI, 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 CMI, 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 CMI, 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 CMI, 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 CMI, 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 CMI, 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 CMI, 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.
RCN CORPORATION
By: ____________________
Date: __________________
