Exhibit 10.2



 






EXHIBIT 10.2




CINCINNATI BELL INC.

PERFORMANCE /RESTRICTED STOCK AGREEMENT




This Agreement is made between Cincinnati Bell Inc. (the “Company” and together with all of its
subsidiary corporations and organizations, the “Employer”) and _______________ (the “Employee”) and
is effective as of _________________________.




Performance Restricted Stock Award




Under and pursuant to the Cincinnati Bell Inc. 1997 Long Term Incentive Plan (the “Plan”), the
Compensation Committee of the Company’s Board of Directors (the “Committee”) hereby, on behalf of
the Company, awards to the Employee as of the effective date of this Agreement ________ shares of
common stock of the Company (the “Award Shares”).




Any Award Shares shall be restricted in that they may not be sold, assigned, transferred, pledged,
or otherwise encumbered and shall be subject to forfeiture in accordance with the terms of this
Agreement (all such restrictions being referred to herein as the “Restrictions”) until, unless, and
to the extent the Restrictions lapse under the terms of this Agreement.




Terms Used In Agreement




The following terms are used in determining whether the Restrictions that apply to the Award Shares
lapse and shall have the meanings indicated below.





	1.  	“Free Cash Flow” means: Cash provided by operating activities less Capital Expenditures (as
specified in the Company’s most recent capital plan) and Other investing activities which do
not exceed $____ million less dividend payments and proceeds from the issuance of equity less
proceeds from the sale of assets which exceed $___ million.






	•  	This definition equals the Company’s externally reported measure of cash flow adjusted
for the following items: 1) substitutes planned capital expenditure amounts for actual
amounts, 2) eliminates financing fees, 3) excludes asset acquisition costs (including the
costs associated with the start of a new business) not to exceed
$___ million, 4) includes
the proceeds from the sale of assets less than $____ million. (Please see the attached
schedule.)






	•  	If the Company acquires or sells assets or makes capital investment in aggregate in
excess of or below its capital plan by $____ million in any given year, the Compensation
Committee will assess the impact of the acquisition or sale upon management’s ability to
achieve the long-term incentive plan cash flow target and will change it as the Committee
deems necessary.






	•  	Also, if the Company were to issue new equity, make an exchange of equity for debt or
change its dividend policy, the Compensation Committee will assess the impact of the




 









 






	   	equity and/or dividend policy changes upon management’s ability to achieve the long-term
incentive plan cash flow target and will change it as the Committee deems necessary.





2. “Free Cash Flow Goal on Cumulative Basis” means:




	 	 	 	 	 	 
	 	for
the ___Performance Period . . .

	 	 	$___	 
	 	for
the ___-___Performance Period . . .

	 	 	$___	 
	 	for
the ___-___Performance Period . . .

	 	 	$___	 
	 





3.“Free Cash Flow Result” means, for any Performance Period, the quotient produced by dividing (a)
the actual Free Cash Flow for such Performance Period by (b) the Free Cash Flow Goal on Cumulative
Basis for such Performance Period (with such quotient expressed as a percentage, to the nearest
one-tenth of one percent).




4.“Maximum Number of Award Shares Subject to Restriction Lapse on Cumulative Basis” means:




	 	 	 	 	 	 
	 	for
the ___Performance Period . . .

	 	 	___Shares	 
	 	for
the ___-___Performance Period . . .

	 	 	___Shares	 
	 	for
the ___-___Performance Period . . .

	 	 	___Shares	 
	 





5.“Performance Period” means each period for which the Restrictions on certain of the Award Shares
may lapse in the event the Free Cash Flow Result for such period meets certain standards set forth
in this Agreement. The Performance Periods are:





	 	a.  	“___Performance Period,” which begins on January 1, ___and ends
on December 31, ___;
	 
	 	b.  	“___-___Performance Period,” which begins on January 1, ___and
ends on December 31, ___; and
	 
	 	c.  	“___-___Performance Period,” which begins on January 1, ___and
ends on December 31, ___.





6.“Performance/Restricted Share Percentage” means:





	 	d.  	for the ___Performance Period or the ___-___Performance Period,
the Performance Share Percentage that is determined for such Performance Period
from the following table (based on the Free Cash Flow Result for such Performance
Period):




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	 	If Free Cash Flow Result for ___	 	 	Then Performance/Restricted Share	 
	 	Performance Period or ____-___	 	 	Percentage for such Performance	 
	 	Performance Period Is:	 	 	Period Is:	 
	 	Under ___%

	 	 	___%	 
	 	___%

	 	 	___%	 
	 	___% or higher

	 	 	___%	 
	 






	 	e.  	for the ___-___Performance Period, the Performance Share Percentage
that is determined for such Performance Period from the following table (based on
the Free Cash Flow Result for such Performance Period):





	 	 	 	 	 	 
	 
	 	 	 	 	Then Performance/Restricted Share	 
	 	If Free Cash Flow Result for the	 	 	Percentage for such Performance	 
	 	____-____ Performance Period Is:	 	 	Period Is:	 
	 	Under ___%

	 	 	___%	 
	 	___%

	 	 	___%	 
	 	___%

	 	 	___%	 
	 	___% or higher

	 	 	___%	 
	 






	 	   	If the Free Cash Flow Result for any Performance Period is between ___% and ___%,
or between ___% and ___% (in the case of the ___-___Performance Period), the
Performance/Restricted Share Percentage for such Performance Period shall be
interpolated from the appropriate table set forth above (on the basis that the
Performance/Restricted Share Percentage increases from ___% to ___%, and then from ___%
to ___% in the case of the ___-___Performance Period, on a linear basis), to the
nearest one-tenth of one percent.





Restrictions and Lapse of Restrictions




For each Performance Period, the Committee shall verify the Free Cash Flow, and the resulting
number of Award Shares with respect to which the Restrictions lapse, within a reasonable period
after the end of such Performance Period (but in no event later than the first March 15 that occurs
after the end of such Performance Period).




Except as is otherwise provided in the subsequent provisions of this Agreement, for each
Performance Period the Restrictions will lapse, on the first January 31, February 28th
or March 31 that occurs after the end of such Performance Period and following the Committee’s
determination of Award Shares with respect to which the Restrictions lapse, as to the number of
Award Shares that is determined by:





	1.  	first multiplying (a) the Maximum Number of Award Shares Subject to Restriction Lapse on
Cumulative Basis for such Performance Period by (b) the Performance/Restricted Share
Percentage for such Performance Period (with the result of this clause 1 rounded to the
nearest whole number of Award Shares); and




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	2.  	then subtracting, from the result obtained in clause 1 above, the total number of Award
Shares with respect to which the Restrictions lapsed for any earlier Performance Period or
Periods (except that the result of this clause 2 shall not in any event be deemed to be less
than zero Award Shares).





Notwithstanding the foregoing and except as is otherwise provided in the subsequent provisions of
this Agreement, the Restrictions shall not lapse on any Award Shares for any Performance Period if
the Employee’s employment with the Employer (on an active employee payroll for payment and
withholding purposes) terminates for any reason prior to the first lapse of Restrictions that
occurs after the end of such Performance Period and (2) the Employee shall forfeit to the Employer
all of such Award Shares on the date of such a termination of employment.




Special Retirement or Disability Benefit Provision




Notwithstanding any of the foregoing provisions of this Agreement, if the Employee’s employment
with the Employer terminates because of retirement or disability prior to the end of any
Performance Period, then, for such Performance Period the Restrictions will lapse, on the first
March 31 that occurs after the end of such Performance Period, as to the number of Award Shares
that is determined by:





	1.  	first multiplying (a) the Maximum Number of Award Shares on a Cumulative Basis by (b) the
Performance Share Percentage for such Performance Period (with the result of this clause 1
rounded to the nearest whole number of Award Shares); and
	 
	2.  	then subtracting, from the result obtained in clause 1 above, the total number of Award
Shares with respect to which the Restrictions lapsed for any earlier Performance Period or
Periods (except that the result of this clause 2 shall not in any event be deemed to be less
than zero Award Shares).





For purposes hereof, the Employee’s termination of employment with the Employer shall be deemed to
occur because of “retirement” only if such employment terminates (1) after the Employee has both
attained at least age 55 and completed at least 10 years of employment with the Employer or (2) is
otherwise deemed eligible for retiree medical coverage and (3) other than by reason of the
Employee’s fraud, misappropriation or embezzlement, gross insubordination, failure to perform in
good faith the Employee’s assigned duties, or any other reason for which a termination of
employment would be deemed for “cause” under any employment agreement between the Employee and the
Employer that is in effect at the time of the Employee’s termination of employment with the
Employer.




Also for purposes hereof, the Employee’s termination of employment with the Employer shall be
deemed to occur because of “disability” only if such employment terminates because the Employee is
unable to perform all of the duties of the Employee’s then current position with the Employer
because of a physical or mental condition and if such inability to perform such duties is
reasonably expected to be permanent. The Employee’s condition of disability must be determined by
a physician chosen or approved by the Committee. However, the Employee shall




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be deemed to be disabled as of the date of the Employee’s termination of employment with the
Employer if the Employee presents evidence that the Employee has been determined to be disabled by
the U.S. Social Security Administration on such date.




Special Change in Control or Death Benefit Provision




Notwithstanding any of the foregoing provisions of this Agreement, if a change in control of the
Company or the Employee’s death occurs while the Employee is still employed by the Employer and
between the last day of a Performance Period and the first March 31 that occurs after the end of
such Performance Period, then, even when the Employee’s employment with the Employer terminates
before such March 31 (in the case of a change in control) or despite the Employee’s termination of
employment before such March 31 (in the case of the Employee’s death), for such Performance Period
the Restrictions will lapse on such March 31 as to the same number of Award Shares as to which the
Restrictions would lapse under the foregoing provisions of this Agreement if the Employee’s
employment with the Employer had not terminated before such March 31.




Also notwithstanding any of the foregoing provisions of this Agreement, if a change in control of
the Company or the Employee’s death occurs while the Employee is still employed by the Employer and
prior to the end of any Performance Period, then the Restrictions will not lapse on any Award
Shares for any Performance Period ending after the date of such change in control or death under
the terms of any other provisions of this Agreement. However, for any Performance Period ending
after the date of such change in control or death the Restrictions will lapse, on the
30th day after the date of the Company’s change in control or the Employee’s death, as
to the number of Award Shares that is determined by:





	1.  	first multiplying (a) the Maximum Number of Award Shares on a Cumulative Basis for such
Performance Period by (b) 66.67% (with the result of this clause 1 rounded to the nearest
whole number of Award Shares); and
	 
	2.  	then subtracting, from the result obtained in clause 1 above, the total number of Award
Shares with respect to which the Restrictions lapsed for any earlier Performance Period or
Periods (except that the result of this clause 2 shall not in any event be deemed to be less
than zero Award Shares).





For purposes hereof, a “change in control” of the Company shall have the meaning ascribed to such
term under the Plan.




Forfeiture Provision




Upon the earliest of (1) the date that the Employee’s employment with the Employer terminates for
any reason (other than for retirement, disability, or death or after the Company’s change in
control), (2) the 30th day after the date of the Company’s change in control or the
Employee’s death (or, if later and if the change in control or the Employee’s death occurs between
January 1 and March 15 of a calendar year, the March 15 of such year), or (3) March 31, 2008, the




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Employee’s ownership and all related rights with respect to all of the Award Shares automatically
will be forfeited to the Company and the Company automatically will become the sole owner of such
shares except to the extent the Restrictions applicable to such Award Shares lapse or lapsed on or
prior to the earliest of such dates under the foregoing provisions of this Agreement.




Stock Certificates




On or as soon as possible after the effective date of this Agreement, one or more stock
certificates which evidence the Award Shares shall be issued by the Company for the benefit of the
Employee. Each such stock certificate shall be deposited with and held by the Company or its
agent. All such stock certificates and the Award Shares evidenced thereby shall be subject to the
forfeiture provisions, limitations on transferability, and all other restrictions described in this
Agreement. The Employee shall deposit with the Company stock powers endorsed by the Employee in
blank and in such number as is requested by the Company.




All stock certificates for any Award Shares shall, prior to the date the Restrictions applicable to
such shares lapse or the date such shares are forfeited, bear the following legend:





	 	   	“The transferability of this certificate and the shares of stock represented hereby
are subject to the terms and conditions (including forfeiture) of the Cincinnati
Bell Inc. 1997 Long Term Incentive Plan and a Performance Restricted Stock
Agreement. Copies of such Plan and Agreement are on file at the offices of
Cincinnati Bell Inc., Cincinnati, Ohio.”





With regard to any Award Shares which cease to be subject to Restrictions pursuant to the foregoing
provisions of this Agreement, the Company shall, within 60 days after the date such shares cease to
be subject to the Restrictions, transfer common shares of the Company for such Award Shares free of
all restrictions set forth in the Plan and this Agreement to the Employee (or in the event of the
Employee’s death prior to such transfer, to the Employee’s legal representatives, heirs, or
legatees.




Shareholder’s Rights




Subject to the other terms of this Agreement, prior to the earliest date on which the Restrictions
on any Award Shares lapse or the date such shares are forfeited to the Company:





	1.  	the Employee shall have, with respect to such Award Shares, the right to vote such shares;
and
	 
	2.  	cash dividends paid with respect to such Award Shares shall be paid in cash to the Employee.




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Regulatory Compliance




The issue of Award Shares and common shares of the Company shall be subject to full compliance with
all then-applicable requirements of law and the requirements of the exchange upon which shares may
be traded.




Withholding Tax




In the event that the award and receipt of the Award Shares or the expiration of the Restrictions
thereon results in the Employee’s realization of income which for federal, state, or local income
tax purposes is, in the opinion of counsel for the Company, subject to withholding of tax by the
Employer, the Employee shall pay to the Employer an amount equal to such withholding tax or make
arrangements satisfactory to the Employer regarding the payment of such tax (or the Employer may,
at its discretion, withhold such amount from the Employee’s salary or from dividends paid by the
Company on shares of the Award Shares or any other compensation payable to the Employee).




Investment Representation




The Employee represents and agrees that if the Employee is awarded and receives the Award Shares at
a time when there is not in effect under the Securities Act of 1933 a registration statement
pertaining to the shares and there is not available for delivery a prospectus meeting the
requirements of Section 10(A)(3) of such Act, (1) the Employee will accept and receive such shares
for the purpose of investment and not with a view to their resale or distribution, (2) that upon
such award and receipt, the Employee will furnish to the Company an investment letter in form and
substance satisfactory to the Company, (3) prior to selling or offering for sale any such shares,
the Employee will furnish the Company with an opinion of counsel satisfactory to the Company to the
effect that such sale may lawfully be made and will furnish the Company with such certificates as
to factual matters as the Company may reasonably request, and (4) that certificates representing
such shares may be marked with an appropriate legend describing such conditions precedent to sale
or transfer.




Federal Income Tax Election




The Employee hereby acknowledges receipt of advice that, pursuant to current federal income tax
laws: (1) the Employee has 30 days in which to elect to have the fair market value of the Award
Shares at the time of their award (determined without regard to the Restrictions) be included in
the Employee’s compensation income for federal income tax purposes in the tax year of the award in
accordance with the provisions of Internal Revenue Code Section 83(b); and (2) if no such election
is made, the fair market value of the Award Shares at the time of their Restrictions lapse will
generally be included in the Employee’s compensation income for federal income tax purposes in the
tax year in which such Restrictions lapse (although the amount and inclusion in income may be
delayed slightly if the Employee’s sale of such shares at a profit at such time could subject the
Employee to a suit under Section 16(b) of the Securities Exchange Act of 1934.




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Adjustments




If, after the date of this Agreement, the common shares of the Company are, as a result of a
merger, reorganization, consolidation, recapitalization, reclassification, split-up, spin-off,
separation, liquidation, stock dividend, stock split, reverse stock split, property dividend, share
repurchase, share combination, share exchange, issuance of warrants, rights or debentures, or other
change in corporate structure of the Company, increased or decreased or changed into or exchanged
for a different number or kind of shares of stock or other securities of the Company or of another
organization, then:





	1.  	there automatically shall be substituted for each Award Share for which the Restrictions have
not lapsed the number and kind of shares of stock or other securities into which each
outstanding share is changed or for which each such share is exchanged;
	 
	2.  	the Company shall make such other adjustments to the securities subject to provisions of the
Plan and this Agreement as may be appropriate and equitable, provided, however, that the
number of shares of Award Shares will always be a whole number; and
	 
	3.  	any additional or other shares that are attributable to such Award Shares as a result of any
event discussed in this part of the Agreement (such as a stock dividend) shall be subject to
the same Restrictions, have the same rights, shall be administered under the same rules, and
shall be subject to same rules as to when their Restrictions lapse or they are forfeited, as
such rules apply to the Award Shares to which such additional or other shares relate.





Deferral Or Receipt of Award




Notwithstanding any other provisions hereof to the contrary, the Employee may surrender any Award
Shares to the Company in return for the Employer’s unfunded and unsecured promise to pay a benefit
in the future and thereby defer the federal income tax on any Award Shares beyond the date that
their Restrictions may lapse to the extent permitted under the terms of the Company’s Cincinnati
Bell Inc. Executive Deferred Compensation Plan (the “Deferred Compensation Plan”) and applicable
law, including the requirements of Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), by following the deferral procedures set forth in the provisions of the Deferred
Compensation Plan (as they are amended to satisfy the requirements of Section 409A of the Code).




In general, but subject to the terms of the Deferred Compensation Plan as amended to meet the
requirements of Code Section 409A, the Employee may elect to surrender any Award Shares under the
procedures of the Deferred Compensation Plan provided such election is made:





	1.  	by June 30, ___as to any Award Shares for which their Restrictions will otherwise lapse in
connection with the ___Performance Period;




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	2.  	by June 30, ___as to Award Shares for which their Restrictions will otherwise lapse in
connection with the ___-___Performance Period; or
	 
	3.  	by June 30, ___as to Award Shares for which their Restrictions will otherwise lapse in
connection with the ___-___Performance Period.





Notices




Any notice to the Company relating to this Agreement must be in writing and delivered in person or
by registered mail to the Company at the following address, Cincinnati Bell Inc., Atrium I-102-600,
201 East Fourth Street, Cincinnati, Ohio 45202, Attention: Director of Compensation and Benefits,
or at such other address as the Company has designated by notice. Any notice to the Employee or
other person or persons succeeding to the Employee’s interest must be delivered to the Employee or
such other person or persons at the Employee’s address on record with the Company or such other
address as is specified in a notice filed with the Company.




Determinations of the Committee Final




Any dispute or disagreement that arises under, as a result of, or in any way relates to the
interpretation or construction of this Agreement shall be determined by the Committee. The
Employee hereby agrees to accept any such determination as final, binding, and conclusive for all
purposes.




Successors




All rights under this Agreement are personal to the Employee and are not transferable except that,
in the event of the Employee’s death, such rights are transferable to the Employee’s legal
representatives, heirs, or legatees. This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns and the Employee and the Employee’s legal
representatives, heirs, and legatees.




Obligations of the Company




The liability of the Company under the Plan and this Agreement is limited to the obligations set
forth therein. No term or provision of the Plan or this Agreement shall be construed to impose any
liability on the Company in favor of the Employee with respect to any loss, cost, or expense which
the Employee may incur in connection with or arising out of any transaction in connection
therewith.




Governing Law




This Agreement will be governed by and interpreted in accordance with the laws of the State of
Ohio.




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Plan




This Agreement is issued under and is subject to all of the terms of the Plan, the Cincinnati Bell
Inc. 1997 Long Term Incentive Plan. The provisions of the Plan shall control if there is any
conflict between the Plan and this Agreement and on any matters that are not contained in this
Agreement. The Plan is incorporated by reference and made a part of this Agreement.




Entire Agreement




This Agreement and the Plan supersede any other agreement, whether written or oral, that may have
been made or entered into by the Employer and the Employee relating to the Award Shares that are
granted under this Agreement. This Agreement and the Plan constitute the entire agreement by the
parties with respect to such matters, and there are no agreements or commitments except as set
forth herein and in the Plan.




Captions; Counterparts




The captions in this Agreement are for convenience only and shall not be considered a part of or
affect the construction or interpretation of any provision of this Agreement. This Agreement may
be executed in any number of counterparts, each of which shall constitute one and the same
instrument.




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     IN ORDER TO GRANT THIS PERFORMANCE RESTRICTED STOCK AWARD, the Company and the Employee have
caused this Agreement to be duly executed as of the dates noted below and, by signing below, agree
to all of the terms of this Agreement.



	 	 	 	 	 	 	 
	 	 	CINCINNATI BELL INC.
	

	 	By	 	 	 	 
	

	 	 	 	 	 	 
	

	 	 	 	Philip D. Cox – Chairman

of the Board of Directors	 	 
	 
	 	 	 	 	 	 
	

	 	Date	 	 
	

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	

	 	EMPLOYEE:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	

	 	Date	 	 
	

	 	 	 	 	 	 







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