Federal Register / Vol. 78, No. 174 / Monday, September 9, 2013 / Notices 55103 

1The Summary of Facts and Representations is 

based on the Applicant’s representations and does 

not reflect the views of the Department. 

The Deputy Administrator also 

establishes aggregate production quotas 

for all other Schedule I and II controlled 

substances included in 21 CFR 1308.11 

and 1308.12 at zero. Pursuant to 21 CFR 

1303.13 and 21 CFR 1315.13, upon 

consideration of the relevant factors, the 

Deputy Administrator may adjust the 

2014 aggregate production quotas and 

assessment of annual needs as needed. 

Dated: August 30, 2013. 

Thomas M. Harrigan, 

Deputy Administrator. 

[FR Doc. 2013–21797 Filed 9–6–13; 8:45 am] 

BILLING CODE 4410–09–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

[Application No. D–11758] 

Notice of Proposed Exemption 

involving AT&T Inc. (Together With 

AT&T Inc.’s Affiliates, AT&T or the 

Applicant) Located in Dallas, TX 

AGENCY: Employee Benefits Security 

Administration, U.S. Department of 

Labor. 

ACTION: Notice of Proposed Exemption. 

SUMMARY: This document contains a 

notice of pendency before the 

Department of Labor (the Department) of 

a proposed individual exemption from 

certain prohibited transaction 

restrictions of the Employee Retirement 

Income Security Act of 1974, as 

amended (ERISA or the Act), and the 

Internal Revenue Code of 1986, as 

amended (the Code). The proposed 

transactions involve AT&T, the AT&T 

Pension Benefit Plan (the Plan), and the 

SBC Master Pension Trust (the Trust). 

The proposed exemption, if granted, 

would affect the Plan and its 

participants and beneficiaries. 

Effective Date: If granted, this 

proposed exemption will be effective as 

of September 1, 2013. 

DATES: Written comments and requests 

for a public hearing on the proposed 

exemption should be submitted to the 

Department within 55 days from the 

date of publication of this Federal 

Register Notice. 

ADDRESSES: Comments and requests for 

a hearing should state: (1) The name, 

address, and telephone number of the 

person making the comment or request, 

and (2) the nature of the person’s 

interest in the proposed exemption and 

the manner in which the person would 

be adversely affected by the exemption, 

if granted. A request for a hearing must 

also state the issues to be addressed and 

include a general description of the 

evidence to be presented at the hearing. 

All written comments and requests for 

a public hearing concerning the 

proposed exemption should be sent to 

the Office of Exemption Determinations, 

Employee Benefits Security 

Administration, Room N–5700, U.S. 

Department of Labor, 200 Constitution 

Avenue NW., Washington DC 20210, 

Attention: Application No. D–11758. 

Interested persons are also invited to 

submit comments and/or hearing 

requests to EBSA via email or FAX. Any 

such comments or requests should be 

sent either by email to: moffitt.betty@

dol.gov, or by FAX to (202) 219–0204 by 

the end of the scheduled comment 

period. The application for exemption 

and the comments received will be 

available for public inspection in the 

Public Documents Room of the 

Employee Benefits Security 

Administration, U.S. Department of 

Labor, Room N–1513, 200 Constitution 

Avenue NW., Washington, DC 20210. 

Comments and hearing requests will 

also be available online at 

www.regulations.gov and www.dol.gov/

ebsa, at no charge. 

Warning: If you submit written 

comments or hearing requests, do not 

include any personally identifiable 

information (such as name, address, or 

other contact information) or 

confidential business information that 

you do not want publicly disclosed. All 

comments and hearing requests may be 

posted on the Internet and can be 

retrieved by most Internet search 

engines. 

FOR FURTHER INFORMATION CONTACT: 

Anna Mpras Vaughan, Office of 

Exemption Determinations, Employee 

Benefits Security Administration, U.S. 

Department of Labor, telephone (202) 

693–8565. (This is not a toll-free 

number.) 

SUPPLEMENTARY INFORMATION: This 

document contains a notice of proposed 

exemption that, if granted, would 

provide exemptive relief from sections 

406(a)(1)(A), 406(a)(1)(B), 406(a)(1)(D), 

406(a)(1)(E), 406(a)(2), 406(b)(1), 

406(b)(2), and 407(a) of the Act and the 

sanctions resulting from the application 

of section 4975 of the Code, by reason 

of section 4975(c)(1)(A), 4975(c)(1)(B), 

4975(c)(1)(D) and 4975(c)(1)(E) of the 

Code. The proposed exemption has been 

requested by AT&T pursuant to section 

408(a) of the Act and section 4975(c)(2) 

of the Code, and in accordance with the 

procedures set forth in 29 CFR Part 

2570, Subpart B (76 FR 66637, 66644, 

October 27, 2011). Effective December 

31, 1978, section 102 of the 

Reorganization Plan No. 4 of 1978, 5 

U.S.C. App. 1 (1996), transferred the 

authority of the Secretary of the 

Treasury to issue administrative 

exemptions under section 4975(c)(2) of 

the Code to the Secretary of Labor. 

Accordingly, this notice of proposed 

exemption is being issued solely by the 

Department. 

Summary of Facts and 

Representations 1

Background 

1. AT&T Inc. (together with its 

affiliates, AT&T), formerly known as 

SBC Communications Inc., is a holding 

company incorporated in 1983 under 

the laws of the State of Delaware that 

has its principal executive offices in 

Dallas, Texas. AT&T, a provider of 

telecommunications services, offers its 

services and products to consumers in 

the U.S. and to businesses and other 

providers of telecommunications 

services worldwide. The services and 

products that AT&T offers vary by 

market, and include: wireless 

communications, local exchange 

services, long-distance services, data/

broadband and Internet services, video 

services, telecommunications 

equipment, managed networking and 

wholesale services. 

2. AT&T is the sponsor of the AT&T 

Pension Benefit Plan (the Plan). 

Effective December 14, 2010, the Plan 

was amended (the 2010 Amendment) to 

name the Plan’s named fiduciary, AT&T 

Services, as the plan administrator. 

AT&T Services, pursuant to delegation 

(the Delegation) from its Board of 

Directors (the Board) dated July 1, 2011, 

delegated to the AT&T Inc. Benefit Plan 

Investment Committee (the Committee) 

all powers and authority that may be 

necessary or appropriate to the 

establishment, qualification, 

administration, maintenance, and 

operation of the SBC Master Pension 

Trust (the Trust) established as part of 

the Plan. Notwithstanding its power to 

delegate authority, the Committee 

retains, and may not delegate, the 

authority to authorize ‘‘companydirected’’ investments (i.e., investments 

that have not been delegated to a third 

party investment manager) in amounts 

greater than $200,000,000. 

3. In addition to AT&T Services and 

the Committee, other Plan fiduciaries 

include Brock Fiduciary Services LLC 

(the Independent Fiduciary), an 

investment manager that is independent 

of AT&T Inc. 


tkelley on DSK3SPTVN1PROD with NOTICES
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2The Department expresses no opinion herein as 

to the applicability of the statutory exemption 

provided by section 408(e) of the Act with respect 

to these investments. 

The Issuer 

4. AT&T Mobility II LLC (the Issuer), 

an indirect wholly-owned subsidiary of 

AT&T Inc., is a Delaware limited 

liability company that has its principal 

executive offices in Atlanta, GA. The 

Issuer provides the wireless services 

marketed under AT&T’s name and 

serves approximately 107 million 

mobile users over a nationwide network 

that spans all major metropolitan areas. 

The Applicant represents that AT&T’s 

wireless business is the fastest growing 

part of AT&T’s business. The Issuer 

earned operating revenues totaling 

$66.763 billion and income totaling 

$16.532 billion in the year ended 

December 31, 2012. During the same 

year, AT&T’s total revenue was 

$127.434 billion and its cash from 

operating activities was $39.2 billion. 

Revenue from wireless data increased 

from $4.3 billion in 2006 to $31.8 

billion in 2012. The Applicant states 

that the continued financial success of 

AT&T, anchored by the growth of the 

Issuer which accounted for 

approximately 53% of the total 

operating revenue for all of AT&T’s 

business segments in 2012, has allowed 

AT&T to pay $10.2 billion in dividends 

to shareholders in 2012 which was the 

29th consecutive year of annual 

dividend increases for AT&T. 

The Plan 

5. The Plan is a noncontributory 

qualified defined benefit pension plan 

covering substantially all U.S. bargained 

and non-bargained employees of the 

participating subsidiaries of AT&T. The 

Plan provides retirement, disability, 

death and certain other ancillary 

benefits to Plan participants. The Plan 

was originally established effective as of 

January 1, 1984, as the Southwestern 

Bell Corporation Management Pension 

Plan. Effective May 1, 1992, the name of 

the Plan was changed to the SBC 

Pension Benefit Plan, and effective 

November 18, 2005, the name of the 

Plan was changed to the AT&T Pension 

Benefit Plan. As of December 31, 2012, 

there were approximately 551,187 

employees participating in the Plan. 

The Trust 

6. The Trust was established pursuant 

to a Declaration of Trust originally 

effective as of January 1, 2007, and 

amended and restated in its entirety 

effective as of February 1, 2012, by and 

between AT&T Services and the 

Trustee. The Trust holds assets of the 

Plan and contributions required to fund 

the Plan are made to and held under the 

Trust. The assets of the Trust are 

invested, in small part, in employer 

securities issued by AT&T. In this 

regard, as of the 2012 year-end, the 

aggregate fair market value of these 

investments was $72,920,000, which 

constituted approximately 0.16% of the 

fair market value of the Trust’s total 

assets. It is AT&T’s belief that these 

investments are covered under the 

statutory exemption described in 

section 408(e) of ERISA.2

Minimum Required Contributions 

7. The Applicant represents that 

AT&T has always satisfied its funding 

obligations and has never asked for a 

waiver of those obligations. The 

Applicant represents that, in fact, AT&T 

generally has voluntarily funded its 

pension obligations in advance of the 

required dates, and notes that AT&T 

made a voluntary $1 billion cash 

contribution in 2011. 

8. The Applicant represents that as of 

August 2013, its anticipated minimum 

required funding contributions for the 

Plan for the years 2013 through 2019 are 

as follows: 

Calendar year beginning 

Minimum required 

contribution 

(billions) 

January 1, 2013 ............ $0.175 

January 1, 2014 ............ 1.2 

January 1, 2015 ............ 1.2 

January 1, 2016 ............ 0.4 

January 1, 2017 ............ 0.0 

January 1, 2018 ............ 0.0 

January 1, 2019 ............ 0.0 

Total ....................... 2.975 

The Applicant represents that these 

minimum required contribution 

estimates are based on certain 

assumptions, including that the Plan’s 

assets will earn an annual return of 

12.0% for 2013 and 2014 and 7.75% 

thereafter, and that interest rates rise 

beginning in January 2013 and increase 

to pre-financial crisis levels by 2017. 

The Preferred Interests 

9. The Applicant proposes to make an 

in-kind contribution (the Contribution) 

of 320 million Series A Cumulative 

Perpetual Preferred Membership 

Interests of the Issuer (i.e., the Preferred 

Interests), a newly created class of 

preferred membership interests, to the 

Trust. In order to effectuate the transfer, 

the Issuer will be recapitalized by 

amending its governing documents to 

provide for an additional class of equity 

consisting of the Preferred Interests. The 

Preferred Interests will be issued by the 

Issuer to its parent company, AT&T Inc., 

and then contributed in their entirety by 

AT&T Inc. to the Trust. The Preferred 

Interests are non-voting and do not 

provide for participation in the 

management of the Issuer. Currently, the 

only membership interests issued by the 

Issuer are common membership 

interests, all of which are held by AT&T. 

10. The Preferred Interests will 

accrue, pursuant to the Second 

Amended and Restated Limited 

Liability Company Agreement of AT&T 

Mobility II LLC (the LLC Agreement), 

cumulative distributions of $1.75 per 

Preferred Interest per annum, payable 

quarterly upon declaration by the Issuer 

(the Distributions). At any time when 

Distributions on any outstanding 

Preferred Interests are in arrears for 

purposes of the LLC Agreement: (i) The 

Issuer will not be permitted to make any 

transfer of cash to its parent, AT&T Inc., 

or any other member of the Issuer, 

whether pursuant to a loan, equity 

distribution or any other arrangement; 

and (ii) AT&T Inc. will not be permitted 

to declare any dividends on or make any 

repurchases of its common stock. The 

Applicant represents that it is in AT&T’s 

financial interest, and AT&T intends to 

exercise its ownership rights in the 

Issuer, to cause the Issuer to pay the 

Distributions each quarter in accordance 

with the LLC Agreement. 

11. The Preferred Interests will rank 

senior to any other class or series of 

equity interests in the Issuer, now in 

existence or created in the future, in 

respect of the right to receive 

Distributions and the right to receive 

payments or distributions out of the 

assets of the Issuer upon voluntary or 

involuntary liquidation, dissolution or 

winding up of the Issuer. Therefore, in 

the event of any voluntary or 

involuntary liquidation, dissolution or 

winding up of the affairs of the Issuer, 

the Trust, as the holder of the Preferred 

Interests, will be entitled to receive the 

liquidation value of the Preferred 

Interests and any accrued cumulative 

but unpaid Distributions, before any 

liquidating distribution or payment is 

made to the holders of any other class 

or series of equity interests of the Issuer. 

The liquidation value of the Preferred 

Interests equals $25.00 per Preferred 

Interest (i.e., $8 billion in the aggregate) 

plus any accrued and unpaid 

Distributions. 

12. The fair market value of the 

Preferred Interests at any point in time 

will be determined by the Independent 

Fiduciary in its sole discretion based on 

certain factors, including the net present 

value of the expected distributions and 

the Option Price using a discount rate 


tkelley on DSK3SPTVN1PROD with NOTICES
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3The Applicant explains that the assumed term 

for valuation purposes is the five year period during 

which the Preferred Interests cannot be put to or 

called by AT&T, absent a Change of Control or other 

acceleration event identified in the Contribution 

Agreement. 

4The Contribution Agreement provides that the 

Issuer’s ‘‘debt-to-total-capitalization ratio’’ means 

the Issuer’s ‘‘Debt’’ divided by the sum of the 

Issuer’s ‘‘Debt’’ and total members’ equity including 

outstanding Preferred Interests (as taken directly 

from the Issuer’s most recently prepared U.S. GAAP 

balance sheet). The term ‘‘Debt’’ means, without 

duplication (i) all obligations of the entity for 

borrowed money or with respect to deposits or 

advances of any kind, and (ii) all obligations of the 

entity evidenced by bonds, debentures, notes or 

similar instruments. Additionally, AT&T Inc.’s 

‘‘debt-to-total-capitalization ratio’’ means AT&T 

Inc.’s Debt divided by the sum of AT&T Inc.’s Debt 

and total shareholders’ equity (as taken directly 

from AT&T Inc.’s most recently prepared U.S. 

GAAP balance sheet). 

5 In this instance the Put Option is triggered by 

a downgrade of AT&T Inc.’s credit rating rather 

than a downgrade of the Issuer’s credit rating 

because the Issuer is assigned the same credit rating 

as AT&T Inc. and has no independent rating of its 

own. 

6Such events include, with respect to the Call 

Option: (i) The twelve month period following the 

date AT&T issues an annual report reflecting the 

fully funded status of the Plan (on a U.S. GAAP 

basis); and (ii) the period on or after a Change of 

Control of the Issuer, and with respect to the Put 

Option: (i) The first date that the Issuer’s debt-tototal-capitalization ratio exceeds that of AT&T; (ii) 

the date on which AT&T is rated below investment 

grade for two consecutive calendar quarters by at 

least two of the following rating agencies: Standard 

& Poor’s Ratings Services, Moody’s Investor 

Services, Inc. or FitchRatings, Inc.; and (iii) the 

period on or after a Change of Control of the Issuer. 

7The Applicant represents that ‘‘appropriate 

treatment’’ refers to changes in the structure or 

features of the Preferred Interests that would protect 

their status, terms and conditions, and hence, value, 

in the context of a new business structure that 

could result from a Change of Control transaction. 

The Applicant explains that this type of language 

is often found in the terms of various equity 

instruments because it is impossible to predict what 

a future capital structure might be upon a Change 

of Control. However, the Applicant stresses that if 

the Independent Fiduciary determines that it 

cannot obtain such appropriate treatment, it has the 

unilateral right to trigger the Put Option. 

8Because AT&T Shares may be issued in payment 

of the Option Price, AT&T and the Trust have 

executed a Registration Rights Agreement, 

Continued 

that reflects the assumed term 3 as of the 

valuation date and an appropriate 

discount for the non-public nature of 

the Preferred Interests. The Independent 

Fiduciary estimates that the Preferred 

Interests will have a fair market value of 

approximately $9.2–$9.5 billion as of 

the date of the Contribution (the 

Contribution Date). The Independent 

Fiduciary will re-value the Preferred 

Interests immediately prior to the 

Contribution Date using the same 

methodology set forth in its original 

valuation report, absent extraordinary 

circumstances. The Independent 

Fiduciary will also value the Preferred 

Interests on a quarterly basis after the 

Contribution Date, using the same 

methodology, absent extraordinary 

circumstances, and in accordance with 

the terms of the IMA. 

The Contribution Agreement 

13. By their terms, as described in the 

Contribution Agreement, the Preferred 

Interests are transferable to AT&T upon 

exercise of a call option (the Call 

Option) and a put option (the Put 

Option), as described below. 

Call Option. AT&T and the Issuer 

(individually or collectively, the 

Purchaser) will have the right to 

purchase from the Trust all or any 

portion of the Preferred Interests, at a 

price per Preferred Interest equal to the 

Option Price, at any time and from time 

to time: (i) During the 12 month period 

following the date AT&T Inc. issues an 

annual report reflecting that the Plan is 

fully funded as determined under U.S. 

GAAP and calculated by including the 

fair market value of the Preferred 

Interests; (ii) on or after a ‘‘Change of 

Control’’ of the Issuer, as such term is 

defined in the Contribution Agreement; 

or (iii) on or after the fifth anniversary 

of the Contribution Date. The Call 

Option will be exercisable upon 30 

days’ prior written notice by the 

Purchaser. 

Put Option. The Trust will have the 

right to require AT&T Inc. to purchase 

the Preferred Interests, at a price per 

Preferred Interest equal to the Option 

Price, at any time and from time to time 

on or after the earlier of: (i) The first 

date that the Issuer’s debt-to-totalcapitalization ratio exceeds that of 

AT&T Inc.4; (ii) the date on which 

AT&T Inc. is rated below investment 

grade for two consecutive calendar 

quarters by at least two of the following 

rating agencies: Standard & Poor’s 

Ratings Services, Moody’s Investor 

Services, Inc. or FitchRatings, Inc.5; (iii) 

a ‘‘Change of Control’’ of the Issuer, as 

such term is defined in the Contribution 

Agreement and described below; or (iv) 

the seventh anniversary of the 

Contribution Date; provided, however, 

that except in the event of a Change of 

Control of the Issuer, AT&T Inc. will not 

be required to purchase more than 

106,666,667 Preferred Interests in any 

12 month period. Upon the Independent 

Fiduciary’s request, as of the end of any 

calendar quarter, AT&T Inc. will, within 

forty-five (45) calendar days after the 

end of such calendar quarter, certify as 

to whether the Issuer’s debt-to-totalcapitalization ratio exceeds that of 

AT&T Inc. The Put Option will be 

exercisable by the Independent 

Fiduciary on behalf of the Trust upon 60 

days’ prior written notice to AT&T Inc. 

The obligation to purchase the Preferred 

Interests upon exercise of the Put 

Option may be consummated by any 

Purchaser (including, for purposes of 

clarity, any affiliate of AT&T). 

Option Price. The Option Price per 

Preferred Interest is defined as the 

greater of: (i) The fair market value of 

the Preferred Interest, determined by the 

Independent Fiduciary as of the last day 

of the calendar quarter preceding the 

date of notice of exercise of a Call 

Option or Put Option, as the case may 

be, without regard to certain prior 

events (the Prior Events),6 or, for a 

Preferred Interest that cannot be 

purchased due to certain limitations 

noted in the ‘‘Put Option’’ description, 

the fair market value of the Preferred 

Interest, determined by Brock as of the 

last day of the calendar quarter 

immediately preceding the date such 

Preferred Interest is actually purchased 

by AT&T Inc., without regard to the 

Prior Events; and (ii) the sum of $25.00 

plus any accrued and unpaid 

Distributions. 

Change of Control. The Contribution 

Agreement provides that, on the 

occurrence of any Change of Control, 

AT&T may exercise or assign its Call 

Option to the Issuer or any successor 

owner of 50% or more of the capital or 

profits interest (or equity) of the Issuer 

(exclusive of the Preferred Interests). If 

the Call Option is not exercised upon a 

Change of Control, the parties will 

negotiate in good faith to determine 

‘‘appropriate treatment’’ 7 of the 

Preferred Interests, which will be 

subject to the approval of the 

Independent Fiduciary in its sole 

discretion. If no agreement can be 

reached within 60 days of the Change of 

Control, the Put Option will become 

immediately exercisable in full, thereby 

giving the Independent Fiduciary the 

right to require AT&T to purchase all or 

any portion of the Preferred Interests at 

the Option Price, except that: (i) The 

limitation on the number of Preferred 

Interests that AT&T may be required to 

purchase in any twelve month period as 

described above will not apply; and (ii) 

AT&T will have a period of up to one 

year to pay the Option Price. 

Notwithstanding the foregoing, in no 

event shall AT&T and the Issuer 

authorize the transfer of the Preferred 

Interests to any plan not covered by the 

Trust except in the event of an 

occurrence of a Change of Control as 

defined herein. 

Settlement. At the sole election of 

AT&T, Inc., or any other Purchaser, as 

the case may be, payment of the Option 

Price may be made in: (i) Fully paid and 

non-assessable shares of AT&T Inc. 

common stock (AT&T Shares) 8; (ii) 


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providing the Trust certain rights in connection 

with the registration of the AT&T Shares for sale to 

the public. The Registration Rights Agreement is 

described in more detail below. 

9The Capped Number is equal to or less than the 

number of authorized but unissued AT&T Shares 

that are not reserved for future issuance on the date 

of the Contribution Agreement. According to the 

Applicant, the Capped Number is an accounting 

concept necessary to the characterization of the 

Preferred Interests as equity. Furthermore, the 

Applicant notes that AT&T can use more than the 

number of Capped Shares to satisfy its purchase 

obligation and the number and value of authorized 

but unissued AT&T Shares far exceeds the value of 

the Preferred Interests. Therefore, according to the 

Applicant, the Capped Number does not present a 

practical limitation on the right of the Independent 

Fiduciary to exercise the Plan’s rights under the Put 

Option. 

cash; or (iii) a combination of AT&T 

Shares and cash. Any AT&T Shares 

delivered to pay all or a portion of the 

Option Price will be valued for the 

purpose of determining the number of 

AT&T Shares to be delivered to satisfy 

the Option Price, at the average closing 

price of the 20 trading days preceding 

the date of notice of exercise (or, in the 

case of a delayed payment pursuant to 

the twelve month payment period 

described herein in connection with a 

Change of Control, the 20 trading days 

preceding the date of payment). 

The Contribution Agreement provides 

that in no event will AT&T Inc. or any 

other Purchaser, as the case may be, be 

required to deliver more than 250 

million AT&T Shares (the Capped 

Number) to the Trust in settlement of 

the Option Price for the Preferred 

Interests; provided, however, the 

Purchaser may, in its discretion, deliver 

more than the Capped Number of AT&T 

Shares.9 In the event that the Purchaser, 

through delivery of the Capped Number 

of AT&T Shares and AT&T Shares in 

addition to the Capped Number of 

AT&T Shares, if any, does not deliver 

the full number of AT&T Shares 

otherwise deliverable in settlement of 

the Option Price for the Preferred 

Interests, the Purchaser will use its best 

efforts to authorize and deliver 

additional AT&T Shares. Finally, the 

Purchaser may elect, solely at its option, 

to settle the Option Price, in whole or 

in part, by delivering cash. 

The Contribution Agreement provides 

further that, in the event that the 

Purchaser, through delivery of the 

Capped Number of AT&T Shares and 

AT&T Shares in addition to the Capped 

Number of AT&T Shares, if any, does 

not deliver the full number of AT&T 

Shares otherwise deliverable in 

settlement of the Option Price for the 

Preferred Interests (resulting in a 

shortfall), the Preferred Interests for 

which neither AT&T Shares nor cash 

have been delivered will remain 

outstanding, and the Plan will continue 

to receive its Distributions, in 

accordance with the terms thereof. 

The Contribution Agreement also 

provides that, in the event of a merger, 

reorganization, consolidation, 

recapitalization, separation, split-up, 

liquidation, share combination, stock 

split, stock dividend, or other change in 

the corporate structure of AT&T 

affecting the AT&T Shares (including a 

conversion of the AT&T Shares into 

cash or other property), an adjustment 

may be made in the number and class 

of shares that may be delivered in 

settlement of the Option Price for the 

Preferred Interests, as determined by 

AT&T, to prevent dilution or accretion 

with respect to the Capped Number and 

reflect such changes in corporate 

structure (e.g., substitution of successor 

shares), provided, that, if AT&T does 

not make any such adjustment or the 

Independent Fiduciary disagrees with 

the adjustment, the Independent 

Fiduciary can request that AT&T modify 

its determination and if AT&T fails to 

do so, the parties shall resolve the 

matter in accordance with the dispute 

resolution procedures specified in the 

Investment Management Agreement by 

and between AT&T Services, Inc., the 

AT&T Benefit Plan Investment 

Committee, AT&T Inc., and Brock 

Fiduciary Services LLC or any successor 

thereto, effective on or about September 

9, 2013 (the IMA). 

Termination or Resignation of the 

Independent Fiduciary. The Applicant 

states that, in the event of a termination 

or resignation by the Independent 

Fiduciary, the Independent Fiduciary 

will continue to serve as the 

Independent Fiduciary until a successor 

is appointed, provided that the 

Committee must use its reasonably 

commercial efforts to hire a successor 

within a specified period of time, in 

accordance with the terms of the IMA. 

Such successor independent fiduciary 

shall, among other things, acknowledge 

in writing the assignment to it of the 

Contribution Agreement and the IMA 

and its acceptance of all rights and 

responsibilities of the Independent 

Fiduciary thereunder. 

Reasons for Entering Into the 

Exemption Transactions 

14. The Applicant represents that the 

Contribution would benefit the Plan. In 

this regard, the Applicant states that the 

Contribution would be substantially in 

excess of the legally required Plan 

contributions and would allow AT&T to 

enhance the sound funding of the Plan. 

In that respect, the Applicant represents 

that the value of the Contribution 

substantially exceeds the amount of 

contributions that AT&T will be 

required to make to the Plan for 2013 

and for a number of years thereafter. 

Pursuant to section 412 of the Code, as 

amended by 2012 legislation titled 

‘‘Moving Ahead for Progress in the 21st 

Century’’ (MAP–21), AT&T anticipates 

that its minimum required funding 

contribution for 2013 would be 

approximately $175 million. The 

Applicant represents that because of 

capital structure requirements relating 

to AT&T’s business operations, AT&T 

could not be expected to make cash 

contributions substantially in excess of 

the minimum amount required to meet 

the funding requirements of section 412 

of the Code. However, if the proposed 

exemption is granted, AT&T will 

contribute Preferred Interests to the 

Trust in an amount equal to 

approximately $9.2–$9.5 billion. 

Therefore, the Applicant states that the 

Trust will receive assets worth 

approximately $9 billion in excess of 

the legally required contributions to the 

Plans for 2013. The Applicant estimates 

that the expected annual cash flow 

payable on the Preferred Interests alone 

would exceed the 2013 minimum 

required contribution. 

15. The Applicant notes that the 

Preferred Interests will accrue 

cumulative Distributions of $1.75 per 

Preferred Interest per annum, payable 

quarterly upon declaration by the Issuer. 

The Applicant believes that this return 

is very favorable given the returns that 

otherwise can be obtained on 

investments in the current market 

environment. The Applicant states that 

the Distributions alone will provide 

$560 million in annual cash flow to the 

Trust, approximately 11% of the Trust’s 

annual cash flow requirements to pay 

benefits, thereby substantially reducing 

the Trust’s need to liquidate other assets 

to meet its benefit payment obligations. 

The Applicant further represents that 

the Contribution would also reduce the 

necessary investment return on other 

Trust assets required to satisfy historic 

annual benefit payments, thereby 

providing greater security to Plan 

participants and beneficiaries. In this 

regard, absent the Contribution, the 

Applicant states that the Trust would 

have to earn at least 9.3% on its existing 

investment portfolio to satisfy its 

historic annual benefit payments 

without requiring the Trust to liquidate 

additional assets. However, the 

Applicant states that due to the 

attractive, highly secure cash yield on 

the Preferred Interests, the remaining 

Trust assets would have to earn only an 

8% rate of return. 


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Benefits to AT&T 

16. The Applicant notes that the 

Contribution will also benefit AT&T in 

that the Contribution may be viewed 

favorably by lenders and the capital 

markets, and will benefit its business 

operations by giving AT&T the 

flexibility to invest further in its 

business. In this regard, the Applicant 

explains that the Issuer represents a 

substantial portion of the value of 

AT&T. The Applicant notes that the 

Contribution would in effect dedicate a 

portion of this valuable asset to 

satisfying the liabilities of the Plan. The 

Applicant suggests that AT&T’s 

business success is, in turn, important 

to the continued existence of the Plan 

and its ability to pay its liabilities. 

Exemptive Relief Requested 

17. AT&T requests exemptive relief 

from sections 406(a)(1)(A), 406(a)(1)(B), 

406(a)(1)(D), 406(a)(1)(E), 406(a)(2), 

406(b)(1), 406(b)(2) and 407(a) of ERISA 

with respect to the acquisition, holding 

and disposition of the Preferred 

Interests by the Plans, and other related 

transactions entered into in accordance 

with the Contribution Agreement. 

18. The Applicant believes that absent 

the requested relief, the Contribution 

and the exercise of the Call Option or 

the Put Option (as contemplated by the 

Contribution Agreement) would violate 

section 406(a)(1)(A) of ERISA. Section 

406(a)(1)(A) of ERISA provides that a 

fiduciary with respect to a plan shall not 

cause the plan to engage in a transaction 

if he knows or should know that such 

transaction constitutes a direct or 

indirect sale or exchange of any 

property between the plan and a party 

in interest. Under DOL Regulations, 

section 2509.94–3, an in-kind 

contribution to a defined benefit 

pension plan would be prohibited under 

section 406(a)(1)(A) of ERISA, because it 

reduces the funding obligation of the 

plan sponsor. 

AT&T also requests exemptive relief 

from sections 406(a)(1)(B) and 406(b)(1) 

with respect to certain benefits to AT&T 

ancillary to the Contribution. For 

example, the Applicant states that 

AT&T will claim a deduction under 

section 404 of the Code for the fair 

market value of the Preferred Interests 

on the Contribution Date. Further, the 

Contribution will preserve cash for 

application towards AT&T’s operations 

and investments, that will, among other 

things, maintain AT&T’s debt metrics 

and avoid dilution of shareholder value. 

Section 406(a)(1)(D) prohibits the use of 

Plan assets for the benefit of a party in 

interest, and section 406(b)(2) prohibits 

a fiduciary from acting in its individual 

or any other capacity in any transactions 

involving the Plan on behalf of a party 

whose interests are adverse to the 

interests of the Plan or its participants 

or beneficiaries. The Applicant believes 

that relief from section 406(a)(1)(D) 

would avoid arguments that the above 

referenced (or other) ancillary benefits 

to AT&T resulting from the Contribution 

violate the prohibited transaction 

provisions of ERISA and the Code. 

Section 406(a)(1)(E) of ERISA 

provides that a fiduciary with respect to 

a plan shall not cause the plan to engage 

in a transaction if he knows or should 

know that such transaction constitutes a 

direct or indirect acquisition, on behalf 

of the plan, of any employer security in 

violation of section 407(a). Section 

406(a)(2) of ERISA prohibits a fiduciary 

who has authority or discretionary 

control of plan assets to permit the plan 

to hold any employer security if he 

knows or should know that holding 

such security violates section 407(a) of 

ERISA. Section 407(a)(1) of ERISA states 

that a plan may not acquire or hold any 

employer security that is not a 

qualifying employer security. Section 

407(a)(2) of ERISA states that a plan 

may not acquire any qualifying 

employer security (or qualifying 

employer real property) if immediately 

after such acquisition the aggregate fair 

market value of the employer securities 

(and employer real property) held by the 

plan exceeds 10% of the fair market 

value of the assets of the plan. Section 

407(d)(5) of ERISA defines the term 

‘‘qualifying employer security’’ to mean 

an employer security which is a stock, 

a marketable obligation, or an interest in 

certain publicly traded partnerships. 

The Applicant states that the 

Preferred Interests are not ‘‘qualifying 

employer securities’’ within the 

meaning of section 407(d)(5) of ERISA 

because they do not constitute stock, 

marketable obligations, or interests in a 

publicly traded partnership. 

Furthermore, the Applicant states that 

the Plan will hold 100% of the Preferred 

Interests. The Applicant represents that 

as of December 31, 2012, the fair market 

value of Plan assets held by the Trust 

was approximately $45.06 billion and 

the Contribution of the Preferred 

Interests will result in the Plan holding 

employer securities and employer real 

property in excess of 10% of its total 

assets immediately after the 

Contribution of the Preferred Interests. 

Similarly, the Applicant believes that 

if the consideration paid to the Trust in 

connection with the exercise of the Put 

Option or the Call Option is in the form 

of shares of AT&T Shares, even though 

the AT&T Shares would be ‘‘qualifying 

employer securities,’’ their value may 

exceed 10% of the total assets of the 

Plan, and it may not be in the best 

interests of the Plan to require an 

immediate forced sale of such AT&T 

Shares at any particular point in time. 

Further, AT&T requests exemptive 

relief under sections 406(a)(1)(B) and 

406(b)(1) related to the provisions in the 

Contribution Agreement that, in the 

event that the Independent Fiduciary 

exercises its Put Option (i) other than on 

account of a Change of Control, limit the 

number of Preferred Interests that AT&T 

can be required to purchase in any 12- 

month period, (ii) in the event of a 

Change of Control, allow AT&T to defer 

the purchase of Preferred Interests for 

up to 12 months (collectively, the 

‘‘deferral provisions’’) or (iii) in the 

event the limitation on the maximum 

number of shares (i.e., the ‘‘Capped 

Number’’) that AT&T is required to 

deliver in payment of the Option Price 

results in a deferral of the purchase of 

any of the Preferred Interests. Relief 

with respect to the deferral provisions 

would avoid arguments that the deferral 

provisions are extensions of credit in 

violation of the above-cited sections of 

ERISA and the Code. 

Section 406(b)(1) of ERISA provides 

that a fiduciary with respect to a plan 

shall not deal with the assets of the plan 

in his or her own interest or for his or 

her own account. The Applicant states 

that it is possible that the Contribution 

could violate that section of ERISA 

because of any ancillary benefits to 

AT&T of the excess funding to the Trust. 

Additionally, section 406(b)(2) of ERISA 

provides that a fiduciary with respect to 

a plan shall not in his individual or in 

any other capacity act in any transaction 

involving the plan on behalf of a party 

(or represent a party) whose interests are 

adverse to the interests of the plan or 

the interests of its participants or 

beneficiaries. The Applicant notes that 

the Contribution and its related 

agreements may also violate section 

406(b)(2) of ERISA because in effecting 

the Contribution and its related 

agreements and arrangements, AT&T 

will be acting on behalf of the Plan and 

on behalf of another party (itself) whose 

interests are adverse to those of the 

Plan. 

The Independent Fiduciary 

19. The Independent Fiduciary, a 

wholly owned subsidiary of Brock 

Capital Group, has been appointed by 

AT&T Services to serve as an 

independent fiduciary on behalf of the 

Plan and the Plan’s participants and 

beneficiaries with respect to the 

Contribution, pursuant to the 

Independent Fiduciary Agreement dated 

May 1, 2012, by and among AT&T 


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10 In carrying out its authority with respect to this 

responsibility, the Independent Fiduciary shall take 

into consideration the Trust’s portfolio, including 

other similar investments held by the Trust. 

11The Applicant notes that the foregoing 

responsibilities are subject only to the terms of the 

Preferred Interests and any conditions or limitations 

imposed on ownership and disposition of the 

Preferred Interests under the Contribution 

Agreement or in the proposed exemption, if 

granted, and applicable law. 

12The Independent Fiduciary’s team members 

include Stephen R. Wilson (former CFO of RJR 

Nabisco, The Reader’s Digest Association, and 

Reckitt & Colman plc), Steven C. Baum (former 

Managing Partner of Marks Paneth & Shron), 

Norman H. Brown Jr. (former Managing Director of 

Donaldson Lufkin & Jenrette), Anthony A. 

Dreyspool (ERISA attorney and author of the book 

ERISA Fiduciary Law for Non-Lawyers), Alain 

Lebec (former Vice Chairman of Merrill Lynch 

Investment Banking), Donald Walkovik (former 

Senior Partner at Sullivan & Cromwell) and Charles 

O. Svenson (attorney and investment banker with 

Services, AT&T Inc. and Brock (the 

Independent Fiduciary Agreement). In 

addition, the Independent Fiduciary has 

been appointed to serve as the 

investment manager for the Plan and the 

Plan’s participants and beneficiaries 

with respect to the holding, 

management and disposition of the 

Preferred Interests, pursuant to the IMA, 

and has full discretion to manage that 

portion of the Plan’s assets held by the 

Trust. 

20. The Independent Fiduciary 

represents that it is independent of and 

unrelated to AT&T, and has not 

previously provided services to AT&T. 

Further, the Independent Fiduciary does 

not directly or indirectly receive any 

compensation or other consideration 

from AT&T. The Independent 

Fiduciary’s fees and expenses as 

independent fiduciary will be paid by 

the Trust. The Independent Fiduciary’s 

compensation for its services is not 

contingent upon or in any way affected 

by the Independent Fiduciary’s 

decisions. 

21. The Independent Fiduciary 

represents that it is an investment 

adviser registered under the Investment 

Advisers Act of 1940, as amended, and 

is qualified to act as an ‘‘investment 

manager,’’ as that term is defined in 

section 3(38) of ERISA, for the Plan. In 

addition, the Independent Fiduciary 

represents that it has extensive 

experience as an appraiser of the value 

of non-publicly traded securities, 

including securities of the same type as 

the Preferred Interests. Moreover, the 

Independent Fiduciary calls upon the 

services of members of Brock Capital 

Group who can provide the expertise 

required to appraise the value of 

employer securities contributed to 

employee benefit plans. 

22. The Independent Fiduciary will 

discharge its duties in accordance with 

the terms of the Independent Fiduciary 

Agreement and the IMA (and successors 

to these documents). Pursuant to the 

Independent Fiduciary Agreement, the 

Independent Fiduciary’s responsibilities 

include: (i) Determining the value of the 

Contribution; (ii) determining whether 

the terms and conditions of the 

Preferred Interests are prudent and fair 

to, and in the interest of, the Plan and 

Trust; (iii) reporting its foregoing 

determinations in a written report to 

AT&T and the Committee; (iv) 

negotiating with AT&T and executing 

on behalf of the Trust a Contribution 

Agreement or other collateral 

agreements necessary or appropriate for 

implementing the Contribution; (v) 

reasonably assisting AT&T in obtaining 

an exemption from the Department and 

satisfying any terms and conditions 

thereof; and (vi) reasonably complying 

with the conditions or limitations 

imposed on the Independent Fiduciary 

by such exemption. Moreover, the 

Independent Fiduciary will authorize 

the Trustee to accept or dispose of the 

Preferred Interests, including by 

exercise of the Put Option or the Call 

Option, only after the Independent 

Fiduciary determines that to do so is 

consistent with the applicable 

transaction documents. 

The IMA 

23. Pursuant to the IMA, the 

Independent Fiduciary, in its capacity 

as investment manager to the Plan, shall 

have sole authority and discretion to 

direct the Trustee with respect to the 

holding and disposition of the Preferred 

Interests and any AT&T Shares received 

by the Trust in exchange therefor 

pursuant to the Contribution 

Agreement. In performing its 

responsibilities as investment manager, 

the Independent Fiduciary shall value 

the Preferred Interests once each 

calendar quarter using the methodology 

contained in the valuation report 

delivered pursuant to the Independent 

Fiduciary Agreement (absent 

extraordinary circumstances), and 

report such value to the Committee 

within 30 days of the quarter end and 

shall provide, among other things, an 

estimate of the year end valuation 

within five (5) business days of the end 

of each year. In addition, the 

Independent Fiduciary shall have the 

authority, to be exercised in its sole 

discretion: (i) To exercise all rights of 

the Trust with respect to the Preferred 

Interests, as set out in (and subject to the 

terms of) the Contribution Agreement, 

including but not limited to negotiating 

and accepting any amendments to the 

Contribution Agreement; (ii) to enter 

into any agreements for the benefit of 

the Plan and the Trust, in order to carry 

out the purposes of the IMA; (iii) with 

respect to the Preferred Interests only, to 

enter into any agreements, incur 

reasonable costs on behalf of the Plan 

and the Trust, or pledge or hypothecate 

assets of the Trust (except the Preferred 

Interests or the Shares), in order to carry 

out interest rate swap transactions and 

credit default swap transactions, 

provided that the Independent 

Fiduciary shall provide written notice to 

the Committee at least 15 days prior to 

entering into any such transaction and, 

during such notice period, shall engage 

in good faith discussions with the 

Committee as to the advisability of 

entering into the transactions 10; and (iv) 

to make any decision to sell, loan 

hypothecate, pledge as security for a 

loan, exchange, convert, securitize, sell 

interests in, redeem, or otherwise 

dispose of, any and all of the AT&T 

Shares received by the Trust in 

exchange therefor pursuant to the 

Contribution Agreement.11

The Independent Fiduciary’s Appraisal 

Report 

24. In an appraisal report dated 

October 18, 2012, the Independent 

Fiduciary estimated the fair market 

value of the Preferred Interests as of 

August 13, 2012, to be $9.573 billion (or 

$29.91 per Preferred Interest). 

25. The Independent Fiduciary states 

that in estimating the fair market value 

of the Preferred Interests, the 

Independent Fiduciary, among other 

things, applied valuation methodologies 

that are generally accepted, including a 

discounted cash flow analysis of the 

Preferred Interests’ expected 

Distributions and purchase proceeds, 

reviewed relevant investment and 

financial studies, and conducted other 

such analyses deemed appropriate. In 

its discounted cash flow analysis, the 

Independent Fiduciary has considered 

the appropriate discount rate at which 

the Preferred Interests’ Distributions 

should be valued (as of the Contribution 

Date), the credit quality of AT&T Inc. 

and the Issuer, an appropriate valuation 

discount because the Preferred Interests 

are not publicly traded and therefore, 

illiquid, and a further liquidity discount 

because a purchase of the Preferred 

Interests may be settled in the form of 

unregistered AT&T Inc. common equity. 

The Independent Fiduciary’s Opinion 

26. The Independent Fiduciary 

represents that it negotiated the terms 

and conditions of the Preferred Interests 

on behalf of the Plan over several 

months. The Independent Fiduciary 

represents that, members of its team,12


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Dewey Ballantine Busby Palmer & Wood, Goldman 

Sachs, and Donaldson Lufkin & Jenrette). 

13The Department understands that shelf 

registration is a process authorized by the SEC 

under Rule 415 that allows a single registration 

document to be filed by a company that permits the 

issuance of multiple securities. Form S–3 issuers 

may use shelf-registration to register securities that 

will be offered on an immediate, continuous or 

delayed basis. 

14The Independent Fiduciary explains that AT&T 

Shares will be registered continuously in 3-year 

intervals (with AT&T having obligations to ‘‘renew’’ 

the S–3 every 3 years). According to the 

Independent Fiduciary, this arrangement is fairly 

standard for Shelf Registrations. 

consisting of persons who have 

extensive financial management 

experience as senior executives of major 

corporations and investment banks or 

who have many years of experience as 

ERISA fiduciary law experts, engaged 

with senior officers of AT&T in 

numerous discussions concerning the 

nature of Preferred Interests and their 

terms and conditions. In addition, in 

order to determine whether the 

Contribution would be prudent and in 

the best interest of the Plan and its 

participants and beneficiaries, the 

Independent Fiduciary represents that it 

used the services of its in-house security 

analyst to determine the value of the 

Issuer and the value of the Preferred 

Interests. Those valuations will be 

updated to the Contribution Date. 

27. Based on its aforementioned 

analysis of the Preferred Interests and 

the Issuer, the Independent Fiduciary 

has concluded that it is prudent for the 

Plan to accept the Contribution and that 

the Contribution is in the interests of the 

Plan and its participants and 

beneficiaries for the following reasons. 

With the fair market value of the 

Contribution estimated to be $9.2–$9.5 

billion, the Independent Fiduciary 

states that the Contribution will be well 

in excess of the legally required 

contribution to the Plan. Thus, the 

Independent Fiduciary states that the 

proposed Contribution would far exceed 

what AT&T represents it would 

contribute if it were to make only a cash 

contribution equal to its minimum 

funding requirement. 

28. Further, the Independent 

Fiduciary has determined that the cash 

flows of the Issuer, which is one of the 

largest wireless telecommunications 

providers in the United States and one 

of the most profitable and fastest 

growing business segments in AT&T’s 

corporate structure, are large enough to 

cover the annual cash distributions on 

the Preferred Interests, which are senior 

preferred interests of the Issuer. In 

addition, the Independent Fiduciary 

opines that the cumulative annual cash 

distribution rate of the Preferred 

Interests ($1.75 per annum per Preferred 

Interest) is very favorable compared to 

income returns that could be obtained 

on prudent investments under current 

market conditions. In that respect, the 

Independent Fiduciary states that AT&T 

Inc. has represented that the expected 

annual cash flow payable on the 

Preferred Interests will exceed the 2013 

minimum required funding contribution 

to the Trust, and as noted in the 

Independent Fiduciary’s valuation 

report, the distribution payment rate is 

significantly above the yields on 

comparable fixed income securities. 

29. The Independent Fiduciary also 

states that the restriction on payment of 

dividends on AT&T Shares or purchases 

by AT&T Inc. of AT&T Shares if 

Distributions on any Preferred Interests 

are in arrears will be an incentive to the 

Issuer to pay all Distributions on a 

regular basis. Further, the Independent 

Fiduciary states that if the Issuer misses 

any Distribution payment, the 

cumulative Distribution feature means 

that the Plan will not lose any current 

return on the Preferred Interests. As 

noted above, the Independent Fiduciary 

has also determined in its valuation of 

the Issuer that the Issuer generates an 

annual cash flow after capital expenses 

to easily cover the annual $560 million 

expected Distribution on the Preferred 

Interests. 

30. The Independent Fiduciary has 

also concluded that the Contribution is 

protective of the rights of participants 

and beneficiaries of the Plan because the 

terms of and conditions of the Preferred 

Interests, including the Put Option and 

Call Option, are protective of the 

interests of the Plan and Trust and are 

as favorable to the Plan as such terms 

would be if negotiated at arm’s length 

under similar circumstances between 

unrelated third parties. Further, the 

Independent Fiduciary states that it will 

monitor the continued holding of the 

Preferred Interests by the Trust, will 

manage the holding and disposition of 

the Preferred Interests pursuant to the 

IMA and will have sole authority on 

behalf of the Plan to take whatever 

action the Independent Fiduciary deems 

appropriate to insure that the 

transaction remains in the interest of the 

Plan. Finally, the Independent 

Fiduciary represents that it will enforce 

compliance with all conditions and 

obligations imposed on any party 

dealing with the Plan by proposed 

exemption, if granted, and manage any 

AT&T Shares received by the Trust in 

exchange for the Preferred Interests 

pursuant to the Call Option and Put 

Option until such time as the relief 

provided herein is no longer needed. 

The Registration Rights Agreement 

31. As stated above, pursuant to the 

Contribution Agreement, AT&T has the 

right, in its sole discretion, to pay the 

purchase amount for any Preferred 

Interests purchased pursuant to the Put 

Option or the Call Option, in whole or 

in part, by delivering AT&T Shares to 

the Trust. In connection with the 

foregoing, the Independent Fiduciary, 

acting on behalf of the Plan and the 

Trust, has negotiated the terms of the 

Registration Rights Agreement with 

AT&T. The Registration Rights 

Agreement governs the rights and 

obligations of the parties with respect to 

registration rights, transfers and other 

matters relating to the AT&T Shares (if 

any) that may be delivered to the Trust 

pursuant to the Call Option or the Put 

Option. The Registration Rights 

Agreement terminates on the second 

anniversary of the date on which AT&T 

Shares are delivered to the Trust in the 

last exercise of the Put Option or the 

Call Option, as the case may be. 

32. The Registration Rights Agreement 

provides that AT&T will file a Shelf 

Registration 13 on Form S–3 within 

thirty (30) days following delivery of 

AT&T Shares to the Trust upon exercise 

of the Call or Put Rights (the 

Registration Trigger). According to the 

Applicant, this arrangement takes 

advantage of AT&T’s status as a ‘‘wellknown seasoned issuer’’ (in short, a 

large public company by market 

capitalization, referred to as a ‘‘WKSI’’) 

and the ability to file a registration 

statement that is automatically effective 

upon filing. The Applicant states further 

that the Trust would be able to promptly 

sell AT&T Shares in a public offering 

four (4) times in any twelve (12) month 

period with only fifteen (15) business 

days’ notice given to AT&T. According 

to AT&T and the Independent 

Fiduciary, fifteen (15) days’ notice is 

reasonable, since a registered 

underwritten offering could require the 

Trustee to engage underwriters, etc., 

will require AT&T to prepare 

documentation and will require 

significant involvement from AT&T’s 

outside auditors, all of which will 

involve some period of time. 

33. The Shelf Registration would be 

maintained and renewed while the 

Independent Fiduciary continues to 

manage either the Preferred Interests or 

AT&T Shares.14 The Applicant states 

that this permits the Trust to sell AT&T 

Shares during a thirty (30) day window 

period that begins immediately 

following AT&T’s quarterly earnings 

release (a ‘‘Window’’). Each take down 

under the shelf registration would be for 

at least $500 million and the sale would 


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15The Applicant notes that the Trust can also use 

Rule 144 to sell AT&T Shares during any Window 

period described above, in addition to such sales 

that may take place outside the Window period. 

16The Independent Fiduciary notes that because 

AT&T Shares sold pursuant to Rule 144 would not 

be registered, they would likely sell at a discount 

of at least 10%. 

17The Applicant represents further that the 

Registration Rights Agreement also contains 

provisions that would address AT&T’s failure to 

comply with certain obligations, and that provide 

alternative mechanisms for effecting public 

offerings in the event AT&T loses its status as a 

‘‘well-known seasoned issuer’’ for any reason. 

18The Department notes that the additional cash 

payments agreed to by AT&T lend strength to the 

Applicant’s proposition that the Contribution 

constitutes an additional, voluntary contribution of 

assets to the Plan. As the Plan is entitled to receive 

cash in respect of its minimum required 

contributions, the additional cash payments 

represent AT&T’s attempted satisfaction of its 

burden in this respect. 

19The determination of the total value of the 

Trust’s assets includes the Preferred Interests and 

the actual cash contributions to the Trust, including 

cash contributions made in connection with the 

Lump Sum Payments and Distributions (including 

contribution receivables). 

20The Applicant states that the payment date is 

based on when the Trust values are definitely 

determinable. 

be accomplished in a public offering. 

According to the Applicant, this would 

permit the Trust to sell all or a part of 

the AT&T Shares quickly during a 

Window period in the offering structure 

deemed by the Independent Fiduciary 

to be most advantageous. AT&T will 

have a right-of-first-refusal to purchase 

AT&T Shares offered for sale by the Plan 

for two years after the Plan’s receipt of 

such AT&T Shares. After two years, 

AT&T will have the right to repurchase 

shares held by the Plan at a 10% 

premium to the then current market 

price. 

34. The Applicant represents that, in 

addition to the Shelf Registration, for 

smaller sales, the Independent 

Fiduciary would have the ability to 

make an unlimited number of 

unregistered sales under Rule 144 with 

only five (5) business days’ notice to 

AT&T (once the six (6) month holding 

period of Rule 144 is satisfied).15 The 

Applicant represents that, other than the 

provisions of Rule 144, there is no limit 

on the number of times this provision 

may be used or a minimum size.16

35. The Applicant represents that 

AT&T would have the authority to 

notify the Independent Fiduciary that 

sales of AT&T Shares are suspended for 

up to two (2) blackout periods that may 

not exceed 60 days, in the aggregate, in 

any twelve (12) month period. 

According to the Applicant, the ability 

to suspend sales of AT&T Shares 

pursuant to blackout periods are 

designed to allow AT&T to avoid 

disclosing time-sensitive or confidential 

information relating to transactions or 

other corporate activities that otherwise 

would be disclosable if a securities sale 

were contemplated. According to the 

Applicant, blackout periods like these 

are standard features of longer term 

continuous registration arrangements, 

and protect both AT&T and its 

shareholders, including the Trust.17

36. Finally, in addition to the 

repurchase obligations above, the 

Independent Fiduciary notes that the 

Plan can require AT&T to repurchase 

the AT&T Shares if, during the final 180 

days of the term of the Registration 

Rights Agreement, there is not an S–3 

available for the Plan to sell its AT&T 

Shares (the theory being that the Plan 

should have a simple public liquidity 

option available to it in the final months 

of the term). 

Additional Cash Contribution and 

‘‘Lookback’’ Calculation 

37. The Applicant states that AT&T 

has agreed to make cash contributions to 

the Trust in addition to the 

Contribution, in order to approximate 

the minimum required contributions 

that would otherwise be payable to the 

Plan by AT&T in cash, computed as if 

the Contribution had never been made, 

for as long as relief under the proposed 

exemption is in effect.18 Therefore, the 

Applicant has agreed to make the 

following payments to the Trust: (i) 

Lump sum cash payments (the Lump 

Sum Payments); and (ii) a ‘‘lookback’’ 

payment (the Net Lookback Amount). 

Both types of such payments will be 

made in accordance with the terms 

described below. 

38. With respect to the Lump Sum 

Payments, the Applicant states that 

AT&T will make cash contributions to 

the Trust totaling $700 million, payable 

as follows: (i) $175 million paid on the 

Contribution Date; and (ii) $175 million 

paid no later than the due date for 

AT&T’s tax return for each of the next 

three years (i.e., 2014, 2015 and 2016). 

39. The Applicant represents that the 

calculation of the Net Lookback Amount 

and the timing of such contribution are 

determined as follows: Looking back 

from January 1, 2018, AT&T shall recalculate its minimum required 

contribution after the application of any 

carryover balances (the Mandatory 

Funding Obligation) as of the beginning 

of each of the 2013 through 2017 Plan 

years with the following modifications 

to arrive at the ‘‘Gross Lookback 

Amount’’: (i) The calculation of the 

Mandatory Funding Obligation will use 

actuarial assumptions in effect for 

funding purposes as of the first day of 

the Plan year for which the minimum 

required contribution is calculated, and 

assets will assume Mandatory Funding 

Obligations are contributed when 

required for the 2013 through 2017 Plan 

Years and earn actual Trust returns; (ii) 

the value of Preferred Interests will be 

disregarded; (iii) the actual cash 

contributions to the Trust, including the 

cash contributions made in connection 

with the Lump Sum Payments and the 

Distributions will be disregarded; and 

(iv) earnings on all cash contributions, 

including cash contributions made in 

connection with the Lump Sum 

Payments and the earnings on the 

Distributions will be included. The 

Applicant represents that the Gross 

Lookback Amount is the sum of the 

Mandatory Funding Obligation for each 

of the 2013 through 2017 Plan years. 

The Applicant further represents that 

the Gross Lookback Amount shall be 

reduced by the following items to arrive 

at the the Net Lookback Amount: (i) 

Actual cash contributions to the Trust, 

including cash contributions made in 

connection with the Lump Sum 

Payments and Distributions paid to the 

Trust prior to the date the Net Lookback 

Amount is paid to the Trust; (ii) the 

value of the Preferred Interests as of 

January 1, 2018, that is not in excess of 

10% of the total value of the Trust’s 

assets,19 and (iii) any consideration paid 

to the Trust pursuant to any exercise of 

the Put or Call Options at any time prior 

to the date that the Net Lookback 

Amount is paid to the Trust. The 

Applicant states that the Net Lookback 

Amount will be paid to the Trust no 

later than September 15 of the year 

following the year of the calculation of 

the Net Lookback Amount.20 The 

Independent Fiduciary will determine 

the value of the Preferred Interests for 

purposes of the Lookback calculation. 

Notice to Interested Persons 

It is represented that AT&T Inc. shall 

provide notification (the Notice) of the 

publication of the proposed exemption 

(the Proposed Exemption) in the 

Federal Register to interested persons in 

the following manner. The Notice shall 

be delivered via email to (i) all former 

employees and retirees who have 

consented to and enrolled in electronic 

delivery of benefits information and (ii) 

all currently active employees (which 

includes all non-bargained employees 

and bargained employees) who 

participate in the Plan and who either 

have email access as a part of 

performing their job or have consented 

to and enrolled in electronic delivery. 

Such notification will consist of an 

explanatory cover letter which will 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 78, No. 174 / Monday, September 9, 2013 / Notices 55111 

21For purposes of this proposed exemption, 

references to specific provisions of Title I of the 

Act, unless otherwise specified, refer also to 

corresponding provisions of the Code. 

contain a link to a summary of the 

Proposed Exemption (the Summary) and 

a link to the Proposed Exemption, and 

will be delivered within two (2) 

business days of the date of publication 

of the Notice in the Federal Register. 

The email system will notify AT&T Inc. 

of any delivery failures to (i) active 

employees with an AT&T email address 

on the day that the email notifications 

are sent and (ii) active employees using 

an external email address within one 

business day after the email 

notifications are sent. For each active 

employee whose email transmission 

fails, AT&T Inc. will send the cover 

letter, the Summary and a copy of the 

Proposed Exemption via first class US 

mail to such person’s home address. 

Such mailing will be sent (i) to active 

employees with an AT&T email address 

within one business day after the failed 

email transmission and (ii) to active 

employees using an external email 

address within two business days after 

the failed email transmission. 

The Notice shall also be delivered via 

first class US mail to the home 

addresses of (i) the approximately 

43,000 actively employed bargained 

employees who participate in the Plan 

and who do not have email access as 

part of performing their job or who have 

not consented to electronic delivery of 

benefits information and (ii) the 

estimated 280,000 former employees, 

retirees, alternate payees, and 

beneficiaries with benefits under the 

Plan who have not consented to 

electronic delivery of benefits 

information. Such notification shall 

consist of a cover letter, a Summary and 

a copy of the Proposed Exemption. 

The Trustee and the Independent 

Fiduciary shall receive the Notice via 

first class US mail. Such notification 

shall consist of a cover letter, a 

Summary and a copy of the Proposed 

Exemption. In addition, AT&T Inc. or its 

legal counsel will email such 

documents to the Trustee and the 

Independent Fiduciary no later than two 

(2) business days of the date of 

publication of the Notice in the Federal 

Register. AT&T Inc. will provide 

notification to interested persons within 

25 calendar days of the date of 

publication of the Notice in the Federal 

Register. All written comments and/or 

requests for a hearing must be received 

by the Department from interested 

persons no later than 55 days after 

publication of the Notice in the Federal 

Register. 

All comments will be made available 

to the public. Warning: Do not include 

any personally identifiable information 

(such as name, address, or other contact 

information) or confidential business 

information that you do not want 

publicly disclosed. All comments may 

be posted on the Internet and can be 

retrieved by most Internet search 

engines. 

General Information 

The attention of interested persons is 

directed to the following: 

(1) The fact that a transaction is the 

subject of an exemption under section 

408(a) of the Act and/or section 

4975(c)(2) of the Code does not relieve 

a fiduciary or other party in interest or 

disqualified person from certain other 

provisions of the Act and/or the Code, 

including any prohibited transaction 

provisions to which the exemption does 

not apply and the general fiduciary 

responsibility provisions of section 404 

of the Act, which, among other things, 

require a fiduciary to discharge his 

duties respecting the plan solely in the 

interest of the participants and 

beneficiaries of the plan and in a 

prudent fashion in accordance with 

section 404(a)(1)(b) of the Act; nor does 

it affect the requirement of section 

401(a) of the Code that the plan must 

operate for the exclusive benefit of the 

employees of the employer maintaining 

the plan and their beneficiaries; 

(2) Before an exemption may be 

granted under section 408(a) of the Act 

and/or section 4975(c)(2) of the Code, 

the Department must find that the 

exemption is administratively feasible, 

in the interests of the plan and of its 

participants and beneficiaries, and 

protective of the rights of participants 

and beneficiaries of the plan; 

(3) The proposed exemption, if 

granted, will be supplemental to, and 

not in derogation of, any other 

provisions of the Act and/or the Code, 

including statutory or administrative 

exemptions and transitional rules. 

Furthermore, the fact that a transaction 

is subject to an administrative or 

statutory exemption is not dispositive of 

whether the transaction is in fact a 

prohibited transaction; and 

(4) The proposed exemption, if 

granted, will be subject to the express 

condition that the material facts and 

representations contained in each 

application are true and complete, and 

that each application accurately 

describes all material terms of the 

transaction which is the subject of the 

exemption. 

Proposed Exemption 

Based on the foregoing facts and 

representations submitted by the 

Applicant, the Department is 

considering granting an exemption 

under the authority of section 408(a) of 

the Employee Retirement Income 

Security Act of 1974, as amended 

(ERISA or the Act) and section 

4975(c)(2) of the Internal Revenue Code 

of 1986, as amended (the Code), and in 

accordance with the procedures set 

forth in 29 CFR Part 2570, Subpart B (76 

FR 66637, 66644, October 27, 2011), as 

follows: 21

Section I. Covered Transactions 

If the proposed exemption is granted, 

the restrictions of sections 406(a)(1)(A), 

406(a)(1)(B), 406(a)(1)(D), 406(a)(1)(E), 

406(a)(2), 406(b)(1), 406(b)(2), and 

407(a) of the Act and the sanctions 

resulting from the application of section 

4975 of the Code, by reason of section 

4975(c)(1)(A), 4975(c)(1)(B), 

4975(c)(1)(D) and 4975(c)(1)(E) of the 

Code, shall not apply, effective 

September 1, 2013, to the following 

transactions, provided that the 

conditions described in Section II are 

satisfied: 

(a) The one-time, in-kind contribution 

(the Contribution) by AT&T of 320 

million series A Cumulative Perpetual 

Preferred Membership Interests (the 

Preferred Interests) of AT&T Mobility II 

LLC (the Issuer) to the SBC Master 

Pension Trust (the Trust), which holds 

assets of the AT&T Pension Benefit Plan 

(the Plan) in accordance with the terms 

of the Contribution Agreement; 

(b) The holding of the Preferred 

Interests by the Trust on behalf of the 

Plan; 

(c) The disposition of the Preferred 

Interests by the Trust in connection 

with the exercise of the Put Option by 

the Independent Fiduciary, in 

accordance with the terms of the 

Contribution Agreement; 

(d) The disposition of the Preferred 

Interests by the Independent Fiduciary 

on behalf of the Trust in connection 

with the exercise of the Call Option, in 

accordance with the terms of the 

Contribution Agreement; 

(e) The disposition, restructuring, 

adjustment, or recapitalization of the 

Preferred Interests resulting from a 

Change of Control of the Issuer, in 

accordance with the terms of the 

Contribution Agreement; 

(f) The acquisition and holding by the 

Trust of shares in AT&T common stock 

(the AT&T Shares) received in 

connection with the exercise of the Put 

Option or the Call Option, in 

accordance with the terms of the 

Contribution Agreement, to the extent 

such acquisition and holding is not 

permitted by section 407(a) of ERISA; 

and 


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55112 Federal Register / Vol. 78, No. 174 / Monday, September 9, 2013 / Notices 

(g) The deferred payment by AT&T to 

the Trust of any amounts due under the 

Call Option or the Put Option, in 

accordance with the terms of the 

Contribution Agreement. 

Section II. Conditions 

Relief for the transactions described 

in Section I of this proposed exemption 

is conditioned upon satisfaction of the 

following requirements: 

(a) The Preferred Interests have a 

liquidation value of $25 per Preferred 

Interest and carry distribution rights of 

$1.75 per Preferred Interest, or $560 

million per year in cash payable to the 

Trust (the Distributions) in accordance 

with the terms of the Contribution 

Agreement; 

(b) The Plan incurs no fees, costs or 

other charges in connection with the 

transactions described in paragraphs 

(a)–(g) of Section I, other than fees paid 

by the Plan to the Independent 

Fiduciary for duties required by this 

proposed exemption, if granted, as 

described herein; 

(c) AT&T makes $700 million in 

additional cash payments (the 

Additional Payments) to the Trust in the 

following manner: 

(1) $175 million paid at the time the 

Preferred Interests are contributed to the 

Trust; and 

(2) $175 million paid no later than the 

due date for AT&T’s tax return for each 

of the next three years (i.e., 2014, 2015 

and 2016); 

(d) AT&T makes an additional cash 

contribution to the Trust, equal to the 

‘‘Net Lookback Amount,’’ no later than 

September 15, 2019. The Net Lookback 

Amount will be calculated as follows: 

(1) Looking back from January 1, 

2018, AT&T will recalculate the 

minimum required contribution to the 

Plan after application of any carryover 

balances (the Mandatory Funding 

Obligation) for each of the 2013 through 

2017 Plan Years, subject to the 

following requirements: 

(i) The calculation of each Mandatory 

Funding Obligation will use actuarial 

assumptions in effect for funding 

purposes as of the first day of the Plan 

Year for which such contribution is 

calculated, and the calculation of plan 

assets will assume each Mandatory 

Funding Obligation is contributed when 

required for 2013 through 2017 Plan 

Years and earn actual Trust returns for 

each such year; 

(ii) The value of the Preferred 

Interests will be disregarded; 

(iii) Actual cash contributions to the 

Trust, including the Additional 

Payments and Distributions, will be 

disregarded; and 

(iv) Earnings on all cash 

contributions, including any earnings 

on the Additional Payments and 

Distributions, will be included; 

(2) The amounts described in Section 

(II)(d)(1)(i)–(iv), in the aggregate (the 

Gross Lookback Amount), shall be 

reduced by the following items to arrive 

at the Net Lookback Amount: 

(i) Actual cash contributions to the 

Trust, including the Additional 

Payments and the Distributions paid to 

the Trust prior to the date the Net 

Lookback Amount is paid to the Trust; 

(ii) The value of the Preferred 

Interests as of January 1, 2018, that is 

not in excess of 10% of the total value 

of the Trust’s assets, and for the purpose 

of this clause (ii), the determination of 

the total value of the Trust’s assets 

includes the actual cash contributions to 

the Trust, such as cash contributions 

made in connection with the Lump Sum 

Payments and Distributions (including 

contribution receivables); and 

(iii) Any consideration paid to the 

Trust pursuant to any exercise of the Put 

or Call Options at any time prior to the 

date the Net Lookback Amount is paid 

to the Trust; 

(e) An Independent Fiduciary, acting 

solely on behalf of the Plan and the 

Trust, represents the Plan’s interests for 

all purposes with respect to the 

Preferred Interests, and determines, 

prior to entering into any of the 

transactions described in Section I (a)– 

(g), that each such transaction is in the 

interest of the Plan. 

(f) The Independent Fiduciary will 

have complete discretion regarding the 

disposition of AT&T Shares in 

accordance with the IMA and the 

Registration Rights Agreement; 

(g) The Independent Fiduciary 

negotiated and approved, on behalf of 

the Plan and the Trust, the terms and 

conditions of the Contribution 

Agreement, including the terms of the 

Preferred Interests, the Call Option and 

the Put Option, as well as the terms of 

the IMA and Registration Rights 

Agreement; 

(h) The Independent Fiduciary 

manages the holding and disposition of 

the Preferred Interests and takes 

whatever actions it deems necessary to 

protect the rights of the Plan with 

respect to the Preferred Interests or the 

AT&T Shares received in connection 

with the exercise of the Call Option or 

the Put Option; 

(i) The Independent Fiduciary 

monitors the credit rating of AT&T Inc. 

for purposes of determining whether the 

Put Option is triggered due to AT&T Inc. 

being rated below investment grade for 

two consecutive calendar quarters by at 

least two of the following rating 

agencies: Standard & Poor’s Ratings 

Services, Moody’s Investor Services, 

Inc. or FitchRatings, Inc.; 

(j) An Independent Appraiser, acting 

on behalf of the Plan, determines the 

fair market value of the Preferred 

Interests contributed to the Trust on 

behalf of the Plan as of the date of the 

Contribution and while the Preferred 

Interests are held on behalf of the Plan, 

and for all purposes under this 

exemption, if granted, consistent with 

sound principles of valuation; 

(k) The Preferred Interests rank senior 

to any other equity holders of the Issuer 

in respect of: The right to receive 

Distributions; and the right to receive 

Distributions or payments out of the 

assets of the Issuer upon liquidation of 

the Issuer, in accordance with the terms 

of the Contribution Agreement; 

(l) In the event that the Distributions 

are in arrears, AT&T is restricted from 

making certain transfers of cash out of 

the Issuer or declaring dividends on and 

repurchasing shares of AT&T stock, in 

accordance with the terms of the 

Contribution Agreement; 

(m) The Committee and the 

Independent Fiduciary maintain for a 

period of six (6) years from the date any 

Preferred Interests are contributed to the 

Trust, for a period of six (6) years from 

the date of any disposition of Preferred 

Interests by the Trust or the purchase of 

Preferred Interests by AT&T, and for a 

period of six (6) years from the last date 

that the Trust holds AT&T Shares 

received in connection with the exercise 

of the Put Option or the Call Option in 

violation of section 406(a)(2) of ERISA, 

in a manner that is convenient and 

accessible for audit and examination, 

the records necessary to enable the 

persons described in paragraph (n)(1) 

below to determine whether conditions 

of this exemption have been met, except 

that (i) a prohibited transaction will not 

be considered to have occurred if, due 

to circumstances beyond the control of 

the Committee and/or the Independent 

Fiduciary, the records are lost or 

destroyed prior to the end of the sixyear period, and (ii) no party in interest 

other than the Committee or the 

Independent Fiduciary shall be subject 

to the civil penalty that may be assessed 

under ERISA section 502(i) if the 

records are not maintained, or are not 

available for examination as required by 

paragraph (n) below; and 

(n)(1) Except as provided in section 

(2) of this paragraph and not 

withstanding any provisions of 

subsections (a)(2) and (b) of section 504 

of ERISA, the records referred to in 

paragraph (m) above shall be 

unconditionally available at their 


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customary location during normal 

business hours to: 

(i) any duly authorized employee or 

representative of the Department or the 

Internal Revenue Service; 

(ii) AT&T or any duly authorized 

representative of AT&T; 

(iii) the Independent Fiduciary or any 

duly authorized representative of the 

Independent Fiduciary; 

(iv) the Committee or any duly 

authorized representative of the 

Committee; and 

(v) any participant or beneficiary of 

the Plan, or any duly authorized 

representative of such participant or 

beneficiary; 

(2) None of the persons described 

above in paragraph (n)(1) (iii) or (v) 

shall be authorized to examine the trade 

secrets of AT&T or commercial or 

financial information that is privileged 

or confidential, and should AT&T refuse 

to disclose information on the basis that 

such information is exempt from 

disclosure; AT&T shall by the close of 

the thirtieth (30th) day following the 

request, provide a written notice 

advising that person of the reasons for 

the refusal and that the Department may 

request such information. 

III. Definitions 

For purposes of this proposed 

exemption: 

(a) The term ‘‘Affiliate’’ means: 

(1) Any person directly or indirectly 

through one or more intermediaries, 

controlling, controlled by, or under 

common control with the person; 

(2) Any officer, director, employee, 

relative, or partner in any such person; 

(3) Any corporation or partnership of 

which such person is an officer, 

director, partner, or employee. 

For the purposes of clause (a)(1) above, 

the term ‘‘control’’ means the power to 

exercise a controlling influence over the 

management or policies of a person 

other than an individual. 

(b) The term ‘‘Committee’’ means the 

AT&T Inc. Benefit Plan Investment 

Committee, which has been delegated 

the power and authority to appoint and 

remove trustees and investment 

managers, and to enter into and amend 

trust agreements and other agreements 

relating to the management of Plan 

assets and, in respect of such power and 

authority, has been designated by AT&T 

Services, Inc. as a ‘‘named fiduciary’’ of 

the Plan. 

(c) The term ‘‘Trust’’ means the SBC 

Master Pension Trust, established and 

maintained pursuant to an agreement 

between AT&T Inc. and JPMorgan Chase 

Bank, N.A., as amended and restated 

effective as of February 1, 2012. 

(d) The term ‘‘IMA’’ means the 

Investment Management Agreement by 

and between AT&T Services, Inc., the 

AT&T Benefit Plan Investment 

Committee, AT&T Inc. and Brock 

Fiduciary Services LLC, effective on or 

about September 9, 2013. 

(e) The term ‘‘Contribution 

Agreement’’ means the Contribution 

Agreement between Brock Fiduciary 

Services LLC, JPMorgan Chase Bank, 

N.A., as Directed Trustee of the Trust, 

AT&T Inc. and AT&T Mobility II LLC, 

dated August 30, 2013, which, among 

other things, sets forth the terms and 

conditions of the Contribution, the Put 

Option and the Call Option. 

(f) The term ‘‘Registration Rights 

Agreement’’ means the Registration 

Rights Agreement by and among AT&T 

Inc. the SBC Master Pension Trust and 

Brock Fiduciary Services LLC, as 

Independent Fiduciary and investment 

manager with respect to the AT&T 

Pension Benefit Plan, a participating 

plan in the SBC Master Pension Trust, 

dated August 30, 2013. 

(g) The term ‘‘Change of Control’’ 

means (i) the occurrence of any merger, 

reorganization or other transaction that 

results in AT&T, directly or indirectly, 

owning less than fifty percent of the 

capital or profits interests (where the 

Issuer remains taxable as a partnership), 

or equity (if the Issuer becomes taxable 

as a corporation), of the Issuer, 

exclusive of the Preferred Interests, or 

(ii) a transfer of fifty percent or more of 

the Plan liabilities and Trust assets to an 

entity not under common control with 

AT&T Inc. 

(h) The term ‘‘Independent Fiduciary’’ 

means Brock Fiduciary Services LLC 

and any other fiduciary who (1) is 

independent or unrelated to AT&T Inc. 

and its affiliates and has the appropriate 

training, experience, and facilities to act 

on behalf of the Plan regarding the 

covered transactions in accordance with 

the fiduciary duties and responsibilities 

prescribed by ERISA (including, if 

necessary, the responsibility to seek the 

counsel of knowledgeable advisors to 

assist in its compliance with ERISA), 

and (2) if relevant, succeeds Brock 

Fiduciary Services LLC pursuant to the 

terms of the Investment Management 

Agreement, Independent Fiduciary 

Agreement, or other relevant agreement. 

The Independent Fiduciary will not be 

deemed to be independent of and 

unrelated to AT&T Inc. and its affiliates 

if: (i) Such fiduciary directly or 

indirectly controls, is controlled by or is 

under common control, with AT&T and 

its affiliates; (ii) such fiduciary directly 

or indirectly receives any compensation 

or other consideration in connection 

with any transaction described in this 

proposed exemption other than for 

acting as an Independent Fiduciary in 

connection with the transactions 

described herein, provided that the 

amount or payment of such 

compensation is not contingent upon, or 

in any way affected by, the Independent 

Fiduciary’s ultimate decision; and (iii) 

the annual gross revenue received by 

the Independent Fiduciary, during any 

year of its engagement, from AT&T Inc. 

and its affiliates, exceeds two percent 

(2%) of the Independent Fiduciary’s 

annual gross revenue from all sources 

(for federal income tax purposes) for its 

prior tax year. For the purpose of this 

Section III(h), the term ‘‘control’’ has the 

meaning set forth in Section III(a) above. 

(i) The term ‘‘Put Option’’ means the 

right of the Independent Fiduciary to 

require AT&T to purchase the Preferred 

Interests from the Trust, pursuant to the 

terms and conditions set forth in the 

Contribution Agreement, at the Option 

Price per Preferred Interest at any time 

and from time to time on or after the 

earliest of: (1) The first date that the 

Issuer’s debt-to-total-capitalization ratio 

(as defined in the Contribution 

Agreement) exceeds that of AT&T; (2) 

the date on which AT&T, Inc. is rated 

below investment grade for two 

consecutive calendar quarters by at least 

two of the following rating agencies: (x) 

Standard & Poor’s Ratings Services, (y) 

Moody’s Investor Services, Inc., or (z) 

FitchRatings, Inc.; (3) a Change of 

Control; or (4) the seventh anniversary 

of the date on which the Preferred 

Interests are contributed to the Trust. 

(j) The term ‘‘Call Option’’ means the 

right of AT&T to purchase all or any 

portion of the Preferred Interests from 

the Trust, pursuant to the terms and 

conditions set forth in the Contribution 

Agreement, at a price per Preferred 

Interest equal to the Option Price per 

Preferred Interest, at any time and from 

time to time: (1) During the twelve 

month period following the date AT&T 

issues an annual report reflecting that 

the Plan is fully funded as determined 

under U.S. GAAP and calculated by 

including the fair market value of the 

Preferred Interests; (2) on or after a 

Change of Control; or (3) on or after the 

fifth anniversary of the date on which 

the Preferred Interests are contributed to 

the Trust. 

(k) The term ‘‘Trustee’’ means 

JPMorgan Chase Bank, N.A. or any 

successor trustee retained by the Trust 

to hold the assets of the Trust, acting 

solely as a directed trustee with no 

discretionary authority over the 

investment of Trust assets. 

(l) The term ‘‘Option Price’’ means an 

amount equal to the greater of: (1) The 

fair market value of the Preferred 


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55114 Federal Register / Vol. 78, No. 174 / Monday, September 9, 2013 / Notices 

Interest, determined by the Independent 

Fiduciary as of the last date of the 

calendar quarter preceding the date of 

notice of exercise of a Call Option or Put 

Option, as the case may be, without 

regard to the occurrence of any prior 

event described in clauses (1) or (2) of 

the definition of Call Option or in 

clauses (1) through (3) of the definition 

of Put Option, or, for the portion of 

Preferred Interests that are not 

immediately purchased by AT&T 

pursuant to the Put Option because of 

the limitation on AT&T’s obligation to 

purchase the Preferred Interests 

pursuant to the Put Option to no more 

than 106,666,667 Preferred Interests in 

any twelve month period, the fair 

market value of the Preferred Interest, 

determined by the Independent 

Fiduciary as of the last date of the 

calendar quarter immediately preceding 

the date such portion of the Preferred 

Interest is actually purchased by AT&T 

Inc., without regard to the occurrence of 

any prior event described in clauses (1) 

or (2) of the definition of Call Option or 

in clauses (1) through (3) of the 

definition of Put Option; and (2) the 

sum of $25.00 (i.e., $8 billion in the 

aggregate) plus any accrued and unpaid 

Distributions. 

(m) The term ‘‘Independent Fiduciary 

Agreement’’ means the Independent 

Fiduciary Agreement dated May 1, 

2012, as amended, by and among AT&T 

Services, AT&T Inc. and Brock. 

(n) The term ‘‘Independent 

Appraiser’’ means an individual or 

entity meeting the definition of a 

‘‘Qualified Independent Appraiser’’ 

under 25 CFR 2570.31(i) retained to 

determine, on behalf of the Plan, the fair 

market value of the Preferred Interests 

as of the date of the Contribution and 

while the Preferred Interests are held on 

behalf of the Plan. For avoidance of 

doubt, the Independent Appraiser may 

be the Independent Fiduciary, provided 

it qualifies as a Qualified Independent 

Appraiser. 

Signed at Washington, DC, this 3rd day of 

September, 2013. 

Lyssa Hall, 

Director of Exemption Determinations, 

Employee Benefits Security Administration, 

U.S. Department of Labor. 

[FR Doc. 2013–21801 Filed 9–6–13; 8:45 am] 

BILLING CODE 4510–29–P 

DEPARTMENT OF LABOR 

Employment and Training 

Administration 

Native American Employment and 

Training Council (Council) Charter; 

Notice of Intent To Renew 

AGENCY: Employment and Training 

Administration, Labor. 

ACTION: Notice of Intent to Renew the 

Native American Employment and 

Training Council (Council) Charter. 

SUMMARY: Notice is hereby given 

regarding the renewal of the Workforce 

Investment Act (WIA), Section 166 

Indian and Native American program 

Charter that is necessary and in the 

public interest. Accordingly, the U.S. 

Department of Labor (the Department), 

Employment and Training 

Administration (ETA) intends to renew 

the Council Charter with revisions. The 

revisions are not intended to change the 

purpose or the Council’s original intent. 

The revisions includes language 

regarding membership diversity and 

changes to the terms of members. The 

charter for the Council will expire on 

August 31, 2013. 

SUPPLEMENTARY INFORMATION: 

Background: Pursuant to WIA Section 

166(h)(4)(C), the Council advises the 

Secretary on all aspects of the operation 

and administration of the Native 

American programs authorized under 

the Workforce Investment Act (WIA) 

Section 166. In addition, the Council 

advises the Secretary on matters that 

promote the employment and training 

needs of American Indians and Native 

Americans, as well as enhance the 

quality of life in accordance with the 

Indian Self-Determination Act and 

Education Assistance Act. The Council 

shall also provide guidance to the 

Secretary on ways for Indians, Alaska 

Natives, and Native Hawaiians to 

successfully access and obtain 

Department discretionary funding and 

participate in special initiatives. 

The charter is required to be renewed 

every two years; the previous charter 

expired on August 31, 2013. The 

Council continues to assist ETA and the 

Secretary to administer WIA Section 

166 program policy. 

Summary of Revisions: Due to Federal 

Advisory Committee Act (FACA) 

requirements and budgetary constraints, 

there are two changes that have been 

made to the charter: First, due to 

reduced funding under sequestration, 

the estimated annual operating cost of 

$110,000 is reduced to $100,000. 

Utilizing new and improved 

technologies, (teleconferences and 

virtual meetings) will allow the 

Department of Labor (DOL) to conduct 

conferences and meetings from a 

distance and reduce overall travel cost. 

Second, the membership section was 

modified to enact term limits for the 

chairperson and vice chairperson. 

Adding a limitation on terms allows: (1) 

The Council to create a rolling influx of 

new ideas and perspectives; (2) for an 

equitable distribution of influence with 

the Council leadership; (3) opportunity 

for current members to take on more of 

a leadership role; (4) flexibility to 

maintain a healthy Council balance of 

experience and fresh ideas, and further 

accommodates changes in membership 

due to retirements, member 

withdrawals, or resignations; and, (5) 

the prevention of too many individuals 

representing one interest. The reduction 

in funding and term limits will have no 

impact on the Council’s role. All 

council members shall serve at the 

pleasure of the Secretary and members 

may be appointed, reappointed, and/or 

replaced, and their terms may be 

extended, changed, or terminated at the 

Secretary’s discretion. 

FOR FURTHER INFORMATION CONTACT: Mrs. 

Evangeline M. Campbell, Designated 

Federal Officer, Division of Indian and 

Native American Program, Office of 

Workforce Investment, Employment and 

Training Administration, U.S. 

Department of Labor, Room S–4209, 200 

Constitution Avenue NW., Washington, 

DC 20210. Telephone: (202) 693–3737, 

(this is not a toll-free number). 

Signed at Washington, DC, this 29th day of 

August 2013. 

Eric M. Seleznow, 

Acting Assistant Secretary, Employment and 

Training Administration. 

[FR Doc. 2013–21852 Filed 9–6–13; 8:45 am] 

BILLING CODE 4510–FR–P 

DEPARTMENT OF LABOR 

Occupational Safety and Health 

Administration 

[Docket No. OSHA–2009–0043] 

Access to Employee Exposure and 

Medical Records; Extension of the 

Office of Management and Budget’s 

(OMB) Approval of Information 

Collection (Paperwork) Requirements 

AGENCY: Occupational Safety and Health 

Administration (OSHA), Labor. 

ACTION: Request for public comments. 

SUMMARY: OSHA solicits public 

comments concerning its proposal to 

extend the Office of Management and 

Budget’s (OMB) approval of the 


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