Document:

ex10rr.htm

Exhibit 10-rr

 

AT&T 1997 LONG TERM INCENTIVE PROGRAM

(as amended May 19, 1999 and March 14, 2000)

 

SECTION 1. PURPOSE. The purposes of the AT&T 1997 Long Term Incentive Program (the "Plan") are to encourage selected employees and Non-Employee Directors of AT&T Corp. (the "Company") and its Affiliates to acquire a proprietary and vested interest in the growth and performance of the Company, to generate an increased incentive to contribute to the Company's future success and prosperity, thus enhancing the value of the Company for the benefit of shareholders, and to enhance the ability of the Company and its Affiliates to attract and retain individuals of exceptional managerial talent upon whom, in large measure, the sustained progress, growth and profitability of the Company depends.

 

SECTION 2. DEFINITIONS. As used in the Plan, the following terms shall have the meanings set forth below:

 

(a) "Affiliate" shall mean (i) any Person that directly, or through one or more intermediaries, controls, or is controlled by, or is under common control with, the Company or (ii) any entity in which the Company has a significant equity interest, as determined by the Committee.

 

(b) "Award" shall mean any Option, Stock Appreciation Right, Restricted Stock Award, Performance Share, Performance Unit, Dividend Equivalent, Other Stock Unit Award, or any other right, interest, or option relating to Shares or other property granted pursuant to the provisions of the Plan.

 

(c) "Award Agreement" shall mean any written agreement, contract, or other instrument or document evidencing any Award granted by the Committee hereunder, which may, but need not, be executed or acknowledged by both the Company and the Participant.

 

(d) "Board" shall mean the Board of Directors of the Company.

 

(e) "Change in Control" shall mean the happening of any of the following events:

 

(i) An acquisition by any individual, entity or group (within the meaning of Section 13 (d) (3) or 14 (d) (2) of the Exchange Act) (an "Entity") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then outstanding AT&T Shares (the "Outstanding Company Common Stock") or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); excluding, however, the following: (1) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (4) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section 2(e);

 

(ii) A change in the composition of the Board such that the individuals who, as of the effective date of the Plan, constitute the Board (such Board shall be hereinafter referred to as the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that for purposes of this definition, any individual who becomes a member of the Board subsequent to the effective date of the Plan, whose election, or nomination for election, by the Company's stockholders was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; and provided, further however, that any such individual whose initial assumption of office occurs as a result of or in connection with either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of an Entity other than the Board shall not be so considered as a member of the Incumbent Board;

 

(iii) The approval by the stockholders of the Company of a merger, reorganization or consolidation or sale or other disposition of all or substantially all of the assets of the Company (each, a "Corporate Transaction") or, if consummation of such Corporate Transaction is subject, at the time of such approval by stockholders, to the consent of any government or governmental agency, the obtaining of such consent (either explicitly or implicitly by consummation); excluding however, such a Corporate Transaction pursuant to which (A) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation or other Person which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries (a "Parent Company")) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Entity (other than the Company, any employee benefit plan (or related trust) of the Company, such corporation resulting from such Corporate Transaction or, if reference was made to equity ownership of any Parent Company for purposes of determining whether clause (A) above is satisfied in connection with the applicable Corporate Transaction, such Parent Company) will beneficially own, directly or indirectly, 20% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors unless such ownership resulted solely from ownership of securities of the Company prior to the Corporate Transaction, and (C) individuals who were members of the Incumbent Board will immediately after the consummation of the Corporate Transaction constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction (or, if reference was made to equity ownership of any Parent Company for purposes of determining whether clause (A) above is satisfied in connection with the applicable Corporate Transaction, of the Parent Company); or

 

(iv) The approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

 

(f) "Change in Control Price" means, with respect to an AT&T Share or a Wireless Group Share, as the case may be, the higher of (A) the highest reported sales price, regular way, of such Share in any transaction reported on the New York Stock Exchange Composite Tape or other national exchange on which such Shares are listed or on NASDAQ during the 60-day period prior to and including the date of a Change in Control or (B) if the Change in Control is the result of a tender or exchange offer or a Corporate Transaction, the highest price per such Share paid in such tender or exchange offer or Corporate Transaction; provided however, that in the case of Incentive Stock Options and Stock Appreciation Rights relating to Incentive Stock Options, the Change in Control Price shall be the Fair Market Value of such Share on the date such Incentive Stock Option or Stock Appreciation Right is exercised or deemed exercised pursuant to Section 11(b). To the extent that the consideration paid in any such transaction described above consists all or in part of securities or other noncash consideration, the value of such securities or other noncash consideration shall be determined in the sole discretion of the Board.

 

(g) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto.

 

(h) "Committee" shall mean the Compensation and Employee Benefits Committee of the Board, or any successor to such committee, composed of no fewer than two directors each of whom is a Non-Employee Director and an "outside director" within the meaning of Section 162(m) of the Code, or any successor provision thereto.

 

(i) "Company" shall mean AT&T Corp., a New York corporation.

 

(j) "Covered Employee" shall mean a "covered employee" within the meaning of Section 162(m)(3) of the Code, or any successor provision thereto.

 

(k) "Employee" shall mean any employee of the Company or of any Affiliate. Unless otherwise determined by the Committee in its sole discretion, for purposes of the Plan, an employee shall be considered to have terminated employment and to have ceased to be an Employee if his or her employer ceases to be an Affiliate, even if he or she continues to be employed by such employer.

 

(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

 

(m) "Fair Market Value" shall mean, with respect to any property, the market value of such property determined by such methods or procedures as shall be established from time to time by the Committee.

 

(n) "Incentive Stock Option" shall mean an Option granted under Section 6 hereof that is intended to meet the requirements of Section 422 of the Code or any successor provision thereto.

 

(o) "Non-Employee Director" shall have the meaning set forth in Rule 16b-3(b)(3) promulgated by the Securities and Exchange Commission under the Exchange Act, or any successor definition adopted by the Securities and Exchange Commission.

 

(p) "Nonstatutory Stock Option" shall mean an Option granted under Section 6 hereof that is not intended to be an Incentive Stock Option.

 

(q) "Option" shall mean any right granted to a Participant under the Plan allowing such Participant to purchase Shares at such price or prices and during such period or periods as the Committee shall determine.

 

(r) "Other Stock Unit Award" shall mean any right granted to a Participant by the Committee pursuant to Section 10 hereof.

 

(s) "Participant" shall mean an Employee or Non-Employee Director who is selected by the Committee to receive an Award under the Plan.

 

(t) "Performance Award" shall mean any Award of Performance Shares or Performance Units pursuant to Section 9 hereof.

 

(u) "Performance Period" shall mean that period established by the Committee at the time any Performance Award is granted or at any time thereafter during which any performance goals specified by the Committee with respect to such Award are to be measured.

 

(v) "Performance Share" shall mean any grant pursuant to Section 9 hereof of a unit valued by reference to a designated number of Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including, without limitation, cash, Shares, or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.

 

(w) "Performance Unit" shall mean any grant pursuant to Section 9 hereof of a unit valued by reference to a designated amount of property other than Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including, without limitation, cash, Shares, or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.

 

(x) "Person" shall mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, or government or political subdivision thereof.

 

(y) "Restricted Stock" shall mean any Share issued with the restriction that the holder may not sell, transfer, pledge, or assign such Share and with such other restrictions as the Committee, in its sole discretion, may impose (including, without limitation, any restriction on the right to vote such Share, and the right to receive any cash dividends), which restrictions may lapse separately or in combination at such time or times, in installments or otherwise, as the Committee may deem appropriate.

  

(z) "Restricted Stock Award" shall mean an award of Restricted Stock under Section 8 hereof.

 

(Aa) "Senior Manager" shall mean any Employee of the Company or any Affiliate holding a position above E band or any future salary band that is the equivalent thereof.

 

(Bb) "Shares" shall mean, collectively or as the case may be, (i)the shares of AT&T Common Stock of the Company, $1.00 par value (“AT&T Shares”), and (ii) the shares of Wireless Group Common Stock of the Company, $1.00 par value (“Wireless Group Shares”). “Outstanding Wireless Group Shares” shall mean, as at any date of determination, the sum of (i) the total issued and outstanding Wireless Group Shares, plus (ii) the number of Wireless Group Shares represented by the inter-group interest held by the “AT&T Common Stock Group” (as described the Company’s Proxy Statement dated January 26, 2000). The numbers of AT&T Shares referred to in the Plan have been adjusted to reflect the Company’s 3 for 2 stock split effective April 15, 1999.

 

(Cc) "Stock Appreciation Right" shall mean any right granted to a Participant pursuant to Section 7 hereof to receive, upon exercise by the Participant, the excess of (i) the Fair Market Value of one Share on the date of exercise or, if the Committee shall so determine in the case of any such right other than one related to any Incentive Stock Option, at any time during a specified period before the date of exercise over (ii) the grant price of the right on the date of grant, or if granted in connection with an outstanding Option on the date of grant of the related Option, as specified by the Committee in its sole discretion, which, except in the case of Substitute Awards or in connection with an adjustment provided in Section 4(e), shall not be less than the Fair Market Value of one Share on such date of grant of the right or the related Option, as the case may be. Any payment by the Company in respect of such right may be made in cash, Shares, other property, or any combination thereof, as the Committee, in its sole discretion, shall determine.

 

(Dd) "Subsidiary" shall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the time of the granting of the Award, each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50 percent or more of the total combined voting power of all classes of stock in one of the other corporations in the chain.

 

(Ee) "Substitute Awards" shall mean Awards granted or Shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, by a company acquired by the Company or with which the Company combines.

 

SECTION 3. ADMINISTRATION. The Plan shall be administered by the Committee. The Committee shall have full power and authority, subject to such orders or resolutions not inconsistent with the provisions of the Plan as may from time to time be adopted by the Board, to: (i) select the Employees of the Company and its Affiliates and Non-Employee Directors of the Company to whom Awards may from time to time be granted hereunder; (ii) determine the type or types of Award to be granted to each Participant hereunder; (iii) determine the number of Shares to be covered by each Award granted hereunder; (iv) determine the terms and conditions, not inconsistent with the provisions of the Plan, of any Award granted hereunder; (v) determine whether, to what extent and under what circumstances Awards may be settled in cash, Shares or other property or canceled or suspended; (vi) determine whether, to what extent and under what circumstances cash, Shares and other property and other amounts payable with respect to an Award under this Plan shall be deferred either automatically or at the election of the Participant; (vii) interpret and administer the Plan and any instrument or agreement entered into under the Plan; (viii) establish such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (ix) make any other determination and take any other action that the Committee deems necessary or desirable for administration of the Plan. Decisions of the Committee shall be final, conclusive and binding upon all persons, including the Company, any Participant, any shareholder, and any employee of the Company or of any Affiliate. A majority of the members of the Committee may determine its actions and fix the time and place of its meetings. Notwithstanding the foregoing or anything else to the contrary in the Plan, any action or determination by the Committee specifically affecting or relating to an Award to a Non-Employee Director shall be approved and ratified by the Board.

 

SECTION 4. SHARES SUBJECT TO THE PLAN.

 

(a) Subject to adjustment as provided in Section 4(e), a total of twenty-two and one half (22.5) million AT&T Shares shall be available for a one time grant of Options to substantially all Employees during 1997. Shares available for such one time grant of Options, but not used for such Options, shall be available for other Awards under the Plan, in 1997 or later years.

 

(b) In addition to the number of AT&T Shares available under Section 4(a), and subject to adjustment as provided in Section 4(e), a total of (i) one hundred twenty-seven and one half (127.5) million AT&T Shares, and (ii) a number of Wireless Group Shares equal to 5.00% of the number of Outstanding Wireless Group Shares shall be available for Awards granted under the Plan; provided that, commencing on January 1, 2000 and on each subsequent January 1 throughout the term of the Plan, an additional number of AT&T Shares shall be added to the number of AT&T Shares available for Awards granted under the Plan, which additional number of AT&T Shares shall be calculated by multiplying (x) the number of AT&T Shares outstanding on such January 1, by (y) 1.75%; provided, further, that the number of AT&T Shares available for Awards other than Options and/or Stock Appreciation Rights shall not exceed thirty-seven and one half (37.5) million; and provided further that, commencing on January 1, 2001 and on each subsequent January 1 throughout the term of the Plan, an additional number of Wireless Group Shares shall be added to the number of Wireless Group Shares available for Awards granted under the Plan, which additional number of Wireless Group Shares shall be calculated by multiplying (x) the number of Outstanding Wireless Group Shares on such January 1, by (y) 2.00%; provided, further, that the number of Wireless Group Shares available for Awards other than Options and/or Stock Appreciation Rights shall not exceed 1.25% of the number of Outstanding Wireless Group Shares; and provided, further, that if any Shares subject to an Award or to an award under the Company's 1987 Long Term Incentive Program or 1984 Stock Option Plan (the "Prior Plans") are forfeited or if any Award or award under the Prior Plans based on Shares is settled for cash, or expires or otherwise is terminated without issuance of such Shares, the Shares subject to such Award shall to the extent of such cash settlement, forfeiture or termination again be available for Awards under the Plan. In the event that any Option or other Award granted hereunder is exercised through the delivery of Shares or in the event that withholding tax liabilities arising from such Option or other Award are satisfied by the withholding of Shares by the Company, the number of Shares available for Awards under the Plan shall be increased by the number of Shares so surrendered or withheld. In addition, Substitute Awards shall not reduce the Shares available for grants under the Plan or to a Participant in any calendar year.

 

(c) In addition to the number of Wireless Group Shares available under Section 4(b), and subject to adjustment as provided in Section 4(e), such additional number of Wireless Group Shares as are required for Awards as an adjustment to existing Awards under the Plan based upon AT&T Shares as the result of any distribution of Wireless Group Shares to holders of AT&T Shares as more fully described in the Company’s Proxy Statement dated January 26, 2000.

 

(d) Any Shares issued hereunder may consist, in whole or in part, of authorized and unissued shares, treasury shares, or shares purchased in the open market or otherwise.

 

(ed) In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, stock split, reverse stock split, spin-off or similar transaction or other change in corporate structure affecting the Shares, such adjustments and other substitutions shall be made to the Plan and to Awards as the Committee in its sole discretion deems equitable or appropriate, including without limitation such adjustments in the aggregate number, class and kind of securities which may be delivered under the Plan, in the aggregate or to any one Participant, in the number, class, kind and option or exercise price of securities subject to outstanding Options, Stock Appreciation Rights or other Awards granted under the Plan, and in the number, class and kind of securities subject to Awards granted under the Plan (including, if the Committee deems appropriate, the substitution of similar options to purchase the shares of, or other awards denominated in the shares of, another company) as the Committee may determine to be appropriate in its sole discretion, provided that the number of Shares subject to any Award shall always be a whole number.

 

SECTION 5. ELIGIBILITY. Any Employee or Non-Employee Director shall be eligible to be selected as a Participant, provided, however, that Incentive Stock Options shall only be awarded to Employees of the Company.

 

SECTION 6. STOCK OPTIONS. Options may be granted hereunder to Participants either alone or in addition to other Awards granted under the Plan. Any Option granted under the Plan shall be evidenced by an Award Agreement in such form as the Committee may from time to time approve. Any such Option shall be subject to the following terms and conditions and to such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall deem desirable:

 

(a) OPTION PRICE. The purchase price per Share purchasable under an Option shall be determined by the Committee in its sole discretion; provided that, except in the case of Substitute Awards or in connection with an adjustment provided for in Section 4(e), such purchase price shall not be less than the Fair Market Value of the Share on the date of the grant of the Option.

  

(b) OPTION PERIOD. The term of each Option shall be fixed by the Committee in its sole discretion; provided that no Option shall be exercisable after the expiration of ten years from the date the Option is granted.

 

(c) EXERCISABILITY. Options shall be exercisable at such time or times as determined by the Committee at or subsequent to grant.

 

(d) METHOD OF EXERCISE. Subject to the other provisions of the Plan, any Option may be exercised by the Participant in whole or in part at such time or times, and the Participant may make payment of the option price in such form or forms, including, without limitation, payment by delivery of cash, Shares or other consideration (including, where permitted by law and the Committee, Awards) having a Fair Market Value on the exercise date equal to the total option price, or by any combination of cash, Shares and other consideration as the Committee may specify in the applicable Award Agreement.

 

(e) INCENTIVE STOCK OPTIONS. In accordance with rules and procedures established by the Committee, and except as otherwise provided in Section 11, the aggregate Fair Market Value (determined as of the time of grant) of the Shares with respect to which Incentive Stock Options held by any Participant which are exercisable for the first time by such Participant during any calendar year under the Plan (and under any other benefit plans of the Company or any Subsidiary) shall not exceed $100,000 or, if different, the maximum limitation in effect at the time of grant under Section 422 of the Code, or any successor provision, and any regulations promulgated thereunder. Incentive Stock Options shall be granted only to participants who are employees of the Company or a Subsidiary of the Company. The terms of any Incentive Stock Option granted hereunder shall comply in all respects with the provisions of Section 422 of the Code, or any successor provision, and any regulations promulgated thereunder. The aggregate number of Shares with respect to which Incentive Stock Options may be granted under the Plan shall not exceed (i) seventy-five (75) million in the case of AT&T Shares, and (ii) 50.00% of the aggregate number of all Wireless Group Shares available for Awards under the Plan in the case of Wireless Group Shares.

 

(f) FORM OF SETTLEMENT. In its sole discretion, the Committee may provide, at the time of grant, that the Shares to be issued upon an Option's exercise shall be in the form of Restricted Stock or other similar securities, or may reserve the right so to provide after the time of grant.

 

SECTION 7. STOCK APPRECIATION RIGHTS. Stock Appreciation Rights may be granted hereunder to Participants either alone or in addition to other Awards granted under the Plan and may, but need not, relate to a specific Option granted under Section 6. The provisions of Stock Appreciation Rights need not be the same with respect to each recipient. Any Stock Appreciation Right related to a Nonstatutory Stock Option may be granted at the same time such Option is granted or at any time thereafter before exercise or expiration of such Option. Any Stock Appreciation Right related to an Incentive Stock Option must be granted at the same time such Option is granted. In the case of any Stock Appreciation Right related to any Option, the Stock Appreciation Right or applicable portion thereof shall terminate and no longer be exercisable upon the termination or exercise of the related Option, except that a Stock Appreciation Right granted with respect to less than the full number of Shares covered by a related Option shall not be reduced until the exercise or termination of the related Option exceeds the number of Shares not covered by the Stock Appreciation Right. Any Option related to any Stock Appreciation Right shall no longer be exercisable to the extent the related Stock Appreciation Right has been exercised. The Committee may impose such conditions or restrictions on the exercise of any Stock Appreciation Right as it shall deem appropriate, provided that no Stock Appreciation Right shall have a term that is longer than ten (10) years.

 

SECTION 8. RESTRICTED STOCK.

 

(a) ISSUANCE. A Restricted Stock Award shall be subject to restrictions imposed by the Committee during a period of time specified by the Committee (the "Restriction Period"). Restricted Stock Awards may be issued hereunder to Participants, for no cash consideration or for such minimum consideration as may be required by applicable law, either alone or in addition to other Awards granted under the Plan. The provisions of Restricted Stock Awards need not be the same with respect to each recipient.

 

(b) REGISTRATION. Any Restricted Stock issued hereunder may be evidenced in such manner as the Committee in its sole discretion shall deem appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued in respect of shares of Restricted Stock awarded under the Plan, such certificate shall be registered in the name of the Participant, and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award.

 

(c) FORFEITURE. Except as otherwise determined by the Committee at the time of grant or thereafter, upon termination of employment for any reason during the restriction period, all Shares of Restricted Stock still subject to restriction shall be forfeited by the Participant and reacquired by the Company. Unrestricted Shares, evidenced in such manner as the Committee shall deem appropriate, shall be issued to the grantee promptly after the period of forfeiture, as determined or modified by the Committee, shall expire.

 

(d) MINIMUM VESTING CONDITION. The minimum Restriction Period applicable to any Restricted Stock Award that is not subject to performance conditions restricting transfer shall be three (3) years from the date of grant; provided, however, that a Restriction Period of less than three (3) years may be approved under the Plan for such Awards with respect to (i) up to twelve (12) million AT&T Shares, and (ii) up to 0.50% of the Outstanding Wireless Group Shares.

 

SECTION 9. PERFORMANCE AWARDS. Performance Awards may be issued hereunder to Participants, for no cash consideration or for such minimum consideration as may be required by applicable law, either alone or in addition to other Awards granted under the Plan. The performance criteria to be achieved during any Performance Period and the length of the Performance Period shall be determined by the Committee upon the grant of each Performance Award. Except as provided in Section 11, Performance Awards will be distributed only after the end of the relevant Performance Period. Performance Awards may be paid in cash, Shares, other property or any combination thereof, in the sole discretion of the Committee at the time of payment. The performance levels to be achieved for each Performance Period and the amount of the Award to be distributed shall be conclusively determined by the Committee. Performance Awards may be paid in a lump sum or in installments following the close of the Performance Period or, in accordance with procedures established by the Committee, on a deferred basis.

 

SECTION 10. OTHER STOCK UNIT AWARDS.

 

(a) STOCK AND ADMINISTRATION. Other Awards of Shares and other Awards that are valued in whole or in part by reference to, or are otherwise based on, Shares or other property ("Other Stock Unit Awards") may be granted hereunder to Participants, either alone or in addition to other Awards granted under the Plan. Other Stock Unit Awards may be paid in Shares, cash or any other form of property as the Committee shall determine. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the Employees of the Company and its Affiliates and Non-Employee Directors to whom and the time or times at which such Awards shall be made, the number of Shares to be granted pursuant to such Awards, and all other conditions of the Awards. The provisions of Other Stock Unit Awards need not be the same with respect to each recipient.

 

(b) TERMS AND CONDITIONS. Subject to the provisions of this Plan and any applicable Award Agreement, Awards and Shares subject to Awards made under this Section 10, may not be sold, assigned, transferred, pledged or otherwise encumbered prior to the date on which the Shares are issued, or, if later, the date on which any applicable restriction, performance or deferral period lapses. For any Award or Shares subject to any Award made under this Section 10 the transferability of which is conditioned only on the passage of time, such restriction period shall be a minimum of three (3) years. Shares (including securities convertible into Shares) subject to Awards granted under this Section 10 may be issued for no cash consideration or for such minimum consideration as may be required by applicable law. Shares (including securities convertible into Shares) purchased pursuant to a purchase right awarded under this Section 10 shall be purchased for such consideration as the Committee shall in its sole discretion determine, which, except in the case of Substitute Awards, shall not be less than the Fair Market Value of such Shares or other securities as of the date such purchase right is awarded.

 

SECTION 11. CHANGE IN CONTROL PROVISIONS.

 

(a) IMPACT OF EVENT. Notwithstanding any other provision of the Plan to the contrary, unless the Committee shall determine otherwise at the time of grant with respect to a particular Award, in the event of a Change in Control:

 

(i) any Options and Stock Appreciation Rights outstanding as of the date such Change in Control is determined to have occurred, and which are not then exercisable and vested, shall become fully exercisable and vested to the full extent of the original grant;

 

(ii) the restrictions and deferral limitations applicable to any Restricted Stock shall lapse, and such Restricted Stock shall become free of all restrictions and limitations and become fully vested and transferable to the full extent of the original grant;

 

(iii) all Performance Awards shall be considered to be earned and payable in full, and any deferral or other restriction shall lapse and such Performance Awards shall be immediately settled or distributed; and  

 

(iv) The restrictions and deferral limitations and other conditions applicable to any Other Stock Unit Awards or any other Awards shall lapse, and such Other Stock Unit Awards or such other Awards hall become free of all restrictions, limitations or conditions and become fully vested and transferable to the full extent of the original grant.

 

(b) CHANGE IN CONTROL CASH-OUT. Notwithstanding any other provision of the Plan, during the 60-day period from and after a Change in Control (the "Exercise Period"), if the Committee shall determine at, or at any time after, the time of grant, a Participant holding an Option or Stock Appreciation Right shall have the right, whether or not the Option or Stock Appreciation Right is fully exercisable and in lieu of the payment of the purchase price for the Shares being purchased under the Option or Stock Appreciation Right and by giving notice to the Company, to elect (within the Exercise Period) to surrender all or part of the Option or Stock Appreciation Right to the Company and to receive cash, within 30 days of such notice, in an amount equal to the amount by which the Change in Control Price per Share on the date of such election shall exceed the purchase price per Share under the Option or Stock Appreciation Right (the "Spread") multiplied by the number of Shares granted under the Option or Stock Appreciation right as to which the right granted under this Section 11(b) shall have been exercised.

 

(c) Notwithstanding any other provision of this Plan, if any right granted pursuant to this Plan would make a Change in Control transaction ineligible for pooling-of-interests accounting under APB No. 16, that (after giving effect to any other actions taken to cause such transaction to be eligible for such pooling-of-interests accounting treatment) but for the nature of such right would otherwise be eligible for such accounting treatment, the Committee shall have the ability to substitute for the cash payable pursuant to such right Shares with a Fair Market Value equal to the cash that would otherwise be payable pursuant thereto.

 

SECTION 12. CODE SECTION 162(m) PROVISIONS.

 

(a) Notwithstanding any other provision of this Plan, if the Committee determines at the time Restricted Stock, a Performance Award or an Other Stock Unit Award is granted to a Participant who is then a Senior Manager or an E band employee that such Participant is, or is likely to be as of the end of the tax year in which the Company would claim a tax deduction in connection with such Award, a Covered Employee, then the Committee may provide that this Section 12 is applicable to such Award.

 

(b) If an Award is subject to this Section 12, then the lapsing of restrictions thereon and the distribution of cash, Shares or other property pursuant thereto, as applicable, shall be subject to the achievement of one or more objective performance goals established by the Committee, which shall be based on the attainment of specified levels of one or any combination of the following: net cash provided by operating activities, earnings per share from continuing operations, operating income, revenues, gross margin, return on operating assets, return on equity, economic value added, stock price appreciation, total stockholder return, or cost control, of the Company or the Affiliate or division of the Company for or within which the Participant is primarily employed. Such performance goals also may be based upon the achievement of specified levels of Company performance (or performance of applicable Affiliate or division of the Company) under one or more of the measures described above relative to the performance of  

other corporations. Such performance goals shall be set by the Committee within the time period prescribed by, and shall otherwise comply with the requirements of, Section 162(m) of the Code, or any successor provision thereto, and the regulations thereunder.

 

(c) Notwithstanding any provision of this Plan other than Section 11, with respect to any Award that is subject to this Section 12, the Committee may adjust downwards, but not upwards, the amount payable pursuant to such Award, and the Committee may not waive the achievement of the applicable performance goals except in the case of the death or disability of the Participant.

 

(d) The Committee shall have the power to impose such other restrictions on Awards subject to this Section 12 as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for "performance-based compensation" within the meaning of Section 162(m) (4) (C) of the Code, or any successor provision thereto.

 

(e) Notwithstanding any provision of this Plan other than Section 4(e), commencing with calendar year 1999, no Participant may be granted Options and/or SARs in any calendar year period with respect to more than three million (3,000,000) AT&T Shares, or more than three million (3,000,000) Wireless Group Shares and the maximum dollar value payable with respect to Performance Units and/or Other Stock Unit Awards that are valued with reference to property other than Shares and granted to any Participant in any one calendar year is $10,000,000.

 

SECTION 13. AMENDMENTS AND TERMINATION. The Board may amend, alter, suspend, discontinue or terminate the Plan or any portion thereof at any time; provided that no such amendment, alteration, suspension, discontinuation or termination shall be made without (i) shareholder approval if such approval is necessary to qualify for or comply with any tax or regulatory requirement for which or with which the Board deems it necessary or desirable to qualify or comply or (ii) the consent of the affected Participant, if such action would impair the rights of such Participant under any outstanding Award. Notwithstanding anything to the contrary herein, the Committee may amend the Plan in such manner as may be necessary so as to have the Plan conform to local rules and regulations in any jurisdiction outside the United States.

 

The Committee may amend the terms of any Award theretofore granted, prospectively or retroactively, but no such amendment shall impair the rights of any Participant without his or her consent. Notwithstanding any provision of this plan, the Committee may not amend the terms of any Option to reduce the option price nor may the Committee, without prior shareholder approval, cancel any outstanding Option and replace it with a new Option with a lower option price, where the economic effect would be the same as reducing the option price of the canceled Option.

 

SECTION 14. GENERAL PROVISIONS.

 

(a) Unless the Committee determines otherwise at the time the Award is granted or thereafter: (i) no Award, and no Shares subject to Awards described in Section 10 which have not been issued or as to which any applicable restriction, performance or deferral period has not lapsed, may be sold, assigned, transferred, pledged or otherwise encumbered, except by will or by the laws of descent and distribution; provided that, if so determined by the Committee, a Participant may, in the manner established by the Committee, designate a beneficiary to exercise the rights of the Participant with respect to any Award upon the death of the Participant; and (ii) each Award shall be exercisable, during the Participant's lifetime, only by the Participant or, if permissible under applicable law, by the Participant's guardian or legal representative.

 

(b) The term of each Award shall be for such period of months or years from the date of its grant as may be determined by the Committee; provided that in no event shall the term of any Stock Option or any Stock Appreciation Right exceed a period of ten (10) years from the date of its grant.

 

(c) No Employee or Participant shall have any claim to be granted any Award under the Plan and there is no obligation for uniformity of treatment of Employees or Participants under the Plan.

 

(d) The prospective recipient of any Award under the Plan shall not, with respect to such Award, be deemed to have become a Participant, or to have any rights with respect to such Award, until and unless such recipient shall have executed an agreement or other instrument evidencing the Award and delivered a copy thereof to the Company, and otherwise complied with the then applicable terms and conditions.

 

(e) Except as provided in Section 12, the Committee shall be authorized to make adjustments in performance award criteria or in the terms and conditions of other Awards in recognition of unusual or nonrecurring events affecting the Company or its financial statements or changes in applicable laws, regulations or accounting principles. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem desirable to carry it into effect. In the event the Company shall assume outstanding employee benefit awards or the right or obligation to make future such awards in connection with the acquisition of or combination with another corporation or business entity, the Committee may, in its discretion, make such adjustments in the terms of Awards under the Plan as it shall deem appropriate.

 

(f) The Committee shall have full power and authority to determine whether, to what extent and under what circumstances any Award shall be canceled or suspended. In addition, all outstanding Awards to any Participant shall be canceled if the Participant, without the consent of the Company, while employed by the Company or after termination of such employment, establishes a relationship with a competitor of the Company or engages in activity which is in conflict with or adverse to the interest of the Company, as determined under the AT&T Non-Competition Guideline.

 

(g) All certificates for Shares delivered under the Plan pursuant to any Award shall be subject to such stock-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed, and any applicable Federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

 

(h) No Award granted hereunder shall be construed as an offer to sell securities of the Company, and no such offer shall be outstanding, unless and until the Committee in its sole discretion has determined that any such offer, if made, would be in compliance with all applicable requirements of the U.S. federal securities laws and any other laws to which such offer, if made, would be subject.

 

(i) The Committee shall be authorized to establish procedures pursuant to which the payment of any Award may be deferred. Subject to the provisions of the Plan and any Award Agreement, the recipient of an Award (including, without limitation, any deferred Award) may, if so determined by the Committee, be entitled to receive, currently or on a deferred basis, cash dividends, or cash payments in amounts equivalent to cash dividends on Shares ("dividend equivalents"), with respect to the number of Shares covered by the Award, as determined by the Committee, in its sole discretion, and the Committee may provide that such amounts (if any) shall be deemed to have been reinvested in additional Shares or otherwise reinvested.

 

(j) Except as otherwise required in any applicable Award Agreement or by the terms of the Plan, recipients of Awards under the Plan shall not be required to make any payment or provide consideration other than the rendering of services.

 

(k) The Committee may delegate to one or more Senior Managers or a committee of Senior Managers the right to grant Awards to Employees who are not officers or directors of the Company and to cancel or suspend Awards to Employees who are not officers or directors of the Company.

 

(l) The Company shall be authorized to withhold from any Award granted or payment due under the Plan the amount of withholding taxes due in respect of an Award or payment hereunder and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes. The Committee shall be authorized to establish procedures for election by Participants to satisfy such obligations for the payment of such taxes by delivery of or transfer of Shares to the Company, or by directing the Company to retain Shares otherwise deliverable in connection with the Award.

 

(m) Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to shareholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.

 

(n) The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of New York and applicable Federal law.

 

(o) If any provision of this Plan is or becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan, it shall be stricken and the remainder of the Plan shall remain in full force and effect.

 

(p) Awards may be granted to Participants who are foreign nationals or employed outside the United States, or both, on such terms and conditions different from those applicable to Awards to Employees employed in the United States as may, in the judgment of the Committee, be necessary or desirable in order to recognize differences in local law or tax policy. The Committee also may impose conditions on the exercise or vesting of Awards in order to minimize the Company's obligation with respect to tax equalization for Employees on assignments outside their home country.

 

SECTION 15. EFFECTIVE DATE OF PLAN. The Plan shall be effective as of June 1, 1997.

 

SECTION 16. TERM OF PLAN. No Award shall be granted pursuant to the Plan after May 31, 2004, but any Award theretofore granted may extend beyond that date.ex10ss.htm

Exhibit 10-ss

BELLSOUTH NONQUALIFIED DEFERRED

 COMPENSATION PLAN

 

(As amended and restated effective as of January 1, 2005)

 

 

 

BellSouth Corporation (“BellSouth”) established on the first (1st) day of January, 1985, the BellSouth Nonqualified Deferred Compensation Plan (“Plan”) for certain executive employees and all Nonemployee Directors of BellSouth and its adopting subsidiaries, and the Plan was subsequently amended from time to time. The Plan is now hereby amended and restated, effective as of January 1, 2005, and as so amended and restated is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, with respect to all benefits under the Plan that are subject to Section 409A. Subject to the limitations contained in Article 2 of the Plan, and except as expressly provided herein, the Plan as so amended and restated shall hereafter apply to all Deferral Agreements, including those executed before this effective date, under the Plan.

 

ARTICLE 1

 

DEFINITIONS

 

1.1          “Base Salary” means the gross salary paid to executive employees, not including Nonemployee Directors, plus the amount of any before-tax basic and supplemental contributions to the BellSouth Retirement Savings Plan and the amount of any other deferrals from gross salary under any nonqualified deferred compensation plans which may be maintained by an Employer from time to time.

 

1.2         “Board” means the Board of Directors of BellSouth.

 

1.2A      “Change in Control Severance Plan” means a severance plan (or plans) adopted under the terms of the Company Disclosure Letter to the Merger Agreement (as defined in Section 1.14A below).

 

1.3         “Code” means the Internal Revenue Code of 1986, as amended.

 

1.4         “Compensation” means Net Monthly Salary or Net Directors Fees and Retainers.

 

1.5         “Compensation Rate” means the cash compensation of an Employee Participant, including (i) annual Base Salary rate in effect on the date the Deferral Agreement is executed and (ii) the standard short-term award amount in effect on the date the Deferral Agreement is executed for an Employee Participant who is an officer in the executive compensation group or lump sum payments under incentive compensation programs received for performance rendered during the calendar year preceding the year in which the Deferral Agreement is executed for an Employee Participant other than an officer in the executive compensation group.

 

1.6         “Deferral Agreement” means an agreement pursuant to which deferral elections under this Plan are made and includes a standard Fixed Benefit Agreement for Nonemployee Directors, substantially in the form of Exhibit A hereto, a standard Fixed Benefit Agreement for Employee Participants, substantially in the form of Exhibit B hereto, a standard Deferral Agreement which allows Nonemployee Directors to select between a Fixed Benefit Agreement and a Stock Unit Agreement, substantially in the form of Exhibit C hereto; a Deferral Agreement for deferral of certain lump sum payments by Employee Participants, substantially in the form of Exhibit D hereto; and includes any modifications to such agreements or such other agreements as are approved from time to time for use in connection with this Plan as described in Article 2.

 

1.7        “Designated Beneficiary” means the beneficiary designated by a Participant as provided in Section 6.1.

 

1.8        “Disabled” or “Disability” means, with respect to a Non-Grandfathered Participant, any of the following:

 

(a)         the inability of the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or

 

(b)        the Participant is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Employer.

 

1.8A    “Effective Date” means January 1, 2005, the date as of which the Plan is amended and restated.

 

1.9        “Eligible Person” means an executive employee of an Employer or Nonemployee Director who is authorized by the Board to participate in this Plan and is presented a Deferral Agreement for execution.

 

1.10      “Employee Participant” means an Eligible Person other than a Nonemployee Director.

 

1.11     “Employer” means (i) BellSouth and (ii) any subsidiary of BellSouth, at least eighty percent (80%) of the capital stock of which is owned by BellSouth or by one or more subsidiaries of BellSouth if the Board of Directors of that subsidiary adopts the Plan and if that subsidiary’s adoption of the Plan is approved by the Board or its designee.

 

1.12      “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

1.12A   “Executive Severance Agreement” means a BellSouth executive change in control agreement entered into by and between an executive who is a Participant in this Plan and BellSouth, as amended and/or superseded from time to time, providing certain benefits in the event of a change in corporate control of BellSouth.

 

1.13     “Fixed Benefit Agreement” means a Deferral Agreement which provides for a fixed benefit at Retirement under Section 5.1.

 

1.13A  “Grandfathered Participant” means any Participant other than a Non-Grandfathered Participant.

 

1.14     “Interim Distribution” means a distribution specified as an Interim Distribution in a Deferral Agreement.

 

1.14A    “Merger” means the planned merger, pursuant to the Agreement and Plan of Merger dated as of March 4, 2006 (the “Merger Agreement”), by and among BellSouth, AT&T Inc. (“AT&T”), and ABC Consolidation Corp., a Georgia corporation and wholly-owned subsidiary of AT&T (“Merger Sub”), pursuant to which, at the “Effective Time” (as defined in the Merger Agreement), BellSouth will be merged with and into the Merger Sub.

 

1.15     “Net Credited Service” means an Employee Participant’s net credited service as defined in the BellSouth Corporation Personal Retirement Account Pension Plan under the terms of such plan in effect on the Effective Date, except that it shall include only the portion of an Employee Participant’s net credited service as is attributable to service with BellSouth, an Employer or any other corporation which is a member of the same controlled group of corporations, within the meaning of Code Section 414(b), as BellSouth and any trade or business (whether or not incorporated) which is under common control with BellSouth, within the meaning of Code Section 414(c).

 

1.16     “Net Monthly Salary” or “Net Directors Fees and Retainers” means the amount of a Participant’s Base Salary or Directors Fees and Retainers which actually is paid to him or her in any month net of all withholding, allotments, and deductions other than any reduction as a result of participation in this Plan.

 

1.17     “Nonemployee Director” means a member of the Board, or a member of the Board of Directors of any other Employer, who is not concurrently a common law employee of an Employer.

 

1.17A   “Non-Grandfathered Participant” means any Employee Participant who (a) is described in Section 5.5A or Section 5.5B, or (b) otherwise first becomes eligible for a Retirement benefit, or dies or becomes Disabled, on or after January 1, 2005.

 

1.18     “Participant” means an Eligible Person who has executed a Deferral Agreement which is accepted by an Employer under Article 4.

 

1.19     “Plan Administrator” means the Chief Executive Officer of BellSouth and any individual or committee he designates to act on his behalf with respect to any or all of his responsibilities hereunder; provided, the Board may designate any other person or committee to serve in lieu of the Chief Executive Officer as the Plan Administrator with respect to any or all of the administrative responsibilities hereunder.

 

1.20     “Plan Year” means (i) February 1, 1985, through December 31, 1985, and (ii) each calendar year thereafter through 1996. For certain Employee Participants designated by the Board, “Plan Year” also means calendar year 1997. For Nonemployee Directors, “Plan Year” also means the period from January 1, 1997 through April 30, 1997, and for certain Nonemployee Directors designated by the Board, “Plan Year” also means (A) May 1, 1997, through April 30, 1998, (B) May 1, 1998, through April 30, 1999, and (C) May 1, 1999, through April 30, 2000, to the extent the Board shall designate.

 

1.20A    “Rabbi Trust Agreements” means each and all of the: (i) BellSouth Corporation Trust Under Executive Benefit Plan(s); (ii) BellSouth Telecommunications, Inc. Trust Under Executive Benefit Plan(s); (iii) BellSouth Enterprises, Inc. Trust Under Executive Benefit Plan(s); (iv) BellSouth Corporation Trust Under Executive Benefit Plan(s) for Mobile Systems Executives; (v) BellSouth Corporation Trust Under Executive Benefit Plan(s) for Advertising and Publishing Executives; (vi) Trust Under Executive Benefit Plan(s) for Certain BellSouth Companies; (vii) BellSouth Corporation Trust Under Board of Directors Benefit Plan(s); and (viii) BellSouth Telecommunications, Inc. Trust Under Board of Directors Benefit Plan(s); in each case, as amended from time to time.

 

1.21     “Retirement” means (1) any termination of employment by a Nonemployee Director and (2) any termination of employment by an Employee Participant who is (or would be) eligible for a pension, other than a deferred vested pension, under the terms and conditions of the BellSouth Personal Retirement Account Pension Plan, or comparable plan maintained by the Employer employing such Participant, under the terms of such plans in effect on the Effective Date. Additionally, “Retirement” means any termination of employment by an Employee Participant who has attained age 62 or older and whose Net Credited Service is ten years or more at the time of employment termination.

 

Notwithstanding anything to the contrary herein, after the Merger, with respect to any Non-Grandfathered Participant who otherwise satisfies none of the alternative definitions of Retirement described above, “Retirement” also means the termination of employment by the Non-Grandfathered Participant if at such time (A) the sum of (i) plus (ii) equals or exceeds seventy-five (75) years where (i) is the Non-Grandfathered Participant’s whole years and whole months of age and (ii) is the Non-Grandfathered Participant’s whole years and whole months of Net Credited Service, and (B) the Non-Grandfathered Participant’s Net Credited Service is at least ten (10) years (the “Rule of 75”).

 

1.22     “Retirement Benefit” means a benefit specified as a Retirement Benefit in a Deferral Agreement.

 

1.22A    “Section 409A” means Code section 409A and the Treasury regulations or other authoritative guidance issued thereunder. Whenever the terms “subject to Section 409A” or “to the extent permitted by Section 409A” (or any such similar reference so as to indicate that a Plan provision is subject to Section 409A) are used, such terms shall be interpreted to mean that the applicable Plan provision shall be effective only if and to the extent such provision would not trigger penalty taxes or interest under Section 409A.

 

1.23    “Share” means a share of $1.00 par value common stock of BellSouth.

 

1.24     “Stock Unit” means a bookkeeping entry representing the equivalent of one Share credited to a Participant as described in Section 4.5.

 

1.25     “Stock Unit Agreement” means a Deferral Agreement which provides a benefit at Retirement under Section 5.1 based upon Stock Units.

  

  

  

 

 

ARTICLE 2

 

TERM; AMENDMENT

 

This Plan may at any time or from time to time be amended and modified and shall be effective until terminated by the Board; provided that no such action shall accelerate or postpone the time or schedule of payment of any Plan benefits except as may be permitted under Code Section 409A and regulations thereunder. This Plan originally provided for Plan Years 1985 through 1998 with Plan specifications and applicable interest rates being approved by the Board for each separate Plan Year. Notwithstanding the foregoing, effective November 25, 1996, no deferrals will be permitted under the Plan except with respect to the Plan Years described in Section 1.20 and then only to the extent provided in resolutions adopted by the Board.

 

Notwithstanding the foregoing, no contractual right created by and under any Deferral Agreement on the date of termination or amendment shall be abrogated by the termination or amendment of this Plan unless the Participant who executed such Deferral Agreement consents. Participants have no other right or interest in the continuance of this Plan in any form.

 

ARTICLE 3

 

ADMINISTRATION; INTERPRETATION

 

3.1    Claim Procedure.

 

(a)         Initial Claim. Claims for benefits under the Plan may be filed with the Plan Administrator on forms or in such other written documents as the Plan Administrator may prescribe. The Plan Administrator shall furnish to the claimant written notice of the disposition of a claim within 90 days after the application therefor is filed. In the event the claim is denied, the notice of the disposition of the claim shall provide the specific reasons for the denial, citations of the pertinent provisions of the Plan, and where appropriate, an explanation as to how the claimant can perfect the claim and/or submit the claim for review.

 

(b)        Appeal. Any Participant or Designated Beneficiary who has been denied a benefit shall be entitled, upon request to the Plan Administrator, to appeal the denial of the claim. The claimant (or his duly authorized representative) may review pertinent documents related to the Plan and in the Plan Administrator’s possession in order to prepare the appeal. The request for review, together with written statement of the claimant’s position, must be filed with the Plan Administrator no later than 60 days after receipt of the written notification of denial of a claim provided for in Section 3.1. The Plan Administrator’s decision shall be made within 60 days following the filing of the request for review. If unfavorable, the notice of the decision shall explain the reasons for denial and indicate the provisions of the Plan or other documents used to arrive at the decision.

 

3.2        Interpretation. The Plan Administrator shall have the exclusive responsibility and complete discretionary authority to control the operation and administration of the Plan, with all powers necessary to properly carry out such responsibility, including without limitation, the full and exclusive power to (i) interpret the terms and conditions of this Plan and any Deferral Agreement, including the power to construe ambiguous or uncertain terms, (ii) to establish reasonable procedures with which Participants must comply to exercise any right established hereunder or any contractual right established under the Deferral Agreement, (iii) to determine status, coverage, eligibility for and the amount of benefits, and all questions arising in correction therewith, and (iv) to resolve all questions that arise in the operation and administration of this Plan. The rights and duties of Participants and other persons and entities are subject to, and governed by, such acts of administration, interpretations and procedures. All actions or determinations of the Plan Administrator (or its delegates) under this Article 3 shall be final, conclusive and binding on all persons.

 

3.3        Post-Merger Plan Administration. Notwithstanding anything to the contrary in this Plan, following the Merger, responsibility for administration of the Plan shall be determined under the terms of the Rabbi Trust Agreements. As provided in the Rabbi Trust Agreements, claims for benefits, appeals of benefit denials and Plan interpretations shall be made by a “Trust Contractor” or “Independent Fiduciary” (as such terms are defined in the Rabbi Trust Agreements), as the case may be. At any time during which a Trust Contractor or Independent Fiduciary shall, under the terms of the Rabbi Trust Agreements, have such Plan administrative responsibilities, the term “Plan Administrator” as used in this Plan shall refer to such Trust Contractor or Independent Fiduciary.

 

 

ARTICLE 4

 

DEFERRAL AGREEMENT

 

4.1        Election to Defer.

 

(a)         As hereinafter provided and subject to acceptance by an Employer, (i) an Eligible Person may elect to reduce the amount of Compensation which will be paid to him or her during any Plan Year by executing and delivering to his or her Employer in a timely fashion a standard Deferral Agreement substantially in the form of Exhibit A, Exhibit B or Exhibit C hereto, as presented to such Eligible Person, and (ii) an Employee Participant may elect to reduce the amount of a lump-sum payment to which he or she may become entitled in connection with separation under a severance arrangement approved by the Board as applicable to this Plan by executing and delivering to his or her Employer in a timely fashion a Deferral Agreement substantially in the form of Exhibit D hereto, as presented to such Employee Participant.

 

(b)        The Board shall determine who is an Eligible Person under the Plan for each Plan Year and the terms and conditions of Deferral Agreements to be presented to such Eligible Persons, including the maximum amount of Compensation subject to deferral under Section 4.4, the interest rate approved for calculating Retirement Benefits for Fixed Benefit Agreements under Section 4.2, the timing and number of Retirement Benefit payments under Section 5.1 and of any Interim Distributions under Section 5.2. The Board may limit the number of deferrals by any Eligible Person and may vary the terms and conditions of Deferral Agreements applicable to Eligible Persons based upon the number of an Eligible Person’s previous deferrals, the classification and/or Employer of an Eligible Person or for any other reasons. Only Nonemployee Directors of BellSouth shall be offered Stock Unit Agreements under the Plan.

 

4.2        Creation of Contractual Obligation. An Employer which accepts a properly executed and timely delivered Deferral Agreement for a Plan Year, as evidenced by the execution of such Deferral Agreement (including by facsimile signature) by an officer of such Employer or by an officer of BellSouth on behalf of such Employer, agrees to pay to the Participant or to his or her Designated Beneficiary the benefits described in Article 5, which shall be calculated based upon (i) the amount deferred by each Participant, (ii) either (A) interest rates established for such Deferral Agreement by the Board or its delegate and applied to that amount quarterly for the time which elapses between the Plan Year and the date of benefit payments, or (B) in the case of Stock Unit Agreements, share price and dividend performance as described in Section 4.5, and (iii) other factors established in this Plan and by the Board or its delegate.

 

4.3        Timing of Election. An Eligible Person may execute and deliver to his or her Employer a standard Deferral Agreement, substantially in the form of Exhibit A, B or C hereto, on or before November 30 of any calendar year (or on or before December 16, 1994 in the case of BellSouth Nonemployee Director elections for Plan Year 1995), to reduce the Eligible Person’s Compensation only for the next subsequent Plan Year. In addition, an Employee Participant may execute and deliver to his or her Employer a Deferral Agreement, substantially in the form of Exhibit D hereto, in connection with a lump-sum payment described in Section 4.1(b) of this Plan within the time period prescribed by his or her Employer, but in no event later than the day preceding the day on which he or she enters into a separation agreement with the Employer. Notwithstanding any other provisions of this Plan or any Deferral Agreement, no deferral Agreement shall be effective to defer Compensation (or other amount) which is earned by any Eligible Person on or before the date upon which the Deferral Agreement is properly executed and timely delivered to the Participant’s Employer.

 

4.4        Amount of Deferral.

 

(a)         An Employee Participant may elect to defer during any Plan Year a dollar amount which is less than or equal to a specified percentage of his or her Compensation Rate applicable to the Plan Year rounded to the next highest one thousand dollars. The Board shall establish the specified percentage of the Compensation Rate applicable to each Plan Year. A Nonemployee Director may elect to defer any dollar amount which is less than or equal to one hundred percent (100%) of his or her Compensation during the Plan Year to which the Deferral Agreement applies. Notwithstanding any provision of any Deferral Agreement or this Plan to the contrary, the Deferral Agreement of a Participant shall be modified automatically if necessary such that all actual reductions pursuant to his or her Deferral Agreement are made from his or her Net Monthly Salary or his or her Net Directors Fees and Retainers.

 

(b)        An Employee Participant may elect to defer a portion of a lump-sum payment to which he or she may become entitled as described in Section 4.1(b) in an amount not to exceed the dollar amount by which any election of deferrals under paragraph (a) of this Section 4.4 for the Plan Year in which the Employee Participant terminates employment have not been satisfied at the time of termination of employment, except as may be otherwise approved by the Board.

 

4.5        Stock Units.

 

(a)         Benefits paid to or on behalf of a Participant with respect to a Stock Unit Agreement for a Plan Year will be based upon the value of the Stock Units in such Participant’s Stock Unit account for such Plan Year except as otherwise specifically provided in this Plan. An Employer shall credit Stock Units to such Participant’s account during the Plan Year for which a Stock Unit Agreement is in effect for each date that Compensation otherwise would be paid to such Participant equal to the amount of such Compensation elected to be deferred under the Stock Unit Agreement divided by the average of the high and low sales price of a Share on the New York Stock Exchange (“NYSE”) on such date (or the immediately preceding trading day if the NYSE is closed on such date.) An Employer shall further credit to such Participant’s Stock Unit account with respect to such Stock Unit Agreement for each dividend payment date an amount of additional Stock Units equal to the dividends that would have been paid on the number of Shares equivalent to the Stock Units in such account as of such dividend payment date divided by the average of the daily high and low sales prices of a Share on the New York Stock Exchange (“NYSE”) for the period of five trading days ending on such dividend payment date (or the period of five trading days immediately preceding such date if the NYSE is closed on such date).

 

(b)        Payments from a Participant’s Stock Unit account for a Stock Unit Agreement shall be based upon the value of the Stock Units in such account as of the January 1st, first day of a quarter, or other date as of which payment is scheduled to be made. In the case of a Stock Unit Agreement that provides for the payment of a Retirement benefit in installments, the payment for any such installment shall be based on the value of the number of Stock Units equal to the total number of Stock Units in the Participant’s Stock Unit account for such Agreement as of the close of the day for which such installment payment is scheduled to be made divided by the number of remaining installments on such day (including the installment scheduled to be paid on such day.) The value of each Stock Unit for payment purposes shall equal the average of the high and low sales price of a Share on the NYSE on the date for which the payment is scheduled to be made (or the next succeeding trading day if the NYSE is closed on such scheduled payment date.) The number of Stock Units corresponding to any Retirement Benefit payment will be cancelled upon such payment as of the scheduled payment date. Furthermore, the Stock Unit account of a Participant shall be immediately cancelled upon the scheduled payment date for a lump sum

payment under Section 5.3A, 5.4, 5.5 or 6.1 or upon the scheduled payment date for the first installment of a payment, if applicable, under Section 5.5.

 

(c)         In the event of any change in outstanding Shares by reason of any stock dividend or split, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, the Board shall make such adjustment, if any, that it deems appropriate in the Stock Units credited to Participant’s accounts. Any and all adjustments shall be conclusive and binding upon all parties concerned.

 

4.6        No Deferrals Since 2000. No deferrals have been permitted under the Plan since Plan Year 2000. No current or future deferrals shall be permitted under the Plan.

 

 

ARTICLE 5

 

PAYMENT OF BENEFITS

 

5.1        Retirement Benefit.

 

(a)         If a Participant terminates employment with his or her Employer and is not immediately reemployed by another Employer (or, in the case of a Non-Grandfathered Participant, by any other entity with which his or her Employer would be considered a single employer under Code Section 414(b) or 414(c)), and such termination constitutes a Retirement, or upon any subsequent termination from such an entity that constitutes a Retirement, then the Employer shall pay to the Participant the Retirement Benefits stated in each of his or her Deferral Agreements as soon as administratively practicable after those dates specified for this purpose in each Deferral Agreement. In the case of a Fixed Benefit Agreement, the Employer also shall make any such Retirement Benefit payment to a Participant who has remained employed through the date specified for such payment in his or her Deferral Agreement. The number of Retirement Benefit payments and the date upon which Retirement Benefit payments begin shall be established for each Plan Year by the Board or its delegate and stated in the Deferral Agreement executed by the Participant for each Plan Year.

 

(b)        If a Grandfathered Participant is or becomes a proprietor, officer, partner, or employee of, or otherwise is or becomes affiliated with (i) any business that is in competition with any Employer or (ii) any government agency having regulatory jurisdiction over the business activities of any Employer, then, upon that date, no further benefit payments shall be made to the Participant, or any other person with respect to the Participant’s participation in this Plan, under any provision or Section of this Plan, except that, the Participant shall be paid in a lump sum as soon as administratively practicable after the first (1st) day of January following that date an amount with respect to each of the Participant’s Deferral Agreements equal to (i) the amount deferred pursuant to such Deferral Agreement, (ii) plus interest on such amount (adjusted to be take into account all payments described in (iii) immediately below) credited separately at a rate equal to the rate paid on ten (10) year United States Treasury obligations on each date for which interest is credited, compounded quarterly, for each Plan Year between the Plan Year to which the Deferral Agreement applies and the Plan Year in which the act occurs or status is first attained, inclusive, (iii) minus the amount of all Interim Distributions and Retirement Benefits, if any, paid to the Participant or to which the Participant is entitled on or before the date the act occurs or status is first attained with respect to such Deferral Agreement; provided that (x), if the above calculation results in a negative amount, the result shall be deemed to be zero and such negative amount shall not be collected from, or enforced against, the Participant as a claim by his or her Employer, and (y) the amount paid with respect to a Deferral Agreement that is a Stock Unit Agreement will be the value of such Participant’s Stock Unit account for such Deferral Agreement as determined under Section 4.5(b) for such January 1st scheduled payment date if such value is less than the amount otherwise determined by applying (i), (ii)

and (iii) immediately above to such Deferral Agreement. This Section 5.1(b) shall be inapplicable with respect to any Non-Grandfathered Participant.

 

5.2        Interim Distributions. A Participant shall be paid the Interim Distributions stated in each of his or her Deferral Agreements as soon as administratively practicable after those dates stated in that Deferral Agreement. However, no Interim Distribution shall be stated in a Deferral Agreement or paid to any Participant as a result of the Deferral Agreement if the Participant is age fifty-five (55) or older on any day during the Plan Year to which the Deferral Agreement applies. No Interim Distribution shall be paid to a Participant on or after the date upon which the Participant or his or her Designated Beneficiary receives any benefit or payment under any other Section of this Plan or any paragraph of his or her Deferral Agreement providing benefits other than Interim Distributions. Notwithstanding the foregoing, with respect to any Plan Year or selected deferrals in any Plan Year, the Board may specify alternative Interim Distribution schedules. No Interim Distribution shall be paid in connection with any Stock Unit Agreement or any Fixed Benefit Agreement which does not specifically provide for such benefits.

 

5.3        Pre-retirement, Pre-Disability Eligibility Death Benefit for Plan Year 1985. Regarding deferrals for Plan Year 1985, if a Participant dies on or before the date upon which he or she is first entitled to receive a benefit under Section 5.1 or Section 5.4, then his or her Designated Beneficiary shall be paid in a lump sum as soon as administratively practicable after the first (1st) day of January following his or her date of death an amount equal to: (i) the amount of Compensation deferred pursuant to his or her Deferral Agreement for Plan Year 1985, (ii) plus interest on such amount (adjusted to take into account all payments described in (iii) immediately below) credited separately at the rate approved for and applicable to his or her participation for Plan Year 1985, such rate to be compounded quarterly for each Plan Year between Plan Year 1985 and the Plan Year in which his or her death occurs, inclusive, (iii) minus the amount of all Interim Distributions with respect to such Deferral Agreement, if any, paid to the Participant or to which the Participant is entitled on or before the date of his or her death. If the above calculation results in a negative amount, the result shall be deemed to be zero and such negative amount shall not be collected from, or enforced against the Participant as a claim by his or Participant’s Employer.

 

If the Participant’s Designated Beneficiary receives or is entitled to receive a benefit hereunder, then no person or persons shall receive or be entitled to receive any benefit or payment with respect to such Participant’s deferral for Plan Year 1985 under any other Section of this Plan or under any Deferral Agreement, notwithstanding any other provision of this Plan or any Deferral Agreement.

 

5.3A     Pre-Retirement Eligibility Death Benefit for Plan Years After 1985. Regarding deferrals for any Plan Year after 1985, if an Employee Participant dies before the date upon which he or she would have been eligible for Retirement (assuming a termination of employment), then his or her Designated Beneficiary shall be paid in a lump sum as soon as administratively practicable after the first (1st) day of January following his or her date of death an amount with respect to each of the Participant’s Deferral Agreements for Plan Years after 1985 equal to (i) the amount deferred pursuant to such Deferral Agreement, (ii) plus interest on such amount (adjusted to take into account all payments described in (iii) immediately below) credited separately at the rate approved for and applicable to his or her participation for the Plan Year for such Deferral Agreement, such rate to be compounded quarterly for each Plan Year between the Plan Year to which the Deferral Agreement applies and the Plan Year in which his or her death occurs, inclusive, (iii) minus the amount of all Interim Distributions and Retirement Benefits, if any, paid to the Participant or to which the Participant is entitled on or before the date of his or her death with respect to such Deferral Agreement; provided, that if the above calculation results in a negative amount, such result shall be deemed to be zero and such negative amount shall not be collected from, or enforced against, the Participant as a claim by his or her Employer.

 

If a Nonemployee Director dies, or if an Employee Participant dies on or after the date upon which he or she is eligible for Retirement, whether or not he or she has in fact terminated employment, and in either case if such death occurs prior to the Participant having commenced receipt of benefits or prior to having received all benefits, as the case may be, payable in accordance with a Deferral Agreement under this Plan for Plan Years after 1985, except as provided under Section 5.4, then his or her Designated Beneficiary shall receive all benefits, or continue to receive the remaining benefits, as the case may be, in accordance with that Deferral Agreement; provided, however, that each Grandfathered Participant shall have the right to elect, or to revoke any such election or make a new election, at any time prior to his or her death, to have the death benefit described in this sentence paid to his or her Designated Beneficiary in a lump sum as soon as administratively practicable after the first day of January following the year in which the Grandfathered Participant died. A lump sum payment made pursuant to an election by a Grandfathered Participant in accordance with the preceding sentence shall be in an amount with respect to each of the Grandfathered Participant’s Deferral Agreements for Plan Years after 1985 equal to: (i) the amount deferred pursuant to such Deferral Agreement, (ii) plus interest on such amount (adjusted to take into account all payments described in (iii) immediately below) credited separately at the rate approved for and applicable to his or her participation for the Plan Year for such Deferral Agreement, such rate to be compounded quarterly for each Plan Year between the Plan Year to which the Deferral Agreement applies and the Plan Year in which his or her death occurs, inclusive, (iii) minus the amount of all Interim Distributions and Retirement Benefits, if any, paid to the Grandfathered Participant or to which the Grandfathered Participant is entitled on or before the date of his or her death with respect to such Deferral Agreement; provided that (x), if the above calculation results in a negative amount, such result shall be deemed to be zero and such negative amount shall not be collected from, or enforced against, the estate of the Grandfathered Participant as a claim by the Grandfathered Participant’s Employer, and (y) the amount paid with respect to a Deferral Agreement that is a Stock Unit Agreement will be the value of the Grandfathered Participant’s Stock Unit account for such Deferral Agreement as determined under Section 4.5(b) for such January 1st scheduled payment date instead of the amount determined by applying (i), (ii) and (iii) immediately above to such Deferral Agreement.

 

If the Participant’s Designated Beneficiary receives or is entitled to receive a benefit hereunder, then no person or persons shall receive or be entitled to receive any benefit or payment with respect to such Participant’s deferral for Plan Years after 1985 under any other Section of this Plan or under any Deferral Agreement, notwithstanding any other provision of this Plan or any Deferral Agreement.

 

5.4        Pre-Retirement Eligibility Disability Benefit. If an Employee Participant suffers a Disability or becomes Disabled (with respect to Grandfathered Participants, as those terms are defined in the BellSouth Executive Long Term Disability and Survivor Protection Plan and the BellSouth Long Term Disability Plan for Salaried Employees, as amended from time to time) before the date upon which he or she would have been eligible for Retirement (assuming a termination of employment), then he or she shall be paid by the Employer in a lump sum as soon as administratively practicable after the first (1st) day of January following the Plan Year in which the Disability occurs an amount with respect to each of the Participant’s Deferral Agreements equal to (i) the amount deferred pursuant to such Deferral Agreement, (ii) plus interest on each amount (adjusted to take into account all payments described in (iii) immediately below) credited separately at the rate approved for and applicable to his or her participation for the Plan Year for such Deferral Agreement, such rate to be compounded quarterly for each Plan Year between the Plan Year to which the Deferral Agreement applies and the Plan Year in which his or her Disability occurs, inclusive, (iii) minus the amount of all Interim Distributions and Retirement Benefits, if any, paid to the Participant or to which the Participant is entitled on or before the date of onset of Disability with respect to such Deferral Agreement; provided that if the above calculation results in a negative amount, such result shall be deemed to be zero and such negative amount shall not be collected from, or enforced against, the Participant as a claim by his or her Employer. If the Participant receives or is entitled to receive a benefit hereunder, then no person or persons shall receive or be entitled to receive any benefit or payment under any other Section of this Plan or under any Deferral Agreement, notwithstanding any other provisions of this Plan or any Deferral Agreement.

 

5.5        Termination of Employment Prior to Retirement or Disability. If an Employee Participant terminates employment with his or her Employer, and is not immediately reemployed by another Employer (or, in the case of a Non-Grandfathered Participant, by any other entity with which his or her Employer would be considered a single employer under Code Section 414(b) or 414(c)), prior to death, Disability or Retirement, then a benefit amount shall be paid to the Participant, in a lump sum (or, in the case of a Grandfathered Participant, either in lump sum or in five (5) annual installments, at the election of the Board), as soon as administratively practicable after the first (1st) day of January following his or her date of termination (and anniversaries thereof in case of installments), which amount with respect to each of the Participant’s Deferral Agreements shall be equal to (i) the amount deferred pursuant to such Deferral Agreement, (ii) plus interest on such amount (adjusted to take into account all payments described in (iii) immediately below) credited separately at a rate equal to the rate on ten (10) year United States Treasury obligations on each date for which interest is to be credited, compounded quarterly, for each Plan Year between the Plan Year to which the Deferral Agreement applies and the Plan Year in which the termination occurs, inclusive, (iii) minus the amount of all Interim Distributions and Retirement Benefits, if any, paid to the Participant or to which the Participant is entitled on or before the date of his or her termination with respect to such Deferral Agreement; provided that if the above calculation results in a negative amount, such result shall be deemed to be zero and such negative amount shall not be collected from, nor enforced against, the Participant as a claim by his or her Employer. If the Participant receives or is entitled to receive a benefit hereunder, then no person or persons shall then or thereafter receive any benefit or payment under any other Section of this Plan or any Deferral Agreement, notwithstanding any other provision of this Plan or any Deferral Agreement.

 

5.5A    Termination of Employment Under Change in Control Severance Plan. A Participant (i) who as of his or her termination of employment has not satisfied the age and service requirements for Retirement, (ii) who will be treated under the Change in Control Severance Plan as having satisfied such requirements upon terminating employment under the circumstances specified therein, and (iii) who elects on or before December 31, 2006, to be covered under these terms, shall be deemed to have made a new payment election to have his or her entire Plan benefit paid as if the Participant’s termination of employment constituted a Retirement for all purposes of the Plan. Notwithstanding anything to the contrary in this Plan, no such election made after December 31, 2006, shall be valid and the new payment election described above shall in no event change the terms of payment with respect to benefits that otherwise would have been paid in 2006, or to cause payments to be made in 2006.

 

5.5B     Termination of Employment Under Executive Severance Agreement. A Participant who has an Executive Severance Agreement with BellSouth and (i) who as of his or her “Termination Date,” as defined in the Executive Severance Agreement, has not satisfied the age and service requirements for Retirement, (ii) who will be treated under the Executive Severance Agreement as having satisfied such requirements upon terminating employment under the circumstances specified therein, and (iii) who elects on or before December 31, 2006, to be covered under these terms, shall be deemed to have made a new payment election to have his or her entire Plan benefit paid as if the Participant’s termination of employment constituted a Retirement for all purposes of the Plan. Notwithstanding anything to the contrary in this Plan, no such election made after December 31, 2006, shall be valid, and the new payment election described above shall in no event change the terms of payment with respect to benefits that otherwise would have been paid in 2006, or to cause payments to be made in 2006.

 

5.6         Distributions to Code Section 409A Specified Employees. Notwithstanding any provision of this Plan to the contrary, with respect to any Non-Grandfathered Participant who is a “specified employee” for purposes of Code Section 409A, no payment of any portion of the Non-Grandfathered Participant’s benefit amount which is occasioned by the Non-Grandfathered Participant’s separation from service shall be made before the date that is six (6) months after the date of such Participant’s separation from service.

 

 

ARTICLE 6

 

MISCELLANEOUS

 

6.1        Beneficiary Designation. If a Participant dies and, on the date of his or her death, any benefit or benefits remain to be paid to the Participant under the terms and conditions of this Plan, the remaining benefit or benefits shall be paid to that person or persons designated by the Participant (“Designated Beneficiary”) on the form provided from time to time to the Participant by his or her Employer in accordance with the Deferral Agreement. If the Designated Beneficiary dies prior to completion of all payments under the Deferral Agreement, the estate of the Designated Beneficiary shall be paid by the Employer a lump sum with respect to each of the Participant’s Deferral Agreements for Plan Years after 1985 as soon as administratively practicable after the first (1st) day of January following the year in which the Designated Beneficiary died. The amount of the lump sum with respect to each such Deferral Agreement will be equal to (i) the amount deferred pursuant such Deferral Agreement, (ii) plus interest on each amount (adjusted to take into account all payments described in (iii) immediately below) credited separately at the rate approved for and applicable to the Participant’s participation for the Plan Year for which he or she executed such Deferral Agreement, such rate to be compounded quarterly for each Plan Year between the Plan Year to which the Deferral Agreement applies and the Plan Year in which the Designated Beneficiary’s death occurs, inclusive, (iii) minus the amount of all Interim Distributions and Retirement Benefits, if any, paid to the Participant or Designated Beneficiary with respect to such Deferral Agreement; provided that (x), if the above calculation results in a negative amount, such result shall be deemed to be zero and such negative amount shall not be collected from, or enforced against, the estate of the Designated Beneficiary, and (y) the amount paid with respect to a Deferral Agreement that is a Stock Unit Agreement will be the value of the Participant’s Stock Unit account for such Deferral Agreement as determined under Section 4.5(b) for such January 1st scheduled payment date instead of the amount otherwise determined by applying (i), (ii) and (iii) immediately above to such Deferral Agreement. If no Designated Beneficiary has been chosen by the Participant or if the Designated Beneficiary is not living on the date of the Participant’s death, the estate of the Participant shall be paid by the Employer in a lump sum with respect to each of the Participant’s Deferral Agreements for Plan Years after 1985 as soon as administratively practicable after the first (1st) day of January following the year in which the Participant died. The amount of the lump sum shall be determined in the manner described in the immediately preceding sentence of this Section 6.1. In the case of a Deferral Agreement for Plan Year 1985, any Plan benefit payable following the death of the Participant will be paid to the estate of the Participant if no Designated Beneficiary is in existence on the scheduled payment date.

 

6.2        Obligations of Employers not the Obligations of BellSouth. The duties and obligations of each Employer hereunder are several but not joint, each Employer is only liable to its own employees and Nonemployee Directors who are Participants hereunder, and BellSouth is not liable for the actions, omissions, duties or obligations of any other Employer hereunder.

 

6.3         Recalculation Events; Treatment of this Plan under Applicable Federal Income Tax Laws. With respect to Grandfathered Participants, the adoption and maintenance of the Plan is strictly conditioned upon (i) the applicability of Code Section 451(a) to the Participant’s recognition of gross income as a result of his or her participation, (ii) the fact that Participants will not recognize gross income as a result of participation in this Plan until and to the extent that benefits are received, (iii) the applicability of Code Section 404(a)(5) to the deductibility of the amounts paid to Participants hereunder, (iv) the fact that an Employer will not receive a deduction for amounts credited to any accounting reserve created as a result of this Plan until and only to the extent that benefits are paid, and (v) the inapplicability of Parts 2, 3, and 4 of Title I of ERISA to this Plan by reason of the exemptions set forth in ERISA Sections 201(a), 301(a) and 401(a) and Part 1 of ERISA by reason of the exemption set forth in Section 2520.104-23 of applicable United States Department of Labor regulations. If the Internal Revenue Service, the Department of Labor or any court determines or finds as a fact or legal conclusion that any of the above conditions is untrue and issues or intends to issue an assessment, determination, opinion or report stating such, or if the opinion of the legal counsel of BellSouth based upon legal authorities then existing is that any of the above assumptions is incorrect, then, if the Board so elects within one year of such finding, determination, or opinion, a Recalculation Event shall be deemed to have occurred.

 

If a Recalculation Event occurs under this Section 6.3, Section 6.4, or any other Section of this Plan, then each Grandfathered Participant who has not attained the age of fifty-five (55) years on the date on which the Board takes official action to elect the occurrence of a Recalculation Event shall thereafter be paid benefits in accordance with the election made irrevocably in connection therewith in the Deferral Agreement. For each such Grandfathered Participant the amount of Retirement benefit stated in the Deferral Agreement shall be recalculated and restated using a rate of interest equal to the rate of interest on ten (10) year United States Treasury obligations on each date upon which interest should have been or will be calculated, compounded quarterly, instead of the interest rate assumed in originally calculating the benefit, as referenced in Section 4.2.

 

Notwithstanding anything to the contrary contained in this Plan or a Deferral Agreement, the benefits payable with respect to any Participant who shall have either (i) attained the age of fifty-five (55) years or (ii) died, on or prior to the date on which the Board takes official action to elect the occurrence of a Recalculation Event under either Sections 6.3 or 6.4 of this Plan, shall not be recalculated and restated in the manner described in such Sections or in any other way affected by such action. If such Participant or Designated Beneficiary receives or is entitled to receive a benefit as result of the occurrence of a Recalculation Event, then no person or persons shall receive or be entitled to receive any benefit or payment under any other Section of this Plan or under any Deferral Agreement, notwithstanding any other provision of this Plan or the Deferral Agreement.

 

This Section 6.3 shall be inapplicable with respect to any Non-Grandfathered Participant.

 

6.4        Changes in the Internal Revenue Code of 1954. With respect to Grandfathered Participants, the adoption and maintenance of this Plan also is strictly conditioned upon the existence and continuation of the percentage tax rates for corporations stated in Section 11(b) of the Internal Revenue Code of 1954, as amended through August 13, 1981 but not thereafter (the “1954 Code”). In particular, the adoption and maintenance of this Plan is strictly conditioned upon the rate of tax stated in Section 11(b)(5) of the 1954 Code, that is, “46 percent of so much of the taxable income as exceeds $100,000.” If (1) 1954 Code Section 11(b) is deleted or amended or a surtax or other addition to tax is imposed and, as a result thereof, the rate of federal income tax imposed on taxable income of corporations in excess of One Hundred Thousand Dollars ($100,000) is reduced below such rate in effect immediately before reduction and is less than forty percent (40%), (2) a tax is imposed by the federal government on income, sales, consumption, or the value of goods and services which is not currently contained in the Code, or (3) the Code is amended or restated so extensively that in the opinion of the legal counsel of BellSouth the tax treatment of this Plan to the Employer has materially changed to the detriment of the Employer, then, if the Board so elects within one year after the enactment of the legislation causing such event, a Recalculation Event shall be deemed to have occurred and a benefit will be payable only as described in Section 6.3.

 

This Section 6.4 shall be inapplicable with respect to any Non-Grandfathered Participant.

 

6.5          Governing Law. This Plan and the Deferral Agreements shall be construed in accordance with the laws of the State of Georgia to the extent such laws are not preempted by ERISA.

 

6.6        Successors, Mergers, Consolidations. The terms and conditions of this Plan and each Deferral Agreement shall inure to the benefit of and bind BellSouth, the other Employers, the Participants, their successors, assigns, and personal representatives. If substantially all of the assets of any Employer are acquired by another corporation or entity or if an Employer is merged into, or consolidated with, another corporation or entity, then the obligations created hereunder and as a result of the Employer’s acceptance of Deferral Agreements shall be obligations of the successor corporations or entity.

 

6.7        Discharge of Employer’s Obligation. The payment by the Employer of the benefits due under each and every Deferral Agreement to the Participant or to the person or persons specified in Section 6.1 or Section 6.1A discharges the Employer’s obligations hereunder, and the Participant has no further rights under this Plan or the Deferral Agreements upon receipt by the appropriate person of all benefits.

 

In addition, (i) if any payment is made to a Participant or his or her Designated Beneficiary with respect to benefits described in this Plan from any source arranged by the Employer including, without limitation, any fund, trust, insurance arrangement, bond, security device, or any similar arrangement, such payment shall be deemed to be in full and complete satisfaction of the obligation of the Employer under this Plan and the Deferral Agreements to the extent of such payment as if such payment had been made directly by the Employer; and (ii) if any payment from a source described in clause (i) above shall be made, in whole or in part, prior to the time payment would be made under the terms of this Plan and the Deferral Agreement, such payment shall be deemed to satisfy the Employer’s obligation to pay Plan benefits beginning with the benefit which would next become payable under the Plan and the Deferral Agreement and continuing in the order in which benefits are so payable, until the payment from such other source is fully recovered. In determining the benefits satisfied by a payment described in clause (ii), Plan benefits, as they become payable, shall be discounted to their value as of the date such actual payment was made using an interest rate equal to the valuation interest rate for deferred annuities as last published by the Pension Benefit Guaranty Corporation prior to the date of such actual payment. If the benefits which actually become payable under this Plan, after applying the discount described in the preceding sentence, are less than the amount of the payment(s) described in clause (ii), any such shortfall shall not be collected from or enforced against the Participant as a claim by the Employer.

 

6.8        Social Security and Income Tax Withholding. Each Participant agrees as a condition of participation hereunder that his or her Employer may withhold federal, state, and local income taxes and Social Security taxes from any distribution or benefit paid hereunder.

 

6.9        Notice; Delivery of Deferral Agreement. Any notice required to be delivered hereunder and any Deferral Agreement is properly delivered to Employer when personally delivered to, or actually received from the United States mail, postage prepaid, by Executive Compensation Matters Group, Room 13K06, BellSouth Corporation, 1155 Peachtree Street, N.E., Atlanta, Georgia 30309-3610, or at such other address as the Plan Administrator shall prescribe from time to time.

 

6.10      Nature of Obligations Created Hereunder. The Participants agree as a condition of participation hereunder that:

 

(a)         Participants have the status of general, unsecured creditors of the Employer and the Plan, and the Deferral Agreements constitute the mere promise by the Employer to make benefit payments in the future;

 

(b)        Nothing contained in this Plan or any Deferral Agreement shall create or be construed to create a trust of any kind between BellSouth, any Employer, and any Participant.

 

(c)         Benefits payable, and rights to benefits under, this Plan and Deferral Agreements may not be anticipated, sold, assigned (either at law or in equity), transferred, pledged, encumbered or subject to attachment, garnishment, levy, execution or other legal or equitable process.

 

The Plan is intended to be unfunded for purposes of ERISA and the Code.

 

6.11      No Modification of Employment Agreement. Neither this Plan nor any Deferral Agreement constitutes a modification of the employment agreement of any Participant, and no right to continued employment is created by this Plan or the Deferral Agreement.

 

6.12     Liability of Employers for Individual Participants Employed by More than One Employer; Applicability of Deferral Agreement Filed with One Employer to Subsequent Employers. Any Deferral Agreement which is timely executed and delivered to an Employer shall be effective to defer Compensation earned by the Participant from that Employer or any other Employer during the period in which the Deferral Agreement is effective. The execution and delivery of a Deferral Agreement by a Participant constitutes an election by the Participant to defer Compensation earned from any Employer under the terms of this Plan. A Participant who timely executes and delivers a Deferral Agreement to one Employer and who subsequently transfers to another Employer or otherwise terminates employment and becomes employed by another Employer shall have the Compensation which is paid to him or her by both Employers reduced under the terms of the Deferral Agreement and this Plan as if the transfer or termination and reemployment had not occurred. The Employer which accepts an executed, timely delivered Deferral Agreement is liable to the Participant for all benefits which may be payable under, and as a result of, that Deferral Agreement notwithstanding the transfer of a Participant to or from another Employer, or the termination and reemployment of a Participant by another Employer. If a Participant timely executes and delivers Deferral Agreements to more than one Employer, each Employer is singly and not jointly liable for the Deferral Agreement or Deferral Agreements which it accepted. Any provision of this Plan which refers to a benefit or payment which is payable as a result of more than one (1) Deferral Agreement shall be construed to apply only to the Deferral Agreements delivered by that Participant and accepted by each separate Employer of that Participant, and not to all Deferral Agreements executed and timely delivered by one Participant or all Participants to all Employers, each Deferral Agreement which incorporates the terms of this constituting a separate contractual obligation of a single Employer.

 

6.13      Savings Clause. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

 

6.14      Plan to Comply with Code Section 409A. Notwithstanding any provision to the contrary in this Plan, each provision of this Plan shall be interpreted to permit the deferral of compensation and the payment of deferred amounts in accordance with Code Section 409A and any provision that would conflict with such requirements shall not be valid or enforceable.

  

  

  

 

EXHIBIT A

 

 

DEFERRAL AGREEMENT

FOR THE BELLSOUTH NONQUALIFIED DEFERRED COMPENSATION PLAN

(for Nonemployee Directors)

 

 

1.          Amount of Deferral. I, ____________________________________________ (___-__-___), hereby agree to participate in the BellSouth Nonqualified Deferred Compensation Plan (“Plan”). I have read the Plan in its entirety and agree to its terms and conditions, which are incorporated herein by reference. Pursuant to the terms of the Plan, I elect to defer from my compensation to be paid to me in Plan Year 19__ ___% of my compensation. (Choose amount less than or equal to 100% of Compensation.) I understand that the Compensation which ordinarily would be paid to me in that Plan Year will be reduced by the amount of my deferral and that such reduction will be made only from my retainer and fees as a director. I further understand that the amount of directors’ fees which will be paid to me depends on the full performance of my obligations as a director for the entire year and that the total amount of directors’ fees paid to me during the year will be decreased from the amount normally paid to directors if I fail to attend any scheduled meetings of the Board of Directors or the committees upon which I serve.

 

2.          Retirement Benefits. In consideration for my deferral, the Employer shall pay to me the following benefits determined in accordance with the terms and conditions of the Plan:

 

3.          Interim Distributions. In consideration for my deferral, the Employer shall pay to me the following benefits on the dates specified, if I am entitled to these benefits under the terms and conditions of the Plan:

 

4.          Recalculation Event. If a Recalculation Event applicable to me occurs, the Employer shall pay to me benefits in an amount determined in accordance with the terms and conditions of paragraph 6.3 of the Plan paid in accordance with the terms elected below. The undistributed balance of the recalculated amount will continue to accumulate at the reduced rate specified in paragraph 6.3 of the Plan.

 

	  	
•

	
Recalculated amount paid in a lump sum as soon as administratively practicable after the first day of the year following the date of the Recalculation Event.

 

	  	
•

	
Recalculated amount paid in four annual payments beginning as soon as administratively practicable after the first day of the year following the date of the Recalculation Event.

 

	  	
•

	
Recalculated amount paid in same number of payments beginning on the same date as specified in paragraph 2 of this Agreement.

 

5.          Irrevocable Election. This election is irrevocable after November 30 immediately preceding the Plan Year to which this Agreement pertains.

 

6.          Primacy of Plan. I recognize that I am entitled to benefits hereunder and that this Agreement is subject to the terms and conditions of the Plan.

 

	  	
___

	
I decline to participate in Plan Year 19__.

 

 

	
__________________________________

	
____________________________________

 

	
Director Signature

	
Employer Signature

 

	
__________________________________

	
____________________________________

 

	
Date

	
Date

 

  

  

  

 

EXHIBIT B

 

 

DEFERRAL AGREEMENT

FOR THE BELLSOUTH NONQUALIFIED DEFERRED COMPENSATION PLAN

(for officers and selected executive employees)

 

 

1.          Amount of Deferral. I, ________________________________, hereby agree to participate in the BellSouth Nonqualified Deferred Compensation Plan (“Plan”). I have read the Plan in its entirety and agree to its terms and conditions, which are incorporated herein by reference. Pursuant to the terms of the Plan, I elect to defer from my compensation to be paid to me in Plan Year 19__ the sum of ________Dollars. (Choose amount less than or equal to 35% of Compensation Rate rounded to the next higher thousand dollars). I understand that my Compensation which ordinarily would be paid to me in that Plan Year will be reduced by the amount of my deferral, and that such reduction will be made only from my gross monthly salary, not from my bonus or incentive award which may be payable to me.

 

2.          Retirement Benefits. In consideration for my deferral, the Employer shall pay to me the following benefits on the dates specified, if I am entitled to these benefits under the terms and conditions of the Plan:

 

3.          Interim Distributions. In consideration for my deferral, the Employer shall pay to me the following benefits on the dates specified, if I am entitled to these benefits under the terms and conditions of the Plan:

 

4.          Recalculation Event. If a Recalculation Event applicable to me occurs, the Employer shall pay to me benefits in an amount determined in accordance with the terms and conditions of paragraph 6.3 of the Plan paid in accordance with the terms elected below. The undistributed balance of the recalculated amount will continue to accumulate at the reduced rate specified in paragraph 6.3 of the Plan

 

	  	
•

	
Recalculated amount paid in a lump sum as soon as administratively practicable after the first day of the year following the date of the Recalculation Event.

 

	  	
•

	
Recalculated amount paid in four annual payments beginning as soon as administratively practicable after the first day of the year following the date of the Recalculation Event.

 

	  	
•

	
Recalculated amount in same number of payments beginning on the same date as specified in paragraph 2 of this Agreement.

 

5.          Irrevocable Election. This election is irrevocable after November 30 immediately preceding the Plan Year to which this Agreement pertains.

 

6.          Primacy of Plan. I recognize that I am entitled to benefits hereunder and that this Agreement is subject to the terms and conditions of the Plan.

 

 

	  	
___

	
I decline to participate in Plan Year 19__.

 

 

	
__________________________________

	
____________________________________

 

	
Director Signature

	
Employer Signature

 

	
__________________________________

	
____________________________________

 

	
Date

	
Date

 

  

  

  

 

EXHIBIT C

 

DEFERRAL AGREEMENT

FOR THE BELLSOUTH NONQUALIFIED DEFERRED COMPENSATION PLAN - SCHEDULE B

(for Nonemployee Directors)

 

1.          Amount of Deferral. I, ______________________________ (___-__-____), hereby agree to participate in the BellSouth Nonqualified Deferred Compensation Plan (“Plan”). I have read the Plan in its entirety and agree to its terms and conditions, which are incorporated herein by reference. Pursuant to the terms of the Plan, I elect to defer from my Compensation to be paid to me in Plan Year 19__ __% of my Compensation. (Choose amount less than or equal to 100% of Compensation.) I understand that the Compensation which ordinarily would be paid to me in that Plan Year will be reduced by the amount of my deferral and that such reduction will be made only from my retainer and fees as a director. I also understand that the amount of directors’ fees which will be paid to me depends on the full performance of my obligations as a director for the entire year and that the total amount of directors’ fees paid to me during the year will be decreased from the amount normally paid to directors if I fail to attend any scheduled meetings of the Board of Directors or the committees upon which I serve. I further understand that my election below will be irrevocable after the November 30th immediately preceding the above Plan Year and recognize that my benefits under this Agreement are subject to the terms and conditions of the Plan.

 

[CHECK AND COMPLETE WHICHEVER ONE APPLIES OF A, B OR C BELOW]

 

	
___

	
A.

	
FIXED BENEFIT AGREEMENT ELECTION

 

2.          Retirement Benefits. In consideration for my deferral, the Employer shall pay to me the following benefits determined in accordance with the terms and conditions of the Plan:

 

	  	
Beginning on January 1, ____ the Employer will pay me $___________

 

	  	
annually for ____ years.

 

	  	
3.

	
Interim Distributions. Not applicable.

 

	  	
4.

	
Recalculation Event. If a Recalculation Event applicable to me occurs, the Employer shall pay to me benefits in an amount determined in accordance with the terms and conditions of paragraph 6.3 of the Plan paid in accordance with the terms elected below. The undistributed balance of the recalculated amount will continue to accumulate at the reduced rate specified in paragraph 6.3 of the Plan.

 

	  	
•

	
Recalculated amount paid in a lump sum as soon as administratively practicable after the first day of the year following the date of the Recalculation Event.

 

	  	
•

	
Recalculated amount paid in four annual payments beginning as soon as administratively practicable after the first day of the year following the date of the Recalculation Event.

 

	  	
•

	
Recalculated amount paid in same number of payments beginning on the same date as specified in paragraph 2 of this Agreement.

 

 

	
___

	
B.

	
STOCK UNIT AGREEMENT ELECTION

 

2.          Retirement Benefits. In consideration for my deferral, I will be credited with Stock Units based upon Compensation deferred and dividend equivalents and the Employer shall pay to me the value of those Stock Units in ________ (specify number not to exceed 10) annual installments, the first of which shall be paid as of the first day of the calendar quarter following my Retirement and the remainder of which shall be paid as of each succeeding anniversary of such date.

 

	  	
3.

	
Interim Distributions. Not applicable.

 

	  	
4.

	
Recalculation Event. Not applicable.

 

	
___

	
C.

	
DECLINE PARTICIPATION

 

	  	
I decline to participate for Plan Year 19__.

 

 

	
__________________________________

	
____________________________________

 

	
Director Signature

	
Employer Signature

 

	
__________________________________

	
____________________________________

 

	
Date

	
Date

 

  

  

  

 

EXHIBIT D

 

 

DEFERRAL AGREEMENT

FOR THE BELLSOUTH NONQUALIFIED DEFERRED COMPENSATION PLAN

(For officers and selected executive employees)

 

THIS AGREEMENT is made this _____ day of ____________, 19 __ , by and between _______________________ (the “Company”) and _________________ (the “Executive”);

 

W I T N E S S E T H:

 

WHEREAS, the Executive may retire from the service of the Company under the terms of a separation arrangement to be mutually agreed upon (the “Separation Agreement”); and

 

WHEREAS, the Company desires to permit the Executive to elect irrevocably to defer, under the BellSouth Nonqualified Deferred Compensation Plan (the “Plan”), a portion of the lump-sum separation allowance to which he may become entitled under the Separation Agreement, and the Executive desires to make such deferral;

 

	  	
NOW, THEREFORE, it is mutually agreed as follows:

 

1.

 

PLAN PROVISIONS CONTROL

 

The Plan, including all terms, conditions, restrictions and limitations contained therein, is hereby incorporated by reference and made a part of this Agreement for all purposes. The terms and conditions applicable to the plan year of the Plan in which the Executive separates from service shall apply to deferrals hereunder. In interpreting the Plan for purposes of this Agreement, the lump-sum separation allowance payable under the Separation Agreement shall not be included in the Executive’s “Compensation Rate” as that term is used in the Plan.

 

2.

 

CONDITIONAL DEFERRAL

 

The deferral election contained herein shall be irrevocable by the Executive upon its submission to the Company but shall be expressly conditioned upon the Executive’s separation from service under the Separation Agreement. If the Executive does not separate from service under the Separation Agreement, this Agreement shall be null and void. Neither the Company’s offering of this deferral opportunity to the Executive, the Company’s acceptance of the Executive’s deferral election contained in this Agreement, nor any other provision hereof shall in any way be construed as conferring upon the Executive any right or entitlement to any payment under the Separation Agreement.

 

3.

 

DEFERRAL ELECTION(S)

 

The Executive hereby irrevocably elects to defer from the lump-sum separation allowance payable under the Separation Agreement the dollar amount by which any election of deferrals from base salary under the Plan for the plan year of the Plan in which the Executive separates from service has not been satisfied by the time the Executive separates.

 

YES _______   NO _______

 

	  	
Such amounts shall be subject to the terms of the

 

	  	
original Deferral Agreement to which they relate.

 

I understand that the lump-sum separation allowance payable under the Separation Agreement which would otherwise have been paid to me will be reduced by the amount of my deferral(s).

 

4.

 

RETIREMENT BENEFITS

 

In consideration of my deferral described in section 3(a) above, if any, the Company shall pay to me the following benefits on the dates specified, if I am entitled to these benefits under the terms and conditions of the Plan:

 

5.

 

INTERIM DISTRIBUTIONS

 

In consideration for my deferral described in section 3(a) above, if any, the Company shall pay to me the following benefits on the dates specified, if I am entitled to these benefits under the terms and conditions of the Plan:

 

6.

 

RECALCULATION EVENT

 

If a Recalculation Event occurs, the Company shall pay to me benefits attributable to my deferral described in section 3(a) above in an amount determined in accordance with the terms elected below. The undistributed balance of the recalculated amount will continue to accumulate at the reduced rate specified in paragraph 6.3 of the Plan.

 

	  	
•

	
Recalculated amount paid in a lump sum as soon as administratively practicable after the first day of the year following the date of the Recalculation Event.

 

	  	
•

	
Recalculated amount paid in four annual payments beginning as soon as administratively practicable after the first day of the year following the date of the Recalculation Event.

 

 

	  	
•

	
Recalculated amount paid in same number of payments beginning on the same date as specified in paragraph 2 of this Agreement.

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in its corporate name by a duly authorized officer, and the Executive has hereunto set his hand, as of the date set forth above.

 

	
Executive:

	
THE COMPANY:

 

	
__________________________________

	
By: ________________________________

 

	
Signature

	
Signature

 

	
__________________________________

	
___________________________________

 

	
Name (Print)

	
Title

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