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BELLSOUTH CORPORATION DIRECTORS' COMPENSATION DEFERRAL PLAN

Executive Compensation Plan Agreement

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AT&T INC. | BellSouth Corporation

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Title: BELLSOUTH CORPORATION DIRECTORS' COMPENSATION DEFERRAL PLAN
Governing Law: Georgia     Date: 11/6/2007
Industry: Communications Services     Sector: Services

BELLSOUTH CORPORATION DIRECTORS' COMPENSATION DEFERRAL PLAN, Parties: at&t inc. , bellsouth corporation
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BELLSOUTH CORPORATION DIRECTORS'
COMPENSATION DEFERRAL PLAN
(As Amended and Restated Effective as of January 1, 2005)






      
        
      
      
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BELLSOUTH CORPORATION DIRECTORS COMPENSATION DEFERRAL PLAN
(As Amended and Restated Effective as of January 1, 2005)

TABLE OF CONTENTS

BACKGROUND AND PURPOSE
1
     
ARTICLE I – DEFINITIONS
2
     
1.1
"Account"
2
     
1.2
"Affiliate"
2
     
1.3
"BellSouth
2
     
1.4
"Beneficiary"
2
     
1.5
"Board"
2
     
1.6
"Business Day"
2
     
1.7
"Code"
2
     
1.8
"Company Stock"
2
     
1.9
"Compensation"
2
     
1.10
"Credited Interest Rate"
2
     
1.11
"Deferral Contributions"
3
     
1.12
"Deferral Election
3
     
1.13
"Election Deadline"
3
     
1.14
"Effective Date"
3
     
1.15
"Election Package"
3
     
1.16
"Interest Income Option"
3
     
1.17
"Interest Income Subaccount"
3
     
1.18
"Investment Election"
3
     
1.19
"Investment Options"
4

 
      
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1.19A
"Master Account"
4
     
1.20
"Merger"
4
     
1.21
"Nonemployee Director"
4
     
1.22
"Participant"
4
     
1.23
"Participating Company"
4
     
1.24
"Plan"
4
     
1.25
"Plan Administrator"
4
     
1.26
"Plan Year"
4
     
1.27
"Rabbi Trust Agreements"
4
     
1.28
"Section 409A"
4
     
1.29
"Stock Grant"
5
     
1.30
"Stock Unit"
5
     
1.31
"Stock Unit Option"
5
     
1.32
"Stock Unit Subaccounts"
5
     
1.33
"Valuation Date"
5
     
ARTICLE II – ELIGIBILITY AND PARTICIPATION
6
     
2.1
Annual Participation
6
     
2.2
Interim Plan Year Participation
6
     
2.3
Election Procedures
6
     
2.4
Cessation of Eligibility
6
     
2.5
Limitations on New Elections
6
 
 
 
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ARTICLE III – PARTICIPANTS' ACCOUNTS; DEFERRAL CONTRIBUTIONS
7
         
3.1
Participants' Accounts
7
 
(a)
Establishment of Accounts
7
 
(b)
Nature of Contributions and Accounts
7
 
(c)
Several Liabilities
7
 
(d)
General Creditors
7
         
3.2
Deferral Contributions
7
 
(a)
Effective Date
7
 
(b)
Term
 
8
 
(c)
Amount
8
   
(i)
Compensation Deferrals
8
   
(ii)
Stock Grant Deferrals
8
 
(d)
Revocation
8
 
(e)
Crediting of Deferral Contributions
8
         
3.3
Deferral Elections and Multiple Participating Companies
8
         
3.4
Vesting
 
9
         
ARTICLE IV – DETERMINATION AND CREDITING OF
 
INVESTMENT RETURN  
10
         
4.1
General Investment Parameters
10
         
4.2
Deemed Investments
10
 
(a)
Nature of Deemed Investments
10
 
(b)
Investment of Contributions
10
 
(c)
Investment of Existing Account Balances
10
 
(d)
Investment Subaccounts
11
       
 
4.3
Stock Unit Option
11
 
(a)
Stock Unit Subaccounts
11
 
(b)
Cash Dividends
11
 
(c)
Adjustments
11
         
4.4
Interest Income Option
12
 
(a)
Interest Income Subaccounts
12
 
(b)
Crediting of Deemed Interest
12
   
(i)
Amount Invested
12
   
(ii)
Determination of Amount
12
       
 
4.5
Good Faith Valuation Binding
12
         
4.6
Errors and Omissions in Accounts
12
 
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ARTICLE V – PAYMENT OF ACCOUNT BALANCES
13
       
5.1
Benefit Amounts
13
 
(a)
Benefit Entitlement
13
 
(b)
Valuation of Benefit
13
 
(c)
Conversion of Stock Units into Dollars
13
       
5.2
Elections of Timing and Form
13
 
(a)
Timing
13
 
(b)
Form of Distribution
13
 
(c)
Multiple Selections
13
       
5.3
Benefit Payments to a Participant
14
 
(a)
Timing
14
 
(b)
Form of Distribution
14
 
(c)
Valuation of Single Lump-Sum Payments
14
 
(d)
Valuation of Installment Payments
14
       
5.4
Death Benefits
14
 
(a)
General
14
 
(b)
Valuation
15
       
5.5
Beneficiary Designation
15
 
(a)
General
15
 
(b)
No Designation or Designee Dead or Missing
15
 
(c)
Death of Beneficiary
16
       
5.6
Taxes
16
       
ARTICLE VI – SPECIAL ELECTION REGARDING RETIREMENT PLAN
17
       
6.1
Description of Election
17
       
6.2
Election Deadline
17
       
6.3
Amount
17
       
6.4
Deemed Investment
17
       
6.5
Payment of Benefits
17
       
6.6
Vesting
17
 
 
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SECTION VI-A
 
18
         
6.1A
Description of Election
18
         
6.2A
Election Deadline
 
18
         
6.3A
Effect of Election
 
18
         
6.4A
Deemed Investment
 
18
         
6.5A
Election of Timing and Form of Payment
 
18
 
(a)
Timing
 
18
 
(b)
Form of Distribution
 
19
 
(c)
Benefit Payments
 
19
         
ARTICLE VII – CLAIMS
 
20
         
7.1
Initial Claim
 
20
         
7.2
Appeal
 
20
         
7.3
Satisfaction of Claims
 
20
         
ARTICLE VIII – SOURCE OF FUNDS
 
21
         
ARTICLE IX – PLAN ADMINISTRATION
 
22
         
9.1
Action by the Plan Administrator
 
22
 
(a)
Individual Administrator
 
22
 
(b)
Administrative Committee
 
22
         
9.2
Rights and Duties of the Plan Administrator
 
22
         
9.3
Bond; Compensation
 
23
         
9.4
Post-Merger Plan Administration
 
23
         
ARTICLE X – AMENDMENT AND TERMINATION
 
24
         
10.1
Amendments
 
24
         
10.2
Termination of Plan
 
24
         
10.3
Limitation on Authority
 
24
 
(a)
Plan Amendments
 
24
 
(b)
Plan Termination
 
24
 
(c)
Opinions of Counsel
 
25
 
 
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ARTICLE XI – MISCELLANEOUS
26
       
11.1
Taxation
26
       
11.2
Withholding
26
       
11.3
No Employment Contract
26
       
11.4
Headings
26
       
11.5
Gender and Number
26
       
11.6
Assignment of Benefits
26
       
11.7
Legally Incompetent
26
       
11.8
Entire Document
26
       
11.9
Governing Law
26
       
11.10
Plan to Comply with Code Section 409A
27
 
 
 
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BELLSOUTH CORPORATION DIRECTORS' COMPENSATION DEFERRAL PLAN
(As Amended and Restated Effective as of January 1, 2005)


BellSouth Corporation ("BellSouth") adopted the BellSouth Corporation Directors' Compensation Deferral Plan (the "Plan") on November 25, 1996, and the Plan was subsequently amended from time to time.  The Plan is now 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.  Also, the Plan as restated, among other things, provides that no further elections to defer compensation may be made under the Plan after December 31, 2005, and coordinates Plan administration provisions applicable after the planned merger of BellSouth and AT&T Inc. with provisions of BellSouth's Rabbi Trust Agreements.

BACKGROUND AND PURPOSE

A.    Goal .  BellSouth desires to provide nonemployee members of its Board of Directors, and nonemployee members of the Board of Directors of those of its affiliated companies that participate in the Plan, with an opportunity (i) to defer the receipt and income taxation of a portion of such directors' retainers, fees, and other compensation as described in the Plan; and (ii) to receive an investment return on those deferred amounts which approximates the return of BellSouth stock, and an indexed rate of interest.

B.    Purpose.   The purpose of the Plan is to set forth the terms and conditions pursuant of which these deferrals may be made and deemed invested and to describe the nature and extent of the directors' rights to their deferred amounts.

C.    Type of Plan .  The Plan constitutes an unfunded, nonqualified deferred compensation plan.

D.    No Deferrals after 2005 .  Notwithstanding anything to the contrary herein, no Deferral Elections will be permitted under the Plan after December 31, 2005.


      
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ARTICLE I
DEFINITIONS

For purposes of the Plan, each of the following terms, when used with an initial capital letter, shall have the meaning set forth below unless a different meaning plainly is required by the context.

1.1    " Account " shall mean, with respect to a Participant or Beneficiary, the total dollar amount or value evidenced by the last balance posted in accordance with the terms of the Plan to the account record established for such Participant or Beneficiary with respect to the Deferral Contributions of such Participant for any Plan Year.  " Account " shall also refer to a Master Account.

1.2    " Affiliate " shall mean at any time any corporation, joint venture or partnership in which BellSouth owns directly or indirectly, (i) with respect to a corporation, stock possessing at least ten percent (10%) of the total combined voting power of all classes of stock in the corporation, or (ii) in the case of a joint venture or partnership, a ten percent (10%) or greater interest in the capital or profits of such joint venture or partnership.

1.3    " BellSouth " shall mean BellSouth Corporation, a Georgia corporation, or any successor entity.

1.4    " Beneficiary " shall mean, with respect to a Participant, the person(s) determined in accordance with Section 5.5 to receive any death benefits that may be payable under the Plan upon the death of the Participant.

1.5    " Board " shall mean the Board of Directors of BellSouth.

1.6    " Business Day " shall mean each day on which the New York Stock Exchange operates and is open to the public for trading.

1.7    " Code " shall mean the Internal Revenue Code of 1986, as amended.

1.8    " Company Stock " shall mean the $1.00 par value per share voting common stock of BellSouth; provided that, after the Merger, "Company Stock" shall mean the $1.00 par value per share voting common stock of AT&T Inc.

1.9    " Compensation " shall mean the total of the directors' fees and retainers which actually would be payable to a Nonemployee Director during a Plan Year absent a Deferral Election under this Plan.

1.10    " Credited Interest Rate " shall mean, for each Plan Year, the rate of return equal to Moody's Monthly Average of Yields of Aa Corporate Bonds, as published by Moody's Investors Service, Inc., for the month of July immediately preceding such Plan Year.  If such rate (or any alternative rate described in this sentence) is at any time no longer available, the Plan Administrator shall designate an alternative rate which in the
 

      
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Plan Administrator's reasonable judgment is generally comparable to the rate described in the preceding sentence, and such alternative rate shall thereafter be the Credited Interest Rate.

1.11    " Deferral Contributions " shall mean, for each Plan Year, that portion of a Participant's Compensation and that portion of a Participant's Stock Grant deferred under the Plan pursuant to Section 3.2.

1.12    " Deferral Election " shall mean a written election form provided by the Plan Administrator on which a Nonemployee Director may elect to defer under the Plan all or a portion of such individual's Compensation and/or Stock Grant for a Plan Year.

1.13    " Effective Date " shall mean January 1, 2005, the date as of which this most recent amendment and restatement of the Plan is effective, except to the extent that the Plan expressly provides a different effective date with respect to specific Plan provisions.

1.14    " Election Deadline " shall mean, with respect to a Plan Year:

(a)    For a Nonemployee Director who is then a member of the Board, the November 30 (or if November 30 is not a Business Day, the last Business Day immediately preceding November 30) immediately preceding the first day of such Plan Year.

(b)       For a Nonemployee Director who is first elected by shareholders to be a member of the Board after (or within thirty (30) days before) the Election Deadline described in Section 1.14(a) above with respect to a Plan Year, the date which is thirty (30) days after the date the Nonemployee Director first becomes eligible to participate in the Plan.

1.15    " Election Package " shall mean a package consisting of a Deferral Election, an Investment Election and such other forms and documents distributed to Nonemployee Directors by the Plan Administrator for the purpose of allowing them to elect to actively participate in the Plan for a Plan Year.

1.16    " Interest Income Option " shall mean the Investment Option described in Section 4.4, pursuant to which a Participant's deemed investment earnings are determined on the basis of the Credited Interest Rate.

1.17    " Interest Income Subaccount " shall mean a bookkeeping subaccount reflecting that portion of a Participant's Account for each Plan Year which is deemed to be invested in the Interest Income Option.

1.18    " Investment Election " shall mean a written election form provided by the Plan Administrator on which a Nonemployee Director may elect to have such individual's Deferral Contributions for a Plan Year (and all investment earnings attributable thereto) deemed invested in either the Stock Unit Option and/or the Interest Income Option, to the extent permitted under the terms of the Plan.


      
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1.19    " Investment Options " shall mean the Stock Unit Option and the Interest Income Option.

1.19A    " Master Account " shall have the meaning ascribed to such term in Article VI-A.

1.20    " Merger " shall mean 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.

1.21    " Nonemployee Director " shall mean a member of the Board, or a member of the Board of Directors of any other Participating Company, who is not concurrently a common law employee of a Participating Company.

1.22    " Participant " shall mean any person participating in the Plan pursuant to the provisions of Article II.

1.23    " Participating Company " shall mean BellSouth and each Affiliate which, by action of its Board of Directors (or equivalent governing body), adopts the Plan as a Participating Company with the approval of the Plan Administrator.

1.24    " Plan " shall mean the BellSouth Corporation Directors' Compensation Deferral Plan, as contained herein and all amendments hereto.

1.25    " Plan Administrator " shall mean the person(s) determined under Section 9.4 to the extend said Section is applicable, and otherwise shall mean the Chief Executive Officer of BellSouth and any individual or committee the Chief Executive Officer designates to act on his or her behalf with respect to any or all of the Chief Executive Officer's 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.

1.26    " Plan Yea r" shall mean each fiscal year period beginning on May 1 and ending on April 30 of the succeeding calendar year.

1.27    " Rabbi Trust Agreements " shall mean (i) the BellSouth Corporation Trust Under Board of Directors Benefit Plan(s) and (ii) the BellSouth Telecommunications, Inc. Trust Under Board of Directors Benefit Plan(s), as amended from time to time.

1.28    " Section 409A " shall mean 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.
 
      
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1.29    " Stock Grant " shall mean for each Plan Year the annual grant of shares of Company Stock awarded to Nonemployee Directors.

1.30    " Stock Unit " shall mean an accounting entry that represents an unsecured obligation of a Participating Company to pay to a Participant an amount which is based on the fair market value of one share of Company Stock as set forth herein.  A Stock Unit shall not carry any voting, dividend or other similar rights and shall not constitute an option or any other right to acquire any equity securities of BellSouth.

1.31    " Stock Unit Option " shall mean the Investment Option described in Section 4.3, pursuant to which a Participant's deemed investment earnings are determined by the rate of return (determined as provided in the Plan) applicable to Stock Units.

1.32    " Stock Unit Subaccount " shall mean a bookkeeping subaccount reflecting that portion of a Participant's Account for each Plan Year which is deemed to be invested in the Stock Unit Option.

1.33    " Valuation Date " shall mean (i) for purposes of Article V, each December 31 (or, if December 31 is not a Business Day, the last Business Day immediately preceding December 31), and (ii) for all other purposes, each April 30, July 31, October 31, and January 31 (or if any such date is not a Business Day, the last Business Day immediately preceding such date), and each other day declared by the Plan Administrator to be a Valuation Date.

      
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ARTICLE II
ELIGIBILITY AND PARTICIPATION


2.1    Annual Participation .  Each individual who is a Nonemployee Director as of the first day of a Plan Year and is a member of the Board before the beginning of such Plan Year shall be eligible to defer all or a portion of such individual's Compensation and Stock Grant and thereby to actively participate in the Plan for such Plan Year.  Such individual's participation shall become effective as of the first day of such Plan Year, assuming such individual properly and timely completes the election procedures described below."

2.2     Interim Plan Year Participation .  Each individual who becomes a Nonemployee Director during a Plan Year shall be immediately eligible to make a Deferral Election and thereby to participate actively in the Plan for the remainder of such Plan Year.

2.3     Election Procedures .  Each Nonemployee Director shall elect to defer all or a portion of such individual's Compensation, all or a portion of such individual's Stock Grant, or both, and thereby become an active Participant for a Plan Year by delivering a completed Deferral Election and an Investment Election by the Election Deadline.  The Plan Administrator also may require the Nonemployee Director to complete other forms and provide other data, as a condition of participation in the Plan.

2.4     Cessation of Eligibility .  A Nonemployee Director's active participation in the Plan shall terminate, and such individual shall not be eligible to make any additional Deferral Contributions for any portion of a Plan Year following the date such individual's service as a Nonemployee Director with BellSouth and all Participating Companies terminates (unless such individual once again becomes a Nonemployee Director later in such Plan Year).  In addition, an individual who actively participated in the Plan during prior Plan Years but who is not a Nonemployee Director or does not complete the election procedures, for a subsequent Plan Year, shall cease active participation in the Plan for such subsequent Plan Year.  Even if an individual's active participation in the Plan ends, such individual shall remain an inactive Participant in the Plan until the earlier of (i) the date the full amount of such individual's Accounts is distributed from the Plan, or (ii) the date such individual again becomes a Nonemployee Director and recommences active participation in the Plan.  During the period of time that an individual is an inactive Participant in the Plan, such individual's Accounts shall continue to be credited with deemed earnings as provided in the Plan.

2.5     Limitations on New Elections .  Notwithstanding anything to the contrary herein, after December 31, 2005, no Deferral Elections will be permitted under the Plan.

      
        
      
      
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ARTICLE III
PARTICIPANTS' ACCOUNTS: DEFERRAL CONTRIBUTIONS
 

 
   3.1    Participants' Accounts .   
 
             (a)    Establishment of Accounts .  The Plan Administrator shall establish and maintain an Account on behalf of each Participant to each Plan Year for which the Participant makes Deferral Contributions.  The Plan Administrator shall credit each Participant's Account with the Participant's Deferral Contributions for such Plan Year and earnings attributable thereto, and shall maintain such Account until the value thereof has been distributed to or on behalf of the Participant or the Participant's Beneficiary.
             (b)    Nature of Contributions and Accounts .  The amounts credited to a Participant's Accounts shall be represented solely by bookkeeping entries.  Except as provided in Article VIII, no monies or other assets shall actually be set aside for such Participant, and all payments to a Participant under the Plan shall be made from the general assets of the Participating Companies.
     
             (c)    Several Liabilities .  Each Participating Company shall be severally (and not jointly) liable for the payment of benefits under the Plan under Deferral Elections executed by Nonemployee Directors with, and while serving as a Nonemployee Director of, such Participating Company.
 
             (d)    General Creditors .  Any assets which may be acquired by a Participating Company in anticipation of its obligations under the Plan shall be part of the general assets of such Participating Company.  A Participating Company's obligation to pay benefits under the Plan constitutes a mere promise of such Participating Company to pay such benefits, and a Participant or Beneficiary shall be and remain no more than an unsecured, general creditor of such Participating Company.

3.2     Deferral Contributions .  Each Nonemployee Director may irrevocably elect to have Deferral Contributions made for a Plan Year by completing in a timely manner a Deferral Election and an Investment Election and following other election procedures as provided in Section 2.3.  Subject to any modifications, additions or exceptions that the Plan Administrator, in its sole discretion, deems necessary, appropriate or helpful, and that are made in compliance with Section 409A, the following terms shall apply to such Deferral Elections:
 
             (a)    Effective Date .  A Participant's Deferral Election for all or a portion of a Plan Year shall be effective beginning with the first Compensation or Stock Grant paid (i) in such Plan Year with respect to a Participant participating for the entire Plan Year, and (ii) with respect to a Participant participating for a portion of a Plan Year, in the calendar month following the calendar month in which the Participant makes a Deferral Election.  To be effective, a Participant's Deferral Election must be made by the Election Deadline.  Any Nonemployee Director who fails to deliver a Deferral Election, or to complete any of the other requisite election procedures, in a timely manner, shall be deemed to have elected not to participate in the Plan for that Plan Year.


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             (b)    Term . Each Participant's Deferral Election regarding Compensation for a Plan Year shall remain in effect with respect to a portion of all Compensation paid or payable during such Plan Year, but shall not apply to any subsequent Plan Year.

(c)  
     Amount .
 
                 (i)    Compensation Deferrals .  To defer Compensation, a
Nonemployee Director's Deferral Election shall specify a whole percentage, in increments of ten percent (10%), of Compensation for a Plan Year to be deferred.  A Nonemployee Director may defer for any Plan Year up to one hundred percent (100%) of the Nonemployee Director's Compensation for such Plan Year.  The percentage so elected shall be withheld from each payment of Compensation otherwise payable to such Nonemployee Director during the Plan Year.  Notwithstanding any provision of this Plan or a Deferral Election to the contrary, however, the amount withheld from any payment of Compensation shall be reduced automatically, if necessary, so that it does not exceed the amount of such payment net of all withholding, allotments and deductions, other than any reduction pursuant to such Deferral Election.  No amounts shall be withheld during any period an individual ceases to receive Compensation as a Nonemployee Director for any reason during the Plan Year.  No adjustment shall be made in the amount to be withheld from any subsequent payment of Compensation for a Plan Year to compensate for any missed or reduced withholding amounts above.
 
                 (ii)    Stock Grant Deferrals .  To defer from a Stock Grant, a Nonemployee Director's Deferral Election shall specify the number of shares of Company Stock, in increments of one hundred (100) shares, to be deferred.  A Nonemployee Director may defer for any Plan Year up to one hundred percent (100%) of the Stock Grant awarded for such year.
 
             (d)    Revocation .  Once made for a Plan Year, a Participant may not revoke a Deferral Election for such Plan Year.
 
             (e)    Crediting of Deferral Contributions .  The Plan Administrator shall credit to each Participant's Account for a Plan Year the amount of Compensation or Stock Grant, or both, reflected on the Participant's Deferral Election as of the date(s) on which such Compensation or Stock Grant would have been paid if not subject to the Participant's Deferral Election.

3.3    Deferral Elections and Multiple Participating Companies .  Any Deferral Election which is timely executed and delivered to the Plan Administrator shall be effective to defer Compensation and Stock Grant earned by the Participant from the Participating Company with respect to which such Participant is a Nonemployee Director at the time of the election, or any other Participating Company with respect to which such 

 
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Participant is a Nonemployee Director during the Plan Year for which the Deferral Election is effective.  In particular, a Participant (i) who timely executes and delivers a Deferral Election while serving as a Nonemployee Director of one Participating Company and subsequently becomes a Nonemployee Director of another Participating Company, or (ii) who ceases service as a Nonemployee Director and subsequently becomes a Nonemployee Director of another Participating Company, shall have the Compensation and Stock Grant that is paid or payable to him by both Participating Companies reduced under the terms of the Deferral Election and the Plan as if the moves had not occurred; provided, that, as provided in Section 3.2(c), no amounts of Compensation shall be withheld attributable to any portion of the Plan Year during which he is not receiving Compensation as a Nonemployee Director of a Participating Company.

3.4    Vesting .  A Participant shall at all times be fully vested in such Participant's Deferral Contributions and all deemed investment earnings attributable thereto.

  -9-



ARTICLE IV
DETERMINATION AND CREDITING OF INVESTMENT RETURN


4.1    General Investment Parameters .  The rate of return credited to each Participant's Accounts shall be determined on the basis of the Investment Option(s) applicable to the Participant's Accounts, as set forth in this Article IV.

4.2    Deemed Investments .  The manner in which each Participant's Deferral Contributions for each Plan Year shall be deemed invested in and between the Stock Unit Option and/or the Interest Income Option, shall be determined in accordance with the following terms:
 
             (a)    Nature of Deemed Investments .  A deemed investment in the Stock Unit Option and/or Interest Income Option shall be for the sole purpose of determining the rate of return to be credited to a Participant's Account, and shall not be treated or interpreted in any manner whatsoever as a requirement or direction to actually invest assets in Company Stock, an interest income fund, or any other investment media.  The Plan, as an unfunded, nonqualified deferred compensation plan, at no time shall have any actual investment of assets relative to the benefits or Accounts hereunder.
 
             (b)    Investment of Contributions .  All deferrals of Compensation otherwise payable in the form of Company Stock, and all deferrals of Stock Grants, shall be deemed invested in the Stock Unit Option.  Notwithstanding the foregoing, all deferrals of Compensation otherwise payable with respect to special meetings of the Board (or a committee of the Board) shall be deemed invested in the Interest Income Option.  With respect to deferrals of Compensation otherwise payable in cash,

 
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