Deferred Compensation
Plan
Effective For Units of
Participation
Having a Unit Start Date Prior
to
Effective: January 1,
1984
As amended through April 1,
2002
Senior Management
Deferred Compensation
Plan
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Statement of
Purpose . The
purpose of the Senior Management Deferred Compensation Plan is to
provide retirement, death, or termination-of-employment benefits to
a select group of highly compensated or management employees
consisting of Senior Managers of SBC Communications Inc. (the
“Company”) and its Subsidiaries (“Participating
Companies”).
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Definitions . For the purposes of this Plan, the
following words and phrases shall have the meanings indicated,
unless the context clearly indicates otherwise:
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1.
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Administrative Committee . “Administrative
Committee” means a committee of three or more members, at
least one of whom is a Senior Manager, who shall be designated by
the Senior Vice President-Human Resources to administer the Plan
pursuant to Section 3.
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2.
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Agreement . “Agreement” means the
written agreement entitled “Senior Management Deferred
Compensation Plan Agreement” (substantially in the form
attached to this Plan) that shall be entered into by the Employer
and a Participant with respect to each Unit of Participation to
carry out the Plan with respect to such Participant.
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3.
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Annualized
Total Unit Deferral Amount . The “Annualized Total Unit
Deferral Amount” means the Total Unit Deferral Amount divided
by eight years.
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4.
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Beneficiary . “Beneficiary” means the person or
persons designated as such in accordance with Section 7.
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5.
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Board . “Board” means the Board
of Directors of SBC Communications Inc.
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6.
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Compensation . “Compensation” means
the Participant's monthly base salary as of the Participant's Unit
Start Date, but before reduction for compensation deferred pursuant
to this Plan or any Plan of the Employer whereby compensation is
deferred including but not limited to a plan whereby compensation
is deferred in accordance with Section 401(k) of the Internal
Revenue Code.
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7.
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Deferral
Amounts For All Units of Participation . “Deferral Amounts for all Units of
Participation” means the aggregate amount of Compensation
deferred in a given calendar year with respect to all Units of
Participation as specified in Exhibit A of a Participant's
Agreements.
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8.
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Deferred
Compensation Account . “Deferred Compensation
Account” means the account maintained on the books of account
of the Employer for each Participant pursuant to Section
5.1.
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9.
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Disability . “Disability” means a disability as
defined in the SBC Communications Inc. Sickness and Accident
Disability Benefit Plan and the SBC Communications Inc. Senior
Management Long Term Disability Plan covering the
Participant.
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Early
Retirement . “Early Retirement”
means the termination of a Participant’s employment with
Employer for reasons other than death on or after Participant
attains age 55.
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Election
Form . The
Election Form” means an Eligible Employee's written election
to participate in the Plan with respect to each Unit of
Participation in accordance with Section 4.
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Eligible
Employee . “Eligible Employee”
means an Employee of the Employer who (a) is in active service, (b)
has an employment status which has been approved by the Board or
its Chairman to be eligible to participate in this Plan, and (c)
who continuously maintains the employment status upon which such
approval was based.
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Employee . “Employee” means any person
employed by the Employer on a regular full-time salaried
basis.
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Employer . “Employer” means SBC
Communications Inc. and any of its Subsidiaries.
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Normal
Retirement . “Normal Retirement”
means termination of a Participant’s employment with Employer
for reasons other than death on or after the date Participant
attains age 65.
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Participant . “Participant” means an
Eligible Employee who has entered into an Agreement to participate
in the Plan in accordance with the provisions of Section
4.
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Plan
Year . “Plan Year” means the
calendar year.
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Rotational
Work Assignment Company (“RWAC”)”
shall mean Bell Communications
Research, Inc. (“Bellcore”), formerly the Central
Services Organization, Inc., and/or any other entity with which SBC
Communications Inc. or any of its Subsidiaries may enter into an
agreement to provide an employee for a rotational work
assignment.
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19.
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SBC
Communications Inc. Savings Plan for Salaried. Employees
. “SBC
Communications Inc. Savings Plan for Salaried Employees”
means the SBC Communications Inc. Savings Plan for Salaried
Employees and any successor plan adopted by the
Employer.
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Subsidiary . A “Subsidiary” of the
Company is any corporation, partnership, venture or other entity in
which the Company has, either directly or indirectly, at least a
10% ownership interest.
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Total Unit
Deferral Amount . “Total Unit Deferral
Amount” means the sum of all amounts of Compensation deferred
during the Unit Deferral Period with respect to a Unit of
Participation, as shown in Exhibit A of Participant's Agreement for
that Unit of Participation.
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Unit
Deferral Period . “Unit Deferral Period”
means the number of months the Participant elects to reduce his
Compensation with respect to a Unit of Participation, as shown in
Exhibit A of Participant's Agreement for that Unit of
Participation.
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Unit of
Participation . A “Unit of
Participation” consists of a stated Total Unit Deferral
Amount and associated Employer contributions which provide stated
benefits in accordance with the Participant's Agreement for that
Unit of Participation.
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24.
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Unit Start
Date . “Unit Start Date” means
the date shown in Exhibit A of a Participant's Agreement for a
given Unit of Participation which follows an Eligible Employee's
election to commence a Unit of Participation under the
Plan. For years subsequent to the first year as an
Eligible Employee, the Unit Start Date will be January 1, unless
the Administrative Committee, in its sole discretion deems that
another date is allowable. A Unit of Participation may
not commence if the employee cannot complete eight (8) years of
participation prior to age 65, unless otherwise permitted by the
Administrative Committee.
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Administration of the Plan
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Administration of Plan . The Administrative Committee shall
be the sole administrator of the Plan and will administer the Plan,
interpret, construe and apply its provisions in accordance with its
terms. The Administrative Committee shall further establish, adopt
or revise such rules and regulations as it may deem necessary or
advisable for the administration of the Plan. All decisions of the
Administrative Committee shall be final and binding unless the
Board of Directors should determine otherwise.
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4.1
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Election to
Commence a Unit Of Participation . Any Eligible Employee may elect to
commence deferral of Compensation with respect to a Unit of
Participation in the Plan by filing a completed Election Form with
the Administrative Committee prior to the beginning of the Unit
Start Date. Pursuant to said Election Form, the Eligible Employee
shall elect a Total Unit Deferral Amount and a Unit Deferral Period
to be specified in Exhibit A of Participant's Agreement with
respect to such Unit.
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The Deferral Amount For All Units of
Participation cannot exceed one hundred percent (100%) of
Compensation during any calendar year. In order to
participate in the Plan, a Participant must defer a minimum of six
percent (6%) of his Compensation at the time of commencement of his
first Unit of Participation in the Plan. Subsequent
additional Units of Participation require a minimum annual
Participant deferral of $1,000. The sum of the Participant's
contributions, if any, to the Southwestern Bell Savings Plan for
Salaried Employees plus the Annualized Total Unit Deferral Amounts
for all Units of Participation in a given year may not exceed
thirty percent (30%) of a Participant's Compensation for that
year.
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Termination
Of Election . A Participant's election to defer
Compensation is irrevocable upon the filing of his Election Form
with the Administrative Committee, provided, however, that the
election may be terminated with respect to Compensation not yet
paid by mutual agreement in writing between the Participant and the
Administrative Committee. Such termination if approved shall be
effective beginning the first day of the month following the
execution of such mutual agreement.
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Deferred
Compensation Account . The Administrative Committee shall
establish and maintain a separate Deferred Compensation Account for
each Participant for each Unit of Participation. Each of a
Participant's Deferred Compensation Accounts will be credited from
time to time with interest on the balance compounded at an eight
percent (8%) annual rate.
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Total Unit
Deferral Amount . The Participant's Total Unit
Deferral Amount is deferred in equal amounts on a monthly basis
over the Unit Deferral Period or as otherwise may be permitted by
the Administrative Committee. The amount deferred each month with
respect to a given Unit of Participation shall be credited by the
Employer to the Participant's Deferred Compensation Account for
that Unit of Participation on the last day of such
month.
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The Participant will be permitted to complete
deferrals of the Total Unit Deferral Amount on an accelerated basis
over a shorter period than the original Unit Deferral Period at
such times and in such manner as may be permitted by the
Administrative Committee. In this connection the Administrative
Committee may permit a Participant to defer an additional amount or
percent of his Compensation and/or all or a portion of his Short
Term Incentive Award, subject to the limitations contained in
Section 4.1. Any acceleration in deferrals by a
Participant with respect to a given Unit of Participation shall not
increase the Total Unit Deferral Amount and shall not cause any
change in the amounts of the benefits payable pursuant to Section 6
on account of such Unit of Participation or any change in the
maximum Employer Contribution pursuant to Section 5.3 for the year,
but shall be applied proportionally as a credit against the Total
Unit Deferral Amount and Equivalent Employer Contribution Shortfall
and shorten the length of the Unit Deferral Period for such Unit of
Participation. In no event shall any such increase in
deferrals by a Participant result in any reduction in the amounts
by which the Participant's Compensation is reduced in subsequent
years pursuant to Exhibit A to the Participant's Agreement with
respect to such Unit of Participation prior to completion of
deferral of the Total Unit Deferral Amount for such Unit of
Participation. Equivalent Employer Contribution
Shortfall shall mean an amount equal to the Employer Contribution
that would be associated with the accelerated deferral if said
deferral amount was deferred in the manner as originally agreed
upon as timely. Amounts credited against Equivalent
Employer Contribution Shortfall shall be immediately
vested.
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Employer
Contribution . Participation in this Plan does not
preclude participation in the SBC Communications Inc. Savings Plan
for Salaried Employees. For a given year, the aggregate
Employer contribution to both the Savings Plan for Salaried
Employees and this Plan on behalf of a Participant will be an
amount equal to the Company Match Rate Expressed as a Percent* as
in effect during all or portions of that year times the
Participant's Compensation as in effect during all or portions of
that year which is contributed or deferred during that year in
accordance with each Plan, respectively. Any amount of
Employer contribution not allocated to the Savings Plan for
Salaried Employees will be credited to the Participant's Deferred
Compensation Accounts. The amount or percent of a
Participant's Compensation to be allocated to Basic Allotments in
the Savings Plan for Salaried Employees shall be specified in
Paragraph 3 of his Agreement.
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Vesting of
Deferred Compensation Account . A Participant's interest in his
Deferred Compensation Account shall vest at the same rate and in
the same manner as it would under the SBC Communications Inc.
Savings Plan for Salaried Employees, as in effect from time to
time, had both the amount of the Participant's Deferral Amount and
the Employer contribution with respect to that Participant's
Deferral Amount for any given Unit of Participation been
contributed instead to the Savings Plan for Salaried
Employees. For this purpose all years of previous
participation under the Savings Plan for Salaried Employees, for
purposes of determining a Participant's vested interest under that
Plan, shall be taken into account in determining the Participant's
vested interest under this Plan.
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* The
Company Match Rate Expressed as a Percent means the maximum percent
of salary that can be received as Employer matching contribution
under the SBC Communications Inc. Savings Plan for Salaried
Employees, e.g., a match of 66 2/3% of the amount of basic
allotment (up to 6%) of salary results in a Company Match Rate
Expressed as a Percent of .667 x 6% = 4%.
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Normal
Retirement . Upon Normal Retirement, Employer
shall pay to Participant the amount per month specified in
Paragraph 6 of his Agreement for a period of one hundred eighty
(180) months (“Standard Retirement
Benefit”). Alternatively, a Participant may elect
to receive the present value equivalent of his Standard Retirement
Benefit (“Alternative Retirement Benefit”). He may
elect in his Agreement to receive this Alternative Retirement
Benefit as (i) a lump sum payment, (ii) sixty (60) monthly
installments, or (iii) one hundred twenty (120) monthly
installments. Any such election once made shall be
irrevocable.
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Notwithstanding the foregoing, a Participant may
elect in his Agreement to defer the time by which he is required to
elect the manner of payment of any Alternative Retirement Benefit
until no later than the last day of the calendar year preceding the
calendar year in which Normal Retirement takes
place. Any such deferred election must be made in
writing to the Administrative Committee. If a
Participant's Agreement fails to show an election of a manner of
payment of an Alternative Retirement Benefit, or if the
Participant, having chosen to defer his election, fails to make a
timely election, such Participant will receive the Standard
Retirement Benefit upon his Normal Retirement.
In the event that a final determination shall be
made by the Internal Revenue Service or any court of competent
jurisdiction that by reason of Normal Retirement a Participant has
recognized gross income for Federal Income tax purposes in excess
of the Standard or Alternative Retirement Benefit actually paid by
the Employer to which such gross income is attributable, the
Employer shall deem the Participant to have elected a lump sum
payment of his Alternative Retirement Benefit effective as of his
Normal Retirement. Under these circumstances, the
Employer shall pay to the Participant in one lump sum, within sixty
(60) days of such final determination, an amount equal to the
excess of (a) the lump sum Alternative Retirement Benefit that
would have been payable to the Participant had the Participant so
elected such an Alternative Retirement Benefit in his Agreement
plus interest thereon of 10% per annum, compounded annually, from a
Participant's Normal Retirement until receipt of such lump sum
payment, less (b) any amounts of Standard or Alternative Retirement
Benefit theretofore paid to such Participant plus interest thereon
at 10% per annum, compounded annually from the date of receipt of
each such amount to the date a Participant received such lump sum
payment. If a benefit is payable to a Participant
pursuant to this paragraph, no other Standard or Alternative
Retirement Benefit shall be payable under the Plan.
If a Participant who is entitled to either a
Standard or Alternative Retirement Benefit dies after his Normal
Retirement, his Beneficiary shall be entitled to receive the
remaining installments, if any, of such Standard or Alternative
Retirement Benefit.
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Early
Retirement . Upon Early Retirement after
deferral of a Participant's Total Unit Deferral Amount, Employer
shall pay to Participant commencing on the date he attains age
sixty-five (65) the Standard or Alternative Retirement Benefit as
specified in Paragraphs 6 and 7 of his Agreement.
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A Participant may elect in his Agreements to
commence payment, following his Early Retirement and completion of
deferral of his Total Unit Deferral Amount, of any Standard or
Alternative Retirement Benefit at a date prior to the Participant's
attainment of age sixty-five (65), but no earlier than eight years
following the Unit Start Date. However, in such event,
the amount of the Standard Retirement Benefit shall be reduced by
the result of multiplying (i) fifty one-hundredths of one percent
(0.50%) of such Early Retirement Benefit by (ii) the number of
whole and fractional months between the Participant's age on the
date of commencement of benefits and the date on which the
Participant will attain age sixty-five (65). The amount
of any Alternative Retirement Benefit payable pursuant to this
paragraph shall be the actuarial equivalent of the Standard
Retirement Benefit payable pursuant to this
paragraph. Any such election in any Agreement once made
shall be irrevocable.
Notwithstanding the foregoing, a Participant may
elect in his Agreement to defer the time by which he is required to
elect commencement of payment of Standard Retirement Benefit or
Alternative Retirement Benefit until no later than the last day of
the calendar year preceding the calendar year in which the
Participant's Early Retirement takes place. Any such
deferred election must be made in writing to the Administrative
Committee. If a Participant's Agreements fail to show an
election as to timing of commencement of payment of a Standard or
Alternative Early Retirement Benefit, or if the Participant, having
chosen to defer his election, fails to make a timely election, such
Participant's Standard or Alternative Retirement Benefit, if any,
shall commence as of the date he reaches age sixty-five (65) in
accordance with the first paragraph of this Section 6.2.
In the event that a final determination shall be
made by the Internal Revenue Service or any court of competent
jurisdiction that by reason of Early Retirement a Participant has
recognized gross income for Federal income tax purposes prior to
the actual payment to such Participant of the Standard or
Alternative Retirement Benefit to which such gross income is
attributable, the Employer shall deem the Participant to have
elected a Standard or Alternative Retirement Benefit commencing on
the date as of which such Participant is determined to have
recognized his first payment of Standard or Alternative Retirement
Benefit. Under these circumstances, the Employer shall
pay to the Participant in one lump sum within sixty (60) days
following such final determination an amount equal to the sum of
(a) the excess of (i) the aggregate of the payments that would have
been made to the Participant through such date had the Participant
so elected such a Standard or Alternative Retirement Benefit over
(ii) any amounts of Standard or Alternative Retirement Benefits
theretofore paid to such Participant and (b) 10% per annum
interest, compounded annually, on such payments from the date each
would otherwise have been made had such Standard or Alternative
Retirement Benefit been elected until the date of actual payment.
Thereafter, the Employer shall pay to the Participant the remaining
installments of Standard or Alternative Retirement Benefit in
accordance with the deemed Standard or Alternative Retirement
Benefit election described in the preceding two
sentences. If a benefit is payable to a Participant
pursuant to this paragraph, no other Standard or Alternative
Retirement Benefit shall be payable under the Plan.
If a Participant dies subsequent to commencement
of payment of a Standard or Alternative Retirement Benefit, his
Beneficiary shall be entitled to receive the remaining installments
of Standard or Alternative Retirement Benefit, if any.
If a Participant dies after his Early Retirement
or eligibility for Early Retirement and after his eligibility to
commence payments of his Standard or Alternative Retirement
Benefit, his Beneficiaries will receive his Standard or Alternative
Retirement Benefit as if payments had commenced on the date of the
Participant's death.
If a Participant dies after his Early Retirement
or eligibility for Early Retirement but prior to is eligibility to
commence payments of his Standard or Alternative Retirement
Benefit, his Beneficiaries will receive a Pre-Retirement Survivor
Benefit in accordance with Section 6.4.
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Termination of
Employment Before Attaining Age 55 or After Attaining Age 55 but
Prior To Completion of Deferral of Total Unit Deferral
Amount. Upon any termination of employment of the
Participant for reasons other than death before the Participant
attains age fifty-five (55), or after the Participant attains age
fifty-five (55) but before the Participant completes deferral of
his Total Unit Deferral Amount, the Company shall pay to the
Participant, with respect to each Unit of Participation if
Participant terminates employment before attaining age fifty-five
(55), or with respect to each Unit of Participation for which
deferrals have not been completed if Participant terminates
employment after attaining age fifty-five (55) but before
completing deferral of his Total Unit Deferral Amount, as
Compensation earned for services rendered prior to his termination
of service, a lump sum equal to the vested portion of the amounts
standing credited to his Deferred Compensation Account as of the
date of such termination of service (“Termination
Benefit”).
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Termination
of a Unit of Participation . A Participant may discontinue a
Unit of Participation while continuing in the service of the
Employer. Notwithstanding any other provision of the Plan, upon
such discontinuance, the Participant shall immediately cease to be
eligible for any benefits other than his Termination Benefit with
respect to that Unit of Participation. No other benefit
shall be payable with regard to his Unit of Participation to either
the Participant or any Beneficiary of such
Participant. The Participant shall continue to be
credited with interest on the amounts standing credited to his
Deferred Compensation Accounts as provided under Section 5.1 and to
vest in such amounts as provided under Section 5.4 while he remains
in employment with the Employer until payment of his Termination
Benefit. However, no further Participant deferrals or
Employer contributions shall be made pursuant to Sections 5.2 or
5.3 with respect to a Unit of Participation after a Participant
discontinues or terminates such Unit of Participation.
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A Participation shall terminate a Unit of
Participation if he terminates his election to defer Compensation
with the approval of the Administrative Committee pursuant to
Section 4.2.
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Pre-Retirement Survivor Benefit
. If the Participant dies
prior to his eligibility for Early Retirement while in service with
the Employer, the Employer shall pay to the Participant’s
Beneficiary the amount per month specified in paragraph 5 of his
Agreement for the greater of one hundred twenty (120 months or the
number of months from the date of Participant’s death until
he would have been age 65 (“Pre-Retirement Survivor
Benefit”).
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Additional
Benefit . The
reduction of any benefit payable under the SBC Communications Inc.
Management Pension Plan, which results from participation in this
Plan, will be restored as an additional benefit under this Plan or
any other comparable deferral plan. The Company shall have the
option to pay in a lump sum the present value equivalent of the
pension retirement benefit (life annuity).
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Survivor
Spouse Benefit . If a Participant dies subsequent to
eligibility to commence payment of a Standard or Alternative
Retirement Benefit, and has a surviving spouse, the Employer shall
pay to the spouse commencing on the later of (a) the sixteenth
(16th) year after commencement of payment of any Standard or
Alternative Retirement Benefit or (b) the first of the month
following the Participant's death, an amount per month for the life
of the spouse equal to sixty-six and two-thirds percent (66-2/3%)
of the Standard Retirement Benefit. If the spouse is
more than three (3) years younger or older than the Participant on
the date of Participant's death, the amount of such benefit shall
be actuarially adjusted based on standard mortality
tables.
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Disability . In the event that a Participant
suffers a Disability, amounts that otherwise would have been
credited to the Deferred Compensation Accounts of the Participant
in accordance with Sections 5.2 and 5.3 will continue to be
credited to such Deferred Compensation Accounts at the same times
and in the same amounts as they would have been credited if the
Participant had not suffered a Disability. During such
Disability, deferrals shall continue to be made by the Participant
in accordance with Section 5.2 for as long as he is eligible to
receive monthly disability benefits equal to 100 percent of his
monthly base salary at the time of his Disability. If
the Participant is no longer eligible to receive monthly disability
benefits equal to 100 percent of his monthly base salary at the
time of his Disability, the deferrals which would otherwise have
been made by the Participant in accordance with Section 5.2 shall
be contributed by the Employer. Employer contributions
shall continue to be made by the Employer in accordance with
Section 5.3.
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If the Participant recovers from his Disability
and returns to employment with the Employer in an employment status
which would make him eligible to participate in this Plan or
another similar Deferred Compensation Plan of the Employer, the
Participant shall resume making deferrals in accordance with
Section 5.2 and shall thereafter repay any amounts which were
previously contributed by the Employer in lieu of deferrals which
would otherwise have been made by the Participant in accordance
with Section 5.2. Such repayment shall be made following
the end of the Unit Deferral Period in monthly amounts equal to the
Amount Deferred per Month during the Unit Deferral Period as shown
on Exhibit A, or such larger amounts as the Participant may
elect. The amounts to be repaid by the Participant shall
be equal to the amounts contributed by the Employer which would
otherwise have been deferred by the Employee pursuant to Section
5.2, compounded at an eleven percent (11%) annual rate on all such
amounts from the date of crediting such amounts to the
Participant's Deferred Compensation Account until
repaid.
All Participant deferrals and Employer
contributions shall cease upon the happening of the earliest of the
following:
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the
Participant's attainment of age 65; or
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the
Participant's election to take Early Retirement under the
Plan.
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If a Participant's Disability terminates by
reason of his death, the rights of his Beneficiary shall be those
pursuant to whichever of Section 6.1, 6.2, 6.4, 6.5, or 6.6 would
have been applicable if the Participant had not been disabled but
rather had been in service on the date of his death and either died
or retired on such date, whichever would be most advantageous to
such Beneficiary. If a Participant's Disability
terminates by reason of (b) above, the Participant shall be treated
as having a Normal Retirement upon the attainment of age 65 and
shall be entitled to a Normal Retirement Benefit determined
pursuant to Section 6.1, subject to reduction as provided below in
the following paragraph. If a Participant's Disability
terminates by reason of (c) above, the Participant shall be treated
as having an Early Retirement on the date elected by the
Participant and shall be entitled to an Early Retirement Benefit
determined pursuant to Section 6.2, subject to reduction as
provided below in the following paragraph.
A reduction shall be made in the Normal
Retirement or Early Retirement Benefit paid to the Participant or
his Beneficiary, with respect to any Unit of Participation for
which a portion of the Total Unit Deferral Amount required under
Section 5.2 has been contributed by the Employer rather than from
deferrals by the Employee, unless such amount has been repaid by
the Employee as described in the second paragraph of this Section
6.7. Each payment of the Normal or Early Retirement
Benefit shall be reduced by the amount necessary to amortize over
such payments an amount equal to the sum of (i) the amounts
contributed by the Employer which would otherwise have been
deferred by the Employee pursuant to Section 5.2 plus (ii) the
amounts contributed by the Employer pursuant to Section 5.3 which
are matching contributions based on amounts described in (i) above,
compounded at an eleven percent (11%) annual rate on all such
amounts from the date of crediting such amounts to the
Participant's Deferred Compensation Account until deducted from
amounts paid to the Participant.
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6.8
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Emergency
Benefit . In
the event that the Administrative Committee, upon written petition
of the Participant, determines in its sole discretion, that the
Participant has suffered an unforeseeable financial emergency, the
Employer shall pay to the Participant, as soon as practicable
following such determination, an amount necessary to meet the
emergency not in excess of the Termination Benefit to which the
Participant would have been entitled pursuant to Section 6.3 if he
had a termination of service on the date of such determination (the
“Emergency Benefit”). For purposes of this
Plan, an unforeseeable financial emergency is an unexpected need
for cash arising from an illness, casualty loss, sudden financial
reversal, or other such unforeseeable occurrence. Cash needs
arising from
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foreseeable
events such as the purchase
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