SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-8607
BELLSOUTH CORPORATION
(Exact name of registrant as specified in its charter)
Georgia 58-1533433
(State of Incorporation) (I.R.S. Employer
Identification Number)
1155 Peachtree Street, N. E., Atlanta, Georgia 30309-3610
(Address of principal executive offices) (Zip Code)
Registrant's telephone number 404 249-2000
Indicate by check mark whether theregistrant (1) has filed all reports
required to be filed by Section 13 or 15(d)of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___
At August 7, 1995, a total of 496,540,275 common shares were outstanding.
Table of Contents
Item Page
Part I
1. Financial Statements 3
Consolidated Statements of Income 3
Consolidated Balance Sheets 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7
Selected Operating Data 11
2. Management's Discussion and Analysis ofResults
of Operations and Financial Condition 13
Results of Operations 14
Volumes of Business 14
Operating Revenues 15
Operating Expenses 17
Other Income Statement Items 18
Extraordinary Losses 19
Financial Condition 20
Restructuring of Telephone Operations 21
Additional Workforce Reductions 22
Regulatory and Competitive Environment 23
State Regulation 23
Federal Legislation 25
Business Developments 25
CWA Working Agreement 25
Cellular Reseller Agreement 25
Part II
4. Submission of Matters to a Vote of
Security Holders 26
6. Exhibits and Reports on Form 8-K 27
PART I - FINANCIAL INFORMATION
BELLOUTH CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Millions, Except Per Share Amounts)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1995 1994 1995 1994
Operating Revenues:
Network and related services
Local service $1,793.4 $1,709.7 $3,561.7 $3,389.4
Interstate access 805.6 765.0 1,600.7 1,567.4
Intrastate access 227.0 230.4 453.1 460.5
Toll 265.7 300.4 546.6 600.6
Directory advertising and
publishing 389.0 396.3 742.2 741.1
Wireless communications 623.1 494.4 1,223.0 948.3
Other services 286.5 231.7 561.7 544.9
Total Operating Revenues 4,390.3 4,127.9 8,689.0 8,252.2
Operating Expenses:
Cost of services and
products 1,484.8 1,492.3 2,987.9 2,984.6
Depreciation and
amortization 859.0 800.7 1,693.4 1,599.1
Selling, general and
administrative 950.1 833.3 1,816.0 1,654.7
Total Operating Expenses 3,293.9 3,126.3 6,497.3 6,238.4
Operating Income 1,096.4 1,001.6 2,191.7 2,013.8
Interest Expense 186.3 154.0 360.3 318.9
Other Income (Expense), net 9.0 (11.7) (1.7) 47.8
Income Before Income Taxes
and Extraordinary Losse 919.1 835.9 1,829.7 1,742.7
Provision for Income Taxes 362.2 319.4 725.7 640.9
Income Before Extraordinary
Losses 556.9 516.5 1,104.0 1,101.8
Extraordinary Loss for
Discontinuance of
SFAS No. 71, net of tax
(Note D) (2,717.7) -- (2,717.7) --
Extraordinary Loss on Early
Extinguishment of Debt,
net of tax (Note D (15.8) -- (15.8) --
Net Income (Loss) $(2,176.6) $516.5 $(1,629.5) $1,101.8
BELLSOUTH CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Continued)
(Unaudited)
(In Millions, Except Per Share Amounts)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1995 1994 1995 1994
Weighted Average Common
Shares Outstanding 496.9 496.6 496.7 496.6
Dividends Declared Per
Common Share $.69 $.69 $1.38 $1.38
Earnings Per Share:
Income Before Extraordinary
Losses $1.12 $1.04 $2.22 $2.22
Extraordinary Loss for
Discontinuance of SFAS No.
71, net of tax (Note D) (5.47) -- (5.47) --
Extraordinary Loss on Early
Extinguishment of Debt, net
of tax (Note D) (.03) -- (0.3) --
Earnings Per Share $(4.38) $1.04 $(3.28) $2.22
The accompanying notes are an integral part of these financial
statements.
BELLSOUTH CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Millions, Except Per Share Amounts)
June 30, December
31,
1995 1994
ASSETS
Current Assets:
Cash and cash equivalents $511.3 $606.5
Temporary cash investments 84.9 50.8
Accounts receivable, net of allowance for
uncollectibles of $172.9 and $154.1 3,312.2 3,126.6
Material and supplies 425.7 490.0
Other current assets 512.1 453.9
4,846.2 4,727.8
Investments and Advances 2,682.7 2,531.5
Property, Plant and Equipment, net 20,448.7 25,162.4
Deferred Charges and Other Assets 397.2 535.4
Intangible Assets, net 1,483.4 1,439.9
Total Assets $29,858.2 $34,397.0
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Debt maturing within one year $ 1,825.7 $2,018.7
Accounts payable 1,227.5 1,378.3
Other current liabilities 2,645.2 3,101.1
5,698.4 6,498.1
Long-Term Debt 7,917.3 7,435.1
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 1,875.8 3,646.9
Unamortized investment tax credits 394.6 443.3
Other liabilities and deferred credits 1,887.4 2,006.3
4,157.8 6,096.5
Shareholders' Equity:
Common stock, $1 par value 503.3 502.5
Paid-in capital 8,098.8 8,064.2
Retained earnings 4,411.7 6,721.1
Shares held in trust (374.5) (336.2)
Guarantee of ESOP debt (554.6) (584.3)
12,084.7 14,367.3
Total Liabilities and Shareholders' Equity $29,858.2 $34,397.0
The accompanying notes are an integral part of these financial
statements.
BELLSOUTH CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Millions, Except Per Share Amounts)
For the Six Months
Ended June 30,
1995 1994
Cash Flows from Operating Activities:
Net income (loss) ($1,629.5) $1,101.8
Adjustments to net income:
Extraordinary loss for discontinuance of SFAS No. 71 4,449.0 --
Extraordinary loss on early extinguishment of debt 25.8 --
Payment of call premium (13.8) --
Depreciation and amortization 1,693.5 1,599.1
Losses and dividends from unconsolidated affiliates 101.7 80.9
Provision for losses on bad debts 109.8 88.0
Deferred income taxes and unamortized investment
tax credits (1,726.8) (82.9)
Gain on sale of operations -- (64.7)
Allowance for funds used during construction (7.0) (8.8)
Net change in accounts receivable and other
current assets (218.1) (187.7)
Net change in accounts payable and other current
liabilities (524.2) (142.1)
Net change in deferred charges and other assets 5.5 (63.7)
Net change in other liabilities and deferred credits 201.8 245.3
Other reconciling items, net 35.6 41.3
Net cash provided by operating activities 2,503.3 2,606.5
Cash Flows from Investing Activities:
Capital expenditures (1,828.2) (1,625.5)
Proceeds from disposition of short-term investments 111.8 46.6
Purchases of short-term investments (146.3) (42.4)
Investment dispositions 2.2 132.1
Investments in/advances to unconsolidated affiliates (301.8) (371.5)
Other (35.1) 50.7
Net cash used for investing activities (2,197.4) (1,810.0)
Cash Flows from Financing Activities:
Proceeds from short-term borrowings 9,261.4 11,357.5
Repayments of short-term borrowings (9,456.6)(11,243.9)
Proceeds of long-term debt 843.8 139.4
Repayments of long-term debt (353.3) (78.9)
Dividends paid (693.5) (692.7)
Other (2.9) (1.8)
Net cash used for financing activities (401.1) (520.4)
Net Increase (Decrease) in Cash and Cash Equivalents (95.2) 276.1
Cash and Cash Equivalents at Beginning of Period 606.5 501.5
Cash and Cash Equivalents at End of Period $511.3 $777.6
The accompanying notes are an integral part of these financial
statements.
BELLSOUTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In Millions, Except Per Share Amounts)
Note A -- Preparation of Interim Financial Statements
The consolidated financial statements of BellSouth Corporation
(BellSouth) have been prepared in accordance with the rules and
regulations of the Securities and Exchange Commission (SEC).
Certain amounts have been reclassified from previous presentations.
In the opinion of BellSouth, these statements include all
adjustments necessary for a fair presentation of the results of all
interim periods reported herein. All adjustments are of a normal
recurring nature unless otherwise disclosed. Certain information
and footnote disclosures prepared in accordance with generally
accepted accounting principles have been either condensed or
omitted pursuant to SEC rules and regulations. However, BellSouth
believes that the disclosures made are adequate for a fair
presentation of results of operations, financial position and cash
flows. These consolidated financial statements should be read in
conjunction with the consolidated financial statements and
accompanying notes included in BellSouth's latest annual report on
Form 10-K and previous quarterly report on Form 10-Q.
Note B -- BellSouth Corporation Consolidated Shareholders' Equity
Number of Shares Amount
---------------- --------------------------------------------
Shares Shares Guarantee
Common Held in Common Paid-in Retained Held in of ESOP
Stock Trust Stock Capital Earnings Trust Debt
(1) (1)
______ _______ ______ ________ ________ _______ ________
Balance at
December 31,
1994 502.5 6.3 $502.5 $8,064.2 $6,721.1 $(336.2) $(584.3)
Net Loss (1,629.5)
Dividends
declared (685.0)
Shares issued
in connection
with various
employee
benefit
plans 0.2 0.2 6.5
Shares
issued to
grantor
trusts 0.6 0.6 0.6 37.7 (38.3)
Reduction of
ESOP debt
and other
related
activity 5.1 29.7
Foreign
currency
translation
adjustment (9.6)
------ ------- ------ ------- -------- ------ -------
Balance at
June 30,
1995 503.3 6.9 $503.3 $8,098.8 $4,411.7 $(374.5 $(554.6)
(1) Such shares are not considered to be outstanding for financial
reporting purposes.
BELLSOUTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(In Millions, Except Per Share Amounts)
Note C -- Supplemental Cash Flow Information
The following supplemental information is presented in
accordance with the provisions of Statement of Financial
Accounting Standards (SFAS) No. 95, "Statement of Cash
Flows."
For the Six Months
Ended June 30,
1995 1994
Cash Paid For:
Income taxes $696.2 $788.5
Interest $375.3 $314.6
Noncash Investing and Financing Activities:
Shares issued to grantor trusts .6 43.6
Note D -- Extraordinary Losses
Discontinuance of SFAS No. 71. As a result of its continuing
regulatory and marketplace assessments, BellSouth
Telecommunications, Inc. (BellSouth Telecommunications), a wholly-
owned subsidiary of BellSouth, has concluded that it is no longer
appropriate to prepare its external financial results using the
accounting method required for regulated enterprises. BellSouth
Telecommunications believes that based on the changing regulatory
environment and the increasing level of competition, it was
required to discontinue SFAS No. 71, "Accounting for the Effects of
Certain Types of Regulation," for financial reporting purposes.
Discontinuance was required because most of BellSouth
Telecommunications' revenues will be generated under market-based
pricing and because it is doubtful that regulated rates sufficient
to recover the net book value of telephone plant could be charged
to and collected from customers. Accordingly, in the second
quarter, BellSouth Telecommunications discontinued application of
SFAS No. 71 and recorded a non-cash extraordinary charge of
$2,717.7 (net of a deferred tax benefit of $1,731.3). The
components of the charge are as follows:
Pretax After tax
Reduction in recorded value of long-
lived telephone plant ($4,896) ($3,002)
Full adoption of issue basis accounting 317 194
Elimination of regulatory assets and
liabilities 111 71
Partial adjustment to unamortized
investment tax credits 19 19
Total ($4,449) ($2,718)
BELLSOUTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(In Millions, Except Per Share Amounts)
Note D -- Extraordinary Losses (continued)
The reduction of telephone plant, $4,896 pretax, was recorded as an
increase to the related accumulated depreciation accounts, the
categories and amounts of which are as follows:
Category Amount
Buried metallic cable $1,345
Digital switching 1,305
Circuit-other 1,291
Aerial metallic cable 630
Underground metallic cable 325
Total $4,896
Such reduction of plant was determined by an impairment analysis
that identified estimated amounts not recoverable from future
discounted cash flows. The analysis considered projected effects
of future competition as well as changes in technology and capital
requirements. The plant-related charge was further supported by
depreciation studies that identified inadequate levels of
accumulated depreciation for certain asset categories. These
studies give recognition to the historical underdepreciation of
assets resulting primarily from regulator-prescribed asset lives
that exceeded the estimated economic asset lives.
For financial reporting purposes, the average depreciable lives of
affected categories of long lived telephone plant have been reduced
to more closely reflect the economic and technological lives.
Differences between regulator-approved asset lives and the current
estimated economic asset lives are as follows:
Composite of Estimated
Regulator-Approved Economic Asset
Category Asset Lives (in Lives (in Years)
Years)
Buried metallic cable 20.0 14.0
Digital switching 17.0 10.0
Circuit-other 10.5 9.1
Aerial metallic cable 20.0 14.0
Underground metallic cable 25.0 12.0
The remaining components of the extraordinary charge, which
partially offset the plant-related portion of the overall charge,
include $194 (after tax) related to the method by which BellSouth
Telecommunications reports its directory publishing revenues.
BellSouth's unregulated subsidiaries recognize directory publishing
revenues and production expenses using issue basis accounting.
Under issue basis accounting,
BELLSOUTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(In Millions, Except Per Share Amounts)
Note D -- Extraordinary Losses (continued)
revenues and product expenses are recognized when directories are
published rather than over the lives of the directories (generally
one year) as under the prescribed regulatory accounting framework.
BellSouth Telecommunications will now begin reporting using issue
basis accounting consistent with BellSouth's unregulated
subsidiaries and with publishing companies in general. The overall
extraordinary charge was also reduced by $71 (after tax) to
reflect the removal of regulatory assets and liabilities that were
recorded as a result of previous actions by regulators. Virtually
all of these regulatory assets and liabilities arose in connection
with the incorporation of new accounting standards into the
ratemaking process, and were transitory in nature. The magnitude
of the regulatory assets and liabilities has been decreasing over
time due to the ongoing amortization prescribed as a part of the
adoption in 1988 of the Federal Communications Commission's current
Uniform System of Accounts. In addition, the overall extraordinary
charge was reduced by $19 (after tax) for the partial acceleration
of unamortized investment tax credits associated with the
reductions in asset carrying values and in asset lives.
Early Extinguishment of Debt. In the second quarter, BellSouth
Telecommunications issued $300 of Ten Year Notes, the proceeds from
which were used to redeem and refinance an outstanding $300
Debenture issue, due August 1, 2029. In June, BellSouth
Telecommunications called the Debenture issue for redemption on
August 1 and executed an in-substance defeasance by depositing
$326.6 in an irrevocable trust for the purchase of U.S. government
obligations to cover the principal amount called, the call premium
of $13.8 and accrued interest due of $12.8. As a result, the $300
Debenture issue (and related deferred issuance costs of
approximately $12) was removed from the consolidated balance sheet
at June 30, 1995 and an extraordinary loss on early extinguishment
of debt of $15.8 (net of taxes of $10.0) was recognized in the
second quarter.
BELLSOUTH CORPORATION
SELECTED OPERATING DATA
(Unaudited)
Network Access Lines in Service at Percent Change
June 30 (Thousands)(a):
1995 1994
vs. vs.
1995 1994 1993
By Type:
Residence 14,434.6 3.7% 3.4%
Business 6,000.2 7.7 6.6
Other 256.0 1.3 (1.8)
Total Access Lines 20,690.8 4.8 4.2
By State:
Florida 5,456.8 4.8 4.4
Georgia 3,456.0 6.2 5.0
Tennessee 2,388.9 4.6 4.5
Louisiana 2,079.5 3.9 3.3
North Carolina 2,048.3 5.7 4.9
Alabama 1,760.5 3.9 3.5
South Carolina 1,274.3 4.2 3.0
Mississippi 1,143.5 4.1 3.7
Kentucky 1,083.0 3.6 2.9
Total Access Lines 20,690.8 4.8 4.2
Percent Change
for
the Periods
Ended
1995 1994
vs. vs.
1995 1994 1993
Access Minutes of Use
(Millions)(a)(b):
Interstate:
Three months ended March 31 15,131.3 7.7% 7.9%
Three months ended June 30 15,597.1 8.2 7.6
Six months ended June 30 30,728.4 7.9 7.8
Intrastate:
Three months ended March 31 4,529.1 13.1 11.4
Three months ended June 30 4,789.9 14.7 9.9
Six months ended June 30 9,319.0 13.9 10.6
Total Minutes of Use:
Three months ended March 31 19,660.4 8.9 8.7
Three months ended June 30 20,387.0 9.6 8.1
Six months ended June 30 40,047.4 9.3 8.4
Toll Messages (Millions)(a):
Three months ended March 31 370.0 (4.3) 5.3
Three months ended June 30 352.0(11.4) 2.1
Six months ended June 30 722.0 (7.9) 3.7
(a) Prior period operating data are often revised at later dates
to reflect updated information. The above information reflects
the latest data available for the periods indicated.
(b) Minutes of Use are classified as either interstate or
intrastate based on the percentage interstate usage
factor. This factor is updated periodically.
BELLSOUTH CORPORATION
SELECTED OPERATING DATA (Continued)
(Unaudited)
Cellular and Paging Customers Served at June 30 (Equity Basis)(c):
Percent
Change
1995 1994
1995 vs. vs.
1994 1993
Domestic Cellular 2,464,300 36.6% 39.8%
International Cellular 481,000 81.8 127.9
Paging (all domestic)(d) 1,685,400 27.3 18.0
(c) Includes customers served based on BellSouth's ownership
percentage in all markets served.
(d) Includes customers attributable to an acquisition during third
quarter 1994. See "Management's Discussion and Analysis of Results
of Operations and Financial Condition - Volumes of Business."
For the Six
Months Ended
June 30, Year Ended December 31,
1995 1994 1993 1992 1991 1990
Ratio of Earnings to Fixed
Charges (e) 5.47 5.34 2.98 4.00 3.47 3.68
(e) For the purpose of this ratio: (i) earnings have been
calculated by adding income before income taxes
and extraordinary losses, gross interest expense, such portion
of rental expense representative of the
interest factor on such rentals and equity in losses from less-
than-50%-owned investments (accounted
for under the equity method of accounting) less the excess of
earnings over distributions from less-
than-50%-owned investments (accounted for under the equity
method of accounting); (ii) fixed charges
are comprised of gross interest expense and such portion of
rental expense representative of the interest
factor on such rentals.
BELLSOUTH CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
(Dollars in Millions, Except Per Share Amounts)
Management's Discussion and Analysis of Results of Operations and
Financial Condition (MD&A) should be read in conjunction with MD&A in
BellSouth Corporation's (BellSouth) latest annual report on Form 10-K and
previous quarterly report on Form 10-Q.
BellSouth is a holding company headquartered in Atlanta, Georgia
whose operating telephone company subsidiary, BellSouth
Telecommunications, Inc. (BellSouth Telecommunications), serves, in
the aggregate, approximately two-thirds of the population and one-
half of the territory within Alabama, Florida, Georgia, Kentucky,
Louisiana, Mississippi, North Carolina, South Carolina and
Tennessee. BellSouth Telecommunications primarily provides local
exchange and toll communications services within court-defined
geographic areas, called Local Access and Transport Areas (LATAs),
and provides network access services to enable interLATA
communications using the long-distance facilities of interexchange
carriers. Through subsidiaries, other telecommunications services
and products are provided both inside and outside the nine-state
BellSouth Telecommunications region. BellSouth Enterprises, Inc.
(BellSouth Enterprises), another wholly-owned subsidiary, owns
businesses providing domestic and international wireless
communications services and advertising and publishing products.
Approximately 71% and 73% of BellSouth's Total Operating Revenues
for the six-month periods ended June 30, 1995 and 1994,
respectively, and a greater portion of Income Before Extraordinary
Losses were from wireline services provided by BellSouth
Telecommunications. Charges for local, access and toll services
for the six-month period ended June 30, 1995 accounted for
approximately 58%, 33% and 9%, respectively, of the wireline
revenues discussed above. Revenues from wireless communications
services and directory advertising and publishing services
accounted for approximately 14% and 9%, respectively, of Total
Operating Revenues for the six months ended June 30, 1995. The
remainder of such revenues was derived principally from other
nonregulated services provided by BellSouth Telecommunications.
RESULTS OF OPERATIONS
For the Three For the Six
Months Ended June Months Ended June
30, 30,
1995 1994 1995 1994
Income Before
Extraordinary Losses $556.9 $516.5 $1,104.0 $1,101.8
Extraordinary Loss for
Discontinuance of SFAS
No. 71, net of tax (2,727.7) -- (2,717.7) --
Extraordinary Loss on
Early Extinguishment of
Debt, net of tax (15.8) -- (15.8) --
Net Income (Loss) ($2,176.6) $516.5 ($1,629.5) $1,101.8
Earnings (Loss) Per Share:
Income Before
Extraordinary Losses $1.12 $1.04 $2.22 $2.22
Extraordinary Loss for
Discontinuance of SFAS
No. 71, net of tax (5.47) -- (5.47) --
Extraordinary Loss on
Early Exinguishment of
Debt, net of tax (.03) -- (.03) --
Earnings (Loss) Per Share $(4.38) $1.04 $(3.28) $2.22
For the three- and six-month periods ended June 30, 1995, Income
Before Extraordinary Losses increased by $40.4 (7.8%) and $2.2
(0.2%), respectively. The increases for both periods resulted
primarily from continued strong growth in key business volumes and
expense savings attributable to BellSouth Telecommunications'
restructuring plan begun in 1993. The increase for the six-month
period was substantially offset by the effect of a gain in first
quarter 1994 of $67.5 ($.14 per share) related to the sale of an
international cellular investment.
For a discussion of the second quarter 1995 extraordinary losses,
see "Extraordinary Losses" below and Note D to the Consolidated
Financial Statements.
Volumes of Business
The total number of access lines in service since June 30, 1994
increased by approximately 944,500 (4.8%) to 20,690,800, compared
to a 4.2% rate of increase for the same prior year period.
Business and residence access lines increased by 7.7% and 3.7%,
respectively, compared to growth rates of 6.6% and 3.4% in 1994.
The number of second residence lines, included in total residence
lines, increased by 212,700 (22.7%) to 1,150,000 and accounted for
approximately 41.6% and 22.5% of the overall increase in residence
access lines and total access lines, respectively, since June 30,
1994. The growth in all categories of access lines was primarily
attributable to continued economic improvement in the Southeast and
successful marketing programs.
Access minutes of use represent the volume of traffic carried by
interexchange carriers between LATAs, both interstate and
intrastate, using BellSouth Telecommunications' local facilities.
Total access minutes of use increased by 1,789.7 million (9.6%) and
3,393.7 million (9.3%) for the three- and six-month periods ended
June 30, 1995, respectively, compared to increases of 8.1% and 8.4%
for the same periods last year. The increase in access minutes of
use was primarily attributable to access line growth, promotions by
the interexchange carriers and intraLATA toll competition, which
has the effect of increasing access minutes of use while reducing
toll messages carried over BellSouth Telecommunications'
facilities. The growth rate in total minutes of use continues to
be negatively impacted by competition and the migration of
interexchange carriers to categories of service (e.g., special
access) that have a fixed charge as opposed to a volume-driven
charge and to high capacity services.
Toll messages are comprised of Message Telecommunications Service
and Wide Area Telecommunications Service. For the three- and six-
month periods ended June 30, 1995, toll messages decreased by 45.2
million (11.4%) and 61.8 million (7.9%), respectively, compared to
increases of 2.1% and 3.7% for the corresponding periods in 1994.
The decreases in 1995 were primarily attributable to the expansion
of local area calling plans in Florida, Kentucky, Mississippi and
South Carolina. These plans and future implementation of other
such plans in BellSouth Telecommunications' service region, coupled
with competition in the intraLATA toll market, will adversely
impact future toll message volumes. Local area calling plans and
the effects of competition result in the transfer of calls from
toll to local service and access categories, respectively, but the
corresponding revenues are not generally shifted at commensurate
rates.
Domestic cellular customers (equity-weighted) increased by 660,500
(36.6%) since June 30, 1994 to 2,464,300 due to continuing high
demand for wireless services. The overall penetration rate (number
of customers as a percentage of the total population in the service
territory) increased from 4.6% at June 30, 1994 to 6.1% at June 30,
1995. Total minutes of use have also continued to increase,
although average minutes of use per cellular customer declined
slightly due to the trend of increased penetration into lower-usage
market segments.
Since June 30, 1994, the number of international cellular customers
increased by 216,400 (81.8%) to 481,000. Growth in total minutes
of use for international cellular properties remained strong due to
demand stimulated by competitive programs, enhanced services and
underdeveloped land-line service.
Paging customers increased by 361,600 (27.3%) to 1,685,400 since
June 30, 1994 due primarily to the acquisition of the remaining 50%
ownership interest in a paging business, effective August 1, 1994,
and also to continued success of the retail distribution program.
Of the overall growth, approximately 210,000 customers were
attributable to the acquisition. Excluding the effect of the
acquisition, paging customers increased by approximately 151,600
(11.5%) since June 30, 1994.
Operating Revenues
Total Operating Revenues increased $262.4 (6.4%) and $436.8 (5.3%)
for the three- and six-month periods ended June 30, 1995,
respectively, when compared to the corresponding 1994 periods. The
components of Total Operating Revenues were as follows:
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
1995 1994 1995 1994
Local Service $1,793.4 $1,709.7 $3,561.7 $3,389.4
Interstate Access 805.6 765.0 1,600.7 1,567.4
Intrastate Access 227.0 230.4 453.1 460.5
Toll 265.7 300.4 546.6 600.6
Directory Advertising
and Publishing 389.0 396.3 742.2 741.1
Wireless Communications 623.1 494.4 1,223.0 948.3
Other Services 286.5 231.7 561.7 544.9
Total Operating Revenues $4,390.3 $4,127.9 $8,689.0 $8,252.2
Local Service revenues increased $83.7 (4.9%) and $172.3 (5.1%) for
the three- and six-month periods ended June 30, 1995, respectively,
as compared to the same 1994 periods. The increases for both
periods were due primarily to 4.8% growth in access lines in
service since June 30, 1994; increases for the three- and six-month
periods of $27 and $50, respectively, due to higher customer demand
for Touchstar and Custom Calling services; and the effect of
expanded local area calling plans. The increases for both periods
were partially offset by net rate reductions since June 30, 1994 of
approximately $39 and $52, respectively. Such rate reductions
include a $31 refund in Florida that had previously been accrued as
a reduction in Other Services revenues, pending determination of
the specific revenue category affected.
Interstate Access revenues increased $40.6 (5.3%) and $33.3 (2.1%)
for the three- and six-month periods ended June 30, 1995,
respectively, as compared to the same prior year periods. The
increases for both periods were attributable primarily to growth in
minutes of use of 8.2% and 7.9%, respectively and increases in end-
user charges of $12 and $24, respectively, attributable to growth
in the number of access lines in service. Also contributing were
increases of $13 and $18, respectively, due to higher demand for
special access services. The increases were partially offset by
net rate reductions since June 30, 1994, including revenue
deferrals under the Federal Communications Commission's (FCC)
current price cap plan, of approximately $6 and $44, respectively.
Intrastate Access revenues decreased $3.4 (1.5%) and $7.4 (1.6%)
for the three- and six-month periods ended June 30, 1995,
respectively, from the comparable 1994 periods. The decreases were
due primarily to rate reductions since June 30, 1994 of
approximately $25 and $54, respectively, principally in Florida.
The decreases were partially offset by growth in minutes of use of
14.7% and 13.9%, respectively.
Toll revenues decreased $34.7 (11.6%) and $54.0 (9.0%) for the
three- and six-month periods ended June 30, 1995, respectively,
when compared to the same prior year periods. The decreases were
primarily attributable to declines in toll messages of 11.4% and
7.9%, respectively, and net rate reductions since June 30, 1994 of
approximately $17 and $28, respectively. Such factors reflect the
the expansion of area calling plans and increased competition.
Directory Advertising and Publishing revenues were essentially
unchanged for the three- and six-month periods ended June 30, 1995
when compared to the same prior year periods, primarily reflecting
the impacts of changes in the issue dates of certain Yellow Pages
directories, which reduced revenues in the second quarter of 1995.
Wireless Communications revenues include revenues from the
consolidated wireless communications businesses (cellular and
paging within BellSouth Enterprises) as well as revenues from
interconnections by unaffiliated cellular carriers with BellSouth
Telecommunications' network. (BellSouth's interests in the net
income or loss of the unconsolidated wireless businesses within
BellSouth Enterprises, which are accounted for under the equity
method of accounting, are recorded in Other Income (Expense), net.)
Wireless Communications revenues increased $128.7 (26.0%) and
$274.7 (29.0%) for the three- and six-month periods ended June 30,
1995, respectively, when compared to the same periods last year.
The increases were primarily attributable to continued growth of
the customer base in domestic and international markets.
Other Services revenues are principally comprised of revenues from
customer premises equipment (CPE) sales and maintenance services,
billing and collection services and other nonregulated services
(primarily inside wire services) offered by BellSouth
Telecommunications. Other Services revenues increased $54.8
(23.7%) and $16.8 (3.1%) for the three- and six-month periods ended
June 30, 1995, respectively, when compared to the corresponding
1994 periods.
For both periods, the increases were attributable to reduced levels
of revenue reduction accruals related to potential sharing under
certain state regulatory plans, the effect of which increased Other
Services revenues by approximately $30, and the reclassification of
a $31 revenue reduction accrual to Local Service revenues, related
to a refund in Florida. The increases were also due in part to
approximately $10 and $21, respectively, resulting from higher
demand for voice messaging and inside wire services. The increases
were partially offset by $9 for accrual of a refund pending in
Georgia; $9 and $15 for the three- and six-month periods,
respectively, due to reduced demand for billing and collection
services; and, for the six-month period, by approximately $33
related to the sale in April 1994 of BellSouth Telecommunications'
out-of-region CPE sales and service operations.
Operating Expenses
Total Operating Expenses increased $167.6 (5.4%) and $258.9 (4.2%)
for the three- and six-month periods ended June 30, 1995,
respectively, compared to the same periods in 1994. The components
of Total Operating Expenses were as follows:
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
1995 1994 1995 1994
Depreciation and
Amortization $859.0 $800.7 $1,693.4 $1,599.1
Other Operating Expenses:
Cost of Services and
Products 1,484.8 1,492.3 2,987.9 2,984.6
Selling, General
and Administrative 950.1 833.3 1,816.0 1,654.7
2,434.9 2,325.6 4,803.9 4,639.3
Total Operating
Expenses $3,293.9 $3,126.3 $6,497.3 $6,238.4
Depreciation and Amortization increased $58.3 (7.3%) and $94.3
(5.9%) for the three- and six-month periods ended June 30, 1995,
respectively, compared to the same periods in 1994. The increases
were due primarily to higher average levels of property, plant and
equipment since June 30, 1994 resulting from continued growth in
the customer base for wireless and wireline services and continued
modernization of the networks. The increases were also due in part
to depreciation rate adjustments in several states served by
BellSouth Telecommunications.
For a discussion of the impact of discontinuance of SFAS No. 71 on
depreciation expense in future periods, see "Extraordinary Losses -
Discontinuance of SFAS No. 71" below.
Other Operating Expenses are comprised of Cost of Services and
Products and Selling, General and Administrative. Cost of Services
and Products includes employee and employee-related expenses
associated with network repair and maintenance, material and
supplies expense, cost of tangible goods sold and other expenses
associated with providing services. Selling, General and
Administrative includes expenses related to sales activities such
as salaries, commissions, benefits, travel, marketing and
advertising expenses and administrative expenses.
Other Operating Expenses increased $109.3 (4.7%) and $164.6 (3.5%)
for the three- and six-month periods ended June 30, 1995,
respectively, when compared to the corresponding 1994 periods. The
increases for the periods were primarily attributable to increased
expenses of $101 and $194, respectively, related to growth in the
wireless communications customer base, reflecting additional
marketing and operational costs associated with higher levels of
sales and expanded operations. At the core wireline business,
increases related primarily to volume growth were substantially
offset by decreases of approximately $52 and $89, respectively, for
labor costs, including expenses for employee benefits. The
decreases in such labor costs reflect employee reductions since
June 30, 1994 attributable to the restructuring plan begun in 1993,
partially offset by annual compensation increases for management
and represented employees. For the six-month period, the increase
was partially offset by a decrease of $34 at BellSouth
Telecommunications' CPE business, primarily attributable to the
sale in April 1994 of the out-of-region CPE sales and service
operations.
Other Income Statement Items
The other income statement components were as follows:
For the Three For the Six
Months Ended June Months Ended June
30, 30,
1995 1994 1995 1994
Interest Expense $186.3 $154.0 $360.3 $318.9
Other Income
(Expense), net 9.0 (11.7) (1.7) 47.8
Provision for
Income Tax 362.2 319.4 725.7 640.9
Interest Expense increased $32.3 (21.0%) and $41.4 (13.0%) for the
three- and six- month periods ended June 30, 1995, respectively,
compared to the same periods last year. The increases were
primarily attributable to higher average interest rates on short-
term borrowings.
Other Income, net increased $20.7 and decreased $49.5 for the three-
and six-month periods ended June 30, 1995, respectively, compared
to the corresponding periods in 1994. The increase for the three-
month period was due primarily to $13 related to changes in
minority interests in wireless and developing businesses and $6 in
increased interest income. The decrease for the six-month period
was due to the inclusion in first quarter 1994 of a $67.5 gain on
the sale of an international cellular investment and increased
losses in 1995 of approximately $23 from unconsolidated affiliates,
primarily developing cellular operations in Germany and Israel.
The decrease for the six-month period was partially offset by a $15
increase in interest income and the $13 increase related to changes
in minority interests.
Provision for Income Taxes increased $42.8 (13.4%) and $84.8
(13.2%) for the three-and six-month periods ended June 30, 1995,
respectively, over the comparable 1994 periods. For the three- and
six-month periods ended June 30, 1995, BellSouth's effective tax
rates were 39.4% and 39.7%, respectively, compared to 38.2% and
36.8%, respectively, for the same periods last year. The lower
effective tax rate for such six-month period in 1994 reflects the
benefit of capital loss carryforwards used in connection with the
sale in first quarter 1994 of an international cellular investment.
Extraordinary Losses
Discontinuance of SFAS No. 71. As a result of its continuing
regulatory and marketplace assessments, BellSouth
Telecommunications has concluded that it is no longer appropriate
to prepare its external financial results using the accounting
method required for regulated enterprises. BellSouth
Telecommunications believes that based on the changing regulatory
environment and the increasing level of competition, it was
required to discontinue SFAS No. 71 for financial reporting
purposes. Discontinuance was required because most of BellSouth
Telecommunications' revenues will be generated under market-based
pricing and because it is doubtful that regulated rates sufficient
to recover the net book value of telephone plant could be charged
to and collected from customers. Accordingly, in the second
quarter, BellSouth Telecommunications discontinued application of
SFAS No. 71 and recorded a non-cash extraordinary charge of
$2,717.7 (net of a deferred tax benefit of $1,731.3). The
extraordinary charge reflects $3,002 (after tax) to reduce the
recorded value of long lived telephone plant and equipment to the
level appropriate for non-regulated enterprises. The overall
charge was partially offset by $194 related to the method by which
BellSouth Telecommunications reports its directory publishing
revenues, $71 related to the elimination of regulatory assets and
liabilities and $19 for the partial acceleration of unamortized
investment tax credits associated with the reductions in asset
carrying values and in asset lives.
Recent changes in its regulatory framework and the simultaneous
elimination of legal and regulatory barriers for its competitors
both support discontinuance of SFAS No. 71.
In the regulatory arena, obtaining price regulation has been and
continues to be a cornerstone in BellSouth Telecommunications'
corporate strategy. Due in part to its actions in implementing
this strategy, changes in the regulatory framework are now
occurring (see "Regulatory and Competitive Environment - State
Regulation"). As a result of such changes, a significant portion
of BellSouth Telecommunications' revenue will no longer be
regulated based on the recovery of specific costs. Furthermore,
BellSouth Telecommunications expects that competition in its local
exchange markets will accelerate. The removal of legal and
regulatory barriers is expected to encourage potential competitors
to accelerate deployment of competing networks to either compete
directly for local service or to bypass the BellSouth
Telecommunications network for long distance access. Potential
competitors have continued to make investments in wireless
licenses, cable properties and enhanced interexchange networks,
which serves as further evidence of increased competition.
In connection with the discontinuance of SFAS No. 71, the average
depreciable lives of significant categories of long lived telephone
plant will be reduced to more closely reflect the economic and
technological lives. As a result of such shorter lives applicable
to both existing and newly acquired assets, BellSouth expects that
depreciation expense will increase about $22 in 1995 and about $70
in 1996. However, the impact on net income in these time periods
is not expected to be significant because of the elimination of the
amortization of regulatory assets and the acceleration of
unamortized investment tax credits due to the shorter lives of
telephone plant.
See Note D to the Consolidated Financial Statements.
Early Extinguishment of Debt. During the second quarter, BellSouth
Telecommunications recognized an extraordinary loss of $15.8 (net
of taxes of $10.0) related to the early extinguishment of an
outstanding debt issue. See Note D to the Consolidated Financial
Statements.
FINANCIAL CONDITION
BellSouth uses the net cash generated from its operations and
external financing to fund capital expenditures, pay dividends and
invest in and operate its existing operations and new businesses.
While current liabilities exceeded current assets at both June 30,
1995 and December 31, 1994, BellSouth's sources of funds --
primarily from operations and, to the extent necessary, from
readily available external financing arrangements -- are sufficient
to meet all current obligations on a timely basis. In addition,
BellSouth believes such sources of funds will be sufficient to meet
the needs of its business for the foreseeable future.
For the Six
Months Ended
June 30,
1995 1994
Net Cash Provided by Operating
Activities $2,503.3 $2,606.5
Operating Activities. Net cash provided by operating activities
decreased $103.2 (4.0%) in the first six months of 1995 compared
with the same period in 1994. The decrease resulted primarily from
a reduction of accounts payable and other current liabilities
totalling $382; such reduction was partially offset by an increase
of $272 in operating income excluding depreciation and
amortization.
For the Six
Months Ended
June 30,
1995 1994
Net Cash Used for Investing
Activities ($2,197.4) ($1,810.0)
Investing Activities. BellSouth's primary use of capital resources
continues to be for capital expenditures to support development of
the wireline and wireless networks. Net cash used for investing
activities increased $387.4 (21.4%) in the first six months of 1995
compared to the corresponding 1994 period. The increase was
primarily due to higher capital expenditures of $203 related to
network development, the inclusion in 1994 of approximately $130
from the sale of an international investment and other businesses
and the purchase in 1995 of PCS licenses from the FCC for $82.
Internal sources provided substantially all cash required for
capital expenditures in the first six months of 1995. For the
remainder of 1995, BellSouth expects to continue to finance capital
expenditures primarily through internally generated funds, and, to
the extent necessary, from external sources.
For the Six
Months Ended
June 30,
1995 1994
Net Cash Used for Financing
Activities ($401.1) ($520.4)
Financing Activities. Net cash used for financing activities
decreased $119.3 (22.9%) in first six months of 1995 compared with
the same period last year. The decrease reflects higher levels of
proceeds from net long-term borrowing activity partially offset by
lower levels of proceeds from net short-term borrowing activity.
During second quarter 1995, BellSouth issued $500 of long-term debt
and, with the net proceeds, refinanced outstanding short-term debt.
During the same period, BellSouth issued an additional $300 of long-
term debt and refinanced an outstanding long-term debenture issue
(see Note D to the Consolidated Financial Statements). Additional
refinancings of both short- and long-term debt are possible during
the remainder of the year depending on prevailing market interest
rates. As of July 31, 1995, shelf registration statements were on
file with the Securities and Exchange Commission under which
$1,727.3 of long-term debt securities could be publicly offered.
BellSouth's debt to total capitalization ratio increased from 39.3%
at December 31, 1994, to 44.5% at June 30, 1995. The increase was
primarily caused by the reduction in equity due to the
extraordinary loss from the discontinuance of SFAS No. 71 .
RESTRUCTURING OF TELEPHONE OPERATIONS
In the fourth quarter of 1993, BellSouth Telecommunications
recognized a $1,136.4 restructuring charge in connection with a
plan to redesign, consolidate and streamline the fundamental
processes and work activities in its telephone operations. The
restructuring is being undertaken in response to an increasingly
competitive business environment. Upon completion, restructuring of
the telephone operations is expected to improve overall
responsiveness to customer needs and reduce costs.
At June 30, 1995, the remaining liability associated with the 1993
restructuring plan was $329.9, all of which was classified as
current. Since inception of the restructuring plan, total employee
reductions were approximately 6,600, including 4,500 since June 30,
1994. As a result of this reduction of 4,500 employees, operating
expenses for the three- and six- month periods ended June 30, 1995
were reduced by approximately $50 and $100, respectively.
A summary of employee reductions and expenditures through June 30,
1995 under the 1993 restructuring plan is as follows:
Second Year-
Quarter to-Date Year Year
1995 1995 1994 1993 Total
Employee Reductions 1,200 1,400 3,900 1,300 6,600
Expenditures By Component:
Consolidation and
Elination of Operations $80.8 $109.1 $164.6 $14.7 $288.4
Systems 55.7 99.0 170.3 --- 269.3
Employee Separation 37.7 76.7 133.8 38.3 248.8
Total $174.2 $284.8 $468.7 $53.0 $806.5
Expenditures By Type:
Cash $159.8 $253.7 $390.2 $53.0 $696.9
Non-Cash 14.4 31.1 78.5 --- 109.6
Total $174.2 $284.8 $468.7 $53.0 $806.5
Capital Expenditures (not
included in above
expenditures) $54.6 $84.1 $203.6 --- $287.7
BellSouth Telecommunications expects to substantially complete the
1993 restructuring plan activities in 1995. In connection with the
1993 plan, total employee reductions in 1995 are projected to be
approximately 5,000, including the reductions of 200 and 1,200
which occurred in the first and second quarters, respectively.
ADDITIONAL WORKFORCE REDUCTIONS
In May 1995, BellSouth Telecommunications announced plans to reduce
its work force by an additional 9,000 to 11,000 employees over the
next two years. These employee reductions, which are in addition
to the employee reductions still pending under the 1993
restructuring plan (discussed above), are necessary to enable
BellSouth Telecommunications to effectively address the rapid
development of competition in its nine-state region. Planned
activities to facilitate these additional employee reductions will
include significant changes in the company's staff support
operations and business processes.
The specific financial impacts are currently not estimable; the
initial cost of such reductions will be recognized by the end of
1995 when the actual number and classification of employees
affected and the final terms and conditions of related separation
benefit plans are determined. As future process improvement plans
are identified and finalized, further employee reductions are
expected.
REGULATORY AND COMPETITIVE ENVIRONMENT
State Regulation
Tennessee. In June, a law was enacted which authorizes local
exchange competition in BellSouth Telecommunications' service areas
and allows qualified service providers to elect price regulation.
As permitted under the provisions of the law, BellSouth
Telecommunications filed an application for a price regulation plan
to be effective October 1, 1995. Under the terms of such plan, the
rates in effect on October 1, 1995 for basic services, which
include residence and business lines and other defined services,
would be capped for four years, after which an inflation-based
formula will be used to change basic rates. The rates in effect on
October 1, 1995 for all services other than basic services remain
in effect upon implementation of the price regulation plan, with
subsequent annual rate adjustments subject to an inflation-based
formula.
An interexchange carrier has filed pleadings with the Tennessee
Commission to block implementation of the plan. A decision is
pending.
Several companies have been approved by the Tennessee Commission to
provide various services, including local exchange and exchange
access, in competition with BellSouth Telecommunications.
Florida. In June, a law was enacted which, effective January 1,
1996, permits local exchange competition in BellSouth
Telecommunications' service areas. The law also allows qualified
service providers to elect price regulation, effective at the later
of January 1, 1996 or such time that an alternative local exchange
carrier is approved to provide services in BellSouth
Telecommunications' territory. Under price regulation, prices for
basic services, which are flat-rate residential and single-line
business local exchange services and other defined services, will
be capped for five years, after which an inflation-based formula
will be used to change basic rates. Prices for certain non-basic
services, including multi-line business service, will be capped for
three years at the rates in effect on July 1, 1995; prices for
other non-basic services may be adjusted annually subject to
defined limitations. The price regulation provisions also provide
that intrastate switched access rates will decrease by 5% annually
until such rates are at parity with interstate switched access
rates effective in 1994.
While BellSouth Telecommunications is eligible to elect price
regulation, it must also comply with the provisions of a previously-
disclosed settlement reached with Florida's Office of Public
Counsel in January 1994. Such settlement provides for scheduled
rate reductions of $80 in October 1995 and $84 in October 1996 as
well as the continuation of current earnings sharing provisions
through 1996 or 1997, subject to defined terms in the settlement.
BellSouth Telecommunications expects to file with the Florida
Commission later in 1995 a notice of election for price regulation.
Several companies have filed applications with the Florida
Commission to provide various services, including local exchange
and exchange access, in competition with BellSouth
Telecommunications.
Georgia. In June, the Georgia Public Service Commission, after a
review of BellSouth Telecommunications' rates and charges, ordered
BellSouth Telecommunications to refund $9 to existing customers and
reduce rates prospectively by $33. Of such $33, approximately $12
had been previously implemented or scheduled; the remaining $21
will be applied to intrastate switched access rates. In August,
the Georgia Commission granted the motion of the Consumers' Utility
Council to reconsider this order. A decision is pending.
In July, BellSouth Telecommunications filed an election for
alternative regulation with the Georgia Commission, to be effective
on August 5, 1995. Under alternative regulation, basic residence
and single-line business rates in effect on the date the company
becomes subject to alternative regulation will be capped for five
years, after which an inflation-based formula will be used to
change rates. Rates for intrastate switched access services will
be no higher than the rates charged for interstate switched access
services. As a result of the rate reductions discussed above, such
intrastate rates have been reduced below the required level. Also,
as of July 1995, competition for local exchange services in areas
served by BellSouth Telecommunications is authorized.
An interexchange carrier has requested that the Georgia Commission
stay BellSouth Telecommunications' election of alternative
regulation. A decision is pending.
Several companies have filed applications to provide various
services, including local exchange and exchange access, in
competition with BellSouth Telecommunications. The Georgia
Commission has announced it will conduct hearings with respect to
these applications; however, the dates of such hearings have not
been scheduled. In addition, at least one other company has filed
an application to resell local exchange services in Georgia.
Alabama. In June, a law was enacted which permits the Alabama
Public Service Commission to authorize alternative methods of
regulation for local exchange carriers, including BellSouth
Telecommunications. BellSouth Telecommunications has filed a price
regulation plan with the Alabama Commission. A decision is
pending.
Kentucky. In July, the Kentucky Public Service Commission approved
BellSouth Telecommunications' previously-filed price regulation
plan, with certain modifications.
In connection with approval of the plan, which is effective
immediately, the Kentucky Commission ordered reductions in rates
for access, toll and residential touch-tone services and other
defined charges, which together aggregate $29. BellSouth
Telecommunications is required to file revised tariffs reflecting
the provisions of the approved plan by August 21, 1995.
Under the plan, after giving effect to the rate reductions
discussed above, basic residential rates are capped for three
years, intrastate switched access rates are limited to rates in
effect for interstate switched access and prices for services
deemed competitive under the plan will be based solely on market
factors.
The Kentucky Commission has also opened a docket to consider local
exchange competition.
North Carolina. As permitted under the law enacted in April,
BellSouth Telecommunications expects to file in 1995 a price
regulation plan for approval by the North Carolina Utilities
Commission. Other companies have filed applications with the North
Carolina Commission to provide local exchange and exchange access
services in competition with BellSouth Telecommunications.
Mississippi. The Mississippi Public Service Commission has opened
a docket to consider a properly structured price regulation plan.
A decision is pending.
Federal Legislation
The U. S. Senate and House of Representatives have each passed
bills, S.652 and H.R. 1555, respectively, which could, if enacted
into law, significantly affect BellSouth's business operations and
opportunities. Among other things, such bills include, subject to
defined terms and limitations, provisions that open local exchange
markets to competition while allowing Bell Holding Companies,
including BellSouth, to provide interLATA (long distance) service.
The ultimate disposition of this matter is uncertain, pending
reconciliation of differences in the bills' provisions by a joint
committee of the House and Senate; approval of a revised bill by
both the House and Senate; and signature by the President.
BUSINESS DEVELOPMENTS
CWA Working Agreement
On August 8, 1995, BellSouth reached a tentative agreement with the
Communications Workers of America (CWA) on new three-year contracts
covering approximately 57,000 employees. The contracts, which are
subject to ratification by CWA members, include basic wage increases
of 10.9% (compounded) over three years. In addition, the agreement provides
a cash payment of one thousand one hundred dollars to each eligible
employee upon ratification and payments of one thousand one hundred dollars
per eligible employee in either cash or BellSouth stock, at the option of
the employee, on the 1996 and 1997 contract anniversary dates. Other terms of
the agreement include discontinuance of annual wage adjustments based on cost
of living increases and discontinuance of annual incentive payments.
Cellular Reseller Agreement
In August, BellSouth Cellular Corp. (BCC), a wholly-owned
subsidiary of BellSouth, and MCI Telecommunications Corporation
(MCI) signed an agreement to allow MCI to resell cellular service
provided by BCC in all BCC-controlled markets. According to the
agreement, MCI will be responsible for all billing, customer
service, marketing and advertising involved in selling the service,
while BCC will provide the network infrastructure for carrying the
cellular traffic.
PART II -- OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
BellSouth's 1995 Annual Meeting of Shareholders was held on April
24, 1995. At the meeting, the following items were submitted to a
vote of the shareholders:
Election of Directors:
The following directors were elected with not less than
97.9% of the votes cast to serve terms expiring in:
1998:
For Withheld
James H. Blanchard 389,771,303 6,999,146
Armando M. Codina 389,491,738 7,278,711
J. Tylee Wilson 389,287,116 7,483,333
1997:
For Withheld
Robin B. Smith 388,555,130 8,215,319
Ratification of Coopers & Lybrand L.L.P. as Independent Auditors:
For Against Abstain
390,364,218 3,458,087 2,948,114
Director Proposals:
Stock Plan:
For Against Abstain Broker Non-
Votes
295,593,058 51,625,383 8,519,795 41,032,213
Non-Employee Director Stock Plan:
For Against Abstain Broker Non-
Votes
286,533,019 59,516,821 9,688,396 41,032,213
Shareholder Proposals:
Limitation on Executive Compensation :
For Against Abstain Broker Non-
Votes
51,207,362 293,298,204 11,232,670 41,032,213
Revised Executive Incentive Award :
For Against Abstain Broker Non-
Votes
45,829,249 295,281,425 14,627,562 41,032,213
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit
Number
4a No instrument which defines the rights of holders of long
and intermediate term debt of BellSouth Corporation is
filed herewith pursuant to Regulation S-K, Item
601(b)(4)(iii)(A). Pursuant to this regulation,
BellSouth Corporation hereby agrees to furnish a copy of
any such instrument to the SEC upon request.
10j-1 BellSouth Corporation Supplemental Executive
Retirement Plan as amended May 15, 1995.
10t-5 Amendment dated March 3, 1995 to the BellSouth
Personal Retirement Account Pension Plan.
10u-1 BellSouth Corporation Trust Under Executive Plan(s)
as amended April 28, 1995.
10v-1 BellSouth Telecommunications, Inc. Trust Under
Executive Benefit Plan(s) as amended April 28, 1995
10w-1 BellSouth Corporation Trust Under Board of Directors
Benefit Plan(s) as amended April 28, 1995.
10x-1 BellSouth Telecommunications, Inc. Trust Under Board
of Directors Benefit Plan(s) as amended April 28, 1995.
10y-1 BellSouth Enterprises, Inc. Trust Under Executive
Benefit Plan(s) as amended April 28, 1995.
10aa-1 BellSouth Nonqualified Deferred Income Plan as
amended May 15, 1995.
10bb BellSouth Corporation Stock Plan
11 Computation of Earnings Per Common Share.
12 Computation of Ratio of Earnings to Fixed Charges.
27 Financial Data Schedule.
(b) Reports on Form 8-K:
May 18, 1995 Workforce Reduction
June 30, 1995 Discontinuance of SFAS No. 71
July 20, 1995 Second Quarter 1995 Earnings Release
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
BELLSOUTH CORPORATION
By /s/ Ronald M. Dykes
RONALD M. DYKES
Vice President, Chief Financial Officer and Comptroller
(Principal Financial and Accounting Officer)
August 10, 1995
EXHIBIT INDEX
Exhibit
Number
10j-1 BellSouth Corporation Supplemental Executive
Retirement Plan as amended May 15, 1995.
10t-5 Amendment dated March 3, 1995 to the BellSouth
Personal Retirement Account Pension Plan.
10u-1 BellSouth Corporation Trust Under Executive Plan(s)
as amended April 28, 1995.
10v-1 BellSouth Telecommunications, Inc. Trust Under
Executive Benefit Plan(s) as amended April 28, 1995.
10w-1 BellSouth Corporation Trust Under Board of Directors
Benefit Plan(s) as amended April 28, 1995.
10x-1 BellSouth Telecommunications, Inc. Trust Under Board
of Directors Benefit Plan(s) as amended April 28, 1995.
10y-1 BellSouth Enterprises, Inc. Trust Under Executive
Benefit Plan(s) as amended April 28, 1995.
10aa-1 BellSouth Nonqualified Deferred Income Plan as
amended May 15, 1995.
10bb BellSouth Corporation Stock Plan
11 Computation of Earnings Per Common Share.
12 Computation of Ratio of Earnings to Fixed Charges.
27 Financial Data Schedule.
5
0040783.01
BELLSOUTH CORPORATION
SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN
TABLE OF CONTENTS
SECTION 1. STATEMENT OF PURPOSE 1
SECTION 2. DEFINITIONS 1
Active Service 1
ADEA 1
Affiliate 1
BellSouth Corporation; Company 1
Chairman of the Board; President; Board of Directors;
Board 1
Claim Review Committee 1
Code 1
Committee 1
Executive 1
Former Affiliate 2
Included Earnings 2
Interchange Company 2
Interchange Company Committee 2
Lump Sum Payments 2
Mandatory Retirement Age 2
Net Credited Service 2
Participants 2
Participating Company 2
Participating Company Claim Review Committee 2
Participating Company Committee 2
Pension Act 3
Pension Commencement Date 3
Pension Plan 3
Plan 3
Predecessor Plan 3
Short Term Incentive Award 3
Standard Annual Incentive Award 3
Standard Short Term Incentive Award; Standard Award 3
Vesting Service Credit 3
SECTION 3. ADMINISTRATION 3
SECTION 4. BENEFITS 4
Participation 4
Mandatory Retirement Age 5
Eligibility 5
Service Benefit 5
Deferred Benefit 5
Disability Pension 6
Benefit Amounts 6
Computation of Benefit 6
(i)
Benefit Formula 6
Special Rules 7
Included Earnings 8
Alternative VEER Benefit Formula 9
Minimum Benefit 10
Early Retirement Discount 10
Deferred Benefit Amount 11
Automatic Survivor Annuity 11
Minimum Survivor Benefit 11
Special Increases 12
Monthly Payments 12
Duration of Payments 12
Treatment During Subsequent Employment 13
SECTION 5. DEATH BENEFITS 13
Eligibility and Administration 13
Source of Payments 13
SECTION 6. GENERAL PROVISIONS 14
Effective Date 14
Rights to Benefit 14
Involuntary Termination 14
Governing Law 15
Assignment or Alienation 15
Determination of Eligibility 15
Option During Disability 15
Break in Service 15
Leaves of Absence 15
Special Classification 16
Method of Payment 16
Amounts Accrued Prior to Death 16
Payments to Others 16
Claims Release 16
Damage Claims or Suits 16
Judgment or Settlement 17
Payment Under Law 17
Plan Termination 17
SECTION 7. INTERCHANGE OF BENEFIT OBLIGATION 17
SECTION 8. PLAN MODIFICATION 18
(ii)
BELLSOUTH CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(as amended and restated November 28, 1994)
BELLSOUTH CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
SECTION 1. STATEMENT OF PURPOSE
The purpose of the BellSouth Corporation Supplemental Executive
Retirement Plan is to provide supplementary pension payments,
commencing January 1, 1984, to Executives and certain other
employees of BellSouth Corporation and certain subsidiaries of
BellSouth Corporation, hereinafter referred to as Participants,
who retire or terminate from service, or in the event of death,
to their annuitant. These pension and death benefits are
predicated on a percent of the Participant's Included Earnings,
offset by retirement benefits payable from the Pension Plan and
actual Primary Social Security benefits.
SECTION 2. DEFINITIONS
1. The term "Active Service " shall mean active employment but
includes any time the Participant was absent on account of
disability and receiving sickness or accident disability
benefits under his or her Company's or any Participating
Company's Sickness and Accident Disability Plan.
2. The term "ADEA " shall mean the Age Discrimination
in Employment Act of 1967, as amended from time to
time.
3. The word "Affiliate " shall mean any corporation, other than
BellSouth Corporation (or a Participating Company), which is
a member of the same controlled group of corporations (within
the meaning of Code Section 414(b)) as BellSouth Corporation
and any trade or business (whether or not incorporated) which
is under common control with BellSouth Corporation within the
meaning of Code Section 414(c).
4. The words "BellSouth Corporation " and "Company" shall mean
BellSouth Corporation, a Georgia corporation, or its
successors.
5. The words "Chairman of the Board ", "President " and "Board
of Directors " or "Board " shall mean the Chairman of the
Board of Directors, President and Board of Directors,
respectively, of the Company.
6. The term "Claim Review Committee" shall have the same meaning
as is attributed to such term under the Pension Plan.
7. The word "Code " shall mean the Internal Revenue Code of
1986, as amended from time to time.
8. The word "Committee " shall mean the Employees' Benefit
Committee appointed by the Company to administer the Pension
Plan.
9. The term "Executive " shall mean an employee on the active
roll of any Participating Company on or after January 1, 1984
who holds a position that a Participating Company's Board of
Directors has designated to be within that company's
executive compensation group.
10. The term "Former Affiliate" shall have the same meaning as is
attributed to such term under the Pension Plan.
11. The term "Included Earnings " shall have the meaning ascribed
to such term in Section 4.4(a)(ii) of this Plan.
12. The term "Interchange Company " shall have the same meaning
as is attributed to such term under the Pension Plan.
13. The term "Interchange Company Committee " shall mean the
Employees' Benefit Committee appointed by the Interchange
Company to administer the Interchange Company Management
Pension Plan.
14. The term "Lump Sum Payments " shall mean those lump sum
payments and other special payments paid annually to a
Participant other than an Executive which are included in the
calculation of pension benefits under the Pension Plan.
15. The term "Mandatory Retirement Age " shall have the same
meaning as is #
attributed to such term under the Pension Plan. #
16. The term "Net Credited Service", except as expressly limited
or otherwise provided in %
this Plan, shall have the same meaning as is attributed to
such term under the Pension |
Plan and shall be interpreted in the same manner as that
term is interpreted for purposes %
of the Pension Plan.
17. The term "Participants " shall mean all Executives as defined
herein, as well
as all other employees designated by the Chief Executive Officer
of *
BellSouth Corporation or his or her delegated representative. *
18. The term "Participating Company " shall mean BellSouth
Corporation, and each subsidiary of BellSouth Corporation
which shall have determined with the concurrence of the
Committee to participate in the Plan.
19. The term "Participating Company Claim Review Committee"
shall mean a committee appointed by a Participating Company,
other than BellSouth Corporation, having the powers and
authorities of the Claim Review Committee with respect to
Participants from such Participating Company.
20. The term "Participating Company Committee " shall mean the
Employees' Benefit Committee appointed by each Participating
Company, other than BellSouth Corporation, to administer the
Pension Plan in such Participating Company in accordance
with the provisions of Section 3.
*Text Revised 04/11/86
#Text Revised 08/12/88
%Text Added 11/28/94
21. The words "Pension Act " shall mean the Employee Retirement
Income Security Act of 1974 (ERISA) as it may be amended
from time to time.
22. The term "Pension Commencement Date" shall have the same
meaning as is attributed *
to such term under the Pension Plan. *
23. The term "Pension Plan " shall mean the BellSouth Personal
Retirement Account Pension Plan.
24. The word "Plan " shall mean this BellSouth Corporation
Supplemental Executive Retirement Plan.
25. The term "Predecessor Plan " shall mean the Bell System
Senior Management Non Qualified Pension Plan as such Plan
existed prior to January 1, 1984.
26. The term "Short Term Incentive Award " shall mean the award
made annually to an Executive pursuant to his or her
company's Short Term Incentive Plan or comparable or
successor plan.
27. The term "Standard Annual Incentive Award" shall mean an
amount determined periodically for each Participant (other
than an Executive) upon which an actual annual team award,
or award under a comparable or successor program, is based.
28. The terms "Standard Short Term Incentive Award " and
"Standard Award" shall mean an amount determined
periodically for each Executive upon which an actual Short
Term Incentive Award is based.
29. The term "Vesting Service Credit ", except as expressly
limited or otherwise provided *
in this Plan, shall have the same meaning as is attributed
to such term under the |
Pension Plan and shall be interpreted in the same manner
as that term is interpreted for *
purposes of the Pension Plan.
30. The use in this Plan of personal pronouns of the masculine
gender is intended to include both the masculine and
feminine genders.
SECTION 3. ADMINISTRATION
1. The Company shall be the Plan Administrator and the Plan
Sponsor of the Plan as those terms are defined in the
Pension Act. The Company may allocate all or any part of
its responsibilities for the operation and administration of
the Plan, except to the extent expressly prohibited by the
Plan's terms, including allocation of all or any part of its
responsibilities to Participating Companies, Participating
Company Committees or Participating Company Claim Review
Committees. The Company may designate in writing other
persons to carry out its responsibilities under the Plan,
and may employ persons to advise it with regard to such
responsibilities. The Company, acting through the
Committee, the Claim Review Committee, a Participating
Company, a Participating Company Committee, a Participating
Company Claim Review Committee or any other
*Text Added 11/28/94
person designated by the Company, as applicable, shall
have the exclusive responsibility and complete discretionary
authority to interpret the terms of the Plan (including the
power to construe ambiguous or uncertain terms), to control
the operation and administration of the Plan and to resolve
all questions in connection therewith, with all powers
necessary to enable it to properly carry out such
responsibilities, including without limitation the powers
and responsibilities set forth in this Section 3, and its
determinations shall be final, conclusive and binding on all
persons.
2. (a) The procedures for the adoption of by-laws, and
rules of procedure, for the employment of a Secretary
and assistants, and for the appointment of Participating
Company Committees with authority with respect to claims
of employees, both within the Company and the
Participating Companies, shall be the same as are set
forth in the Pension Plan.
(b) The Committee and each Participating Company
Committee shall have the power to determine status,
coverage, eligibility for and the amount of benefits
under the Plan and all questions arising in connection
therewith, to grant or deny claims for benefits under the
Plan with respect to employees of each Participating
Company, respectively, and shall have the power to
authorize disbursements according to this Plan. Adequate
notice, pursuant to applicable law and prescribed
Participating Company practices, shall be provided in
writing to any Participant or beneficiary whose claim has
been denied, setting forth the specific reasons for such
denial.
3. The review and appeal procedures for Participants and
beneficiaries whose claims have been denied shall be the
procedures set forth in the summary plan description for
Pension Plan and shall be administered and interpreted in
accordance with Section 503 of the Pension Act and procedures
in effect under the Pension Plan.
4. The expenses of the Committee in administering the Plan shall
be borne by the Company and the expenses of each
Participating Company Committee shall be borne by the related
Participating Company.
5. The Company, the Committee, each Participating Company and
each Participating Company Committee are each a named
fiduciary as that term is used in the Pension Act with
respect to the particular duties and responsibilities herein
provided to be allocated to each of them.
6. Any person or group of persons may serve in more than one
fiduciary capacity with respect to the Plan.
SECTION 4. BENEFITS
1. Participation
All persons included in the definition of the term
"Participants" are deemed participants in this Plan. In
addition, each individual who has participated in this Plan but
who has ceased to be included in the definition of
"Participants", whether due to demotion, termination or
otherwise, shall continue to be a Participant in this Plan,
except for purposes of accruing additional benefits
under Section 4.4, and shall be entitled to a benefit under this
Plan if, at the time such individual ceased to be included in
the definition of "Participants", he or she had satisfied the
service requirements for a deferred vested pension under the
Pension Plan. Each such individual shall receive a benefit
under the terms of the Plan as in effect immediately prior to
the effective date of such demotion, termination or other event,
the amount of such benefit to be calculated as if the individual
retired (or otherwise terminated employment) on such date, it
being the Company's intent that any such demotion, termination
or other event removing individuals from the definition of
"Participants" shall not adversely affect entitlement to such
benefits.
2. Mandatory Retirement Age
Each Participant, whether or not eligible for benefits under
this Plan, shall cease to be eligible for continued employment
no later than the last day of the month in which such
Participant attains the Mandatory Retirement Age.
3. Eligibility
(a) Service Benefit
An individual who is both a Participant in this
Plan and who is eligible for a service pension pursuant
to the terms of the Pension Plan at the time of
employment termination is eligible for a service benefit
pursuant to this Plan, which shall commence immediately
following his or her retirement. *
Additionally, each Participant who has attained
age 62 or older and whose |
Net Credited Service is ten years or more at the
time of employment |
termination is eligible for a service benefit
under this Plan. For purposes of the |
preceding sentence, "Net Credited Service" shall
include only the portion of a |
Participant's Net Credited Service as is
attributable to service with the |
Company, a Participating Company, or other
Affiliates. *
Each Participant, other than an Executive, whose
employment terminates #
between October 1, 1992 and December 31, 1995,
inclusive, is also eligible for |
a service benefit under this Plan, if at the time
of employment termination |
(A) plus (B) equals or exceeds sixty-five (65),
where (A) is the Participant's |
attained age as of his or her most recent birthday
and (B) is the number of full #
years of the Participant's Net Credited Service;
provided, however, that with %
respect to any such Participant who is employed by
BellSouth Telecommunica- |
tions, Inc. at the time of employment termination,
"December 31, 1997" shall be |
substituted for "December 31, 1995" where such date
appears above. %
(b) Deferred Benefit
(i) Except as otherwise specified in
Paragraph 7 of this Section 4, any individual not
described in Paragraph 3(a) of this Section 4
who is a Participant in this Plan at the time of
voluntary employment termination is eligible for
a deferred vested pension pursuant to this Plan,
provided he is eligible for a deferred vested
pension pursuant to the Pension Plan.
*Text Added 05/25/90
#Text Added 10/01/92
%Text Added 05/15/95
(ii) A Participant who leaves the service of a
Participating Company and who has elected to have his
or her deferred vested pension payable early in
reduced amounts, pursuant to the terms and conditions
of the Pension Plan, shall be deemed to have elected
to have his or her deferred benefit under this Plan
payable early in reduced amounts under the same terms
and conditions. In the event of such an election,
the amount of deferred benefit otherwise payable at
Mandatory Retirement Age under this Plan to such
person shall be reduced in accordance with the same
formula set forth in the Pension Plan for the
discounting of the deferred vested pension.
(iii) The Committee or Participating Company
Committee, as appropriate, shall notify each
Participant who leaves the employ of such
Participating Company (except to take employment
without a break in service with another Participating
Company, Affiliate or Interchange Company) of his or
her eligibility, if any, for a deferred benefit by
mailing, within a reasonable time after his or her
leaving, a notice to his or her last known address as
shown on the Participating Company's records.
(iv) When an eligible individual has filed a
written request for a deferred vested pension pursuant
to the requirements of the Pension Plan, he shall be
deemed to have filed a request for the deferred benefit
for which he may be eligible hereunder.
(c) Disability Pension
An individual who while a Participant in this Plan
has become eligible for a disability pension pursuant to
the terms of the Pension Plan shall be eligible for a
disability pension hereunder, calculated as follows: the
amount is determined in accordance with Paragraph 4 of
this Section 4 calculated to one year after date of
disability (pro-rata if less than 20 years of service)
with no reduction factor. Should the disability pension
be discontinued pursuant to the terms of the Pension Plan,
the disability pension hereunder shall be discontinued as
well.
4. Benefit Amounts
(a) Computation of Benefit
(i) (A) Benefit Formula:
The aggregate annual benefit of each Participant
payable as provided in the Plan *
shall be determined by adding the sum of two
percent (2%) of Included |
Earnings for each year of the Participant's
Vesting Service Credit for the first |
twenty years, plus one and one-half percent
(1.5%) of Included Earnings for |
each year of the Participant's Vesting Service
Credit for the next ten years, plus |
one percent (1%) of Included Earnings for each year of
the Participant's |
of Vesting Service Credit for each additional
year up to the month in which *
*Text Revised 9/23/91
the Participant retires less (1) 100% of the
retirement benefit (unreduced for survivor annuity)
payable from the Pension Plan and (2) 100% of the
Primary Social Security benefit payable at age 65.
There is no reduction in the amount of this #
benefit in connection with electing a
post-retirement survivor annuity under the *
Pension Plan.
(B) Special Rules
(1) In the case of each Participant who elects
under the terms of the Pension #
Plan to receive his retirement benefit under the
Pension Plan in the form of a |
single lump sum payment, the benefit reduction to
be applied pursuant to |
Section 4.4(a)(i)(A)(1) above for the retirement
benefit payable from the |
Pension Plan shall be the total amount of the
retirement benefit (unreduced for |
survivor annuity) which would have been payable
to such individual from the |
Pension Plan had such election not been made. #
(2) In the case of each Participant who is
eligible for a service pension under %
the Pension Plan, the benefit reduction to be
applied pursuant to Section |
4.4(a)(i)(A)(1) above for the retirement benefit
payable from the Pension Plan |
shall be the amount of such benefit payable at
such Participant's Pension |
Commencement Date and shall first be applied at
such Pension Commencement |
Date. |
(3) In the case of each Participant who is not
eligible for a service pension |
under the Pension Plan, the benefit reduction to
be applied pursuant to Section |
4.4(a)(i)(A)(1) above for the retirement benefit
payable from the Pension Plan |
shall be the amount of the deferred vested
pension payable from the Pension |
Plan at age 65 and shall first be applied in the
month commencing on or next |
following his or her sixty-fifth birthday
(regardless of the Participant's actual |
Pension Commencement Date under the Pension
Plan). %
(4) In the case of any
Executive (i) who has attained the age of
sixty-two (62) *
(or more) or who is deceased, (ii) who was
previously employed by a Former |
Affiliate, (iii) who serves or has served as an
officer (as such term is used in |
the employment practices and policies of the
relevant company) of BellSouth |
Corporation or an Affiliate, and (iv) whose
service with a Former Affiliate is |
disregarded in determining the Executive's
Vesting Service Credit under the |
Pension Plan, for purposes of this Section
4.4(a), the Executive's Vesting |
Service Credit shall be increased by |
(x) the Executive's Vesting Service Credit with
the Former Affiliate(s) |
(determined under the rules of the Pension
Plan as if the Executive had |
been employed by BellSouth Corporation
during such period and had no |
other service
covered under the Pension Plan), multiplied
by |
(y) a fraction, the numerator of which is the
number of whole years (not to |
(not to exceed ten (10) of such Executive's
Net Credited Service as an |
officer of BellSouth Corporation or an
Affiliate and the denominator of |
which is ten
(10). |
#Text Revised 5/24/91
*Text Added 9/23/91
%Text Revised 11/28/94
Notwithstanding the foregoing, no Executive's Vesting Service
Credit, for |
purposes of this Section 4.4(a), shall be increased
for service with a Former |
Affiliate to the extent that any such service would
otherwise be considered, |
directly or indirectly, in determining such
Executive's benefits under this Plan |
by virtue of the terms of any other agreement,
plan or arrangement. *
(5) In the case of any Participant whose Vesting
Service Credit includes a %
period of service with an employer with respect
to which the Participant is |
entitled to any retirement benefit payable from
defined benefit pension plan(s ) |
(including qualified plans and nonqualified plans
such as excess benefit and |
supplemental executive retirement plans),
including any Executive whose |
Vesting Service Credit under this Plan is
increased pursuant to Section |
4.4(a)(i)(B)(4) preceding, the benefit reduction
described in Section |
4.4(a)(i)(A)(1) above for the retirement benefit
payable from the Pension Plan |
shall include any such retirement benefit payable
by such employer. The |
determination of the benefit reduction for any
such benefit shall be made using |
approaches which approximate as nearly as
practicable the approaches used in |
making such determinations with respect to
benefits payable under the Pension |
Plan, as described above in this Section
4.4(a)(i). In the case of any Executive |
whose Vesting Service Credit under this Plan is
increased pursuant to %
paragraph (B)(4) of Section 4.4(a)(i), the
benefit payable by such employer shall first be
multiplied by the fraction described in that paragraph
and the product thereof shall be the amount of the
benefit reduction.
(ii) Included Earnings
Included Earnings shall equal the 12 month average
of the sum of (1) the
last sixty months of base pay, plus (2) the Short Term
Incentive Awards and Lump Sum Payments received during or
after that sixty month period. In the calculation of
benefits as of December 31, 1990 in accordance with the
BellSouth #
Corporation Voluntary Enhanced Early Retirement
Program, Included Earnings for |
a Participant other than an Executive shall
include the standard MTIA amount for |
which the Participant was eligible in 1990. #
The amounts of base pay and other payments used to
determine Included Earnings as described above include all
amounts during the specified period including those
amounts previously deferred pursuant to other plans.
If a Participant terminates employment eligible
for a benefit under this Plan and %
thereafter receives compensation of the types
described in clause (ii)(2) of this |
Section 4.4(a), his or her benefit shall be
increased to reflect the additional |
Included Earnings effective as of the date such
additional compensation is paid. %
* Text Added 9/23/91
#Text Added 12/1/90
%Text Added 11/28/94
(iii) Alternative VEER Benefit Formula #
(1) In accordance with the BellSouth Corporation
Voluntary Enhanced |
Early Retirement Program (VEER) effective December
1, 1990, in the case of each |
Participant who, on December 31, 1990, was a
regular, full-time employee, actively at |
work (or on a departmental leave not exceeding
thirty days), having five or |
more years of service (as such term was defined in
the Pension Plan at that time), the |
benefit determined under the benefit formula
described in Paragraph 4(a)(i) of this |
Section 4, prior to reduction for the retirement
benefit payable from the Pension Plan |
and the Primary Social Security Benefit, shall be
the greater of (A) and (B), where: #
(A) is such benefit calculated as of
December 31, 1990 (i) adding five years to #
the Participant's age and Vesting Service
Credit and (ii) if the Participant has a |
term of employment of thirty or more
years as of such date (excluding the years |
added in (a)(i) above), disregarding any
otherwise applicable age discounts; and |
(B) is such benefit calculated without giving effect
to the terms of clause (A). |
(2) For purposes of calculating a
Participant's benefit under this Plan as of |
December 31, 1990 under clause (A) of Paragraph
4(a)(iii)(1) above: |
(A) the five years added under
clause (A)(i) of Paragraph (4)(a)(iii)(1) shall not |
be counted in determining a Participant's
eligibility for a service benefit under |
Section 4.3(a) of this Plan; |
(B) the five years of age added under
clause (A)(i) of Paragraph (4)(a)(iii)(1) |
shall be counted in applying the early
retirement discount rules described in |
Paragraph (4)(c) of this Section 4, with
respect to each Participant who is |
eligible for a service pension under the
Pension Plan on December 31, 1990; |
(C) if the Participant becomes eligible for a service
pension under the Pension |
Plan during the five year period
beginning on January 1, 1991, and retires after |
becoming service pension eligible, the
early retirement discount rules described |
in Paragraph 4(c) of this Section 4,
applicable to Participants retiring eligible for |
a service benefit in 1990, shall apply
(on the basis of the Participant's age on |
December 31, 1990, counting the five
years of age added under clause (A)(i) of |
Paragraph 4(a)(iii)(1)); and |
(D) the reduction in the benefit under Section
4(a)(i)(A) for the retirement |
benefit payable from the Pension Plan shall be an
amount equal to the greater of |
(i) 100% of the retirement benefit (unreduced
for survivor annuity) actually |
payable from the Pension Plan, and (ii)
100% of the retirement benefit |
(unreduced for survivor annuity) which
would be payable from the Pension Plan |
if the additional years of age and
service in the Pension Plan amendments |
made in connection with VEER were applicable
to the alternative pension |
benefit formula under the Pension Plan
(described on pages 14 and 15 of |
the summary plan description for the
Pension Plan dated June 1990) taking into |
account all rules applicable to that formula
under the Pension Plan. |
#Text Added 12/1/90
(3) A Participant who is on a rotational
assignment with Bellcore on December |
31, 1990, but who is otherwise eligible to have his or
her pension calculated in |
accordance with this Section shall have his or her
pension so calculated if he returns to |
regular, full-time, active employment immediately
following such rotational |
assignment. #
(b) Minimum Benefit
In no event shall a Participant, whose Vesting Service
Credit has been five years or more, who terminates
employment on or after his or her sixty-second birthday, or
who is retired on a service or disability pension under the
Pension Plan, receive a total annual retirement benefit from
the Company of less than 15% of the employee's annual base
salary plus Standard Award for Executives or Standard Annual
Incentive Award for other Participants in effect on the
employee's last day on the active payroll.
(c) Early Retirement Discount
The service benefit allowance, determined in accordance
with the provisions of this Paragraph 4, for each
Participant who is granted a service benefit for reasons
other than total disability as a result of sickness or
injury, shall be reduced as follows: *
The pension benefit shall be reduced by one-half percent
(0.5%) for each calendar |
month or part thereof by which the employee's Pension
Effective Date precedes |
his or her 56th birthday, except that each employee
retired with thirty (30) or |
more years of service shall receive a pension benefit
reduced by one-quarter |
percent (0.25%) for each calendar month or part thereof
by which such employee's |
Pension Effective Date precedes his or her 56th
birthday. The age before which *
an employee's pension
benefit is reduced as
provided above due to early retirement
shall be increased from age 56 as
specified above to the age in the
right column as of the date in the
left column of the following schedule:
January 1 of
Retirement Prior to Age
1991 57
1994 58
1997 59
2000 60
2003 61
2006 62
Provided, however, that each employee who retires
prior to his or her birthday during a transition year
in the above table shall be deemed to have reached his
or her birthday as of January 1 of such year for the
purpose of calculating his or her pension discount
only.
# Text Added 12/1/90
* Text Revised 5/1/89
(d) Deferred Benefit Amount
The benefit allowance for each Participant eligible for
a deferred benefit under the provisions of Paragraph 3(b) of
this Section 4 shall be calculated exclusively in accordance
with the provisions specified as applicable to those
receiving a benefit under Paragraph 3(a) or 3(c) of this
Section 4 effective as of the date such Participant leaves
the service of a Participating Company other than for
reasons of transfer to another Participating Company,
Affiliate or an Interchange Company, or the date which is
the last day of the month in which he reaches the Mandatory
Retirement Age, whichever is earlier, and, in any case, as
if such Participant had retired on such date and, except as
provided in Section 4.4(a)(ii), no recomputation of the
benefit shall be made after such date or as a result of
amendments made to this Plan subsequent to such date.
(e) Automatic Survivor Annuity
In the event of the death of an active Participant who
at the time of death was eligible for a deferred benefit
under this Plan and who leaves a surviving spouse, such
surviving spouse shall automatically receive a survivor
annuity for life in the amount of 50% of the Participant's
net benefit under this Plan, after offsets, which would have
been payable had such Participant retired with a service
benefit, regardless of his or her actual eligibility
therefor, on the date of his or her death. For purposes of
the automatic survivor annuity provided in this Paragraph
4(e), the early retirement discount in Paragraph 4(c) shall
not apply. If an Executive Participant dies *
prior to retirement, has a surviving spouse, and does
not meet the service |
eligibility requirements for the automatic survivor
annuity under this Plan, |
the death benefit as specified under Section 5, Paragraph
1 of this Plan will be |
increased to include an amount equal to twice the
Participant's annual base salary |
at the time of death. *
In the case of a pensioner
or former employee, who at the
time of his or her death leaves a
surviving spouse, such surviving
spouse shall automatically
receive a survivor annuity for
life in the amount of 50% of
the net retirement benefit
received by such Participant
under this Plan, after offsets.
(f) Minimum Survivor Benefit
In no event shall the surviving spouse of a
Participant, entitled to a minimum retirement benefit or
disability allowance under the long term disability plan
which applies to such Participant, receive a total benefit
from the Company of less than 15% of the deceased
Participant's annual base salary plus Standard Award for
Executives or Standard Annual Incentive Award for other
Participants in effect on the employee's last day on the
active payroll.
*Text Added 04/11/86
(g) Special Increases
Service and disability benefit payments, as
determined under this *
Paragraph 4(a) and (b) of this Section 4, of retired
Participants shall be * increased by
the same percentage and pursuant to the same terms and
conditions as are set forth in the Pension Plan.
5. Monthly Payments
Benefits shall normally be paid in monthly disbursements or at
such other periods as the Committee or a Participating Company
Committee as applicable, may determine in each case.
Notwithstanding the foregoing, if at the time of employment
termination, the present value of the benefit *
of a Participant, whether payable as a service benefit, a deferred
benefit, or a survivor's |
benefit, is less than $20,000, such benefit shall be paid in the
form of a single lump sum |
payment which is the actuarial equivalent of the benefit otherwise
payable. Present value *
and the amount of each lump sum payment shall be determined using
(i) an interest rate based on the Pension Benefit Guaranty
Corporation interest rate for valuing a participant's vested
benefit in a trusteed single employer plan applicable on the first
day of the plan year in which the distribution is or would be made
and (ii) mortality rates equal to the unisex rates published in
the Unisex Pension Mortality Table - 1984 (UP-1984).
6. Duration of Payments
Except for the reasons specified below, benefits granted under
this Plan shall commence on the day following the date of
retirement, either at the Mandatory Retirement Age, or at such
other time as is herein provided for payment of a deferred
benefit or disability benefit, and shall continue to the death of
the retiree.
*Text Added 10/01/92
7. Treatment During Subsequent Employment
Where a Participant's period of service includes service in more
than one Participating Company or in a company that is not a
Participating Company, the last Participating Company to employ
him or her immediately prior to his or her retirement or
termination of employment with entitlement to a benefit hereunder
shall be responsible for the full benefit under this Plan.
Employment with any Participating Company, Affiliate, or with
Bellcore, pursuant to a BellSouth/Bellcore Interchange Agreement,
for which a Participant is an eligible employee, subsequent to
retirement or termination of employment with entitlement to any
type of benefits described heretofore shall result in the
permanent suspension of the benefit for the period of such
employment or reemployment.
SECTION 5. DEATH BENEFITS
1. Eligibility and Administration
All Participants shall be eligible for death benefits under this
Plan. Death benefits described %
herein are in addition to death benefits payable under the
Pension Plan but shall be subject to the |
same terms and conditions of, and administered in the same manner
as, corresponding death |
benefit provisions of the Pension Plan. For an Executive, the
benefit equals the annual base |
salary plus two times the Standard Award. The above stated
amounts of base salary and %
Standard Award are those amounts in effect at the earlier of
retirement or death including
those amounts previously deferred pursuant to other plans. For
all other Participants,
the benefit equals the Standard Annual Incentive Award in effect
at the earlier of retirement or
death. In addition, the death benefit for all Participants will
include the amount of death benefit,
if any, that would otherwise have been payable under the Pension
Plan had there been no
deferral of compensation under any plan of the Company. The
benefit amount will also include *
the amount of death benefit, if any, that would otherwise have
been payable under the Pension |
Plan had the restriction on the amount of compensation that may
be taken into account under |
Code Section 401(a)(17) not been applicable. If a Participant is
eligible for a service benefit |
under this Plan but is not eligible for a service pension under
the Pension Plan, the death benefit *
under this Plan will include the amount of death benefit that
would have been payable under the Pension Plan had the
Participant been eligible for a service pension thereunder.
2. Source of Payments
All death benefits payable pursuant to this Section 5 of the Plan
shall be paid from Company or Participating Company's operating
expenses, or through the purchase of insurance from an Insurance
Company as the Company may determine.
* Test Added 09/01/88
% Text Revised 11/28/94
SECTION 6. GENERAL PROVISIONS
1. Effective Date
This Plan is effective January 1, 1984.
2. Rights to Benefit
There is no right to any benefit under this Plan except as may be
provided by the Company or each Participating Company.
Participants have the status of general, unsecured creditors of
the Participating Company and the Plan constitutes a mere promise
by the Participating Company to make benefit payments in the
future. A Participant shall have only a contractual right to
receive the benefits provided for hereunder if and when he
complies with all of the conditions set forth herein. Nothing
contained in this Plan and no action taken pursuant to the
provisions of this Plan shall create or be construed to create a
trust of any kind. The Plan is intended to be "unfunded" for
purposes of the Pension Act and the Code.
If any payment is made to a Participant, his or her surviving
spouse or other beneficiary #
with respect to benefits described in this Plan from any source
arranged by the Company or a |
Participating Company 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 Company or
Participating Company under this Plan |
to the extent of such payment as if such payment had been made
directly by the Company or |
Participating Company; 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, such payment shall be deemed to satisfy the obligation of
the Company or Participating |
Company to pay Plan benefits beginning with the benefit which
would next become payable |
under the Plan 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 described in clause (ii), any such shortfall shall
not be collected from or enforced |
against the Participant as a claim by the Company or Participating
Company. #
3. Involuntary Termination
In the event that a Participant's employment is terminated
involuntarily prior to his or her becoming eligible for a deferred
benefit under this Plan, other than for cause, such Participant
shall nevertheless be entitled to a deferred benefit hereunder,
based upon the Participant's Vesting Service Credit at his or her
date of termination.
# Text Added 5/25/90
4. Governing Law
The Company intends that this Plan be an unfunded deferred
compensation plan maintained primarily for a select group of
management and highly compensated employees exempt from Parts 2, 3
and 4 of Title I of the Pension Act by reason of the exemptions
set forth in Sections 201(a), 301(a) and 401(a) of the Pension Act
and from Part 1 of the Pension Act by reason of the exemption set
forth in Section 2520.104-23 of applicable United States
Department of Labor regulations. This Plan shall be interpreted
and administered accordingly. This Plan shall be construed in
accordance with the laws of the State of Georgia to the extent
such laws are not preempted by the Pension Act.
5. Assignment or Alienation
Benefits payable, and rights to benefits, under this Plan may not
in any manner be anticipated, sold, transferred, assigned (either
at law or in equity), alienated, pledged, encumbered or subject to
attachment, garnishment, levy, execution or other legal or
equitable process.
6. Nothing contained in this Plan shall be construed as
conferring upon a Participant the right to continue in the employ
of the Company.
7. Determination of Eligibility
In all questions relating to age and service for eligibility for
any benefit hereunder, or relating to a Participant's period of
service and rates of pay for determining benefits, any decision of
the Claim Review Committee or a Participating Company Claim Review
Committee, as applicable, based upon this Plan and upon the
records of the Participating Company last employing such
individual shall be final, conclusive and binding on all persons.
8. Option During Disability
If a Participant who has left the service of a
Participating Company has elected to continue receiving
disability benefits which he had been receiving prior to
his or her termination and to defer receiving pension
payments under the Pension Plan to which he is eligible,
benefits under this Plan shall be deferred until such
time as the Participant begins to receive payments under
the Pension Plan.
9. Break in Service
For purposes of this Plan, a break in service shall be
defined and treated in the same manner as is set forth in
the Pension Plan.
10. Leaves of Absence
For purposes of this Plan, a leave of absence shall be
defined and administered in the same manner as is set
forth in the Pension Plan.
*Text Deleted 6/22/92
11. Special Classification
For purposes of this Plan, the determination of those causes of
death not classed as due to accident shall be accomplished in
the same manner as is set forth in the Pension Plan.
12. Method of Payment
Payments under this Plan shall be made in the same manner as is
set forth under the Pension Plan.
13. Amounts Accrued Prior to Death
Benefit amounts accrued but not actually paid at the time of
death of a former employee or pensioner shall be paid in
accordance with the standards and procedures set forth in the
Pension Plan.
14. Payments to Others
Benefits payable to a former employee or retiree unable to
execute a proper receipt may be paid to other person(s) in
accordance with the standards and procedures set forth in the
Pension Plan.
15. Claims Release
In case of accident resulting in the death of a Participant
which entitles his or her beneficiaries or his or her annuitants
to benefits under this Plan, such beneficiaries or annuitants
shall, prior to the payment of any such benefits, sign a
release, releasing the Company or other Participating Companies,
Affiliates or Interchange Companies, as applicable, from all
claims and demands which the Participant had, and his or her
beneficiaries or his or her annuitant may have against them,
otherwise than under this Plan, on account of such accident. If
any persons, other than the beneficiaries under this Plan might
legally assert claims against a Participating Company,
Affiliate or Interchange Company on account of the death of the
Participant, no part of the death benefit under this Plan shall
be due or payable until there have also been delivered to the
Committee or Participating Company Committee, the Affiliate or
Interchange Company Committee, as applicable, good and
sufficient releases of all claims, arising from or growing out
of the death of the Participant, which such other persons might
legally assert against any Participating Company, Affiliate or
Interchange Company. The Committee or Participating Company
Committee, as applicable, in its discretion, may require that
the releases above described shall release any other company,
connected with the accident, including the Company or any other
Participating Company, Affiliate or Interchange Company, as
applicable. This requirement of a release shall not apply in
the case of survivor annuities under Section 4 of the Plan.
16. Damage Claims or Suits
Should a claim, other than under the Plan, be presented or suit
brought against the Company or any Participating Company,
Affiliate or Interchange Company for damages on account of the
death of a Participant, nothing shall be payable under the Plan
on account of such death except as provided in Paragraph 15 of
this Section 6; provided, however, that the Committee,
Participating Committee, or the Affiliate, as applicable, may,
in its discretion and upon such terms as it may prescribe, waive
this provision if such claims be withdrawn or if such suit be
discontinued, and provided further that this provision shall not
preclude the payment of survivor annuities under Section 4.
17. Judgment or Settlement
In case any judgment is recovered against any Participating
Company, Affiliate or Interchange Company or any settlement is
made of any claim or suit on account of the death of a
Participant, and the amount paid to the beneficiaries who would
have received benefits under the Plan is less than what would
otherwise have been payable under the Plan, the difference
between the two amounts may, in the discretion of the Company,
Participating Company Committee, or Affiliate, as applicable, be
distributed to such beneficiaries.
18. Payment Under Law
In case any benefit, which the Committee, Participating Company
Committee, or Affiliate, as applicable, shall determine to be of
the same general character as a payment provided by the Plan,
shall be payable under any law now in force or hereafter enacted
to any Participant of a Participating Company, to his or her
beneficiaries or to his or her annuitant under such law, the
excess only, if any, of the amount prescribed by law shall be
payable under the Plan; provided, however, that no benefit
payable under this Plan shall be reduced by reason of any
governmental benefit or pension payable on account of military
service. In those cases where, because of differences in the
beneficiaries, or differences in the time or methods of payment,
or otherwise, whether or not there is such excess is not
ascertainable by mere comparison but adjustments are necessary,
the Committee or Participating Company Committee, as applicable,
has discretion to determine whether or not in fact any such
excess exists and to make the adjustments necessary to carry out
in a fair and equitable manner the spirit of the provision for
the payment of such excess.
19. Plan Termination
Subject to the limitations described below, the Company retains
the right to terminate, in *
whole or in part, and each Participating Company retains the right
to withdraw from this | Plan, at any time, for any reason, with
or without notice. The Company will continue to |
make payments, in accordance with the terms and conditions of the
Plan, to all Participants |
who were either retired or terminated prior to Plan termination,
and will also continue to |
recognize its obligation to the surviving spouse of the
aforementioned individuals. |
Additionally, Participants who have satisfied the service
requirements for a deferred vested |
pension under the Pension Plan on the date of Plan termination
shall receive benefits under |
the terms of the Plan as in effect immediately prior to its
termination, the amount of such |
benefit to be calculated as if the Participant retired (or
otherwise terminated employment) |
on the termination date of the Plan, it being the Company's intent
that termination of the Plan |
shall not adversely affect any entitlement to such benefits and
any amendment, modification |
or termination of this Plan inconsistent with this expression of
intent shall be null and void. *
SECTION 7. INTERCHANGE OF BENEFIT OBLIGATION
The same transfer of service credit provisions contained in
interchange agreements presently in existence under the Pension
Plan, or as they may be amended from time to time, between the
Company, on behalf of all Participating Companies, with any
Interchange Company shall apply to the transfer of service
credit for purposes of this Plan.
* Text Added 08/12/88
SECTION 8. PLAN MODIFICATION
The Company may in its sole discretion from time to time make
any changes in the Plan as it deems appropriate, provided,
however, such modifications shall not result in a reduction of
*
benefits to either: (i) those participants or their surviving
spouses already receiving benefits |
under this Plan, or (ii) those participants who have satisfied
the service requirements for a *
deferred vested pension under the Pension Plan. Specifically,
no Plan modification shall have
the effect of reducing a Participant's benefits under the Plan
to which he or she would be
entitled under the terms of the Plan as in effect in immediately
prior to its modification, the
amount of such benefit to be calculated as if the Participant
retired (or otherwise terminated
employment) on the date the Plan was modified, it being the
Company's intent that any *
modification of the Plan shall not adversely affect any
entitlement to such benefits and any |
amendment, modification or termination of this Plan inconsistent
with this expression of intent |
shall be null and void. *
In addition, the Company may authorize the execution of
agreements providing retirement benefits subject generally to
the terms and conditions of the Plan and benefits under such
agreements shall be deemed provided hereunder.
* Text Added 08/12/88
08/07/95/0037147.03
AMENDMENT TO THE BELLSOUTH PERSONAL
RETIREMENT ACCOUNT PENSION PLAN
This Amendment is made to the BellSouth Personal Retirement
Account Pension Plan (the "Plan"), which was adopted effective
July 1, 1993, as a restatement and amendment of the BellSouth
Management Pension Plan. The BellSouth Employees' Benefit Claim
Review Committee, acting under authority delegated by the
Nominating and Compensation Committee of the Board of Directors
of BellSouth, hereby amends the Plan as follows:
1.
Amend Section 3 of the Plan by deleting Paragraph 3.04 in
its entirety and substituting therefor the following:
3.04 Interest Credit. Except as otherwise
provided in this Paragraph, on the last day of each Plan Year,
each Participant's account shall be credited with an interest
credit equal to the Participant's account balance on the first
day of the Plan Year multiplied by 4.8 percent in 1995 and 4.0
percent for each year after 1995. If at any time in the 1995
Plan Year a Participant is not actively employed, the 4.8 percent
interest credit rate shall apply for the month(s) in which the
Participant was actively employed during such Plan Year, and a
4.0 percent interest credit rate shall apply for the remainder of
such Plan Year that precedes the Participant's Pension
Commencement Date, if applicable. In addition, if a Participant
has attained or will first attain (assuming continuous service)
35 years of Vesting Service Credit after April 1, 1994, and
before January 1, 1996, the 4.0 percent interest credit rate
shall apply to the account for the entire 1995 Plan Year.
2.
Amend Section 3 of the Plan by deleting Subparagraph 3.05(a)
in its entirety and substituting therefor the following:
(a) Additional Credit. The Board has approved an
additional credit for the 1995 Plan Year equal to the
Participant's Compensation multiplied by 2 percent, and this
additional credit shall be credited to each Participant's account
on the last day of such Plan Year.
3.
Amend Section 3 of the Plan by deleting Subparagraph 3.06(b)
in its entirety and substituting therefor the following:
(b) 1/12th of the interest credit that would be
credited to his account on the last day of the Plan Year (for
purposes of this Subparagraph, if a Participant both terminates
employment and has his Pension Commencement Date occur during the
first two months of the same Plan Year, 1/12th of such interest
credit shall be determined using the interest credit rate for the
preceding Plan Year), multiplied by the number that corresponds
to the calendar month in which such date occurs, plus
4.
Amend Section 10 of the Plan by deleting the last paragraph
of Paragraph 10.05 in its entirety and substituting therefor the
following:
Notwithstanding anything above to the contrary, if a
Participant receives a lump sum settlement pursuant to Paragraph
7.06 or Paragraph 7.08, the Participant's Net Credited Service
and Vesting Service Credit after he receives the lump sum
settlement shall not reflect (subject to their restoration as
provided below) his Net Credited Service and Vesting Service
Credit prior to the settlement date. The Participant's Net
Credited Service and Vesting Service Credit shall be restored if
he is reemployed in accordance with the terms of a court order,
arbitration award or settlement agreement involving litigation,
arbitration, or other action relating to a prior termination of
employment and within two years of such reemployment, or such
longer period as may be specified in such order, award or
agreement, repays to the Plan the amount distributed plus
interest permitted under Section 411(c)(2)(C) of the Code. The
Participant's Net Credited Service shall be restored under the
bridging rules in the preceding paragraph if he receives a lump
sum settlement as a deferred vested pensioner.
5.
Amend Appendix E of the Plan by deleting said Appendix in
its entirety and by substituting therefor the attached pages that
are designated "Appendix E".
This Amendment shall be effective as of January 1, 1995 for
Paragraphs 1, 2 and 5; shall be effective as of March 1, 1995 for
Paragraph 3; and shall be effective as of July 1, 1993 for
Paragraph 4.
Approved this 3rd day of March, 1995.
EMPLOYEE'S BENEFIT CLAIM REVIEW COMMITTEE
___/S/ H.C. Henry___________
H.C. Henry, Jr.
Executive Vice President - Corporate
Relations,
Chairman
39569.05
BELLSOUTH CORPORATION
TRUST UNDER EXECUTIVE BENEFIT PLAN(S)
TABLE OF CONTENTS
Section 1. Establishment of Trust 2
Section 2. Payments to Plan Participants and
Their Beneficiaries 5
Section 3. Trustee Responsibility Regarding
Payments to Trust Beneficiary When
Company is Insolvent 9
Section 4. Payments to Company 11
Section 5. Investment Authority 12
Section 5A. Sale of Company Stock by Trustee 16
Section 6. Disposition of Income 21
Section 7. Accounting by Trustee 21
Section 8. Responsibility of Trustee 21
Section 9. Compensation and Expenses of Trustee 23
Section 10. Resignation and Removal of Trustee 23
Section 11. Appointment of Successor 24
Section 12. Amendment or Termination 25
Section 13. Miscellaneous 27
Section 14. Effective Date 33
BELLSOUTH CORPORATION
TRUST UNDER EXECUTIVE BENEFIT PLAN(S)
This Agreement made this 28th day of April, 1995, by and
between BellSouth Corporation, a Georgia corporation (Company)
and Bankers Trust Company, a New York corporation (Trustee);
(a) WHEREAS, Company has adopted the nonqualified deferred
compensation Plan(s) as listed in Appendix A;
(b) WHEREAS, Company has incurred or expects to incur
liability under the terms of such Plan(s) with respect to the
individuals participating in such Plan(s);
(c) WHEREAS, to make certain provisions for the payment of
such liability, Company and Trustee on April 25, 1990 executed a
trust agreement for the benefit of certain officers and certain
key managers of Company and Company's affiliates who participate
in the Plan(s) (the "Predecessor Trust");
(d) WHEREAS, Company and Trustee on April 29, 1993 amended
and restated the Predecessor Trust insofar as it related to
Company's obligations (but not obligations of subsidiary or other
affiliated entities) to pay benefits under the Plan(s)
(hereinafter, called "Successor Trust") and contributed assets to
the Successor Trust, subject to the claims of Company's creditors
in the event of Company's Insolvency, as herein defined, until
full payment has been made in respect of such obligations of
Company to Plan participants and their beneficiaries in such
manner and at such times as specified in the Plan(s);
(e) WHEREAS, Company and Trustee now desire to amend and
restate the Successor Trust in the form of this Trust Agreement
(hereinafter, called "Trust");
(f) WHEREAS, it is the intention of the parties that this
Trust shall constitute an unfunded arrangement and shall not
affect the status of the Plan(s) as an unfunded plan maintained
for the purpose of providing deferred compensation for a select
group of management or highly compensated employees or as an
excess benefit plan for purposes of Title I of the Employee
Retirement Income Security Act of 1974; and
(g) WHEREAS, it is the intention of Company to make
contributions to the Trust to provide itself with a source of
funds to assist it in the meeting of its liabilities under the
Plan(s);
NOW, THEREFORE, the parties do hereby establish the Trust
and agree that the Trust shall be comprised, held and disposed of
as follows:
Section 1. Establishment of Trust.
(a) Company and Trustee hereby amend and restate in all
respects the Successor Trust in the form of this Trust Agreement.
The principal of the Trust shall be held, administered and
disposed of by Trustee as provided in this Trust Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which
Company is the grantor, within the meaning of subpart E, part I,
subchapter J, chapter 1, subtitle A of the Internal Revenue Code
of 1986, as amended, and shall be construed accordingly.
(d) The principal of the Trust, and any earnings thereon
shall be held separate and apart from other funds of Company and
shall be used exclusively for the uses and purposes of Plan
participants and general creditors as herein set forth. Plan
participants and their beneficiaries shall have no preferred
claim on, or any beneficial ownership interest in, any assets of
the Trust. Any rights created under the Plan(s) and this Trust
Agreement shall be mere unsecured contractual rights of Plan
participants and their beneficiaries against Company. Any assets
held by the Trust will be subject to the claims of Company's
general creditors under federal and state law in the event of
Insolvency, as defined in Section 3(a) herein.
(e)(1) Company, in its sole discretion, may at any
time, or from time to time, make additional deposits of cash
or other property acceptable to Trustee in trust with
Trustee to augment the principal to be held, administered
and disposed of by Trustee as provided in this Trust
Agreement. Neither Trustee nor any Plan participant or
beneficiary shall have any right to compel any such
additional deposits under this subsection (1).
(2) If, as of the last day of a fiscal year of the
Trust, the funding level of the Trust shall be less than
eighty percent (80%) of the Trust's funding level as of the
last day of any of the five (5) most recently preceding
fiscal years of the Trust (taking into account contributions
made under this Section 1(e)(2) for each such year), Company
shall notify Trustee of such situation and Company shall
make an irrevocable contribution to the Trust within one
hundred eighty (180) days following the last day of such
fiscal year. Such contribution shall be in the amount
which, had such contribution been made as of the last day of
such fiscal year of the Trust, would have been sufficient to
bring the Trust's funding level equal to the Trust's funding
level as of the last day of the fiscal year among the five
(5) most recently preceding fiscal years on which the
Trust's funding level was highest. In no event shall such
contribution be required if, as of the last day of such
fiscal year, the fair market value of the Trust's assets is
one hundred percent (100%), or greater, of the aggregate
Current Liability (as defined in subsection (3) of this
Section 1(e)) of Company under the Plan(s). For these
purposes, "funding level" shall mean the ratio (stated as a
percentage) that the fair market value of the assets in the
Trust bears to the aggregate Current Liability of Company
under the Plan(s). Such funding level shall be determined
by Company; provided, however, that following the engagement
of a Trustee's Contractor, such determination shall be made
by Trustee's Contractor. The Trustee may rely on the
accuracy of all such determinations.
(3)(A) For purposes of this Trust, "Current Liability"
shall mean the amount required to pay each Plan participant
or beneficiary the benefits to which Plan participants or
their beneficiaries would be entitled pursuant to the terms
of the Plan(s), to the extent such benefits are obligations
of Company (and not obligations of subsidiary or other
affiliated entities). The Current Liability on any date
with respect to a Plan shall be determined as if the Plan
terminated as of such date using an interest rate equal to
the Pension Benefit Guaranty Corporation valuation interest
rate for immediate annuities as in effect on such date, the
1983 Group Annuity Mortality Table published by the Society
of Actuaries, and reasonable actuarial calculation
principles consistently applied. Current Liability shall be
determined, as of the last day of each fiscal year of the
Trust and at such additional times as are necessary to
implement the provisions of this Trust Agreement, by
Company; provided, however, that following the engagement of
a Trustee's Contractor, such determinations shall be made by
Trustee's Contractor. The Trustee may rely on the accuracy
of all such determinations.
(3)(B) In the event that the interest rate assumption
described in subsection (3)(A) above is at any time no
longer available or the mortality assumption described above
is at any time no longer considered a reasonable and
reliable mortality assumption, other interest rate or
mortality assumptions, as the case may be, deemed generally
comparable to the above-specified assumptions, may be used
instead. All determinations regarding substitute
assumptions, including whether such substitution is
reasonably necessary and the selection of the substitute
assumption(s), shall be made by Company; provided, however,
that following the engagement of a Trustee's Contractor,
such determinations shall be made by Trustee's Contractor.
(f) Upon a Change of Control, Company shall promptly notify
Trustee thereof and, as soon as possible, but in no event longer
than one hundred twenty (120) days following the Change of
Control, as defined herein, Company shall make an irrevocable
contribution to the Trust in an amount that is sufficient to pay
each Plan participant or beneficiary the benefits to which Plan
participants or their beneficiaries would be entitled pursuant to
the terms of the Plan(s), to the extent such benefits are
obligations of Company (and not obligations of subsidiary or
other affiliated entities), as of the date on which the Change of
Control occurred. Such contribution shall be in an amount equal
to the excess, if any, of the aggregate Current Liability as of
the date on which the Change of Control occurred over the fair
market value of the Trust's assets as of the valuation date most
recently preceding the date on which such contribution is made.
Thereafter, Company shall make an additional contribution each
fiscal year to the Trust, as soon as possible, but in no event
longer than one hundred twenty (120) days following the last day
of each such fiscal year, in an amount equal to the excess, if
any, of the aggregate Current Liability under the Plan(s) as of
the last day of the fiscal year over the fair market value of the
Trust's assets as determined on the valuation date most recently
preceding the date on which such contribution is made. The
amount of all such contributions shall be determined by Trustee's
Contractor. The Trustee may rely on the accuracy of all such
determinations.
(g) If, as of a Distribution Date with respect to
outstanding rights to purchase Series A First Preferred Stock,
under the terms of and as defined in a Rights Agreement between
Company and Chemical Bank, as Rights Agent, under an agreement
originally dated November 27, 1989 (a "Distribution Date"), the
aggregate Current Liability exceeds the fair market value of the
Trust's assets (such fair market value determined as of the
valuation date most recently preceding such Distribution Date),
Company shall be required to make an additional contribution to
the Trust in an amount equal to such excess or, at Company's
option, to obtain a letter of credit, or a series of letters of
credit, adequate to fund such amount as of such Distribution Date
under the Plan(s) and maintain such letter(s) of credit until
such time as the aggregate Current Liability no longer exceeds
the fair market value of the Trust's assets. The determination
of whether the aggregate Current Liability exceeds the fair
market value of the Trust's assets upon a Distribution Date and,
if so, the amount of such excess, shall be made by Company;
provided, however, that following the engagement of a Trustee's
Contractor, such determinations shall be made by Trustee's
Contractor. The Trustee may rely on the accuracy of all such
determinations. Any such letter of credit, or series of letters
of credit, shall be part of the general assets of Company and
shall not be an asset of this Trust and, unless otherwise agreed
to in writing by Trustee, Trustee shall have no responsibility
whatsoever with respect to the adequacy of, or selection of the
issuer or issuers of, any such letter or letters of credit.
(h) If, in any five (5) consecutive calendar year period,
(i) there are five (5) or more final determinations by courts of
competent jurisdiction that (A) Company or a subsidiary of
Company which both is a member of Company's "controlled group of
corporations" as such term is defined in Section 13(g)(4) and has
adopted a Plan (a "Participating Company") has failed to pay
(after reasonable notice and demand for payment) any benefit due
under the terms and conditions of a Plan and that (B) there was
no material issue of fact or law respecting such company's
obligation to make such benefit payment, or (ii) there are two
(2) or more final determinations by courts of competent
jurisdiction, in lawsuits instituted after reasonable notice and
demand with respect thereto, in which the court determines that
Company or a Participating Company had acted in bad faith and
with a clear and deliberate disregard for such company's
obligations under the Plan(s), there shall be deemed to have
occurred a Change of Control as defined in this Trust Agreement
and Company shall give Trustee prompt written notice of such
event. For purposes of this Trust Agreement, the term "final
determination" means a determination with respect to which all
rights of appeal or to request a review, a rehearing or
redetermination have been exhausted or have lapsed.
Section 2. Payments to Plan Participants and Their
Beneficiaries.
(a) Company, or the Trustee's Contractor if one shall have
been engaged, shall deliver to Trustee a schedule (the "Payment
Schedule") that indicates the amounts payable by Company in
accordance with the terms and conditions of the Plan(s) in
respect of each Plan participant (and his or her beneficiaries),
that provides a formula or other instructions acceptable to
Trustee for determining the amounts so payable, the form in which
such amount is to be paid (as provided for or available under the
Plan(s)), and the time of commencement for payment of such
amounts. Except as otherwise provided herein, Trustee shall make
payments to the Plan participants and their beneficiaries in
accordance with such Payment Schedule. The Trustee shall make
provision for the reporting and withholding of any federal, state
or local taxes that may be required to be withheld with respect
to the payment of benefits pursuant to the terms of the Plan(s)
and shall pay amounts withheld to the appropriate taxing
authorities or determine that such amounts have been reported,
withheld and paid by Company. Payments may be made in cash or,
where called for under the terms of the Plan(s), in Company Stock
(as such term is defined in Section 5(g) hereof).
Notwithstanding the foregoing, if a benefit which is
distributable in the form of Company Stock under the terms of a
Plan becomes payable at a time when there is no (or insufficient)
Company Stock in the Trust with which to satisfy such benefit
obligation and if the Company fails or refuses to pay such
benefit within a reasonable time after notice from Trustee that
it has become so payable, Trustee shall use other assets of the
Trust to acquire Company Stock, on the open market or otherwise
in its discretion, sufficient to satisfy such benefit obligation.
(b) The entitlement of a Plan participant or his or her
beneficiaries to benefits payable by Company under the Plan(s)
shall be determined in accordance with the terms of the Plan(s)
by Company or such party as it shall designate under the Plan(s),
or the Trustee's Contractor if one shall have been engaged, and
any claim for such benefits shall be considered and reviewed and
paid or not paid under the procedures set out in the Plan(s).
Notwithstanding any Plan provision to the contrary, if a
Trustee's Contractor shall have been engaged, all such
determinations shall be made by the Trustee's Contractor whose
determinations shall be final, conclusive and binding on all
persons. Neither Trustee nor Trustee's Contractor shall have any
obligation for determining whether any Plan participant or
beneficiary has died and shall be entitled to rely upon any
information in this regard furnished by Company.
(c) Company may make payment of benefits directly to Plan
participants or their beneficiaries as they become due under the
terms of the Plan(s). In such event, Company shall make
provision for the reporting and withholding of any federal, state
or local taxes that may be required to be withheld with respect
to the payment of benefits pursuant to the terms of the Plan(s)
and shall pay amounts withheld to the appropriate taxing
authorities. Company shall notify Trustee of its decision to
make payment of benefits directly prior to the time amounts are
payable to participants or their beneficiaries. In addition, if
the principal of the Trust, and any earnings thereon, are not
sufficient to make payments of benefits payable by Company in
accordance with the terms of the Plan(s), Company shall make the
balance of each such payment as it falls due. Trustee shall
notify Company where principal and earnings are not sufficient.
(d) Company may engage a third party administrator as a
contractor of the Trustee ("Trustee's Contractor"), who shall not
be a Plan participant or beneficiary (but who may be the
Trustee), to perform functions described in this Section 2(d) and
elsewhere in this Trust Agreement which would otherwise be
performed by Company.
(1) Upon engagement of a Trustee's Contractor, as soon
as practicable but in no event longer than thirty (30) days
thereafter, Company shall furnish to the Trustee's
Contractor copies of the Plan documents, employment records
of participants, and other information necessary to
determine the benefits which are or may become payable by
Company to or with respect to each participant in each Plan,
including any benefits payable after the participant's
death, and the recipient of same and the procedures which
Company has adopted to calculate such benefit payments.
Company shall regularly, at least annually, and upon each
benefit change under the Plan(s) furnish revised, updated
information to the Trustee's Contractor. In the event
Company refuses or neglects to provide updated participant
information as contemplated herein, the Trustee's Contractor
shall be entitled to rely on the most recent information
furnished to it by Company.
(2) In the event of a Change of Control, Company shall
have the duty to engage, as soon as practicable thereafter,
a Trustee's Contractor reasonably acceptable to the Trustee
if there shall at that time be no Trustee's Contractor then
serving. In addition, if as of a Distribution Date (as such
term is defined in Section 1(g) hereof), there shall be no
Trustee's Contractor then serving, Company shall have the
duty to designate on a stand-by basis a Trustee's Contractor
who shall commence to serve as Trustee's Contractor in the
event such Distribution Date is followed by a Change of
Control. After a Change of Control, Company shall not have
any control or authority with respect to the Trustee's
Contractor so engaged or then serving, or any successor
Trustee's Contractor, including without limitation any
rights with respect to the removal or replacement of any
such Trustee's Contractor or its duties pursuant to this
Trust Agreement.
(3) Unless Trustee agrees to perform the functions of
the Trustee's Contractor described herein, Trustee shall
have no responsibility hereunder for any obligation assigned
to a Trustee's Contractor or (subject to subsection (4)
below) for the performance of a Trustee's Contractor's
duties and responsibilities under this Trust Agreement.
(4) Company may replace or remove any Trustee's
Contractor from time to time serving hereunder, in its sole
discretion, prior to the occurrence of a Change of Control.
Following a Change of Control, Trustee, in its sole
discretion, may remove a Trustee's Contractor engaged by
Company or any successor Trustee's Contractor and shall
remove any such person and engage a successor to such person
if Trustee deems such person's performance as a Trustee's
Contractor unsatisfactory. At all times following a Change
of Control, upon any such removal, or the voluntary
resignation of any such Trustee's Contractor or the
occurrence of any other event which shall result in the
cessation of performance of the Trustee's Contractor's
duties hereunder, Trustee shall use its best efforts to
engage a new Trustee's Contractor (which may be Trustee);
provided, however, Trustee shall perform the duties of the
Trustee's Contractor during any period for which Trustee is
unable to find a new Trustee's Contractor (so that there
will be no default in payments under the Plan(s) as a result
of the absence of a Trustee's Contractor), and any person
engaged as a Trustee's Contractor shall in the judgment of
Trustee be independent of Company. The person who removes
or replaces a Trustee's Contractor shall be responsible for
assuring that there is a timely and complete transfer of
records from such Trustee's Contractor to such person's
successor.
(5) Except for the records dealing solely with the
assets of the Trust and investment of those assets, which
shall be maintained by the Trustee, if a Trustee's
Contractor shall be engaged, the Trustee's Contractor shall
maintain all Plan participant records contemplated by this
Agreement, including the Payment Schedule. All such records
and copies of the Plan(s) documents and employment records
of the participants in the possession of the Trustee's
Contractor shall be made available promptly upon request of
Trustee or Company. The Trustee's Contractor shall also
prepare and distribute participant statements to
participants and beneficiaries and shall perform such other
duties and responsibilities contemplated under the terms of
this Trust Agreement as Company or Trustee, as the case may
be, determines is necessary or advisable to achieve the
objectives of this Trust Agreement.
(6) Company shall indemnify and hold harmless the
Trustee's Contractor for any liability or expenses,
including without limitation advances for or prompt
reimbursement of reasonable fees and expenses of counsel and
other agents retained by it, incurred by the Trustee's
Contractor with respect to keeping the records for
participants' benefits, reporting thereon to participants
and beneficiaries, certifying benefit information to
Trustee, determining the status of benefits hereunder and
otherwise carrying out its obligations under this Trust
Agreement, other than those resulting from Trustee's
Contractor's negligence or willful misconduct or its failure
to reasonably calculate and certify the amount of benefits
based on the applicable terms of the Plan documents and
other information and procedures furnished by Company to the
Trustee's Contractor in accordance with this Trust
Agreement. The Trustee's Contractor shall be entitled to
reasonable compensation for services hereunder, the amount
of which shall be agreed upon from time to time by Company
or, following a Change of Control, the Trustee, and the
Trustee's Contractor in writing, and reimbursement for
reasonable expenses incurred in connection with its
performance of such services. Following a Change of
Control, Trustee's good faith determination of compensation
to be paid to a Trustee's Contractor (including Trustee when
it acts in such capacity) shall be binding on the Company
and each other person having an interest in the Trust. All
such compensation and expenses shall be paid by Trustee from
the assets of the Trust. If not so paid, such compensation
and expenses shall be paid by Company.
(7) Except as may be otherwise agreed by the Trustee's
Contractor and Company, or Trustee following a Change of
Control, the Trustee's Contractor's obligations are limited
solely to those explicitly set forth herein and the
Trustee's Contractor shall have no responsibility, authority
or control, direct or indirect, over the maintenance or
investment of the Trust and shall have no obligation in
respect of Trustee or the Trustee's compliance with the
Trustee's Contractor's certifications to Trustee.
Section 3. Trustee Responsibility Regarding Payments to
Trust Beneficiary When Company Is Insolvent.
(a) Trustee shall cease payment of benefits to Plan
participants and their beneficiaries if the Company is Insolvent.
Company shall be considered "Insolvent" for purposes of this
Trust Agreement if (i) Company is unable to pay its debts as they
become due, or (ii) Company is subject to a pending proceeding as
a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as
provided in Section 1(d) hereof, the principal and income of the
Trust shall be subject to claims of general creditors of Company
under federal and state law as set forth below.
(1) The Board of Directors and the Chief Executive
Officer of Company shall have the duty to inform Trustee in
writing of Company's Insolvency. If a person claiming to be
a creditor of Company alleges in writing to Trustee that
Company has become Insolvent, Trustee shall determine
whether Company is Insolvent and, pending such
determination, Trustee shall discontinue payment of benefits
to Plan participants or their beneficiaries.
(2) Unless Trustee has actual knowledge of Company's
Insolvency, or has received notice from Company or a person
claiming to be a creditor alleging that Company is
Insolvent, Trustee shall have no duty to inquire whether
Company is Insolvent. Trustee may in all events rely on
such evidence concerning Company's solvency as may be
furnished to Trustee and that provides Trustee with a
reasonable basis for making a determination concerning
Company's solvency.
(3) If at any time Trustee has determined that Company
is Insolvent, Trustee shall discontinue payments to Plan
participants or their beneficiaries and shall hold the
assets of the Trust for the benefit of Company's general
creditors. Nothing in this Trust Agreement shall in any
way diminish any rights of Plan participants or their
beneficiaries to pursue their rights as general creditors of
Company with respect to benefits due under the Plan(s) or
otherwise.
(4) Trustee shall resume the payment of benefits to
Plan participants or their beneficiaries in accordance with
Section 2 of this Trust Agreement only after Trustee has
determined that Company is not Insolvent (or is no longer
Insolvent).
(c) Provided that there are sufficient assets, if Trustee
discontinues the payment of benefits from the Trust pursuant to
Section 3(b) hereof and subsequently resumes such payments, the
first payment following such discontinuance shall include the
aggregate amount of all payments due from Company to Plan
participants or their beneficiaries under the terms of the
Plan(s) for the period of such discontinuance, less the aggregate
amount of any payments made to Plan participants or their
beneficiaries by Company in lieu of the payments provided for
hereunder during any such period of discontinuance.
Section 4. Payments to Company.
(a) Except as provided in Sections 3, 4(b), 4(c), 4(d),
5(b) and 12(c) hereof, after the Trust has become irrevocable,
Company shall have no right or power to direct Trustee to return
to Company or to divert to others any of the Trust assets before
all payment of benefits have been made to Plan participants and
their beneficiaries pursuant to the terms of the Plan(s) to the
extent such benefits are obligations of Company.
(b) If, prior to a Change of Control, within sixty (60)
days following the end of a fiscal year of the Trust, Company
provides a written certification to Trustee, reasonably
acceptable to the Trustee that, as of the last day of the fiscal
year, the fair market value of the assets of the Trust exceeds
one hundred twenty percent (120%) of the aggregate Current
Liability, Trustee shall, at Company's request, distribute to
Company all or part of such excess. No distribution pursuant to
this Section 4(b) may be made following a Change of Control.
(c) Prior to a Change of Control, Trustee shall, if so
instructed by Company in writing within thirty (30) days after
the actual filing of Company's federal income tax return for a
year, reimburse Company from the assets of the Trust for federal,
state or local income taxes, or any part thereof, which Company
certifies that it has paid, attributable to income of the Trust
for such year, as determined by Company, within thirty (30) days
after receipt of such request. No reimbursement for taxes
pursuant to this Section 4(c) may be made following a Change of
Control.
(d) Notwithstanding any other provision of this Trust
Agreement, including without limitation Section 1(b) hereof,
prior to a Change of Control Company shall have the right with
respect to each contribution to the Trust (other than
contribution(s) required pursuant to Section 1(e)(2) hereof) to
cause Trustee to return all or any portion of a contribution and
any and all income on such contribution to Company. Such right
shall be exercised by giving written notice to Trustee and shall
be exercisable in a nonfiduciary capacity without the approval or
consent of Trustee or any other person. Such right shall expire
with respect to each contribution to the Trust upon the earlier
of (i) thirty days following the date on which the contribution
is made, (ii) the last day of the taxable year of Company in
which the contribution is made or (iii) a Change of Control.
Company's right under this Section 4(d) shall expire upon a
Change of Control.
Section 5. Investment Authority.
(a) Except as otherwise provided in subsections (c), (d),
(e) and (g) of this Section 5, the assets of the Trust shall be
invested and reinvested by Trustee, without distinction between
principal and income, at such time or times in such investments
and pursuant to such investment strategies or courses of action
and in such shares and proportions, as Trustee, in its sole
discretion, shall deem advisable. Except as otherwise provided
herein, Trustee may invest in securities (including stock or
rights to acquire stock) or obligations issued by Company. All
rights associated with assets of the Trust shall be exercised by
Trustee or the person designated by Trustee, and shall in no
event be exercisable by or rest with Plan participants.
(b) Company shall have the right, at any time, and from
time to time in its sole discretion, to substitute assets of
equal fair market value for any asset held by the Trust. This
right is exercisable by Company in a nonfiduciary capacity
without the approval or consent of any person in a fiduciary
capacity. In connection with any substitution of assets
described in this Section 5(b), Company Stock may not revert to
Company in kind at any time following a voting record date for
any meeting of Company stockholders and before such meeting,
unless Trustee shall have voted such shares by proxy. Such
reversion may occur immediately following the stockholders'
meeting to which such record date relates. Further, any such
substitution may be made only out of property available to the
Company for the purchase of shares of stock under applicable
state law, as determined by Company.
(c) Subject to the provisions of Section 5A, investment
authority over the Trust's assets, or any portion thereof, other
than dividends on Company Stock held by the Trust, may be
reserved by Company to itself from time to time in its absolute
discretion, prior to a Change of Control. Any such reservation
of discretionary authority by Company shall be communicated to
Trustee in writing. In this regard, unless Company notifies
Trustee to the contrary, Company shall act through its Treasurer,
or any person who such Treasurer authorizes in writing to act on
his behalf or any other person who is authorized to act on
Company's behalf by a resolution of Company's Board of Directors.
Company shall furnish Trustee from time to time with a list of
the names and signatures of all persons authorized to so act.
Notwithstanding anything to the contrary contained herein,
following a Change of Control, Company may not reserve
discretionary authority for the management and control of any
assets of the Trust and any prior reservation then in effect
shall immediately be nullified.
(d) Trustee shall be under no duty or obligation to review
or to question any direction of Company pursuant to authority
reserved under subsection (c) of this Section 5, or to review
securities or any other property so held with respect to prudence
or proper diversification, or to make any suggestions or
recommendation to Company with respect to the retention or
investment of any such assets and shall have no authority to take
any action or to refrain from taking any action with respect to
any such assets unless and until it is directed to do so by
Company. Notwithstanding anything to the contrary in this Trust
Agreement, Company does hereby discharge, indemnify and hold
harmless Trustee, its directors, officers, employees, and agents,
from and against any and all losses, costs, damages, claims,
penalties, expenses (including reasonable attorneys' fees and
expenses) or liabilities arising in connection with Trustee's
administration of the Trust consistent with Section 5(c).
(e) Trustee shall be responsible for assuring the daily
investment of cash balances, unless directed otherwise by the
Company pursuant to authority reserved in subsection (c) of this
Section 5, so as to maintain uninvested cash balances at a
minimum.
(f) Without in any way limiting the powers and discretions
conferred upon Trustee by the other provisions of this Trust
Agreement, Trustee (and Company acting pursuant to authority
reserved under subsection (c) of this Section 5) shall be vested
with the following powers and discretions (to be exercised in
light of the nature and purpose of this Trust) with respect to
the assets of the Trust subject to its management and control:
(1) To invest and reinvest in any property, real,
personal or mixed, wherever situated and whether or not
productive of income or consisting of wasting assets,
including without limitation, common and preferred stocks,
bonds, notes, debentures (including convertible stocks and
securities), leaseholds, mortgages, certificates of deposit
or demand or time deposits (including any such deposits with
Trustee), shares of investment companies and mutual funds,
interests in partnerships and trusts, insurance policies and
annuity contracts, and oil, mineral or gas properties,
royalties, interests or rights, without being limited to the
classes of property in which trustees are authorized to
invest by any law or any rule of court of any state and
without regard to the proportion any such property may bear
to the entire amount of the Trust;
(2) To invest and reinvest all or any portion of the
Trust collectively through the medium of any common,
collective or commingled trust fund that may be established
and maintained by Trustee, to be held and invested subject
to all of the terms and conditions thereof, and such trust
shall be deemed adopted as a part of the Trust to the extent
that assets of the Trust are invested therein;
(3) To retain any property at any time received by the
Trustee;
(4) To sell or exchange any property held by it at
public or private sale, for cash or on credit, to grant and
exercise options for the purchase or exchange thereof, to
exercise all conversion or subscription rights
pertaining to any such property and to enter into any
covenant or agreement to purchase any property in the
future;
(5) To participate in any plan of reorganization,
consolidation, merger, combination, liquidation or other
similar plan relating to property held by it and to consent to or
oppose any such plan or any action thereunder or any contract,
lease, mortgage, purchase, sale or other action by any
person;
(6) To deposit any property held by it with any
protective, reorganization or similar committee, to delegate
discretionary power thereto, and to pay part of the expenses
and compensation thereof and any assessments levied with
respect to any such property so deposited;
(7) To extend the time of payment of any obligation
held by it;
(8) To hold uninvested any monies received by it,
without liability for interest thereon until such
monies shall be invested, reinvested or disbursed;
(9) To exercise all voting or other rights with
respect to any property held by it and to grant proxies,
discretionary or otherwise;
(10) For the purposes of the Trust, to borrow money
from others, to issue its promissory note or notes therefor,
and to secure the repayment thereof by pledging any property
held by it;
(11) To manage, administer, operate, insure, repair,
improve, develop, preserve, mortgage, lease or otherwise
deal with, for any period, any real property or any oil,
mineral or gas properties, royalties, interests, or rights
held by joining with others, using other Trust assets for
any such purposes, to modify, extend, renew, waive or
otherwise adjust any provision for amortization of the
investment in or depreciation of the value of such property;
(12) To employ suitable agents (including but not
limited to actuarial and employee benefit consulting firms)
and counsel, who may be counsel to Company or Trustee, and
to pay their reasonable expenses and compensation from the
Trust to the extent not paid by Company;
(13) To register any securities held in the Trust in
the name of a nominee and to hold any investment in bearer
form, and to combine certificates representing such
investments with certificates of the same issue held by the
Trustee in other fiduciary capacities or to deposit or
arrange for the deposit of such securities in a qualified
central depository even though, when so deposited, such
securities may be merged and held in bulk in the name of the
nominee of such depository with other securities deposited
therein by any other person, or to deposit or arrange for
the deposit of any securities issued by the United States
Government, or an agency or instrumentality thereof, with a
federal reserve bank, but the books and records of Trustee
shall at all times show that all such investments are part
of the Trust;
(14) To settle, compromise, or submit to arbitration
any claims, debts, or damages due or owing to or from the
Trust, respectively, to commence or defend suits or legal
proceedings to protect any interest of the Trust, and to
represent the Trust in all suits or legal proceedings in any
court or before any other body or tribunal; provided,
however, Trustee shall not be required to take any such
action unless it shall have been indemnified by Company or
the Trust to its reasonable satisfaction against liability
and expense it might incur therefrom;
(15) To organize under laws of any state a corporation
or trust for the purpose of acquiring and holding title to
any property which it is authorized to acquire hereunder and
to exercise with respect thereto any or all of the powers
set forth herein; and
(16) Generally, to do all acts consistent with its
duties hereunder, whether or not expressly authorized, that
Trustee may deem necessary or desirable for the protection
of the Trust.
(g) Notwithstanding anything to the contrary contained
herein (other than the provisions of Section 5A hereof), unless
and until directed otherwise by Company, or the occurrence of a
Change of Control, the assets of the Trust (other than dividends
on Company Stock held by the Trust) shall be invested and
reinvested exclusively in the common stock, par value $1.00 per
share, of Company ("Company Stock") except to the extent that
Company directs otherwise with respect to a portion of the assets
in anticipation of reasonable liquidity needs of the Trust.
Trustee shall purchase from Company any such Company Stock
acquired for the Trust, unless Trustee is instructed otherwise by
Company in writing. With respect to assets of the Trust invested
in Company Stock, Trustee shall have no obligation to diversify
investments in the Trust, and shall not be subject to any rule of
applicable law which might otherwise make necessary, require, or
in any way deem appropriate diversification of investments in the
Trust, all such rules being hereby expressly waived.
Notwithstanding anything to the contrary in this Trust Agreement,
Company does hereby discharge, indemnify and hold harmless
Trustee, its directors, officers, employees and agents, from and
against any and all losses, costs, damages, claims, penalties,
expenses (including reasonable attorneys' fees and expenses) or
liabilities arising in connection with such Trustee's
administration of the Trust consistent with this Section 5(g).
(h) Following a Change of Control, Trustee may no
longer invest in Company Stock or any other securities or
obligations issued by Company, and Section 5(g) shall no
longer apply. After a Change of Control, Trustee shall have
and exercise all discretionary authority for the management
and control of Trust assets and shall commence the orderly
disposition of Company Stock, subject to the provisions of
Section 5A hereof to the extent applicable. Trustee may, in
its sole discretion, retain Company Stock acquired prior to
a Change of Control for such period of time as Trustee deems
appropriate and in the best interest of participants and
beneficiaries in the Plan(s). In no event may Trustee make
additional investments in Company Stock on behalf of the
Trust after a Change of Control, other than (i) amounts held
in diversified common investment vehicles in which Trustee
invests, and (ii) through the exercise of rights to acquire
Company Stock attributable to shares held at the time of the
Change of Control, in the Trustee's sole discretion, if the
Trustee deems such exercise appropriate and in best interest
of the participants and beneficiaries in the Plan(s).
Section 5A. Sale of Company Stock by Trustee.
(a) Except as otherwise specifically permitted herein,
Trustee may not sell Company Stock except: (1) as necessary
from time to time to satisfy benefit obligations under the
Plan(s) which are required to be paid by Trustee under this
Trust; (2) pursuant to a tender or exchange offer, by other
than Company, for all or substantially all of the issued and
outstanding Company Stock; or (3) following a Change of
Control; and then only as specifically permitted herein.
(b) Trustee shall provide Company with not less than
30 days prior notice that it proposes to sell any Company
Stock, unless Trustee determines in good faith that such
delay would cause irreparable harm to Trustee or to the
Trust, in which event Trustee shall provide reasonable
notice of such proposed sale. Notice shall be given by
telephone, confirmed promptly by facsimile or first class
mail, postage prepaid. Trustee shall specify in any event
the number of shares proposed to be sold.
(c) Trustee shall make sales of Company Stock pursuant
to an effective registration statement under, or an
exemption (including but not limited to Rule 144) from, the
registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and in compliance with
applicable state securities laws.
(d) Should either Company or Trustee determine in good
faith, with the written advice of counsel delivered to and
in form reasonably acceptable to the other party hereto,
that such proposed sale could not reasonably be made
pursuant to an exemption from the Securities Act, then
Trustee may demand in writing that Company, at Company's
option, either purchase under Section 5A(f) or register
under the Securities Act under Section 5A(e), such number of
shares of Company Stock held and proposed to be sold by
Trustee. Company shall promptly notify Trustee by
telephone, confirmed promptly by facsimile or first class
mail, postage prepaid, whether it elects to proceed under
Section 5A(f) or 5A(e).
(e) If Company elects registration pursuant to a
demand under Section 5A(d) above, then:
(1) As soon as practicable, but in any event within 90
days after receipt of the demand from Trustee, Company
shall:
(i) file with the Securities and Exchange
Commission (the "Commission") a registration statement
covering the shares to be sold and use its reasonable
best efforts to have such registration statement filed
pursuant to this Agreement declared effective as
promptly as practicable. Company shall advise Trustee
of the progress of such filing and of any review
thereof undertaken by the Commission, and promptly
notify Trustee, and confirm such advice in writing, (x)
when such registration statement becomes effective, (y)
when any post-effective amendment to such registration
statement becomes effective and (z) of any request by
the Commission for any amendment or supplement to such
registration statement or any prospectus relating
thereto or for additional information;
(ii) use its reasonable best efforts to
register, qualify, or effect compliance not later than
the effective date of any registration statement filed
pursuant to this Trust Agreement, the shares of Company
Stock registered thereunder under the blue sky laws of
such states or the District of Columbia as the Trustee
may reasonably request; provided, however, that Company
shall not be obligated to qualify as a foreign
corporation or as a dealer in securities or to execute
or file any general consent to service of process under
the laws of any such jurisdiction where it is not so
subject; and, provided, further, that Company reserves
the right not to register or qualify shares of Company
Stock in any jurisdiction where registration or
qualification of such shares would be unreasonably
burdensome;
(iii) from time to time (x) after the
Company has elected to satisfy a demand for sale by
means of registration, immediately advise Trustee of
any event or development, including a material adverse
change in the financial condition, business or affairs
of Company, known to Company (other than events or
developments affecting market or economic conditions
generally), which may have a material adverse impact on
the proposed offering; and (y) within the period of
effectiveness of such registration statement, advise
Trustee of any event or development requiring amendment
or supplement (which amendment or supplement shall be
prepared with reasonable promptness by Company) of the
registration statement or prospectus used in connection
therewith or rendering it inadvisable to use the
prospectus until it is supplemented or amended; and
(iv) furnish to Trustee such number of
copies of any preliminary and final prospectuses and
any amendments and supplements thereto as Trustee may
reasonably request.
(2) Trustee and Company shall negotiate with an
underwriter selected or approved by Company with regard to
the underwriting of such requested registration. Company
shall enter into an underwriting agreement in customary form
with the underwriter(s) and Trustee in which Company and
Trustee (to the extent applicable based only on such
information as is provided in writing by Trustee) shall
provide customary indemnification to such underwriter(s) and
each other.
(3) Company shall have the right to terminate or
withdraw any registration contemplated by it under this
Section 5A(e) prior to or following the effectiveness of
such registration for any reason whatsoever, provided that
it shall thereupon be required to purchase shares pursuant
to Section 5A(f).
(4) Trustee shall provide all such information and
materials and take all such actions, furnish all such
information, execute all such documents and cooperate with
Company in good faith, all as may be reasonably required in
order to permit Company to comply with all applicable
requirements of the Commission and all other applicable laws
or regulations and to obtain acceleration of the effective
date of the registration statement.
(5) All expenses incurred in connection with any
registration, qualification or compliance pursuant to this
Trust Agreement, including without limitation, all
registration, filing and qualification fees, printing and
engraving expenses, fees and disbursements of counsel for
Company, and expenses of any special audits or comfort
letters incidental to or required by such registration,
shall be borne by Company, provided, that Trustee may pay
such expenses and recover same from the Trust if Company
fails to pay such expenses in a timely manner.
(f) Notwithstanding any contrary provision of this
Agreement, if Company advises Trustee of any delays in filing or
effectiveness of more than 60 days, if Company and Trustee are
unable despite good faith efforts to agree as to registration or
an exempt sale, or if a registered sale would not permit Trustee
to sell Company Stock expeditiously enough to meet Trustee's good
faith needs, Trustee may demand that Company purchase, or if
Company elects to purchase stock pursuant to Section 5A(d),
(e)(3) or (g), Company shall purchase the Company Stock desired
to be sold at fair market value, which shall be the volume
weighted average trading price (including only trades which would
meet the time of purchases conditions under Rule 10b-18 under the
Securities Exchange Act of 1934, as amended ("Rule 10b-18"), of a
share of such security on the New York Stock Exchange on the day
that Company receives such demand or gives notice of such
election. Company and Trustee shall use their reasonable best
efforts to agree as to the prompt execution, closing and delivery
of shares and proceeds therefor.
(g) Until a Change of Control, Company may, on notice of a
proposed sale by Trustee, whether or not exempt, elect to
purchase such Company Stock from Trustee at fair market value, as
defined in Section 5A(f), and with the manner, conditions, and
closing of such sale to be agreed upon by Company and Trustee.
(h) Company shall be entitled to postpone the filing of any
registration statement and any amendment or supplement thereto
otherwise required to be prepared and filed by it, or to direct
that Trustee postpone any sale or put if, at the time it receives
a request for registration or sale, (i) Company determines, in
its reasonable business judgment, that such filing, registration
and offering, or sale or put, would materially interfere with the
likely success of a proposed purchase or sale of securities by
Company; or (ii) counsel for Company opines in writing that the
filing of such registration statement, amendment or supplement,
or sale or put would have a material adverse impact on any
material ongoing or pending transaction or program of Company or
any of its subsidiaries or any other circumstances; provided,
that should such delays adversely affect the Trustee's ability to
pay benefits as contemplated by this Trust Agreement, then
Company shall advance such funds as may be reasonably needed by
Trustee for such proposed pending sale.
(i) Notwithstanding any provisions above permitting sale by
Trustee of Company Stock, Trustee shall, until a Change of
Control or a tender or exchange offer for all or substantially
all of the issued and outstanding Common Stock, limit sales,
whether registered or exempt (other than sales described in
Section 5A(f)), by reference to the volume limitations for issuer
repurchases within Rule 10b-18; provided, that block sales may
not exceed 25% of the trading volume on the New York Stock
Exchange, Inc. for the 14 day period prior to such sale. Company
shall provide all information reasonably required by Trustee to
make determinations as to the number of shares which may be sold,
and Trustee shall promptly notify Company as to all sales made
other than through a registered public offering.
(j) Company and Trustee shall each cooperate in good faith
and employ their reasonable best efforts in permitting and
effecting any purchase or sale of Company Stock as contemplated
in this Section 5A and each shall comply with all applicable laws
and regulations relating to the foregoing including, without
limitation, federal and state securities laws, rules and
regulations issued thereunder, and any other governmental or
stock exchange requirements or regulations relating thereto.
Section 6. Disposition of Income.
During the term of this Trust, all income received by the
Trust, net of expenses and taxes, shall be accumulated and
reinvested.
Section 7. Accounting by Trustee.
Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions
required to be made, including such specific records as shall be
agreed upon in writing between Company and Trustee. Within forty-
five (45) days following the close of each calendar year and
within forty-five (45) days after the removal or resignation of
the Trustee, Trustee shall deliver to Company a written account
of its administration of the Trust during such year or during the
period from the close of the last preceding year to the date of
such removal or resignation, setting forth all investments,
receipts, disbursements and other transactions effected by it,
including a description of all securities and investments
purchased and sold with the cost or net proceeds of such
purchases or sales (accrued interest paid or receivable being
shown separately), and showing all cash, securities and other
property held in the Trust at the end of such year or as of the
date of such removal or resignation, as the case may be. In
addition, as of the end of each calendar month (referred to in
this Trust as a "valuation date"), within ten (10) days after
each such month-end, Trustee shall deliver to Company a written
account setting forth the value of the Trust's assets, together
with such other information as shall be agreed upon between
Company and Trustee.
Section 8. Responsibility of Trustee.
(a) Trustee shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent
person acting in like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character and
with like aims, provided, however, that Trustee shall incur no
liability to any person for (i) any action taken pursuant to a
direction, request or approval given by Company or a Trustee's
Contractor which is contemplated by, and in conformity with, the
terms of the Plan(s) or this Trust and is given in writing by
Company or a Trustee's Contractor (other than Trustee when it
acts as Trustee's Contractor), or (ii) the investment in, or
retention of, Company Stock pursuant to the terms of this
Agreement, and no such action shall be considered a breach of the
fiduciary standard herein set forth. In the event of a dispute
between Company or a Trustee's Contractor and a party, Trustee
may apply to a court of competent jurisdiction to resolve the
dispute.
(b) If Trustee undertakes or defends any litigation arising
in connection with this Trust or a Plan (including without
limitation any action to compel funding of the Trust pursuant to
Section 1 hereof, to compel Company to take any action under the
Trust or the Plan(s), or to determine Trustee's obligations
hereunder), Trustee shall be indemnified by the Trust against
Trustee's costs, expenses and liabilities (including, without
limitation, reasonable attorneys' fees and expenses) relating
thereto and the Trust shall be primarily liable for such
payments, other than those arising from Trustee's negligence or
willful misconduct. Trustee shall also be entitled to reasonable
payment from the Trust for the allocation of Trustee's personnel
to the investigation and defense or prosecution thereof, at
Trustee's normal hourly billing rates. If such costs, expenses
and liabilities are not paid from the Trust for any reason
(including without limitation insufficiency of the Trust's assets
to satisfy such obligations) in a reasonably timely manner,
Company agrees to indemnify Trustee against such costs, expenses
and liabilities. Anything in this subsection (b) to the contrary
notwithstanding, Company shall indemnify and hold Trustee
harmless from and against all costs, expenses and liabilities
arising out of or relating to the acquisition, retention or
disposition of Company Stock, except with respect to matters
covered by the Trustee's indemnity to be provided under Section
5A(e)(2).
(c) Trustee may consult with legal counsel (who may also be
counsel for Company generally) with respect to any of its duties
or obligations hereunder.
(d) Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants or other professionals
to assist it in performing any of its duties or obligations
hereunder.
(e) Trustee shall have, without exclusion, all powers
consistent with the terms hereof conferred on trustees by
applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an
asset of the Trust, Trustee shall have no power to name a
beneficiary of the policy other than the Trust, to assign the
policy (as distinct from conversion of the policy to a different
form) other than to a successor Trustee, or to loan to any person
the proceeds of any borrowing against such policy.
(f) Notwithstanding any powers granted to Trustee pursuant
to this Trust Agreement or to applicable law, Trustee shall not
have any power that could give this Trust the objective of
carrying on a business and dividing the gains therefrom, within
the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal
Revenue Code.
Section 9. Compensation and Expenses of Trustee.
All administrative and Trustee's fees as agreed upon between
Trustee and Company and reasonable expenses actually incurred by
the Trustee in performing its duties hereunder including the fees
and expenses of any third party which provides services
contemplated herein or in the Plan(s) shall be paid by Trustee
from the assets of the Trust and, until so paid, shall constitute
a lien on the assets of the Trust. If not so paid, the fees and
expenses shall be paid by Company.
Section 10. Resignation and Removal of Trustee.
(a) Trustee may resign at any time by written notice to
Company, which shall be effective sixty (60) days after receipt
of such notice unless Company and Trustee agree otherwise;
provided that in no event shall any such resignation take effect
prior to the appointment of a successor Trustee.
(b) Trustee may be removed by Company on sixty (60) days
notice or upon shorter notice accepted by Trustee.
(c) Upon a Change of Control, as defined herein, Trustee may
not be removed by Company for one (1) year. Additionally, after
the expiration of the one (1) year period following a Change of
Control, Trustee may be removed by Company only if Company first
obtains the express written consent to such removal of more than
twenty-five percent (25%) of the participants in the Plan(s).
(d) If Trustee resigns or is removed within one (1) year of
a Change of Control, as defined herein, Trustee shall select a
successor Trustee in accordance with the provisions of Section
11(b) hereof prior to the effective date of Trustee's resignation
or removal. Additionally, if Trustee resigns or is removed after
expiration of the one (1) year period following a Change of
Control, Company may select a successor Trustee in accordance
with the provisions of Section 11(b) hereof if it shall first
obtain the express written consent to the appointment of the
proposed successor of more than twenty-five percent (25%) of the
participants in the Plan(s). If Company fails to so appoint a
successor Trustee, Trustee shall select a successor Trustee.
Upon the appointment and acceptance by, and transfer of assets
to, a successor Trustee, Trustee shall have no further
responsibilities under this Trust Agreement.
(e) Upon resignation or removal of Trustee and appointment
of a successor Trustee, all assets shall subsequently be
transferred to the successor Trustee. The transfer shall be
completed within sixty (60) days after receipt of notice of
resignation, removal or transfer, unless Company extends the time
limit.
(f) If Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 11 hereof, by the effective
date of resignation or removal under paragraph (a) of this
section. If no such appointment has been made, Trustee may apply
to a court of competent jurisdiction for appointment of a
successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed and charged to
the Trust as administrative expenses of the Trust.
Section 11. Appointment of Successor.
(a) If Trustee resigns or is removed in accordance with
Section 10(a) or (b) or (c) hereof, Company may, subject to
Section 10(d), appoint any third party, such as a bank trust
department or other party that may be granted corporate trustee
powers under state or federal law, as a successor to replace
Trustee upon resignation or removal. The appointment shall be
effective when accepted in writing by the new Trustee, who shall
have all the rights and powers of the former Trustee, including
ownership rights in the Trust assets. The former Trustee shall
execute any instrument necessary or reasonably requested by
Company or the successor Trustee to evidence the transfer.
(b) If Trustee resigns or is removed pursuant to the
provisions of Section 10(a), (b), (c) or (d) hereof and selects a
successor Trustee pursuant to Section 10(d) hereof, Trustee may
appoint any third party such as a bank trust department or other
party that may be granted corporate trustee powers under state or
federal law. The appointment of a successor Trustee shall be
effective when accepted in writing by the new Trustee. The new
Trustee shall have all the rights and powers of the former
Trustee, including ownership rights in Trust assets. The former
Trustee shall execute any instrument necessary or reasonably
requested by the successor Trustee to evidence the transfer.
(c) A former Trustee shall prepare and deliver to Company
and to the successor Trustee a final accounting unless Company
waives Company's right to such accounting, and such accounting
shall be effective through the date of the former Trustee's
transfer of all assets to its successor. The successor Trustee
need not examine the records and acts of any prior Trustee unless
requested to do so by Company (and, after a Change of Control,
unless the successor Trustee in addition concludes that there is
a reasonable basis for such request by Company) and may retain or
dispose of existing Trust assets, subject to Sections 7 and 8
hereof. Subject to the foregoing, the successor Trustee shall
not be responsible for and Company shall indemnify and defend the
successor Trustee from any claim or liability resulting from any
action or inaction of any prior Trustee or from any other past
event, or any condition existing at the time it becomes successor
Trustee. The compensation arrangement for the successor Trustee
shall be reasonable in relation to the services to be performed
by the successor Trustee.
Section 12. Amendment or Termination.
(a) This Trust Agreement (including Appendix A hereto) may
be amended by a written instrument executed by Trustee and
Company. Notwithstanding the foregoing, (i) no such amendment
shall conflict with the terms of the Plan(s) as then in effect or
shall make the Trust revocable after it has become irrevocable in
accordance with Section 1(b) hereof and (ii) the duties and
responsibilities of Trustee shall not be increased without
Trustee's written consent.
(1) Furthermore, notwithstanding anything to the
contrary in this Trust Agreement (except as otherwise
provided in this Section 12), (i) prior to a Change of
Control, no amendment shall be made to Section 1(d) through
(h), Section 2, Section 4, Section 5(h), Section 10(c),
Section 10(d), this Section 12(a), Section 13(d), Section
13(g), Section 13(j), and Section 13(k), and no deletion
shall be made in Appendix A, without the prior written
consent of more than twenty-five percent (25%) of the
adversely affected participants in the Plan(s) unless such
amendment would not, in the opinion of counsel, have a
material and adverse effect on the rights or interests of
such participants; and (ii) following a Change of Control,
no amendment shall be made to any provision of this Trust
Agreement (including Appendix A hereto) without the prior
written consent of more than twenty-five percent (25%) of
the adversely affected participants in the Plan(s) unless
such amendment would not, in the opinion of counsel, have a
material and adverse effect on the rights or interests of
such participants.
(2) The limitations contained in Section 12(a)(1)
shall not apply with respect to any amendment which is
reasonably necessary, in the opinion of counsel, to preserve
the status of the Trust as a grantor trust and the status of
the Plan(s) as unfunded for federal income tax purposes and
for purposes of the Employee Retirement Income Security Act
of 1974, as amended, or to guard against an adverse impact
on Plan participants or beneficiaries and which, in the
opinion of counsel, is drafted primarily to preserve such
status or to reduce or eliminate such adverse impact on such
person or persons.
(3) In each instance in which an opinion of counsel is
contemplated in this Section 12(a) prior to a Change of
Control, such opinion shall be in writing and delivered to
Trustee, rendered by a nationally recognized law firm
selected by Company, and in each instance in which an
opinion of counsel is contemplated in this Section 12(a)
after a Change of Control, such opinion shall be in writing
and delivered to Trustee, rendered by a nationally
recognized law firm selected by the Trustee's Contractor.
Trustee may rely on all such opinions and determinations.
(b) The Trust shall not terminate until the date on which
Plan participants and their beneficiaries are no longer entitled
to benefits from Company pursuant to the terms of the Plan(s).
Upon termination of the Trust any assets remaining in the Trust
shall be returned to Company.
(c) Upon written approval of participants or beneficiaries
entitled to payment of benefits pursuant to the terms of the
Plan(s), Company may terminate this Trust prior to the time all
benefit payments under the Plan(s) have been made. All assets in
the Trust at termination shall be returned to Company.
(d) Trustee may rely for purposes of this Section 12 on a
certificate furnished by Company prior to a Change of Control,
and by the Trustee's Contractor after a Change of Control,
(i) with respect to any amendment requiring the prior written
consent of more than twenty-five percent (25%) of the adversely
affected participants in the Plan(s) pursuant to subsection (a)
of this Section 12, that such consent has been obtained, (ii)
with respect to subsection (b) of this Section 12, that Plan
participants and their beneficiaries are no longer entitled to
benefits pursuant to the terms of the Plan(s), and (iii) with
respect to subsection (c) of this Section 12, that the written
approval of participants or beneficiaries entitled to payment of
benefits pursuant to the terms of the Plan(s) has been obtained.
Section 13. Miscellaneous.
(a) Any provision of this Trust Agreement prohibited by law
shall be ineffective to the extent of any such prohibition,
without invalidating the remaining provisions hereof.
(b) Benefits payable to Plan participants and their
beneficiaries under this Trust Agreement may not be anticipated,
assigned (either at law or in equity), alienated, pledged,
encumbered or subjected to attachment, garnishment, levy,
execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed
in accordance with the laws of New York.
(d) For purposes of this Trust, Change of Control shall
mean: (i) any "person" (as such term is defined in the
Securities Exchange Act of 1934, as amended), other than a
trustee or other fiduciary holding securities under an employee
benefit plan of Company or a corporation owned directly or
indirectly by the shareholders of Company in substantially the
same proportions as their ownership of stock of Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under
said Act), directly or indirectly, of securities of Company
representing 20% or more of the total voting power represented by
Company's then outstanding voting securities; or (ii) during any
period of two consecutive years, individuals who at the beginning
of such period constitute the Board of Directors of Company and
any new director whose election by the Board of Directors or
nomination for election by Company's shareholders was approved by
a vote of at least two-thirds of the directors who either were
directors at the beginning of the two-year period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof.
Notwithstanding anything to the contrary in this Trust Agreement,
for purposes of Section 5 and Section 5A hereof, "50%" shall be
substituted for "20%" where such reference appears in clause (i)
of this Section 13(d). For all purposes of this Trust Agreement,
Trustee shall have no responsibility whatsoever to determine
whether or not a Change of Control of Company has occurred.
(e)(1) After the execution of this Trust Agreement,
Company shall promptly file with Trustee, and following the
appointment of a Trustee's Contractor, Company shall
promptly file with the Trustee's Contractor, a certified
list of the names and specimen signatures of the officers of
Company and any delegate authorized to act for it. Unless
Company notifies Trustee to the contrary, Company shall act
through its Treasurer or any person who such Treasurer
authorizes in writing to act on his behalf or any other
person who is authorized to act on Company's behalf by a
resolution of Company's Board of Directors. Company shall
promptly notify Trustee and the Trustee's Contractor, if
applicable, of the addition or deletion of any person's name
to or from such list, respectively. Until receipt by
Trustee and/or the Trustee's Contractor of notice that any
person is no longer authorized so to act, Trustee or the
Trustee's Contractor may continue to rely on the authority
of the person. All certifications, notices and directions
by any such person or persons to Trustee or the Trustee's
Contractor shall be in writing signed by such person or
persons. Trustee and the Trustee's Contractor may rely on
any certification, notice or direction of Company that the
Trustee or the Trustee's Contractor reasonably believes to
have been signed by a duly authorized officer or agent of
Company. Trustee and the Trustee's Contractor shall have no
responsibility for acting or not acting in reliance upon any
notification reasonably believed by Trustee or the Trustee's
Contractor to have been signed by a duly authorized officer
or agent of Company.
(e)(2) After the engagement of a Trustee's Contractor
(other than Trustee), the Trustee's Contractor shall
promptly file with Trustee a certified list of the names and
specimen signatures of the officers of the Trustee's
Contractor and any delegate authorized to act for it.
Trustee's Contractor shall promptly notify Trustee of the
addition or deletion of any person's name to or from such
list. Until receipt by Trustee of notice that any person is
no longer authorized so to act, Trustee may continue to rely
on the authority of the person. All certifications, notices
and directions by any such person or persons to Trustee
shall be in writing signed by such person or persons.
Trustee may rely on any such certification, notice or
direction of the Trustee's Contractor that Trustee
reasonably believes to have been signed by or on behalf of a
duly authorized officer or agent of the Trustee's
Contractor. Trustee shall have no responsibility for acting
or not acting in reliance upon any notification reasonably
believed by the Trustee to have been signed by a duly
authorized officer or agent of the Trustee's Contractor.
(f) Neither the gender nor the number (singular or plural)
of any word shall be construed to exclude another gender or
number when a different gender or number would be appropriate.
(g)(1) This Trust Agreement shall be binding upon and
inure to the benefit of any successor(s) to Company and
Trustee.
(g)(2)(A) If there is a transfer of any liability for
the payment of any Transferred Benefit (as defined below) to
any individual or entity (the "New Company") as a result of
any transaction, including without limitation any sale of
Company, its business or a portion thereof, merger,
consolidation, reorganization, spin-off, division or
transfer of assets (hereinafter a "corporate transaction")
and there is a "Default" (as defined below) by New Company
with respect to the payment of such benefit, Company shall
(subject to this Section 13(g)(2)) pay such unpaid
Transferred Benefit which is otherwise due and payable (and
such payment may be made on Company's behalf from this Trust
pursuant to Section 2) if (i) this Trust remains in effect
at the time such benefit is payable, (ii) there are
sufficient assets in this Trust to pay such benefit and
(iii) Section 13(g)(3) does not apply to such corporate
transaction.
(g)(2)(B) For purposes of this Section 13(g)(2):
(i) the term "Transferred Benefit" shall mean any
Plan benefit (I) which is attributable to compensation
deferrals made for pay periods ending before the
effective date of such corporate transaction under any
Plan(s) which are plans of deferred compensation and
any interest on such deferrals (at an interest rate no
higher than the rate payable under the terms of the
Plan as of the date of such transaction) or which was
accrued under any Plan(s) which are supplemental
retirement or pension plans before the effective date
of any such transaction, (II) for which the liability
for payment was transferred to New Company in
connection with such corporate transaction and
(III) which are properly payable under the terms and
conditions of the Plan(s) as in effect as of the date
of such corporate transaction; and
(ii) the term "Default" shall mean a default on
the payment of a Transferred Benefit by the New Company
if (I) the affected participant or beneficiary has
timely and properly made a claim for such benefit and
has exhausted all claims and claims review procedures
properly imposed under the terms of the Plan(s) with
respect to such benefit, (II) such participant or
beneficiary has agreed to provide and timely provides
whatever information Company or a Trustee's Contractor
might request from such person with respect to such
Transferred Benefit and New Company and (III) such
participant or beneficiary promptly takes whatever
action is reasonably requested by Company or the
Trustee's Contractor to enable Company or the Trustee
to be fully subrogated to the extent of any such
payments to all the rights, claims and remedies such
participant or beneficiary might have against New
Company for the payment of the related Transferred
Benefits. Trustee shall not be required to take any
action with respect to a subrogation claim unless there
are sufficient assets in the Trust to cover the expense
thereof.
(g)(2)(C) The liability of Company under this Section
13(g)(2) shall not exceed the value of the assets of the
Trust as of the date payment is to be made by Company under
this Section 13(g)(2).
(g)(3) The provisions of Section 13(g)(2) shall not
apply to, and Company for purposes of Section 12(b) and each
other provision of this Trust Agreement shall be deemed to
have paid in full and shall have no further obligation to
pay, any Transferred Benefit which is payable following any
corporate transaction (i) which involves a Disposition, if
there is established, or there is imposed on Company's
successor an obligation to establish (or there is otherwise
provided with respect to affected Plan participants and
beneficiaries), with respect to the Transferred Benefit an
irrevocable trust which, in the opinion of counsel, meets
the requirements for a "rabbi trust" as set forth in the
model grantor trust agreement contained in Rev. Proc. 92-64,
1992-2 C. B. 422, or any successor to such Revenue
Procedure, with a bank as trustee, and which when
established (or, if already in existence, at the effective
date of such corporate transaction) is funded to at least
the funding level of this Trust, or (ii) which does not
involve a Disposition, if (A) there is established, or there
is imposed on Company's successor an obligation to
establish, with respect to the Transferred Benefit a trust
which, in the opinion of counsel, has terms substantially
similar to any one of the Trusts under Executive Benefit
Plan(s) established by Company or a subsidiary on or before
the date hereof, as such trusts are then in effect, with a
bank as trustee, and which when established is funded to at
least the funding level of this Trust; or (B) the
Transferred Benefit becomes covered, as of the effective
date of such corporate transaction, by any trust described
in, or previously established pursuant to, (A) above and
which trust, if such transfer takes place on or after a
Change of Control has occurred, is funded (after taking into
account the Transferred Benefit) to at least the funding
level of this Trust. The determination of whether the
requirements of the preceding sentence have been satisfied
shall be made by Company; provided, however, that following
the engagement of a Trustee's Contractor, such
determinations shall be made by Trustee's Contractor. The
opinions of counsel contemplated in this Section 13(g)(3)
shall be in writing and delivered to Trustee, rendered by
counsel for Company or, following the engagement of a
Trustee's Contractor, counsel selected by Trustee's
Contractor. Trustee may rely on the accuracy of all such
determinations and opinions. For purposes of this Section
13(g)(3), "funding level" shall have the meaning ascribed to
such term in Section 1(e)(2) hereof, except that (i) in
determining Current Liability of a trust other than this
Trust, reference shall be made to liabilities under the
plan(s) covered by each such trust and (ii) in determining
funding level as of any date other than the last day of any
trust's (including this Trust's) fiscal year, there may be
employed reasonable estimation techniques, consistently
applied.
(g)(4) For purposes of this Trust Agreement, there
shall be a "Disposition" of Company or its business, or a
portion thereof, whenever as a result of any transaction the
Company, successor(s) to Company or its business, or a
portion thereof as the case may be, is not a member of
Company's "controlled group of corporations", as such term
is defined in Section 1563(a) of the Internal Revenue Code
of 1986, as amended, substituting "more than 50 percent" for
the phrase "at least 80 percent" each place it appears in
Section 1563(a)(1).
(h) This Trust Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but all of which shall together constitute only one Agreement.
(i) Communications to Trustee shall be sent to Bankers Trust
Company, 280 Park Avenue, New York, New York 10017 - ATTENTION:
Senior Vice President, Retirement Services Group, or to such
other address as Trustee may specify in writing. No
communication shall be binding upon Trustee until it is received
by Trustee. Communications to Company and the Trustee's
Contractor shall be sent to the principal offices of Company or
the Trustee's Contractor, as the case may be, or to such other
address as Company or the Trustee's Contractor, as applicable,
may specify in writing.
(j) In the event the participants and beneficiaries in one
or more of the Plan(s) are determined generally to be subject to
federal income tax on any amount in the Trust prior to the time
of payment hereunder, the entire amount determined to be so
taxable shall be distributed by Trustee to each affected
participant or beneficiary. Company may, at its option, make
such payments directly to affected participants and
beneficiaries. An amount shall be determined to be subject to
federal income tax upon the earliest of: (a) a final
determination by the United States Internal Revenue Service
addressed to a participant or beneficiary which is not appealed
to the courts; (b) a final determination by the United States Tax
Court or any other federal court affirming any such determination
by the Internal Revenue Service; or (c) an opinion by counsel for
Company reasonably acceptable to Trustee addressed to Company and
Trustee, that, by reason of the Treasury Regulations, amendments
to the Internal Revenue Code, published Internal Revenue Service
rulings, court decisions or other substantial precedent, amounts
hereunder are generally subject to federal income tax prior to
payment; provided, that following a Change of Control, only an
opinion by counsel selected by the Trustee's Contractor may be
accepted by Trustee for purposes of (c). Company shall undertake
at its sole expense to defend any tax claims described herein
which are asserted by the Internal Revenue Service against any
participant or beneficiary and which it determines would affect
participants or beneficiaries generally, including attorneys'
fees and costs of appeal, and shall have the sole authority to
determine whether or not to appeal any determination made by the
Internal Revenue Service or by a lower court. Company also
agrees to reimburse any participant or beneficiary for any
interest or penalties in respect of tax claims hereunder which it
determines would affect participants or beneficiaries generally,
upon receipt of documentation of same. Any distributions from
the Trust to a participant or beneficiary under this Section
13(j) (other than reimbursements of interest or penalties
referred to in the preceding sentence) shall reduce the benefits
payable to such participant and/or beneficiary under the Plan(s).
(k) In the event that Company shall fail to satisfy any
obligation of Company to a Plan participant or beneficiary under
this Trust Agreement, or in one or more of the Plan(s), after
reasonable notice and demand with respect thereto, and one or
more participants or beneficiaries obtains a final determination
by a court of competent jurisdiction that Company has so failed,
such participant(s) or beneficiary(ies) shall be indemnified by
the Trust against reasonable and appropriate costs and
expenses (including without limitation reasonable attorneys' fees
and expenses) relating thereto and the Trust shall be primarily
liable for such payments. Interest on any Plan benefit payments
which such court determines have been delayed to the extent
interest or similar payments in an equal or greater amount are
not provided in the Plan or by the court or otherwise shall also
be paid from the assets of the Trust. Such interest shall be
calculated using a rate of interest equal to the rate of interest
on ten (10) year United States Treasury obligations, as
determined on the first day of each calendar quarter, compounded
quarterly. If such costs, expenses and interest are not paid
from the Trust for any reason (including without limitation
insufficiency of the Trust's assets to satisfy such obligations)
in a reasonably timely manner, such participant(s) or
beneficiary(ies) may obtain payment from Company.
(l) Nothing herein shall be construed as restricting or
limiting in any way amendment of the Plan(s) in accordance with
the terms of the Plan(s).
(m) Any other provisions of this Trust Agreement to the
contrary notwithstanding, this Trust shall terminate no later
than the twenty-first anniversary of the date of death of the
survivor from among a class consisting of all of the descendants
of the late Joseph P. Kennedy, the former Ambassador to the Court
of Saint James, who are living on the date of the establishment
of the Trust and, if the Trust is still in existence on such
anniversary date, Trustee shall dispose of the Trust as Company
shall direct.
(n) In case of any conflict or inconsistency between the
terms of this Trust Agreement and any Plan, the terms of this
Trust Agreement shall control.
Section 14. Effective Date.
The effective date of this Trust Agreement shall be the date
of its execution set forth on page 1 of the Trust Agreement.
IN WITNESS WHEREOF, the parties hereto have caused the Trust
Agreement to be duly executed and their respective corporate
seals to be hereto affixed on the date set forth on page 1 of the
Trust Agreement.
BELLSOUTH CORPORATION
By:____/S/ Arlen G. Yokley_______
Title: Vice President, Secretary
and Treasurer
(CORPORATE SEAL)
ATTEST:__/S/ Marcy A. Bass___
Title:___Assistant Secretary_
BANKERS TRUST COMPANY,
as Trustee
By:___/S/ Gary D. Cohen_______
Title:__Vice President________
(CORPORATE SEAL)
ATTEST:__/S/ Marie B. Colaninno__
Title:_______Vice President______
APPENDIX A
BellSouth Nonqualified Deferred Compensation Plan
BellSouth Nonqualified Deferred Income Plan
BellSouth Corporation Supplemental Executive Retirement
Plan
BellSouth Corporation Executive Incentive Award Deferral
Plan
BellSouth Corporation Section 415 Excess Pension Plan
08/10/95/BST.EXE
BELLSOUTH TELECOMMUNICATIONS, INC.
TRUST UNDER EXECUTIVE BENEFIT PLAN(S)
TABLE OF CONTENTS
Section 1. Establishment of Trust 2
Section 2. Payments to Plan Participants and
Their Beneficiaries 5
Section 3. Trustee Responsibility Regarding
Payments to Trust Beneficiary When
Company is Insolvent 9
Section 4. Payments to Company 10
Section 5. Investment Authority 11
Section 5A. Sale of Company Stock by Trustee 16
Section 6. Disposition of Income 20
Section 7. Accounting by Trustee 21
Section 8. Responsibility of Trustee 21
Section 9. Compensation and Expenses of Trustee 23
Section 10. Resignation and Removal of Trustee 23
Section 11. Appointment of Successor 24
Section 12. Amendment or Termination 25
Section 13. Miscellaneous 26
Section 14. Effective Date 33
BELLSOUTH CORPORATION
TRUST UNDER EXECUTIVE BENEFIT PLAN(S)
This Agreement made this 28th day of April, 1995, by and
between BellSouth Corporation, a Georgia corporation (Company)
and Bankers Trust Company, a New York corporation (Trustee);
(a) WHEREAS, Company has adopted the nonqualified deferred
compensation Plan(s) as listed in Appendix A;
(b) WHEREAS, Company has incurred or expects to incur
liability under the terms of such Plan(s) with respect to the
individuals participating in such Plan(s);
(c) WHEREAS, to make certain provisions for the payment of
such liability Company and Trustee on April 25, 1990 executed a
trust agreement for the benefit of certain officers and certain
key managers of Company and Company's affiliates who participate
in the Plan(s) (the "Predecessor Trust");
(d) WHEREAS, Company and Trustee on April 29, 1993 amended
and restated the Predecessor Trust insofar as it related to
Company's obligations (but not obligations of subsidiary or other
affiliated entities) to pay benefits under the Plan(s)
(hereinafter, called "Trust") and contributed to the Trust assets
that are held therein, subject to the claims of Company's
creditors in the event of Company's Insolvency, as herein
defined, until full payment has been made in respect of such
obigaations of Company to Plan participants and their
beneficiaries in such manner and at such times as specified in
the Plan(s);
(e) WHEREAS, Company and Trustee now desire to amend and
restate the Trust in the form of this Trust Agreement;
(f) WHEREAS, it is the intention of the parties that this
Trust shall constitute an unfunded arrangement and shall not
affect the status of the Plan(s) as an unfunded plan maintained
for the purpose of providing deferred compensation for a select
group of management or highly compensated employees or as an
excess benefit plan for purposes of Title I of the Employee
Retirement Income Security Act of 1974; and
(g) WHEREAS, it is the intention of Company to make
contributions to the Trust to provide itself with a source of
funds to assist it in the meeting of its liabilities under the
Plan(s);
NOW, THEREFORE, the parties do hereby establish the Trust
and agree that the Trust shall be comprised, held and disposed of
as follows:
Section 1. Establishment of Trust.
(a) Company and Trustee hereby amend and restate in all
respects the Trust in the form of this Trust Agreement. The
principal of the Trust shall be held, administered and disposed
of by Trustee as provided in this Trust Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which
Company is the grantor, within the meaning of subpart E, part I,
subchapter J, chapter 1, subtitle A of the Internal Revenue Code
of 1986, as amended, and shall be construed accordingly.
(d) The principal of the Trust, and any earnings thereon
shall be held separate and apart from other funds of Company and
shall be used exclusively for the uses and purposes of Plan
participants and general creditors as herein set forth. Plan
participants and their beneficiaries shall have no preferred
claim on, or any beneficial ownership interest in, any assets of
the Trust. Any rights created under the Plan(s) and this Trust
Agreement shall be mere unsecured contractual rights of Plan
participants and their beneficiaries against Company. Any assets
held by the Trust will be subject to the claims of Company's
general creditors under federal and state law in the event of
Insolvency, as defined in Section 3(a) herein.
(e)(1) Company, in its sole discretion, may at any
time, or from time to time, make additional deposits of cash
or other property acceptable to Trustee in trust with
Trustee to augment the principal to be held, administered
and disposed of by Trustee as provided in this Trust
Agreement. Neither Trustee nor any Plan participant or
beneficiary shall have any right to compel any such
additional deposits under this subsection (e)(1).
(2) If, as of the last day of a fiscal year of the
Trust, the funding level of the Trust shall be less than
eighty percent (80%) of the Trust's funding level as of the
last day of any of the five (5) most recently preceding
fiscal years (taking into account contributions made under
this Section 1(e)(2) for each such year), Company shall
notify Trustee of such situation and Company shall make an
additional contribution to the Trust as soon as possible,
but in no event longer than one hundred twenty (120) days
following the last day of the fiscal year. Such additional
contribution shall be in an amount which, had such
contribution been made as of the last day of the immediately
preceding fiscal year of the Trust, would have been
sufficient to bring the Trust's funding level at least equal
to the Trust's funding level as of the last day of the
fiscal year among the five (5) most recently preceding
fiscal years on which the Trust's funding level was highest.
For these purposes, "funding level" shall mean the ratio
that the fair market value of the assets in the Trust bears
to the aggregate Current Liability (as defined in Section
1(e)(3) hereof) under the Plan(s). Such funding level shall
be determined by Company; provided, however, that following
the engagement of a Trustee's Contractor, such determination
shall be made by Trustee's Contractor. The Trustee may rely
on the accuracy of all such determinations. In no event
shall such additional contribution be required if, as of the
last day of the fiscal year, the fair market value of the
Trust's assets is one hundred percent (100%), or greater, of
the aggregate Current Liability of Company under the
Plan(s).
(3) For purposes of this Trust, "Current Liability"
shall mean the amount required to pay each Plan participant
or beneficiary the benefits to which Plan participants or
their beneficiaries would be entitled pursuant to the terms
of the Plan(s), to the extent such benefits are obligations
of Company (and not obligations of subsidiary or other
affiliated entities). The Current Liability on any date
with respect to a Plan shall be determined as if the Plan
terminated as of such date using an interest rate equal to
the Pension Benefit Guaranty Corporation valuation interest
rate for immediate annuities as in effect on such date, the
1983 Group Annuity Mortality Table published by the Society
of Actuaries, and reasonable actuarial calculation
principles consistently applied. Current Liability shall be
determined, as of the last day of each fiscal year of the
Trust and at such additional times as are necessary to
implement the provisions of this Trust Agreement, by
Company; provided, however, that following the engagement of
a Trustee's Contractor, such determinations shall be made by
Trustee's Contractor. The Trustee may rely on the accuracy
of all such determinations.
(f) Upon a Change of Control, Company shall promptly notify
Trustee thereof and, as soon as possible, but in no event longer
than one hundred twenty (120) days following the Change of
Control, as defined herein, Company shall make an irrevocable
contribution to the Trust in an amount that is sufficient to pay
each Plan participant or beneficiary the benefits to which Plan
participants or their beneficiaries would be entitled pursuant to
the terms of the Plan(s), to the extent such benefits are
obligations of Company (and not obligations of subsidiary or
other affiliated entities), as of the date on which the Change of
Control occurred. Such contribution shall be in an amount equal
to the excess, if any, of the aggregate Current Liability as of
the date on which the Change of Control occurred over the fair
market value of the Trust's assets as of the valuation date most
recently preceding the date on which such contribution is made.
Thereafter, Company shall make an additional contribution each
fiscal year to the Trust, as soon as possible, but in no event
longer than one hundred twenty (120) days following the last day
of each such fiscal year, in an amount equal to the excess, if
any, of the aggregate Current Liability under the Plan(s) as of
the last day of the fiscal year over the fair market value of the
Trust's assets as determined on the valuation date most recently
preceding the date on which such contribution is made. The
amount of all such contributions shall be determined by Trustee's
Contractor. The Trustee may rely on the accuracy of all such
determinations.
(g) If, as of a Distribution Date with respect to
outstanding rights to purchase Series A First Preferred Stock,
under the terms of and as defined in a Rights Agreement between
Company and Chemical Bank, as Rights Agent, under an agreement
originally dated November 27, 1989 (a "Distribution Date"), the
aggregate Current Liability exceeds the fair market value of the
Trust's assets (such fair market value determined as of the
valuation date most recently preceding such Distribution Date),
Company shall be required to make an additional contribution to
the Trust in an amount equal to such excess or, at Company's
option, to obtain a letter of credit, or a series of letters of
credit, adequate to fund such amount as of such Distribution Date
under the Plan(s) and maintain such letter(s) of credit until
such time as the aggregate Current Liability no longer exceeds
the fair market value of the Trust's assets. The determination
of whether the aggregate Current Liability exceeds the fair
market value of the Trust's assets upon a Distribution Date and,
if so, the amount of such excess, shall be made by Company;
provided, however, that following the engagement of a Trustee's
Contractor, such determinations shall be made by Trustee's
Contractor. The Trustee may rely on the accuracy of all such
determinations. Any such letter of credit, or series of letters
of credit, shall be part of the general assets of Company and
shall not be an asset of this Trust and, unless otherwise agreed
to in writing by Trustee, Trustee shall have no responsibility
whatsoever with respect to the adequacy of, or selection of the
issuer or issuers of, any such letter or letters of credit.
(h) If, in any five (5) consecutive calendar year period,
(i) there are five (5) or more final determinations by courts of
competent jurisdiction that Company has failed to pay (after
reasonable notice and demand for payment) any benefit due under
the terms and conditions of a Plan and that there was no material
issue of fact or law respecting Company's obligation to make such
benefit payment, or (ii) there are two (2) or more final
determinations by courts of competent jurisdiction, in lawsuits
instituted after reasonable notice and demand with respect
thereto, in which the court determines that Company had acted in
bad faith and with a clear and deliberate disregard for Company's
obligations under the Plan(s), there shall be deemed to have
occurred a Change of Control as defined in this Trust Agreement
and Company shall give Trustee prompt written notice of such
event. The term "final determination" means a determination with
respect to which all rights of appeal or to request a review, a
rehearing or redetermination have been exhausted or have lapsed.
Section 2. Payments to Plan Participants and Their
Beneficiaries.
(a) Company, or the Trustee's Contractor if one shall have
been engaged, shall deliver to Trustee a schedule (the "Payment
Schedule") that indicates the amounts payable in accordance with
the terms and conditions of the Plan(s) in respect of each Plan
participant (and his or her beneficiaries), that provides a
formula or other instructions acceptable to Trustee for
determining the amounts so payable, the form in which such amount
is to be paid (as provided for or available under the Plan(s)),
and the time of commencement for payment of such amounts. Except
as otherwise provided herein, Trustee shall make payments to the
Plan participants and their beneficiaries in accordance with such
Payment Schedule. The Trustee shall make provision for the
reporting and withholding of any federal, state or local taxes
that may be required to be withheld with respect to the payment
of benefits pursuant to the terms of the Plan(s) and shall pay
amounts withheld to the appropriate taxing authorities or
determine that such amounts have been reported, withheld and paid
by Company. Payments may be made in cash or, where called for
under the terms of the Plan(s), in Company Stock (as such term is
defined in Section 5(g) hereof). Notwithstanding the foregoing,
if a benefit which is distributable in the form of Company Stock
under the terms of a Plan becomes payable at a time when there is
no (or insufficient) Company Stock in the Trust with which to
satisfy such benefit obligation and if the Company fails or
refuses to pay such benefit within a reasonable time after notice
from Trustee that it has become so payable, Trustee shall use
other assets of the Trust to acquire Company Stock, on the open
market or otherwise in its discretion, sufficient to satisfy such
benefit obligation.
(b) The entitlement of a Plan participant or his or her
beneficiaries to benefits payable by Company under the Plan(s)
shall be determined in accordance with the terms of the Plan(s)
by Company or such party as it shall designate under the Plan(s),
or the Trustee's Contractor if one shall have been engaged, and
any claim for such benefits shall be considered and reviewed and
paid or not paid under the procedures set out in the Plan(s).
Notwithstanding any Plan provision to the contrary, if a
Trustee's Contractor shall have been engaged, all such
determinations shall be made by the Trustee's Contractor whose
determinations shall be final, conclusive and binding on all
persons. Neither Trustee nor Trustee's Contractor shall have any
obligation for determining whether any Plan participant or
beneficiary has died and shall be entitled to rely upon any
information in this regard furnished by Company.
(c) Company may make payment of benefits directly to Plan
participants or their beneficiaries as they become due under the
terms of the Plan(s). In such event, Company shall make
provision for the reporting and withholding of any federal, state
or local taxes that may be required to be withheld with respect
to the payment of benefits pursuant to the terms of the Plans(s)
and shall pay amounts withheld to the appropriate taxing
authorities. Company shall notify Trustee of its decision to
make payment of benefits directly prior to the time amounts are
payable to participants or their beneficiaries. In addition, if
the principal of the Trust, and any earnings thereon, are not
sufficient to make payments of benefits payable by Company in
accordance with the terms of the Plan(s), Company shall make the
balance of each such payment as it falls due. Trustee shall
notify Company where principal and earnings are not sufficient.
(d) Company may engage a third party administrator as a
contractor of the Trustee ("Trustee's Contractor"), who shall not
be a Plan participant or beneficiary (but who may be the
Trustee), to perform functions described in this Section 2(d) and
elsewhere in this Trust Agreement which would otherwise be
performed by Company.
(1) Upon engagement of a Trustee's Contractor, as soon
as practicable but in no event longer than thirty (30) days
thereafter, Company shall furnish to the Trustee's
Contractor copies of the Plan documents, employment records
of participants, and other information necessary to
determine the benefits which are or may become payable by
Company to or with respect to each participant in each Plan,
including any benefits payable after the participant's
death, and the recipient of same and the procedures which
Company has adopted to calculate such benefit payments.
Company shall regularly, at least annually, and upon each
benefit change under the Plan(s) furnish revised, updated
information to the Trustee's Contractor. In the event
Company refuses or neglects to provide updated participant
information as contemplated herein, the Trustee's Contractor
shall be entitled to rely on the most recent information
furnished to it by Company.
(2) In the event of a Change of Control, Company shall
have the duty to engage, as soon as practicable thereafter,
a Trustee's Contractor reasonably acceptable to the Trustee
if there shall at that time be no Trustee's Contractor then
serving. In addition, if as of a Distribution Date (as such
term is defined in Section 1(g) hereof), there shall be no
Trustee's Contractor then serving, Company shall have the
duty to designate on a stand-by basis a Trustee's Contractor
who shall commence to serve as Trustee's Contractor in the
event such Distribution Date is followed by a Change of
Control. After a Change of Control, Company shall not have
any control or authority with respect to the Trustee's
Contractor so engaged or then serving, or any successor
Trustee's Contractor, including without limitation any
rights with respect to the removal or replacement of any
such Trustee's Contractor or its duties pursuant to this
Trust Agreement.
(3) Unless Trustee agrees to perform the functions of
the Trustee's Contractor described herein, Trustee shall
have no responsibility hereunder for any obligation assigned
to a Trustee's Contractor or (subject to subsection (4)
below) for the performance of a Trustee's Contractor's
duties and responsibilities under this Trust Agreement.
(4) Company may replace or remove any Trustee's
Contractor from time to time serving hereunder, in its sole
discretion, prior to the occurrence of a Change of Control.
Following a Change of Control, Trustee, in its sole
discretion, may remove a Trustee's Contractor engaged by
Company or any successor Trustee's Contractor and shall
remove any such person and engage a successor to such person
if Trustee deems such person's performance as a Trustee's
Contractor unsatisfactory. At all times following a Change
of Control, upon any such removal, or the voluntary
resignation of any such Trustee's Contractor or the
occurrence of any other event which shall result in the
cessation of performance of the Trustee's Contractor's
duties hereunder, Trustee shall use its best efforts to
engage a new Trustee's Contractor (which may be Trustee);
provided, however, Trustee shall perform the duties of the
Trustee's Contractor during any period for which Trustee is
unable to find a new Trustee's Contractor (so that there
will be no default in payments under the Plan(s) as a result
of the absence of a Trustee's Contractor), and any person
engaged as a Trustee's Contractor shall in the judgment of
Trustee be independent of Company. The person who removes
or replaces a Trustee's Contractor shall be responsible for
assuring that there is a timely and complete transfer of
records from such Trustee's Contractor to such person's
successor.
(5) Except for the records dealing solely with the
assets of the Trust and investment of those assets, which
shall be maintained by the Trustee, if a Trustee's
Contractor shall be engaged, the Trustee's Contractor shall
maintain all Plan participant records contemplated by this
Agreement, including the Payment Schedule. All such records
and copies of the Plan(s) documents and employment records
of the participants in the possession of the Trustee's
Contractor shall be made available promptly upon request of
Trustee or Company. The Trustee's Contractor shall also
prepare and distribute participant statements to
participants and beneficiaries and shall perform such other
duties and responsibilities contemplated under the terms of
this Trust Agreement as Company or Trustee, as the case may
be, determines is necessary or advisable to achieve the
objectives of this Trust Agreement.
(6) Company shall indemnify and hold harmless the
Trustee's Contractor for any liability or expenses,
including without limitation advances for or prompt
reimbursement of reasonable fees and expenses of counsel and
other agents retained by it, incurred by the Trustee's
Contractor with respect to keeping the records for
participants' benefits, reporting thereon to participants
and beneficiaries, certifying benefit information to
Trustee, determining the status of benefits hereunder and
otherwise carrying out its obligations under this Trust
Agreement, other than those resulting from Trustee's
Contractor's negligence or willful misconduct or its failure
to reasonably calculate and certify the amount of benefits
based on the applicable terms of the Plan documents and
other information and procedures furnished by Company to the
Trustee's Contractor in accordance with this Trust
Agreement. The Trustee's Contractor shall be entitled to
reasonable compensation for services hereunder, the amount
of which shall be agreed upon from time to time by Company
or, following a Change of Control, the Trustee, and the
Trustee's Contractor in writing, and reimbursement for
reasonable expenses incurred in connection with its
performance of such services. Following a Change of
Control, Trustee's good faith determination of compensation
to be paid to a Trustee's Contractor (including Trustee when
it acts in such capacity) shall be binding on the Company
and each other person having an interest in the Trust. All
such compensation and expenses shall be paid by Trustee from
the assets of the Trust. If not so paid, such compensation
and expenses shall be paid by Company.
(7) Except as may be otherwise agreed by the Trustee's
Contractor and Company, or Trustee following a Change of
Control, the Trustee's Contractor's obligations are limited
solely to those explicitly set forth herein and the
Trustee's Contractor shall have no responsibility, authority
or control, direct or indirect, over the maintenance or
investment of the Trust and shall have no obligation in
respect of Trustee or the Trustee's compliance with the
Trustee's Contractor's certifications to Trustee.
Section 3. Trustee Responsibility Regarding Payments to
Trust Beneficiary When Company Is Insolvent.
(a) Trustee shall cease payment of benefits to Plan
participants and their beneficiaries if the Company is Insolvent.
Company shall be considered "Insolvent" for purposes of this
Trust Agreement if (i) Company is unable to pay its debts as they
become due, or (ii) Company is subject to a pending proceeding as
a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as
provided in Section 1(d) hereof, the principal and income of the
Trust shall be subject to claims of general creditors of Company
under federal and state law as set forth below.
(1) The Board of Directors and the Chief Executive
Officer of Company shall have the duty to inform Trustee in
writing of Company's Insolvency. If a person claiming to be
a creditor of Company alleges in writing to Trustee that
Company has become Insolvent, Trustee shall determine
whether Company is Insolvent and, pending such
determination, Trustee shall discontinue payment of benefits
to Plan participants or their beneficiaries.
(2) Unless Trustee has actual knowledge of Company's
Insolvency, or has received notice from Company or a person
claiming to be a creditor alleging that Company is
Insolvent, Trustee shall have no duty to inquire whether
Company is Insolvent. Trustee may in all events rely on
such evidence concerning Company's solvency as may be
furnished to Trustee and that provides Trustee with a
reasonable basis for making a determination concerning
Company's solvency.
(3) If at any time Trustee has determined that Company
is Insolvent, Trustee shall discontinue payments to Plan
participants or their beneficiaries and shall hold the
assets of the Trust for the benefit of Company's general
creditors. Nothing in this Trust Agreement shall in any
way diminish any rights of Plan participants or their
beneficiaries to pursue their rights as general creditors of
Company with respect to benefits due under the Plan(s) or
otherwise.
(4) Trustee shall resume the payment of benefits to
Plan participants or their beneficiaries in accordance with
Section 2 of this Trust Agreement only after Trustee has
determined that Company is not Insolvent (or is no longer
Insolvent).
(c) Provided that there are sufficient assets, if Trustee
discontinues the payment of benefits from the Trust pursuant to
Section 3(b) hereof and subsequently resumes such payments, the
first payment following such discontinuance shall include the
aggregate amount of all payments due from Company to Plan
participants or their beneficiaries under the terms of the
Plan(s) for the period of such discontinuance, less the aggregate
amount of any payments made to Plan participants or their
beneficiaries by Company in lieu of the payments provided for
hereunder during any such period of discontinuance.
Section 4. Payments to Company.
(a) Except as provided in Sections 3, 4(b), 4(c), 5(b) and
12(c) hereof, after the Trust has become irrevocable, Company
shall have no right or power to direct Trustee to return to
Company or to divert to others any of the Trust assets before all
payment of benefits have been made to Plan participants and their
beneficiaries pursuant to the terms of the Plan(s) to the extent
such benefits are obligations of Company.
(b) If, prior to a Change of Control, within sixty (60)
days following the end of a fiscal year of the Trust, Company
provides a written certification to Trustee, reasonably
acceptable to the Trustee that, as of the last day of the fiscal
year, the fair market value of the assets of the Trust exceeds
one hundred twenty percent (120%) of the aggregate Current
Liability, Trustee shall, at Company's request, distribute to
Company all or part of such excess. No distribution pursuant to
this Section 4(b) may be made following a Change of Control.
(c) Prior to a Change of Control, Trustee shall, if so
instructed by Company in writing within thirty (30) days after
the actual filing of Company's federal income tax return for a
year, reimburse Company from the assets of the Trust for federal,
state or local income taxes, or any part thereof, which Company
certifies that it has paid, attributable to income of the Trust
for such year, as determined by Company, within thirty (30) days
after receipt of such request. No reimbursement for taxes
pursuant to this Section 4(c) may be made following a Change of
Control.
(d) Notwithstanding any other provision of this Trust
Agreement, including without limitation Section 1(b) hereof,
prior to a Change of Control Company shall have the right with
respect to each contribution to the Trust (other than
contribution(s) required pursuant to Section 1(e)(2) hereof) to
cause Trustee to return all or any portion of a contribution and
any and all income on such contribution to Company. Such right
shall be exercised by giving written notice to Trustee and shall
be exercisable in a nonfiduciary capacity without the approval or
consent of Trustee or any other person. Such right shall expire
with respect to each contribution to the Trust upon the earlier
of (i) thirty days following the date on which the contribution
is made, (ii) the last day of the taxable year of Company in
which the contribution is made or (iii) a Change of Control.
Company's right under this Section 4(d) shall expire upon a
Change of Control.
Section 5. Investment Authority.
(a) Except as otherwise provided in subsections (c), (d),
(e) and (g) of this Section 5, the assets of the Trust shall be
invested and reinvested by Trustee, without distinction between
principal and income, at such time or times in such investments
and pursuant to such investment strategies or courses of action
and in such shares and proportions, as Trustee, in its sole
discretion, shall deem advisable. Except as otherwise provided
herein, Trustee may invest in securities (including stock or
rights to acquire stock) or obligations issued by Company. All
rights associated with assets of the Trust shall be exercised by
Trustee or the person designated by Trustee, and shall in no
event be exercisable by or rest with Plan participants.
(b) Company shall have the right, at any time, and from
time to time in its sole discretion, to substitute assets of
equal fair market value for any asset held by the Trust. This
right is exercisable by Company in a nonfiduciary capacity
without the approval or consent of any person in a fiduciary
capacity. In connection with any substitution of assets
described in this Section 5(b), Company Stock may not revert to
Company in kind at any time following a voting record date for
any meeting of Company stockholders and before such meeting,
unless Trustee shall have voted such shares by proxy. Such
reversion may occur immediately following the stockholders'
meeting to which such record date relates. Further, any such
substitution may be made only out of property available to the
Company for the purchase of shares of stock under applicable
state law, as determined by Company.
(c) Subject to the provisions of Section 5A, investment
authority over the Trust's assets, or any portion thereof, other
than dividends on Company Stock held by the Trust, may be
reserved by Company to itself from time to time in its absolute
discretion, prior to a Change of Control. Any such reservation
of discretionary authority by Company shall be communicated to
Trustee in writing. In this regard, Company shall act through
its Treasurer, or any person who such Treasurer authorizes in
writing to act on his behalf or any other person who is
authorized to act on Company's behalf by a resolution of
Company's Board of Directors. Company shall furnish Trustee from
time to time with a list of the names and signatures of all
persons authorized to so act. Notwithstanding anything to the
contrary contained herein, following a Change of Control, Company
may not reserve discretionary authority for the management and
control of any assets of the Trust and any prior reservation then
in effect shall immediately be nullified.
(d) Trustee shall be under no duty or obligation to review
or to question any direction of Company pursuant to authority
reserved under subsection (c) of this Section 5, or to review
securities or any other property so held with respect to prudence
or proper diversification, or to make any suggestions or
recommendation to Company with respect to the retention or
investment of any such assets and shall have no authority to take
any action or to refrain from taking any action with respect to
any such assets unless and until it is directed to do so by
Company. Notwithstanding anything to the contrary in this Trust
Agreement, Company does hereby discharge indemnify and hold
harmless Trustee, its directors, officers, employees, and agents,
from and against any and all losses, costs, damages, claims,
penalties, expenses (including reasonable attorneys' fees and
expenses) or liabilities arising in connection with Trustee's
administration of the Trust consistent with Section 5(c).
(e) Trustee shall be responsible for assuring the daily
investment of cash balances, unless directed otherwise by the
Company pursuant to authority reserved in subsection (c) of this
Section 5, so as to maintain uninvested cash balances at a
minimum.
(f) Without in any way limiting the powers and discretions
conferred upon Trustee by the other provisions of this Trust
Agreement, Trustee (and Company acting pursuant to authority
reserved under subsection (c) of this Section 5) shall be vested
with the following powers and discretions (to be exercised in
light of the nature and purpose of this Trust) with respect to
the assets of the Trust subject to its management and control:
(1) To invest and reinvest in any property, real,
personal or mixed, wherever situated and whether or not
productive of income or consisting of wasting assets,
including without limitation, common and preferred stocks,
bonds, notes, debentures (including convertible stocks and
securities), leaseholds, mortgages, certificates of deposit
or demand or time deposits (including any such deposits with
Trustee), shares of investment companies and mutual funds,
interests in partnerships and trusts, insurance policies and
annuity contracts, and oil, mineral or gas properties,
royalties, interests or rights, without being limited to the
classes of property in which trustees are authorized to
invest by any law or any rule of court of any state and
without regard to the proportion any such property may bear
to the entire amount of the Trust;
(2) To invest and reinvest all or any portion of the
Trust collectively through the medium of any common,
collective or commingled trust fund that may be established
and maintained by Trustee, to be held and invested subject
to all of the terms and conditions thereof, and such trust
shall be deemed adopted as a part of the Trust to the extent
that assets of the Trust are invested therein;
(3) To retain any property at any time received by the
Trustee;
(4) To sell or exchange any property held by it at
public or private sale, for cash or on credit, to grant and
exercise options for the purchase or exchange thereof, to
exercise all conversion or subscription rights
pertaining to any such property and to enter into any
covenant or agreement to purchase any property in the
future;
(5) To participate in any plan of reorganization, consolidation,
merger, combination, liquidation or other similar plan relating to property
held by it and to consent to or oppose any such plan or any action
thereunder or any contract, lease, mortgage, purchase, sale or other action
by any person;
(6) To deposit any property held by it with any
protective, reorganization or similar committee, to delegate
discretionary power thereto, and to pay part of the expenses
and compensation thereof and any assessments levied with
respect to any such property so deposited;
(7) To extend the time of payment of any obligation held by it;
(8) To hold uninvested any monies received by it,
without liability for interest thereon until such
monies shall be invested, reinvested or disbursed.
(9) To exercise all voting or other rights with
respect to any property held by it and to grant proxies,
discretionary or otherwise;
(10) For the purposes of the Trust, to borrow money
from others, to issue its promissory note or notes therefor,
and to secure the repayment thereof by pledging any property
held by it;
(11) To manage, administer, operate, insure, repair,
improve, develop, preserve, mortgage, lease or otherwise
deal with, for any period, any real property or any oil,
mineral or gas properties, royalties, interests, or rights
held by joining with others, using other Trust assets for
any such purposes, to modify, extend, renew, waive or
otherwise adjust any provision for amortization of the
investment in or depreciation of the value of such property;
(12) To employ suitable agents (including but not
limited to actuarial and employee benefit consulting firms)
and counsel, who may be counsel to Company or Trustee, and
to pay their reasonable expenses and compensation from the
Trust to the extent not paid by Company;
(13) To register any securities held in the Trust in
the name of a nominee and to hold any investment in bearer
form, and to combine certificates representing such
investments with certificates of the same issue held by the
Trustee in other fiduciary capacities or to deposit or
arrange for the deposit of such securities in a qualified
central depository even though, when so deposited, such
securities may be merged and held in bulk in the name of the
nominee of such depository with other securities deposited
therein by any other person, or to deposit or arrange for
the deposit of any securities issued by the United States
Government, or an agency or instrumentality thereof, with a
federal reserve bank, but the books and records of Trustee
shall at all times show that all such investments are part
of the Trust;
(14) To settle, compromise, or submit to arbitration
any claims, debts, or damages due or owing to or from the
Trust, respectively, to commence or defend suits or legal
proceedings to protect any interest of the Trust, and to
represent the Trust in all suits or legal proceedings in any
court or before any other body or tribunal; provided,
however, Trustee shall not be required to take any such
action unless it shall have been indemnified by Company or
the Trust to its reasonable satisfaction against liability
and expense it might incur therefrom;
(15) To organize under laws of any state a corporation
or trust for the purpose of acquiring and holding title to
any property which it is authorized to acquire hereunder and
to exercise with respect thereto any or all of the powers
set forth herein; and
(16) Generally, to do all acts consistent with its
duties hereunder, whether or not expressly authorized, that
Trustee may deem necessary or desirable for the protection
of the Trust.
(g) Notwithstanding anything to the contrary contained
herein (other than the provisions of Section 5A hereof), unless
and until directed otherwise by Company, or the occurrence of a
Change of Control, the assets of the Trust (other than dividends
on Company Stock held by the Trust) shall be invested and
reinvested exclusively in the common stock, par value $1.00 per
share, of Company ("Company Stock") except to the extent that
Company directs otherwise with respect to a portion of the assets
in anticipation of reasonable liquidity needs of the Trust.
Trustee shall purchase from Company any such Company Stock
acquired for the Trust, unless Trustee is instructed otherwise by
Company in writing. With respect to assets of the Trust invested
in Company Stock, Trustee shall have no obligation to diversify
investments in the Trust, and shall not be subject to any rule of
applicable law which might otherwise make necessary, require, or
in any way deem appropriate diversification of investments in the
Trust, all such rules being hereby expressly waived.
Notwithstanding anything to the contrary in this Trust Agreement,
Company does hereby discharge, indemnify and hold harmless
Trustee, its directors, officers, employees and agents, from and
against any and all losses, costs, damages, claims, penalties,
expenses (including reasonable attorneys' fees and expenses) or
liabilities arising in connection with such Trustee's
administration of the Trust consistent with this Section 5(g).
(h) Following a Change of Control, Trustee may no longer
invest in Company Stock or any other securities or obligations
issued by Company, and Section 5(g) shall no longer apply. After
a Change of Control, Trustee shall have and exercise all
discretionary authority for the management and control of Trust
assets and shall commence the orderly disposition of Company
Stock, subject to the provisions of Section 5A hereof to the
extent applicable. Trustee may, in its sole discretion, retain
Company Stock acquired prior to a Change of Control for such
period of time as Trustee deems appropriate and in the best
interest of participants and beneficiaries in the Plan(s). In no
event may Trustee make additional investments in Company Stock on
behalf of the Trust after a Change of Control, other than
(i) amounts held in diversified common investment vehicles in
which Trustee invests, and (ii) through the exercise of rights to
acquire Company Stock attributable to shares held at the time of
the Change of Control, in the Trustee's sole discretion, if the
Trustee deems such exercise appropriate and in best interest of
the participants and beneficiaries in the Plan(s).
Section 5A. Sale of Company Stock by Trustee.
(a) Except as otherwise specifically permitted herein,
Trustee may not sell Company Stock except: (1) as necessary from
time to time to satisfy benefit obligations under the Plan(s)
which are required to be paid by Trustee under this Trust;
(2) pursuant to a tender or exchange offer, by other than
Company, for all or substantially all of the issued and
outstanding Company Stock; or (3) following a Change of Control;
and then only as specifically permitted herein.
(b) Trustee shall provide Company with not less than 30
days prior notice that it proposes to sell any Company Stock,
unless Trustee determines in good faith that such delay would
cause irreparable harm to Trustee or to the Trust, in which event
Trustee shall provide reasonable notice of such proposed sale.
Notice shall be given by telephone, confirmed promptly by
facsimile or first class mail, postage prepaid. Trustee shall
specify in any event the number of shares proposed to be sold.
(c) Trustee shall make sales of Company Stock pursuant to
an effective registration statement under, or an exemption
(including but not limited to Rule 144) from the registration
requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and in compliance with applicable state
securities laws.
(d) Should either Company or Trustee determine in good
faith, with the written advice of counsel delivered to and in
form reasonably acceptable to the other party hereto, that such
proposed sale could not reasonably be made pursuant to an
exemption from the Securities Act, then Trustee may demand in
writing that Company, at Company's option, either purchase under
Section 5A(f) or register under the Securities Act under Section
5A(e), such number of shares of Company Stock held and proposed
to be sold by Trustee. Company shall promptly notify Trustee by
telephone, confirmed promptly by facsimile or first class mail,
postage prepaid, whether it elects to proceed under Section 5A(f)
or 5A(e).
(e) If Company elects registration pursuant to a demand
under Section 5A(d) above, then:
(1) As soon as practicable, but in any event within 90
days after receipt of the demand from Trustee, Company
shall:
(i) file with the Securities and Exchange
Commission (the "Commission") a registration statement
covering the shares to be sold and use its reasonable
best efforts to have such registration statement filed
pursuant to this Agreement declared effective as
promptly as practicable. Company shall advise Trustee
of the progress of such filing and of any review
thereof undertaken by the Commission, and promptly
notify Trustee, and confirm such advice in writing, (x)
when such registration statement becomes effective, (y)
when any post-effective amendment to such registration
statement becomes effective and (z) of any request by
the Commission for any amendment or supplement to such
registration statement or any prospectus relating
thereto or for additional information;
(ii) use its reasonable best efforts to
register, qualify, or effect compliance not later than
the effective date of any registration statement filed
pursuant to this Trust Agreement, the shares of Company
Stock registered thereunder under the blue sky laws of
such states or the District of Columbia as the Trustee
may reasonably request; provided, however, that Company
shall not be obligated to qualify as a foreign
corporation or as a dealer in securities or to execute
or file any general consent to service of process under
the laws of any such jurisdiction where it is not so
subject; and, provided, further, that Company reserves
the right not to register or qualify shares of Company
Stock in any jurisdiction where registration or
qualification of such shares would be unreasonably
burdensome;
(iii) from time to time (x) after the
Company has elected to satisfy a demand for sale by
means of registration, immediately advise Trustee of
any event or development, including a material adverse
change in the financial condition, business or affairs
of Company, known to Company (other than events or
developments affecting market or economic conditions
generally), which may have a material adverse impact on
the proposed offering; and (y) within the period of
effectiveness of such registration statement, advise
Trustee of any event or development requiring amendment
or supplement (which amendment or supplement shall be
prepared with reasonable promptness by Company) of the
registration statement or prospectus used in connection
therewith or rendering it inadvisable to use the
prospectus until it is supplemented or amended; and
(iv) furnish to Trustee such number of
copies of any preliminary and final prospectuses and
any amendments and supplements thereto as Trustee may
reasonably request.
(2) Trustee and Company shall negotiate with an
underwriter selected or approved by Company with regard to
the underwriting of such requested registration. Company
shall enter into an underwriting agreement in customary form
with the underwriter(s) and Trustee in which Company and
Trustee (to the extent applicable based only on such
information as is provided in writing by Trustee) shall
provide customary indemnification to such underwriter(s) and
each other.
(3) Company shall have the right to terminate or withdraw any
registration contemplated by it under this Section 5A(e) prior to or
following the effectiveness of such registration for any reason
whatsoever, provided that it shall thereupon be required to purchase
shares pursuant to Section 5A(f).
(4) Trustee shall provide all such information and materials and
take all such actions, furnish all such information, execute all such
documents and cooperate with Company in good faith, all as may be
reasonably required in order to permit Company to comply with all
applicable requirements of the Commission
and all other applicable laws or regulations and to obtain acceleration
of the effective date of the registration statement.
(5) All expenses incurred in connection with any
registration, qualification or compliance pursuant to this
Trust Agreement, including without limitation, all
registration, filing and qualification fees, printing and
engraving expenses, fees and disbursements of counsel for
Company, and expenses of any special audits or comfort
letters incidental to or required by such registration,
shall be borne by Company, provided, that Trustee may pay
such expenses and recover same from the Trust if Company
fails to satisfy such expenses in a timely manner.
(f) Notwithstanding any contrary provision of this
Agreement, if Company advises Trustee of any delays in filing or
effectiveness of more than 60 days, if Company and Trustee are
unable despite good faith efforts to agree as to registration or
an exempt sale, or if a registered sale would not permit Trustee
to sell Company Stock expeditiously enough to meet Trustee's good
faith needs, Trustee may demand that Company purchase, or if
Company elects to purchase stock pursuant to Section 5A(d) or
(g), Company shall purchase the Company Stock desired to be sold
at fair market value, which shall be the volume weighted average
trading price (including only trades which would meet the time of
purchases conditions under Rule 10b-18 under the Securities
Exchange Act of 1934, as amended ("Rule 10b-18"), of a share of
such security on the New York Stock Exchange on the day that
Company receives such demand or gives notice of such election.
Company and Trustee shall use their reasonable best efforts to
agree as to the prompt execution, closing and delivery of shares
and proceeds therefor.
(g) Until a Change of Control, Company may, on notice of a
proposed sale by Trustee, whether or not exempt, elect to
purchase such Company Stock from Trustee at fair market value, as
defined in Section 5A(f), and with the manner, conditions, and
closing of such sale to be agreed upon by Company and Trustee.
(h) Company shall be entitled to postpone the filing of any
registration statement and any amendment or supplement thereto
otherwise required to be prepared and filed by it, or to direct
that Trustee postpone any sale or put if, at the time it receives
a request for registration or sale, (i) Company determines, in
its reasonable business judgment, that such filing, registration
and offering, or sale, would materially interfere with the likely
success of a proposed purchase or sale of securities by Company;
or (ii) counsel for Company opines in writing that the filing of
such registration statement, amendment or supplement, or sale or
put would have a material adverse impact on any material ongoing
or pending transaction or program of Company or any of its
subsidiaries or any other circumstances; provided, that should
such delays adversely affect the Trustee's ability to pay
benefits as contemplated by this Trust Agreement, then Company
shall advance such funds as may be reasonably needed by Trustee
for such proposed pending sale.
(i) Notwithstanding any provisions above permitting sale by
Trustee of Company Stock, Trustee shall, until a Change of
Control or a tender or exchange offer for all or substantially
all of the issued and outstanding Common Stock, limit sales,
whether registered or exempt (other than sales described in
Section 5A(f)), by reference to the volume limitations for issuer
repurchases within Rule 10b-18; provided, that block sales may
not exceed 25% of the trading volume on the New York Stock
Exchange, Inc. for the 14 day period prior to such sale. Company
shall provide all information reasonably required by Trustee to
make determinations as to the number of shares which may be sold,
and Trustee shall promptly notify Company as to all sales made
other than through a registered public offering.
(j) Company and Trustee shall each cooperate in good faith
and employ their reasonable best efforts in permitting and
effecting any purchase or sale of Company Stock as contemplated
in this Section 5A and each shall comply with all applicable laws
and regulations relating to the foregoing including, without
limitation, federal and state securities laws, rules and
regulations issued thereunder, and any other governmental or
stock exchange requirements or regulations relating thereto.
Section 6. Disposition of Income.
During the term of this Trust, all income received by the
Trust, net of expenses and taxes, shall be accumulated and
reinvested.
Section 7. Accounting by Trustee.
Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions
required to be made, including such specific records as shall be
agreed upon in writing between Company and Trustee. Within forty-
five (45) days following the close of each calendar year and
within forty-five (45) days after the removal or resignation of
the Trustee, Trustee shall deliver to Company a written account
of its administration of the Trust during such year or during the
period from the close of the last preceding year to the date of
such removal or resignation, setting forth all investments,
receipts, disbursements and other transactions effected by it,
including a description of all securities and investments
purchased and sold with the cost or net proceeds of such
purchases or sales (accrued interest paid or receivable being
shown separately), and showing all cash, securities and other
property held in the Trust at the end of such year or as of the
date of such removal or resignation, as the case may be. In
addition, as of the end of each calendar month (referred to in
this Trust as a "valuation date"), within ten (10) days after
each such month-end, Trustee shall deliver to Company a written
account setting forth the value of the Trust's assets, together
with such other information as shall be agreed upon between
Company and Trustee.
Section 8. Responsibility of Trustee.
(a) Trustee shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent
person acting in like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character and
with like aims, provided, however, that Trustee shall incur no
liability to any person for (i) any action taken pursuant to a
direction, request or approval given by Company or a Trustee's
Contractor which is contemplated by, and in conformity with, the
terms of the Plan(s) or this Trust and is given in writing by
Company or a Trustee's Contractor (other than Trustee when it
acts as Trustee's Contractor), or (ii) the investment in, or
retention of, Company Stock pursuant to the terms of this
Agreement, and no such action shall be considered a breach of the
fiduciary standard herein set forth. In the event of a dispute
between Company or a Trustee's Contractor and a party, Trustee
may apply to a court of competent jurisdiction to resolve the
dispute.
(b) If Trustee undertakes or defends any litigation arising
in connection with this Trust or a Plan (including without
limitation any action to compel funding of the Trust pursuant to
Section 1 hereof, to compel Company to take any action under the
Trust or the Plan(s), or to determine Trustee's obligations
hereunder), Trustee shall be indemnified by the Trust against
Trustee's costs, expenses and liabilities (including, without
limitation, reasonable attorneys' fees and expenses) relating
thereto and the Trust shall be primarily liable for such
payments, other than those arising from Trustee's negligence or
willful misconduct. Trustee shall also be entitled to reasonable
payment from the Trust for the allocation of Trustee's personnel
to the investigation and defense or prosecution thereof, at
Trustee's normal hourly billing rates. If such costs, expenses
and liabilities are not paid from the Trust for any reason
(including without limitation insufficiency of the Trust's assets
to satisfy such obligations) in a reasonably timely manner,
Company agrees to indemnify Trustee against such costs, expenses
and liabilities. Anything in this subsection (b) to the contrary
notwithstanding, Company shall indemnify and hold Trustee
harmless from and against all costs, expenses and liabilities
arising out of or relating to the acquisition, retention or
disposition of Company Stock, except with respect to matters
covered by the Trustee's indemnity under Section 5A(e)(2).
(c) Trustee may consult with legal counsel (who may also be
counsel for Company generally) with respect to any of its duties
or obligations hereunder.
(d) Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants or other professionals
to assist it in performing any of its duties or obligations
hereunder.
(e) Trustee shall have, without exclusion, all powers
consistent with the terms hereof conferred on trustees by
applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an
asset of the Trust, Trustee shall have no power to name a
beneficiary of the policy other than the Trust, to assign the
policy (as distinct from conversion of the policy to a different
form) other than to a successor Trustee, or to loan to any person
the proceeds of any borrowing against such policy.
(f) Notwithstanding any powers granted to Trustee pursuant
to this Trust Agreement or to applicable law, Trustee shall not
have any power that could give this Trust the objective of
carrying on a business and dividing the gains therefrom, within
the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal
Revenue Code.
Section 9. Compensation and Expenses of Trustee.
All administrative and Trustee's fees as agreed upon between
Trustee and Company and reasonable expenses actually incurred by
the Trustee in performing its duties hereunder including the fees
and expenses of any third party which provides services
contemplated herein or in the Plan(s) shall be paid by Trustee
from the assets of the Trust and, until so paid, shall constitute
a lien on the assets of the Trust. If not so paid, the fees and
expenses shall be paid by Company.
Section 10. Resignation and Removal of Trustee.
(a) Trustee may resign at any time by written notice to
Company, which shall be effective sixty (60) days after receipt
of such notice unless Company and Trustee agree otherwise;
provided that in no event shall any such resignation take effect
prior to the appointment of a successor Trustee.
(b) Trustee may be removed by Company on sixty (60) days
notice or upon shorter notice accepted by Trustee.
(c) Upon a Change of Control, as defined herein, Trustee may
not be removed by Company for one (1) year. Additionally, after
the expiration of the one (1) year period following a Change of
Control, Trustee may be removed by Company only if Company first
obtains the express written consent to such removal of more than
twenty-five percent (25%) of the participants in the Plan(s).
(d) If Trustee resigns or is removed within one (1) year of
a Change of Control, as defined herein, Trustee shall select a
successor Trustee in accordance with the provisions of Section
11(b) hereof prior to the effective date of Trustee's resignation
or removal. Additionally, if Trustee resigns or is removed after
expiration of the one (1) year period following a Change of
Control, Company may select a successor Trustee in accordance
with the provisions of Section 11(b) hereof if it shall first
obtain the express written consent to the appointment of the
proposed successor of more than twenty-five percent (25%) of the
participants in the Plan(s). If Company fails to so appoint a
successor Trustee, Trustee shall select a successor Trustee.
Upon the appointment and acceptance by, and transfer of assets
to, a successor Trustee, Trustee shall have no further
responsibilities under this Trust Agreement.
(e) Upon resignation or removal of Trustee and appointment
of a successor Trustee, all assets shall subsequently be
transferred to the successor Trustee. The transfer shall be
completed within sixty (60) days after receipt of notice of
resignation, removal or transfer, unless Company extends the time
limit.
(f) If Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 11 hereof, by the effective
date of resignation or removal under paragraph (a) of this
section. If no such appointment has been made, Trustee may apply
to a court of competent jurisdiction for appointment of a
successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed and charged to
the Trust as administrative expenses of the Trust.
Section 11. Appointment of Successor.
(a) If Trustee resigns or is removed in accordance with
Section 10(a) or (b) or (c) hereof, Company may, subject to
Section 10(d), appoint any third party, such as a bank trust
department or other party that may be granted corporate trustee
powers under state or federal law, as a successor to replace
Trustee upon resignation or removal. The appointment shall be
effective when accepted in writing by the new Trustee, who shall
have all the rights and powers of the former Trustee, including
ownership rights in the Trust assets. The former Trustee shall
execute any instrument necessary or reasonably requested by
Company or the successor Trustee to evidence the transfer.
(b) If Trustee resigns or is removed pursuant to the
provisions of Section 10(a), (b), (c) or (d) hereof and selects a
successor Trustee pursuant to Section 10(d) hereof, Trustee may
appoint any third party such as a bank trust department or other
party that may be granted corporate trustee powers under state or
federal law. The appointment of a successor Trustee shall be
effective when accepted in writing by the new Trustee. The new
Trustee shall have all the rights and powers of the former
Trustee, including ownership rights in Trust assets. The former
Trustee shall execute any instrument necessary or reasonably
requested by the successor Trustee to evidence the transfer.
(c) A former Trustee shall prepare and deliver to Company
and to the successor Trustee a final accounting unless Company
waives Company's right to such accounting, and such accounting
shall be effective through the date of the former Trustee's
transfer of all assets to its successor. The successor Trustee
need not examine the records and acts of any prior Trustee unless
requested to do so by Company (and, after a Change of Control,
unless the successor Trustee in addition concludes that there is
a reasonable basis for such request by Company) and may retain or
dispose of existing Trust assets, subject to Sections 7 and 8
hereof. Subject to the foregoing, the successor Trustee shall
not be responsible for and Company shall indemnify and defend the
successor Trustee from any claim or liability resulting from any
action or inaction of any prior Trustee or from any other past
event, or any condition existing at the time it becomes successor
Trustee. The compensation arrangement for the successor Trustee
shall be reasonable in relation to the services to be performed
by the successor Trustee.
Section 12. Amendment or Termination.
(a) This Trust Agreement (including Appendix A hereto) may
be amended by a written instrument executed by Trustee and
Company. Notwithstanding the foregoing, (i) no such amendment
shall conflict with the terms of the Plan(s) as then in effect or
shall make the Trust revocable after it has become irrevocable in
accordance with Section 1(b) hereof and (ii) the duties and
responsibilities of Trustee shall not be increased without
Trustee's written consent.
(1) Furthermore, notwithstanding anything to the
contrary in this Trust Agreement (except as otherwise
provided in this Section 12), (i) prior to a Change of
Control, no amendment shall be made to Section 1(d) through
(h), Section 2, Section 4, Section 5(h), Section 10(c),
Section 10(d), this Section 12(a), Section 13(d), Section
13(g), Section 13(j), and Section 13(k), and no deletion
shall be made in Appendix A, without the prior written
consent of more than twenty-five percent (25%) of the
affected participants in the Plan(s) unless such amendment
would not, in the opinion of counsel, have a material and
adverse effect on the rights or interests of such
participants; and (ii) following a Change of Control, no
amendment shall be made to any provision of this Trust
Agreement (including Appendix A hereto) without the prior
written consent of more than twenty-five percent (25%) of
the affected participants in the Plan(s) unless such
amendment would not, in the opinion of counsel, have a
material and adverse effect on the rights or interests of
such participants.
(2) The limitations contained in Section 12(a)(1)
shall not apply with respect to any amendment which is
reasonably necessary, in the opinion of counsel, to preserve
the status of the Trust as a grantor trust and the status of
the Plan(s) as unfunded for federal income tax purposes and
for purposes of the Employee Retirement Income Security Act
of 1974, as amended, or to guard against an adverse impact
on Plan participants or beneficiaries and which, in the
opinion of counsel, is drafted primarily to preserve such
status or to reduce or eliminate such adverse impact on such
person or persons.
(3) In each instance in which an opinion of counsel is
contemplated in this Section 12(a) prior to a Change of
Control, such opinion shall be in writing and delivered to
Trustee, rendered by counsel for Company, and in each
instance in which an opinion of counsel is contemplated in
this Section 12(a) after a Change of Control, such opinion
shall be in writing and delivered to Trustee, rendered by
counsel selected by the Trustee's Contractor. Trustee may
rely on all such opinions and determinations.
(b) The Trust shall not terminate until the date on which
Plan participants and their beneficiaries are no longer entitled
to benefits from Company pursuant to the terms of the Plan(s).
Upon termination of the Trust any assets remaining in the Trust
shall be returned to Company.
(c) Upon written approval of participants or beneficiaries
entitled to payment of benefits pursuant to the terms of the
Plan(s), Company may terminate this Trust prior to the time all
benefit payments under the Plan(s) have been made. All assets in
the Trust at termination shall be returned to Company.
(d) Trustee may rely for purposes of this Section 12 on a
certificate furnished by Company prior to a Change of Control,
and by the Trustee's Contractor after a Change of Control,
(i) with respect to any amendment requiring the prior written
consent of more than twenty-five percent (25%) of the affected
participants in the Plan(s) pursuant to subsection (a) of this
Section 12, that such consent has been obtained, (ii) with
respect to subsection (b) of this Section 12, that Plan
participants and their beneficiaries are no longer entitled to
benefits pursuant to the terms of the Plan(s), and (iii) with
respect to subsection (c) of this Section 12, that the written
approval of participants or beneficiaries entitled to payment of
benefits pursuant to the terms of the Plan(s) has been obtained.
Section 13. Miscellaneous.
(a) Any provision of this Trust Agreement prohibited by law
shall be ineffective to the extent of any such prohibition,
without invalidating the remaining provisions hereof.
(b) Benefits payable to Plan participants and their
beneficiaries under this Trust Agreement may not be anticipated,
assigned (either at law or in equity), alienated, pledged,
encumbered or subjected to attachment, garnishment, levy,
execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed
in accordance with the laws of New York.
(d) For purposes of this Trust, Change of Control shall
mean: (i) any "person" (as such term is defined in the
Securities Exchange Act of 1934, as amended), other than a
trustee or other fiduciary holding securities under an employee
benefit plan of Company or a corporation owned directly or
indirectly by the shareholders of Company in substantially the
same proportions as their ownership of stock of Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under
said Act), directly or indirectly, of securities of Company
representing 20% or more of the total voting power represented by
Company's then outstanding voting securities; or (ii) during any
period of two consecutive years, individuals who at the beginning
of such period constitute the Board of Directors of Company and
any new director whose election by the Board of Directors or
nomination for election by Company's shareholders was approved by
a vote of at least two-thirds of the directors who either were
directors at the beginning of the two-year period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof. For all
purposes of this Trust Agreement, Trustee shall have no
responsibility whatsoever to determine whether or not a Change of
Control of Company has occurred.
(e)(1) After the execution of this Trust Agreement,
Company shall promptly file with Trustee, and following the
appointment of a Trustee's Contractor, Company shall
promptly file with the Trustee's Contractor, a certified
list of the names and specimen signatures of the officers of
Company and any delegate authorized to act for it. Company
shall act through its Treasurer or any person who such
Treasurer authorizes in writing to act on his behalf or any
other person who is authorized to act on Company's behalf by
a resolution of Company's Board of Directors. Company shall
promptly notify Trustee and the Trustee's Contractor, if
applicable, of the addition or deletion of any person's name
to or from such list, respectively. Until receipt by
Trustee and/or the Trustee's Contractor of notice that any
person is no longer authorized so to act, Trustee or the
Trustee's Contractor may continue to rely on the authority
of the person. All certifications, notices and directions
by any such person or persons to Trustee or the Trustee's
Contractor shall be in writing signed by such person or
persons. Trustee and the Trustee's Contractor may rely on
any certification, notice or direction of Company that the
Trustee or the Trustee's Contractor reasonably believes to
have been signed by a duly authorized officer or agent of
Company. Trustee and the Trustee's Contractor shall have no
responsibility for acting or not acting in reliance upon any
notification reasonably believed by Trustee or the Trustee's
Contractor to have been signed by a duly authorized officer
or agent of Company.
(e)(2) After the engagement of a Trustee's Contractor
(other than Trustee), the Trustee's Contractor shall
promptly file with Trustee a certified list of the names and
specimen signatures of the officers of the Trustee's
Contractor and any delegate authorized to act for it.
Trustee's Contractor shall promptly notify Trustee of the
addition or deletion of any person's name to or from such
list. Until receipt by Trustee of notice that any person is
no longer authorized so to act, Trustee may continue to rely
on the authority of the person. All certifications, notices
and directions by any such person or persons to Trustee
shall be in writing signed by such person or persons.
Trustee may rely on any such certification, notice or
direction of the Trustee's Contractor that Trustee
reasonably believes to have been signed by or on behalf of a
duly authorized officer or agent of the Trustee's
Contractor. Trustee shall have no responsibility for acting
or not acting in reliance upon any notification reasonably
believed by the Trustee to have been signed by a duly
authorized officer or agent of the Trustee's Contractor.
(f) Neither the gender nor the number (singular or plural)
of any word shall be construed to exclude another gender or
number when a different gender or number would be appropriate.
(g)(1) This Trust Agreement shall be binding upon and
inure to the benefit of any successor(s) to Company and
Trustee.
(g)(2)(A) If there is a transfer of any liability for
the payment of any Transferred Benefit (as defined below) to
any individual or entity (the "New Company") as a result of
any transaction, including without limitation any sale of
Company, its business or a portion thereof, merger,
consolidation, reorganization, spin-off, division or
transfer of assets (hereinafter a "corporate transaction")
and there is a "Default" (as defined below) by New Company
with respect to the payment of such benefit, Company shall
(subject to this Section 13(g)(2)) pay such unpaid
Transferred Benefit which is otherwise due and payable (and
such payment may be made on Company's behalf from this Trust
pursuant to Section 12) if (i) this Trust remains in effect
at the time such benefit is payable, (ii) there are
sufficient assets in this Trust to pay such benefit and
(iii) Section 13(g)(3) does not apply to such corporate
transaction.
(g)(2)(B) For purposes of this Section 13(g)(2):
(i) the term "Transferred Benefit" shall mean any
Plan benefit (I) which is attributable to compensation
deferrals made for pay periods ending before the
effective date of such corporate transaction under any
Plan(s) which are plans of deferred compensation and
any interest on such deferrals (at an interest rate no
higher than the rate payable under the terms of the
Plan as of the date of such transaction) or which was
accrued under any Plan(s) which are supplemental
retirement or pension plans before the effective date
of any such transaction, (II) for which the liability
for payment was transferred to New Company in
connection with such corporate transaction and
(III) which are properly payable under the terms and
conditions of the Plan(s) as in effect as of the date
of such corporate transaction; and
(ii) the term "Default" shall mean a default on
the payment of a Transferred Benefit by the New Company
if (I) the affected participant or beneficiary has
timely and properly made a claim for such benefit and
has exhausted all claims and claims review procedures
properly imposed under the terms of the Plan(s) with
respect to such benefit, (II) such participant or
beneficiary has agreed to provide and timely provides
whatever information Company or a Trustee's Contractor
might request from such person with respect to such
Transferred Benefit and New Company and (III) such
participant or beneficiary promptly takes whatever
action is reasonably requested by Company or the
Trustee's Contractor to enable Company or the Trustee
to be fully subrogated to the extent of any such
payments to all the rights, claims and remedies such
participant or beneficiary might have against New
Company for the payment of the related Transferred
Benefits. Trustee shall not be required to take any
action with respect to a subrogation claim unless there
are sufficient assets in the Trust to cover the expense
thereof.
(g)(2)(C) The liability of Company under this Section
13(g)(2) shall not exceed the value of the assets of the
Trust as of the date payment is to be made by Company under
this Section 13(g)(2).
(g)(3) The provisions of Section 13(g)(2) shall not
apply to, and Company for purposes of Section 12(b) and each
other provision of this Trust Agreement shall be deemed to
have paid in full and shall have no further obligation to
pay, any Transferred Benefit which is payable following any
corporate transaction (i) which involves a Disposition, if
there is established, or there is imposed on Company's
successor an obligation to establish (or there is otherwise
provided with respect to affected Plan participants and
beneficiaries), with respect to the Transferred Benefit an
irrevocable trust which, in the opinion of counsel, meets
the requirements for a "rabbi trust" as set forth in the
model grantor trust agreement contained in Rev. Proc. 92-64,
1992-2 C. B. 422, or any successor to such Revenue
Procedure, with a bank as trustee, and which when
established (or, if already in existence, at the effective
date of such corporate transaction) is funded to at least
the funding level of this Trust, or (ii) which does not
involve a Disposition, if (A) there is established, or there
is imposed on Company's successor an obligation to
establish, with respect to the Transferred Benefit a trust
which, in the opinion of counsel, has terms substantially
similar to any one of the Trusts under Executive Benefit
Plan(s) established by BellSouth or a subsidiary on or
before the date hereof, as such trusts are then in effect,
with a bank as trustee, and which when established is funded
to at least the funding level of this Trust; or (B) the
Transferred Benefit becomes covered, as of the effective
date of such corporate transaction, by any trust described
in, or previously established pursuant to, (A) above and
which trust, if such transfer takes place on or after a
Change in Control has occurred, is funded (after taking into
account the Transferred Benefit) to at least the funding
level of this Trust. The determination of whether the
requirements of the preceding sentence have been satisfied
shall be made by Company; provided, however, that following
the engagement of a Trustee's Contractor, such
determinations shall be made by Trustee's Contractor. The
opinions of counsel contemplated in this Section 13(g)(3)
shall be in writing and delivered to Trustee, rendered by
counsel for Company or, following the engagement of a
Trustee's Contractor, counsel selected by Trustee's
Contractor. Trustee may rely on the accuracy of all such
determinations and opinions. For purposes of this Section
13(g)(3), "funding level" shall have the meaning ascribed to
such term in Section 1(e)(2) hereof, except that (i) in
determining Current Liability of a trust other than this
Trust, reference shall be made to liabilities under the
plan(s) covered by each such trust and (ii) in determining
funding level as of any date other than the last day of any
trust's (including this Trust's) fiscal year, there may be
employed reasonable estimation techniques, consistently
applied.
(g)(4) For purposes of this Trust Agreement, there
shall be a "Disposition" of Company or its business, or a
portion thereof, whenever as a result of any transaction the
Company, successor(s) to Company or its business, or a
portion thereof as the case may be, is not a member of
BellSouth's "controlled group of corporations", as such term
is defined in Section 1563(a) of the Internal Revenue Code
of 1986, as amended, substituting "more than 50 percent" for
the phrase "at least 80 percent" each place it appears in
Section 1563(a)(1).
(i) Communications to Trustee shall be sent to Bankers Trust
Company, 280 Park Avenue, New York, New York 10017 - ATTENTION:
Senior Vice President, Retirement Services Group, or to such
other address as Trustee may specify in writing. No
communication shall be binding upon Trustee until it is received
by Trustee. Communications to Company and the Trustee's
Contractor shall be sent to the principal offices of Company or
the Trustee's Contractor, as the case may be, or to such other
address as Company or the Trustee's Contractor, as applicable,
may specify in writing.
(j) In the event the participants and beneficiaries in one
or more of the Plan(s) are determined generally to be subject to
federal income tax on any amount in the Trust prior to the time
of payment hereunder, the entire amount determined to be so
taxable shall be distributed by Trustee to each affected
participant or beneficiary. Company may, at its option, make
such payments directly to affected participants and
beneficiaries. An amount shall be determined to be subject to
federal income tax upon the earliest of: (a) a final
determination by the United States Internal Revenue Service
addressed to a participant or beneficiary which is not appealed
to the courts; (b) a final determination by the United States Tax
Court or any other federal court affirming any such determination
by the Internal Revenue Service; or (c) an opinion by counsel for
Company acceptable to Trustee addressed to Company and Trustee,
that, by reason of the Treasury Regulations, amendments to the
Internal Revenue Code, published Internal Revenue Service
rulings, court decisions or other substantial precedent, amounts
hereunder are generally subject to federal income tax prior to
payment; provided, that following a Change of Control, only an
opinion by counsel selected by the Trustee's Contractor may be
accepted by Trustee for purposes of (c). Company shall undertake
at its sole expense to defend any tax claims described herein
which are asserted by the Internal Revenue Service against any
participant or beneficiary and which it determines would affect
participants or beneficiaries generally, including attorneys'
fees and costs of appeal, and shall have the sole authority to
determine whether or not to appeal any determination made by the
Internal Revenue Service or by a lower court. Company also
agrees to reimburse any participant or beneficiary for any
interest or penalties in respect of tax claims hereunder which it
determines would affect participants or beneficiaries generally,
upon receipt of documentation of same. Any distributions from
the Trust to a participant or beneficiary under this Section
13(j) (other than reimbursements of interest or penalties
referred to in the preceding sentence) shall reduce the benefits
payable to such participant and/or beneficiary under the Plan(s).
(k) In the event that Company shall fail to satisfy any
obligation of Company to a Plan participant or beneficiary under
this Trust Agreement, or in one or more of the Plan(s), after
reasonable notice and demand with respect thereto, and one or
more participants or beneficiaries obtains a final determination
by a court of competent jurisdiction that Company has so failed,
such participant(s) or beneficiary(ies) shall be indemnified by
the Trust against reasonable and appropriate costs and
expenses (including without limitation reasonable attorneys' fees
and expenses) relating thereto and the Trust shall be primarily
liable for such payments. Interest on any Plan benefit payments
which such court determines have been delayed to the extent
interest or similar payments in an equal or greater amount are
not provided in the Plan or by the court or otherwise shall also
be paid from the assets of the Trust. Such interest shall be
calculated using a rate of interest equal to the rate of interest
on ten (10) year United States Treasury obligations, as
determined on the first day of each calendar quarter, compounded
quarterly. If such costs, expenses and interest are not paid
from the Trust for any reason (including without limitation
insufficiency of the Trust's assets to satisfy such obligations)
in a reasonably timely manner, such participant(s) or
beneficiary(ies) may obtain payment from Company.
(l) Nothing herein shall be construed as restricting or
limiting in any way amendment of the Plan(s) in accordance with
the terms of the Plan(s).
(m) Any other provisions of this Trust Agreement to the
contrary notwithstanding, this Trust shall terminate no later
than the twenty-first anniversary of the date of death of the
survivor from among a class consisting of all of the descendants
of the late Joseph P. Kennedy, the former Ambassador to the Court
of Saint James, who are living on the date of the establishment
of the Trust and, if the Trust is still in existence on such
anniversary date, Trustee shall dispose of the Trust as Company
shall direct.
(n) In case of any conflict or inconsistency between the
terms of this Trust Agreement and any Plan, the terms of this
Trust Agreement shall control.
Section 14. Effective Date.
The effective date of this Trust Agreement shall be the date
of its execution set forth on page 1 of the Trust Agreement.
IN WITNESS WHEREOF, the parties hereto have caused the Trust
Agreement to be duly executed and their respective corporate
seals to be hereto affixed on the date set forth on page 1 of the
Trust Agreement.
BELLSOUTH CORPORATION
By:____/S/_Arlen G. Yokley_______
Title: Vice President, Secretary
and Treasurer
(CORPORATE SEAL)
ATTEST:__/S/ Marcy A. Bass___
Title:___Assistant Secretary_
BANKERS TRUST COMPANY,
as Trustee
By:____/S/ Gary D. Cohen______
Title:___Vice President_______
(CORPORATE SEAL)
ATTEST:__/S/ Marie B. Colaninno_
Title:___Vice President_________
APPENDIX A
BellSouth Nonqualified Deferred Compensation Plan
BellSouth Nonqualified Deferred Income Plan
BellSouth Corporation Supplemental Executive Retirement
Plan
BellSouth Corporation Executive Incentive Award Deferral
Plan
BellSouth Corporation Section 415 Excess Pension Plan
"NEW" ORIGINAL - Draft #3 (4/4/95)
0015747.02
BELLSOUTH CORPORATION
TRUST UNDER BOARD OF DIRECTORS BENEFIT PLAN(S)
TABLE OF CONTENTS
Section 1. Establishment of Trust 2
Section 2. Payments to Plan Participants and
Their Beneficiaries 6
Section 3. Trustee Responsibility Regarding
Payments to Trust Beneficiary When
Company is Insolvent 10
Section 4. Payments to Company 11
Section 5. Investment Authority 12
Section 5A. Sale of Company Stock by Trustee 17
Section 6. Disposition of Income 21
Section 7. Accounting by Trustee 21
Section 8. Responsibility of Trustee 21
Section 9. Compensation and Expenses of Trustee 23
Section 10. Resignation and Removal of Trustee 23
Section 11. Appointment of Successor 24
Section 12. Amendment or Termination 25
Section 13. Miscellaneous 27
Section 14. Effective Date 32
BELLSOUTH CORPORATION
TRUST UNDER BOARD OF DIRECTORS BENEFIT PLAN(S)
This Agreement made this 28th day of April, 1995, by and
between BellSouth Corporation, a Georgia corporation (Company)
and Bankers Trust Company, a New York corporation (Trustee);
(a) WHEREAS, Company has adopted the nonqualified deferred
compensation Plan(s) as listed in Appendix A for certain members
of its Board of Directors;
(b) WHEREAS, Company has incurred or expects to incur
liability under the terms of such Plan(s) with respect to the
individuals participating in such Plan(s);
(c) WHEREAS, to make certain provisions for the payment of
such liability, Company and Trustee on April 25, 1990 executed a
trust agreement for the benefit of certain directors of Company
and Company's affiliates who participate in the Plan(s) (the
"Predecessor Trust");
(d) WHEREAS, Company and Trustee on November 9, 1993 amended
and restated the Predecessor Trust insofar as it related to
Company's obligations (but not obligations of subsidiary or other
affiliated entities) to pay benefits under the Plan(s)
(hereinafter, called "Successor Trust") and contributed assets to
the Successor Trust, subject to the claims of Company's creditors
in the event of Company's Insolvency, as herein defined, until
full payment has been made in respect of such obligations of
Company to Plan participants and their beneficiaries in such
manner and at such times as specified in the Plan(s);
(e) WHEREAS, Company and Trustee now desire to amend and
restate the Successor Trust in the form of this Trust Agreement
(hereinafter, called "Trust");
(f) WHEREAS, it is the intention of the parties that this
Trust shall constitute an unfunded arrangement and shall not
affect the status of the Plan(s) as an unfunded plan maintained
for the purpose of providing deferred compensation for members of
Company's board of directors who are not employees of Company or
affiliated entities; and
(g) WHEREAS, it is the intention of Company to make
contributions to the Trust to provide itself with a source of
funds to assist it in the meeting of its liabilities under the
Plan(s);
NOW, THEREFORE, the parties do hereby establish the Trust
and agree that the Trust shall be comprised, held and disposed of
as follows:
Section 1. Establishment of Trust.
(a) Company and Trustee hereby amend and restate in all
respects the Successor Trust in the form of this Trust Agreement.
The principal of the Trust shall be held, administered and
disposed of by Trustee as provided in this Trust Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which
Company is the grantor, within the meaning of subpart E, part I,
subchapter J, chapter 1, subtitle A of the Internal Revenue Code
of 1986, as amended, and shall be construed accordingly.
(d) The principal of the Trust, and any earnings thereon
shall be held separate and apart from other funds of Company and
shall be used exclusively for the uses and purposes of Plan
participants and general creditors as herein set forth. Plan
participants and their beneficiaries shall have no preferred
claim on, or any beneficial ownership interest in, any assets of
the Trust. Any rights created under the Plan(s) and this Trust
Agreement shall be mere unsecured contractual rights of Plan
participants and their beneficiaries against Company. Any assets
held by the Trust will be subject to the claims of Company's
general creditors under federal and state law in the event of
Insolvency, as defined in Section 3(a) herein.
(e)(1) Company, in its sole discretion, may at any
time, or from time to time, make additional deposits of cash
or other property acceptable to Trustee in trust with
Trustee to augment the principal to be held, administered
and disposed of by Trustee as provided in this Trust
Agreement. Neither Trustee nor any Plan participant or
beneficiary shall have any right to compel any such
additional deposits under this subsection (1).
(2) If, as of the last day of a fiscal year of the
Trust, the funding level of the Trust shall be less than
eighty percent (80%) of the Trust's funding level as of the
last day of any of the five (5) most recently preceding
fiscal years of the Trust (taking into account contributions
made under this Section 1(e)(2) for each such year),
disregarding for purposes of this Section 1(e)(2) fiscal
years ending prior to January 1, 1994, Company shall notify
Trustee of such situation and Company shall make an
irrevocable contribution to the Trust as soon as possible,
but in no event longer than one hundred twenty (120) days
following the last day of such fiscal year. Such
contribution shall be in an amount sufficient to bring the
Trust's funding level equal to the Trust's funding level as
of the last day of the fiscal year among the five (5) most
recently preceding fiscal years on which the Trust's funding
level was highest. In no event shall such contribution be
required if, as of the last day of such fiscal year, the
fair market value of the Trust's assets is one hundred
percent (100%), or greater, of the aggregate Current
Liability (as defined in subsection (3) of this
Section 1(e)) of Company under the Plan(s). For these
purposes, "funding level" shall mean the ratio (stated as a
percentage) that the fair market value of the assets in the
Trust bears to the aggregate Current Liability of Company
under the Plan(s). The Trust's funding level shall be
determined as of the last day of each fiscal year, except
that in determining the amount of the required contribution,
the fair market value of the Trust's assets shall be
determined as of the valuation date most recently preceding
the date on which such contribution is made. Such funding
level shall be determined by Company; provided, however,
that following the engagement of a Trustee's Contractor,
such determination shall be made by Trustee's Contractor.
The Trustee may rely on the accuracy of all such
determinations.
(3)(A) For purposes of this Trust, "Current Liability"
shall mean the amount required to pay each Plan participant
or beneficiary the benefits to which Plan participants or
their beneficiaries would be entitled pursuant to the terms
of the Plan(s), to the extent such benefits are obligations
of Company (and not obligations of subsidiary or other
affiliated entities). The Current Liability on any date
with respect to a Plan shall be determined as if the Plan
terminated as of such date using an interest rate equal to
the Pension Benefit Guaranty Corporation valuation interest
rate for immediate annuities as in effect on such date, the
1983 Group Annuity Mortality Table published by the Society
of Actuaries, and reasonable actuarial calculation
principles consistently applied. Current Liability shall be
determined, as of the last day of each fiscal year of the
Trust and at such additional times as are necessary to
implement the provisions of this Trust Agreement, by
Company; provided, however, that following the engagement of
a Trustee's Contractor, such determinations shall be made by
Trustee's Contractor. The Trustee may rely on the accuracy
of all such determinations.
(3)(B) In the event that the interest rate assumption
described in subsection (3)(A) above is at any time no
longer available or the mortality assumption described above
is at any time no longer considered a reasonable and
reliable mortality assumption, other interest rate or
mortality assumptions, as the case may be, deemed generally
comparable to the above-specified assumptions, may be used
instead. All determinations regarding substitute
assumptions, including whether such substitution is
reasonably necessary and the selection of the substitute
assumption(s), shall be made by Company; provided, however,
that following the engagement of a Trustee's Contractor,
such determinations shall be made by Trustee's Contractor.
(f) Upon a Change of Control, Company shall promptly notify
Trustee thereof and, as soon as possible, but in no event longer
than one hundred twenty (120) days following the Change of
Control, as defined herein, Company shall make an irrevocable
contribution to the Trust in an amount that is sufficient to pay
each Plan participant or beneficiary the benefits to which Plan
participants or their beneficiaries would be entitled pursuant to
the terms of the Plan(s), to the extent such benefits are
obligations of Company (and not obligations of subsidiary or
other affiliated entities), as of the date on which the Change of
Control occurred. Such contribution shall be in an amount equal
to the excess, if any, of the aggregate Current Liability as of
the date on which the Change of Control occurred over the fair
market value of the Trust's assets as of the valuation date most
recently preceding the date on which such contribution is made.
Thereafter, Company shall make an additional contribution each
fiscal year to the Trust, as soon as possible, but in no event
longer than one hundred twenty (120) days following the last day
of each such fiscal year, in an amount equal to the excess, if
any, of the aggregate Current Liability under the Plan(s) as of
the last day of the fiscal year over the fair market value of the
Trust's assets as determined on the valuation date most recently
preceding the date on which such contribution is made. The
amount of all such contributions shall be determined by Trustee's
Contractor. The Trustee may rely on the accuracy of all such
determinations.
(g) If, as of a Distribution Date with respect to
outstanding rights to purchase Series A First Preferred Stock,
under the terms of and as defined in a Rights Agreement between
Company and Chemical Bank, as Rights Agent, under an agreement
originally dated November 27, 1989 (a "Distribution Date"), the
aggregate Current Liability exceeds the fair market value of the
Trust's assets (such fair market value determined as of the
valuation date most recently preceding such Distribution Date),
Company shall be required to make an additional contribution to
the Trust in an amount equal to such excess or, at Company's
option, to obtain a letter of credit, or a series of letters of
credit, adequate to fund such amount as of such Distribution Date
under the Plan(s) and maintain such letter(s) of credit until
such time as the aggregate Current Liability no longer exceeds
the fair market value of the Trust's assets. The determination
of whether the aggregate Current Liability exceeds the fair
market value of the Trust's assets upon a Distribution Date and,
if so, the amount of such excess, shall be made by Company;
provided, however, that following the engagement of a Trustee's
Contractor, such determinations shall be made by Trustee's
Contractor. The Trustee may rely on the accuracy of all such
determinations. Any such letter of credit, or series of letters
of credit, shall be part of the general assets of Company and
shall not be an asset of this Trust and, unless otherwise agreed
to in writing by Trustee, Trustee shall have no responsibility
whatsoever with respect to the adequacy of, or selection of the
issuer or issuers of, any such letter or letters of credit.
(h) If, in any five (5) consecutive calendar year period,
(i) there are five (5) or more final determinations by courts of
competent jurisdiction that (A) Company or a subsidiary of
Company which both is a member of Company's controlled group of
corporations and has adopted a Plan (a "Participating Company")
has failed to pay (after reasonable notice and demand for
payment) any benefit due under the terms and conditions of a Plan
and that (B) there was no material issue of fact or law
respecting such company's obligation to make such benefit
payment, or (ii) there are two (2) or more final determinations
by courts of competent jurisdiction, in lawsuits instituted after
reasonable notice and demand with respect thereto, in which the
court determines that Company or a Participating Company had
acted in bad faith and with a clear and deliberate disregard for
such company's obligations under the Plan(s), there shall be
deemed to have occurred a Change of Control as defined in this
Trust Agreement and Company shall give Trustee prompt written
notice of such event. For purposes of this Trust Agreement,
(i) the term "controlled group of corporations" has the meaning
ascribed to such term in Section 1563(a) of the Internal Revenue
Code of 1986, as amended, substituting "more than 50 percent" for
the phrase "at least 80 percent" each place it appears in
Section 1563(a)(1), and (ii) the term "final determination" means
a determination with respect to which all rights of appeal or to
request a review, a rehearing or redetermination have been
exhausted or have lapsed.
Section 2. Payments to Plan Participants and Their
Beneficiaries.
(a) Company, or the Trustee's Contractor if one shall have
been engaged, shall deliver to Trustee a schedule (the "Payment
Schedule") that indicates the amounts payable in accordance with
the terms and conditions of the Plan(s) in respect of each Plan
participant (and his or her beneficiaries), that provides a
formula or other instructions acceptable to Trustee for
determining the amounts so payable, the form in which such amount
is to be paid (as provided for or available under the Plan(s)),
and the time of commencement for payment of such amounts. Except
as otherwise provided herein, Trustee shall make payments to the
Plan participants and their beneficiaries in accordance with such
Payment Schedule. The Trustee shall make provision for the
reporting and withholding of any federal, state or local taxes
that may be required to be withheld with respect to the payment
of benefits pursuant to the terms of the Plan(s) and shall pay
amounts withheld to the appropriate taxing authorities or
determine that such amounts have been reported, withheld and paid
by Company. Payments may be made in cash or, where called for
under the terms of the Plan(s), in Company Stock (as such term is
defined in Section 5(g) hereof). Notwithstanding the foregoing,
if a benefit which is distributable in the form of Company Stock
under the terms of a Plan becomes payable at a time when there is
no (or insufficient) Company Stock in the Trust with which to
satisfy such benefit obligation and if the Company fails or
refuses to pay such benefit within a reasonable time after notice
from Trustee that it has become so payable, Trustee shall use
other assets of the Trust to acquire Company Stock, on the open
market or otherwise in its discretion, sufficient to satisfy such
benefit obligation.
(b) The entitlement of a Plan participant or his or her
beneficiaries to benefits payable by Company under the Plan(s)
shall be determined in accordance with the terms of the Plan(s)
by Company or such party as it shall designate under the Plan(s),
or the Trustee's Contractor if one shall have been engaged, and
any claim for such benefits shall be considered and reviewed and
paid or not paid under the procedures set out in the Plan(s).
Notwithstanding any Plan provision to the contrary, if a
Trustee's Contractor shall have been engaged, all such
determinations shall be made by the Trustee's Contractor whose
determinations shall be final, conclusive and binding on all
persons. Neither Trustee nor Trustee's Contractor shall have any
obligation for determining whether any Plan participant or
beneficiary has died and shall be entitled to rely upon any
information in this regard furnished by Company.
(c) Company may make payment of benefits directly to Plan
participants or their beneficiaries as they become due under the
terms of the Plan(s). In such event, Company shall make
provision for the reporting and withholding of any federal, state
or local taxes that may be required to be withheld with respect
to the payment of benefits pursuant to the terms of the Plan(s)
and shall pay amounts withheld to the appropriate taxing
authorities. Company shall notify Trustee of its decision to
make payment of benefits directly prior to the time amounts are
payable to participants or their beneficiaries. In addition, if
the principal of the Trust, and any earnings thereon, are not
sufficient to make payments of benefits payable by Company in
accordance with the terms of the Plan(s), Company shall make the
balance of each such payment as it falls due. Trustee shall
notify Company where principal and earnings are not sufficient.
(d) Company may engage a third party administrator as a
contractor of the Trustee ("Trustee's Contractor"), who shall not
be a Plan participant or beneficiary (but who may be the
Trustee), to perform functions described in this Section 2(d) and
elsewhere in this Trust Agreement which would otherwise be
performed by Company.
(1) Upon engagement of a Trustee's Contractor, as soon
as practicable but in no event longer than thirty (30) days
thereafter, Company shall furnish to the Trustee's
Contractor copies of the Plan documents, employment records
of participants, and other information necessary to
determine the benefits which are or may become payable by
Company to or with respect to each participant in each Plan,
including any benefits payable after the participant's
death, and the recipient of same and the procedures which
Company has adopted to calculate such benefit payments.
Company shall regularly, at least annually, and upon each
benefit change under the Plan(s) furnish revised, updated
information to the Trustee's Contractor. In the event
Company refuses or neglects to provide updated participant
information as contemplated herein, the Trustee's Contractor
shall be entitled to rely on the most recent information
furnished to it by Company.
(2) In the event of a Change of Control, Company shall
have the duty to engage, as soon as practicable thereafter,
a Trustee's Contractor reasonably acceptable to the Trustee
if there shall at that time be no Trustee's Contractor then
serving. In addition, if as of a Distribution Date (as such
term is defined in Section 1(g) hereof), there shall be no
Trustee's Contractor then serving, Company shall have the
duty to designate on a stand-by basis a Trustee's Contractor
who shall commence to serve as Trustee's Contractor in the
event such Distribution Date is followed by a Change of
Control. After a Change of Control, Company shall not have
any control or authority with respect to the Trustee's
Contractor so engaged or then serving, or any successor
Trustee's Contractor, including without limitation any
rights with respect to the removal or replacement of any
such Trustee's Contractor or its duties pursuant to this
Trust Agreement.
(3) Unless Trustee agrees to perform the functions of
the Trustee's Contractor described herein, Trustee shall
have no responsibility hereunder for any obligation assigned
to a Trustee's Contractor or (subject to subsection (4)
below) for the performance of a Trustee's Contractor's
duties and responsibilities under this Trust Agreement.
(4) Company may replace or remove any Trustee's
Contractor from time to time serving hereunder, in its sole
discretion, prior to the occurrence of a Change of Control.
Following a Change of Control, Trustee, in its sole
discretion, may remove a Trustee's Contractor engaged by
Company or any successor Trustee's Contractor and shall
remove any such person and engage a successor to such person
if Trustee deems such person's performance as a Trustee's
Contractor unsatisfactory. At all times following a Change
of Control, upon any such removal, or the voluntary
resignation of any such Trustee's Contractor or the
occurrence of any other event which shall result in the
cessation of performance of the Trustee's Contractor's
duties hereunder, Trustee shall use its best efforts to
engage a new Trustee's Contractor (which may be Trustee);
provided, however, Trustee shall perform the duties of the
Trustee's Contractor during any period for which Trustee is
unable to find a new Trustee's Contractor (so that there
will be no default in payments under the Plan(s) as a result
of the absence of a Trustee's Contractor), and any person
engaged as a Trustee's Contractor shall in the judgment of
Trustee be independent of Company. The person who removes
or replaces a Trustee's Contractor shall be responsible for
assuring that there is a timely and complete transfer of
records from such Trustee's Contractor to such person's
successor.
(5) Except for the records dealing solely with the
assets of the Trust and investment of those assets, which
shall be maintained by the Trustee, if a Trustee's
Contractor shall be engaged, the Trustee's Contractor shall
maintain all Plan participant records contemplated by this
Agreement, including the Payment Schedule. All such records
and copies of the Plan(s) documents and employment records
of the participants in the possession of the Trustee's
Contractor shall be made available promptly upon request of
Trustee or Company. The Trustee's Contractor shall also
prepare and distribute participant statements to
participants and beneficiaries and shall perform such other
duties and responsibilities contemplated under the terms of
this Trust Agreement as Company or Trustee, as the case may
be, determines is necessary or advisable to achieve the
objectives of this Trust Agreement.
(6) Company shall indemnify and hold harmless the
Trustee's Contractor for any liability or expenses,
including without limitation advances for or prompt
reimbursement of reasonable fees and expenses of counsel and
other agents retained by it, incurred by the Trustee's
Contractor with respect to keeping the records for
participants' benefits, reporting thereon to participants
and beneficiaries, certifying benefit information to
Trustee, determining the status of benefits hereunder and
otherwise carrying out its obligations under this Trust
Agreement, other than those resulting from Trustee's
Contractor's negligence or willful misconduct or its failure
to reasonably calculate and certify the amount of benefits
based on the applicable terms of the Plan documents and
other information and procedures furnished by Company to the
Trustee's Contractor in accordance with this Trust
Agreement. The Trustee's Contractor shall be entitled to
reasonable compensation for services hereunder, the amount
of which shall be agreed upon from time to time by Company
or, following a Change of Control, the Trustee, and the
Trustee's Contractor in writing, and reimbursement for
reasonable expenses incurred in connection with its
performance of such services. Following a Change of
Control, Trustee's good faith determination of compensation
to be paid to a Trustee's Contractor (including Trustee when
it acts in such capacity) shall be binding on the Company
and each other person having an interest in the Trust. All
such compensation and expenses shall be paid by Trustee from
the assets of the Trust. If not so paid, such compensation
and expenses shall be paid by Company.
(7) Except as may be otherwise agreed by the Trustee's
Contractor and Company, or Trustee following a Change of
Control, the Trustee's Contractor's obligations are limited
solely to those explicitly set forth herein and the
Trustee's Contractor shall have no responsibility, authority
or control, direct or indirect, over the maintenance or
investment of the Trust and shall have no obligation in
respect of Trustee or the Trustee's compliance with the
Trustee's Contractor's certifications to Trustee.
Section 3. Trustee Responsibility Regarding Payments
to Trust Beneficiary When Company Is Insolvent.
(a) Trustee shall cease payment of benefits to Plan
participants and their beneficiaries if the Company is
Insolvent. Company shall be considered "Insolvent" for
purposes of this Trust Agreement if (i) Company is unable to
pay its debts as they become due, or (ii) Company is subject
to a pending proceeding as a debtor under the United States
Bankruptcy Code.
(b) At all times during the continuance of this Trust,
as provided in Section 1(d) hereof, the principal and income
of the Trust shall be subject to claims of general creditors
of Company under federal and state law as set forth below.
(1) The Board of Directors and the Chief Executive
Officer of Company shall have the duty to inform Trustee in
writing of Company's Insolvency. If a person claiming to be
a creditor of Company alleges in writing to Trustee that
Company has become Insolvent, Trustee shall determine
whether Company is Insolvent and, pending such
determination, Trustee shall discontinue payment of benefits
to Plan participants or their beneficiaries.
(2) Unless Trustee has actual knowledge of Company's
Insolvency, or has received notice from Company or a person
claiming to be a creditor alleging that Company is
Insolvent, Trustee shall have no duty to inquire whether
Company is Insolvent. Trustee may in all events rely on
such evidence concerning Company's solvency as may be
furnished to Trustee and that provides Trustee with a
reasonable basis for making a determination concerning
Company's solvency.
(3) If at any time Trustee has determined that Company
is Insolvent, Trustee shall discontinue payments to Plan
participants or their beneficiaries and shall hold the
assets of the Trust for the benefit of Company's general
creditors. Nothing in this Trust Agreement shall in any
way diminish any rights of Plan participants or their
beneficiaries to pursue their rights as general creditors of
Company with respect to benefits due under the Plan(s) or
otherwise.
(4) Trustee shall resume the payment of benefits to
Plan participants or their beneficiaries in accordance with
Section 2 of this Trust Agreement only after Trustee has
determined that Company is not Insolvent (or is no longer
Insolvent).
(c) Provided that there are sufficient assets, if Trustee
discontinues the payment of benefits from the Trust pursuant to
Section 3(b) hereof and subsequently resumes such payments, the
first payment following such discontinuance shall include the
aggregate amount of all payments due from Company to Plan
participants or their beneficiaries under the terms of the
Plan(s) for the period of such discontinuance, less the aggregate
amount of any payments made to Plan participants or their
beneficiaries by Company in lieu of the payments provided for
hereunder during any such period of discontinuance.
Section 4. Payments to Company.
(a) Except as provided in Sections 3, 4(b), 4(c), 4(d),
5(b) and 12(c) hereof, after the Trust has become irrevocable,
Company shall have no right or power to direct Trustee to return
to Company or to divert to others any of the Trust assets before
all payment of benefits have been made to Plan participants and
their beneficiaries pursuant to the terms of the Plan(s) to the
extent such benefits are obligations of Company.
(b) If, prior to a Change of Control, within sixty (60)
days following the end of a fiscal year of the Trust, Company
provides a written certification to Trustee, reasonably
acceptable to the Trustee that, as of the last day of the fiscal
year, the fair market value of the assets of the Trust exceeds
one hundred twenty percent (120%) of the aggregate Current
Liability, Trustee shall, at Company's request, distribute to
Company all or part of such excess. No distribution pursuant to
this Section 4(b) may be made following a Change of Control.
(c) Prior to a Change of Control, Trustee shall, if so
instructed by Company in writing within thirty (30) days after
the actual filing of Company's federal income tax return for a
year, reimburse Company from the assets of the Trust for federal,
state or local income taxes, or any part thereof, which Company
certifies that it has paid, attributable to income of the Trust
for such year, as determined by Company, within thirty (30) days
after receipt of such request. No reimbursement for taxes
pursuant to this Section 4(c) may be made following a Change of
Control.
(d) Notwithstanding any other provision of this Trust
Agreement, including without limitation Section 1(b) hereof,
prior to a Change of Control Company shall have the right with
respect to each contribution to the Trust (other than
contribution(s) required pursuant to Section 1(e)(2) hereof) to
cause Trustee to return all or any portion of a contribution and
any and all income on such contribution to Company. Such right
shall be exercised by giving written notice to Trustee and shall
be exercisable in a nonfiduciary capacity without the approval or
consent of Trustee or any other person. Such right shall expire
with respect to each contribution to the Trust upon the earlier
of (i) thirty days following the date on which the contribution
is made, (ii) the last day of the taxable year of Company in
which the contribution is made or (iii) a Change of Control.
Company's right under this Section 4(d) shall expire upon a
Change of Control.
Section 5. Investment Authority.
(a) Except as otherwise provided in subsections (c), (d),
(e) and (g) of this Section 5, the assets of the Trust shall be
invested and reinvested by Trustee, without distinction between
principal and income, at such time or times in such investments
and pursuant to such investment strategies or courses of action
and in such shares and proportions, as Trustee, in its sole
discretion, shall deem advisable. Except as otherwise provided
herein, Trustee may invest in securities (including stock or
rights to acquire stock) or obligations issued by Company. All
rights associated with assets of the Trust shall be exercised by
Trustee or the person designated by Trustee, and shall in no
event be exercisable by or rest with Plan participants.
(b) Company shall have the right, at any time, and from
time to time in its sole discretion, to substitute assets of
equal fair market value for any asset held by the Trust. This
right is exercisable by Company in a nonfiduciary capacity
without the approval or consent of any person in a fiduciary
capacity. In connection with any substitution of assets
described in this Section 5(b), Company Stock may not revert to
Company in kind at any time following a voting record date for
any meeting of Company stockholders and before such meeting,
unless Trustee shall have voted such shares by proxy. Such
reversion may occur immediately following the stockholders'
meeting to which such record date relates. Further, any such
substitution may be made only out of property available to the
Company for the purchase of shares of stock under applicable
state law, as determined by Company.
(c) Subject to the provisions of Section 5A, investment
authority over the Trust's assets, or any portion thereof, other
than dividends on Company Stock held by the Trust, may be
reserved by Company to itself from time to time in its absolute
discretion, prior to a Change of Control. Any such reservation
of discretionary authority by Company shall be communicated to
Trustee in writing. In this regard, unless Company notifies
Trustee to the contrary, Company shall act through its Treasurer,
or any person who such Treasurer authorizes in writing to act on
his behalf or any other person who is authorized to act on
Company's behalf by a resolution of Company's Board of Directors.
Company shall furnish Trustee from time to time with a list of
the names and signatures of all persons authorized to so act.
Notwithstanding anything to the contrary contained herein,
following a Change of Control, Company may not reserve
discretionary authority for the management and control of any
assets of the Trust and any prior reservation then in effect
shall immediately be nullified.
(d) Trustee shall be under no duty or obligation to review
or to question any direction of Company pursuant to authority
reserved under subsection (c) of this Section 5, or to review
securities or any other property so held with respect to prudence
or proper diversification, or to make any suggestions or
recommendation to Company with respect to the retention or
investment of any such assets and shall have no authority to take
any action or to refrain from taking any action with respect to
any such assets unless and until it is directed to do so by
Company. Notwithstanding anything to the contrary in this Trust
Agreement, Company does hereby discharge, indemnify and hold
harmless Trustee, its directors, officers, employees, and agents,
from and against any and all losses, costs, damages, claims,
penalties, expenses (including reasonable attorneys' fees and
expenses) or liabilities arising in connection with Trustee's
administration of the Trust consistent with Section 5(c).
(e) Trustee shall be responsible for assuring the daily
investment of cash balances, unless directed otherwise by the
Company pursuant to authority reserved in subsection (c) of this
Section 5, so as to maintain uninvested cash balances at a
minimum.
(f) Without in any way limiting the powers and discretions
conferred upon Trustee by the other provisions of this Trust
Agreement, Trustee (and Company acting pursuant to authority
reserved under subsection (c) of this Section 5) shall be vested
with the following powers and discretions (to be exercised in
light of the nature and purpose of this Trust) with respect to
the assets of the Trust subject to its management and control:
(1) To invest and reinvest in any property, real,
personal or mixed, wherever situated and whether or not
productive of income or consisting of wasting assets,
including without limitation, common and preferred stocks,
bonds, notes, debentures (including convertible stocks and
securities), leaseholds, mortgages, certificates of deposit
or demand or time deposits (including any such deposits with
Trustee), shares of investment companies and mutual funds,
interests in partnerships and trusts, insurance policies and
annuity contracts, and oil, mineral or gas properties,
royalties, interests or rights, without being limited to the
classes of property in which trustees are authorized to
invest by any law or any rule of court of any state and
without regard to the proportion any such property may bear
to the entire amount of the Trust;
(2) To invest and reinvest all or any portion of the
Trust collectively through the medium of any common,
collective or commingled trust fund that may be established
and maintained by Trustee, to be held and invested subject
to all of the terms and conditions thereof, and such trust
shall be deemed adopted as a part of the Trust to the extent
that assets of the Trust are invested therein;
(3) To retain any property at any time received by the
Trustee;
(4) To sell or exchange any property held by it at
public or private sale, for cash or on credit, to grant and
exercise options for the purchase or exchange thereof, to
exercise all conversion or subscription rights
pertaining to any such property and to enter into any
covenant or agreement to purchase any property in the
future;
(5) To participate in any plan of reorganization,
consolidation, merger, combination, liquidation or other
similar plan relating to property held by it and to consent to or
oppose any such plan or any action thereunder or any contract,
lease, mortgage, purchase, sale or other action by any
person;
(6) To deposit any property held by it with any
protective, reorganization or similar committee, to delegate
discretionary power thereto, and to pay part of the expenses
and compensation thereof and any assessments levied with
respect to any such property so deposited;
(7) To extend the time of payment of any obligation
held by it;
(8) To hold uninvested any monies received by it,
without liability for interest thereon until such
monies shall be invested, reinvested or disbursed;
(9) To exercise all voting or other rights with
respect to any property held by it and to grant proxies,
discretionary or otherwise;
(10) For the purposes of the Trust, to borrow money
from others, to issue its promissory note or notes therefor,
and to secure the repayment thereof by pledging any property
held by it;
(11) To manage, administer, operate, insure, repair,
improve, develop, preserve, mortgage, lease or otherwise
deal with, for any period, any real property or any oil,
mineral or gas properties, royalties, interests, or rights
held by joining with others, using other Trust assets for
any such purposes, to modify, extend, renew, waive or
otherwise adjust any provision for amortization of the
investment in or depreciation of the value of such property;
(12) To employ suitable agents (including but not
limited to actuarial and employee benefit consulting firms)
and counsel, who may be counsel to Company or Trustee, and
to pay their reasonable expenses and compensation from the
Trust to the extent not paid by Company;
(13) To register any securities held in the Trust in
the name of a nominee and to hold any investment in bearer
form, and to combine certificates representing such
investments with certificates of the same issue held by the
Trustee in other fiduciary capacities or to deposit or
arrange for the deposit of such securities in a qualified
central depository even though, when so deposited, such
securities may be merged and held in bulk in the name of the
nominee of such depository with other securities deposited
therein by any other person, or to deposit or arrange for
the deposit of any securities issued by the United States
Government, or an agency or instrumentality thereof, with a
federal reserve bank, but the books and records of Trustee
shall at all times show that all such investments are part
of the Trust;
(14) To settle, compromise, or submit to arbitration
any claims, debts, or damages due or owing to or from the
Trust, respectively, to commence or defend suits or legal
proceedings to protect any interest of the Trust, and to
represent the Trust in all suits or legal proceedings in any
court or before any other body or tribunal; provided,
however, Trustee shall not be required to take any such
action unless it shall have been indemnified by Company or
the Trust to its reasonable satisfaction against liability
and expense it might incur therefrom;
(15) To organize under laws of any state a corporation
or trust for the purpose of acquiring and holding title to
any property which it is authorized to acquire hereunder and
to exercise with respect thereto any or all of the powers
set forth herein; and
(16) Generally, to do all acts consistent with its
duties hereunder, whether or not expressly authorized, that
Trustee may deem necessary or desirable for the protection
of the Trust.
(g) Notwithstanding anything to the contrary contained
herein (other than the provisions of Section 5A hereof), unless
and until directed otherwise by Company, or the occurrence of a
Change of Control, the assets of the Trust (other than dividends
on Company Stock held by the Trust) shall be invested and
reinvested exclusively in the common stock, par value $1.00 per
share, of Company ("Company Stock") except to the extent that
Company directs otherwise with respect to a portion of the assets
in anticipation of reasonable liquidity needs of the Trust.
Trustee shall purchase from Company any such Company Stock
acquired for the Trust, unless Trustee is instructed otherwise by
Company in writing. With respect to assets of the Trust invested
in Company Stock, Trustee shall have no obligation to diversify
investments in the Trust, and shall not be subject to any rule of
applicable law which might otherwise make necessary, require, or
in any way deem appropriate diversification of investments in the
Trust, all such rules being hereby expressly waived.
Notwithstanding anything to the contrary in this Trust Agreement,
Company does hereby discharge, indemnify and hold harmless
Trustee, its directors, officers, employees and agents, from and
against any and all losses, costs, damages, claims, penalties,
expenses (including reasonable attorneys' fees and expenses) or
liabilities arising in connection with such Trustee's
administration of the Trust consistent with this Section 5(g).
(h) Following a Change of Control, Trustee may no longer
invest in Company Stock or any other securities or obligations
issued by Company, and Section 5(g) shall no longer apply. After
a Change of Control, Trustee shall have and exercise all
discretionary authority for the management and control of Trust
assets and shall commence the orderly disposition of Company
Stock, subject to the provisions of Section 5A hereof to the
extent applicable. Trustee may, in its sole discretion, retain
Company Stock acquired prior to a Change of Control for such
period of time as Trustee deems appropriate and in the best
interest of participants and beneficiaries in the Plan(s). In no
event may Trustee make additional investments in Company Stock on
behalf of the Trust after a Change of Control, other than
(i) amounts held in diversified common investment vehicles in
which Trustee invests, and (ii) through the exercise of rights to
acquire Company Stock attributable to shares held at the time of
the Change of Control, in the Trustee's sole discretion, if the
Trustee deems such exercise appropriate and in best interest of
the participants and beneficiaries in the Plan(s).
Section 5A. Sale of Company Stock by Trustee
(a) Except as otherwise specifically permitted herein,
Trustee may not sell Company Stock except: (1) as necessary from
time to time to satisfy benefit obligations under the Plan(s)
which are required to be paid by Trustee under this Trust;
(2) pursuant to a tender or exchange offer, by other than
Company, for all or substantially all of the issued and
outstanding Company Stock; or (3) following a Change of Control;
and then only as specifically permitted herein.
(b) Trustee shall provide Company with not less than 30
days prior notice that it proposes to sell any Company Stock,
unless Trustee determines in good faith that such delay would
cause irreparable harm to Trustee or to the Trust, in which event
Trustee shall provide reasonable notice of such proposed sale.
Notice shall be given by telephone, confirmed promptly by
facsimile or first class mail, postage prepaid. Trustee shall
specify in any event the number of shares proposed to be sold.
(c) Trustee shall make sales of Company Stock pursuant to
an effective registration statement under, or an exemption
(including but not limited to Rule 144) from, the registration
requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and in compliance with applicable state
securities laws.
(d) Should either Company or Trustee determine in good
faith, with the written advice of counsel delivered to and in
form reasonably acceptable to the other party hereto, that such
proposed sale could not reasonably be made pursuant to an
exemption from the Securities Act, then Trustee may demand in
writing that Company, at Company's option, either purchase under
Section 5A(f) or register under the Securities Act under Section
5A(e), such number of shares of Company Stock held and proposed
to be sold by Trustee. Company shall promptly notify Trustee by
telephone, confirmed promptly by facsimile or first class mail,
postage prepaid, whether it elects to proceed under Section 5A(f)
or 5A(e).
(e) If Company elects registration pursuant to a demand
under Section 5A(d) above, then:
(1) As soon as practicable, but in any event within 90
days after receipt of the demand from Trustee, Company
shall:
(i) file with the Securities and Exchange
Commission (the "Commission") a registration statement
covering the shares to be sold and use its reasonable
best efforts to have such registration statement filed
pursuant to this Agreement declared effective as
promptly as practicable. Company shall advise Trustee
of the progress of such filing and of any review
thereof undertaken by the Commission, and promptly
notify Trustee, and confirm such advice in writing, (x)
when such registration statement becomes effective, (y)
when any post-effective amendment to such registration
statement becomes effective and (z) of any request by
the Commission for any amendment or supplement to such
registration statement or any prospectus relating
thereto or for additional information;
(ii) use its reasonable best efforts to
register, qualify, or effect compliance not later than
the effective date of any registration statement filed
pursuant to this Trust Agreement, the shares of Company
Stock registered thereunder under the blue sky laws of
such states or the District of Columbia as the Trustee
may reasonably request; provided, however, that Company
shall not be obligated to qualify as a foreign
corporation or as a dealer in securities or to execute
or file any general consent to service of process under
the laws of any such jurisdiction where it is not so
subject; and, provided, further, that Company reserves
the right not to register or qualify shares of Company
Stock in any jurisdiction where registration or
qualification of such shares would be unreasonably
burdensome;
(iii) from time to time (x) after the
Company has elected to satisfy a demand for sale by
means of registration, immediately advise Trustee of
any event or development, including a material adverse
change in the financial condition, business or affairs
of Company, known to Company (other than events or
developments affecting market or economic conditions
generally), which may have a material adverse impact on
the proposed offering; and (y) within the period of
effectiveness of such registration statement, advise
Trustee of any event or development requiring amendment
or supplement (which amendment or supplement shall be
prepared with reasonable promptness by Company) of the
registration statement or prospectus used in connection
therewith or rendering it inadvisable to use the
prospectus until it is supplemented or amended; and
(iv) furnish to Trustee such number of
copies of any preliminary and final prospectuses and
any amendments and supplements thereto as Trustee may
reasonably request.
(2) Trustee and Company shall negotiate with an
underwriter selected or approved by Company with regard to the
underwriting of such requested registration. Company shall enter
into an underwriting agreement in customary form with the
underwriter(s) and Trustee in which Company and Trustee (to the
extent applicable based only on such information as is provided
in writing by Trustee) shall provide customary indemnification to
such underwriter(s) and each other.
(3) Company shall have the right to terminate or
withdraw any registration contemplated by it under this
Section 5A(e) prior to or following the effectiveness of
such registration for any reason whatsoever, provided that
it shall thereupon be required to purchase shares pursuant
to Section 5A(f).
(4) Trustee shall provide all such information and
materials and take all such actions, furnish all such
information, execute all such documents and cooperate with
Company in good faith, all as may be reasonably required in
order to permit Company to comply with all applicable
requirements of the Commission and all other applicable laws
or regulations and to obtain acceleration of the effective
date of the registration statement.
(5) All expenses incurred in connection with any
registration, qualification or compliance pursuant to this
Trust Agreement, including without limitation, all
registration, filing and qualification fees, printing and
engraving expenses, fees and disbursements of counsel for
Company, and expenses of any special audits or comfort
letters incidental to or required by such registration,
shall be borne by Company, provided that Trustee may pay
such expenses and recover same from the Trust if Company
fails to pay such expenses in a timely manner.
(f) Notwithstanding any contrary provision of this
Agreement, if Company advises Trustee of any delays in filing or
effectiveness of more than 60 days, if Company and Trustee are
unable despite good faith efforts to agree as to registration or
an exempt sale, or if a registered sale would not permit Trustee
to sell Company Stock expeditiously enough to meet Trustee's good
faith needs, Trustee may demand that Company purchase, or if
Company elects to purchase stock pursuant to Section 5A(d),
(e)(3) or (g), Company shall purchase the Company Stock desired
to be sold at fair market value, which shall be the volume
weighted average trading price (including only trades which would
meet the time of purchases conditions under Rule 10b-18 under the
Securities Exchange Act of 1934, as amended ("Rule 10b-18"), of a
share of such security on the New York Stock Exchange on the day
that Company receives such demand or gives notice of such
election. Company and Trustee shall use their reasonable best
efforts to agree as to the prompt execution, closing and delivery
of shares and proceeds therefor.
(g) Until a Change of Control, Company may, on notice of a
proposed sale by Trustee, whether or not exempt, elect to
purchase such Company Stock from Trustee at fair market value, as
defined in Section 5A(f), and with the manner, conditions, and
closing of such sale to be agreed upon by Company and Trustee.
(h) Company shall be entitled to postpone the filing of any
registration statement and any amendment or supplement thereto
otherwise required to be prepared and filed by it, or to direct
that Trustee postpone any sale or put if, at the time it receives
a request for registration or sale, (i) Company determines, in
its reasonable business judgment, that such filing, registration
and offering, or sale or put, would materially interfere with the
likely success of a proposed purchase or sale of securities by
Company; or (ii) counsel for Company opines in writing that the
filing of such registration statement, amendment or supplement,
or sale or put would have a material adverse impact on any
material ongoing or pending transaction or program of Company or
any of its subsidiaries or any other circumstances; provided,
that should such delays adversely affect Trustee's ability to pay
benefits as contemplated by this Trust Agreement, then Company
shall advance such funds as may be reasonably needed by Trustee
for such proposed pending sale.
(i) Notwithstanding any provisions above permitting sale by
Trustee of Company Stock, Trustee shall, until a Change of
Control or a tender or exchange offer for all or substantially
all of the issued and outstanding Common Stock, limit sales,
whether registered or exempt (other than sales described in
Section 5A(f)), by reference to the volume limitations for issuer
repurchases within Rule 10b-18; provided, that block sales may
not exceed 25% of the trading volume on the New York Stock
Exchange, Inc. for the 14 day period prior to such sale. Company
shall provide all information reasonably required by Trustee to
make determinations as to the number of shares which may be sold,
and Trustee shall promptly notify Company as to all sales made
other than through a registered public offering.
(j) Company and Trustee shall each cooperate in good faith
and employ their reasonable best efforts in permitting and
effecting any purchase or sale of Company Stock as contemplated
in this Section 5A and each shall comply with all applicable laws
and regulations relating to the foregoing including, without
limitation, federal and state securities laws, rules and
regulations issued thereunder, and any other governmental or
stock exchange requirements or regulations relating thereto.
Section 6. Disposition of Income.
During the term of this Trust, all income received by the
Trust, net of expenses and taxes, shall be accumulated and
reinvested.
Section 7. Accounting by Trustee.
Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions
required to be made, including such specific records as shall be
agreed upon in writing between Company and Trustee. Within forty-
five (45) days following the close of each calendar year and
within forty-five (45) days after the removal or resignation of
the Trustee, Trustee shall deliver to Company a written account
of its administration of the Trust during such year or during the
period from the close of the last preceding year to the date of
such removal or resignation, setting forth all investments,
receipts, disbursements and other transactions effected by it,
including a description of all securities and investments
purchased and sold with the cost or net proceeds of such
purchases or sales (accrued interest paid or receivable being
shown separately), and showing all cash, securities and other
property held in the Trust at the end of such year or as of the
date of such removal or resignation, as the case may be. In
addition, as of the end of each calendar month (referred to in
this Trust as a "valuation date"), within ten (10) days after
each such month-end, Trustee shall deliver to Company a written
account setting forth the value of the Trust's assets, together
with such other information as shall be agreed upon between
Company and Trustee.
Section 8. Responsibility of Trustee.
(a) Trustee shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent
person acting in like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character and
with like aims, provided, however, that Trustee shall incur no
liability to any person for (i) any action taken pursuant to a
direction, request or approval given by Company or a Trustee's
Contractor which is contemplated by, and in conformity with, the
terms of the Plan(s) or this Trust and is given in writing by
Company or a Trustee's Contractor (other than Trustee when it
acts as Trustee's Contractor), or (ii) the investment in, or
retention of, Company Stock pursuant to the terms of this
Agreement, and no such action shall be considered a breach of the
fiduciary standard herein set forth. In the event of a dispute
between Company or a Trustee's Contractor and a party, Trustee
may apply to a court of competent jurisdiction to resolve the
dispute.
(b) If Trustee undertakes or defends any litigation arising
in connection with this Trust or a Plan (including without
limitation any action to compel funding of the Trust pursuant to
Section 1 hereof, to compel Company to take any action under the
Trust or the Plan(s), or to determine Trustee's obligations
hereunder), Trustee shall be indemnified by the Trust against
Trustee's costs, expenses and liabilities (including, without
limitation, reasonable attorneys' fees and expenses) relating
thereto and the Trust shall be primarily liable for such
payments, other than those arising from Trustee's negligence or
willful misconduct. Trustee shall also be entitled to reasonable
payment from the Trust for the allocation of Trustee's personnel
to the investigation and defense or prosecution thereof, at
Trustee's normal hourly billing rates. If such costs, expenses
and liabilities are not paid from the Trust for any reason
(including without limitation insufficiency of the Trust's assets
to satisfy such obligations) in a reasonably timely manner,
Company agrees to indemnify Trustee against such costs, expenses
and liabilities. Anything in this subsection (b) to the contrary
notwithstanding, Company shall indemnify and hold Trustee
harmless from and against all costs, expenses and liabilities
arising out of or relating to the acquisition, retention or
disposition of Company Stock, except with respect to matters
covered by the Trustee's indemnity to be provided under Section
5A(e)(2).
(c) Trustee may consult with legal counsel (who may also be
counsel for Company generally) with respect to any of its duties
or obligations hereunder.
(d) Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants or other professionals
to assist it in performing any of its duties or obligations
hereunder.
(e) Trustee shall have, without exclusion, all powers
consistent with the terms hereof conferred on trustees by
applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an
asset of the Trust, Trustee shall have no power to name a
beneficiary of the policy other than the Trust, to assign the
policy (as distinct from conversion of the policy to a different
form) other than to a successor Trustee, or to loan to any person
the proceeds of any borrowing against such policy.
(f) Notwithstanding any powers granted to Trustee pursuant
to this Trust Agreement or to applicable law, Trustee shall not
have any power that could give this Trust the objective of
carrying on a business and dividing the gains therefrom, within
the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal
Revenue Code.
Section 9. Compensation and Expenses of Trustee.
All administrative and Trustee's fees as agreed upon between
Trustee and Company and reasonable expenses actually incurred by
the Trustee in performing its duties hereunder including the fees
and expenses of any third party which provides services
contemplated herein or in the Plan(s) shall be paid by Trustee
from the assets of the Trust and, until so paid, shall constitute
a lien on the assets of the Trust. If not so paid, the fees and
expenses shall be paid by Company.
Section 10. Resignation and Removal of Trustee.
(a) Trustee may resign at any time by written notice to
Company, which shall be effective sixty (60) days after receipt
of such notice unless Company and Trustee agree otherwise;
provided that in no event shall any such resignation take effect
prior to the appointment of a successor Trustee.
(b) Trustee may be removed by Company on sixty (60) days
notice or upon shorter notice accepted by Trustee.
(c) Upon a Change of Control, as defined herein, Trustee may
not be removed by Company for one (1) year. Additionally, after
the expiration of the one (1) year period following a Change of
Control, Trustee may be removed by Company only if Company first
obtains the express written consent to such removal of more than
one-half of a combination of the participants and beneficiaries
of deceased participants in the Plan(s).
(d) If Trustee resigns or is removed within one (1) year of
a Change of Control, as defined herein, Trustee shall select a
successor Trustee in accordance with the provisions of Section
11(b) hereof prior to the effective date of Trustee's resignation
or removal. Additionally, if Trustee resigns or is removed after
expiration of the one (1) year period following a Change of
Control, Company may select a successor Trustee in accordance
with the provisions of Section 11(b) hereof if it shall first
obtain the express written consent to the appointment of the
proposed successor of more than one-half of a combination of the
participants and beneficiaries of deceased participants in the
Plan(s). If Company fails to so appoint a successor Trustee,
Trustee shall select a successor Trustee. Upon the appointment
and acceptance by, and transfer of assets to, a successor
Trustee, Trustee shall have no further responsibilities under
this Trust Agreement.
(e) Upon resignation or removal of Trustee and appointment
of a successor Trustee, all assets shall subsequently be
transferred to the successor Trustee. The transfer shall be
completed within sixty (60) days after receipt of notice of
resignation, removal or transfer, unless Company extends the time
limit.
(f) If Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 11 hereof, by the effective
date of resignation or removal under paragraph (a) of this
section. If no such appointment has been made, Trustee may apply
to a court of competent jurisdiction for appointment of a
successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed and charged to
the Trust as administrative expenses of the Trust.
Section 11. Appointment of Successor.
(a) If Trustee resigns or is removed in accordance with
Section 10(a) or (b) or (c) hereof, Company may, subject to
Section 10(d), appoint any third party, such as a bank trust
department or other party that may be granted corporate trustee
powers under state or federal law, as a successor to replace
Trustee upon resignation or removal. The appointment shall be
effective when accepted in writing by the new Trustee, who shall
have all the rights and powers of the former Trustee, including
ownership rights in the Trust assets. The former Trustee shall
execute any instrument necessary or reasonably requested by
Company or the successor Trustee to evidence the transfer.
(b) If Trustee resigns or is removed pursuant to the
provisions of Section 10(a), (b), (c) or (d) hereof and selects a
successor Trustee pursuant to Section 10(d) hereof, Trustee may
appoint any third party such as a bank trust department or other
party that may be granted corporate trustee powers under state or
federal law. The appointment of a successor Trustee shall be
effective when accepted in writing by the new Trustee. The new
Trustee shall have all the rights and powers of the former
Trustee, including ownership rights in Trust assets. The former
Trustee shall execute any instrument necessary or reasonably
requested by the successor Trustee to evidence the transfer.
(c) A former Trustee shall prepare and deliver to Company
and to the successor Trustee a final accounting unless Company
waives Company's right to such accounting, and such accounting
shall be effective through the date of the former Trustee's
transfer of all assets to its successor. The successor Trustee
need not examine the records and acts of any prior Trustee unless
requested to do so by Company (and, after a Change of Control,
unless the successor Trustee in addition concludes that there is
a reasonable basis for such request by Company) and may retain or
dispose of existing Trust assets, subject to Sections 7 and 8
hereof. Subject to the foregoing, the successor Trustee shall
not be responsible for and Company shall indemnify and defend the
successor Trustee from any claim or liability resulting from any
action or inaction of any prior Trustee or from any other past
event, or any condition existing at the time it becomes successor
Trustee. The compensation arrangement for the successor Trustee
shall be reasonable in relation to the services to be performed
by the successor Trustee.
Section 12. Amendment or Termination.
(a) This Trust Agreement (including Appendix A hereto) may
be amended by a written instrument executed by Trustee and
Company. Notwithstanding the foregoing, (i) no such amendment
shall conflict with the terms of the Plan(s) as then in effect or
shall make the Trust revocable after it has become irrevocable in
accordance with Section 1(b) hereof and (ii) the duties and
responsibilities of Trustee shall not be increased without
Trustee's written consent.
(1) Furthermore, notwithstanding anything to the
contrary in this Trust Agreement (except as otherwise
provided in this Section 12), (i) prior to a Change of
Control, no amendment shall be made to Section 1(d) through
(h), Section 2, Section 4, Section 5(h), Section 10(c),
Section 10(d), this Section 12(a), Section 13(d), Section
13(g), Section 13(j), and Section 13(k), and no deletion
shall be made in Appendix A, without the prior written
consent of more than one-half of a combination of the
participants and beneficiaries of deceased participants in
the Plan(s) unless such amendment would not, in the opinion
of counsel, have a material and adverse effect on the rights
or interests of such participants or beneficiaries or
procedures for distribution of benefits to participants or
beneficiaries; and (ii) following a Change of Control, no
amendment shall be made to any provision of this Trust
Agreement (including Appendix A hereto) without the prior
written consent of more than one-half of a combination of
the participants and beneficiaries of deceased participants
in the Plan(s) unless such amendment would not, in the
opinion of counsel, have a material and adverse effect on
the rights or interests of such participants or
beneficiaries or procedures for distribution of benefits to
participants and beneficiaries.
(2) The limitations contained in Section 12(a)(1)
shall not apply with respect to any amendment which is
reasonably necessary, in the opinion of counsel, to preserve
the status of the Trust as a grantor trust and the status of
the Plan(s) as unfunded for federal income tax purposes and
for purposes of the Employee Retirement Income Security Act
of 1974, as amended, or to guard against an adverse impact
on Plan participants or beneficiaries and which, in the
opinion of counsel, is drafted primarily to preserve such
status or to reduce or eliminate such adverse impact on such
person or persons.
(3) In each instance in which an opinion of counsel is
contemplated in this Section 12(a) prior to a Change of
Control, such opinion shall be in writing and delivered to
Trustee, rendered by a nationally recognized law firm
selected by Company, and in each instance in which an
opinion of counsel is contemplated in this Section 12(a)
after a Change of Control, such opinion shall be in writing
and delivered to Trustee, rendered by a nationally
recognized law firm selected by the Trustee's Contractor.
Trustee may rely on all such opinions and determinations.
(b) The Trust shall not terminate until the date on which
Plan participants and their beneficiaries are no longer entitled
to benefits from Company pursuant to the terms of the Plan(s).
Upon termination of the Trust any assets remaining in the Trust
shall be returned to Company.
(c) Upon written approval of participants or beneficiaries
entitled to payment of benefits pursuant to the terms of the
Plan(s), Company may terminate this Trust prior to the time all
benefit payments under the Plan(s) have been made. All assets in
the Trust at termination shall be returned to Company.
(d) Trustee may rely for purposes of this Section 12 on a
certificate furnished by Company prior to a Change of Control,
and by the Trustee's Contractor after a Change of Control,
(i) with respect to any amendment requiring the prior written
consent of more than one-half of the participants and
beneficiaries in the Plan(s) pursuant to subsection (a) of this
Section 12, that such consent has been obtained, (ii) with
respect to subsection (b) of this Section 12, that Plan
participants and their beneficiaries are no longer entitled to
benefits pursuant to the terms of the Plan(s), and (iii) with
respect to subsection (c) of this Section 12, that the written
approval of participants or beneficiaries entitled to payment of
benefits pursuant to the terms of the Plan(s) has been obtained.
Section 13. Miscellaneous.
(a) Any provision of this Trust Agreement prohibited by law
shall be ineffective to the extent of any such prohibition,
without invalidating the remaining provisions hereof.
(b) Benefits payable to Plan participants and their
beneficiaries under this Trust Agreement may not be anticipated,
assigned (either at law or in equity), alienated, pledged,
encumbered or subjected to attachment, garnishment, levy,
execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed
in accordance with the laws of New York.
(d) For purposes of this Trust, Change of Control shall
mean: (i) any "person" (as such term is defined in the
Securities Exchange Act of 1934, as amended), other than a
trustee or other fiduciary holding securities under an employee
benefit plan of Company or a corporation owned directly or
indirectly by the shareholders of Company in substantially the
same proportions as their ownership of stock of Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under
said Act), directly or indirectly, of securities of Company
representing 20% or more of the total voting power represented by
Company's then outstanding voting securities; or (ii) during any
period of two consecutive years, individuals who at the beginning
of such period constitute the Board of Directors of Company and
any new director whose election by the Board of Directors or
nomination for election by Company's shareholders was approved by
a vote of at least two-thirds of the directors who either were
directors at the beginning of the two-year period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof. For all
purposes of this Trust Agreement, Trustee shall have no
responsibility whatsoever to determine whether or not a Change of
Control of Company has occurred.
(e)(1) After the execution of this Trust Agreement,
Company shall promptly file with Trustee, and following the
appointment of a Trustee's Contractor, Company shall
promptly file with the Trustee's Contractor, a certified
list of the names and specimen signatures of the officers of
Company and any delegate authorized to act for it. Unless
Company notifies Trustee to the contrary, Company shall act
through its Treasurer or any person who such Treasurer
authorizes in writing to act on his behalf or any other
person who is authorized to act on Company's behalf by a
resolution of Company's Board of Directors. Company shall
promptly notify Trustee and the Trustee's Contractor, if
applicable, of the addition or deletion of any person's name
to or from such list, respectively. Until receipt by
Trustee and/or the Trustee's Contractor of notice that any
person is no longer authorized so to act, Trustee or the
Trustee's Contractor may continue to rely on the authority
of the person. All certifications, notices and directions
by any such person or persons to Trustee or the Trustee's
Contractor shall be in writing signed by such person or
persons. Trustee and the Trustee's Contractor may rely on
any certification, notice or direction of Company that the
Trustee or the Trustee's Contractor reasonably believes to
have been signed by a duly authorized officer or agent of
Company. Trustee and the Trustee's Contractor shall have no
responsibility for acting or not acting in reliance upon any
notification reasonably believed by Trustee or the Trustee's
Contractor to have been signed by a duly authorized officer
or agent of Company.
(e)(2) After the engagement of a Trustee's Contractor
(other than Trustee), the Trustee's Contractor shall
promptly file with Trustee a certified list of the names and
specimen signatures of the officers of the Trustee's
Contractor and any delegate authorized to act for it.
Trustee's Contractor shall promptly notify Trustee of the
addition or deletion of any person's name to or from such
list. Until receipt by Trustee of notice that any person is
no longer authorized so to act, Trustee may continue to rely
on the authority of the person. All certifications, notices
and directions by any such person or persons to Trustee
shall be in writing signed by such person or persons.
Trustee may rely on any such certification, notice or
direction of the Trustee's Contractor that Trustee
reasonably believes to have been signed by or on behalf of a
duly authorized officer or agent of the Trustee's
Contractor. Trustee shall have no responsibility for acting
or not acting in reliance upon any notification reasonably
believed by the Trustee to have been signed by a duly
authorized officer or agent of the Trustee's Contractor.
(f) Neither the gender nor the number (singular or plural)
of any word shall be construed to exclude another gender or
number when a different gender or number would be appropriate.
(g)(1) This Trust Agreement shall be binding upon and
inure to the benefit of any successor to Company or its
business, or a portion thereof, which assumes Company
obligations under the Plan(s), as the result of merger,
consolidation, reorganization, spin-off, division, transfer
of assets or otherwise (hereinafter referred to as a
"corporate transaction") and any subsequent successor
thereto which assumes Company obligations under the Plan(s).
All references in this Trust Agreement to "Company" shall
include all such successors. In the event of any such
corporate transaction, the successor to Company or its
business or subsequent successor thereto shall promptly
notify Trustee in writing of its successorship. In no event
shall any such corporate transaction suspend or delay the
payment of benefits to Plan participants or beneficiaries
hereunder.
(g)(2) Except as provided in Section 13(g)(3), Company
shall remain liable for the payment of any Plan benefits
attributable to deferrals made under plans of deferred
compensation prior to the effective date of any such
corporate transaction, or benefits accrued under any
supplemental retirement or pension plan prior to the
effective date of any such corporate transaction, to the
extent of the then assets of the Trust, if such payments are
proper but not timely made by a successor to Company or its
business or any subsequent successor thereto, and the assets
of the Trust shall be available to make such payments
pursuant to Section 2. The obligation to make any such
payments hereunder shall arise only after the affected Plan
participant or beneficiary has exhausted all claims and
review procedures properly imposed under the terms of the
Plan. The Trust shall be subrogated, to the extent of any
payment made pursuant to this Section 13(g)(2) to a Plan
participant or beneficiary, to all rights and remedies of
such Plan participant or beneficiary, and Trustee shall be
entitled to sue the nonpaying successor to Company in the
name of the Plan participant or beneficiary, but Trustee
shall not be required to take any such action unless there
are sufficient assets in the Trust to cover the expense
thereof. Entitlement to any payment hereunder is expressly
conditioned upon the reasonable assistance and cooperation
of the Plan participant or beneficiary in pursuing such
rights and remedies.
(g)(3) The provisions of Section 13(g)(2) shall be
inapplicable to any Plan benefits payable following any
corporate transaction with respect to which Company shall
have contracted with its successor or otherwise provided for
the establishment of a trust providing substantially similar
rights and protections to Plan participants and
beneficiaries as are provided herein and which at the
effective date of such corporate transaction is funded to at
least the "funding level" (as such term is used in Section
1(e)(2) hereof) of this Trust. The determination of whether
the requirements of the preceding sentence have been
satisfied shall be made by Company; provided, however, that
following the engagement of a Trustee's Contractor, such
determinations shall be made by Trustee's Contractor.
Trustee may rely on the accuracy of all such determinations.
(h) This Trust Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but all of which shall together constitute only one Agreement.
(i) Communications to Trustee shall be sent to Bankers Trust
Company, 280 Park Avenue, New York, New York 10017 - ATTENTION:
Senior Vice President, Retirement Services Group, or to such
other address as Trustee may specify in writing. No
communication shall be binding upon Trustee until it is received
by Trustee. Communications to Company and the Trustee's
Contractor shall be sent to the principal offices of Company or
the Trustee's Contractor, as the case may be, or to such other
address as Company or the Trustee's Contractor, as applicable,
may specify in writing.
(j) In the event the participants and beneficiaries in one
or more of the Plan(s) are determined generally to be subject to
federal income tax on any amount in the Trust prior to the time
of payment hereunder, the entire amount determined to be so
taxable shall be distributed by Trustee to each affected
participant or beneficiary. Company may, at its option, make
such payments directly to affected participants and
beneficiaries. An amount shall be determined to be subject to
federal income tax upon the earliest of: (a) a final
determination by the United States Internal Revenue Service
addressed to a participant or beneficiary which is not appealed
to the courts; (b) a final determination by the United States Tax
Court or any other federal court affirming any such determination
by the Internal Revenue Service; or (c) an opinion by counsel for
Company reasonably acceptable to Trustee addressed to Company and
Trustee, that, by reason of the Treasury Regulations, amendments
to the Internal Revenue Code, published Internal Revenue Service
rulings, court decisions or other substantial precedent, amounts
hereunder are generally subject to federal income tax prior to
payment; provided, that following a Change of Control, only an
opinion by counsel selected by the Trustee's Contractor may be
accepted by Trustee for purposes of (c). Company shall undertake
at its sole expense to defend any tax claims described herein
which are asserted by the Internal Revenue Service against any
participant or beneficiary and which it determines would affect
participants or beneficiaries generally, including attorneys'
fees and costs of appeal, and shall have the sole authority to
determine whether or not to appeal any determination made by the
Internal Revenue Service or by a lower court. Company also
agrees to reimburse any participant or beneficiary for any
interest or penalties in respect of tax claims hereunder which it
determines would affect participants or beneficiaries generally,
upon receipt of documentation of same. Any distributions from
the Trust to a participant or beneficiary under this Section
13(j) (other than reimbursements of interest or penalties
referred to in the preceding sentence) shall reduce the benefits
payable to such participant and/or beneficiary under the Plan(s).
(k) In the event that Company shall fail to satisfy any
obligation of Company to a Plan participant or beneficiary under
this Trust Agreement, or in one or more of the Plan(s), after
reasonable notice and demand with respect thereto, and one or
more participants or beneficiaries obtains a final determination
by a court of competent jurisdiction that Company has so failed,
such participant(s) or beneficiary(ies) shall be indemnified by
the Trust against reasonable and appropriate costs and expenses
(including without limitation reasonable attorneys' fees and
expenses) relating thereto and the Trust shall be primarily
liable for such payments. Interest on any Plan benefit payments
which such court determines have been delayed to the extent
interest or similar payments in an equal or greater amount are
not provided in the Plan or by the court or otherwise shall also
be paid from the assets of the Trust. Such interest shall be
calculated using a rate of interest equal to the rate of interest
on ten (10) year United States Treasury obligations, as
determined on the first day of each calendar quarter, compounded
quarterly. If such costs, expenses and interest are not paid
from the Trust for any reason (including without limitation
insufficiency of the Trust's assets to satisfy such obligations)
in a reasonably timely manner, such participant(s) or
beneficiary(ies) may obtain payment from Company.
(l) Nothing herein shall be construed as restricting or
limiting in any way amendment of the Plan(s) in accordance with
the terms of the Plan(s).
(m) Any other provisions of this Trust Agreement to the
contrary notwithstanding, this Trust shall terminate no later
than the twenty-first anniversary of the date of death of the
survivor from among a class consisting of all of the descendants
of the late Joseph P. Kennedy, the former Ambassador to the Court
of Saint James, who are living on the date of the establishment
of the Trust and, if the Trust is still in existence on such
anniversary date, Trustee shall dispose of the Trust as Company
shall direct.
(n) In case of any conflict or inconsistency between the
terms of this Trust Agreement and any Plan, the terms of this
Trust Agreement shall control.
Section 14. Effective Date.
The effective date of this Trust Agreement shall be
the date of its execution set forth on page 1 of the Trust
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused the Trust
Agreement to be duly executed and their respective corporate
seals to be hereto affixed on the date set forth on page 1 of the
Trust Agreement.
BELLSOUTH CORPORATION
By:___/S/ Arlen G. Yokley________
Title: Vice President, Secretary
and Treasurer
(CORPORATE SEAL)
ATTEST:__/S/ Marcy A. Bass___
Title:___Assistant Secretary_
BANKERS TRUST COMPANY,
as Trustee
By:___/S/ Gary D. Cohen________
Title:__Vice President_________
(CORPORATE SEAL)
ATTEST:__/S/ Marie B. Colaninno__
Title:_______Vice President______
APPENDIX A
BellSouth Nonqualified Deferred Compensation Plan
BellSouth Corporation Directors' Retirement Plan
BellSouth Corporation Deferred Compensation Plan for Non-
Employee Directors
0015746.01B
BELLSOUTH TELECOMMUNICATIONS, INC.
TRUST UNDER BOARD OF DIRECTORS BENEFIT PLAN(S)
TABLE OF CONTENTS
Section 1. Establishment of Trust 2
Section 2. Payments to Plan Participants and
Their Beneficiaries 6
Section 3. Trustee Responsibility Regarding
Payments to Trust Beneficiary When
Company is Insolvent 10
Section 4. Payments to Company 11
Section 5. Investment Authority 12
Section 5A. Sale of Company Stock by Trustee 17
Section 6. Disposition of Income 21
Section 7. Accounting by Trustee 21
Section 8. Responsibility of Trustee 22
Section 9. Compensation and Expenses of Trustee 23
Section 10. Resignation and Removal of Trustee 23
Section 11. Appointment of Successor 24
Section 12. Amendment or Termination 25
Section 13. Miscellaneous 27
Section 14. Effective Date 32
BELLSOUTH TELECOMMUNICATIONS, INC.
TRUST UNDER BOARD OF DIRECTORS BENEFIT PLAN(S)
This Agreement made this 28th day of April, 1995, by and
between BellSouth Corporation, a Georgia corporation (BellSouth),
BellSouth Telecommunications, Inc., a Georgia corporation wholly-
owned by BellSouth (Company), and Bankers Trust Company, a New
York corporation (Trustee);
(a) WHEREAS, Company has adopted the nonqualified deferred
compensation Plan(s) as listed in Appendix A for certain members
of its Board of Directors;
(b) WHEREAS, Company has incurred or expects to incur
liability under the terms of such Plan(s) with respect to the
individuals participating in such Plan(s);
(c) WHEREAS, to make certain provisions for the payment of
such liability, BellSouth and Trustee on April 25, 1990 executed
a trust agreement for the benefit of certain directors of
BellSouth and its affiliates (including Company) who participate
in the Plan(s) (the "Predecessor Trust");
(d) WHEREAS, BellSouth, Company and Trustee on November 9,
1993 amended and restated the Predecessor Trust insofar as it
related to Company's obligations (but not obligations of
subsidiary or other affiliated entities) to pay benefits under
the Plan(s) (hereinafter, called "Successor Trust") and
contributed assets to the Successor Trust, subject to the claims
of Company's creditors in the event of Company's Insolvency, as
herein defined, until full payment has been made in respect of
such obligations of Company to Plan participants and their
beneficiaries in such manner and at such times as specified in
the Plan(s);
(e) WHEREAS, BellSouth, Company and Trustee now desire to
amend and restate the Successor Trust in the form of this Trust
Agreement (hereinafter, called "Trust");
(f) WHEREAS, it is the intention of the parties that this
Trust shall constitute an unfunded arrangement and shall not
affect the status of the Plan(s) as an unfunded plan maintained
for the purpose of providing deferred compensation for members of
Company's board of directors who are not employees of Company or
affiliated entities; and
(g) WHEREAS, it is the intention of Company to make
contributions to the Trust to provide itself with a source of
funds to assist it in the meeting of its liabilities under the
Plan(s);
NOW, THEREFORE, the parties do hereby establish the Trust
and agree that the Trust shall be comprised, held and disposed of
as follows:
Section 1. Establishment of Trust.
(a) BellSouth, Company and Trustee hereby amend and
restate in all respects the Successor Trust in the form of this
Trust Agreement. The principal of the Trust shall be held,
administered and disposed of by Trustee as provided in this Trust
Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which
Company is the grantor, within the meaning of subpart E, part I,
subchapter J, chapter 1, subtitle A of the Internal Revenue Code
of 1986, as amended, and shall be construed accordingly.
(d) The principal of the Trust, and any earnings thereon
shall be held separate and apart from other funds of Company and
shall be used exclusively for the uses and purposes of Plan
participants and general creditors as herein set forth. Plan
participants and their beneficiaries shall have no preferred
claim on, or any beneficial ownership interest in, any assets of
the Trust. Any rights created under the Plan(s) and this Trust
Agreement shall be mere unsecured contractual rights of Plan
participants and their beneficiaries against Company. Any assets
held by the Trust will be subject to the claims of Company's
general creditors under federal and state law in the event of
Insolvency, as defined in Section 3(a) herein.
(e)(1) Company, in its sole discretion, may at any
time, or from time to time, make additional deposits of cash
or other property acceptable to Trustee in trust with
Trustee to augment the principal to be held, administered
and disposed of by Trustee as provided in this Trust
Agreement. Neither Trustee nor any Plan participant or
beneficiary shall have any right to compel any such
additional deposits under this subsection (1).
(2) If, as of the last day of a fiscal year of the
Trust, the funding level of the Trust shall be less than
eighty percent (80%) of the Trust's funding level as of the
last day of any of the five (5) most recently preceding
fiscal years of the Trust (taking into account contributions
made under this Section 1(e)(2) for each such year),
disregarding for purposes of this Section 1(e)(2) fiscal
years ending prior to January 1, 1994, BellSouth shall
notify Trustee of such situation and Company shall make an
irrevocable contribution to the Trust as soon as possible,
but in no event longer than one hundred twenty (120) days
following the last day of such fiscal year. Such
contribution shall be in an amount sufficient to bring the
Trust's funding level equal to the Trust's funding level as
of the last day of the fiscal year among the five (5) most
recently preceding fiscal years on which the Trust's funding
level was highest. In no event shall such contribution be
required if, as of the last day of such fiscal year, the
fair market value of the Trust's assets is one hundred
percent (100%), or greater, of the aggregate Current
Liability (as defined in subsection (3) of this
Section 1(e)) of Company under the Plan(s). For these
purposes, "funding level" shall mean the ratio (stated as a
percentage) that the fair market value of the assets in the
Trust bears to the aggregate Current Liability of Company
under the Plan(s). The Trust's funding level shall be
determined as of the last day of each fiscal year, except
that in determining the amount of the required contribution,
the fair market value of the Trust's assets shall be
determined as of the valuation date most recently preceding
the date on which such contribution is made. Such funding
level shall be determined by BellSouth; provided, however,
that following the engagement of a Trustee's Contractor,
such determination shall be made by Trustee's Contractor.
The Trustee may rely on the accuracy of all such
determinations.
(3)(A) For purposes of this Trust, "Current Liability"
shall mean the amount required to pay each Plan participant
or beneficiary the benefits to which Plan participants or
their beneficiaries would be entitled pursuant to the terms
of the Plan(s), to the extent such benefits are obligations
of Company (and not obligations of subsidiary or other
affiliated entities). The Current Liability on any date
with respect to a Plan shall be determined as if the Plan
terminated as of such date using an interest rate equal to
the Pension Benefit Guaranty Corporation valuation interest
rate for immediate annuities as in effect on such date, the
1983 Group Annuity Mortality Table published by the Society
of Actuaries, and reasonable actuarial calculation
principles consistently applied. Current Liability shall be
determined, as of the last day of each fiscal year of the
Trust and at such additional times as are necessary to
implement the provisions of this Trust Agreement, by
BellSouth; provided, however, that following the engagement
of a Trustee's Contractor, such determinations shall be made
by Trustee's Contractor. The Trustee may rely on the
accuracy of all such determinations.
(3)(B) In the event that the interest rate assumption
described above in subsection (3)(A) is at any time no
longer available or the mortality assumption described above
is at any time no longer considered a reasonable and
reliable mortality assumption, other interest rate or
mortality assumptions, as the case may be, deemed generally
comparable to the above-specified assumptions, may be used
instead. All determinations regarding substitute
assumptions, including whether such substitution is
reasonably necessary and the selection of the substitute
assumption(s), shall be made by BellSouth; provided,
however, that following the engagement of a Trustee's
Contractor, such determinations shall be made by Trustee's
Contractor.
(f) Upon a Change of Control, BellSouth shall promptly
notify Trustee thereof and, as soon as possible, but in no event
longer than one hundred twenty (120) days following the Change of
Control, as defined herein, Company shall make an irrevocable
contribution to the Trust in an amount that is sufficient to pay
each Plan participant or beneficiary the benefits to which Plan
participants or their beneficiaries would be entitled pursuant to
the terms of the Plan(s), to the extent such benefits are
obligations of Company (and not obligations of subsidiary or
other affiliated entities), as of the date on which the Change of
Control occurred. Such contribution shall be in an amount equal
to the excess, if any, of the aggregate Current Liability as of
the date on which the Change of Control occurred over the fair
market value of the Trust's assets as of the valuation date most
recently preceding the date on which such contribution is made.
Thereafter, Company shall make an additional contribution each
fiscal year to the Trust, as soon as possible, but in no event
longer than one hundred twenty (120) days following the last day
of each such fiscal year, in an amount equal to the excess, if
any, of the aggregate Current Liability under the Plan(s) as of
the last day of the fiscal year over the fair market value of the
Trust's assets as determined on the valuation date most recently
preceding the date on which such contribution is made. The
amount of all such contributions shall be determined by Trustee's
Contractor. The Trustee may rely on the accuracy of all such
determinations.
(g) If, as of a Distribution Date with respect to
outstanding rights to purchase Series A First Preferred Stock,
under the terms of and as defined in a Rights Agreement between
BellSouth and Chemical Bank, as Rights Agent, under an agreement
originally dated November 27, 1989 (a "Distribution Date"), the
aggregate Current Liability exceeds the fair market value of the
Trust's assets (such fair market value determined as of the
valuation date most recently preceding such Distribution Date),
Company shall be required to make an additional contribution to
the Trust in an amount equal to such excess or, at Company's
option, to obtain a letter of credit, or a series of letters of
credit, adequate to fund such amount as of such Distribution Date
under the Plan(s) and maintain such letter(s) of credit until
such time as the aggregate Current Liability no longer exceeds
the fair market value of the Trust's assets. The determination
of whether the aggregate Current Liability exceeds the fair
market value of the Trust's assets upon a Distribution Date and,
if so, the amount of such excess, shall be made by BellSouth;
provided, however, that following the engagement of a Trustee's
Contractor, such determinations shall be made by Trustee's
Contractor. The Trustee may rely on the accuracy of all such
determinations. Any such letter of credit, or series of letters
of credit, shall be part of the general assets of Company and
shall not be an asset of this Trust and, unless otherwise agreed
to in writing by Trustee, Trustee shall have no responsibility
whatsoever with respect to the adequacy of, or selection of the
issuer or issuers of, any such letter or letters of credit.
(h) If, in any five (5) consecutive calendar year period,
(i) there are five (5) or more final determinations by courts of
competent jurisdiction that (A) BellSouth or a subsidiary of
BellSouth, including Company, which both is a member of
BellSouth's controlled group of corporations and has adopted a
Plan (a "Participating Company") has failed to pay (after
reasonable notice and demand for payment) any benefit due under
the terms and conditions of a Plan and that (B) there was no
material issue of fact or law respecting such company's
obligation to make such benefit payment, or (ii) there are two
(2) or more final determinations by courts of competent
jurisdiction, in lawsuits instituted after reasonable notice and
demand with respect thereto, in which the court determines that
BellSouth or a Participating Company had acted in bad faith and
with a clear and deliberate disregard for such company's
obligations under the Plan(s), there shall be deemed to have
occurred a Change of Control as defined in this Trust Agreement
and BellSouth shall give Trustee prompt written notice of such
event. For purposes of this Trust Agreement, (i) the term
"controlled group of corporations" has the meaning ascribed to
such term in Section 1563(a) of the Internal Revenue Code of
1986, as amended, substituting "more than 50 percent" for the
phrase "at least 80 percent" each place it appears in
Section 1563(a)(1), and (ii) the term "final determination" means
a determination with respect to which all rights of appeal or to
request a review, a rehearing or redetermination have been
exhausted or have lapsed.
Section 2. Payments to Plan Participants and Their
Beneficiaries.
(a) BellSouth, or the Trustee's Contractor if one shall
have been engaged, shall deliver to Trustee a schedule (the
"Payment Schedule") that indicates the amounts payable in
accordance with the terms and conditions of the Plan(s) in
respect of each Plan participant (and his or her beneficiaries),
that provides a formula or other instructions acceptable to
Trustee for determining the amounts so payable, the form in which
such amount is to be paid (as provided for or available under the
Plan(s)), and the time of commencement for payment of such
amounts. Except as otherwise provided herein, Trustee shall make
payments to the Plan participants and their beneficiaries in
accordance with such Payment Schedule. The Trustee shall make
provision for the reporting and withholding of any federal, state
or local taxes that may be required to be withheld with respect
to the payment of benefits pursuant to the terms of the Plan(s)
and shall pay amounts withheld to the appropriate taxing
authorities or determine that such amounts have been reported,
withheld and paid by Company. Payments may be made in cash or,
where called for under the terms of the Plan(s), in Company Stock
(as such term is defined in Section 5(g) hereof).
Notwithstanding the foregoing, if a benefit which is
distributable in the form of Company Stock under the terms of a
Plan becomes payable at a time when there is no (or insufficient)
Company Stock in the Trust with which to satisfy such benefit
obligation and if the Company fails or refuses to pay such
benefit within a reasonable time after notice from Trustee that
it has become so payable, Trustee shall use other assets of the
Trust to acquire Company Stock, on the open market or otherwise
in its discretion, sufficient to satisfy such benefit obligation.
(b) The entitlement of a Plan participant or his or her
beneficiaries to benefits payable by Company under the Plan(s)
shall be determined in accordance with the terms of the Plan(s)
by BellSouth (or Company) or such party as it shall designate
under the Plan(s), or the Trustee's Contractor if one shall have
been engaged, and any claim for such benefits shall be considered
and reviewed and paid or not paid under the procedures set out in
the Plan(s). Notwithstanding any Plan provision to the contrary,
if a Trustee's Contractor shall have been engaged, all such
determinations shall be made by the Trustee's Contractor whose
determinations shall be final, conclusive and binding on all
persons. Neither Trustee nor Trustee's Contractor shall have any
obligation for determining whether any Plan participant or
beneficiary has died and shall be entitled to rely upon any
information in this regard furnished by BellSouth or Company.
(c) Company may make payment of benefits directly to Plan
participants or their beneficiaries as they become due under the
terms of the Plan(s). In such event, Company shall make
provision for the reporting and withholding of any federal, state
or local taxes that may be required to be withheld with respect
to the payment of benefits pursuant to the terms of the Plan(s)
and shall pay amounts withheld to the appropriate taxing
authorities. BellSouth shall notify Trustee of Company's
decision to make payment of benefits directly prior to the time
amounts are payable to participants or their beneficiaries. In
addition, if the principal of the Trust, and any earnings
thereon, are not sufficient to make payments of benefits payable
by Company in accordance with the terms of the Plan(s), Company
shall make the balance of each such payment as it falls due.
Trustee shall notify BellSouth where principal and earnings are
not sufficient.
(d) BellSouth may engage a third party administrator as a
contractor of the Trustee ("Trustee's Contractor"), who shall not
be a Plan participant or beneficiary (but who may be the
Trustee), to perform functions described in this Section 2(d) and
elsewhere in this Trust Agreement which would otherwise be
performed by BellSouth or Company.
(1) Upon engagement of a Trustee's Contractor, as soon
as practicable but in no event longer than thirty (30) days
thereafter, BellSouth shall furnish to the Trustee's
Contractor copies of the Plan documents, employment records
of participants, and other information necessary to
determine the benefits which are or may become payable by
Company to or with respect to each participant in each Plan,
including any benefits payable after the participant's
death, and the recipient of same and the procedures which
BellSouth has adopted to calculate such benefit payments.
BellSouth shall regularly, at least annually, and upon each
benefit change under the Plan(s) furnish revised, updated
information to the Trustee's Contractor. In the event
BellSouth refuses or neglects to provide updated participant
information as contemplated herein, the Trustee's Contractor
shall be entitled to rely on the most recent information
furnished to it by BellSouth.
(2) In the event of a Change of Control, BellSouth
shall have the duty to engage, as soon as practicable
thereafter, a Trustee's Contractor reasonably acceptable to
the Trustee if there shall at that time be no Trustee's
Contractor then serving. In addition, if as of a
Distribution Date (as such term is defined in Section 1(g)
hereof), there shall be no Trustee's Contractor then
serving, BellSouth shall have the duty to designate on a
stand-by basis a Trustee's Contractor who shall commence to
serve as Trustee's Contractor in the event such Distribution
Date is followed by a Change of Control. After a Change of
Control, BellSouth shall not have any control or authority
with respect to the Trustee's Contractor so engaged or then
serving, or any successor Trustee's Contractor, including
without limitation any rights with respect to the removal or
replacement of any such Trustee's Contractor or its duties
pursuant to this Trust Agreement.
(3) Unless Trustee agrees to perform the functions of
the Trustee's Contractor described herein, Trustee shall
have no responsibility hereunder for any obligation assigned
to a Trustee's Contractor or (subject to subsection (4)
below) for the performance of a Trustee's Contractor's
duties and responsibilities under this Trust Agreement.
(4) BellSouth may replace or remove any Trustee's
Contractor from time to time serving hereunder, in its sole
discretion, prior to the occurrence of a Change of Control.
Following a Change of Control, Trustee, in its sole
discretion, may remove a Trustee's Contractor engaged by
BellSouth or any successor Trustee's Contractor and shall
remove any such person and engage a successor to such person
if Trustee deems such person's performance as a Trustee's
Contractor unsatisfactory. At all times following a Change
of Control, upon any such removal, or the voluntary
resignation of any such Trustee's Contractor or the
occurrence of any other event which shall result in the
cessation of performance of the Trustee's Contractor's
duties hereunder, Trustee shall use its best efforts to
engage a new Trustee's Contractor (which may be Trustee);
provided, however, Trustee shall perform the duties of the
Trustee's Contractor during any period for which Trustee is
unable to find a new Trustee's Contractor (so that there
will be no default in payments under the Plan(s) as a result
of the absence of a Trustee's Contractor), and any person
engaged as a Trustee's Contractor shall in the judgment of
Trustee be independent of Company and BellSouth. The person
who removes or replaces a Trustee's Contractor shall be
responsible for assuring that there is a timely and complete
transfer of records from such Trustee's Contractor to such
person's successor.
(5) Except for the records dealing solely with the
assets of the Trust and investment of those assets, which
shall be maintained by the Trustee, if a Trustee's
Contractor shall be engaged, the Trustee's Contractor shall
maintain all Plan participant records contemplated by this
Agreement, including the Payment Schedule. All such records
and copies of the Plan(s) documents and employment records
of the participants in the possession of the Trustee's
Contractor shall be made available promptly upon request of
Trustee, BellSouth or Company. The Trustee's Contractor
shall also prepare and distribute participant statements to
participants and beneficiaries and shall perform such other
duties and responsibilities contemplated under the terms of
this Trust Agreement as BellSouth or Trustee, as the case
may be, determines is necessary or advisable to achieve the
objectives of this Trust Agreement.
(6) BellSouth and Company shall indemnify and hold
harmless the Trustee's Contractor for any liability or
expenses, including without limitation advances for or
prompt reimbursement of reasonable fees and expenses of
counsel and other agents retained by it, incurred by the
Trustee's Contractor with respect to keeping the records for
participants' benefits, reporting thereon to participants
and beneficiaries, certifying benefit information to
Trustee, determining the status of benefits hereunder and
otherwise carrying out its obligations under this Trust
Agreement, other than those resulting from Trustee's
Contractor's negligence or willful misconduct or its failure
to reasonably calculate and certify the amount of benefits
based on the applicable terms of the Plan documents and
other information and procedures furnished by BellSouth to
the Trustee's Contractor in accordance with this Trust
Agreement. The Trustee's Contractor shall be entitled to
reasonable compensation for services hereunder, the amount
of which shall be agreed upon from time to time by BellSouth
or, following a Change of Control, the Trustee, and the
Trustee's Contractor in writing, and reimbursement for
reasonable expenses incurred in connection with its
performance of such services. Following a Change of
Control, Trustee's good faith determination of compensation
to be paid to a Trustee's Contractor (including Trustee when
it acts in such capacity) shall be binding on BellSouth, the
Company and each other person having an interest in the
Trust. All such compensation and expenses shall be paid by
Trustee from the assets of the Trust. If not so paid, such
compensation and expenses shall be paid by Company.
(7) Except as may be otherwise agreed by the Trustee's
Contractor and BellSouth, or Trustee following a Change of
Control, the Trustee's Contractor's obligations are limited
solely to those explicitly set forth herein and the
Trustee's Contractor shall have no responsibility, authority
or control, direct or indirect, over the maintenance or
investment of the Trust and shall have no obligation in
respect of Trustee or the Trustee's compliance with the
Trustee's Contractor's certifications to Trustee.
Section 3. Trustee Responsibility Regarding Payments to
Trust Beneficiary When Company Is Insolvent.
(a) Trustee shall cease payment of benefits to Plan
participants and their beneficiaries if the Company is Insolvent.
Company shall be considered "Insolvent" for purposes of this
Trust Agreement if (i) Company is unable to pay its debts as they
become due, or (ii) Company is subject to a pending proceeding as
a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as
provided in Section 1(d) hereof, the principal and income of the
Trust shall be subject to claims of general creditors of Company
under federal and state law as set forth below.
(1) The Board of Directors and the Chief Executive
Officer of Company shall have the duty to inform Trustee in
writing of Company's Insolvency. If a person claiming to be
a creditor of Company alleges in writing to Trustee that
Company has become Insolvent, Trustee shall determine
whether Company is Insolvent and, pending such
determination, Trustee shall discontinue payment of benefits
to Plan participants or their beneficiaries.
(2) Unless Trustee has actual knowledge of Company's
Insolvency, or has received notice from Company or a person
claiming to be a creditor alleging that Company is
Insolvent, Trustee shall have no duty to inquire whether
Company is Insolvent. Trustee may in all events rely on
such evidence concerning Company's solvency as may be
furnished to Trustee and that provides Trustee with a
reasonable basis for making a determination concerning
Company's solvency.
(3) If at any time Trustee has determined that Company
is Insolvent, Trustee shall discontinue payments to Plan
participants or their beneficiaries and shall hold the
assets of the Trust for the benefit of Company's general
creditors. Nothing in this Trust Agreement shall in any
way diminish any rights of Plan participants or their
beneficiaries to pursue their rights as general creditors of
Company with respect to benefits due under the Plan(s) or
otherwise.
(4) Trustee shall resume the payment of benefits to
Plan participants or their beneficiaries in accordance with
Section 2 of this Trust Agreement only after Trustee has
determined that Company is not Insolvent (or is no longer
Insolvent).
(c) Provided that there are sufficient assets, if Trustee
discontinues the payment of benefits from the Trust pursuant to
Section 3(b) hereof and subsequently resumes such payments, the
first payment following such discontinuance shall include the
aggregate amount of all payments due from Company to Plan
participants or their beneficiaries under the terms of the
Plan(s) for the period of such discontinuance, less the aggregate
amount of any payments made to Plan participants or their
beneficiaries by Company in lieu of the payments provided for
hereunder during any such period of discontinuance.
Section 4. Payments to Company.
(a) Except as provided in Sections 3, 4(b), 4(c), 4(d),
5(b) and 12(c) hereof, after the Trust has become irrevocable,
neither BellSouth nor Company shall have the right or power to
direct Trustee to return to Company or to divert to others any of
the Trust assets before all payment of benefits have been made to
Plan participants and their beneficiaries pursuant to the terms
of the Plan(s) to the extent such benefits are obligations of
Company.
(b) If, prior to a Change of Control, within sixty (60)
days following the end of a fiscal year of the Trust, BellSouth
provides a written certification to Trustee, reasonably
acceptable to the Trustee that, as of the last day of the fiscal
year, the fair market value of the assets of the Trust exceeds
one hundred twenty percent (120%) of the aggregate Current
Liability, Trustee shall, at BellSouth's request, distribute to
Company all or part of such excess. No distribution pursuant to
this Section 4(b) may be made following a Change of Control.
(c) Prior to a Change of Control, Trustee shall, if so
instructed by BellSouth in writing within thirty (30) days after
the actual filing of BellSouth's federal income tax return for a
year, reimburse Company from the assets of the Trust for federal,
state or local income taxes, or any part thereof, which BellSouth
certifies that Company has paid, attributable to income of the
Trust for such year, as determined by BellSouth, within thirty
(30) days after receipt of such request. No reimbursement for
taxes pursuant to this Section 4(c) may be made following a
Change of Control.
(d) Notwithstanding any other provision of this Trust
Agreement, including without limitation Section 1(b) hereof,
prior to a Change of Control Company shall have the right with
respect to each contribution to the Trust (other than
contribution(s) required pursuant to Section 1(e)(2) hereof) to
cause Trustee to return all or any portion of a contribution and
any and all income on such contribution to Company. Such right
shall be exercised by giving written notice to Trustee and shall
be exercisable in a nonfiduciary capacity without the approval or
consent of Trustee or any other person. Such right shall expire
with respect to each contribution to the Trust upon the earlier
of (i) thirty days following the date on which the contribution
is made, (ii) the last day of the taxable year of Company in
which the contribution is made or (iii) a Change of Control.
Company's right under this Section 4(d) shall expire upon a
Change of Control.
Section 5. Investment Authority.
(a) Except as otherwise provided in subsections (c), (d),
(e) and (g) of this Section 5, the assets of the Trust shall be
invested and reinvested by Trustee, without distinction between
principal and income, at such time or times in such investments
and pursuant to such investment strategies or courses of action
and in such shares and proportions, as Trustee, in its sole
discretion, shall deem advisable. Except as otherwise provided
herein, Trustee may invest in securities (including stock or
rights to acquire stock) or obligations issued by BellSouth. All
rights associated with assets of the Trust shall be exercised by
Trustee or the person designated by Trustee, and shall in no
event be exercisable by or rest with Plan participants.
(b) Company shall have the right, at any time, and from
time to time in its sole discretion, to substitute assets of
equal fair market value for any asset held by the Trust. This
right is exercisable by Company in a nonfiduciary capacity
without the approval or consent of any person in a fiduciary
capacity. In connection with any substitution of assets
described in this Section 5(b), Company Stock may not revert to
Company in kind at any time following a voting record date for
any meeting of BellSouth stockholders and before such meeting,
unless Trustee shall have voted such shares by proxy. Such
reversion may occur immediately following the stockholders'
meeting to which such record date relates. Further, any such
substitution may be made only out of property available to the
Company for the purchase of shares of stock under applicable
state law, as determined by Company.
(c) Subject to the provisions of Section 5A, investment
authority over the Trust's assets, or any portion thereof, other
than dividends on Company Stock held by the Trust, may be
reserved by BellSouth to itself from time to time in its absolute
discretion, prior to a Change of Control. Any such reservation
of discretionary authority by BellSouth shall be communicated to
Trustee in writing. In this regard, unless BellSouth notifies
Trustee to the contrary, BellSouth shall act through its
Treasurer, or any person who such Treasurer authorizes in writing
to act on his behalf or any other person who is authorized to act
on BellSouth's behalf by a resolution of BellSouth's Board of
Directors. BellSouth shall furnish Trustee from time to time
with a list of the names and signatures of all persons authorized
to so act. Notwithstanding anything to the contrary contained
herein, following a Change of Control, BellSouth may not reserve
discretionary authority for the management and control of any
assets of the Trust and any prior reservation then in effect
shall immediately be nullified.
(d) Trustee shall be under no duty or obligation to review
or to question any direction of BellSouth pursuant to authority
reserved under subsection (c) of this Section 5, or to review
securities or any other property so held with respect to prudence
or proper diversification, or to make any suggestions or
recommendation to BellSouth with respect to the retention or
investment of any such assets and shall have no authority to take
any action or to refrain from taking any action with respect to
any such assets unless and until it is directed to do so by
BellSouth. Notwithstanding anything to the contrary in this
Trust Agreement, BellSouth does hereby discharge, indemnify and
hold harmless Trustee, its directors, officers, employees, and
agents, from and against any and all losses, costs, damages,
claims, penalties, expenses (including reasonable attorneys' fees
and expenses) or liabilities arising in connection with Trustee's
administration of the Trust consistent with Section 5(c).
(e) Trustee shall be responsible for assuring the daily
investment of cash balances, unless directed otherwise by the
BellSouth pursuant to authority reserved in subsection (c) of
this Section 5, so as to maintain uninvested cash balances at a
minimum.
(f) Without in any way limiting the powers and discretions
conferred upon Trustee by the other provisions of this Trust
Agreement, Trustee (and BellSouth acting pursuant to authority
reserved under subsection (c) of this Section 5) shall be vested
with the following powers and discretions (to be exercised in
light of the nature and purpose of this Trust) with respect to
the assets of the Trust subject to its management and control:
(1) To invest and reinvest in any property, real,
personal or mixed, wherever situated and whether or not
productive of income or consisting of wasting assets,
including without limitation, common and preferred stocks,
bonds, notes, debentures (including convertible stocks and
securities), leaseholds, mortgages, certificates of deposit
or demand or time deposits (including any such deposits with
Trustee), shares of investment companies and mutual funds,
interests in partnerships and trusts, insurance policies and
annuity contracts, and oil, mineral or gas properties,
royalties, interests or rights, without being limited to the
classes of property in which trustees are authorized to
invest by any law or any rule of court of any state and
without regard to the proportion any such property may bear
to the entire amount of the Trust;
(2) To invest and reinvest all or any portion of the
Trust collectively through the medium of any common,
collective or commingled trust fund that may be established
and maintained by Trustee, to be held and invested subject
to all of the terms and conditions thereof, and such trust
shall be deemed adopted as a part of the Trust to the extent
that assets of the Trust are invested therein;
(3) To retain any property at any time received by the
Trustee;
(4) To sell or exchange any property held by it at
public or private sale, for cash or on credit, to grant and
exercise options for the purchase or exchange thereof, to
exercise all conversion or subscription rights
pertaining to any such property and to enter into any
covenant or agreement to purchase any property in the
future;
(5) To participate in any plan of reorganization, consolidation,
merger, combination, liquidation or other similar plan relating to property
held by it and to consent to or oppose any such plan or any action
thereunder or any contract, lease, mortgage, purchase, sale or other
action by any person;
(6) To deposit any property held by it with any
protective, reorganization or similar committee, to delegate
discretionary power thereto, and to pay part of the expenses
and compensation thereof and any assessments levied with
respect to any such property so deposited;
(7) To extend the time of payment of any obligation held by it;
(8) To hold uninvested any monies received by it,
without liability for interest thereon until such
monies shall be invested, reinvested or disbursed;
(9) To exercise all voting or other rights with
respect to any property held by it and to grant proxies,
discretionary or otherwise;
(10) For the purposes of the Trust, to borrow money
from others, to issue its promissory note or notes therefor,
and to secure the repayment thereof by pledging any property
held by it;
(11) To manage, administer, operate, insure, repair,
improve, develop, preserve, mortgage, lease or otherwise
deal with, for any period, any real property or any oil,
mineral or gas properties, royalties, interests, or rights
held by joining with others, using other Trust assets for
any such purposes, to modify, extend, renew, waive or
otherwise adjust any provision for amortization of the
investment in or depreciation of the value of such property;
(12) To employ suitable agents (including but not
limited to actuarial and employee benefit consulting firms)
and counsel, who may be counsel to BellSouth, Company or
Trustee, and to pay their reasonable expenses and
compensation from the Trust to the extent not paid by
Company;
(13) To register any securities held in the Trust in
the name of a nominee and to hold any investment in bearer
form, and to combine certificates representing such
investments with certificates of the same issue held by the
Trustee in other fiduciary capacities or to deposit or
arrange for the deposit of such securities in a qualified
central depository even though, when so deposited, such
securities may be merged and held in bulk in the name of the
nominee of such depository with other securities deposited
therein by any other person, or to deposit or arrange for
the deposit of any securities issued by the United States
Government, or an agency or instrumentality thereof, with a
federal reserve bank, but the books and records of Trustee
shall at all times show that all such investments are part
of the Trust;
(14) To settle, compromise, or submit to arbitration
any claims, debts, or damages due or owing to or from the
Trust, respectively, to commence or defend suits or legal
proceedings to protect any interest of the Trust, and to
represent the Trust in all suits or legal proceedings in any
court or before any other body or tribunal; provided,
however, Trustee shall not be required to take any such
action unless it shall have been indemnified by BellSouth,
Company or the Trust to its reasonable satisfaction against
liability and expense it might incur therefrom;
(15) To organize under laws of any state a corporation
or trust for the purpose of acquiring and holding title to
any property which it is authorized to acquire hereunder and
to exercise with respect thereto any or all of the powers
set forth herein; and
(16) Generally, to do all acts consistent with its
duties hereunder, whether or not expressly authorized, that
Trustee may deem necessary or desirable for the protection
of the Trust.
(g) Notwithstanding anything to the contrary contained
herein (other than the provisions of Section 5A hereof), unless
and until directed otherwise by BellSouth, or the occurrence of a
Change of Control, the assets of the Trust (other than dividends
on Company Stock held by the Trust) shall be invested and
reinvested exclusively in the common stock, par value $1.00 per
share, of BellSouth Corporation ("Company Stock") except to the
extent that BellSouth directs otherwise with respect to a portion
of the assets in anticipation of reasonable liquidity needs of
the Trust. Trustee shall purchase from BellSouth any such
Company Stock acquired for the Trust, unless Trustee is
instructed otherwise by BellSouth in writing. With respect to
assets of the Trust invested in Company Stock, Trustee shall have
no obligation to diversify investments in the Trust, and shall
not be subject to any rule of applicable law which might
otherwise make necessary, require, or in any way deem appropriate
diversification of investments in the Trust, all such rules being
hereby expressly waived. Notwithstanding anything to the
contrary in this Trust Agreement, BellSouth and Company do hereby
discharge, indemnify and hold harmless Trustee, its directors,
officers, employees and agents, from and against any and all
losses, costs, damages, claims, penalties, expenses (including
reasonable attorneys' fees and expenses) or liabilities arising
in connection with such Trustee's administration of the Trust
consistent with this Section 5(g).
(h) Following a Change of Control, Trustee may no longer
invest in Company Stock or any other securities or obligations
issued by BellSouth or Company, and Section 5(g) shall no longer
apply. After a Change of Control, Trustee shall have and
exercise all discretionary authority for the management and
control of Trust assets and shall commence the orderly
disposition of Company Stock, subject to the provisions of
Section 5A hereof to the extent applicable. Trustee may, in its
sole discretion, retain Company Stock acquired prior to a Change
of Control for such period of time as Trustee deems appropriate
and in the best interest of participants and beneficiaries in the
Plan(s). In no event may Trustee make additional investments in
Company Stock on behalf of the Trust after a Change of Control,
other than (i) amounts held in diversified common investment
vehicles in which Trustee invests, and (ii) through the exercise
of rights to acquire Company Stock attributable to shares held at
the time of the Change of Control, in the Trustee's sole
discretion, if the Trustee deems such exercise appropriate and in
best interest of the participants and beneficiaries in the
Plan(s).
Section 5A. Sale of Company Stock by Trustee
(a) Except as otherwise specifically permitted herein,
Trustee may not sell Company Stock except: (1) as necessary from
time to time to satisfy benefit obligations under the Plan(s)
which are required to be paid by Trustee under this Trust; (2)
pursuant to a tender or exchange offer, by other than BellSouth,
for all or substantially all of the issued and outstanding
Company Stock; or (3) following a Change of Control; and then
only as specifically permitted herein.
(b) Trustee shall provide BellSouth with not less than 30
days prior notice that it proposes to sell any Company Stock,
unless Trustee determines in good faith that such delay would
cause irreparable harm to Trustee or to the Trust, in which event
Trustee shall provide reasonable notice of such proposed sale.
Notice shall be given by telephone, confirmed promptly by
facsimile or first class mail, postage prepaid. Trustee shall
specify in any event the number of shares proposed to be sold.
(c) Trustee shall make sales of Company Stock pursuant to
an effective registration statement under, or an exemption
(including but not limited to Rule 144) from, the registration
requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and in compliance with applicable state
securities laws.
(d) Should either BellSouth or Trustee determine in good
faith, with the written advice of counsel delivered to and in
form reasonably acceptable to the other party hereto, that such
proposed sale could not reasonably be made pursuant to an
exemption from the Securities Act, then Trustee may demand in
writing that BellSouth, at BellSouth's option, either purchase
under Section 5A(f) or register under the Securities Act under
Section 5A(e), such number of shares of Company Stock held and
proposed to be sold by Trustee. BellSouth shall promptly notify
Trustee by telephone, confirmed promptly by facsimile or first
class mail, postage prepaid, whether it elects to proceed under
Section 5A(f) or 5A(e).
(e) If BellSouth elects registration pursuant to a demand
under Section 5A(d) above, then:
(1) As soon as practicable, but in any event within 90
days after receipt of the demand from Trustee, BellSouth
shall:
(i) file with the Securities and Exchange
Commission (the "Commission") a registration statement
covering the shares to be sold and use its reasonable
best efforts to have such registration statement filed
pursuant to this Agreement declared effective as
promptly as practicable. BellSouth shall advise
Trustee of the progress of such filing and of any
review thereof undertaken by the Commission, and
promptly notify Trustee, and confirm such advice in
writing, (x) when such registration statement becomes
effective, (y) when any post-effective amendment to
such registration statement becomes effective and (z)
of any request by the Commission for any amendment or
supplement to such registration statement or any
prospectus relating thereto or for additional
information;
(ii) use its reasonable best efforts to
register, qualify, or effect compliance not later than
the effective date of any registration statement filed
pursuant to this Trust Agreement, the shares of Company
Stock registered thereunder under the blue sky laws of
such states or the District of Columbia as the Trustee
may reasonably request; provided, however, that neither
BellSouth nor Company shall be obligated to qualify as
a foreign corporation or as a dealer in securities or
to execute or file any general consent to service of
process under the laws of any such jurisdiction where
it is not so subject; and, provided, further, that
BellSouth reserves the right not to register or qualify
shares of Company Stock in any jurisdiction where
registration or qualification of such shares would be
unreasonably burdensome;
(iii) from time to time (x) after BellSouth
has elected to satisfy a demand for sale by means of
registration, immediately advise Trustee of any event
or development, including a material adverse change in
the financial condition, business or affairs of
BellSouth, known to BellSouth (other than events or
developments affecting market or economic conditions
generally), which may have a material adverse impact on
the proposed offering; and (y) within the period of
effectiveness of such registration statement, advise
Trustee of any event or development requiring amendment
or supplement (which amendment or supplement shall be
prepared with reasonable promptness by BellSouth) of
the registration statement or prospectus used in
connection therewith or rendering it inadvisable to use
the prospectus until it is supplemented or amended; and
(iv) furnish to Trustee such number of
copies of any preliminary and final prospectuses and
any amendments and supplements thereto as Trustee may
reasonably request.
(2) Trustee and BellSouth shall negotiate with an
underwriter selected or approved by BellSouth with regard to
the underwriting of such requested registration. BellSouth
shall enter into an underwriting agreement in customary form
with the underwriter(s) and Trustee in which BellSouth and
Trustee (to the extent applicable based only on such
information as is provided in writing by Trustee) shall
provide customary indemnification to such underwriter(s) and
each other.
(3) BellSouth shall have the right to terminate or
withdraw any registration contemplated by it under this
Section 5A(e) prior to or following the effectiveness of
such registration for any reason whatsoever, provided that
it shall thereupon be required to purchase shares pursuant
to Section 5A(f).
(4) Trustee shall provide all such information and
materials and take all such actions, furnish all such
information, execute all such documents and cooperate with
BellSouth in good faith, all as may be reasonably required
in order to permit BellSouth to comply with all applicable
requirements of the Commission and all other applicable laws
or regulations and to obtain acceleration of the effective
date of the registration statement.
(5) All expenses incurred in connection with any
registration, qualification or compliance pursuant to this
Trust Agreement, including without limitation, all
registration, filing and qualification fees, printing and
engraving expenses, fees and disbursements of counsel for
BellSouth, and expenses of any special audits or comfort
letters incidental to or required by such registration,
shall be borne by BellSouth, provided that Trustee may pay
such expenses and recover same from the Trust if BellSouth
fails to pay such expenses in a timely manner.
(f) Notwithstanding any contrary provision of this
Agreement, if BellSouth advises Trustee of any delays in filing
or effectiveness of more than 60 days, if BellSouth and Trustee
are unable despite good faith efforts to agree as to registration
or an exempt sale, or if a registered sale would not permit
Trustee to sell Company Stock expeditiously enough to meet
Trustee's good faith needs, Trustee may demand that BellSouth
purchase, or if BellSouth elects to purchase stock pursuant to
Section 5A(d), (e)(3) or (g), BellSouth shall purchase the
Company Stock desired to be sold at fair market value, which
shall be the volume weighted average trading price (including
only trades which would meet the time of purchases conditions
under Rule 10b-18 under the Securities Exchange Act of 1934, as
amended ("Rule 10b-18"), of a share of such security on the New
York Stock Exchange on the day that BellSouth receives such
demand or gives notice of such election. BellSouth and Trustee
shall use their reasonable best efforts to agree as to the prompt
execution, closing and delivery of shares and proceeds therefor.
(g) Until a Change of Control, BellSouth may, on notice of
a proposed sale by Trustee, whether or not exempt, elect to
purchase such Company Stock from Trustee at fair market value, as
defined in Section 5A(f), and with the manner, conditions, and
closing of such sale to be agreed upon by BellSouth and Trustee.
(h) BellSouth shall be entitled to postpone the filing of
any registration statement and any amendment or supplement
thereto otherwise required to be prepared and filed by it, or to
direct that Trustee postpone any sale or put if, at the time it
receives a request for registration or sale, (i) BellSouth
determines, in its reasonable business judgment, that such
filing, registration and offering, or sale or put, would
materially interfere with the likely success of a proposed
purchase or sale of securities by BellSouth; or (ii) counsel for
BellSouth opines in writing that the filing of such registration
statement, amendment or supplement, or sale or put would have a
material adverse impact on any material ongoing or pending
transaction or program of BellSouth or any of its subsidiaries or
any other circumstances; provided, that should such delays
adversely affect Trustee's ability to pay benefits as
contemplated by this Trust Agreement, then BellSouth shall
advance such funds as may be reasonably needed by Trustee for
such proposed pending sale.
(i) Notwithstanding any provisions above permitting sale by
Trustee of Company Stock, Trustee shall, until a Change of
Control or a tender or exchange offer for all or substantially
all of the issued and outstanding Common Stock, limit sales,
whether registered or exempt (other than sales described in
Section 5A(f)), by reference to the volume limitations for issuer
repurchases within Rule 10b-18; provided, that block sales may
not exceed 25% of the trading volume on the New York Stock
Exchange, Inc. for the 14 day period prior to such sale.
BellSouth shall provide all information reasonably required by
Trustee to make determinations as to the number of shares which
may be sold, and Trustee shall promptly notify BellSouth as to
all sales made other than through a registered public offering.
(j) BellSouth and Trustee shall each cooperate in good
faith and employ their reasonable best efforts in permitting and
effecting any purchase or sale of Company Stock as contemplated
in this Section 5A and each shall comply with all applicable laws
and regulations relating to the foregoing including, without
limitation, federal and state securities laws, rules and
regulations issued thereunder, and any other governmental or
stock exchange requirements or regulations relating thereto.
Section 6. Disposition of Income.
During the term of this Trust, all income received by the
Trust, net of expenses and taxes, shall be accumulated and
reinvested.
Section 7. Accounting by Trustee.
Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions
required to be made, including such specific records as shall be
agreed upon in writing between BellSouth and Trustee. Within
forty-five (45) days following the close of each calendar year
and within forty-five (45) days after the removal or resignation
of the Trustee, Trustee shall deliver to BellSouth a written
account of its administration of the Trust during such year or
during the period from the close of the last preceding year to
the date of such removal or resignation, setting forth all
investments, receipts, disbursements and other transactions
effected by it, including a description of all securities and
investments purchased and sold with the cost or net proceeds of
such purchases or sales (accrued interest paid or receivable
being shown separately), and showing all cash, securities and
other property held in the Trust at the end of such year or as of
the date of such removal or resignation, as the case may be. In
addition, as of the end of each calendar month (referred to in
this Trust as a "valuation date"), within ten (10) days after
each such month-end, Trustee shall deliver to BellSouth a written
account setting forth the value of the Trust's assets, together
with such other information as shall be agreed upon between
BellSouth and Trustee.
Section 8. Responsibility of Trustee.
(a) Trustee shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent
person acting in like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character and
with like aims, provided, however, that Trustee shall incur no
liability to any person for (i) any action taken pursuant to a
direction, request or approval given by BellSouth, Company or a
Trustee's Contractor which is contemplated by, and in conformity
with, the terms of the Plan(s) or this Trust and is given in
writing by BellSouth, Company or a Trustee's Contractor (other
than Trustee when it acts as Trustee's Contractor), or (ii) the
investment in, or retention of, Company Stock pursuant to the
terms of this Agreement, and no such action shall be considered a
breach of the fiduciary standard herein set forth. In the event
of a dispute between BellSouth, Company or a Trustee's Contractor
and a party, Trustee may apply to a court of competent
jurisdiction to resolve the dispute.
(b) If Trustee undertakes or defends any litigation arising
in connection with this Trust or a Plan (including without
limitation any action to compel funding of the Trust pursuant to
Section 1 hereof, to compel BellSouth or Company to take any
action under the Trust or the Plan(s), or to determine Trustee's
obligations hereunder), Trustee shall be indemnified by the Trust
against Trustee's costs, expenses and liabilities (including,
without limitation, reasonable attorneys' fees and expenses)
relating thereto and the Trust shall be primarily liable for such
payments, other than those arising from Trustee's negligence or
willful misconduct. Trustee shall also be entitled to reasonable
payment from the Trust for the allocation of Trustee's personnel
to the investigation and defense or prosecution thereof, at
Trustee's normal hourly billing rates. If such costs, expenses
and liabilities are not paid from the Trust for any reason
(including without limitation insufficiency of the Trust's assets
to satisfy such obligations) in a reasonably timely manner,
Company agrees to indemnify Trustee against such costs, expenses
and liabilities. Anything in this subsection (b) to the contrary
notwithstanding, BellSouth and Company shall indemnify and hold
Trustee harmless from and against all costs, expenses and
liabilities arising out of or relating to the acquisition,
retention or disposition of Company Stock, except with respect to
matters covered by the Trustee's indemnity to be provided under
Section 5A(e)(2).
(c) Trustee may consult with legal counsel (who may also be
counsel for BellSouth generally) with respect to any of its
duties or obligations hereunder.
(d) Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants or other professionals
to assist it in performing any of its duties or obligations
hereunder.
(e) Trustee shall have, without exclusion, all powers
consistent with the terms hereof conferred on trustees by
applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an
asset of the Trust, Trustee shall have no power to name a
beneficiary of the policy other than the Trust, to assign the
policy (as distinct from conversion of the policy to a different
form) other than to a successor Trustee, or to loan to any person
the proceeds of any borrowing against such policy.
(f) Notwithstanding any powers granted to Trustee pursuant
to this Trust Agreement or to applicable law, Trustee shall not
have any power that could give this Trust the objective of
carrying on a business and dividing the gains therefrom, within
the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal
Revenue Code.
Section 9. Compensation and Expenses of Trustee.
All administrative and Trustee's fees as agreed upon between
Trustee and BellSouth and reasonable expenses actually incurred
by the Trustee in performing its duties hereunder including the
fees and expenses of any third party which provides services
contemplated herein or in the Plan(s) shall be paid by Trustee
from the assets of the Trust and, until so paid, shall constitute
a lien on the assets of the Trust. If not so paid, the fees and
expenses shall be paid by Company.
Section 10. Resignation and Removal of Trustee.
(a) Trustee may resign at any time by written notice to
BellSouth, which shall be effective sixty (60) days after receipt
of such notice unless BellSouth and Trustee agree otherwise;
provided that in no event shall any such resignation take effect
prior to the appointment of a successor Trustee.
(b) Trustee may be removed by BellSouth on sixty (60) days
notice or upon shorter notice accepted by Trustee.
(c) Upon a Change of Control, as defined herein, Trustee may
not be removed by BellSouth for one (1) year. Additionally,
after the expiration of the one (1) year period following a
Change of Control, Trustee may be removed by BellSouth only if
BellSouth first obtains the express written consent to such
removal of more than one-half of a combination of the
participants and beneficiaries of deceased participants in the
Plan(s).
(d) If Trustee resigns or is removed within one (1) year of
a Change of Control, as defined herein, Trustee shall select a
successor Trustee in accordance with the provisions of Section
11(b) hereof prior to the effective date of Trustee's resignation
or removal. Additionally, if Trustee resigns or is removed after
expiration of the one (1) year period following a Change of
Control, BellSouth may select a successor Trustee in accordance
with the provisions of Section 11(b) hereof if it shall first
obtain the express written consent to the appointment of the
proposed successor of more than one-half of a combination of the
participants and beneficiaries of deceased participants in the
Plan(s). If BellSouth fails to so appoint a successor Trustee,
Trustee shall select a successor Trustee. Upon the appointment
and acceptance by, and transfer of assets to, a successor
Trustee, Trustee shall have no further responsibilities under
this Trust Agreement.
(e) Upon resignation or removal of Trustee and appointment
of a successor Trustee, all assets shall subsequently be
transferred to the successor Trustee. The transfer shall be
completed within sixty (60) days after receipt of notice of
resignation, removal or transfer, unless BellSouth extends the
time limit.
(f) If Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 11 hereof, by the effective
date of resignation or removal under paragraph (a) of this
section. If no such appointment has been made, Trustee may apply
to a court of competent jurisdiction for appointment of a
successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed and charged to
the Trust as administrative expenses of the Trust.
Section 11. Appointment of Successor.
(a) If Trustee resigns or is removed in accordance with
Section 10(a) or (b) or (c) hereof, BellSouth may, subject to
Section 10(d), appoint any third party, such as a bank trust
department or other party that may be granted corporate trustee
powers under state or federal law, as a successor to replace
Trustee upon resignation or removal. The appointment shall be
effective when accepted in writing by the new Trustee, who shall
have all the rights and powers of the former Trustee, including
ownership rights in the Trust assets. The former Trustee shall
execute any instrument necessary or reasonably requested by
BellSouth or the successor Trustee to evidence the transfer.
(b) If Trustee resigns or is removed pursuant to the
provisions of Section 10(a), (b), (c) or (d) hereof and selects a
successor Trustee pursuant to Section 10(d) hereof, Trustee may
appoint any third party such as a bank trust department or other
party that may be granted corporate trustee powers under state or
federal law. The appointment of a successor Trustee shall be
effective when accepted in writing by the new Trustee. The new
Trustee shall have all the rights and powers of the former
Trustee, including ownership rights in Trust assets. The former
Trustee shall execute any instrument necessary or reasonably
requested by the successor Trustee to evidence the transfer.
(c) A former Trustee shall prepare and deliver to BellSouth
and to the successor Trustee a final accounting unless BellSouth
waives BellSouth's right to such accounting, and such accounting
shall be effective through the date of the former Trustee's
transfer of all assets to its successor. The successor Trustee
need not examine the records and acts of any prior Trustee unless
requested to do so by BellSouth (and, after a Change of Control,
unless the successor Trustee in addition concludes that there is
a reasonable basis for such request by BellSouth) and may retain
or dispose of existing Trust assets, subject to Sections 7 and 8
hereof. Subject to the foregoing, the successor Trustee shall
not be responsible for and BellSouth shall indemnify and defend
the successor Trustee from any claim or liability resulting from
any action or inaction of any prior Trustee or from any other
past event, or any condition existing at the time it becomes
successor Trustee. The compensation arrangement for the
successor Trustee shall be reasonable in relation to the services
to be performed by the successor Trustee.
Section 12. Amendment or Termination.
(a) This Trust Agreement (including Appendix A hereto) may
be amended by a written instrument executed by Trustee, BellSouth
and Company. Notwithstanding the foregoing, (i) no such
amendment shall conflict with the terms of the Plan(s) as then in
effect or shall make the Trust revocable after it has become
irrevocable in accordance with Section 1(b) hereof and (ii) the
duties and responsibilities of Trustee shall not be increased
without Trustee's written consent.
(1) Furthermore, notwithstanding anything to the
contrary in this Trust Agreement (except as otherwise
provided in this Section 12), (i) prior to a Change of
Control, no amendment shall be made to Section 1(d) through
(h), Section 2, Section 4, Section 5(h), Section 10(c),
Section 10(d), this Section 12(a), Section 13(d), Section
13(g), Section 13(j), and Section 13(k), and no deletion
shall be made in Appendix A, without the prior written
consent of more than one-half of a combination of the
participants and beneficiaries of deceased participants in
the Plan(s) unless such amendment would not, in the opinion
of counsel, have a material and adverse effect on the rights
or interests of such participants or beneficiaries or
procedures for distribution of benefits to participants or
beneficiaries; and (ii) following a Change of Control, no
amendment shall be made to any provision of this Trust
Agreement (including Appendix A hereto) without the prior
written consent of more than one-half of a combination of
the participants and beneficiaries of deceased participants
in the Plan(s) unless such amendment would not, in the
opinion of counsel, have a material and adverse effect on
the rights or interests of such participants or
beneficiaries or procedures for distribution of benefits to
participants and beneficiaries.
(2) The limitations contained in Section 12(a)(1)
shall not apply with respect to any amendment which is
reasonably necessary, in the opinion of counsel, to preserve
the status of the Trust as a grantor trust and the status of
the Plan(s) as unfunded for federal income tax purposes and
for purposes of the Employee Retirement Income Security Act
of 1974, as amended, or to guard against an adverse impact
on Plan participants or beneficiaries and which, in the
opinion of counsel, is drafted primarily to preserve such
status or to reduce or eliminate such adverse impact on such
person or persons.
(3) In each instance in which an opinion of counsel is
contemplated in this Section 12(a) prior to a Change of
Control, such opinion shall be in writing and delivered to
Trustee, rendered by a nationally recognized law firm
selected by BellSouth, and in each instance in which an
opinion of counsel is contemplated in this Section 12(a)
after a Change of Control, such opinion shall be in writing
and delivered to Trustee, rendered by a nationally
recognized law firm selected by the Trustee's Contractor.
Trustee may rely on all such opinions and determinations.
(b) The Trust shall not terminate until the date on which
Plan participants and their beneficiaries are no longer entitled
to benefits from Company pursuant to the terms of the Plan(s).
Upon termination of the Trust any assets remaining in the Trust
shall be returned to Company.
(c) Upon written approval of participants or beneficiaries
entitled to payment of benefits pursuant to the terms of the
Plan(s), Company may terminate this Trust prior to the time all
benefit payments under the Plan(s) have been made. All assets in
the Trust at termination shall be returned to Company.
(d) Trustee may rely for purposes of this Section 12 on a
certificate furnished by BellSouth prior to a Change of Control,
and by the Trustee's Contractor after a Change of Control,
(i) with respect to any amendment requiring the prior written
consent of more than one-half of the participants and
beneficiaries in the Plan(s) pursuant to subsection (a) of this
Section 12, that such consent has been obtained, (ii) with
respect to subsection (b) of this Section 12, that Plan
participants and their beneficiaries are no longer entitled to
benefits pursuant to the terms of the Plan(s), and (iii) with
respect to subsection (c) of this Section 12, that the written
approval of participants or beneficiaries entitled to payment of
benefits pursuant to the terms of the Plan(s) has been obtained.
Section 13. Miscellaneous.
(a) Any provision of this Trust Agreement prohibited by law
shall be ineffective to the extent of any such prohibition,
without invalidating the remaining provisions hereof.
(b) Benefits payable to Plan participants and their
beneficiaries under this Trust Agreement may not be anticipated,
assigned (either at law or in equity), alienated, pledged,
encumbered or subjected to attachment, garnishment, levy,
execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed
in accordance with the laws of New York.
(d) For purposes of this Trust, Change of Control shall
mean: (i) any "person" (as such term is defined in the
Securities Exchange Act of 1934, as amended), other than a
trustee or other fiduciary holding securities under an employee
benefit plan of BellSouth or Company or other corporation owned
directly or indirectly by the shareholders of BellSouth in
substantially the same proportions as their ownership of stock of
BellSouth, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under said Act), directly or indirectly, of securities
of BellSouth representing 20% or more of the total voting power
represented by BellSouth's then outstanding voting securities; or
(ii) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors
of BellSouth and any new director whose election by the Board of
Directors or nomination for election by BellSouth's shareholders
was approved by a vote of at least two-thirds of the directors
who either were directors at the beginning of the two year period
or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof;
or (iii) any "person" (as such term is used in Section 13(c) and
14(d) of the Securities Exchange Act of 1934, as amended), other
than a trustee or other fiduciary holding securities under an
employee benefit plan of BellSouth or Company or other
corporation owned directly or indirectly by the shareholders of
BellSouth in substantially the same proportions as their
ownership of stock of BellSouth, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of Company representing more than 50%
of the total voting power represented by Company's then
outstanding voting securities. For all purposes of this Trust
Agreement, Trustee shall have no responsibility whatsoever to
determine whether or not a Change of Control has occurred.
(e)(1) After the execution of this Trust Agreement,
BellSouth shall promptly file with Trustee, and following
the appointment of a Trustee's Contractor, BellSouth shall
promptly file with the Trustee's Contractor, a certified
list of the names and specimen signatures of the officers of
BellSouth and any delegate authorized to act for it. Unless
BellSouth notifies Trustee to the contrary, BellSouth shall
act through its Treasurer or any person who such Treasurer
authorizes in writing to act on his behalf (who shall in
this regard act exclusively on behalf of BellSouth) or any
other person who is authorized to act on BellSouth's behalf
by a resolution of BellSouth's Board of Directors.
BellSouth shall promptly notify Trustee and the Trustee's
Contractor, if applicable, of the addition or deletion of
any person's name to or from such list, respectively. Until
receipt by Trustee and/or the Trustee's Contractor of notice
that any person is no longer authorized so to act, Trustee
or the Trustee's Contractor may continue to rely on the
authority of the person. All certifications, notices and
directions by any such person or persons to Trustee or the
Trustee's Contractor shall be in writing signed by such
person or persons. Trustee and the Trustee's Contractor may
rely on any certification, notice or direction of BellSouth
that the Trustee or the Trustee's Contractor reasonably
believes to have been signed by a duly authorized officer or
agent of BellSouth. Trustee and the Trustee's Contractor
shall have no responsibility for acting or not acting in
reliance upon any notification reasonably believed by
Trustee or the Trustee's Contractor to have been signed by a
duly authorized officer or agent of BellSouth.
(e)(2) After the engagement of a Trustee's Contractor
(other than Trustee), the Trustee's Contractor shall
promptly file with Trustee a certified list of the names and
specimen signatures of the officers of the Trustee's
Contractor and any delegate authorized to act for it.
Trustee's Contractor shall promptly notify Trustee of the
addition or deletion of any person's name to or from such
list. Until receipt by Trustee of notice that any person is
no longer authorized so to act, Trustee may continue to rely
on the authority of the person. All certifications, notices
and directions by any such person or persons to Trustee
shall be in writing signed by such person or persons.
Trustee may rely on any such certification, notice or
direction of the Trustee's Contractor that Trustee
reasonably believes to have been signed by or on behalf of a
duly authorized officer or agent of the Trustee's
Contractor. Trustee shall have no responsibility for acting
or not acting in reliance upon any notification reasonably
believed by the Trustee to have been signed by a duly
authorized officer or agent of the Trustee's Contractor.
(f) Neither the gender nor the number (singular or plural)
of any word shall be construed to exclude another gender or
number when a different gender or number would be appropriate.
(g)(1) This Trust Agreement shall be binding upon and
inure to the benefit of any successor to Company or its
business, or a portion thereof, which assumes Company
obligations under the Plan(s), as the result of merger,
consolidation, reorganization, spin-off, division, transfer
of assets or otherwise (hereinafter referred to as a
"corporate transaction") and any subsequent successor
thereto which assumes Company obligations under the Plan(s).
All references in this Trust Agreement to "Company" shall
include all such successors. In the event of any such
corporate transaction, the successor to Company or its
business or subsequent successor thereto shall promptly
notify Trustee in writing of its successorship. In no event
shall any such corporate transaction suspend or delay the
payment of benefits to Plan participants or beneficiaries
hereunder.
(g)(2) Except as provided in Section 13(g)(3), Company
shall remain liable for the payment of any Plan benefits
attributable to deferrals made under plans of deferred
compensation prior to the effective date of any such
corporate transaction, or benefits accrued under any
supplemental retirement or pension plan prior to the
effective date of any such corporate transaction, to the
extent of the then assets of the Trust, if such payments are
proper but not timely made by a successor to Company or its
business or any subsequent successor thereto, and the assets
of the Trust shall be available to make such payments
pursuant to Section 2. The obligation to make any such
payments hereunder shall arise only after the affected Plan
participant or beneficiary has exhausted all claims and
review procedures properly imposed under the terms of the
Plan. The Trust shall be subrogated, to the extent of any
payment made pursuant to this Section 13(g)(2) to a Plan
participant or beneficiary, to all rights and remedies of
such Plan participant or beneficiary, and Trustee shall be
entitled to sue the nonpaying successor to Company in the
name of the Plan participant or beneficiary, but Trustee
shall not be required to take any such action unless there
are sufficient assets in the Trust to cover the expense
thereof. Entitlement to any payment hereunder is expressly
conditioned upon the reasonable assistance and cooperation
of the Plan participant or beneficiary in pursuing such
rights and remedies.
(g)(3) The provisions of Section 13(g)(2) shall be
inapplicable to any Plan benefits payable following any
corporate transaction with respect to which Company shall
have contracted with its successor or otherwise provided for
the establishment of a trust providing substantially similar
rights and protections to Plan participants and
beneficiaries as are provided herein and which at the
effective date of such corporate transaction is funded to at
least the "funding level" (as such term is used in Section
1(e)(2) hereof) of this Trust. The determination of whether
the requirements of the preceding sentence have been
satisfied shall be made by BellSouth; provided, however,
that following the engagement of a Trustee's Contractor,
such determinations shall be made by Trustee's Contractor.
Trustee may rely on the accuracy of all such determinations.
(h) This Trust Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but all of which shall together constitute only one Agreement.
(i) Communications to Trustee shall be sent to Bankers Trust
Company, 280 Park Avenue, New York, New York 10017 - ATTENTION:
Senior Vice President, Retirement Services Group, or to such
other address as Trustee may specify in writing. No
communication shall be binding upon Trustee until it is received
by Trustee. Communications to BellSouth, Company and the
Trustee's Contractor shall be sent to the principal offices of
BellSouth, Company or the Trustee's Contractor, as the case may
be, or to such other address as BellSouth, Company or the
Trustee's Contractor, as applicable, may specify in writing.
(j) In the event the participants and beneficiaries in one
or more of the Plan(s) are determined generally to be subject to
federal income tax on any amount in the Trust prior to the time
of payment hereunder, the entire amount determined to be so
taxable shall be distributed by Trustee to each affected
participant or beneficiary. Company may, at its option, make
such payments directly to affected participants and
beneficiaries. An amount shall be determined to be subject to
federal income tax upon the earliest of: (a) a final
determination by the United States Internal Revenue Service
addressed to a participant or beneficiary which is not appealed
to the courts; (b) a final determination by the United States Tax
Court or any other federal court affirming any such determination
by the Internal Revenue Service; or (c) an opinion by counsel for
BellSouth reasonably acceptable to Trustee addressed to
BellSouth, Company and Trustee, that, by reason of the Treasury
Regulations, amendments to the Internal Revenue Code, published
Internal Revenue Service rulings, court decisions or other
substantial precedent, amounts hereunder are generally subject to
federal income tax prior to payment; provided, that following a
Change of Control, only an opinion by counsel selected by the
Trustee's Contractor may be accepted by Trustee for purposes of
(c). Company shall undertake at its sole expense to defend any
tax claims described herein which are asserted by the Internal
Revenue Service against any participant or beneficiary and which
it determines would affect participants or beneficiaries
generally, including attorneys' fees and costs of appeal, and
shall have the sole authority to determine whether or not to
appeal any determination made by the Internal Revenue Service or
by a lower court. Company also agrees to reimburse any
participant or beneficiary for any interest or penalties in
respect of tax claims hereunder which it determines would affect
participants or beneficiaries generally, upon receipt of
documentation of same. Any distributions from the Trust to a
participant or beneficiary under this Section 13(j) (other than
reimbursements of interest or penalties referred to in the
preceding sentence) shall reduce the benefits payable to such
participant and/or beneficiary under the Plan(s).
(k) In the event that Company shall fail to satisfy any
obligation of Company to a Plan participant or beneficiary under
this Trust Agreement, or in one or more of the Plan(s), after
reasonable notice and demand with respect thereto, and one or
more participants or beneficiaries obtains a final determination
by a court of competent jurisdiction that Company has so failed,
such participant(s) or beneficiary(ies) shall be indemnified by
the Trust against reasonable and appropriate costs and expenses
(including without limitation reasonable attorneys' fees and
expenses) relating thereto and the Trust shall be primarily
liable for such payments. Interest on any Plan benefit payments
which such court determines have been delayed to the extent
interest or similar payments in an equal or greater amount are
not provided in the Plan or by the court or otherwise shall also
be paid from the assets of the Trust. Such interest shall be
calculated using a rate of interest equal to the rate of interest
on ten (10) year United States Treasury obligations, as
determined on the first day of each calendar quarter, compounded
quarterly. If such costs, expenses and interest are not paid
from the Trust for any reason (including without limitation
insufficiency of the Trust's assets to satisfy such obligations)
in a reasonably timely manner, such participant(s) or
beneficiary(ies) may obtain payment from Company.
(l) Nothing herein shall be construed as restricting or
limiting in any way amendment of the Plan(s) in accordance with
the terms of the Plan(s).
(m) Any other provisions of this Trust Agreement to the
contrary notwithstanding, this Trust shall terminate no later
than the twenty-first anniversary of the date of death of the
survivor from among a class consisting of all of the descendants
of the late Joseph P. Kennedy, the former Ambassador to the Court
of Saint James, who are living on the date of the establishment
of the Trust and, if the Trust is still in existence on such
anniversary date, Trustee shall dispose of the Trust as Company
shall direct.
(n) In case of any conflict or inconsistency between the
terms of this Trust Agreement and any Plan, the terms of this
Trust Agreement shall control.
Section 14. Effective Date.
The effective date of this Trust Agreement shall be the date
of its execution set forth on page 1 of the Trust Agreement.
IN WITNESS WHEREOF, the parties hereto have caused the Trust
Agreement to be duly executed and their respective corporate
seals to be hereto affixed on the date set forth on page 1 of the
Trust Agreement.
BELLSOUTH CORPORATION
By:___/S/_Arlen G. Yokley________
Title: Vice President, Secretary
(CORPORATE SEAL) and Treasurer
ATTEST:_/S/Marcy A. Bass___
Title:____Assistant Secretary__
BELLSOUTH TELECOMMUNICATIONS, INC.
By:___/S/Patrick H. Casey_____
Title: Vice President and
Comptroller
(CORPORATE SEAL)
ATTEST:___/S/ Eric B. Rudolf_
Title:__Assistant Secretary__
BANKERS TRUST COMPANY,
as Trustee
By:___/S/ Gary D. Cohen_______
Title:___Vice President_______
(CORPORATE SEAL)
ATTEST:__/S/ Marie B. Colaninno__
Title:___Vice President ___
APPENDIX A
BellSouth Nonqualified Deferred Compensation Plan
BellSouth Corporation Directors' Retirement Plan
BellSouth Corporation Deferred Compensation Plan for Non-
Employee Directors
Southern Bell Telephone and Telegraph Company Deferred
Compensation Plan for Non-Employee Directors
South Central Bell Telephone Company Deferred Compensation
Plan for Non-Employee Directors
0023014.02C
BELLSOUTH ENTERPRISES, INC.
TRUST UNDER EXECUTIVE BENEFIT PLAN(S)
TABLE OF CONTENTS
Section 1. Establishment of Trust 2
Section 2. Payments to Plan Participants and
Their Beneficiaries 5
Section 3. Trustee Responsibility Regarding
Payments to Trust Beneficiary When
Company is Insolvent 9
Section 4. Payments to Company 11
Section 5. Investment Authority 12
Section 5A. Sale of Company Stock by Trustee 16
Section 6. Disposition of Income 21
Section 7. Accounting by Trustee 21
Section 8. Responsibility of Trustee 21
Section 9. Compensation and Expenses of Trustee 23
Section 10. Resignation and Removal of Trustee 23
Section 11. Appointment of Successor 24
Section 12. Amendment or Termination 25
Section 13. Miscellaneous 27
Section 14. Effective Date 33
BELLSOUTH ENTERPRISES, INC.
TRUST UNDER EXECUTIVE BENEFIT PLAN(S)
This Agreement made this 28th day of April, 1995, by and
between BellSouth Corporation, a Georgia corporation (BellSouth),
BellSouth Enterprises, Inc., a Georgia corporation wholly-owned
by BellSouth (Company), and Bankers Trust Company, a New York
corporation (Trustee);
(a) WHEREAS, Company has adopted the nonqualified deferred
compensation Plan(s) as listed in Appendix A;
(b) WHEREAS, Company has incurred or expects to incur
liability under the terms of such Plan(s) with respect to the
individuals participating in such Plan(s);
(c) WHEREAS, to make certain provisions for the payment of
such liability, BellSouth and Trustee on April 25, 1990 executed
a trust agreement for the benefit of certain officers and certain
key managers of BellSouth and its affiliates (including Company)
who participate in the Plan(s) (the "Predecessor Trust");
(d) WHEREAS, BellSouth, Company and Trustee on February 18,
1994 amended and restated the Predecessor Trust insofar as it
related to Company's obligations (but not obligations of
subsidiary or other affiliated entities) to pay benefits under
the Plan(s)(hereinafter, called "Successor Trust") and
contributed assets to the Successor Trust, subject to the claims
of Company's creditors in the event of Company's Insolvency, as
herein defined, until full payment has been made in respect of
such obligations of Company to Plan participants and their
beneficiaries in such manner and at such times as specified in
the Plan(s);
(e) WHEREAS, BellSouth, Company and Trustee now desire to
amend and restate the Successor Trust in the form of this Trust
Agreement (hereinafter, called "Trust");
(f) WHEREAS, it is the intention of the parties that this
Trust shall constitute an unfunded arrangement and shall not
affect the status of the Plan(s) as an unfunded plan maintained
for the purpose of providing deferred compensation for a select
group of management or highly compensated employees or as an
excess benefit plan for purposes of Title I of the Employee
Retirement Income Security Act of 1974; and
(g) WHEREAS, it is the intention of Company to make
contributions to the Trust to provide itself with a source of
funds to assist it in the meeting of its liabilities under the
Plan(s);
NOW, THEREFORE, the parties do hereby establish the Trust
and agree that the Trust shall be comprised, held and disposed of
as follows:
Section 1. Establishment of Trust.
(a) BellSouth, Company and Trustee hereby amend and restate
in all respects the Successor Trust in the form of this Trust
Agreement. The principal of the Trust shall be held,
administered and disposed of by Trustee as provided in this Trust
Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which
Company is the grantor, within the meaning of subpart E, part I,
subchapter J, chapter 1, subtitle A of the Internal Revenue Code
of 1986, as amended, and shall be construed accordingly.
(d) The principal of the Trust, and any earnings thereon
shall be held separate and apart from other funds of Company and
shall be used exclusively for the uses and purposes of Plan
participants and general creditors as herein set forth. Plan
participants and their beneficiaries shall have no preferred
claim on, or any beneficial ownership interest in, any assets of
the Trust. Any rights created under the Plan(s) and this Trust
Agreement shall be mere unsecured contractual rights of Plan
participants and their beneficiaries against Company. Any assets
held by the Trust will be subject to the claims of Company's
general creditors under federal and state law in the event of
Insolvency, as defined in Section 3(a) herein.
(e)(1) Company, in its sole discretion, may at any
time, or from time to time, make additional deposits of cash
or other property acceptable to Trustee in trust with
Trustee to augment the principal to be held, administered
and disposed of by Trustee as provided in this Trust
Agreement. Neither Trustee nor any Plan participant or
beneficiary shall have any right to compel any such
additional deposits under this subsection (1).
(2) If, as of the last day of a fiscal year of the
Trust, the funding level of the Trust shall be less than
eighty percent (80%) of the Trust's funding level as of the
last day of any of the five (5) most recently preceding
fiscal years of the Trust (taking into account contributions
made under this Section 1(e)(2) for each such year),
BellSouth shall notify Trustee of such situation and Company
shall make an irrevocable contribution to the Trust within
one hundred eighty (180) days following the last day of such
fiscal year. Such contribution shall be in the amount
which, had such contribution been made as of the last day of
such fiscal year of the Trust, would have been sufficient to
bring the Trust's funding level equal to the Trust's funding
level as of the last day of the fiscal year among the five
(5) most recently preceding fiscal years on which the
Trust's funding level was highest. In no event shall such
contribution be required if, as of the last day of such
fiscal year, the fair market value of the Trust's assets is
one hundred percent (100%), or greater, of the aggregate
Current Liability (as defined in subsection (3) of this
Section 1(e)) of Company under the Plan(s). For these
purposes, "funding level" shall mean the ratio (stated as a
percentage) that the fair market value of the assets in the
Trust bears to the aggregate Current Liability of Company
under the Plan(s). Such funding level shall be determined
by BellSouth; provided, however, that following the
engagement of a Trustee's Contractor, such determination
shall be made by Trustee's Contractor. The Trustee may rely
on the accuracy of all such determinations.
(3)(A) For purposes of this Trust, "Current Liability"
shall mean the amount required to pay each Plan participant
or beneficiary the benefits to which Plan participants or
their beneficiaries would be entitled pursuant to the terms
of the Plan(s), to the extent such benefits are obligations
of Company (and not obligations of subsidiary or other
affiliated entities). The Current Liability on any date
with respect to a Plan shall be determined as if the Plan
terminated as of such date using an interest rate equal to
the Pension Benefit Guaranty Corporation valuation interest
rate for immediate annuities as in effect on such date, the
1983 Group Annuity Mortality Table published by the Society
of Actuaries, and reasonable actuarial calculation
principles consistently applied. Current Liability shall be
determined, as of the last day of each fiscal year of the
Trust and at such additional times as are necessary to
implement the provisions of this Trust Agreement, by
BellSouth; provided, however, that following the engagement
of a Trustee's Contractor, such determinations shall be made
by Trustee's Contractor. The Trustee may rely on the
accuracy of all such determinations.
(3)(B) In the event that the interest rate assumption
described in subsection (3)(A) above is at any time no
longer available or the mortality assumption described above
is at any time no longer considered a reasonable and
reliable mortality assumption, other interest rate or
mortality assumptions, as the case may be, deemed generally
comparable to the above-specified assumptions, may be used
instead. All determinations regarding substitute
assumptions, including whether such substitution is
reasonably necessary and the selection of the substitute
assumption(s), shall be made by BellSouth; provided,
however, that following the engagement of a Trustee's
Contractor, such determinations shall be made by Trustee's
Contractor.
(f) Upon a Change of Control, BellSouth shall promptly
notify Trustee thereof and, as soon as possible, but in no event
longer than one hundred twenty (120) days following the Change of
Control, as defined herein, Company shall make an irrevocable
contribution to the Trust in an amount that is sufficient to pay
each Plan participant or beneficiary the benefits to which Plan
participants or their beneficiaries would be entitled pursuant to
the terms of the Plan(s), to the extent such benefits are
obligations of Company (and not obligations of subsidiary or
other affiliated entities), as of the date on which the Change of
Control occurred. Such contribution shall be in an amount equal
to the excess, if any, of the aggregate Current Liability as of
the date on which the Change of Control occurred over the fair
market value of the Trust's assets as of the valuation date most
recently preceding the date on which such contribution is made.
Thereafter, Company shall make an additional contribution each
fiscal year to the Trust, as soon as possible, but in no event
longer than one hundred twenty (120) days following the last day
of each such fiscal year, in an amount equal to the excess, if
any, of the aggregate Current Liability under the Plan(s) as of
the last day of the fiscal year over the fair market value of the
Trust's assets as determined on the valuation date most recently
preceding the date on which such contribution is made. The
amount of all such contributions shall be determined by Trustee's
Contractor. The Trustee may rely on the accuracy of all such
determinations.
(g) If, as of a Distribution Date with respect to
outstanding rights to purchase Series A First Preferred Stock,
under the terms of and as defined in a Rights Agreement between
BellSouth and Chemical Bank, as Rights Agent, under an agreement
originally dated November 27, 1989 (a "Distribution Date"), the
aggregate Current Liability exceeds the fair market value of the
Trust's assets (such fair market value determined as of the
valuation date most recently preceding such Distribution Date),
Company shall be required to make an additional contribution to
the Trust in an amount equal to such excess or, at Company's
option, to obtain a letter of credit, or a series of letters of
credit, adequate to fund such amount as of such Distribution Date
under the Plan(s) and maintain such letter(s) of credit until
such time as the aggregate Current Liability no longer exceeds
the fair market value of the Trust's assets. The determination
of whether the aggregate Current Liability exceeds the fair
market value of the Trust's assets upon a Distribution Date and,
if so, the amount of such excess, shall be made by BellSouth;
provided, however, that following the engagement of a Trustee's
Contractor, such determinations shall be made by Trustee's
Contractor. The Trustee may rely on the accuracy of all such
determinations. Any such letter of credit, or series of letters
of credit, shall be part of the general assets of Company and
shall not be an asset of this Trust and, unless otherwise agreed
to in writing by Trustee, Trustee shall have no responsibility
whatsoever with respect to the adequacy of, or selection of the
issuer or issuers of, any such letter or letters of credit.
(h) If, in any five (5) consecutive calendar year period,
(i) there are five (5) or more final determinations by courts of
competent jurisdiction that (A) BellSouth or a subsidiary of
BellSouth, including Company, which both is a member of
BellSouth's "controlled group of corporations" as such term is
defined in Section 13(g)(4) and has adopted a Plan (a
"Participating Company") has failed to pay (after reasonable
notice and demand for payment) any benefit due under the terms
and conditions of a Plan and that (B) there was no material issue
of fact or law respecting such company's obligation to make such
benefit payment, or (ii) there are two (2) or more final
determinations by courts of competent jurisdiction, in lawsuits
instituted after reasonable notice and demand with respect
thereto, in which the court determines that BellSouth or a
Participating Company had acted in bad faith and with a clear and
deliberate disregard for such company's obligations under the
Plan(s), there shall be deemed to have occurred a Change of
Control as defined in this Trust Agreement and BellSouth shall
give Trustee prompt written notice of such event. For purposes
of this Trust Agreement, the term "final determination" means a
determination with respect to which all rights of appeal or to
request a review, a rehearing or redetermination have been
exhausted or have lapsed.
Section 2. Payments to Plan Participants and Their
Beneficiaries.
(a) BellSouth or the Trustee's Contractor if one shall have
been engaged, shall deliver to Trustee a schedule (the "Payment
Schedule") that indicates the amounts payable by Company in
accordance with the terms and conditions of the Plan(s) in
respect of each Plan participant (and his or her beneficiaries),
that provides a formula or other instructions acceptable to
Trustee for determining the amounts so payable, the form in which
such amount is to be paid (as provided for or available under the
Plan(s)), and the time of commencement for payment of such
amounts. Except as otherwise provided herein, Trustee shall make
payments to the Plan participants and their beneficiaries in
accordance with such Payment Schedule. The Trustee shall make
provision for the reporting and withholding of any federal, state
or local taxes that may be required to be withheld with respect
to the payment of benefits pursuant to the terms of the Plan(s)
and shall pay amounts withheld to the appropriate taxing
authorities or determine that such amounts have been reported,
withheld and paid by Company. Payments may be made in cash or,
where called for under the terms of the Plan(s), in Company Stock
(as such term is defined in Section 5(g) hereof).
Notwithstanding the foregoing, if a benefit which is
distributable in the form of Company Stock under the terms of a
Plan becomes payable at a time when there is no (or insufficient)
Company Stock in the Trust with which to satisfy such benefit
obligation and if Company fails or refuses to pay such benefit
within a reasonable time after notice from Trustee that it has
become so payable, Trustee shall use other assets of the Trust to
acquire Company Stock, on the open market or otherwise in its
discretion, sufficient to satisfy such benefit obligation.
(b) The entitlement of a Plan participant or his or her
beneficiaries to benefits payable by Company under the Plan(s)
shall be determined in accordance with the terms of the Plan(s)
by BellSouth (or Company) or such party as it shall designate
under the Plan(s), or the Trustee's Contractor if one shall have
been engaged, and any claim for such benefits shall be considered
and reviewed and paid or not paid under the procedures set out in
the Plan(s). Notwithstanding any Plan provision to the contrary,
if a Trustee's Contractor shall have been engaged, all such
determinations shall be made by the Trustee's Contractor whose
determinations shall be final, conclusive and binding on all
persons. Neither Trustee nor Trustee's Contractor shall have any
obligation for determining whether any Plan participant or
beneficiary has died and shall be entitled to rely upon any
information in this regard furnished by BellSouth or Company.
(c) Company may make payment of benefits directly to Plan
participants or their beneficiaries as they become due under the
terms of the Plan(s). In such event, Company shall make
provision for the reporting and withholding of any federal, state
or local taxes that may be required to be withheld with respect
to the payment of benefits pursuant to the terms of the Plan(s)
and shall pay amounts withheld to the appropriate taxing
authorities. BellSouth shall notify Trustee of Company's
decision to make payment of benefits directly prior to the time
amounts are payable to participants or their beneficiaries. In
addition, if the principal of the Trust, and any earnings
thereon, are not sufficient to make payments of benefits payable
by Company in accordance with the terms of the Plan(s), Company
shall make the balance of each such payment as it falls due.
Trustee shall notify BellSouth where principal and earnings are
not sufficient.
(d) BellSouth may engage a third party administrator as a
contractor of the Trustee ("Trustee's Contractor"), who shall not
be a Plan participant or beneficiary (but who may be the
Trustee), to perform functions described in this Section 2(d) and
elsewhere in this Trust Agreement which would otherwise be
performed by BellSouth or Company.
(1) Upon engagement of a Trustee's Contractor, as soon
as practicable but in no event longer than thirty (30) days
thereafter, BellSouth shall furnish to the Trustee's
Contractor copies of the Plan documents, employment records
of participants, and other information necessary to
determine the benefits which are or may become payable by
Company to or with respect to each participant in each Plan,
including any benefits payable after the participant's
death, and the recipient of same and the procedures which
BellSouth has adopted to calculate such benefit payments.
BellSouth shall regularly, at least annually, and upon each
benefit change under the Plan(s) furnish revised, updated
information to the Trustee's Contractor. In the event
BellSouth refuses or neglects to provide updated participant
information as contemplated herein, the Trustee's Contractor
shall be entitled to rely on the most recent information
furnished to it by BellSouth.
(2) In the event of a Change of Control, BellSouth
shall have the duty to engage, as soon as practicable
thereafter, a Trustee's Contractor reasonably acceptable to
the Trustee if there shall at that time be no Trustee's
Contractor then serving. In addition, if as of a
Distribution Date (as such term is defined in Section 1(g)
hereof), there shall be no Trustee's Contractor then
serving, BellSouth shall have the duty to designate on a
stand-by basis a Trustee's Contractor who shall commence to
serve as Trustee's Contractor in the event such Distribution
Date is followed by a Change of Control. After a Change of
Control, BellSouth shall not have any control or authority
with respect to the Trustee's Contractor so engaged or then
serving, or any successor Trustee's Contractor, including
without limitation any rights with respect to the removal or
replacement of any such Trustee's Contractor or its duties
pursuant to this Trust Agreement.
(3) Unless Trustee agrees to perform the functions of
the Trustee's Contractor described herein, Trustee shall
have no responsibility hereunder for any obligation assigned
to a Trustee's Contractor or (subject to subsection (4)
below) for the performance of a Trustee's Contractor's
duties and responsibilities under this Trust Agreement.
(4) BellSouth may replace or remove any Trustee's
Contractor from time to time serving hereunder, in its sole
discretion, prior to the occurrence of a Change of Control.
Following a Change of Control, Trustee, in its sole
discretion, may remove a Trustee's Contractor engaged by
BellSouth or any successor Trustee's Contractor and shall
remove any such person and engage a successor to such person
if Trustee deems such person's performance as a Trustee's
Contractor unsatisfactory. At all times following a Change
of Control, upon any such removal, or the voluntary
resignation of any such Trustee's Contractor or the
occurrence of any other event which shall result in the
cessation of performance of the Trustee's Contractor's
duties hereunder, Trustee shall use its best efforts to
engage a new Trustee's Contractor (which may be Trustee);
provided, however, Trustee shall perform the duties of the
Trustee's Contractor during any period for which Trustee is
unable to find a new Trustee's Contractor (so that there
will be no default in payments under the Plan(s) as a result
of the absence of a Trustee's Contractor), and any person
engaged as a Trustee's Contractor shall in the judgment of
Trustee be independent of Company and BellSouth. The person
who removes or replaces a Trustee's Contractor shall be
responsible for assuring that there is a timely and complete
transfer of records from such Trustee's Contractor to such
person's successor.
(5) Except for the records dealing solely with the
assets of the Trust and investment of those assets, which
shall be maintained by the Trustee, if a Trustee's
Contractor shall be engaged, the Trustee's Contractor shall
maintain all Plan participant records contemplated by this
Agreement, including the Payment Schedule. All such records
and copies of the Plan(s) documents and employment records
of the participants in the possession of the Trustee's
Contractor shall be made available promptly upon request of
Trustee, BellSouth or Company. The Trustee's Contractor
shall also prepare and distribute participant statements to
participants and beneficiaries and shall perform such other
duties and responsibilities contemplated under the terms of
this Trust Agreement as BellSouth or Trustee, as the case
may be, determines is necessary or advisable to achieve the
objectives of this Trust Agreement.
(6) BellSouth and Company shall indemnify and hold
harmless the Trustee's Contractor for any liability or
expenses, including without limitation advances for or
prompt reimbursement of reasonable fees and expenses of
counsel and other agents retained by it, incurred by the
Trustee's Contractor with respect to keeping the records for
participants' benefits, reporting thereon to participants
and beneficiaries, certifying benefit information to
Trustee, determining the status of benefits hereunder and
otherwise carrying out its obligations under this Trust
Agreement, other than those resulting from Trustee's
Contractor's negligence or willful misconduct or its failure
to reasonably calculate and certify the amount of benefits
based on the applicable terms of the Plan documents and
other information and procedures furnished by BellSouth to
the Trustee's Contractor in accordance with this Trust
Agreement. The Trustee's Contractor shall be entitled to
reasonable compensation for services hereunder, the amount
of which shall be agreed upon from time to time by BellSouth
or, following a Change of Control, the Trustee, and the
Trustee's Contractor in writing, and reimbursement for
reasonable expenses incurred in connection with its
performance of such services. Following a Change of
Control, Trustee's good faith determination of compensation
to be paid to a Trustee's Contractor (including Trustee when
it acts in such capacity) shall be binding on BellSouth and
each other person having an interest in the Trust. All such
compensation and expenses shall be paid by Trustee from the
assets of the Trust. If not so paid, such compensation and
expenses shall be paid by BellSouth or Company.
(7) Except as may be otherwise agreed by the Trustee's
Contractor and BellSouth, or Trustee following a Change of
Control, the Trustee's Contractor's obligations are limited
solely to those explicitly set forth herein and the
Trustee's Contractor shall have no responsibility, authority
or control, direct or indirect, over the maintenance or
investment of the Trust and shall have no obligation in
respect of Trustee or the Trustee's compliance with the
Trustee's Contractor's certifications to Trustee.
Section 3. Trustee Responsibility Regarding Payments to
Trust Beneficiary When Company Is Insolvent.
(a) Trustee shall cease payment of benefits to Plan
participants and their beneficiaries if the Company is Insolvent.
Company shall be considered "Insolvent" for purposes of this
Trust Agreement if (i) Company is unable to pay its debts as they
become due, or (ii) Company is subject to a pending proceeding as
a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as
provided in Section 1(d) hereof, the principal and income of the
Trust shall be subject to claims of general creditors of Company
under federal and state law as set forth below.
(1) The Board of Directors and the Chief Executive
Officer of Company shall have the duty to inform Trustee in
writing of Company's Insolvency. If a person claiming to be
a creditor of Company alleges in writing to Trustee that
Company has become Insolvent, Trustee shall determine
whether Company is Insolvent and, pending such
determination, Trustee shall discontinue payment of benefits
to Plan participants or their beneficiaries.
(2) Unless Trustee has actual knowledge of Company's
Insolvency, or has received notice from Company or a person
claiming to be a creditor alleging that Company is
Insolvent, Trustee shall have no duty to inquire whether
Company is Insolvent. Trustee may in all events rely on
such evidence concerning Company's solvency as may be
furnished to Trustee and that provides Trustee with a
reasonable basis for making a determination concerning
Company's solvency.
(3) If at any time Trustee has determined that Company
is Insolvent, Trustee shall discontinue payments to Plan
participants or their beneficiaries and shall hold the
assets of the Trust for the benefit of Company's general
creditors. Nothing in this Trust Agreement shall in any
way diminish any rights of Plan participants or their
beneficiaries to pursue their rights as general creditors of
Company with respect to benefits due under the Plan(s) or
otherwise.
(4) Trustee shall resume the payment of benefits to
Plan participants or their beneficiaries in accordance with
Section 2 of this Trust Agreement only after Trustee has
determined that Company is not Insolvent (or is no longer
Insolvent).
(c) Provided that there are sufficient assets, if Trustee
discontinues the payment of benefits from the Trust pursuant to
Section 3(b) hereof and subsequently resumes such payments, the
first payment following such discontinuance shall include the
aggregate amount of all payments due from Company to Plan
participants or their beneficiaries under the terms of the
Plan(s) for the period of such discontinuance, less the aggregate
amount of any payments made to Plan participants or their
beneficiaries by Company in lieu of the payments provided for
hereunder during any such period of discontinuance.
Section 4. Payments to Company.
(a) Except as provided in Sections 3, 4(b), 4(c), 4(d),
5(b) and 12(c) hereof, after the Trust has become irrevocable,
neither BellSouth nor Company shall have the right or power to
direct Trustee to return to Company or to divert to others any of
the Trust assets before all payment of benefits have been made to
Plan participants and their beneficiaries pursuant to the terms
of the Plan(s) to the extent such benefits are obligations of
Company.
(b) If, prior to a Change of Control, within sixty (60)
days following the end of a fiscal year of the Trust, BellSouth
provides a written certification to Trustee, reasonably
acceptable to the Trustee that, as of the last day of the fiscal
year, the fair market value of the assets of the Trust exceeds
one hundred twenty percent (120%) of the aggregate Current
Liability, Trustee shall, at BellSouth's request, distribute to
Company all or part of such excess. No distribution pursuant to
this Section 4(b) may be made following a Change of Control.
(c) Prior to a Change of Control, Trustee shall, if so
instructed by BellSouth in writing within thirty (30) days after
the actual filing of BellSouth's federal income tax return for a
year, reimburse Company from the assets of the Trust for federal,
state or local income taxes, or any part thereof, which BellSouth
certifies that Company has paid, attributable to income of the
Trust for such year, as determined by BellSouth, within thirty
(30) days after receipt of such request. No reimbursement for
taxes pursuant to this Section 4(c) may be made following a
Change of Control.
(d) Notwithstanding any other provision of this Trust
Agreement, including without limitation Section 1(b) hereof,
prior to a Change of Control Company shall have the right with
respect to each contribution to the Trust (other than
contribution(s) required pursuant to Section 1(e)(2) hereof) to
cause Trustee to return all or any portion of a contribution and
any and all income on such contribution to Company. Such right
shall be exercised by giving written notice to Trustee and shall
be exercisable in a nonfiduciary capacity without the approval or
consent of Trustee or any other person. Such right shall expire
with respect to each contribution to the Trust upon the earlier
of (i) thirty days following the date on which the contribution
is made, (ii) the last day of the taxable year of Company in
which the contribution is made or (iii) a Change of Control.
Company's right under this Section 4(d) shall expire upon a
Change of Control.
Section 5. Investment Authority.
(a) Except as otherwise provided in subsections (c), (d),
(e) and (g) of this Section 5, the assets of the Trust shall be
invested and reinvested by Trustee, without distinction between
principal and income, at such time or times in such investments
and pursuant to such investment strategies or courses of action
and in such shares and proportions, as Trustee, in its sole
discretion, shall deem advisable. Except as otherwise provided
herein, Trustee may invest in securities (including stock or
rights to acquire stock) or obligations issued by BellSouth. All
rights associated with assets of the Trust shall be exercised by
Trustee or the person designated by Trustee, and shall in no
event be exercisable by or rest with Plan participants.
(b) Company shall have the right, at any time, and from
time to time in its sole discretion, to substitute assets of
equal fair market value for any asset held by the Trust. This
right is exercisable by Company in a nonfiduciary capacity
without the approval or consent of any person in a fiduciary
capacity. In connection with any substitution of assets
described in this Section 5(b), Company Stock may not revert to
Company in kind at any time following a voting record date for
any meeting of BellSouth stockholders and before such meeting,
unless Trustee shall have voted such shares by proxy. Such
reversion may occur immediately following the stockholders'
meeting to which such record date relates. Further, any such
substitution may be made only out of property available to the
Company for the purchase of shares of stock under applicable
state law, as determined by Company.
(c) Subject to the provisions of Section 5A, investment
authority over the Trust's assets, or any portion thereof, other
than dividends on Company Stock held by the Trust, may be
reserved by BellSouth to itself from time to time in its absolute
discretion, prior to a Change of Control. Any such reservation
of discretionary authority by BellSouth shall be communicated to
Trustee in writing. In this regard, unless BellSouth notifies
Trustee to the contrary, BellSouth shall act through its
Treasurer or any person who such Treasurer authorizes in writing
to act on his behalf or any other person who is authorized to act
on BellSouth's behalf by a resolution of BellSouth's Board of
Directors. BellSouth shall furnish Trustee from time to time
with a list of the names and signatures of all persons authorized
to so act. Notwithstanding anything to the contrary contained
herein, following a Change of Control, BellSouth may not reserve
discretionary authority for the management and control of any
assets of the Trust and any prior reservation then in effect
shall immediately be nullified.
(d) Trustee shall be under no duty or obligation to review
or to question any direction of BellSouth pursuant to authority
reserved under subsection (c) of this Section 5, or to review
securities or any other property so held with respect to prudence
or proper diversification, or to make any suggestions or
recommendation to BellSouth with respect to the retention or
investment of any such assets and shall have no authority to take
any action or to refrain from taking any action with respect to
any such assets unless and until it is directed to do so by
BellSouth. Notwithstanding anything to the contrary in this
Trust Agreement, BellSouth does hereby discharge, indemnify and
hold harmless Trustee, its directors, officers, employees, and
agents, from and against any and all losses, costs, damages,
claims, penalties, expenses (including reasonable attorneys' fees
and expenses) or liabilities arising in connection with Trustee's
administration of the Trust consistent with Section 5(c).
(e) Trustee shall be responsible for assuring the daily
investment of cash balances, unless directed otherwise by
BellSouth pursuant to authority reserved in subsection (c) of
this Section 5, so as to maintain uninvested cash balances at a
minimum.
(f) Without in any way limiting the powers and discretions
conferred upon Trustee by the other provisions of this Trust
Agreement, Trustee (and BellSouth acting pursuant to authority
reserved under subsection (c) of this Section 5) shall be vested
with the following powers and discretions (to be exercised in
light of the nature and purpose of this Trust) with respect to
the assets of the Trust subject to its management and control:
(1) To invest and reinvest in any property, real,
personal or mixed, wherever situated and whether or not
productive of income or consisting of wasting assets,
including without limitation, common and preferred stocks,
bonds, notes, debentures (including convertible stocks and
securities), leaseholds, mortgages, certificates of deposit
or demand or time deposits (including any such deposits with
Trustee), shares of investment companies and mutual funds,
interests in partnerships and trusts, insurance policies and
annuity contracts, and oil, mineral or gas properties,
royalties, interests or rights, without being limited to the
classes of property in which trustees are authorized to
invest by any law or any rule of court of any state and
without regard to the proportion any such property may bear
to the entire amount of the Trust;
(2) To invest and reinvest all or any portion of the
Trust collectively through the medium of any common,
collective or commingled trust fund that may be established
and maintained by Trustee, to be held and invested subject
to all of the terms and conditions thereof, and such trust
shall be deemed adopted as a part of the Trust to the extent
that assets of the Trust are invested therein;
(3) To retain any property at any time received by the
Trustee;
(4) To sell or exchange any property held by it at
public or private sale, for cash or on credit, to grant and
exercise options for the purchase or exchange thereof, to
exercise all conversion or subscription rights
pertaining to any such property and to enter into any
covenant or agreement to purchase any property in the
future;
(5) To participate in any plan of reorganization,
consolidation, merger, combination, liquidation or other
similar plan relating to property held by it and to consent to or
oppose any such plan or any action thereunder or any contract,
lease, mortgage, purchase, sale or other action by any
person;
(6) To deposit any property held by it with any
protective, reorganization or similar committee, to delegate
discretionary power thereto, and to pay part of the expenses
and compensation thereof and any assessments levied with
respect to any such property so deposited;
(7) To extend the time of payment of any obligation
held by it;
(8) To hold uninvested any monies received by it,
without liability for interest thereon until such
monies shall be invested, reinvested or disbursed;
(9) To exercise all voting or other rights with
respect to any property held by it and to grant proxies,
discretionary or otherwise;
(10) For the purposes of the Trust, to borrow money
from others, to issue its promissory note or notes therefor,
and to secure the repayment thereof by pledging any property
held by it;
(11) To manage, administer, operate, insure, repair,
improve, develop, preserve, mortgage, lease or otherwise
deal with, for any period, any real property or any oil,
mineral or gas properties, royalties, interests, or rights
held by joining with others, using other Trust assets for
any such purposes, to modify, extend, renew, waive or
otherwise adjust any provision for amortization of the
investment in or depreciation of the value of such property;
(12) To employ suitable agents (including but not
limited to actuarial and employee benefit consulting firms)
and counsel, who may be counsel to BellSouth or Trustee, and
to pay their reasonable expenses and compensation from the
Trust to the extent not paid by Company or BellSouth;
(13) To register any securities held in the Trust in
the name of a nominee and to hold any investment in bearer
form, and to combine certificates representing such
investments with certificates of the same issue held by the
Trustee in other fiduciary capacities or to deposit or
arrange for the deposit of such securities in a qualified
central depository even though, when so deposited, such
securities may be merged and held in bulk in the name of the
nominee of such depository with other securities deposited
therein by any other person, or to deposit or arrange for
the deposit of any securities issued by the United States
Government, or an agency or instrumentality thereof, with a
federal reserve bank, but the books and records of Trustee
shall at all times show that all such investments are part
of the Trust;
(14) To settle, compromise, or submit to arbitration
any claims, debts, or damages due or owing to or from the
Trust, respectively, to commence or defend suits or legal
proceedings to protect any interest of the Trust, and to
represent the Trust in all suits or legal proceedings in any
court or before any other body or tribunal; provided,
however, Trustee shall not be required to take any such
action unless it shall have been indemnified by BellSouth or
the Trust to its reasonable satisfaction against liability
and expense it might incur therefrom;
(15) To organize under laws of any state a corporation
or trust for the purpose of acquiring and holding title to
any property which it is authorized to acquire hereunder and
to exercise with respect thereto any or all of the powers
set forth herein; and
(16) Generally, to do all acts consistent with its
duties hereunder, whether or not expressly authorized, that
Trustee may deem necessary or desirable for the protection
of the Trust.
(g) Notwithstanding anything to the contrary contained
herein (other than the provisions of Section 5A hereof), unless
and until directed otherwise by BellSouth, or the occurrence of a
Change of Control, the assets of the Trust (other than dividends
on Company Stock held by the Trust) shall be invested and
reinvested exclusively in the common stock, par value $1.00 per
share, of BellSouth Corporation ("Company Stock") except to the
extent that BellSouth directs otherwise with respect to a portion
of the assets in anticipation of reasonable liquidity needs of
the Trust. Trustee shall purchase from BellSouth any such
Company Stock acquired for the Trust, unless Trustee is
instructed otherwise by BellSouth in writing. With respect to
assets of the Trust invested in Company Stock, Trustee shall have
no obligation to diversify investments in the Trust, and shall
not be subject to any rule of applicable law which might
otherwise make necessary, require, or in any way deem appropriate
diversification of investments in the Trust, all such rules being
hereby expressly waived. Notwithstanding anything to the
contrary in this Trust Agreement, BellSouth and Company do hereby
discharge, indemnify and hold harmless Trustee, its directors,
officers, employees and agents, from and against any and all
losses, costs, damages, claims, penalties, expenses (including
reasonable attorneys' fees and expenses) or liabilities arising
in connection with such Trustee's administration of the Trust
consistent with this Section 5(g).
(h) Following a Change of Control, Trustee may no longer
invest in Company Stock or any other securities or obligations
issued by BellSouth or Company, and Section 5(g) shall no longer
apply. After a Change of Control, Trustee shall have and
exercise all discretionary authority for the management and
control of Trust assets and shall commence the orderly
disposition of Company Stock, subject to the provisions of
Section 5A hereof to the extent applicable. Trustee may, in its
sole discretion, retain Company Stock acquired prior to a Change
of Control for such period of time as Trustee deems appropriate
and in the best interest of participants and beneficiaries in the
Plan(s). In no event may Trustee make additional investments in
Company Stock on behalf of the Trust after a Change of Control,
other than (i) amounts held in diversified common investment
vehicles in which Trustee invests, and (ii) through the exercise
of rights to acquire Company Stock attributable to shares held at
the time of the Change of Control, in the Trustee's sole
discretion, if the Trustee deems such exercise appropriate and in
best interest of the participants and beneficiaries in the
Plan(s).
Section 5A. Sale of Company Stock by Trustee.
(a) Except as otherwise specifically permitted herein,
Trustee may not sell Company Stock except: (1) as necessary from
time to time to satisfy benefit obligations under the Plan(s)
which are required to be paid by Trustee under this Trust;
(2) pursuant to a tender or exchange offer, by other than
BellSouth, for all or substantially all of the issued and
outstanding Company Stock; or (3) following a Change of Control;
and then only as specifically permitted herein.
(b) Trustee shall provide BellSouth with not less than 30
days prior notice that it proposes to sell any Company Stock,
unless Trustee determines in good faith that such delay would
cause irreparable harm to Trustee or to the Trust, in which event
Trustee shall provide reasonable notice of such proposed sale.
Notice shall be given by telephone, confirmed promptly by
facsimile or first class mail, postage prepaid. Trustee shall
specify in any event the number of shares proposed to be sold.
(c) Trustee shall make sales of Company Stock pursuant to
an effective registration statement under, or an exemption
(including but not limited to Rule 144) from, the registration
requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and in compliance with applicable state
securities laws.
(d) Should either BellSouth or Trustee determine in good
faith, with the written advice of counsel delivered to and in
form reasonably acceptable to the other party hereto, that such
proposed sale could not reasonably be made pursuant to an
exemption from the Securities Act, then Trustee may demand in
writing that BellSouth, at BellSouth's option, either purchase
under Section 5A(f) or register under the Securities Act under
Section 5A(e), such number of shares of Company Stock held and
proposed to be sold by Trustee. BellSouth shall promptly notify
Trustee by telephone, confirmed promptly by facsimile or first
class mail, postage prepaid, whether it elects to proceed under
Section 5A(f) or 5A(e).
(e) If BellSouth elects registration pursuant to a demand
under Section 5A(d) above, then:
(1) As soon as practicable, but in any event within 90
days after receipt of the demand from Trustee, BellSouth
shall:
(i) file with the Securities and Exchange
Commission (the "Commission") a registration statement
covering the shares to be sold and use its reasonable
best efforts to have such registration statement filed
pursuant to this Agreement declared effective as
promptly as practicable. BellSouth shall advise
Trustee of the progress of such filing and of any
review thereof undertaken by the Commission, and
promptly notify Trustee, and confirm such advice in
writing, (x) when such registration statement becomes
effective, (y) when any post-effective amendment to
such registration statement becomes effective and (z)
of any request by the Commission for any amendment or
supplement to such registration statement or any
prospectus relating thereto or for additional
information;
(ii) use its reasonable best efforts to
register, qualify, or effect compliance not later than
the effective date of any registration statement filed
pursuant to this Trust Agreement, the shares of Company
Stock registered thereunder under the blue sky laws of
such states or the District of Columbia as the Trustee
may reasonably request; provided, however, that neither
BellSouth nor Company shall be obligated to qualify as
a foreign corporation or as a dealer in securities or
to execute or file any general consent to service of
process under the laws of any such jurisdiction where
it is not so subject; and, provided, further, that
BellSouth reserves the right not to register or qualify
shares of Company Stock in any jurisdiction where
registration or qualification of such shares would be
unreasonably burdensome;
(iii) from time to time (x) after BellSouth
has elected to satisfy a demand for sale by means of
registration, immediately advise Trustee of any event
or development, including a material adverse change in
the financial condition, business or affairs of
BellSouth, known to BellSouth (other than events or
developments affecting market or economic conditions
generally), which may have a material adverse impact on
the proposed offering; and (y) within the period of
effectiveness of such registration statement, advise
Trustee of any event or development requiring amendment
or supplement (which amendment or supplement shall be
prepared with reasonable promptness by BellSouth) of
the registration statement or prospectus used in
connection therewith or rendering it inadvisable to use
the prospectus until it is supplemented or amended; and
(iv) furnish to Trustee such number of
copies of any preliminary and final prospectuses and
any amendments and supplements thereto as Trustee may
reasonably request.
(2) Trustee and BellSouth shall negotiate with an
underwriter selected or approved by BellSouth with regard to
the underwriting of such requested registration. BellSouth
shall enter into an underwriting agreement in customary form
with the underwriter(s) and Trustee in which BellSouth and
Trustee (to the extent applicable based only on such
information as is provided in writing by Trustee) shall
provide customary indemnification to such underwriter(s) and
each other.
(3) BellSouth shall have the right to terminate or
withdraw any registration contemplated by it under this
Section 5A(e) prior to or following the effectiveness of
such registration for any reason whatsoever, provided that
it shall thereupon be required to purchase shares pursuant
to Section 5A(f).
(4) Trustee shall provide all such information and
materials and take all such actions, furnish all such
information, execute all such documents and cooperate with
BellSouth in good faith, all as may be reasonably required
in order to permit BellSouth to comply with all applicable
requirements of the Commission and all other applicable laws
or regulations and to obtain acceleration of the effective
date of the registration statement.
(5) All expenses incurred in connection with any
registration, qualification or compliance pursuant to this
Trust Agreement, including without limitation, all
registration, filing and qualification fees, printing and
engraving expenses, fees and disbursements of counsel for
BellSouth, and expenses of any special audits or comfort
letters incidental to or required by such registration,
shall be borne by BellSouth, provided that Trustee may pay
such expenses and recover same from the Trust if BellSouth
fails to pay such expenses in a timely manner.
(f) Notwithstanding any contrary provision of this
Agreement, if BellSouth advises Trustee of any delays in filing
or effectiveness of more than 60 days, if BellSouth and Trustee
are unable despite good faith efforts to agree as to registration
or an exempt sale, or if a registered sale would not permit
Trustee to sell Company Stock expeditiously enough to meet
Trustee's good faith needs, Trustee may demand that BellSouth
purchase, or if BellSouth elects to purchase stock pursuant to
Section 5A(d), (e)(3) or (g), BellSouth shall purchase the
Company Stock desired to be sold at fair market value, which
shall be the volume weighted average trading price (including
only trades which would meet the time of purchases conditions
under Rule 10b-18 under the Securities Exchange Act of 1934, as
amended ("Rule 10b-18"), of a share of such security on the New
York Stock Exchange on the day that BellSouth receives such
demand or gives notice of such election. BellSouth and Trustee
shall use their reasonable best efforts to agree as to the prompt
execution, closing and delivery of shares and proceeds therefor.
(g) Until a Change of Control, BellSouth may, on notice of
a proposed sale by Trustee, whether or not exempt, elect to
purchase such Company Stock from Trustee at fair market value, as
defined in Section 5A(f), and with the manner, conditions, and
closing of such sale to be agreed upon by BellSouth and Trustee.
(h) BellSouth shall be entitled to postpone the filing of
any registration statement and any amendment or supplement
thereto otherwise required to be prepared and filed by it, or to
direct that Trustee postpone any sale or put if, at the time it
receives a request for registration or sale, (i) BellSouth
determines, in its reasonable business judgment, that such
filing, registration and offering, or sale or put, would
materially interfere with the likely success of a proposed
purchase or sale of securities by BellSouth; or (ii) counsel for
BellSouth opines in writing that the filing of such registration
statement, amendment or supplement, or sale or put would have a
material adverse impact on any material ongoing or pending
transaction or program of BellSouth or any of its subsidiaries or
any other circumstances; provided, that should such delays
adversely affect Trustee's ability to pay benefits as
contemplated by this Trust Agreement, then BellSouth shall
advance such funds as may be reasonably needed by Trustee for
such proposed pending sale.
(i) Notwithstanding any provisions above permitting sale by
Trustee of Company Stock, Trustee shall, until a Change of
Control or a tender or exchange offer for all or substantially
all of the issued and outstanding Common Stock, limit sales,
whether registered or exempt (other than sales described in
Section 5A(f)), by reference to the volume limitations for issuer
repurchases within Rule 10b-18; provided, that block sales may
not exceed 25% of the trading volume on the New York Stock
Exchange, Inc. for the 14 day period prior to such sale.
BellSouth shall provide all information reasonably required by
Trustee to make determinations as to the number of shares which
may be sold, and Trustee shall promptly notify BellSouth as to
all sales made other than through a registered public offering.
(j) BellSouth and Trustee shall each cooperate in good
faith and employ their reasonable best efforts in permitting and
effecting any purchase or sale of Company Stock as contemplated
in this Section 5A and each shall comply with all applicable laws
and regulations relating to the foregoing including, without
limitation, federal and state securities laws, rules and
regulations issued thereunder, and any other governmental or
stock exchange requirements or regulations relating thereto.
Section 6. Disposition of Income.
During the term of this Trust, all income received by the
Trust, net of expenses and taxes, shall be accumulated and
reinvested.
Section 7. Accounting by Trustee.
Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions
required to be made, including such specific records as shall be
agreed upon in writing between BellSouth and Trustee. Within
forty-five (45) days following the close of each calendar year
and within forty-five (45) days after the removal or resignation
of the Trustee, Trustee shall deliver to BellSouth a written
account of its administration of the Trust during such year or
during the period from the close of the last preceding year to
the date of such removal or resignation, setting forth all
investments, receipts, disbursements and other transactions
effected by it, including a description of all securities and
investments purchased and sold with the cost or net proceeds of
such purchases or sales (accrued interest paid or receivable
being shown separately), and showing all cash, securities and
other property held in the Trust at the end of such year or as of
the date of such removal or resignation, as the case may be. In
addition, as of the end of each calendar month (referred to in
this Trust as a "valuation date"), within ten (10) days after
each such month-end, Trustee shall deliver to BellSouth a written
account setting forth the value of the Trust's assets, together
with such other information as shall be agreed upon between
BellSouth and Trustee.
Section 8. Responsibility of Trustee.
(a) Trustee shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent
person acting in like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character and
with like aims, provided, however, that Trustee shall incur no
liability to any person for (i) any action taken pursuant to a
direction, request or approval given by BellSouth, Company or a
Trustee's Contractor which is contemplated by, and in conformity
with, the terms of the Plan(s) or this Trust and is given in
writing by BellSouth, Company or a Trustee's Contractor (other
than Trustee when it acts as Trustee's Contractor), or (ii) the
investment in, or retention of, Company Stock pursuant to the
terms of this Agreement, and no such action shall be considered a
breach of the fiduciary standard herein set forth. In the event
of a dispute between BellSouth, Company or a Trustee's Contractor
and a party, Trustee may apply to a court of competent
jurisdiction to resolve the dispute.
(b) If Trustee undertakes or defends any litigation arising
in connection with this Trust or a Plan (including without
limitation any action to compel funding of the Trust pursuant to
Section 1 hereof, to compel BellSouth or Company to take any
action under the Trust or the Plan(s), or to determine Trustee's
obligations hereunder), Trustee shall be indemnified by the Trust
against Trustee's costs, expenses and liabilities (including,
without limitation, reasonable attorneys' fees and expenses)
relating thereto and the Trust shall be primarily liable for such
payments, other than those arising from Trustee's negligence or
willful misconduct. Trustee shall also be entitled to reasonable
payment from the Trust for the allocation of Trustee's personnel
to the investigation and defense or prosecution thereof, at
Trustee's normal hourly billing rates. If such costs, expenses
and liabilities are not paid from the Trust for any reason
(including without limitation insufficiency of the Trust's assets
to satisfy such obligations) in a reasonably timely manner,
BellSouth and Company agree to indemnify Trustee against such
costs, expenses and liabilities. Anything in this subsection (b)
to the contrary notwithstanding, BellSouth and Company shall
indemnify and hold Trustee harmless from and against all costs,
expenses and liabilities arising out of or relating to the
acquisition, retention or disposition of Company Stock, except
with respect to matters covered by the Trustee's indemnity to be
provided under Section 5A(e)(2).
(c) Trustee may consult with legal counsel (who may also be
counsel for BellSouth generally) with respect to any of its
duties or obligations hereunder.
(d) Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants or other professionals
to assist it in performing any of its duties or obligations
hereunder.
(e) Trustee shall have, without exclusion, all powers
consistent with the terms hereof conferred on trustees by
applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an
asset of the Trust, Trustee shall have no power to name a
beneficiary of the policy other than the Trust, to assign the
policy (as distinct from conversion of the policy to a different
form) other than to a successor Trustee, or to loan to any person
the proceeds of any borrowing against such policy.
(f) Notwithstanding any powers granted to Trustee pursuant
to this Trust Agreement or to applicable law, Trustee shall not
have any power that could give this Trust the objective of
carrying on a business and dividing the gains therefrom, within
the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal
Revenue Code.
Section 9. Compensation and Expenses of Trustee.
All administrative and Trustee's fees as agreed upon between
Trustee and BellSouth and reasonable expenses actually incurred
by the Trustee in performing its duties hereunder including the
fees and expenses of any third party which provides services
contemplated herein or in the Plan(s) shall be paid by Trustee
from the assets of the Trust and, until so paid, shall constitute
a lien on the assets of the Trust. If not so paid, the fees and
expenses shall be paid by Company or BellSouth.
Section 10. Resignation and Removal of Trustee.
(a) Trustee may resign at any time by written notice to
BellSouth, which shall be effective sixty (60) days after receipt
of such notice unless BellSouth and Trustee agree otherwise;
provided that in no event shall any such resignation take effect
prior to the appointment of a successor Trustee.
(b) Trustee may be removed by BellSouth on sixty (60) days
notice or upon shorter notice accepted by Trustee.
(c) Upon a Change of Control, as defined herein, Trustee may
not be removed by BellSouth for one (1) year. Additionally,
after the expiration of the one (1) year period following a
Change of Control, Trustee may be removed by BellSouth only if
BellSouth first obtains the express written consent to such
removal of more than twenty-five percent (25%) of the
participants in the Plan(s).
(d) If Trustee resigns or is removed within one (1) year of
a Change of Control, as defined herein, Trustee shall select a
successor Trustee in accordance with the provisions of Section
11(b) hereof prior to the effective date of Trustee's resignation
or removal. Additionally, if Trustee resigns or is removed after
expiration of the one (1) year period following a Change of
Control, BellSouth may select a successor Trustee in accordance
with the provisions of Section 11(b) hereof if it shall first
obtain the express written consent to the appointment of the
proposed successor of more than twenty-five percent (25%) of the
participants in the Plan(s). If BellSouth fails to so appoint a
successor Trustee, Trustee shall select a successor Trustee.
Upon the appointment and acceptance by, and transfer of assets
to, a successor Trustee, Trustee shall have no further
responsibilities under this Trust Agreement.
(e) Upon resignation or removal of Trustee and appointment
of a successor Trustee, all assets shall subsequently be
transferred to the successor Trustee. The transfer shall be
completed within sixty (60) days after receipt of notice of
resignation, removal or transfer, unless BellSouth extends the
time limit.
(f) If Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 11 hereof, by the effective
date of resignation or removal under paragraph (a) of this
section. If no such appointment has been made, Trustee may apply
to a court of competent jurisdiction for appointment of a
successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed and charged to
the Trust as administrative expenses of the Trust.
Section 11. Appointment of Successor.
(a) If Trustee resigns or is removed in accordance with
Section 10(a) or (b) or (c) hereof, BellSouth may, subject to
Section 10(d), appoint any third party, such as a bank trust
department or other party that may be granted corporate trustee
powers under state or federal law, as a successor to replace
Trustee upon resignation or removal. The appointment shall be
effective when accepted in writing by the new Trustee, who shall
have all the rights and powers of the former Trustee, including
ownership rights in the Trust assets. The former Trustee shall
execute any instrument necessary or reasonably requested by
BellSouth or the successor Trustee to evidence the transfer.
(b) If Trustee resigns or is removed pursuant to the
provisions of Section 10(a), (b), (c) or (d) hereof and selects a
successor Trustee pursuant to Section 10(d) hereof, Trustee may
appoint any third party such as a bank trust department or other
party that may be granted corporate trustee powers under state or
federal law. The appointment of a successor Trustee shall be
effective when accepted in writing by the new Trustee. The new
Trustee shall have all the rights and powers of the former
Trustee, including ownership rights in Trust assets. The former
Trustee shall execute any instrument necessary or reasonably
requested by the successor Trustee to evidence the transfer.
(c) A former Trustee shall prepare and deliver to BellSouth
and to the successor Trustee a final accounting unless BellSouth
waives BellSouth's right to such accounting, and such accounting
shall be effective through the date of the former Trustee's
transfer of all assets to its successor. The successor Trustee
need not examine the records and acts of any prior Trustee unless
requested to do so by BellSouth (and, after a Change of Control,
unless the successor Trustee in addition concludes that there is
a reasonable basis for such request by BellSouth) and may retain
or dispose of existing Trust assets, subject to Sections 7 and 8
hereof. Subject to the foregoing, the successor Trustee shall
not be responsible for and BellSouth shall indemnify and defend
the successor Trustee from any claim or liability resulting from
any action or inaction of any prior Trustee or from any other
past event, or any condition existing at the time it becomes
successor Trustee. The compensation arrangement for the
successor Trustee shall be reasonable in relation to the services
to be performed by the successor Trustee.
Section 12. Amendment or Termination.
(a) This Trust Agreement (including Appendix A hereto) may
be amended by a written instrument executed by Trustee, BellSouth
and Company. Notwithstanding the foregoing, (i) no such
amendment shall conflict with the terms of the Plan(s) as then in
effect or shall make the Trust revocable after it has become
irrevocable in accordance with Section 1(b) hereof and (ii) the
duties and responsibilities of Trustee shall not be increased
without Trustee's written consent.
(1) Furthermore, notwithstanding anything to the
contrary in this Trust Agreement (except as otherwise
provided in this Section 12), (i) on or after February 18,
1996, and prior to a Change of Control, no amendment shall
be made to Section 1(d) through (h), Section 2, Section 4,
Section 5(h), Section 10(c), Section 10(d), this Section
12(a), Section 13(d), Section 13(g), Section 13(j), and
Section 13(k), and no deletion shall be made in Appendix A,
without the prior written consent of more than twenty-five
percent (25%) of the adversely affected participants in the
Plan(s) unless such amendment would not, in the opinion of
counsel, have a material and adverse effect on the rights or
interests of such participants; (ii) following a Change of
Control, no amendment shall be made to any provision of this
Trust Agreement (including Appendix A hereto) without the
prior written consent of more than twenty-five percent (25%)
of the adversely affected participants in the Plan(s) unless
such amendment would not, in the opinion of counsel, have a
material and adverse effect on the rights or interests of
such participants; and (iii) before the earlier of
February 18, 1996 or a Change of Control, no amendment shall
be made to any provision of this Trust Agreement (including
any deletion to Appendix A hereto) unless the Executive Vice
President and General Counsel of BellSouth Corporation, or
his successor, determines in his discretion that such
amendment is consistent with the purposes of the Trust
Agreement.
(2) The limitations contained in Section 12(a)(1)
shall not apply with respect to any amendment which is
reasonably necessary, in the opinion of counsel, to preserve
the status of the Trust as a grantor trust and the status of
the Plan(s) as unfunded for federal income tax purposes and
for purposes of the Employee Retirement Income Security Act
of 1974, as amended, or to guard against an adverse impact
on Plan participants or beneficiaries and which, in the
opinion of counsel, is drafted primarily to preserve such
status or to reduce or eliminate such adverse impact on such
person or persons.
(3) In each instance in which an opinion of counsel is
contemplated in this Section 12(a) prior to a Change of
Control, such opinion shall be in writing and delivered to
Trustee, rendered by a nationally recognized law firm
selected by BellSouth, and in each instance in which an
opinion of counsel is contemplated in this Section 12(a)
after a Change of Control, such opinion shall be in writing
and delivered to Trustee, rendered by a nationally
recognized law firm selected by the Trustee's Contractor. A
determination by the Executive Vice President and General
Counsel of BellSouth Corporation, or his successor, under
Section 12(a)(1)(iii) also shall be in writing and delivered
to the Trustee. Trustee may rely on all such opinions and
determinations.
(b) The Trust shall not terminate until the date on which
Plan participants and their beneficiaries are no longer entitled
to benefits from Company pursuant to the terms of the Plan(s).
Upon termination of the Trust any assets remaining in the Trust
shall be returned to Company.
(c) Upon written approval of participants or beneficiaries
entitled to payment of benefits pursuant to the terms of the
Plan(s), BellSouth and Company may terminate this Trust prior to
the time all benefit payments under the Plan(s) have been made.
All assets in the Trust at termination shall be returned to
Company.
(d) Trustee may rely for purposes of this Section 12 on a
certificate furnished by BellSouth prior to a Change of Control,
and by the Trustee's Contractor after a Change of Control,
(i) with respect to any amendment requiring the prior written
consent of more than twenty-five percent (25%) of the adversely
affected participants in the Plan(s) pursuant to subsection (a)
of this Section 12, that such consent has been obtained, (ii)
with respect to subsection (b) of this Section 12, that Plan
participants and their beneficiaries are no longer entitled to
benefits pursuant to the terms of the Plan(s), and (iii) with
respect to subsection (c) of this Section 12, that the written
approval of participants or beneficiaries entitled to payment of
benefits pursuant to the terms of the Plan(s) has been obtained.
Section 13. Miscellaneous.
(a) Any provision of this Trust Agreement prohibited by law
shall be ineffective to the extent of any such prohibition,
without invalidating the remaining provisions hereof.
(b) Benefits payable to Plan participants and their
beneficiaries under this Trust Agreement may not be anticipated,
assigned (either at law or in equity), alienated, pledged,
encumbered or subjected to attachment, garnishment, levy,
execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed
in accordance with the laws of New York.
(d) For purposes of this Trust, Change of Control shall
mean: (i) any "person" (as such term is defined in the
Securities Exchange Act of 1934, as amended), other than a
trustee or other fiduciary holding securities under an employee
benefit plan of BellSouth or Company or other corporation owned
directly or indirectly by the shareholders of BellSouth in
substantially the same proportions as their ownership of stock of
BellSouth, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under said Act), directly or indirectly, of securities
of BellSouth representing 20% or more of the total voting power
represented by BellSouth's then outstanding voting securities; or
(ii) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors
of BellSouth and any new director whose election by the Board of
Directors or nomination for election by BellSouth's shareholders
was approved by a vote of at least two-thirds of the directors
who either were directors at the beginning of the two year period
or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof.
Notwithstanding anything to the contrary in this Trust Agreement,
for purposes of Section 5 and Section 5A hereof, "50%" shall be
substituted for "20%" where such reference appears in clause (i)
of this Section 13(d). For all purposes of this Trust Agreement,
Trustee shall have no responsibility whatsoever to determine
whether or not a Change of Control has occurred.
(e)(1) After the execution of this Trust Agreement,
BellSouth shall promptly file with Trustee, and following
the appointment of a Trustee's Contractor, BellSouth shall
promptly file with the Trustee's Contractor, a certified
list of the names and specimen signatures of the officers of
BellSouth and any delegate authorized to act for it. Unless
BellSouth notifies Trustee to the contrary, BellSouth shall
act through its Treasurer or any person who such Treasurer
authorizes in writing to act on his behalf or any other
person who is authorized to act on BellSouth's behalf by a
resolution of BellSouth's Board of Directors. BellSouth
shall promptly notify Trustee and the Trustee's Contractor,
if applicable, of the addition or deletion of any person's
name to or from such list, respectively. Until receipt by
Trustee and/or the Trustee's Contractor of notice that any
person is no longer authorized so to act, Trustee or the
Trustee's Contractor may continue to rely on the authority
of the person. All certifications, notices and directions
by any such person or persons to Trustee or the Trustee's
Contractor shall be in writing signed by such person or
persons. Trustee and the Trustee's Contractor may rely on
any certification, notice or direction of BellSouth that the
Trustee or the Trustee's Contractor reasonably believes to
have been signed by a duly authorized officer or agent of
BellSouth. Trustee and the Trustee's Contractor shall have
no responsibility for acting or not acting in reliance upon
any notification reasonably believed by Trustee or the
Trustee's Contractor to have been signed by a duly
authorized officer or agent of BellSouth.
(e)(2) After the engagement of a Trustee's Contractor
(other than Trustee), the Trustee's Contractor shall
promptly file with Trustee a certified list of the names and
specimen signatures of the officers of the Trustee's
Contractor and any delegate authorized to act for it.
Trustee's Contractor shall promptly notify Trustee of the
addition or deletion of any person's name to or from such
list. Until receipt by Trustee of notice that any person is
no longer authorized so to act, Trustee may continue to rely
on the authority of the person. All certifications, notices
and directions by any such person or persons to Trustee
shall be in writing signed by such person or persons.
Trustee may rely on any such certification, notice or
direction of the Trustee's Contractor that Trustee
reasonably believes to have been signed by or on behalf of a
duly authorized officer or agent of the Trustee's
Contractor. Trustee shall have no responsibility for acting
or not acting in reliance upon any notification reasonably
believed by the Trustee to have been signed by a duly
authorized officer or agent of the Trustee's Contractor.
(f) Neither the gender nor the number (singular or
plural) of any word shall be construed to exclude another
gender or number when a different gender or number would be
appropriate.
(g)(1) This Trust Agreement shall be binding upon and
inure to the benefit of any successor(s) to BellSouth,
Company and Trustee; provided, that in the event of a
Disposition (as defined in Section 13(g)(4) hereof) of
Company, BellSouth shall cease to be a party to this
Agreement and all rights, duties and obligations of
BellSouth hereunder shall thereafter be rights, duties and
obligations of Company or its successor(s).
(g)(2)(A) If there is a transfer of any liability for
the payment of any Transferred Benefit (as defined below) to
any individual or entity (the "New Company") as a result of
any transaction, including without limitation any sale of
Company, its business or a portion thereof, merger,
consolidation, reorganization, spin-off, division or
transfer of assets (hereinafter a "corporate transaction")
and there is a "Default" (as defined below) by New Company
with respect to the payment of such benefit, Company shall
(subject to this Section 13(g)(2)) pay such unpaid
Transferred Benefit which is otherwise due and payable (and
such payment may be made on Company's behalf from this Trust
pursuant to Section 2) if (i) this Trust remains in effect
at the time such benefit is payable, (ii) there are
sufficient assets in this Trust to pay such benefit and
(iii) Section 13(g)(3) does not apply to such corporate
transaction.
(g)(2)(B) For purposes of this Section 13(g)(2):
(i) the term "Transferred Benefit" shall mean any
Plan benefit (I) which is attributable to compensation
deferrals made for pay periods ending before the
effective date of such corporate transaction under any
Plan(s) which are plans of deferred compensation and
any interest on such deferrals (at an interest rate no
higher than the rate payable under the terms of the
Plan as of the date of such transaction) or which was
accrued under any Plan(s) which are supplemental
retirement or pension plans before the effective date
of any such transaction, (II) for which the liability
for payment was transferred to New Company in
connection with such corporate transaction and
(III) which are properly payable under the terms and
conditions of the Plan(s) as in effect as of the date
of such corporate transaction; and
(ii) the term "Default" shall mean a default on
the payment of a Transferred Benefit by the New Company
if (I) the affected participant or beneficiary has
timely and properly made a claim for such benefit and
has exhausted all claims and claims review procedures
properly imposed under the terms of the Plan(s) with
respect to such benefit, (II) such participant or
beneficiary has agreed to provide and timely provides
whatever information Company or a Trustee's Contractor
might request from such person with respect to such
Transferred Benefit and New Company and (III) such
participant or beneficiary promptly takes whatever
action is reasonably requested by Company or the
Trustee's Contractor to enable Company or the Trustee
to be fully subrogated to the extent of any such
payments to all the rights, claims and remedies such
participant or beneficiary might have against New
Company for the payment of the related Transferred
Benefits. Trustee shall not be required to take any
action with respect to a subrogation claim unless there
are sufficient assets in the Trust to cover the expense
thereof.
(g)(2)(C) The liability of Company under this Section
13(g)(2) shall not exceed the value of the assets of the
Trust as of the date payment is to be made by Company under
this Section 13(g)(2).
(g)(3) The provisions of Section 13(g)(2) shall not
apply to, and Company for purposes of Section 12(b) and each
other provision of this Trust Agreement shall be deemed to
have paid in full and shall have no further obligation to
pay, any Transferred Benefit which is payable following any
corporate transaction (i) which involves a Disposition, if
there is established, or there is imposed on Company's
successor an obligation to establish (or there is otherwise
provided with respect to affected Plan participants and
beneficiaries), with respect to the Transferred Benefit an
irrevocable trust which, in the opinion of counsel, meets
the requirements for a "rabbi trust" as set forth in the
model grantor trust agreement contained in Rev. Proc. 92-64,
1992-2 C. B. 422, or any successor to such Revenue
Procedure, with a bank as trustee, and which when
established (or, if already in existence, at the effective
date of such corporate transaction) is funded to at least
the funding level of this Trust, or (ii) which does not
involve a Disposition, if (A) there is established, or there
is imposed on Company's successor an obligation to
establish, with respect to the Transferred Benefit a trust
which, in the opinion of counsel, has terms substantially
similar to any one of the Trusts under Executive Benefit
Plan(s) established by BellSouth or a subsidiary on or
before the date hereof, as such trusts are then in effect,
with a bank as trustee, and which when established is funded
to at least the funding level of this Trust; or (B) the
Transferred Benefit becomes covered, as of the effective
date of such corporate transaction, by any trust described
in, or previously established pursuant to, (A) above and
which trust, if such transfer takes place on or after a
Change of Control has occurred, is funded (after taking into
account the Transferred Benefit) to at least the funding
level of this Trust. The determination of whether the
requirements of the preceding sentence have been satisfied
shall be made by BellSouth; provided, however, that
following the engagement of a Trustee's Contractor, such
determinations shall be made by Trustee's Contractor. The
opinions of counsel contemplated in this Section 13(g)(3)
shall be in writing and delivered to Trustee, rendered by
counsel for BellSouth or, following the engagement of a
Trustee's Contractor, counsel selected by Trustee's
Contractor. Trustee may rely on the accuracy of all such
determinations and opinions. For purposes of this Section
13(g)(3), "funding level" shall have the meaning ascribed to
such term in Section 1(e)(2) hereof, except that (i) in
determining Current Liability of a trust other than this
Trust, reference shall be made to liabilities under the
plan(s) covered by each such trust and (ii) in determining
funding level as of any date other than the last day of any
trust's (including this Trust's) fiscal year, there may be
employed reasonable estimation techniques, consistently
applied.
(g)(4) For purposes of this Trust Agreement, there
shall be a "Disposition" of Company or its business, or a
portion thereof, whenever as a result of any transaction the
Company, successor(s) to Company or its business, or a
portion thereof as the case may be, is not a member of
BellSouth's "controlled group of corporations", as such term
is defined in Section 1563(a) of the Internal Revenue Code
of 1986, as amended, substituting "more than 50 percent" for
the phrase "at least 80 percent" each place it appears in
Section 1563(a)(1).
(h) This Trust Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but all of which shall together constitute only one Agreement.
(i) Communications to Trustee shall be sent to Bankers Trust
Company, 280 Park Avenue, New York, New York 10017 - ATTENTION:
Senior Vice President, Retirement Services Group, or to such
other address as Trustee may specify in writing. No
communication shall be binding upon Trustee until it is received
by Trustee. Communications to BellSouth, Company and the
Trustee's Contractor shall be sent to the principal offices of
BellSouth, Company or the Trustee's Contractor, as the case may
be, or to such other address as BellSouth, Company or the
Trustee's Contractor, as applicable, may specify in writing.
(j) In the event the participants and beneficiaries in one
or more of the Plan(s) are determined generally to be subject to
federal income tax on any amount in the Trust prior to the time
of payment hereunder, the entire amount determined to be so
taxable shall be distributed by Trustee to each affected
participant or beneficiary. Company may, at its option, make
such payments directly to affected participants and
beneficiaries. An amount shall be determined to be subject to
federal income tax upon the earliest of: (a) a final
determination by the United States Internal Revenue Service
addressed to a participant or beneficiary which is not appealed
to the courts; (b) a final determination by the United States Tax
Court or any other federal court affirming any such determination
by the Internal Revenue Service; or (c) an opinion by counsel for
BellSouth reasonably acceptable to Trustee addressed to BellSouth
and Trustee, that, by reason of the Treasury Regulations,
amendments to the Internal Revenue Code, published Internal
Revenue Service rulings, court decisions or other substantial
precedent, amounts hereunder are generally subject to federal
income tax prior to payment; provided, that following a Change of
Control, only an opinion by counsel selected by the Trustee's
Contractor may be accepted by Trustee for purposes of (c).
Company shall undertake at its sole expense to defend any tax
claims described herein which are asserted by the Internal
Revenue Service against any participant or beneficiary and which
it determines would affect participants or beneficiaries
generally, including attorneys' fees and costs of appeal, and
shall have the sole authority to determine whether or not to
appeal any determination made by the Internal Revenue Service or
by a lower court. Company also agrees to reimburse any
participant or beneficiary for any interest or penalties in
respect of tax claims hereunder which it determines would affect
participants or beneficiaries generally, upon receipt of
documentation of same. Any distributions from the Trust to a
participant or beneficiary under this Section 13(j) (other than
reimbursements of interest or penalties referred to in the
preceding sentence) shall reduce the benefits payable to such
participant and/or beneficiary under the Plan(s).
(k) In the event that Company shall fail to satisfy any
obligation of Company to a Plan participant or beneficiary under
this Trust Agreement, or in one or more of the Plan(s), after
reasonable notice and demand with respect thereto, and one or
more participants or beneficiaries obtains a final determination
by a court of competent jurisdiction that Company has so failed,
such participant(s) or beneficiary(ies) shall be indemnified by
the Trust against reasonable and appropriate costs and expenses
(including without limitation reasonable attorneys' fees and
expenses) relating thereto and the Trust shall be primarily
liable for such payments. Interest on any Plan benefit payments
which such court determines have been delayed to the extent
interest or similar payments in an equal or greater amount are
not provided in the Plan or by the court or otherwise shall also
be paid from the assets of the Trust. Such interest shall be
calculated using a rate of interest equal to the rate of interest
on ten (10) year United States Treasury obligations, as
determined on the first day of each calendar quarter, compounded
quarterly. If such costs, expenses and interest are not paid
from the Trust for any reason (including without limitation
insufficiency of the Trust's assets to satisfy such obligations)
in a reasonably timely manner, such participant(s) or
beneficiary(ies) may obtain payment from Company.
(l) Nothing herein shall be construed as restricting or
limiting in any way amendment of the Plan(s) in accordance with
the terms of the Plan(s).
(m) Any other provisions of this Trust Agreement to the
contrary notwithstanding, this Trust shall terminate no later
than the twenty-first anniversary of the date of death of the
survivor from among a class consisting of all of the descendants
of the late Joseph P. Kennedy, the former Ambassador to the Court
of Saint James, who are living on the date of the establishment
of the Trust and, if the Trust is still in existence on such
anniversary date, Trustee shall dispose of the Trust as Company
shall direct.
(n) In case of any conflict or inconsistency between the
terms of this Trust Agreement and any Plan, the terms of this
Trust Agreement shall control.
Section 14. Effective Date.
The effective date of this Trust Agreement shall be
the date of its execution set forth on page 1 of the Trust
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused the Trust
Agreement to be duly executed and their respective corporate
seals to be hereto affixed on the date set forth on page 1 of the
Trust Agreement.
BELLSOUTH CORPORATION
By: /S/ Arlen G. Yokley_______
Title: Vice President, Secretary
and Treasurer
(CORPORATE SEAL)
ATTEST: /S/ Marcy A. Bass_____
Title: Assistant Secretary__
BELLSOUTH ENTERPRISES, INC.
By:__/S/ Ronald M. Dykes_______
Title: Vice President - Finance
(CORPORATE SEAL)
ATTEST:_/S/ Joyce Clower Irvine_
Title:__Assistant Secretary_____
BANKERS TRUST COMPANY,
as Trustee
By:___/S/ Gary D. Cohen_____
Title: __Vice President_____
CORPORATE SEAL)
ATTEST:__/S/_Marie B. Colaninno__
Title:____Vice President_________
APPENDIX A
BellSouth Nonqualified Deferred Compensation Plan
BellSouth Nonqualified Deferred Income Plan
BellSouth Corporation Supplemental Executive Retirement
Plan
BellSouth Corporation Executive Incentive Award Deferral
Plan
BellSouth Corporation Section 415 Excess Pension Plan
/0041083.01
BELLSOUTH NONQUALIFIED DEFERRED INCOME PLAN
BellSouth Nonqualified Deferred Income Plan
BellSouth Corporation ("BellSouth") hereby
establishes this first (1st) day of September, 1985,
the BellSouth Nonqualified Deferred Income Plan
("Plan") for certain employees of BellSouth and its
subsidiaries.
Article 1
Definitions
1.1 "Base Salary" means the gross salary
of the Participants, including the amount of any
before-tax basic and supplemental contributions to
the BellSouth Management Savings and Employee Stock
Ownership Plan or similar contributions to a
comparable plan maintained by a Participating Company
and the amount of any other deferrals from gross
salary under any nonqualified deferred compensation
plans which may be maintained by a Participating
Company from time to time.
1.1(A) "CEO" means the Chief Executive
Officer of BellSouth Corporation.
1.1(B) "Code" means the Internal Revenue
Code of *
1986, as amended. *
1.2 "Compensation" means Net Gross Monthly
Salary.
1.3 "Compensation Rate" means the cash
compensation of a Participant, including (i) annual
Base Salary rate in effect on the date the Deferral
Agreement is executed, and (ii) lump-sum
* Text Added 5/30/90
awards under incentive compensation programs received
for #
performance rendered during the calendar year
preceding the year|
in which the Deferral Agreement is executed. For
Participants |
employed by Participating Companies whose
compensation |
structures do not readily fit within this definition,
#
Compensation Rate means cash compensation as defined
by the CEO.
1.4 "Deferral Agreement" means an
agreement *
pursuant to which deferral elections under this Plan
are made
and includes a standard Deferral Agreement,
substantially in
the form of Exhibit A hereto, a Deferral Agreement
for deferral
of certain lump-sum payments, substantially in the
form of
Exhibit B hereto, and other agreements approved from
time to
time for use in connection with this Plan as
described in
Article 2.
*
1.5 "Employer" means (i) BellSouth and
(ii) any subsidiary of BellSouth authorized by
BellSouth to enter into Deferral Agreements pursuant
to this Plan.
1.5(A) "ERISA" means the Employee
Retirement Income Security Act of 1974, as amended.
1.6 "Net Gross Monthly Salary" means the
amount of a Participant's Base Salary 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.
# Text Revised 10/1/94
* Text Revised 8/10/93
1.7 "Participant" means an employee who is
authorized by the CEO or his delegated representative
to participate in the Plan and to execute a Deferral
Agreement.
1.8 "Plan Year" means (i) January 1, 1986
through December 31, 1986 and (ii) each and every
calendar year thereafter.
1.8(A) "Responsible Officer" means the
officer * elected by the Employer's Board of
Directors (or similar governing body)
responsible for human resources matters for the
Employer.
*
1.9 "Retirement" means any termination by
a Participant who is eligible for a pension, other
than a deferred vested pension, under the terms and
conditions of the BellSouth Personal Retirement
Account Pension Plan, as amended from time to time,
or comparable plan maintained by the Participating
Company employing the Participant. (In the absence
of a comparable Participating Company sponsored plan,
Retirement eligibility is based upon certification by
the Board of Directors of the Participating Company
employing the Participant that the Participant is
retirement eligible.)
Additionally, "Retirement" means (i) any
termina-
tion by a Participant who is eligible for a service
benefit #
under terms and conditions of the BellSouth
Corporation Supplemental Executive
Retirement Plan, (ii) any termination by
* Text Added 8/10/93
# Text Revised 8/10/93
a Participant who has attained age 62 or older and
whose Term |
of Employment is ten years or more at the time of
employment |
termination, (iii) any termination by a Participant
who
separates from service under the BellSouth Career
Transition
Assistance Plan (CTAP), the BellSouth Enterprises
Employee
Career Transition Plan (ECTP), the BellSouth
Telecommunications,
Inc. Career Transition Assistance Plan (BST CTAP),
the #
BellSouth Telecommunications, Inc. Career Transition
Assistance %
Plan-Professional (BST CTAP-P), the BellSouth
Telecommunica-
tions, Inc. Employee Separation Assistance Plan
(ESAP), the %
BellSouth Telecommunications, Inc. Competitive
Management +
Restaffing Plan (CMRP), the BellSouth Advertising &
Publishing +
Corporation Voluntary Management Separation Pay Plan
(VMSPP), % or a designated successor to any such
plan, or other severance arrangement approved by
the CEO as applicable to this Plan, and %
(iv) any termination by a Participant who separates
from @
service under the BellSouth Voluntary Transition
Incentive Plan
(VTIP) and whose Term of Employment is ten years or
more of the @
time of such separation.
*
# Text Revised 8/10/93
% Text Revised 10/01/93
@ Text Revised 5/01/94
* Text Deleted 10/1/94
+ Text Added 5/15/95
1.10 "Disability" means a condition as
that term *
is defined in the BellSouth Long Term Disability Plan
for Salaried Employees, as amended from time
to time, or comparable plan maintained by the
Participating Company employing the
Participant. In the absence of a comparable
Participating Company sponsored disability
plan, the condition is based upon certification by
the Board of Directors of the Participating
Company employing the Participant that the
Participant is disabled.
1.11 "Participating Company" 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,
which has been designated
by BellSouth for participation in this Plan.
*
1.12 "Term of Employment" shall have the
same #
meaning as is given such term in the BellSouth
Personal |
Retirement Account Pension Plan, except that it shall
include |
only the portion of a Participant's term
of employment as is |
attributable to service with BellSouth, a
Participating Company |
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).
#
* Text Added 9/15/88
# Text Added 10/1/94
Article 2
Term; Amendment
This Plan is effective on the date hereof
and shall be effective until terminated by the CEO.
This Plan provides for 1986 through 1998 with Plan
specifications and interest rates being established
by the CEO for each separate Plan Year. This Plan
may be amended, renewed, restated or extended for
additional Plan Years by the CEO and the CEO may in
his sole discretion, on the basis of financial or
other considerations, not authorize the execution of
Deferral Agreements by Plan Participants
prospectively deferring Compensation for any given
Plan Year.
The CEO may also establish the maximum number of
deferrals for
which Participants are eligible under this Plan. The
CEO may *
also authorize the execution of Deferral Agreements,
in addition to those specifically described
herein, which are subject to the terms and
conditions of this Plan with such
modifications as the CEO may approve, and such
Deferral Agreements shall be deemed to have
been made hereunder. *
* Text Added 10/16/92
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
The CEO 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 power (i) to
interpret the terms of this Plan and any
Deferral Agreement, (ii) to establish reasonable
procedures with which Participants must comply to
exercise any right established under the Plan
or any Deferral Agreement, (iii) to determine
status, coverage and eligibility for
# Text Revised 8/10/93
benefits, (iv) to resolve all questions that arise in
the operation and administration of this
Plan, and (v) to delegate his responsibilities
hereunder to any person or entity. All actions
or determinations of the CEO (or his delegate) shall
(subject to Section 6.13) be final, conclusive and
binding on all persons. The rights and duties of
Participants and other # persons and entities are
subject to, and governed by, such acts of
administration, interpretations, procedures, and
delegations.
Article 4
Deferral Agreement
4.1 Election to Defer. As hereinafter
provided and subject to acceptance by an Employer,
(a) a Participant 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
hereto, and (b) a # Participant may elect to
reduce the amount of a lump-sum pay-
ment to which he or she may become entitled in
connection with separation under the BellSouth
Career Transition Assistance Plan (CTAP), the
BellSouth Enterprises Employee Career
Transition Plan (ECTP), the BellSouth
Telecommunications, Inc. # Career Transition
Assistance Plan (BST CTAP), the BellSouth %
Telecommunications, Inc. Career Transition Assistance
Plan-
Professional (BST CTAP-P), the BellSouth
Telecommunications, Inc. Employee Separation
Assistance Plan (ESAP), the BellSouth %
# Text Revised 8/10/93
% Text Revised 10/01/93
Telecommunications, Inc. Competitive Management
Restaffing +
Plan (CMRP), the BellSouth Advertising & Publishing
Corporation +
Voluntary Management Separation Pay Plan (VMSPP), the
%
BellSouth Voluntary Transition Incentive Plan (VTIP)
or a # designated successor to any such
plan, or other severance # arrangement approved
by the CEO 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 B hereto; provided that
subsection #
(b) of this Section 4.1 shall apply to a Participant
separating under the BellSouth Voluntary Transition
Incentive # Plan (VTIP) only if the Participant's
Term of Employment @
is ten years or more at the time of such separation.
@
4.2 Creation of Contractual Obligation.
An *
Employer which accepts a properly executed and timely
delivered Deferral Agreement agrees to pay to the
Participant or his or her Designated Beneficiary,
as defined in Section 6.1, the benefits
described in Article 5, which shall be calculated
based upon (i) the amount deferred by each
Participant, (ii) interest rate established
for each Plan Year by the CEO or his delegate
and applied to that amount annually, (iii) the
time which elapses between the Plan Year of deferral
and the date of benefit payments, and (iv) other
factors established in this Plan and by the CEO or
his delegate.
% Text Revised 10/01/93
# Text Revised 5/1/94
* Text Revised 8/10/93
@ Text Deleted 10/1/94
+ Text Added 5/15/95
An Employer's senior executive officer or
Responsible Officer is authorized to accept and
approve a properly executed Deferral
Agreement on behalf of that Employer under Section
4.2. *
4.3 Timing of Election. A Participant may
execute and deliver to his or her Employer a standard
Deferral Agreement, substantially in the form of
Exhibit A hereto, on or before November 30 of
any calendar year to reduce the Participant's #
Compensation only for the next subsequent Plan Year.
In *
addition, a Participant may execute and deliver to
his or her |
Employer a Deferral Agreement, substantially in the
form of |
Exhibit B 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 individuals are
selected for |
separation under such program by the Employer.
* Notwithstanding any other provisions of
this Plan or any Deferral Agreement, no Deferral
Agreement shall be effective to defer Compensation
(or other amounts) which is earned by any
Participant on or before the date upon which the
Deferral Agreement is properly executed and timely
delivered to the Participant's Employer.
* Text Revised 8/10/93
# Text Deleted 10/1/94
4.4 Amount of Deferral. (a) A Participant
may elect to defer during any Plan Year a dollar
amount which is less than or equal to a specified
percent of his or her Compensation Rate applicable to
the Plan Year rounded to the next highest one
thousand dollars. The CEO shall establish the
specified # percent of the Compensation Rate
applicable to each Plan Year. # Notwithstanding any
provision of a Deferral Agreement or this Plan to the
contrary, the Deferral Agreement of a Participant,
with regard to a deferral described in this paragraph
(a) 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
Gross Monthly Salary.
(b) A 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 (i) a dollar
amount which is less than or equal to the maximum
deferral, if any, which such Participant could elect
under paragraph (a) of this Section 4.4 at the
time of election, and (ii) the dollar amount by
which any election of deferrals under paragraph (a)
of this Section 4.4 for the Plan Year in which
the Participant terminates employment have not been
satisfied at the time of termination of
employment, except as may be otherwise
approved by the CEO.
*
# Text Revised 8/26/88
* Text Revised 8/10/93
Article 5
Payment of Benefits
5.1 Retirement Benefit. If a Participant
terminates employment with his or her Employer and is
not immediately reemployed by another Employer and
such termination constitutes a Retirement, then the
Employer shall pay to the Participant the
annual Retirement benefit stated in his or her
Deferral Agreements on those dates specified in each
Deferral Agreement. Except as hereinafter provided,
the number of Retirement benefit payments which will
be stated in a Participant's Deferral Agreement shall
equal the lesser of (i) fifteen (15) and (ii) the
remainder of eighty (80) minus the age at which
Retirement benefit payments commence pursuant to this
Section. The first Retirement benefit payable under
a Deferral Agreement shall be paid as soon as
administratively practicable after the first *
(1st) day of January following the calendar year
in which the Participant attains age sixty-five (65).
Any Deferral Agreement executed by a Participant
which defers amounts which would otherwise be payable
to the Participant in or after the Plan Year in which
he or she attains age sixty-five (65), however, shall
provide that the first Retirement benefit payable
shall be paid as soon as administratively practicable
after *
the first (1st) day of January following the later of
(i) the fifth (5th) anniversary of the date upon
which the Deferral Agreement is accepted by the
Employer or (ii) his or her Retirement, and that the
number of Retirement benefit payments shall equal the
remainder of (i) eighty (80) minus
* Text Revised 10/1/94
(ii) the age at which Retirement benefit payments
commence
pursuant to this Section. Notwithstanding the
foregoing, with *
respect to any Plan Year or selected deferrals, the
CEO may |
specify alternative benefit payment schedules.
*
If a Participant is, on the date of
Retirement, or becomes thereafter 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 lump-
sum as soon as #
administratively practicable after the first (1st)
day #
of January following that date an amount equal to (i)
the amount deferred pursuant to each of his or her
Deferral Agreements, % (ii) plus interest on each
such amount (adjusted to take into account all
payments described in clause (iii) 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
* Text Added 9/15/88
% Text Revised 8/10/93
# Text Revised 10/1/94
attained, inclusive, (iii) minus the amount of all
Interim
Distributions and any other payments hereunder. If
the above calculation results in a negative amount,
such amount shall not be collected from, or enforced
against the Participant as a claim by his or her
Employer.
5.2 Interim Distributions. A Participant
shall be paid the benefits stated in Paragraph 3 of
his or her standard Deferral Agreements on those
dates stated in that paragraph of
each such Deferral Agreement (herein referred to as
"Interim Distributions"). 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. Except
as may be otherwise
specified by the CEO, 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 other paragraph of his or
her Deferral Agreement. No Interim Distribution
shall * be paid in connection with any Deferral
Agreement which does not specifically provide
for such benefits. *
5.3 Death Benefit. If a Participant dies
on or before the date upon which he or she is
eligible for Retirement,#
then his or her Designated Beneficiary, as defined
in Section &
6.1, shall be paid in a lump-sum as soon as
administratively %
* Text Added 8/10/93
# Text Revised 8/26/88
& Text Deleted 10/1/94
% Text Revised 10/1/94
practicable after the first day of January following
his or her %
date of death an amount equal to: (i) the amount
deferred *
pursuant to each of his or her Deferral Agreements,
(ii) plus interest on each such amount (adjusted to
take into account all payments described in clause
(iii) below) credited separately at the rate approved
for and applicable to his or her participation
in each Plan Year for which he or she executed
accepted Deferral Agreements, such rates 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, if any, received by 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, such
amount shall
not be collected from, or enforced against the
Participant as a claim by his or her Employer.
If a Participant dies on or after the date
upon which he or she is eligible for Retirement (as
defined in Section 1.9), whether or not he or she has
in fact terminated employment, prior to commencing
receipt of benefits, or having received all benefits,
as the case may be, payable in accordance with the
duly authorized Deferral Agreement under this Plan,
except as provided under Section 5.4, then his or her
Designated Beneficiary, as defined in Section 6.1,
shall receive all benefits, or continue to receive
the remaining benefits, as the case may be, in
accordance with that Deferral Agreement.
* Text Revised 8/1/93
% Text Revised 10/1/94
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 under
any other Section or this Plan or under any Deferral
Agreement, notwithstanding any other provision of
this Plan or any Deferral Agreement.
5.4 Pre-Retirement Disability Benefit. If
a Participant suffers a Disability or becomes
Disabled (as * defined in Section 1.10) prior
to the date upon which he or * she receives or is
entitled to receive a benefit under Section 5.1 or
Section 5.3, 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 equal to: (i)
the amount deferred pursuant to each of his or her
Deferral Agreements, (ii) plus #
interest on each such amount (adjusted to take into
account all payments described in clause (iii) below)
credited separately at the rate approved for and
applicable to his or her participation in each Plan
Year for which he or she executed accepted Deferral
Agreements, such rates to be compounded annually 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, if any,
received by the Participant or to which the
Participant is entitled on or before the date of
onset of Disability.
* Text Revised 8/26/88
# Text Revised 8/10/93
% Text Revised 10/1/94
If the above calculation results in a negative
amount, such 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 a Participant
terminates employment with his or her Employer, and
is not immediately reemployed by another Employer,
prior to death, Disability or Retirement, then a
benefit amount shall be paid to the Participant,
either in a lump-sum or in five (5) annual
installments, at the election of the CEO, payable 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 equals (i) the
amount deferred pursuant *
to each of his or her Deferral Agreements,
(ii) plus interest on each such amount (adjusted to
take into account all payments described in clause
(iii) 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
* Text Revised 8/10/93
# Text Revised 10/1/94
amount of all Interim Distributions, if any, received
by the
Participant or to which the Participant is entitled
on or before
the date of his or her termination. If the above
calculation results in a negative amount, such 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 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.
5.6 Certain Rotational Assignments. In
the event that a Participant is transferred to
Bellcore or to any other
subsidiary of BellSouth that is not a Participating
Company, * and under circumstances where it is
expected that such Participant will return
to employment with BellSouth or another * Employer,
then (1) such transfer will not be considered a
termination of employment under Section 5.5, (2) such
Participant's Compensation deferrals shall cease as
of the date of such transfer and (3) his Deferral
Agreement in effect for the
year of transfer shall automatically be amended by
his Employer to reduce his Retirement benefits and
Interim Distributions to equal the percentage of such
payments equal to the percentage #
that his actual Compensation deferrals made for the
year of |
transfer are of his elected Compensation deferrals
#
for such year. Such a Participant shall be deemed to
have terminated employment under Section 5.5 if, and
as of the date, that he terminates employment with
Bellcore or such other
* Text Revised 8/1/88
# Text Revised 10/1/94
applicable company and fails to return to employment
with
BellSouth or other Employer, or he otherwise fails to
meet the terms of his rotational assignment.
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 in a lump-sum 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 will be equal to (i) the
amount deferred pursuant to each of the Participant's
Deferral Agreements, * ii) plus
interest on each such amount (adjusted to take into
account all payments described in clauses (iii) and
(iv) below) credited separately at the rate approved
for and applicable to the Participant's participation
in each Plan Year from which he or she executed
accepted Deferral Agreements, such rates to be
# Text Revised 10/1/94
* Text Revised 8/10/93
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,
if any
received by the Participant or Designated
Beneficiary, (iv) minus the Retirement benefits paid
to the Participant or Designated Beneficiary pursuant
to the Deferral Agreement(s). If the above
calculation results in a negative amount, such amount
shall not be collected from, or enforced against the
estate of the Designated Beneficiary. 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 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 previously in this Section 6.1.
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 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.
The adoption and maintenance of the Plan is strictly
conditioned upon (i) the
# Text Revised 10/1/94
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 CEO so elects within one year of such finding,
determination, or opinion, a Recalculation Event
shall be deemed to have occurred.
% Text Revised 5/30/90
* Text Revised 8/10/93
If a Recalculation Event occurs under this
Section # 6.3, Section 6.4, or any other Section of
this Plan, then each Participant who has not
attained the age of fifty-five (55)
years on the date on which the CEO 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 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 CEO 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
# Text Added 8/1/88
payment under any other Section of this Plan or under
any Deferral Agreement, notwithstanding any other
provision of this Plan or the Deferral Agreement.
6.4 Changes in the Internal Revenue Code
of 1954. 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,
* Text Revised 6/1/90
then, if the CEO 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.
*
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
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
* Text Added 8/1/88
# Text Revised 8/10/93
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
* Text Added 5/25/90
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 the Employer when personally delivered
to, or actually received from the United States mail,
postage prepaid, by Executive Compensation and
Benefits Group, #
Room 13J08, BellSouth Corporation, 1155 Peachtree
St., N.E., Atlanta, Georgia 30309-3610.
#
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;
* Text Added 5/25/90
# Text Revised 10/1/94
(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 any
employment agreement which may exist between the
Participant and the Participating Company employing
the 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 Claims for Benefits. The CEO (or his
* delegate) shall review all claims for benefits
under the Plan and the Deferral Agreements. Any
claim for benefits hereunder
* Text Added 8/10/93
which is denied, in whole or in part, shall be
subject to the review and appeals procedures
adopted by BellSouth for * executive and
senior manager benefits. #
* Text Added 8/10/93
# Text Revised 10/1/94
Exhibit A
Deferral Agreement
for the BellSouth Nonqualified Deferred Income Plan
1. Amount of Deferral. I,
, hereby agree to participate in the BellSouth
Nonqualified Deferred Income 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 ____ the sum of
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 any bonus or incentive award
which may be payable to me.
2. Retirement Benefits. In consideration for my
deferral, my 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, my 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, my 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. This election is
irrevocable after November 30 immediately preceding
the Plan Year to which this Agreement pertains:
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. 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.
Accepted by
Employer:
_________________________
____________________________
Signature Signature
_________________________
____________________________
Date Date
Exhibit B
DEFERRAL AGREEMENT
FOR THE BELLSOUTH NONQUALIFIED DEFERRED INCOME PLAN
(For Deferral of Lump-Sum Payments)
THIS AGREEMENT is made this _____ day of
____________, 19 , by and between
(the "Company") and _________________ (the
"Employee");
W I T N E S S E T H:
WHEREAS, the Employee may separate from service
with the Company under the terms of an eligible
separation plan or arrangement sponsored by the
Company (hereinafter, the "Separation Plan"); and
WHEREAS, the BellSouth Nonqualified Deferred
Income Plan (the "Plan") permits the Employee to
elect irrevocably to defer a portion of the lump-sum
separation allowance to which he may become entitled
thereunder, and the Employee 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 Employee 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 Plan shall not
be included in the Employee's "Compensation Rate" as
that term is used in the Plan.
2.
CONDITIONAL DEFERRAL
The deferral election contained herein shall be
irrevocable by the Employee upon its submission to
the Company but shall be expressly conditioned upon
the Employee's separation from service under the
Separation Plan. If the Employee does not separate
from service under the Separation Plan, this
Agreement shall be null and void. Neither the
Company's offering of this deferral opportunity to
the Employee, the Company's acceptance of the
Employee's deferral election contained in this
Agreement, nor any other provision hereof shall in
any way be construed as conferring upon the Employee
any right or entitlement to any payment under the
Separation Plan.
3.
DEFERRAL ELECTION(S)
(a) Subject to the Plan's limitations, the
Employee hereby irrevocably elects to defer from the
lump-sum separation allowance payable under the
Separation Plan Dollars ($
).*
*NOTE: Amount may not exceed __% of the sum of
your current
annual base salary and lump-sum awards received
in the previous twelve (12) months.
YES NO
(b) The Employee hereby irrevocably elects to
defer from the lump-sum separation allowance payable
under the Separation Plan 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
Employee separates from service has not been
satisfied by the time the Employee 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 Plan 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:
Any distributions attributable to deferral(s)
under Schedule B of the Plan shall be made beginning
on in annual payments.
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 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 4 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 Employee has hereunto set his hand, as of the date set
forth above.
EMPLOYEE: THE COMPANY:
By:
Signature Signature
Name (Print) Title
08/07/95/0034744.01
BELLSOUTH CORPORATION
STOCK PLAN
EFFECTIVE APRIL 24, 1995
ARTICLE I. PURPOSE
The purpose of this Plan is to promote the interest of
BellSouth by granting stock-related Awards to Eligible Employees
(1) to attract and retain Eligible Employees,
(2) to provide Eligible Employees with long term financial
incentives to increase the value of BellSouth, and
(3) to provide Eligible Employees with a stake in the
future of BellSouth which corresponds to the stake of each of
BellSouth's shareowners.
Only Eligible Employees shall be eligible for Awards under this
Plan.
ARTICLE II. DEFINITIONS
2.1 Definitions.
Each term set forth in this Article II shall have the
respective meaning set forth opposite such term for purposes of
this Plan, and when the defined meaning is intended the term is
capitalized.
"Administrator" means the Committee or the Company
Administrator, as applicable.
"Agreement" means the written agreement which sets forth the
terms and conditions of the grant of an Award as provided in this
Plan and such additional terms and conditions, not inconsistent
with this Plan, as the Committee determines are appropriate.
"Award" means an Option, SAR, Restricted Share, Performance
Share, Dividend Equivalent Right or Stock Payment granted to a
Participant under this Plan.
"BellSouth" means BellSouth Corporation, a Georgia
corporation.
"Beneficiary" means the person entitled to receive any
payments or exercise any rights following the death of a
Participant as determined pursuant to Section 10.5.
"Board" means the Board of Directors of BellSouth.
"Change in Control" means the occurrence of either of the
following: (i) any "person" (as such term is used in Section
13(c) and 14(d) of the Exchange Act), other than a trustee or
other fiduciary holding securities under an employee benefit plan
of BellSouth or a corporation owned directly or indirectly by the
shareholders of BellSouth in substantially the same proportions
as their ownership of stock of BellSouth, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of BellSouth
representing 20% or more of the total voting power represented by
BellSouth's then outstanding voting securities; or (ii) during
any period of two consecutive years, individuals who at the
beginning of such period constitute the Board and any new
director whose election by the Board or nomination for election
by BellSouth's shareholders was approved by a vote of at least
two-thirds of the directors who either were directors at the
beginning of the two-year period or whose election or nomination
for election was previously so approved, cease for any reason to
constitute a majority thereof.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Committee" means the Nominating and Compensation Committee
of the Board, or any successor committee of the Board which
administers this Plan as provided in Article V.
"Company Administrator" means the chief executive officer of
BellSouth, the senior officer of BellSouth responsible for human
resource matters or such other person or persons as are
designated by the Committee to administer the Plan on behalf of
Participants who are not Officers or Executive Officers.
"Covered Employee" means with respect to any grant of an
Award an Officer whom the Committee deems may be or become a
covered employee as defined in Section 162(m)(3) of the Code for
any year that such Award may result in remuneration to the
Participant and for which year such Participant may receive
remuneration over $1 million which would not be deductible under
Section 162(m) of the Code but for the provisions of the Plan and
any other "qualified performance-based compensation" plan (as
defined under Section 162(m) of the Code) of BellSouth; provided,
however, that the Committee may determine that a Participant has
ceased to be a Covered Employee prior to Settlement of any Award.
"Dividend Equivalent Right" means a right, granted to a
Participant under Section 9.4, to receive cash or Shares based on
the value of dividends paid with respect to a Share.
"Eligible Employee" means any employee (including an
Officer, Executive Officer or director who is an employee and
including for purposes other than ISOs any former employee) of
the Company or any Subsidiary. Such term also includes for
purposes other than ISOs any non-employee advisor, consultant or
independent contractor to the Company or any Subsidiary, and any
references to employment or termination of employment under this
Plan shall be deemed to apply to such an advisor, consultant or
independent contractor, for purposes of this Plan only, as if the
services of such person constitute employment services.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"Executive Officer" means an Officer or other employee or
former employee of BellSouth or a Subsidiary who is subject to
the reporting requirements of Section 16(a) of the Exchange Act.
"Fair Market Value" for any day means the average of the
high and low daily sale prices of a Share on the New York Stock
Exchange for that day or, if there are no sales on such day, for
the most recent prior day on which a Share was sold on the New
York Stock Exchange.
"ISO" or "Incentive Stock Option" means an option granted
under this Plan to purchase Shares which is intended by BellSouth
to satisfy the requirements of Code Section 422.
"NQSO" or "Non-Qualified Stock Option" means an option
granted under this Plan to purchase Shares which is not intended
by BellSouth to be treated as an ISO.
"Officer" means any executive of the Company or any
Subsidiary who is a member of the executive compensation group
under BellSouth's compensation practices (but not necessarily an
Executive Officer.)
"Option" means an NQSO or ISO granted under this Plan.
"Option Price" means the price determined in accordance with
Section 6.4 which shall be paid to purchase one Share upon the
exercise of an Option granted under this Plan.
"Parent Corporation" means any corporation which is a parent
of BellSouth within the meaning of Code Section 424(e).
"Participant" means an Eligible Employee to whom an Award is
made.
"Performance Objective" means as described in Section 10.2 a
performance objective specified in the Agreement for a
Performance Share, or for any other Award which the Administrator
determines to make subject to a performance objective, upon which
the vesting or Settlement of such Award is conditioned.
"Performance Period" means the period of time specified in
an Agreement over which Performance Shares are to be earned.
"Performance Share" means a bookkeeping entry that records
the equivalent of one share awarded pursuant to Section 9.2 of
this Plan.
"Plan" means this BellSouth Corporation Stock Plan, as
effective April 24, 1995 and as thereafter amended from time to
time.
"Prior Plan" means the BellSouth Corporation Stock Option
Plan, the BellSouth Enterprises, Inc. Key Manager Incentive
Compensation Plan, the BellSouth Executive Long Term Incentive
Plan, the BellSouth Corporation Shareholder Return Cash Plan and
the BellSouth Corporation Key Manager Shareholder Return Cash
Plan, as applicable.
"Restricted Period" means the period of time from the date
of grant of a Restricted Share until the lapse of restrictions
attached thereto under the terms of the applicable Agreement.
"Restricted Share" means a Share which has been awarded to a
Participant subject to restrictions under Section 8.1.
"Rule 16b-3" means Rule 16b-3 of the Securities Exchange
Commission under the Exchange Act.
"SAR" or "Stock Appreciation Right" means the contractual
right granted to a Participant pursuant to Section 7.1 to receive
a payment upon the exercise of such right which reflects the
appreciation in the Fair Market Value of the number of Shares for
which such right was granted.
"SAR Exercise Date" means the date on which the exercise of
an SAR occurs under the related Agreement.
"SAR Exercise Price" means the Fair Market Value of a Share
on the SAR Exercise Date.
"SAR Grant Price" means the price which would have been the
Option Price for one Share if the SAR had been granted as an
Option or, if the SAR is granted in tandem with an Option, the
Option Price for the related Option.
"Settlement Date" means (i) with respect to any Option that
has been exercised in whole or in part, the date or dates upon
which Shares are to be delivered to the Participant and the
Option Price therefor paid, (ii) with respect to any SARs that
have been exercised, the date or dates upon which a cash payment
is to be made to the Participant, or in the case of SARs that are
to be settled in Shares, the date or dates upon which such Shares
are to be delivered to the Participant, (iii) with respect to
Performance Shares, the date or dates upon which cash or Shares
are to be delivered to the Participant, (iv) with respect to
Dividend Equivalent Rights, the date upon which payment thereof
is to be made, and (v) with respect to Stock Payments, the date
upon which payment thereof is to be made, in each case,
determined in accordance with the terms of this Plan and the
Agreement under which any such Award was made.
"Share" means a share of Stock.
"Stock" means the $1.00 par value common stock of BellSouth.
"Stock Payment" means payment of compensation in the form of
Shares pursuant to Section 9.3.
"Subsidiary" means (A), with respect to an Award other than
an ISO, 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%) interest in the capital or
profits of such joint venture or partnership, and (B) any
corporation which is a subsidiary corporation (within the meaning
of Code Section 424(f)) of BellSouth by reason of being in an
unbroken chain of corporations (beginning with BellSouth) in
which each corporation in the unbroken chain (except the last
such corporation) owns stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
"Ten Percent Shareowner" means a person who owns (after
taking into account the attribution rules of Code Section 424(d))
more than ten percent (10%) of the total combined voting power of
all classes of stock of either BellSouth, or Subsidiary or a
Parent Corporation.
2.2 References.
All pronouns are masculine, solely for ease of reading, and
should be read as feminine where applicable. Unless the context
clearly requires otherwise, the singular shall include the plural
and the plural shall include the singular. All references to
sections of the Code or other laws or regulations shall include
amendments and successor provisions thereto unless otherwise
specifically stated or clearly required by the context.
ARTICLE III. SHARES SUBJECT TO PLAN
3.1 Aggregate Limits.
The aggregate number of Shares with respect to which the
grant of Awards other than Stock Payments may be made in any
calendar year under this Plan shall not exceed one percent (1%)
of the total number of Shares outstanding at the time of such
grant. Within such total, the aggregate number of Shares with
respect to which the grant of Performance Shares and Restricted
Shares may be made in any calendar year under this Plan shall not
exceed in combination two-tenths of one percent (.2%) of the
total number of Shares outstanding at the time of grant.
Furthermore, in no event shall ISOs with respect to more than one
million (1,000,000) Shares be granted under this Plan. Finally,
the aggregate number of Shares with respect to which the grant of
Stock Payments may be made in any calendar year under this Plan
shall not exceed one-tenth of one percent (.1%) of the total
number of Shares outstanding at the time of grant.
3.2 Individual Limits.
The number of Shares with respect to which the grant of
Awards other than Stock Payments may be made to any Participant
in any calendar year under this Plan shall not exceed one-tenth
of one percent (.1%) of the total number of Shares outstanding at
the end of 1994. Within such total, the number of Shares with
respect to which the grant of each of Performance Shares,
Restricted Shares and Dividend Equivalent Rights may be made to
any Participant in any calendar year under this Plan shall not
exceed in combination two-hundredths of one percent (.02%) of the
total number of Shares outstanding at the end of 1994. Finally,
the number of Shares with respect to which the grant of Stock
Payments may be made to any Participant in any calendar year
under this Plan shall not exceed one-hundredth of one percent
(.01%) of the total number of Shares outstanding at the end of
1994.
3.3 Application of Limits.
No grant of an Award shall be made at any time during a
calendar year to the extent the number of Shares subject to such
Award and the number of Shares subject to Awards previously
granted during such year (or during the life of the Plan in the
case of ISOs) would exceed a limit in Section 3.1 or 3.2. The
number of Shares subject to an Award shall be (i) the number of
Shares subject to an Option or subject to a SAR that is not
granted in tandem with an Option (including a SAR that can be
settled in cash), (ii) the number of Shares subject to a grant of
Restricted Shares, (iii) the maximum number of Shares that could
be issued upon Settlement of a grant of Performance Shares (or
upon which a cash payment could be based) as determined under the
Agreement for such grant and this Plan, (iv) the number of Shares
with respect to which Dividend Equivalent Rights are granted, but
excluding Shares subject to Dividend Equivalent Rights which are
granted in tandem with another Award grant which otherwise does
not provide for the payment of dividends to the Participant, and
(v) the number of Shares that are paid as a Stock Payment.
3.4 Adjustments.
The limits in Sections 3.1 and 3.2 shall be adjusted as
provided in Section 10.6. If any Shares subject to an Award are
forfeited or such Award otherwise terminates, such number of
Shares shall be available for new Awards under the Plan. In
addition, Shares surrendered in payment of any exercise or
purchase price or in payment of taxes relating to any such Award
shall be deemed to constitute Shares not delivered to the
Participant and shall be deemed to be available for new Awards
under the Plan for purposes of Section 3.1 only.
3.4 Shares.
BellSouth shall reserve from time to time Shares for use
under this Plan, and such Shares shall be reserved to the extent
BellSouth deems appropriate from authorized but unissued Shares
and from Shares which have been reacquired by BellSouth.
ARTICLE IV. EFFECTIVE DATE AND DURATION
4.1 Effective Date.
The effective date of this Plan shall be April 24, 1995.
This Plan will become effective only if approved by the
shareholders of BellSouth on such date.
4.2 Prior Plan.
This Plan is a successor to each Prior Plan. No further
grants of stock options, stock appreciation rights, performance
shares, dividend equivalent rights, shareholders return cash
units or other interests shall be made under the Prior Plans on
or after April 24, 1995, subject to this Plan becoming effective.
Options and stock appreciation rights, or performance share,
dividend equivalent rights, shareholders return cash units or
other outstanding interests under a Prior Plan shall continue to
be governed by the terms of the Prior Plan.
4.3 Duration.
This Plan shall terminate on December 31, 2004, unless
earlier terminated by the Board pursuant to Article XI. No Award
shall be granted after the date this Plan terminates. The
applicable terms of this Plan, and any terms and conditions
applicable to Awards granted prior to such date, shall survive
the termination of the Plan and continue to apply to such Awards.
ARTICLE V. ADMINISTRATION
5.1 Administrator.
The Plan shall be administered by the Committee with respect
to Officers and Executive Officers and, subject to regulations
and guidelines that may be established by the Committee, by the
Company Administrator with respect to all other Eligible
Employees. The Committee may adopt such regulations and
guidelines as it deems are necessary or appropriate for the
administration of the Plan. Subject to such rules, regulations
or guidelines, the Company Administrator shall have the power to
adopt rules, regulations and guidelines to permit it to
administer the Plan with respect to Eligible Employees other than
Officers and Executive Officers.
5.2 Committee Responsibilities.
The Committee shall consist of two or more disinterested
directors of BellSouth, who shall be appointed by the Board. A
member of the Board shall be deemed to be "disinterested" only if
he or she satisfies such requirements as the Securities and
Exchange Commission may establish for disinterested
administrators acting under plans intended to qualify for
exemption under Rule 16b-3. No member of the Committee shall be
personally liable for any action, determination, or
interpretation made in good faith with respect to the Plan or
Awards. All members of the Committee shall be fully protected by
BellSouth, to the fullest extent permitted by applicable law, in
respect of any such action, determination or interpretation.
5.3 Administrator Responsibilities.
The Administrator shall (a) determine the amount of all
grants of Awards under this Plan, (b) determine the terms and
conditions of grant Agreements and all election and other forms,
which terms and conditions shall not be inconsistent with this
Plan, (c) interpret the Plan, and (d) make all other decisions
relating to the operation of the Plan. The Administrator may
adopt such rules or guidelines as it deems are appropriate to
implement the Plan. The Administrator's determinations under the
Plan shall be final and binding on all persons.
5.4 Determinations.
All actions taken and all interpretations and determinations
made by the Administrator in good faith shall be final and
binding upon Participants, BellSouth and all other interested
persons.
ARTICLE VI. OPTIONS
6.1 Grant.
Subject to the terms and conditions of this Plan, the
Administrator from time to time may grant such Options to such
Eligible Employees to purchase Shares as the Administrator acting
in its sole discretion deems are appropriate under the
circumstances. Each grant of an Option shall be evidenced by an
Agreement, and each Agreement shall incorporate such terms and
conditions as the Administrator in its sole discretion deems are
consistent with the terms of this Plan, including conditions on
the exercise of such Option which relate to the employment of the
Participant or the requirement that the Participant exchange a
prior outstanding Option and/or SAR; provided, if the
Administrator grants an ISO and NQSO to an Eligible Employee, the
right of the Eligible Employee to exercise one such Option shall
not be conditioned on his failure to exercise the other such
Option. The Administrator may issue new Options equal to the
number of Shares surrendered by a Participant upon exercise of a
previously granted stock option.
6.2 Special Rules to Incentive Stock Options.
The grant of ISO's shall be subject to the following
additional restrictions:
a. Eligible Individuals. Incentive Stock Options shall
only be granted to an Eligible Employee who at the time of grant
is a common law employee of BellSouth or a Subsidiary.
b. Time of Grant. No Incentive Option shall be granted
pursuant to this Plan more than ten (10) years after the
effective date of the Plan under Section 4.1.
c. Annual Limit. The aggregate Fair Market Value
(determined at the time the ISO is granted) of the Shares with
respect to which one or more ISOs are exercisable for the first
time by a Participant during any calendar year under the Plan or
with respect to which any incentive stock options described in
Section 422 of the Code are so first exercisable under any other
stock plan of the Company or a Parent Corporation or any
Subsidiary shall not exceed $100,000 or such other maximum amount
permitted under Section 422 of the Code.
d. Option Term. The term of an ISO shall not exceed ten
(10) years from the date of grant.
f. Ten Percent Shareholder. If any Participant to whom an
ISO is to be granted pursuant to the provisions of the Plan is,
on the date of grant, a Ten Percent Shareholder, then the
following special provisions shall be applicable to the ISO
granted to such individual:
(i) the Option Price of shares subject to such ISO
shall not be less than 110% of Fair Market Value on the date
of grant; and
(ii) the Option shall not have a term in excess of (5)
years from the date of grant.
Any Option purporting to constitute an ISO in violation of the
restrictions in this Section 6.2 shall constitute a NQSO.
6.3 Other Options.
The Administrator may establish rules with respect to, and
may grant to Eligible Employees, Options which comply with any
amendment to the Code providing for special tax benefits for
stock options made after the effective date of this Plan,
provided such rules otherwise are consistent with the terms of
this Plan.
6.4 Option Price.
The Option Price for each Share subject to an Option shall
not be less than the greater of (i) the par value of a Share or
(ii) the Fair Market Value of a Share on the date the Option is
granted.
6.5 Option Period.
Each Option granted under this Plan shall be exercisable at
such time or times as set forth in the related Agreement over the
period which begins on the date such Option is granted, and each
Option shall expire automatically on the earliest of (i) the date
such Option is exercised in full, (ii) the date such Option
expires in accordance with the terms of the related Agreement or
(iii) the date such Option is forfeited or deemed to expire upon
the exercise of any tandem SAR. An Agreement may provide for the
exercise of an Option after the employment of an Eligible
Employee has terminated for any reason whatsoever, including
retirement, death or disability, but such provision shall have no
force or effect whatsoever and shall be inoperative if the
Administrator determines that such termination was for "cause" or
was a result of misconduct in connection with his employment.
6.6 Method of Exercise.
An Option may be exercised by properly completing and
actually delivering to BellSouth an exercise form prescribed by
the Administrator for this purpose, together with payment in full
of the Option Price for the Shares the Participant desires to
purchase through such exercise in the manner specified in the
exercise form. Payment may be made in the form of cash or
Shares, or a combination of cash and Shares, or in the form of
other property as determined by the Administrator. Any Shares
which are tendered in payment shall be valued at their Fair
Market Value on the Settlement Date.
ARTICLE VII. STOCK APPRECIATION RIGHTS
7.1 Grant.
Subject to the terms and conditions of this Plan, the
Administrator may grant a SAR to any Eligible Employee either (i)
in tandem with the grant of an ISO, (ii) in tandem with the grant
of an NQSO or (iii) independent of the grant of an ISO or NQSO.
Each grant of a SAR which is in tandem with the grant of an ISO
or an NQSO shall be evidenced by the same Agreement as the ISO or
NQSO which is granted in tandem with such SAR and such SAR shall
relate to the same number of Shares as such Option. Each SAR
which is granted independent of an ISO or NQSO shall be evidenced
by a separate Agreement which shall state the number of Shares to
which such SAR shall relate and such other terms and conditions
as the Administrator in its sole discretion deems are consistent
with the terms of this Plan, including conditions on the exercise
of such SAR which relate to the employment of the Participant or
the requirement that the Participant exchange a prior outstanding
Option and/or SAR.
7.2 Payment at Exercise.
Upon the settlement of a SAR in accordance with the terms of
the related Agreement, the Participant shall (subject to the
terms and conditions of this Plan and such Agreement) receive a
payment equal to the excess, if any, of the SAR Exercise Price
for the number of Shares of the SAR being exercised at that time
over the SAR Grant Price for such Shares. Such payment may be
made in whole Shares or in cash, or partially in Shares and
partially in cash, as determined under the SAR Agreement. If
payment is made in whole or in part in Shares, such Shares shall
be valued for this purpose at the SAR Exercise Price on the date
the SAR is exercised, and any payment in Shares which calls for a
payment in a fractional Share automatically shall be paid in cash
based on such valuation.
7.3 Special Terms and Conditions.
Each Agreement which evidences the grant of a SAR shall
incorporate such terms and conditions as the Administrator in its
absolute discretion deems are consistent with the terms of this
Plan and the Agreement for the ISOs and NQSOs, if any, granted in
tandem with such SAR except that (i) if a SAR is granted in
tandem with an ISO or a NQSO, the SAR shall be exercisable only
when the related ISO or NQSO is exercisable and (ii) the
Participant's right to exercise a SAR granted in tandem with an
ISO or NQSO shall be forfeited to the extent that he exercises
the related ISO or NQSO and his right to exercise the ISO or NQSO
shall be forfeited to the extent he exercises the related SAR,
but any such forfeiture shall not count as a forfeiture for
purposes of making the Shares subject to such Option or SAR again
available for use under Article III.
ARTICLE VIII. RESTRICTED SHARES
8.1 Grant.
Subject to the terms and conditions of this Plan, the
Administrator may grant Restricted Shares to any Eligible
Employee as provided in this Article VIII. Each grant of
Restricted Shares shall be evidenced by an Agreement which shall
state such terms and conditions as the Administrator deems are
consistent with the terms of this Plan.
8.2 Restrictions.
Restricted Shares shall be subject to such conditions and
restrictions as the Administrator shall determined and specify in
the related Agreement, which may include, but are not limited to,
continued employment with BellSouth or a Subsidiary and
achievement of Performance Objectives, which restrictions may
lapse separately or in combination at such times, under such
circumstances, in such installments, or otherwise, as the
Administrator may determine and so specify. Except to the extent
restricted under the terms of the Plan and the Agreement relating
to the Restricted Shares, a Participant granted Restricted Shares
shall have all of the rights of a shareholder including, without
limitation, the right to vote Restricted Shares and the right to
receive dividends thereon.
8.3 Forfeiture.
If a Participant fails to meet the terms and conditions of
the Agreement for such Restricted Shares during the Restricted
Period, Restricted Shares still subject to restrictions shall be
forfeited, and all rights of the Participant to such Shares shall
terminate without further obligation on the part of BellSouth.
An Agreement may provide that the Restricted Period will end upon
the retirement, death or disability of a Participant while an
employee or upon such other event or events as the Administrator
shall determine or may otherwise provide that such an event will
not result in forfeiture of the Restricted Shares.
8.4 Certificates for Shares.
Restricted Shares granted under the Plan may be evidenced in
such manner as the Administrator shall determine. The
Administrator may place a legend on the Share certificates
referring to such restrictions and may require the Participant,
until the restrictions have lapsed, to keep the Share
certificates, together with duly endorsed stock powers, in the
custody of BellSouth or its transfer agent or to maintain
evidence of Share ownership, together with duly endorsed stock
powers, in a certificateless book-entry account with BellSouth's
transfer agent.
8.5 Adjustments.
Shares distributed in connection with a stock split or stock
dividend, and other property distributed as a dividend or
pursuant to an adjustment under Section 10.6, shall be subject to
restrictions and a risk of forfeiture to the same extent as the
Restricted Shares with respect to which such Shares or other
property has been distributed.
ARTICLE IX. OTHER STOCK RIGHTS
9.1 Grant.
Subject to the terms and conditions of this Plan, the
Administrator may grant Performance Shares, Stock Payments or
Dividend Equivalent Rights as provided in this Article IX. A
grant of Performance Shares and Dividend Equivalent Rights shall
be evidenced by an Agreement, and a grant of Stock Payments may
be evidenced by an Agreement, which Agreement shall contain such
terms and conditions as the Administrator deems are consistent
with the terms of this Plan.
9.2 Performance Shares.
Performance Shares shall become payable to a Participant
based upon the achievement of specified Performance Objectives
and upon such other terms and conditions as the Administrator may
determine and specify in the Agreement evidencing such
Performance Shares.
Each grant shall satisfy the conditions for performance-based
Awards under Section 10.2. A grant may provide for the
forfeiture of Performance Shares in the event of termination of
employment or other events, subject to exceptions for death,
disability, retirement or other events, all as the Administrator
may determine
and specify in the Agreement for such grant. Payment may be made
at such time and in such form, either cash or Shares, or a
combination thereof, as the Administrator shall determine and
specify in the Agreement.
9.3 Stock Payments.
The Administrator may grant Stock Payments to an Eligible
Employee as a bonus or additional compensation or in lieu of the
obligation of the Company or a Subsidiary to pay cash
compensation under other compensatory arrangements, with or
without the election of the Eligible Employee. A Participant
shall have all voting, dividend, liquidation and other rights
with respect to Shares issued to the Participant as a Stock
Payment upon the Participant becoming holder of record of such
Shares; provided, however, the Plan Administrator may impose such
restrictions on the assignment or transfer of such Shares as it
are appropriate and specifies in an Agreement for such Stock
Payment. A Stock Payment shall be subject to such other terms as
the Administrator deems are consistent with the terms of this
Plan and specifies in any Agreement for such Stock Payment.
9.4 Dividend Equivalent Rights.
The Plan Administrator may grant Dividend Equivalent Rights
in tandem with the grant of Options, SARs, or Performance Shares
that otherwise do not provide for the payment of dividends on the
Shares subject to such Awards for the period of time to which
such Dividend Equivalent Rights apply, or may grant Dividend
Equivalent Rights that are independent of any such Award. A
Dividend Equivalent Right granted in tandem with another Award
may be evidenced by the Agreement for such other Award;
otherwise, a Dividend Equivalent Right shall be evidenced by a
separate Agreement. Payment may be made in cash or Shares, or a
combination thereof, may be immediate or deferred, and may be
subject to such employment, Performance Objectives or other
conditions as the Administrator may determine and specify in the
Agreement for such Dividend Equivalent Rights. The total payment
attributable to a Share subject to a Dividend Equivalent Right
shall not exceed one hundred percent (100%) of the equivalent
dividends payable with respect to a Share during the term of such
Dividend Equivalent Right, taking into account any assumed
reinvestment (including assumed reinvestment in Shares) or
interest earnings on such equivalent dividends as determined
under the Agreement in the case of deferred payment, provided
that such percentage may increase to a maximum of two hundred
percent (200%) if the Dividend Equivalent Right is subject to a
Performance Objective as described in Section 10.2.
ARTICLE X. SPECIAL PROVISIONS APPLICABLE TO AWARDS
10.1 Rule 16b-3 Compliance.
(a) Six-Month Holding Period. Unless a Participant could
otherwise exercise a derivative security or dispose of Shares
delivered upon exercise of a derivative security granted under
the Plan without incurring liability under Section 16(b) of the
Exchange Act, (i) Shares delivered under the Plan other than upon
exercise or conversion of a derivative security granted under the
Plan shall be held for at least six months from the date of
acquisition, and (ii), with respect to a derivative security
granted under the Plan, at least six months shall elapse from the
date of acquisition of the derivative security to the date of
disposition of the derivative security (other than upon exercise
or conversion) or its underlying equity security.
(b) Reformation to Comply with Exchange Act Rules. It is
the intent of the Company that this Plan comply in all respects
with applicable provisions of Rule 16b-3 or Rule 16a-1(c)(3)
under the Exchange Act in connection with any grant of Awards to,
or other transaction by, a Participant who is subject to Section
16 of the Exchange Act (except for transactions exempted under
alternative Exchange Act Rules). Accordingly, if any provision
of this Plan or any Agreement relating to an Award does not
comply with the requirements of Rule 16b-3 or Rule 16a-1(c)(3) as
then applicable to any such transaction, such provision will be
construed or deemed amended to the extent necessary to conform to
the applicable requirements of Rule 16b-3 or Rule 16a-1(c)(3) so
that such Participant shall avoid liability under Section 16(b).
10.2 Performance-Based Awards.
(a) General. Each Agreement for the grant of Performance
Shares shall specify the number of Performance Shares subject to
such Agreement, the Performance Period and the Performance
Objective, and each Agreement for the grant of any other Award
that the Administrator determines to make subject to a
Performance Objective similarly shall specify the applicable
number of Shares, the period for measuring performance and the
Performance Objective. Each Agreement for a performance-based
grant shall specify in respect of a Performance Objective the
minimum level of performance below which no payment will be made,
shall describe the method for determining the amount of any
payment to be made if performance is at or above the minimum
acceptable level but falls short of full achievement of the
Performance Objective, and shall specify the maximum percentage
payout under the Agreement. Such maximum percentage in no event
shall exceed one hundred percent (100%) in the case of
performance-based Restricted Shares and two hundred percent
(200%) in the case of Performance Shares or performance-based
Dividend Equivalent Rights.
(b) Performance Objective. The Administrator shall
determine and specify the Performance Objective in the Agreement
for a Performance Share or for any other performance-based Award,
which Performance Objective shall consist of (i) one or more
business criteria, including (except as limited under Section
10.2(c) below for Awards to Covered Employees) financial, service
level and individual performance criteria, and (ii) a targeted
level or levels of performance with respect to such criteria.
Performance Objectives may differ between Participants and
between types of Awards and from year to year.
(c) Additional Rules Applicable to Covered Employees. The
Performance Objective for Performance Shares and any other
performance-based Award granted to a Covered Employee shall be
objective and shall otherwise meet the requirements of Section
162(m)(4)(C) of the Code and shall be based upon the business
criterion of total BellSouth shareholder return as measured
against total shareholder return of a peer group of companies
determined by the Committee. Achievement of this Performance
Objective shall be measured over a period of years not to exceed
ten as specified by the Committee in the Agreement for the
performance-based Award. No business criterion other than that
named above in this Section 10.2(c) may be used in establishing
the performance objective for an Award to a Covered Employee
under this Section 10.2. For each such Award relating to a
Covered Employee, the Committee shall establish the targeted
level or levels of performance for such business criterion. The
Committee may, in its discretion, reduce the amount of a payout
otherwise to be made in connection with an Award under this
Section 10.2(c), but may not exercise discretion to increase such
amount, and the Committee may consider other performance criteria
in exercising such discretion. All determinations by the
Committee as to the achievement of Performance Objectives under
this Section 10.2(c) shall be made in writing. The Committee may
not delegate any responsibility under this Section 10.2(c).
(d) Intent with regard to Code Section 162(m). It is the
intent of BellSouth that, unless otherwise determined by the
Committee, Options, SARs, and Awards subject to Performance
Objectives specified under this Section 10.2, granted under the
Plan to persons who are Covered Employees, shall constitute
"qualified performance-based compensation" within the meaning of
Code Section 162(m) and regulations thereunder. Accordingly,
unless otherwise determined by the Committee, if any provision of
the Plan or any Award agreement relating to such an Award granted
to a Covered Employee does not comply or is inconsistent with the
requirements of Code Section 162(m) or regulations thereunder
(including Proposed Regulation 1.162-27 unless and to the extent
it is superseded by an interim or final regulation), such
provision shall be construed or deemed amended to the extent
necessary to conform to such requirements, and no provision shall
be deemed to confer upon the Committee or any other person
discretion to increase the amount of compensation otherwise
payable to a Covered Employee in connection with any such Award
upon attainment of the Performance Objectives.
10.3 Change of Control.
The Administrator shall have the right in its sole
discretion to include with respect to any Award granted to a
Participant under this Plan provisions accelerating the vesting
or Settlement of such Award upon a Change of Control, subject to
the restrictions on dispositions of equity securities set forth
in Sections 10.1(a) and 12.1. Such acceleration rights may be
included as part of the Agreement for such Award or may be
included at any time after the Award has been granted to the
Participant. Such acceleration rights may include, or be made
subject to, such restrictions as the Administrator may deem are
appropriate to avoid or ameliorate the federal income tax impact
of excess parachute payments as defined in Section 280G(b) of the
Code.
10.4 Transferability During Lifetime.
During the lifetime of a Participant to whom an Award is
granted, only the Participant (or such Participant's legal
representative) may exercise or receive payment of an Award;
provided, however, that the Administrator may permit transfers of
NQSOs and SARs for estate planning purposes if and to the extent
such transfers do not cause a Participant subject to Section 16
of the Exchange Act who then or thereafter has transactions with
respect to such Option or SAR to lose the benefit of the
exemption under Rule 16b-3 for such transactions or violate other
rules or regulations of the Securities and Exchange Commission or
the Internal Revenue Service or materially increase the cost of
BellSouth's compliance with such rules or regulations. No Award
(other than unrestricted Stock Payments upon receipt) may be
sold, assigned, transferred (except as provided in the sentence
above), exchanged, or otherwise encumbered or made subject to any
creditor's process, whether voluntary, involuntary or by
operation of law, and any attempt to do so shall be of no effect.
10.5 Transfers to Death Beneficiary.
In the event of a Participant's death, all of such person's
outstanding Awards, including his or her rights to receive any
accrued but unpaid Stock Payments, will transfer to the maximum
extent permitted by law to such person's Beneficiary (except to
the extent a permitted transfer of a NQSO or SAR previously was
made pursuant to Section 10.4.) Each Participant may name, from
time to time, any beneficiary or beneficiaries (which may be
named contingently or successively) as his or her Beneficiary for
purposes of this Plan. Each designation shall be on a form
prescribed by the Administrator, will be effective only when
delivered to BellSouth, and when effective will revoke all prior
designations by the Participant. If a Participant dies with no
such beneficiary designation in effect, such person's Beneficiary
shall be his or her estate and such person's Awards will be
transferable by will or pursuant to laws of descent and
distribution applicable to such person.
10.6 Adjustments.
In the event that the Administrator shall determine that any
dividend or other distribution (whether in the form of cash,
Shares, or other property), recapitalization, forward or reverse
split, reorganization, merger, consolidation, spin-off,
combination, repurchase, or share exchange, or other similar
corporate transaction or event, affects Shares such that an
adjustment is appropriate in order to prevent dilution or
enlargement of the rights of Participants under this Plan, then
the Administrator, in such manner as it may deem equitable, shall
adjust any or all of (i) the number and kind of shares which may
thereafter be delivered in connection with Awards, (ii) the
number and kind of shares that may be delivered or deliverable in
respect of outstanding Awards, (iii) the number and kind of
shares with respect to which Awards may be granted as set forth
in Article III, and (iv) the exercise price, grant price, or
purchase price relating to any Award, or, if deemed appropriate,
make provision for a cash payment with respect to any outstanding
Award. Any such adjustment made by the Administrator, including
any cancellation of an outstanding Award made as part of such
adjustment, will be final and binding.
ARTICLE XI. AMENDMENTS AND TERMINATION
The Board shall have the right to amend, modify, suspend or
terminate the Plan at any time; provided, that following the
approval of the Plan by BellSouth shareholders, this Plan may not
be amended without further approval by shareholders with respect
to the amount, timing, Option Price or method for determining
Fair Market Value of Shares, and related provisions with respect
to tandem SARs, or in any way to (a) extend the maximum life of
the Plan under Section 4.3,(b) change the class of persons
eligible for Awards or to otherwise materially modify (within the
meaning of Rule 16b-3) the requirements as to eligibility for
participation in this Plan, or (c) otherwise materially increase
(within the meaning of Rule 16b-3 of the Exchange Act) the
benefits accruing under this Plan. No enactment, modification,
suspension or termination of the Plan shall alter or impair any
Awards previously granted under this Plan without the consent of
the holder thereof, unless otherwise required by law. It is
conclusively presumed for this purpose that any adjustment for
changes in capitalization pursuant to Section 10.6 of this Plan
does not affect any right of the holder of an Award.
Notwithstanding approval by shareholders, the Board may amend
this Plan without further shareholder approval to add provisions
required or enabled by changes to Rule 16b-3.
ARTICLE XII. GENERAL PROVISIONS
12.1 Stock Restrictions.
BellSouth shall have the right under this Plan to restrict
or otherwise delay the issuance of any Shares purchased or paid
under this Plan until the requirements of any applicable laws or
regulations and any stock exchange requirements have been in
BellSouth's judgment satisfied in full. Furthermore, any Shares
which are issued as a result of purchases or payments made under
this Plan shall be issued subject to such restrictions and
conditions on any resale and any other disposition as BellSouth
shall deem necessary or desirable under any applicable laws or
regulations or in light of any stock exchange requirements.
12.2 Term of Service.
The granting of an Award to a Participant under this Plan
shall not obligate BellSouth to provide that Participant upon the
termination of his or her employment with any benefit whatsoever
except as provided under the terms and conditions of that Award
or obligate the Participant to remain an employee.
12.3 No Shareholder Rights.
No Award shall confer on any Participant, or anyone claiming
on his behalf, any of the rights of a shareholder of BellSouth
unless and until Shares are duly issued or transferred on the
books of BellSouth in accordance with the terms and conditions of
the Award.
12.4 Unfunded Plan.
This Plan shall be unfunded and BellSouth shall not be
required to segregate any assets that may at any time be
represented by Awards under this Plan. Neither BellSouth, its
affiliates, the Administrator, nor the Board shall be deemed to
be a trustee of any amounts to be paid under this Plan nor shall
anything contained in this Plan or any action taken pursuant to
its provisions create or be construed to create a fiduciary
relationship between any such party and a Participant or anyone
claiming on his or her behalf. To the extent a Participant or
any other person acquires a right to receive payment pursuant to
an Award under this Plan, such right shall be no greater than the
right of an unsecured general creditor of BellSouth.
12.5 Taxes.
BellSouth or any Subsidiary shall withhold from any payment
of cash or Shares to a Participant or other person under this
Plan an amount sufficient to cover any withholding taxes which
may become required with respect to such payment. BellSouth or
any Subsidiary shall have the right to require the payment of any
such taxes and require that any person furnish information deemed
necessary by BellSouth or any Subsidiary to meet any tax
reporting obligation before making any payment pursuant to an
Award.
12.6 Binding Effect.
The provisions of this Plan, and any applicable Agreement,
election, Beneficiary designation or other related document,
shall be binding upon each Participant and any of his
Beneficiaries, transferees, heirs, assignees, distributees,
executors, administrators, personal representatives or any other
person claiming any rights under this Plan. Any such person
claiming any rights under this Plan shall be subject to the terms
and conditions of this Plan and all such documents and such other
terms and conditions, not inconsistent with this Plan, as the
Administrator may impose pursuant to Article V.
12.7 Choice of Law and Venue.
This Plan and all related documents shall be governed by,
and construed in accordance with, the laws of the State of
Georgia (except to the extent provisions of federal law may be
applicable.) Acceptance of an Award shall be deemed to
constitute consent to the jurisdiction and venue of the Superior
Court of Fulton County, Georgia and the United States District
Court for the Northern District of Georgia for all purposes in
connection with any suit, action, or other proceeding relating to
such Award, including the enforcement of any rights under this
Plan or any Agreement or other document, and shall be deemed to
constitute consent to any process or notice of motion in
connection with such proceeding being served by certified or
registered mail or personal service within or without the State
of Georgia, provided a reasonable time for appearance is allowed.
EXHIBIT 11
BellSouth Corporation
Computation of Earnings Per Share
For the Three Month For the Six Month
Periods Ended June Periods Ended June
30, 30,
1995 1994 1995 1994
Earnings Per Common Share:
Income Before $556,817,981 $516,518,038 $1,103,899,325 $1,101,818,096
Extraordinary
Losses
Extraordinary
Loss for
Discontinuance
of Statement
of (2,717,664,443) --- (2,717,664,443) ---
Financial
Accounting
Standards
No. 71, net
of tax
Extraordinary
Loss on Early
Extinguishment
of (15,802,834) --- (15,802,834) ---
Debt, net of
tax
Net (2,176,649,296)516,518,038(1,629,567,952) 1,101,818,096
Income\(Loss)
Weighted
average shares496,371,385 496,168,530 496,335,387 496,141,208
outstanding
Incremental
shares from
assumed
exercise of
stock
options and 483,124 463,125 414,177 418,228
payment of
performance
share awards
Total Shares 496,854,509 496,631,655 496,749,564 496,559,436
Earnings Per
Common
Share Before $1.12 $1.04 $2.22 $2.22
Extraordinary
Losses
Extraordinary
Loss for
Discontinuance
of (5.47) --- (5.47) ---
Statement of
Financial
Accounting
Standards
No. 71, net
of tax
Extraordinary
Loss on
Early (0.03) --- (0.03) ---
Extinguishment
of
Debt, net of
tax
Earnings\(Loss)
Per (4.38) 1.04 (3.28) 2.22
Common Share
EXHIBIT 11
BellSouth Corporation
Computation of Earnings Per Share (continued)
For the Three Month For the Six Month
Periods Ended June Periods Ended June
30, 30,
1995 1994 1995 1994
Fully Diluted Earnings Per Common Share:
Income Before $556,817,981 $516,518,038 $1,103,899,325 $1,101,818,096
Extraordinary
Losses
Extraordinary
Loss for
Discontinuance
of (2,717,664,443) --- (2,717,664,443) ---
Statement of
Financial
Accounting
Standards
No. 71, net
of tax
Extraordinary
Loss on
Early
Extinguishment(15,802,834) --- (15,802,834) ---
of
Debt, net of
tax
Net (2,176,649,296) 516,518,038 (1,629,567,952) 1,101,818,096
Income\(Loss)
Weighted
average shares496,371,385 496,168,530 496,335,387 496,141,208
outstanding
Incremental
shares from
assumed
exercise of
stock
options and 587,269 529,546 625,952 546,427
payment of
performance
share awards
Total Shares 496,958,654 496,698,076 496,961,339 496,687,635
Fully Diluted
Earnings
Per Common
Share $1.12 $1.04 $2.22 $2.22
Before
Extraordinary
Losses
Extraordinary
Loss for
Discontinuance
of (5.47) --- (5.47) ---
Statement of
Financial
Accounting
Standards
No. 71, net
of tax
Extraordinary
Loss on
Early (0.03) --- (0.03) ---
Extinguishment
of
Debt, net of
tax
Fully Diluted
Earnings\(Loss) (4.38) 1.04 (3.28) 2.22
Per
Common Share
EXHIBIT 12
BellSouth Corporation
Computation Of Earnings To Fixed Charges
(Dollars In Millions)
For the
Six
Months Year Ended December 31,
Ended
June 30,
1995 1994 1993 1992 1991 1990
1. Earnings
(a) Income
from continuing
operations before $2,189.9 $4,068.8 $2,318.2 $3,353.6 $3,086.1 $3,179.4
deductions for
taxes and
interest
(b) Portion of
rental expense
representative of 47.1 100.4 103.4 104.1 92.5 94.0
interest factor
(c) Equity in
losses from less-
than-50% owned
investments
(accounted for 69.6 78.9 45.4 23.4 --- ---
under the equity
method of
accounting)
(d) Excess of
earnings over
distributions of
less-than-50%-
owned investments
(accounted for (39.7) (53.1) (37.4) (15.4) --- ---
under the equity
mehtod of
accounting)
TOTAL $2,266.9 $4,195.0 $2,429.6 $3,465.7 $3,178.6 $3,273.4
2. Fixed Charges
(a) Interest $367.4 $685.8 $712.3 $761.3 $824.6 $796.0
(b) Portion of
rental expense
representative of
interest factor 47.1 100.4 103.4 104.1 92.5 94.0
TOTAL $414.5 $786.2 $815.7 $865.4 $917.1 $890.0
Ratio (1
divided by 2) 5.47 5.34 2.98 4.00 3.47 3.68
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<NAME> BELLSOUTH CORPORATION
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0
0
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<SALES> 232
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<INCOME-PRETAX> 1,830
<INCOME-TAX> 726
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<EXTRAORDINARY> (2,734)
<CHANGES> 0
<NET-INCOME> (1,630)
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