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 September 30, 1996
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 58-153343
(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 the registrant (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 October 31, 1996, a total of 993,425,212 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 10
2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 12
Results of Operations 13
Volumes of Business 13
Operating Revenues 15
Operating Expenses 16
Other Income Statement Items 18
Financial Condition 19
Regulatory Developments and Competition 20
Federal Developments 20
State Developments 21
Business Developments 22
Part II
6. Exhibits and Reports on Form 8-K 23
PART I - FINANCIAL INFORMATION
BELLSOUTH CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Millions, Except Per Share Amounts)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
Operating Revenues:
Network and related services:
Local service $ 2,061 $ 1,857 $ 6,012 $ 5,419
Interstate access 892 805 2,672 2,406
Intrastate access 207 230 627 683
Toll 195 220 600 767
Wireless communications 723 665 2,039 1,888
Directory advertising and
publishing 415 366 1,100 1,108
Other services 336 289 940 850
Total Operating Revenues 4,829 4,432 13,990 13,121
Operating Expenses:
Cost of services and
products 1,516 1,542 4,483 4,530
Depreciation and
amortization 940 874 2,760 2,568
Selling, general and
administrative 1,172 958 3,175 2,774
Total Operating Expenses 3,628 3,374 10,418 9,872
Operating Income 1,201 1,058 3,572 3,249
Interest Expense 177 172 531 532
Gain on Sale of Paging
Business -- -- 442 --
Other Income, net 32 53 84 51
Income Before Income Taxes
and Extraordinary Losses 1,056 939 3,567 2,768
Provision for Income Taxes 425 380 1,337 1,105
Income Before Extraordinary
Losses 631 559 2,230 1,663
Extraordinary Loss for
Discontinuance of SFAS No.
71, net of tax -- -- -- (2,718)
Extraordinary Loss on Early
Extinguishment of Debt, net
of tax -- -- -- (16)
Net Income (Loss) $ 631 $ 559 $ 2,230 $(1,071)
BELLSOUTH CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Continued)
(Unaudited)
(In Millions, Except Per Share Amounts)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
Weighted Average Common
Shares Outstanding 994 993 994 993
Dividends Declared Per Common
Share $ .36 $ .36 $ 1.08 $ 1.05
Earnings (Loss) Per Share:
Income Before Extraordinary
Losses $ .63 $ .56 $ 2.24 $ 1.67
Extraordinary Loss for
Discontinuance of SFAS No.
71, net of tax -- -- -- (2.73)
Extraordinary Loss on Early
Extinguishment of Debt, net
of tax -- -- -- (.02)
Earnings (Loss) Per Share $ .63 $ .56 $ 2.24 $(1.08)
The accompanying notes are an integral part of these financial statements.
BELLSOUTH CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Millions, Except Per Share Amounts)
September 30, December 31,
1996 1995
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 1,338 $ 1,711
Temporary cash investments 44 71
Accounts receivable, net of allowance for
uncollectibles of $162 and $171 3,846 3,772
Material and supplies 416 430
Other current assets 404 521
6,048 6,505
Investments and Advances 2,563 2,418
Property, Plant and Equipment:
Property, Plant and Equipment 49,232 46,869
Accumulated Depreciation 27,625 25,777
21,607 21,092
Intangible Assets, net 1,321 1,527
Deferred Charges and Other Assets 529 338
Total Assets $ 32,068 $ 31,880
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Debt maturing within one year $ 2,219 $ 2,951
Accounts payable 1,357 1,724
Other current liabilities 2,671 2,715
6,247 7,390
Long-Term Debt 7,878 7,924
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 1,728 1,650
Unamortized investment tax credits 297 355
Other liabilities and deferred credits 2,860 2,736
4,885 4,741
Shareholders' Equity:
Common stock, $1 par value 1,009 1,007
Paid-in capital 7,664 7,619
Retained earnings 5,262 4,099
Shares held in trust (409) (374)
Guarantee of ESOP debt (468) (526)
13,058 11,825
Total Liabilities and Shareholders' Equity $ 32,068 $ 31,880
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 Nine Months
Ended September 30,
1996 1995
Cash Flows from Operating Activities:
Net income (loss) $ 2,230 $(1,071)
Adjustments to net income (loss):
Extraordinary loss for discontinuance of SFAS
No. 71 -- 4,449
Extraordinary loss on early extinguishment of
debt -- 26
Depreciation and amortization 2,760 2,568
Gain on sale of paging business (442) --
Net losses and dividends from unconsolidated
affiliates 174 143
Provision for losses on bad debts 180 159
Deferred income taxes and amortization of
investment tax credits 78 (1,683)
Net change in:
Accounts receivable and other current assets (295) (308)
Accounts payable and other current liabilities (472) (279)
Deferred charges and other assets (193) (14)
Deferred credits and other liabilities 178 261
Other reconciling items, net (20) (45)
Net cash provided by operating activities 4,178 4,206
Cash Flows from Investing Activities:
Capital expenditures (3,327) (2,823)
Proceeds from sale of paging business 930 --
Proceeds from disposition of short-term
investments 254 124
Purchases of short-term investments (228) (151)
Investment dispositions and repayments of
advances 16 111
Investments in and advances to unconsolidated
affiliates (282) (401)
Other investing activities, net (35) (47)
Net cash used for investing activities (2,672) (3,187)
Cash Flows from Financing Activities:
Proceeds from short-term borrowings 18,998 14,394
Repayments of short-term borrowings (19,320) (14,802)
Proceeds from long-term debt 67 835
Repayments of long-term debt (535) (376)
Dividends paid (1,073) (1,027)
Other financing activities, net (16) --
Net cash used for financing activities (1,879) (976)
Net Increase (Decrease) in Cash and Cash
Equivalents (373) 43
Cash and Cash Equivalents at Beginning of Period 1,711 606
Cash and Cash Equivalents at End of Period $ 1,338 $ 649
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.
These consolidated financial statements include estimates and
assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities and
the amounts of revenues and expenses. Actual results could differ
from those estimates. 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 reports on Form
10-Q.
BELLSOUTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(In Millions, Except Per Share Amounts)
Note B -- BellSouth Corporation Consolidated Shareholders' Equity
Number of
Shares Amount
Shares Shares Guaran-
Held in Held tee of
Common Trust/ Common Paid-in Retained in ESOP
Stock Treasury Stock Capital Earnings Trust Debt
(1) (1)
Balance at
December 31, 1995 1,007 (13) $1,007 $7,619 $4,099 $(374) $(526)
Net Income 2,230
Dividends declared (1,074)
Shares issued for:
Employee benefit
plans 1 1 20
Grantor Trusts 1 (1) 1 34 (35)
Treasury shares
purchased (1) (30)
ESOP activities
and related tax
benefit 7 58
Foreign currency
translation
adjustment ______ ______ ______ 21 ________ ______ _______
Balance at
September 30, 1996 1,009 (15) $1,009 $7,664 $5,262 $(409) $(468)
(1) Such shares are not considered to be outstanding for financial
reporting purposes. As of September 30, 1996 there were
approximately 14 million shares held in trust and 1 million
treasury shares held by the company.
BELLSOUTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(In Millions, Except Per Share Amounts)
Note C -- Supplemental Cash Flow Information
For the Nine Months
Ended September 30,
1996 1995
Cash Paid For:
Income taxes $1,074 $ 932
Interest $ 529 $ 566
Noncash Investing and Financing Activities:
Shares issued to grantor trusts $ 35 $ 38
Note D -- Sale of Paging Subsidiary
In January 1996, BellSouth sold to MobileMedia Corporation its
paging subsidiary, Mobile Communications Corporation of America
(MCCA), and its two-way nationwide narrowband personal
communications services license for a total of $930. The pretax
gain on such sale was $442.
For the three- and nine-month periods ended September 30,
1995, MCCA's total operating revenues were $92 and $257,
respectively. Total operating expenses for the same periods were
$81 and $228, respectively. Total assets at December 31, 1995 were
$355.
Note E -- Extraordinary Losses
Discontinuance of SFAS No. 71. In the second quarter 1995,
BellSouth Telecommunications, Inc. (BellSouth Telecommunications)
discontinued application of SFAS No. 71 and recorded a non-cash
extraordinary charge of $2,718 (net of a deferred tax benefit of
$1,731). The components of the charge included a $3,002 (after tax)
reduction of telephone plant partially offset by a $194 (after tax)
benefit for a change in the method by which BellSouth
Telecommunications reported its directory publishing revenues, a
$71 (after tax) benefit reflecting the removal of regulatory assets
and liabilities that were recorded as a result of previous actions
by regulators and a $19 (after tax) benefit 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 1995,
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. As a result
of the early extinguishment of this issue, an extraordinary loss of
$16 (net of taxes of $10) was recognized in the second quarter
1995.
BELLSOUTH CORPORATION
SELECTED OPERATING DATA
(Unaudited)
Percent Change
1996 vs. 1995 vs.
1996 1995 1994
Network Access Lines in Service at September 30 (Thousands)(a):
By Type:
Residence 15,039 3.4% 3.5%
Business 6,639 8.5 7.7
Other 265 3.5 0.8
Total Access Lines 21,943 4.9 4.7
By State:
Florida 5,815 5.5 4.6
Georgia 3,738 6.5 6.0
Tennessee 2,525 4.7 4.4
North Carolina 2,192 5.2 5.7
Louisiana 2,170 3.5 3.8
Alabama 1,846 3.8 3.9
South Carolina 1,338 4.1 4.0
Mississippi 1,190 3.2 3.8
Kentucky 1,129 3.4 3.7
Total Access Lines 21,943 4.9 4.7
Percent Change for
the Periods Ended
1996 vs. 1995 vs.
1996 1995 1994
Access Minutes of Use (Millions)(a)(b):
Interstate:
Three months ended March 31 16,660 10.1% 7.7%
Three months ended June 30 16,847 8.0 8.2
Three months ended September 30 16,966 8.0 8.5
Nine months ended September 30 50,473 8.7 8.1
Intrastate:
Three months ended March 31 5,118 13.0 13.1
Three months ended June 30 5,235 9.3 14.7
Three months ended September 30 5,348 9.5 13.8
Nine months ended September 30 15,701 10.5 13.9
Total Minutes of Use:
Three months ended March 31 21,778 10.8 8.9
Three months ended June 30 22,082 8.3 9.6
Three months ended September 30 22,314 8.3 9.7
Nine months ended September 30 66,174 9.1 9.4
Toll Messages (Millions)(a):
Three months ended March 31 281 (24.1) (4.3)
Three months ended June 30 258 (26.7) (11.4)
Three months ended September 30 252 (23.6) (14.9)
Nine months ended September 30 791 (24.8) (10.2)
BELLSOUTH CORPORATION
SELECTED OPERATING DATA (Continued)
(Unaudited)
(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.
Percent Change
1996 vs. 1995 vs.
1996 1995 1994
Cellular Customers Served at September 30(Equity basis)(Thousands)(c):
Domestic Cellular 3,333 31.0% 31.9%
International Cellular 1,110 101.8 77.9
(c) Includes customers served based on BellSouth's ownership
percentage in all markets served.
For the Nine
Months Ended
September 30,
1996
Ratio of Earnings to Fixed Charges (d) 6.8
(d) For the purpose of this ratio: (i) earnings have been
calculated by adding income before income taxes, 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 reports 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 geographic areas,
called Local Access and Transport Areas (LATAs), and provides
network access services to enable interLATA and intraLATA
communications using the long-distance facilities of interexchange
carriers. Through subsidiaries, other telecommunications services
and products are provided primarily within the nine-state BellSouth
Telecommunications region. BellSouth Enterprises, Inc. (BellSouth
Enterprises), another wholly-owned subsidiary, owns businesses
providing primarily wireless and international communications
services and advertising and publishing products.
Approximately 71% of BellSouth's Total Operating Revenues for each
of the nine-month periods ended September 30, 1996 and 1995 were
from wireline services provided by BellSouth Telecommunications.
Charges for local, access and toll services for the nine-month
period ended September 30, 1996 accounted for approximately 61%,
33% and 6%, respectively, of the wireline revenues discussed above.
Revenues from wireless communications services and directory
advertising and publishing services accounted for approximately 15%
and 8%, respectively, of Total Operating Revenues for the nine
months ended September 30, 1996. The remainder of such revenues
was derived principally from other nonregulated services provided
by BellSouth Telecommunications.
RESULTS OF OPERATIONS
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
1996 1995 1996 1995
Income Before Extraordinary
Losses $ 631 $ 559 $ 2,230 $ 1,663
Extraordinary Loss for
Discontinuance of SFAS No.
71, net of tax -- -- -- (2,718)
Extraordinary Loss on Early
Extinguishment of Debt, net
of tax -- -- -- (16)
Net Income (Loss) $ 631 $ 559 $ 2,230 $(1,071)
Earnings (Loss) Per Share:
Income Before Extraordinary
Losses $ .63 $ .56 $ 2.24 $ 1.67
Extraordinary Loss for
Discontinuance of SFAS No.
71, net of tax -- -- -- (2.73)
Extraordinary Loss on Early
Extinguishment of Debt, net
of tax -- -- -- (.02)
Earnings (Loss) Per Share $ .63 $ .56 $ 2.24 $(1.08)
For the three and nine-month periods ended September 30, 1996,
Income Before Extraordinary Losses increased by $72 (12.9%) and
$567 (34.1%), respectively, and Income Before Extraordinary Losses
Per Share increased $.07 (12.5%) and $.57 (34.1%), respectively.
The increase for the three-month period resulted primarily from
continued strong growth in key business volumes and expense savings
primarily attributable to employee reductions under BellSouth
Telecommunications' restructuring and work force reduction plans.
The increase for the nine-month period resulted primarily from the
$344 gain ($.35 per share) on sale of BellSouth's paging business
(see Note D to the Consolidated Financial Statements) as well as
the growth in key business volumes and expense savings previously
noted.
For a description of the second quarter 1995 extraordinary losses,
see Note E to the Consolidated Financial Statements.
Volumes of Business
The total number of access lines in service as of September 30,
1996 increased by approximately 1,019,000 (4.9%) since September
30, 1995 to 21,943,000, compared to a 4.7% rate of increase for the
same period a year ago. Business and residence access lines
increased by 8.5% and 3.4%, respectively, compared to growth rates
of 7.7% and 3.5% in 1995. The number of second residence lines,
included in total residence lines, increased by 280,000 (23.5%) to
1,474,000 and accounted for approximately 57.4% and 27.5% of the
overall increases in residence access lines and total access lines,
respectively, since September 30, 1995. Such second residence
lines are generally used for home office purposes, access to on-
line computer services and children's phones. 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, both interstate and intrastate, using
BellSouth Telecommunications' local facilities. Total access
minutes of use increased by 1,715 million (8.3%) and 5,528 million
(9.1%) for the three- and nine-month periods ended September 30,
1996, respectively, compared to increases of 9.7% and 9.4% 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 nine-
month periods ended September 30, 1996, toll messages decreased by
78 million (23.6%) and 261 million (24.8%), respectively, compared
to decreases of 14.9% and 10.2% for the corresponding periods in
1995. The decrease in 1996 was primarily attributable to the
expansion of local area calling plans (LACPs) in Florida, Georgia
and North Carolina and also to increased competition from
interexchange carriers in the intraLATA toll market. While the
respective impacts of such factors cannot be precisely quantified,
BellSouth estimates that about 70% of the decline in toll messages
was attributable to expanded LACPs and about 30% was due to
increased competition.
The expanded LACPs discussed above 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. Expanded LACPs 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 789,000
(31.0%) since September 30, 1995 to 3,333,000 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 6.4% at September 30, 1995 to
8.2% at September 30, 1996. Total minutes of use have also
continued to increase and average minutes of use per cellular
customer have remained essentially unchanged from third quarter
1995, with stimulation due to promotions being substantially offset
by the continuing trend of increased penetration into lower-usage
market segments.
Since September 30, 1995, the number of international cellular
customers increased by 560,000 (101.8%) to 1,110,000. 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.
Operating Revenues
Total Operating Revenues increased $397 (9.0%) and $869 (6.6%) for
the three- and nine-month periods ended September 30, 1996,
respectively, when compared to the corresponding 1995 periods. The
components of Total Operating Revenues were as follows:
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
1996 1995 1996 1995
Local Service $2,061 $1,857 $ 6,012 $ 5,419
Interstate Access 892 805 2,672 2,406
Intrastate Access 207 230 627 683
Toll 195 220 600 767
Wireless Communications 723 665 2,039 1,888
Directory Advertising and
Publishing 415 366 1,100 1,108
Other Services 336 289 940 850
Total Operating Revenues $4,829 $4,432 $13,990 $13,121
Local Service revenues increased $204 (11.0%) and $593 (10.9%) for
the three- and nine-month periods ended September 30, 1996,
respectively, as compared to the same 1995 periods. The increases
for both periods were due primarily to 4.9% growth in access lines
in service since September 30, 1995 and the effect of expanded
LACPs. Also contributing were increases of approximately $80 and
$170, for the three- and nine-month periods, respectively, due to
higher customer demand for Touchstar and Custom Calling services,
including those offered under the Complete Choicesm plan.
Interstate Access revenues increased $87 (10.8%) and $266 (11.1%)
for the three- and nine-month periods ended September 30, 1996,
respectively, as compared to the same prior year periods. The
increases for both periods were attributable primarily to growth in
minutes of use of 8.0% and 8.7%, respectively, and, for the nine-
month period ended September 30, 1996, net rate activity, which
increased revenues by $30.
Intrastate Access revenues decreased $23 (10.0%) and $56 (8.2%) for
the three- and nine-month periods ended September 30, 1996,
respectively, when compared to the corresponding 1995 periods. The
decreases were due primarily to rate reductions of $37 and $110,
respectively, compared with the same 1995 periods, partially offset
by increases attributable to growth in minutes of use of 9.5% and
10.5%, respectively.
Toll revenues decreased $25 (11.4%) and $167 (21.8%) for the three-
and nine-month periods ended September 30, 1996 when compared to
the same prior year periods. The decreases were primarily
attributable to the expansion of LACPs and increased competition,
the effect of which reduced toll messages by 23.6% and 24.8% in the
three- and nine-month periods, respectively. The decreases were
lessened as a result of a retroactive independent company
settlement during third quarter 1995 which reduced revenues by $31
in both the three- and nine-month periods.
Wireless Communications revenues include revenues from the
consolidated wireless communications businesses (cellular and, for
1995, 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, net.)
Wireless Communications revenues increased $58 (8.7%) and $151
(8.0%) for the three- and nine-month periods ended September 30,
1996, 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 cellular markets,
partially offset by the effect of the January 1996 sale of
BellSouth's paging business. For the three- and nine-month periods
ended September 30, 1995, revenues from paging services were $92
and $257, respectively. Excluding the effects of the sale of the
paging business, Wireless Communications revenues increased 26.2%
and 25.0% for the three- and nine-month periods, respectively.
Directory Advertising and Publishing revenues increased $49 (13.4%)
and decreased $8 (.7%) for the three- and nine-month periods ended
September 30, 1996, respectively, when compared to the same prior
year periods. The increase for the three-month period was due
primarily to changes in the issue dates of certain directories and
volume growth which increased revenues in the quarter ended
September 30, 1996 by $25 and $24, respectively. The decrease for
the nine-month period was due primarily to a $41 reduction
resulting from the adoption of issue basis accounting, effective in
the third quarter of 1995, for all directory revenues in connection
with the discontinuance of Statement of Financial Accounting
Standards (SFAS) No. 71, "Accounting for the Effects of Certain
Types of Regulation," and changes in the issue dates of certain
directories which decreased revenues in the nine-month period by
$24. The decrease for the nine-month period was partially offset by
increased revenues attributable to volume growth of $57.
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 $47 (16.3%)
and $90 (10.6%) for the three- and nine-month periods ended
September 30, 1996, respectively, when compared to the
corresponding 1995 periods. The increases for the three- and nine-
month periods were primarily attributable to increased CPE sales,
billing and collection services and other non-regulated services
offered by BellSouth Telecommunications partially offset by the
sale of a subsidiary which performed computer maintenance. The
increase for the nine-month period was also due to incremental rate
impacts related to potential sharing under certain state regulatory
plans.
Operating Expenses
Total Operating Expenses increased $254 (7.5%) and $546 (5.5%) for
the three- and nine-month periods ended September 30, 1996 compared
to the same periods in 1995. The components of Total Operating
Expenses were as follows:
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
1996 1995 1996 1995
Depreciation and Amortization $ 940 $ 874 $ 2,760 $ 2,568
Other Operating Expenses:
Cost of Services and
Products 1,516 1,542 4,483 4,530
Selling, General and
Administrative 1,172 958 3,175 2,774
2,688 2,500 7,658 7,304
Total Operating Expenses $ 3,628 $ 3,374 $10,418 $ 9,872
Depreciation and Amortization increased $66 (7.6%) and $192 (7.5%)
for the three- and nine-month periods ended September 30, 1996,
respectively, compared to the same periods in 1995. The increases
were due primarily to higher levels of property, plant and
equipment since September 30, 1995, and, in the case of the nine-
month period, shorter depreciable lives subsequent to the
discontinuance of SFAS No. 71. The higher levels of property, plant
and equipment resulted from continued growth in the customer base
for wireless and wireline services and continued modernization of
the networks.
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 $188 (7.5%) and $354 (4.8%) for the three- and
nine-month periods ended September 30, 1996, respectively, when
compared to the corresponding 1995 periods. The increases are
primarily related to growth in the wireless and wireline
businesses.
Expenses related to the cellular business increased $93 and $248
for the three- and nine-month periods, respectively, as a result of
sustained growth in the cellular customer base, reflecting
additional marketing and operational costs associated with higher
levels of sales and expanded operations. In addition, other
operating expenses increased $25 and $35 in the three- and nine-
month periods as a result of expenses incurred in connection with
the initiation of personal communications service during 1996.
At BellSouth Telecommunications, Other Operating Expenses increased
$96 and $188, for the three- and nine-month periods ended September
30, 1996, respectively, due principally to higher business volumes
and costs related to initiatives to compete effectively, including
new service offerings and intensified marketing and advertising.
The increases for the periods were partially offset by decreases of
approximately $5 and $97, for the three- and nine-month periods
ended September 30, 1996, respectively, for employee-related costs
in the core wireline business, including expenses for employee
benefits. The decreases in such labor costs reflect net employee
reductions in BellSouth Telecommunications' telephone operations of
approximately 6,200 since September 30, 1995 primarily attributable
to previously-disclosed restructuring and work force reduction
plans, partially offset by annual compensation increases for
management and represented employees. The increases in other
operating expenses at BellSouth Telecommunications were also
partially offset by the sale of a subsidiary which performed
computer maintenance.
The increases for the periods were partially offset by the effect
of the January 1996 sale of BellSouth's paging business. For the
three- and nine-month periods ended September 30, 1995, Other
Operating Expenses for the paging business were $70 and $194,
respectively. Excluding the effects of the sale of the paging
business, Other Operating Expenses increased 10.6% and 7.7%,
respectively.
Other Income Statement Items
The other income statement components were as follows:
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
1996 1995 1996 1995
Interest Expense $177 $172 $531 $532
Gain on Sale of Paging
Business -- -- 442 --
Other Income, net 32 53 84 51
Provision for Income Taxes 425 380 1,337 1,105
Interest Expense increased $5 (2.9%) and decreased $1 (.2%) for the
three- and nine-month periods ended September 30, 1996,
respectively, compared to the same periods last year. The increase
for the three-month period was primarily attributable to higher
average debt balances, partially offset by lower average interest
rates on borrowings due in part to refinancings during 1995.
Gain on Sale of Paging Business represents the pre-tax gain on the
sale of BellSouth's paging business in January 1996.
Other Income, net decreased $21 and increased $33 for the three-
and nine-month periods ended September 30, 1996, respectively,
compared to the corresponding periods in 1995. The decrease in the
three-month period was primarily attributable to increased equity
in losses of unconsolidated affiliates and the effect of non-
strategic business activities partially offset by higher interest
income due to the investment of cash proceeds from the sale of the
paging business. The increase for the nine-month period was
primarily attributable to higher interest income, partially offset
by increased equity in losses of unconsolidated affiliates.
The amounts of equity in losses of unconsolidated affiliates were
($7) and ($65), respectively, for the three- and nine-month periods
ending September 30, 1996 compared to $0 and ($46) for the same
periods in 1995. The increased equity in losses of unconsolidated
affiliates in the nine-month period was attributable to certain
international businesses, principally operations in Germany and
Denmark, partially offset by improved results from unconsolidated
domestic cellular operations.
Provision for Income Taxes increased $45 (11.8%) and $232 (21.0%)
for the three- and nine-month periods ended September 30, 1996,
respectively, over the comparable 1995 periods. For the three- and
nine-month periods ended September 30, 1996, BellSouth's effective
tax rates were 40.2% and 37.5%, respectively, compared to 40.5% and
39.9%, respectively, for the same periods last year. The lower
effective tax rate for the nine-month period in 1996 was due
primarily to a higher tax than book basis for the paging business,
which resulted in a lower gain on sale for computing tax expense.
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 September
30, 1996 and December 31, 1995, 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 Nine Months
Ended September 30,
1996 1995
Net Cash Provided by Operating Activities $4,178 $4,206
Operating Activities. Net cash provided by operating activities
decreased $28 (0.7%) in the first nine months of 1996 compared with
the same period in 1995. The decrease was primarily due to
liability reductions and payment of a deposit related to a FCC
license auction partially offset by increases in operating income.
For the Nine Months
Ended September 30,
1996 1995
Net Cash Used for Investing Activities $(2,672) $(3,187)
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 decreased $515 (16.2%) in the first nine months of 1996
compared to the corresponding 1995 period. The decrease was
primarily due to $930 in cash received from the sale of the paging
business, partially offset by higher capital expenditures of $504
related to network development.
Internal sources provided substantially all cash required for
capital expenditures in the first nine months of 1996. For the
remainder of 1996, BellSouth expects to continue to finance capital
expenditures primarily through internally generated funds, and, to
the extent necessary, from external sources.
For the Nine Months
Ended September 30,
1996 1995
Net Cash Used for Financing Activities $(1,879) $(976)
Financing Activities. Net cash used for financing activities
increased $903 (92.5%) in the first nine months of 1996 compared to
the same period last year. The increase reflects repayments of
$266 in commercial paper and $485 in debentures as well as
reductions in the level of new long-term borrowings in 1996.
BellSouth's debt to total capitalization ratio decreased to 43.5%
at September 30, 1996 from 46.7% at December 31, 1995. The
decrease was primarily caused by the repayment of commercial paper
described above and the increase in Shareholders' Equity due to
earnings during 1996.
BellSouth's Board of Directors has authorized the repurchase of an
unspecified number of shares of BellSouth Common Stock on the open
market or through privately negotiated purchases. As of September
30, 1996, approximately 798,000 shares had been repurchased for an
aggregate of $30; 133,000 of such shares had been reissued for an
aggregate of $5 under stock option and benefit plans. BellSouth
intends to use the remaining shares and any additional purchases
for general corporate purposes.
In November 1996, BellSouth committed to issue $300 of 6.04%
debentures due November 15, 2026. The proceeds of such issuance
will be used to retire commercial paper. The issuance of the
debentures is scheduled for November 14, 1996. After giving effect
to this transaction, shelf registration statements were on file
with the Securities and Exchange Commission under which $1,927 of
debt securities could be publicly offered.
REGULATORY DEVELOPMENTS AND COMPETITION
Federal Developments
In February 1996, Congress passed the Telecommunications Act of
1996 (the 1996 Act). Among its provisions, the 1996 Act removes
state legislative and regulatory barriers to competition for local
telephone service, subject only to competitively neutral
requirements to preserve and advance universal service, protect the
public safety and welfare, maintain the quality of
telecommunnications services and safeguard the rights of customers.
The 1996 Act also includes requirements that incumbent local
exchange carriers (ILECs) negotiate agreements for the
interconnection and access to network elements on an unbundled
basis, with competing companies. If a negotiated agreement cannot
be reached, either party may seek arbitration with the state
regulatory authority. The arbitrator must set rates for access to
network elements on an unbundled basis, based on cost, and may
include a reasonable profit. ILECs are also required to negotiate
agreements for providing their retail services at wholesale rates
for the purposes of resale by competing companies. If agreement
cannot be reached, the arbitrator shall set the wholesale rates at
the ILEC's retail rates less costs to be avoided.
In connection with the requirements of the 1996 Act, on August 8,
1996, the FCC released an order adopting rules governing
interconnection and open competition in the local telephone service
industry (the Order). Among the issues specifically addressed by
the Order are the network elements that ILECs must make available;
pricing standards to be followed by states in setting rates for
interconnection, access to network elements on an unbundled basis
and resold services. The FCC will address access charges and
universal service matters in subsequent proceedings, although an
interim access charge plan will lower access charges paid by
carriers that purchase unbundled network elements from ILECs. The
decision also reduces rates paid by wireless carriers for
connection to the wireline networks of the ILECs.
BellSouth and several other ILECs joined in an appeal of the Order
to the United States Court of Appeals for the Eighth Circuit (the
Court). Upon request of several state commissions and ILECs, the
Court stayed the Order in part, pending appeal. Such stay relates
to pricing prescriptions and certain other terms contained within
the Order. The Court has scheduled oral arguments for January 17,
1997.
BellSouth is evaluating the impact that the Order may have on its
operations. It will not be possible to assess fully its
implications until all challenges thereto have been resolved and
the state regulatory commissions have addressed the related matters
within their jurisdictions.
State Developments
In order to comply with the requirements of the 1996 Act, all
states in BellSouth Telecommunications' local service area have
proceedings and other activities in progress necessary to
implement open competition for local service. Among the issues
being addressed in these proceedings are the level of wholesale
discounts required to be offered by the ILECs to carriers providing
competing local service and the price of access to network elements
on an unbundled basis.
A number of carriers have been approved or have filed applications
to provide local service in many of the areas in which BellSouth
Telecommunications provides service. BellSouth has executed 27
interconnection or resale agreements with such carriers. BellSouth
believes that a number of these agreements address all of the 14
checklist items required for interLATA authority contained in the
1996 Act. BellSouth continues to negotiate with a number of other
telecommunications companies and is also involved in arbitration
proceedings with carriers (including AT&T, MCI and Sprint) with
whom BellSouth has been unable to reach agreements on pricing and
other provisions.
Price regulation plans have been approved or authorized by the
requisite legislative or regulatory bodies in all states in the
BellSouth Telecommunications local service area. Recent
significant developments with respect to discounts to be offered to
carriers providing competing local service and other related issues
are discussed below.
Georgia. In second quarter 1996, the Georgia Public Service
Commission ordered a wholesale discount rate to local service
resellers of 20.3% for residential services and 17.3% for business
services. The discount levels are to remain in effect for a twelve-
month period from implementation after which the Commission will
conduct a review to determine if any modifications are necessary.
BellSouth Telecommunications appealed these discounts to the
Superior Court of Fulton County, Georgia which affirmed the Order
on October 8, 1996. The Commission also set out a time line
starting in the third quarter of 1996 for electronic interface
implementation with carriers providing competing local service.
Kentucky. In September 1996, the Kentucky Public Service
Commission issued an order concerning local competition and
universal service funds. The order set an interim, single discount
rate of 19.2%. The order also provided that Commission-approved
negotiated agreements for interconnection shall be the primary
means for implementing local competition. The universal service
fund rules established by the Commission are preliminary and
interim until the FCC issues its order on this matter.
Louisiana. In October 1996, the Louisiana Public Service Commission
approved the Administrative Law Judge's recommendation that the
wholesale discount based on BellSouth Telecommunications' avoided
cost should be 20.72%, subject to adjustment pending further
hearings on resale.
South Carolina. As previously disclosed, in December 1994, the South
Carolina Public Service Commission issued an order which, in addition to a
prospective rate reduction of $26 million, required a refund of
approximately $29 million, plus interest, based on the 1992 adjusted
earnings of BellSouth Telecommunications. The prospective rate reduction
was implemented, but the refund was stayed pending judicial review of the
decision. On October 23, 1996, the South Carolina Court of Common Pleas
entered its order affirming the Commission's order of the refund but
reversing the rate of interest applied by the Commission. BellSouth
Telecommunications intends to appeal the order to the South Carolina
Supreme Court. The Commission has previously postponed review of BellSouth
Telecommunications' earnings in 1993 and 1994 until a resolution of the
1992 period is reached. While complete assurance cannot be given as to the
outcome of these matters, BellSouth believes that any financial impact
would not be material to its financial position, annual operating results
or cash flows.
BUSINESS DEVELOPMENTS
In April 1996, BellSouth Telecommunications received approval from
the Florida Public Service Commission to provide competing local
service in other carriers' service areas. BellSouth
Telecommunications intends to offer local service in the near
future to business customers in parts of the Orlando market not
previously served by BellSouth Telecommunications.
BellSouth plans to begin offering interLATA wireline service within
its nine-state local service territory as soon as possible after
completion of FCC, appellate court and state regulatory proceedings
and satisfaction of requirements arising out of these proceedings.
As a result of the appellate proceedings described in "Federal
Developments," it is uncertain when BellSouth will be authorized to
initiate such service.
As permitted by the 1996 Act, BellSouth began offering interLATA
wireless service to its cellular customers in February. Also, in
March, BellSouth began joint marketing of wireless and wireline
services in select markets.
PART II -- OTHER INFORMATION
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.
10r BellSouth Personal Retirement Account Pension Plan, as
amended and restated effective July 1, 1996.
10x BellSouth Retirement Savings Plan as amended and restated
effective July 1, 1996.
10y BellSouth Corporation Officer Short Term Incentive Award
Plan.
10z BellSouth Corporation Non-Employee Directors' Stock Plan.
10aa Form of Executive Officer Successor and Retirement
Agreement
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:
Date of Event Subject
October 17, 1996 Third Quarter 1996 Earnings Release
and 1997 Financial Projection
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
Executive Vice President, Chief
Financial Officer and Comptroller
(Principal Financial and Accounting Officer)
November 12, 1996
EXHIBIT INDEX
Exhibit
Number
10r BellSouth Personal Retirement Account Pension Plan, as
amended and restated effective July 1, 1996.
10x BellSouth Retirement Savings Plan as amended and restated
effective July 1, 1996.
10y BellSouth Corporation Officer Short Term Incentive Award
Plan.
10z BellSouth Corporation Non-Employee Directors' Stock Plan.
10aa Form of Executive Officer Successor and Retirement
Agreement
11 Computation of Earnings Per Common Share.
12 Computation of Ratio of Earnings to Fixed Charges.
27 Financial Data Schedule.
BELLSOUTH PERSONAL RETIREMENT ACCOUNT
PENSION PLAN
Effective July 1, 1993Amended and Restated Effective July 1, 1996
BELLSOUTH PERSONAL RETIREMENT ACCOUNT PENSION PLAN
TABLE OF CONTENTS
Section 1. Definitions
1.01 ADEA 1-1
1.02 Affiliate 1-1
1.02A Applicable Interest Rate 1-1
1.02B Applicable Mortality Table 1-2
1.03 BellSouth 1-2
1.04 Benefit Committee 1-2
1.05 Board 1-2
1.06 Claimant 1-2
1.07 Claim Review Committee 1-3
1.08 Code 1-3
1.09 Compensation 1-3
1.10 Effective Date 1-5
1.11 Elect 1-6
1.12 Eligible Employee 1-6
1.13 Employee 1-7
1.14 ERISA 1-7
1.15 Former Affiliate 1-7
1.16 Hour of Service 1-7
1.17 Interchange Agreement 1-7
1.18 Interchange Company 1-8
1.19 Net Credited Service 1-8
1.20 Normal Retirement Age 1-8
1.21 Occasional Employee 1-8
1.22 Participant 1-9
1.23 Participating Company 1-9
1.24 PBGC Interest Rate 1-9
1.25 Pension Commencement Date 1-9
1.26 Pension Fund 1-9
1.27 Plan 1-9
1.28 Plan Year 1-9
1.29 Prior Plan 1-9
1.30 Regular Employee 1-10
1.31 Statutory Break in Service 1-10
1.32 Temporary Employee 1-10
1.33 Vesting Eligibility Year 1-10
1.34 Vesting Service Credit 1-10
Section 2. Participation and Vesting
2.01 Participation 2-1
2.02 Waiver of Participation by Temporary Employee 2-1
2.03 Vesting 2-1
Section 3. Accounts
3.01 Hypothetical Account 3-1
3.02 Basic Service Credit 3-1
3.03 Supplemental Credit 3-2
3.04 Interest Credit 3-2
3.05 Other Credits 3-2
(a) Additional Credit 3-2
(b) Transition Credit 3-3
3.06 Interim Account Balances 3-3
3.07 Accounts for New Participants 3-4
3.08 Establishment of Account upon Reemployment 3-4
Section 4. Retirement
4.01 Service Pension 4-1
4.02 Disability Pension 4-1
4.03 Deferred Vested Pension 4-2
4.04 Mandatory Retirement 4-2
4.05 Certain Transfers 4-2
Section 5. Pension Commencement Date
5.01 Early Retirement 5-1
5.02 Normal Retirement 5-1
5.03 Deferred Retirement 5-1
5.04 Disability Retirement 5-2
5.05 Termination before Retirement 5-2
5.06 Application Required 5-2
5.07 Leave of Absence or Layoff 5-2
5.08 Continuance upon Reemployment 5-3
Section 6. Benefit Amount
6.01 Accrued Benefit 6-1
6.02 Amount of Benefit 6-1
(a) Service or Deferred Vested Pension 6-1
(b) Disability Pension 6-2
6.03 No Reduction in Accrued Benefits 6-3
6.04 Offset for Other Pensions 6-3
6.05 Limitation of Benefit Amount 6-4
Section 7. Payment Options
7.01 Annuity Forms of Payment 7-1
(a) Normal Forms of Benefit 7-1
(1) Married Participant 7-1
(2) Unmarried Participant 7-1
(b) Optional Form of Benefit for Married
Participant 7-1
7.02 Election of Early Retirement or Alternate Form of
Benefit 7-2
(a) Notification Requirements 7-2
(b) Election Requirements 7-2
(c) Spousal Consent 7-3
7.03 Revocation or Change in Status 7-3
7.04 Pop-up Feature 7-4
7.05 Election Periods for Disability Pensioners 7-4
7.06 Cash-out of Small Pensions 7-4
(a) Payment to Participant 7-4
(b) Payment of Surviving Spouse 7-5
7.07 Rollover Distributions 7-6
(a) General 7-6
(b) Definitions 7-6
(1) Eligible Rollover Distribution 7-6
(2) Eligible Retirement Plan 7-7
(3) Distributee 7-7
(4) Direct Rollover 7-7
7.08 Lump Sum Settlement Option 7-7
Section 8. Preretirement Surviving Spouse Pension
8.01 Eligibility 8-1
8.02 Death prior to Retirement or Termination 8-1
8.03 Death after Retirement or Termination 8-2
Section 9. Death Benefit Plan
9.01 Accidental Death Benefit 9-1
9.02 Sickness Death Benefit 9-2
9.03 Pensioner Death Benefit 9-2
9.04 Beneficiaries Eligible to Receive Death Benefits 9-5
9.05 Method of Payment 9-7
9.06 Source of Payment 9-8
9.07 Special Rules 9-9
Section 10. Computation of Service
10.01 Hour of Service 10-1
10.02 Net Credited Service 10-3
10.03 Vesting Service Credit 10-4
10.04 Part-time Service 10-5
10.05 Breaks in Service 10-5
10.06 Leaves of Absence 10-6
10.07 Layoffs 10-7
10.08 Vesting Eligibility Year 10-8
Section 11. Interchange of Benefit Obligations and Transfers
Among Affiliates
11.01 Transfers from Interchange Company or BellSouth 11-1
Pension Plan
11.02 Transfers to Interchange Company 11-1
11.03 Transfers to BellSouth Pension Plan 11-2
11.04 Prior Benefits 11-2
(a) Former Interchange Company Plan Lump Sum 11-2
(b) Repayment of Plan Lump Sum Benefits 11-3
(c) Offset for Periodic Distributions 11-3
11.05 Transfers Between Certain Affiliates 11-4
Section 12. Administration
12.01 Plan Administrator 12-1
12.02 Benefit Committees 12-1
12.03 Claim Review Committee 12-2
12.04 Named Fiduciary 12-2
12.05 Allocation of Responsibilities 12-3
12.06 Delegation of Responsibilities 12-3
12.07 Plan Expenses 12-4
12.08 Miscellaneous 12-4
Section 13. Rights and Claims
13.01 Notice to Employees 13-1
13.02 Claims Procedure 13-1
13.03 Non-assignability 13-3
13.04 Payment to Others 13-3
13.05 Forfeiture of Benefits by Killers 13-4
13.06 Recovery of Overpayment 13-4
13.07 No Review by Former Affiliate Plan or
Predecessor Plan Committee 13-5
13.08 No Claims Against a Participating Company 13-5
Section 14. Pension Fund
14.01 Establishment of Pension Fund 14-1
14.02 Appointment of Trustees and Investment Managers 14-2
14.03 Contributions Subject to Tax-Deductibility 14-4
14.04 Forfeitures 14-4
14.05 Separate Plan Accounting 14-4
Section 15. Plan Changes
15.01 Plan Amendments 15-1
15.02 Plan Termination 15-2
15.03 Consolidation, Merger, or Sale of Property 15-4
15.04 Top-Heavy Provisions 15-4
Section 16. Adoption of the Plan by a Participating Company
16.01 Adoption Agreement 16-1
16.02 Separate Plans 16-1
16.03 Amendment 16-2
Appendix A. Calculation of Opening Account
Appendix B. Transition Credit Calculation
Appendix C. Conversion Factors
C-1 - Employees at least 65 on April 1, 1994
C-2 - Employees Attaining Age 65 after April 1, 1994
Appendix D. Prior Plan Benefit
Appendix E. Maximum Annual Pension Benefit
Appendix F. Top-Heavy Provisions
Appendix G. Maximum Lump Sum Under Section 415 for 1995
Schedule 1. Modifications for Each Separate PRA Plan
FOREWORD
The BellSouth Management Pension Plan was established by
BellSouth as of January 1, 1984. The Plan hereby is being
renamed the BellSouth Personal Retirement Account Pension Plan.
Except as otherwise specifically provided herein, this document
describes the Plan as it applies to persons actively employed by
BellSouth or certain of its affiliates after June 30, 1993.
This amendment and restatement of the Plan is expressly
conditioned upon receipt of a favorable determination letter from
the Internal Revenue Service with respect to the Plan as set
forth in this document.
All pronouns are masculine, solely for ease of reading, and
should be read as feminine where applicable.
SECTION 1
DEFINITIONS
For purposes of this Plan, the following words shall have
the indicated meanings when such words are capitalized:
1.01 "ADEA" means the Age Discrimination in Employment
Act of 1967, as amended, or any successor law.
1.02 "Affiliate" means, with respect to a Participating
Company, (a) any corporation included with such Participating
Company in a controlled group of corporations as determined under
Section 414(b) of the Code, (b) any trade or business under
common control with such Participating Company as determined
under Section 414(c) of the Code, (c) any member of any
"affiliated service group" as such term is defined in Section
414(m) of the Code which includes as one of its members an entity
described in (a) or (b) above, and (d) any trade or business
which is otherwise aggregated with such Participating Company
under Section 414(o) of the Code but only during the period such
corporation, trade or business, or member is, as applicable, in a
controlled group of corporations with such Participating Company,
under common control with such Participating Company, or included
in the affiliated service group or otherwise aggregated.
1.02A "Applicable Interest Rate" means
(a) for Plan Years beginning before January 1,
2000, the interest rate used by the Pension Benefit
Guaranty Corporation to value (1) immediate annuities,
as to annuities that are in payment status, or
(2) deferred annuities, as to annuities that are not
otherwise currently payable, in a trusteed single
employer plan that terminates as of January 1st of the
applicable calendar year, and
(b) for Plan Years beginning on or after
January 1, 2000, the average yield, expressed as an
annual rate of interest, of 30-year Treasury securities
for November of the immediately preceding Plan Year.
1.02B "Applicable Mortality Table" means
(a) for Plan Years beginning before January 1,
2000, the BellSouth Management 50/50 mortality rates,
and
(b) for Plan Years beginning on or after
January 1, 2000, the GAM 83 mortality tables, adjusted
to eliminate gender distinctions, or such other table
or tables as may be prescribed by the Secretary of the
Treasury from time to time.
1.03 "BellSouth" means BellSouth Corporation, a Georgia
corporation, or its successors.
1.04 "Benefit Committee" means the applicable
Employees' Benefit Committee appointed by a Participating Company
to administer the Plan with respect to its Employees. The
organization and operation of the Benefit Committee is described
in Section 12. "BellSouth Benefit Committee" means the Benefit
Committee appointed by BellSouth.
1.05 "Board" means the Board of Directors of BellSouth.
1.06 "Claimant" means any person claiming benefits
under the Plan.
1.07 "Claim Review Committee" means the Employees'
Benefit Claim Review Committee appointed by BellSouth to serve as
the final review committee in connection with all claims or
questions dealing with the administration of the Plan.
1.08 "Code" means the Internal Revenue Code of 1986, as
amended, or any successor law.
1.09 "Compensation" means the sum of the following
amounts that are paid by a Participating Company or Companies
during the Plan Year:
(a) basic pay,
(b) differentials,
(c) marketing incentive payments and commissions
or equivalent payments approved by BellSouth,
(d) team awards, awards to officers under short
term incentive plans and equivalents, and
(e) salary transition payments.
Compensation is determined before any reduction elected in
accordance with a "cafeteria plan" or a "cash or deferred
arrangement" pursuant to Sections 125 or 401(k) of the Code.
In no event shall the amount of Compensation taken into
account for any Participant under the Plan for any Plan Year
exceed $150,000 or such other amount as the Secretary of the
Treasury may determine or as may apply for such Plan Year under
Section 401(a)(17) of the Code; provided, however, the limitation
for the 1993 Plan Year shall be such amount less the compensation
taken into account in calculating the benefit accrued under the
Prior Plan for the period from January 1, 1993, to June 30, 1993.
For purposes of this limitation only, in determining
Compensation, the rules of Section 414(q)(6) of the Code shall
apply, except that in applying such rules, the term "family"
shall include only the spouse of the Participant and any lineal
descendants of the Participant who have not attained age 19
before the close of the Plan Year.
If a Participant receives benefits under a Participating
Company's short term disability plan, his Compensation shall be
determined as though he received basic pay (at his last basic pay
rate) while he receives such benefits. If the position rate of
his job changes while receiving such benefits, his basic pay rate
shall be deemed to change (prospectively) by the same percentage
for the purpose of determining his Compensation.
If a Participant is reemployed by a Participating Company 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 from employment, he shall
be deemed to have received Compensation at his basic rate of pay
for the "applicable period," as defined below. The "applicable
period" shall be the following:
(a) the period of time specified in the order, award
or agreement;
(b) if no period of time is specified, the period that
is the number of weeks determined by dividing the
full amount of the award or payment by the
Participant's basic weekly wage rate in effect at
the time of this prior termination; or
(c) the period of time between the date of the prior
termination and the date of reemployment, not in
excess of thirty days, if the termination was
converted by the Participating Company from which
the Participant was terminated to a suspension.
If (b) above applies, the amount of the award or payment
shall be deemed to include any amount of compensation or other
payment received by the Participant from other sources which has
been offset against the amount awarded or paid to the Participant
in accordance with the order, award, or agreement. In no event
shall the period of time exceed the actual amount of time from
the date of the Participant's termination to the date of the
Participant's reemployment.
For purposes of performing discrimination testing to ensure
compliance with Code Section 401(a)(4), the definition of
"Compensation" as set forth above in this Paragraph 1.09
generally shall be used; provided, on a plan year-by-plan year
basis, the Benefit Committee may elect to use as the definition
of "Compensation" any definition that satisfies the
nondiscrimination requirements of Code Section 414(s).
If a Participant retires or terminates employment and
receives any Compensation of the type described in clause (d)
hereof after the Participant's Pension Commencement Date, his
accrued benefit shall be increased to reflect such Compensation
effective as of the date such Compensation is paid (d) hereof
after the Participant terminates employment, such Compensation
shall be deemed to have been paid as of the date the Participant
terminates, and the amount of his pension shall be corrected
accordingly.
1.10 "Effective Date" means July 1, 1993, which is the
effective date of the amended and restated Plan as described
herein, unless another Effective Date is noted with respect to a
Participating Company in Schedule 1. Any amendment required by
law which has an effective date prior to July 1, 1993, shall be
effective as of the date specifically provided herein or as
otherwise required by law. The rights and benefits of any
Employee who is a Participant on or after the Effective Date
shall be determined as provided herein. The rights and benefits
of any other person entitled to or receiving benefits under the
Prior Plan (including persons receiving disability benefits under
the Prior Plan as of the Effective Date) shall be determined in
accordance with the provisions of the Prior Plan as in effect on
the date such person (or the person upon whose behalf benefits
are being paid) ceased to be an Eligible Employee, except as
specifically provided by subsequent amendment, including this
amendment. This amendment shall not decrease or remove any
protected right or benefit which had already accrued with respect
to any Participant as of the Effective Date.
1.11 "Elect" means to make an election in accordance
with Paragraph 7.02.
1.12 "Eligible Employee" means any Employee (a) who
receives a regular and stated salary, i.e., pay at a monthly or
annual rate, other than a pension or retainer, from a
Participating Company and who is classified as a salaried
employee, or (b) who is a non-represented Employee and who is
employed by a Participating Company that is a subsidiary of
BellSouth Enterprises, Inc., other than BellSouth Advertising &
Publishing Corporation. The term "Eligible Employee" shall not
include (a) a "leased employee," within the meaning of Section
414(n)(2) of the Code, (b) a represented Employee who is not
otherwise an Eligible Employee and who is temporarily promoted to
salaried employee status for one year or less, (c) any Employee
(i) who is a non-resident alien, (ii) who has no U.S. source of
income, and (iii) who was not covered by a predecessor plan on
September 30, 1980, and (d) any Employee who is a third country
national or local national employee of a Participating Company.
1.13 "Employee" means any person who is employed by a
Participating Company or any Affiliate, and any person who is a
"leased employee" within the meaning of Section 414(n)(2) of the
Code of a Participating Company or Affiliate. Notwithstanding
the foregoing, if such "leased employees" constitute less than 20
percent of the combined non-highly compensated work force of
BellSouth and its Affiliates, within the meaning of Section
414(n)(5)(c)(ii) of the Code, the term "Employee" shall not
include those "leased employees" covered by a plan described in
Section 414(n)(5) of the Code.
1.14 "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, or any successor law.
1.15 "Former Affiliate" means any of the following
companies: American Telephone and Telegraph Company, American
Information Technologies Corporation, Bell Atlantic Corp., NYNEX
Corp., Pacific Telesis Group, Southwestern Bell Corp., U.S. West
Inc., any subsidiary of any such company which participates in a
defined benefit pension plan maintained by any such company or
maintains a comparable plan and with respect to which such
company has an interchange agreement comparable to the
Interchange Agreement, and Bell Communications Research, Inc.
1.16 "Hour of Service" is defined in Paragraph 10.01.
1.17 "Interchange Agreement" means any agreement which
provides for the interchange of benefit obligations and the
mutual recognition of service credit upon the transfer of a
person between BellSouth or an Affiliate of BellSouth and another
employer, including, but not limited to, (a) the agreement
between BellSouth, each of the other regional Bell operating
companies, and Bell Communications Research, Inc., which provides
for the interchange of benefit obligations and the mutual
recognition of service credit upon the transfer of a person
between a regional Bell operating company and Bell Communications
Research, Inc., under circumstances set forth in the Plan of
Reorganization, (b) the agreement between BellSouth, American
Telephone and Telegraph Company and one or more other companies
in connection with the reorganization of American Telephone and
Telegraph Company and its subsidiaries on January 1, 1984, which
provides for the portability of benefits with respect to certain
employees, and (c) the agreement between BellSouth, American
Telephone and Telegraph Company, and each of the other entities
subject to the "modified final judgment" as such term is defined
in the Tax Reform Act of 1984, which agreement provides for the
portability of benefits with respect to certain employees.
1.18 "Interchange Company" means a company, other than
a Participating Company, which is a party to an Interchange
Agreement.
1.19 "Net Credited Service" is defined in Paragraph
10.02.
1.20 "Normal Retirement Age" means age 65 or, if later,
the fifth anniversary of the date on which the Employee becomes a
Participant in the Plan.
1.21 "Occasional Employee" means an Eligible Employee
who is hired for a period not exceeding three consecutive weeks
and who is not employed for more than 30 days in a year.
1.22 "Participant" means an Eligible Employee, a former
Eligible Employee for whom or with respect to whom an account is
maintained under Section 3, or an annuitant.
1.23 "Participating Company" means BellSouth, any
entity which participated in the Plan as of July 1, 1993, and any
entity which elects to participate in the Plan in accordance with
Section 16 .
1.24 "PBGC Interest Rate" means the interest rate used
by the Pension Benefit Guaranty Corporation to value (a)
immediate annuities, as to annuities that are in payment status,
or (b) deferred annuities, as to annuities that are not otherwise
currently payable, in a trusteed single employer plan that
terminates as of January 1st of the applicable calendar year.
1.25 "Pension Commencement Date" means the first day as
of which a Participant's pension benefits are payable under the
Plan.
1.26 "Pension Fund" means the trust established by
BellSouth separate from its assets and the assets of any
Participating Company or Affiliate for the payment of certain
Plan benefits and includes any allocable interest in the
Telephone Real Estate Equity Trust.
1.27 "Plan" means the BellSouth Personal Retirement
Account Pension Plan as maintained by one or more Participating
Companies for the benefit of their Eligible Employees.
1.28 "Plan Year" means July 1, 1993, through December
31, 1993, solely for purposes of determining Plan benefits for
the first Plan Year, and the calendar year for subsequent Plan
Years.
1.29 "Prior Plan" means the Plan, if any, as in effect
immediately prior to its amendment and restatement as of the
Effective Date.
1.30 "Regular Employee" means an Eligible Employee
whose employment is expected to continue for more than one year
and who is not classified as a Temporary or Occasional Employee.
1.31 "Statutory Break in Service" means any calendar
year in which an Employee fails to complete more than 500 Hours
of Service.
1.32 "Temporary Employee" means an Eligible Employee
who is employed to work more than 30 days but not more than
eighteen months.
1.33 "Vesting Eligibility Year" is defined in Paragraph
10.08.
1.34 "Vesting Service Credit" is defined in Paragraph
10.03.
SECTION 2
PARTICIPATION AND VESTING
2.01 Participation. Each Eligible Employee is a
Participant in the Plan on the later of the Effective Date, or
his date of hire.
2.02 Waiver of Participation by Temporary Employee. A
service pensioner who is reemployed as a Temporary Employee may
elect, prior to reemployment, to waive participation in the Plan
in accordance with procedures established by the BellSouth
Benefit Committee. No benefit shall accrue to such Employee
during the period of such reemployment. Effective with the date
this restatement is executed, any other Employee may make a
prospective election, in an employment agreement or other written
agreement with the applicable Participating Company, not to
participate in the Plan, and no benefit shall accrue to such
Employee during the period such election is in effect.
2.03 Vesting. In order to receive benefits under the
Plan, a Participant must become vested. A Participant becomes
vested on the earlier of when he completes five Vesting
Eligibility Years or when he attains Normal Retirement Age. A
Participant also may become vested prior to completing five
Vesting Eligibility Years if his participation in the Plan is
terminated incident to the sale of the Participating Company or
some or all of the assets of the Participating Company to a non-
Affiliate and if the Claim Review Committee or the Nominating and
Compensation Committee of the Board, as appropriate, determines
via plan amendment to vest the Participant and similarly situated
Participants.
SECTION 3
ACCOUNTS
3.01 Hypothetical Account. A hypothetical account
shall be maintained for each Participant in accordance with this
Section 3. The balance in each Participant's account as of the
Effective Date shall be determined in accordance with Appendix A.
On the last day of the Plan Year three types of credits may
be added to each Participant's account: basic service credits,
supplemental credits and interest credits. Each Participant's
account also may be credited with additional and transition
credits in accordance with Paragraph 3.05.
3.02 Basic Service Credit. On the last day of each
Plan Year each Participant's account shall be credited with
basic service credits equal to the Participant's Compensation for
the Plan Year multiplied by the percentage shown in the following
table based on his full years of Vesting Service Credit at the
end of that Plan Year:
Years of Vesting Basic Service
Service Credit Credit Percentage
0 through 4 3%
5 through 9 4%
10 through 14 5%
15 through 19 6%
20 through 24 7%
25 through 29 8%
30 through 34 6%
35 or more 4%
3.03 Supplemental Credit. On the last day of each Plan
Year the account of each Participant whose Compensation is in
excess of the contribution and benefit base for such year under
Section 230 of the Social Security Act (for the 1993 Plan Year,
such base shall be deemed to be $28,800) shall be credited with a
supplemental credit equal to the amount of such excess multiplied
by 3 percent.
3.04 Interest Credit. Except as otherwise provided in
this Paragraph, onas of 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
each year afte6 percent in 1996 and 4.0 percent for each year
1995. If at any time in the 1995after 1996. If at any time in
the 1996 Plan Year a Participant is not actively employed, the
4.86 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'sParticipant'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 1,
1994, and before January 1, 1997, the 4.0 percent interest credit
rate shall apply to the account for the entire 19956 Plan Year.
3.05 Other Credits.
(a) Additional Credit. The Board has approved an
additional credit for the 19956 Plan Year equal to the
Participant's Compensation multiplied by 21 percent,
and this additional credit shall be credited to each
Participant's account as of the last day of such Plan
Year.
(b) Transition Credit. On the last days of the
1993, 1994, 1995, and 1996 Plan Years, the account of
each Participant who was covered by the Prior Plan on
June 30, 1993, and who has been continuously employed
by a Participating Company from July 1, 1993, to the
last day of such Plan Year (or, in the case of the 1996
Plan Year, to June 30, 1996) shall be credited with the
transition credits, if any, determined under the
provisions of Appendix B.
3.06 Interim Account Balances. As of any date during
the Plan Year, a Participant's account balance equals the sum of:
(a) his account balance as of the first day of
the Plan Year, plus
(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
(c) the basic service, and, if applicable,
supplemental, additional and transition credits that
would be credited to his account on the last day of the
Plan Year, based on the Participant's Compensation for
the Plan Year up to such date, taking into account the
full benefit and contribution base under Section 230 of
the Social Security Act for such year, and as approved
by the Board, if applicable.
3.07 Accounts for New Participants. Except as provided
in Paragraph 3.08 and Section 11, if an individual first becomes
an Eligible Employee on or after July 1, 1993, and was not a
participant in the Prior Plan or in the BellSouth Pension Plan on
June 30, 1993, no account shall be established on his behalf
until the end of the Plan Year in which he became an Eligible
Employee. At such time, his basic service and, if applicable,
supplemental and additional credits shall be based on his
Compensation for the entire Plan Year.
3.08 Establishment of Account upon Reemployment. If
an individual who retired or terminated employment before the
Effective Date, is reemployed by BellSouth or a Participating
Company as an Eligible Employee, an account shall be established
for such Eligible Employee upon his reemployment. The balance in
such account shall be zero if (a) such Eligible Employee received
a lump sum settlement of his entire accrued benefit prior to
reemployment and is not eligible to or does not buy back into the
Plan pursuant to Paragraph 10.05, or (b) his pension commenced to
be paid prior to reemployment and is not suspended pursuant to
Paragraph 5.08. Otherwise, the balance in such account shall be
the amount determined in accordance with Appendix A.
If an Eligible Employee retires or terminates employment
(other than pursuant to a transfer of employment between
Affiliates that is described in Subparagraph 11.05(a) or (b)) on
or after the Effective Date, his account shall continue to be
maintained, and credited with interest, until (a) he receives or
is deemed to receive a lump sum settlement of his entire accrued
benefit, or (b) his pension commences to be paid. If an Eligible
Employee is reemployed by BellSouth or a Participating Company
after his account ceases to be maintained for one of the
preceding reasons, an account shall be established for him at the
end of the Plan Year of his reemployment as an Eligible Employee
with a zero initial balance unless he is eligible and he elects
or is deemed to buy back into the Plan pursuant to Paragraph 7.06
or 10.05 or his pension is suspended pursuant to Paragraph 5.08,
in which case an account shall be established for him upon his
reemployment. The balance in such account, if not zero, shall be
(a) if the Eligible Employee is deemed to buy back into the Plan
pursuant to Paragraph 7.06, the amount in the Eligible Employee's
account upon his termination of employment, credited with
interest at the rate of 4 percent per year, compounded annually,
from termination to rehire, or (b) in all other cases, the amount
determined in accordance with Appendix A.
SECTION 4
RETIREMENT
4.01 Service Pension. Any Participant may retire on a
service pension provided he has attained any combination of whole
years and whole months of age and whole years and whole months of
Net Credited Service, with a minimum of ten (10) years of Net
Credited Service, which totals at least seventy-five (75) years
as of the date of his retirement. However, if a Participant's
final service is with an Affiliate that is not a Participating
Company, he must have completed a minimum of 10 years of Vesting
Service Credit to be eligible for a service pension under this
Paragraph.
4.02 Disability Pension. A Participant who (i) becomes
totally disabled as a result of sickness or injury while employed
by a Participating Company and who , (ii) has at least 15 years
of Net Credited Service at the expiration of his short term
disability benefits, (iii) is eligible to apply for long term
disability benefits at the expiration of his short term
disability benefits and who (iv) is not then eligible for a
service pension shall immediately be paid a disability pension;
provided, however, such Participant may elect to be paid a
deferred vested pension instead of a disability pension; and
provided further, however, if such Participant is then service
pension eligible, he may elect to receive a service pension in
lieu of a disability pension, and if such Participant has
attained Normal Retirement Age and is eligible for a service
pension, a service pension shall be paid instead of a disability
pension. The disability pension shall terminate when (a) it is
determined that the Participant is no longer totally disabled or
(b) he attains Normal Retirement Age and is eligible for a
service pension, whichever of (a) or (b) occurs first. The
disability pension shall terminate when (a) it is determined that
the Participant is no longer totally disabled, or (b) he attains
Normal Retirement Age and is eligible for a service pension,
which ever (a) or (b) occurs first.
4.03 Deferred Vested Pension. A Participant who
terminates employment and meets the vesting rule in Paragraph
2.03 shall receive a deferred vested pension in accordance with
Paragraph 5.05.
4.04 Mandatory Retirement. Each Employee, whether or
not a Participant, shall be retired from active service no later
than the last day of the month in which he attains age 65 or, if
later, the earliest age permissible under applicable provisions
of ADEA and any state law.
Mandatory retirement applies only to those Employees
referred to in Section 12(c)(1) of ADEA and those Employees for
whom age is a bona fide occupational qualification within the
meaning of Section 4(f)(1) of ADEA.
4.05 Certain Transfers. A Participant who transfers
between companies may not retire until he ceases to be employed
by a Participating Company or any Affiliate.
SECTION 5
PENSION COMMENCEMENT DATE
5.01 Early Retirement. If a Participant who is
eligible for a service pension retires before he attains Normal
Retirement Age, he can Elect to have his pension payable
commencing on any date on or after his retirement, but not later
than the first of the month coincident with or following his
attainment of Normal Retirement Age, and such date shall be his
Pension Commencement Date.
5.02 Normal Retirement. If a Participant retires on or
after attainment of his Normal Retirement Age, his pension shall
be payable commencing on the first day following his retirement,
and such date shall be his Pension Commencement Date.
5.03 Deferred Retirement. If a Participant works until
the April 1st following the calendar year in which he attains age
70, he shall be treated as having retired on such April 1st, with
his pension, computed as of December 31 of the prior year,
payable commencing on such April 1st, and such date shall be his
Pension Commencement Date.
His pension shall be recomputed as of each succeeding
January 1st and upon actual retirement to reflect additional
benefit accruals and an actuarial adjustment for the pension paid
(a) during the prior year, if he continues to work, and (b)
during the current year, upon his actual retirement.
5.04 Disability Retirement. A Participant who is
eligible for a disability pension under Paragraph 4.02 shall have
his disability pension commence on the day following the
expiration of his short term disability benefits, and such date
shall be the Participant's Pension Commencement Date with respect
to such disability pension.
5.05 Termination Before Retirement. If a Participant
terminates employment with the Participating Company, all other
Participating Companies and all Affiliates after becoming vested
and before becoming eligible to retire under Paragraph 4.01, he
may Elect to have his pension payable commencing on or after the
birthday on which he would have become eligible to retire under
Paragraph 4.01 if he were an Eligible Employee on such birthday;
provided, however, if such Participant terminates employment as
described above before December 31, 1997, he may Elect to have
his pension payable commencing on or before December 31,
1997vested, he may Elect to have his pension payable commencing
on the first day following such termination of employment.
Absent such an election his pension shall be payable commencing
on his attainment of Normal Retirement Age. The date on which
such pension first is payable shall be his Pension Commencement
Date Date. .
5.06 Application Required. Except as provided in this
Section, a Participant must file a written request with the
Benefit Committee to have his pension commence.
Except for months after Normal Retirement Age, no pension
payment shall be made for any month before the month in which the
Benefit Committee receives such written request. In the case of
any Participant who is no longer an Employee on or after his
Normal Retirement Age, pension payments shall commence whether or
not a written request for such payments is received.
5.07 Leave of Absence or Layoff. Subject to Paragraph
5.03, no pension shall be paid under this Plan during a period of
leave of absence or layoff unless the Participant elects to
retire or terminate his employment and end such leave or layoff.
5.08 Continuance Upon Reemployment. Except as provided
below, once a Participant begins to receive a pension, it shall
continue to be paid during any subsequent period of employment
with a Participating Company, any Affiliate, or any Interchange
Company. A Participant's pension shall be suspended during a
period of subsequent employment with a Participating Company if
the Participant is rehired before attaining age 65, in which case
the suspension shall commence with the first month following the
month of rehire; provided, however, that the Participant's
pension shall not be suspended if he is rehired as a Temporary
Employee and waives participation in the Plan pursuant to
Paragraph 2.02.
A Participant's pension also shall be suspended if he is
hired by an Interchange Company provided the Participant is
covered by the provisions of the Interchange Agreement and either
has not attained age 65 or has attained age 65 and is working
more than 40 hours in each month.
Subject to the other restrictions in this Paragraph, if a
Participant is reemployed by a Participating Company before he
begins to receive a pension and prior to attaining age 65, he may
not Elect to have payments commence while so employed.
Subject to Paragraph 5.03, suspensions shall continue for
the period of reemployment, and a Participant's suspended pension
shall recommence beginning with the month in which his
reemployment terminates.
SECTION 6
BENEFIT AMOUNT
6.01 Accrued Benefit. A Participant's accrued benefit
is a monthly benefit, commencing at his Normal Retirement Age,
that is the actuarial equivalent of the Participant's account
balance. Such accrued benefit shall be computed by (a) taking
the amount of such account balance, plus interest thereon (if the
Participant has not attained Normal Retirement Age) projected to
Normal Retirement Age at the rate of 4 percent per year
compounded annually, (b) converting such amount into a lifetime
pension at the Participant's Normal Retirement Age (or the
Participant's actual age if he has already attained his Normal
Retirement Age) using the appropriate factor from the table set
forth in Appendix C, and (c) dividing the resulting amount by 12.
6.02 Amount of Benefit.
(a) Service or Deferred Vested Pension. A
Participant's account shall be converted into an
actuarially equivalent, monthly single life annuity on
his Pension Commencement Date. Such annuity shall be
computed using the appropriate factor from the table
set forth in Appendix C, and dividing the resulting
amount by 12. Notwithstanding anything in this Plan to
the contrary, the benefit payable to a Participant
retiring with a service pension on or before December
31, 2005, shall equal the greater of (i) such
Participant's benefit determined under the preceding
provisions of this Plan, and (ii) such Participant's
benefit determined under the terms of the Prior Plan in
accordance with Appendix D hereto, taking into account
the Participant's age and service as of the date of his
retirement and the Participant's compensation, as
appropriate, on and after the Effective Date in
accordance with the provisions of Appendix D.
The amount of the annuity actually payable to a
Participant may be reduced in accordance with
subparagraph 7.01(a)(1) and may be increased in
accordance with the last paragraph of Paragraph 1.09.
Except as otherwise provided in Paragraph 5.08,
all pensions shall be paid through the month of the
pensioner or annuitant's death.
(b) Disability Pension. If a Participant who is
eligible for a disability pension under Paragraph 4.02
has not attained age 62 upon the expiration of his
short term disability benefits, his disability pension
shall be payable immediately at the expiration of such
benefits in the amount which would have been payable to
the Participant had (i) he terminated employment at
the expiration of his short term disability benefits,
(ii) his account been credited with interest at the
rate of 4 percent per year, compounded annually, from
such date to his 62nd birthday, and (iii) his account
been converted into an actuarially equivalent, monthly
single life annuity when he attained age 62 in
accordance with subparagraph 6.02(a). If a
Participant 6.02(a). If a Participant who is eligible
for a disability pension under Paragraph 4.02 has
attained age 62 upon the expiration of his short term
disability benefits, his disability pension shall be
payable immediately at the expiration of his short term
disability benefits in the amount which would have been
payable to the Participant had his account been
converted into an actuarially equivalent, monthly
single life annuity in accordance with subparagraph
6.02(a) at such time. 6.02(a) at such time; provided,
however, such Participant may elect to be paid a
deferred vested pension instead of a disability
pension.
The amount of the annuity actually payable to a participant
may be reduced in accordance with subparagraph 7.01(a)(1).
In the event a disability pension is not terminated earlier
under Paragraph 4.02, it shall be paid through the month of the
pensioner's death.
6.03 No Reduction in Accrued Benefits. In no event
shall any Participant's accrued benefit as of the Effective Date
be less than his accrued benefit under the Prior Plan, reduced,
if applicable, for early commencement and the election of an
optional form of pension in accordance with the provisions of the
Prior Plan. In addition, in no event shall the accrued benefit
of a Participant who is eligible for a service pension on
December 31, 2005, be less than his accrued benefit on such date.
This Plan shall be deemed to incorporate the provisions of the
Prior Plan to the extent required to determine benefit rights
under the Prior Plan.
6.04 Offset for Other Pensions. If a Participant is
entitled to an employer-provided pension under another defined
benefit pension plan that is qualified under Section 401(a) of
the Code which is attributable to employment with respect to
which an account has been established under this Plan, his
pension under this Plan shall be reduced by the amount of such
other pension. If the other pension is paid in a different form,
or commences at a different time, the offset under this Plan is
based on what the other pension would have been had it been paid
in the same form as the pension under this Plan and commenced at
the same time as the pension under this Plan. In case any
benefit or pension, which the Claim Review Committee 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 employee of a Participating Company,
to his beneficiaries or to his annuitant under such law, the
excess only, if any, of the amount prescribed in the Plan above
the amount of such payment prescribed by law shall be payable
under the Plan; provided, however, that no benefit or pension
payable under this Plan shall be reduced by reason of any
governmental benefit or pensions payable on account of military
service or by reason of any benefit which the recipient would be
entitled to receive under the Social Security Act. In those
cases where, because of differences in the beneficiaries, or
differences in the time or methods of payment, or otherwise,
whether there is such excess or not is not ascertainable by mere
comparison but adjustments are necessary, the Claim Review
Committee in its discretion is authorized to determine whether or
not in fact any such excess exists, and in case of such excess,
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.
6.05 Limitation of Benefit Amount. Notwithstanding any
other provision of the Plan, the actuarially equivalent monthly
lifetime pension which is derived from the account of any
Participant, when added to any pension benefits payable to such
Participant under any other defined benefit pension plan
maintained by a Participating Company or Affiliate, shall not
exceed the "maximum permissible amount" described in subparagraph
(a) below. The portion of any pension or survivor annuity with
respect to any Participant in excess of the applicable "maximum
permissible amount" shall be paid by the Participating Company
which last employed such Participant directly to the Participant
or beneficiary entitled thereto and shall be charged to its
operating expense accounts when and as paid.
(a) The "maximum permissible amount" shall be
equal to the lesser of (1) ninety thousand dollars
($90,000) or (2) one hundred percent (100%) of the
Participant's average annual earnings for the period of
three consecutive Plan Years during which such
Participant both was an active Participant in the Plan
and had the greatest aggregate earnings from a
Participating Company. For purposes of this Paragraph
6.05, the term "earnings" shall mean earnings as
defined in Appendix F of the Plan. However, the
"maximum permissible amount" may not exceed the amount
from the applicable table in Appendix E related to the
Participant's completed years and months of age. The
term "Social Security Retirement Age" shall mean the
age used as the retirement age for the Participant
under Section 216(1) of the Social Security Act, except
that such section shall be applied without regard to
the age increase factor and as if the early retirement
age under Section 216(1) of such Act was 62.
(b) If a pension or survivor annuity is payable
with respect to a Participant who has less than ten
years of participation in the Plan, the amount
specified in subparagraph (a)(1) above shall be
multiplied by a fraction, the numerator of which is the
Participant's years of participation and the
denominator of which is 10. If a pension or survivor
annuity is payable with respect to a participant who
has less than ten years of Vesting Service Credit, the
amount specified in subparagraph (a)(2) above shall be
multiplied by a fraction, the numerator of which is the
Participant's years of Vesting Service Credit and the
denominator of which is 10.
(c) If a pension or survivor annuity is payable
with respect to a Participant who was a Participant in
the Plan as of December 31, 1986, the "maximum
permissible amount" shall not be less than the lesser
of (i) the Participant's accrued benefit under the Plan
as of December 31, 1986, or (ii) the maximum limitation
applicable to such Participant as of December 31, 1986
under Section 415(b) of the Code.
(d) Effective January 1, 1988, and each January 1
thereafter, the $90,000 limitation specified in the
first sentence of subparagraph (a) above shall be
automatically adjusted to the new dollar limitation
determined by the Commissioner of Internal Revenue for
that calendar year. The new limitation shall apply to
Plan Years ending with the calendar year of the
adjustment.
(e) If a Participant's pension hereunder is
payable as a joint and 50% survivor annuity with the
Participant's spouse as the beneficiary, the
modification of the pension for such form of payment
shall be made before the application of the limitation
hereunder and, as so modified, shall be subject to such
limitation.
(f) If an individual is a Participant in this
Plan and has ever participated in one or more of the
following:
(1) the BellSouth Management Savings and
Employee Stock Ownership Plan (the
"Savings Plan");
(2) the BellSouth Savings and Security Plan
(the "Savings and Security Plan");
(3) the BellSouth Employee Stock Ownership
Plan (the "ESOP"); or
(4) any other defined contribution plan
maintained by a Participating Company or
Affiliate,
the applicable "maximum permissible amount" under
subparagraph (a) or (c) shall be reduced to the extent
necessary to prevent the sum of the following
fractions, computed as of the close of any year, from
exceeding 1.0.
(1) A fraction, the numerator of
which is the individual's projected
annual benefit under the Plan and the
projected annual benefit under any other
defined benefit pension plan qualified
under Section 401(a) of the Code and
maintained by a Participating Company or
Affiliate (computed in accordance with
Section 415(e)(2) of the Code), and the
denominator of which is the product of
1.25 and the applicable "maximum
permissible amount" under subparagraph
(a) or (c) above.
PLUS
(2) A fraction, the numerator of which is
the sum of (A) the annual additions
(computed in accordance with Section
415(e)(3) of the Code) to the
individual's account in any of the plans
referred to in this subparagraph (f),
and (B) the annual additions prior to
1984 to the individual's account in the
Bell System Savings Plan for Salaried
Employees, and the Bell System Savings
and Security Plan and the Bell System
Employees Stock Ownership Plan (if the
individual's accounts in such plans have
been transferred to the Savings Plan and
the Savings and Security Plan and ESOP
respectively), and the denominator of
which is the total of the lesser of the
following amounts separately computed
for each year of service with any
company participating in such plans:
(A) 35 percent of the
Participant's earnings for each year, or
(B) 125 percent of the dollar
limitation under Section 415(c)(1)(A) of
the Code for each such year.
Pursuant to regulations to be prescribed by the
Secretary of the Treasury or his delegate, an amount
shall be subtracted from the numerator of the fraction
computed
under (2) above with respect to any Participant (but
not exceeding such numerator), so that the sum of the
"defined benefit plan fraction" and the "defined
contribution plan fraction" computed as of December 31,
1986 under Section 415(e)(1) of the Code does not
exceed 1.0.
(g) If a Participant participates in a defined
benefit plan or plans maintained by a Participating
Company or Affiliate and a defined contribution plan or
plans maintained by a Participating Company or
Affiliate, such Participant's rate of benefit accrual
under such defined benefit plan or plans, and/or the
allocation to his account under such defined
contribution plan or plans, shall be reduced if such
reduction is required to comply with the limitations
set forth in section 415 of the Code. If a reduction
in the rate of benefit accrual or a reduction in the
allocation to an account is required, benefits payable
from, or allocations under, the following plans shall
be reduced in the order the Plans are listed:
(1) BellSouth Personal Retirement Account
Pension Plan (not including the benefits
payable in excess of the "maximum
permissible amount" under this Paragraph
6.05);
(2) BellSouth Pension Plan;
(3) Any other defined benefit pension plan
maintained by an Affiliate;
(4) Savings Plan;
(5) Savings and Security Plan;
(6) ESOP; and
(7) Any other defined contribution plan
maintained by an Affiliate.
(h) This Paragraph 6.05 is intended to comply
with Code Section 415 and should be interpreted to
limit benefits only to the extent required by that Code
Section. Accordingly, the limits of this Paragraph
6.05 shall be applied by considering all plans
maintained by a Participating Company and its
Affiliates [(as defined in this subparagraph 6.05(h)],
in which a Participant participates or has
participated, but without combining plans maintained by
Participating Companies that are not Affiliates. For
purposes of this Paragraph 6.05, "Affiliate" shall have
the same meaning as in Paragraph 1.02, except that the
provisions of subparagraphs 1.02(a) and 1.02(b) shall
be applied by substituting the phrase "more than 50
percent" for the phrase "at least 80 percent" each
place it appears in Code Section 1563(a)(1).
SECTION 7
PAYMENT OPTIONS
7.01 Annuity Forms of Payment.
(a) Normal Forms of Benefit.
(1) Married Participant. If a Participant is
married on his Pension Commencement Date, his
pension shall be payable as a joint and 50%
survivor annuity unless he Elects otherwise as
provided in Paragraph 7.02. The joint and 50%
survivor annuity shall be 90 percent of the
benefit amount described in Section 6, and 50
percent of such reduced pension shall be paid to
the Participant's surviving spouse (if such spouse
is the one to whom the Participant was married on
his Pension Commencement Date) for the remainder
of the surviving spouse's lifetime.
(2) Unmarried Participant. If a Participant
is not married on his Pension Commencement Date, his
pension shall be unreduced and shall be a single
life annuity.
(b) Optional Form of Benefit for Married
Participant. A married Participant may Elect to waive
the joint and 50% survivor annuity and to receive in
lieu thereof a single life annuity.
7.02 Election of Early Retirement or Alternate Form of
Benefit. A Participant who wants to Elect to have his pension
commence prior to attaining his Normal Retirement Age and a
married Participant who wants to Elect a single life annuity form
of benefit may do so in accordance with the following procedures.
(a) Notification Requirements. The Participant
must be given written notification, as described below,
during the 90-day period preceding his Pension
Commencement Date. The notification must explain (1)
the Participant's right to make the election, (2) the
effect of his making the election, (3) the rights of
his spouse with respect to such election, (4) his right
to revoke the election during the election period, (5)
the effect of such a revocation, and (6) if applicable,
his right to defer receipt of his pension. Any
notification with respect to the joint and 50% survivor
annuity must include (1) a written explanation of the
terms, conditions and relative values of that option
and (2) a reasonable estimate of both the joint and 50%
survivor annuity payable and the single life annuity
payable if he so Elects.
(b) Election Requirements. The notification must
include an election form on which the Participant may
make the applicable election. The election form must
be signed and must acknowledge the effect of such
election, and all signatures on the form must be
notarized. The election must be made during the 30 to
90-day period (the length of which shall be set by
BellSouth) following receipt of the notification and
the election form and may be revoked at any time during
such period by filing a new election form.
(c) Spousal Consent. If the Participant is
married on the Pension Commencement Date, the
Participant's spouse must consent to the election of a
single life annuity, and such consent must (1) be
written and the spouse's signature must be notarized,
(2) state the elected form of benefit, and (3)
acknowledge the effect of such election and form of
benefit. Any such spousal consent shall be
irrevocable.
Spousal consent is not required if the Participant
establishes to the satisfaction of the Benefit
Committee that such consent cannot be obtained because
there is no spouse, because the spouse cannot be
located or because of any other circumstances under
which spousal consent is not required under Section 417
of the Code.
7.03 Revocation or Change in Status. If the
Participant's spouse dies after the Participant has made an
election and before his Pension Commencement Date,
notwithstanding subparagraph 7.02(c) above, such election shall
be deemed to be revoked. If the marriage of the Participant and
his spouse terminates after the Pension Commencement Date, such
person shall continue to be regarded as the Participant's spouse
for purposes of this Section 7 unless a qualified domestic
relations order provides otherwise.
7.04 Pop-up Feature. If the spouse of a former
Participant who is receiving a joint and 50% survivor annuity (a)
was married to the Participant on his Pension Commencement Date
or was entitled to part or all of the survivor portion of the
Participant's annuity under the terms of a qualified domestic
relations order in effect on such Date, and (b) dies after such
date, his pension shall be increased by the amount his pension
was originally reduced to provide the survivor benefit to such
spouse, starting with the pension payment for the month following
the death of the spouse.
7.05 Election Periods for Disability Pensioners. Any
Participant determined to be eligible for disability pension
payments shall be covered by the election provisions in Paragraph
7.02, above. The provisions shall apply both at the time the
disability pension payments commence and at the time the
disability pension converts to a service pension. If a
Participant eligible for a disability pension Elects a single
life annuity form of benefit for his disability pension and dies
prior to age 65, the provisions of Section 8 that apply to
terminated vested employees are applicable.
7.06 Cash-out of Small Pensions.
(a) Payment to Participant. If the greater of
the Participant''s account balance or the present value
of the Participant''s accrued benefit (determined using
the BellSouth Management 50/50 mortality rates and the
PBGCApplicable Mortality Table and the Applicable
Interest Rate) is less than or equal to $3,500 as of
the date of his retirement or termination, a lump-sum
settlement equal to such greater amount shall be
payable to him on such date in lieu of any other
benefits under the Plan, provided the greater of such
amounts remains $3,500 or less through the date of
payment.
If a Participant ceases to be an Employee prior to
becoming vested in his accrued benefit hereunder, such
Participant shall be deemed to have received a lump sum
settlement of $0, and his entire accrued benefit shall
immediately be forfeited. In the event such a
Participant again becomes an Employee before he has
incurred five consecutive Statutory Breaks in Service,
he shall be deemed to have immediately repaid to the
Plan the amount which was deemed to have been
distributed upon his prior termination of employment,
and his account shall be restored in accordance with
Paragraph 3.08.
(b) Payment to Surviving Spouse. A lump sum
settlement shall be payable to the Participant's
surviving spouse in lieu of the benefits otherwise
payable to such spouse pursuant to Paragraph 8.02 or
8.03 if (i) with respect to survivor benefits payable
under Paragraph 8.02, the greater of 45 percent of the
Participant's account balance, as increased by the
interest credits provided in clause (ii) of that
Paragraph, and the present value of the benefit payable
to such spouse (determined using the assumptions in
subparagraph 7.06(a) above) is less than or equal to
$3,500, or (ii) with respect to survivor benefits
payable under Paragraph 8.03, the greater of 45 percent
of the Participant's account balance as of the date of
his death and the present value of the benefit payable
to such spouse (determined using the assumptions in
subparagraph 7.06(a) above) is less than or equal to
$3,500 but only if such greater amount remains $3,500
or less through the date of payment.
7.07 Rollover Distributions.
(a) General. Notwithstanding any provision of
the Plan to the contrary that would otherwise limit a
distributee's election under this Paragraph 7.07, a
distributee may elect, at the time and in the manner
prescribed by the Committee, to have any portion of an
eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee
in a direct rollover.
(b) Definitions.
1) Eligible Rollover Distribution. An
eligible rollover distribution is any distribution
of all or any portion of the balance to the credit
of the distributee, except that an eligible
rollover distribution does not include any
distribution that is one of a series of
substantially equal periodic payments (not less
frequently than annually) made for the life (or
life expectancy) of the distributee or the joint
lives (or joint life expectancies) of the
distributee and the distributee's designated
beneficiary, or for a specified period of ten
years or more; any distribution to the extent such
distribution is required under Code Section
401(a)(9); and the portion of any distribution
that is not includible in gross income (determined
without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
2) Eligible Retirement Plan. An eligible
retirement plan is an individual retirement
account described in Code Section 408(a), an
individual retirement annuity described in Code
Section 408(b), an annuity plan described in Code
Section 403(a), or a qualified trust described in
Code Section 401(a), that accepts the
distributee's eligible rollover distribution.
However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible
retirement plan is an individual retirement
account or individual retirement annuity.
3) Distributee. A distributee includes an
Employee or former Employee. In addition, the
Employee's or former Employee's surviving spouse
and the Employee's or former Employee's spouse or
former spouse who is the alternate payee under a
qualified domestic relations order, as defined in
Code Section 414(p), are distributees with regard
to the interest of the spouse or former spouse.
4) Direct Rollover. A direct rollover is a
payment by the Plan to the eligible retirement
plan specified by the distributee.
7.08 Temporary Lump Sum Settlement Option. A
Participant described in subparagraph (a) of this Paragraph 7.08
may Elect to receive a lump sum settlement as determined below in
lieu of the forms of benefit described in Paragraph 7.01.
7.01.
(a) The Participants to whom the lump sum
settlement option described in this Paragraph 7.08
apply are the vested Employees of Participating
Companies who retire or terminate employment during the
period beginning July 1, 1993, and ending December 30,
1997, with a pension commencement date on or before
December 31, 1997.
(b) An Ea) An election to receive a lump sum
settlement described in this Paragraph 7.08 by a
Participant shall include amounts payable by
Participating Companies pursuant to Paragraph 6.05 of
the Plan which are in excess of the ""maximum
permissible amount"" described in such Paragraph only
if the present value of such amounts, determined using
the BellSouth Management 50/50 mortality rates and 120
percent of the PBGCon the Pension Commencement Date
using the Applicable Mortality Table and the Applicable
Interest Rate, does not exceed $20,000.
(c) b) The lump sum settlement of any
Participant described in subparagraph 7.08(a) who
Elects the lump sum settlement option shall equal the
greater of (i) the Participant's account balance, and
(ii) the present value of the Participant' the
Participant's account balance, and (ii) the present
value of the Participant's pension on his Pension
Commencement Date, which shall be determined using the
BellSouth Management 50/50 mortality rates and an
interest rate equal to 100 percent (120 percent if the
single sum so determined exceeds $25,000, and if the
single sum determined using 120 percent is less than
$25,000, the single sum shall be deemed to be $25,000)
of the PBGC Interest Rate. Applicable Mortality Table
and the Applicable Interest Rate.
(d) c) A Participant who wants to Elect to
receive a lump sum settlement as described above must
do so in accordance with the procedures in Paragraph
7.02. 7.02.
(d) As a special transition rule for Participants
whose Pension Commencement Dates occur on or after
July 1, 1996, and in a Plan Year which begins before
January 1, 2000, such a Participant's present value
amount in clause (ii) of Subparagraph 7.08(b) shall be
determined using the interest rate specified in
Paragraph 1.02A(b) and the mortality table specified in
Paragraph 1.02B(b) if the combined use of that rate and
table results in a higher present value amount than the
combined use of the rate and table specified in
Paragraphs 1.02A(a) and 1.02B(a), respectively.
SECTION 8
PRERETIREMENT SURVIVING SPOUSE PENSION
8.01 Eligibility. If a Participant dies after becoming
vested but before his Pension Commencement Date, the benefits
described in this Section 8 are payable to his surviving spouse.
Except as provided in the following sentence, a
Participant's spouse is not eligible for benefits under this
Section 8 unless the Participant and spouse were married to each
other throughout the one-year period ending on the date of his
death. The rule in the preceding sentence shall not apply if the
Participant dies while an active Employee of a Participating
Company or an Affiliate or dies while service pension eligible
but prior to his Pension Commencement Date.
8.02 Death Prior to Retirement or Termination. If the
Participant dies after becoming vested but while actively
employed by a Participating Company or Affiliate or while
receiving benefits under the short term disability plan of a
Participating Company or Affiliate, his surviving spouse may
elect to have payments begin at any time following the
Participant's death.
The surviving spouse's monthly pension shall be 45 percent
of the amount which would have been payable to the Participant
had (i) he terminated employment with a deferred vested pension
on the date of his death, (ii) if he had not attained age 62 as
of his death, his account been credited with interest at the rate
of 4 percent per year, compounded annually, from the date of his
death to his 62nd birthday, and (iii) his account been converted
into an actuarially equivalent single life annuity at age 62, if
he had not attained age 62 on the date of his death, or on the
date of his death, if he had attained age 62 as of such date,
using the appropriate factor from the table in Appendix C.
Effective for such Participants who die on or after
July 22, 1996, (a) if the Participant has a surviving spouse, in
lieu of the monthly pension described above, the surviving spouse
may elect to receive a lump sum settlement that is equal to the
greater of (I) 45% of the Participant's hypothetical account
balance determined in steps (i) and (ii), above, and (II) the
present value of such monthly pension determined using the
Applicable Mortality Table and the Applicable Interest Rate, and
(b) if such a Participant dies and does not have a surviving
spouse, the amount determined in the prior sentence shall be paid
to his estate in a lump sum.
8.03 Death After Retirement or Termination. If the
Participant dies after retirement but before his Pension
Commencement Date, his surviving spouse may elect to have
payments begin at any time following the Participant's death.
If the Participant terminates employment after becoming
vested but before becoming eligible to retire and then dies
before his Pension Commencement Date, his surviving spouse may
elect to have payments begin on any date the Participant could
have elected to have had his pension commence had he survived
until that date.
In either case, the surviving spouse's pension is the amount
such spouse would have received had the Participant lived until
the date payments begin to be paid to the surviving spouse,
elected payments to begin on such date in the form of the joint
and 50% survivor annuity, and then died.
SECTION 9
DEATH BENEFIT PLAN
9.01 Accidental Death Benefit. In the event an
Eligible Employee dies as a result of an accidental injury
arising out of and in the course of employment of a Participating
Company (including while the Eligible Employee is in travel
status such that his expenses are being paid by a Participating
Company), there shall be paid to his beneficiary, as determined
under Paragraph 9.04, an Accidental Death Benefit not to exceed
three years' wages, as such term is defined in subparagraph
9.07(c), plus an amount equal to the necessary expenses of burial
of the Eligible Employee not in excess of $500. The Benefit
Committee must determine that the injury causing the Eligible
Employee's death resulted solely from an accident occurring
during and in connection with the performance of services by the
Eligible Employee for a Participating Company, which services the
Eligible Employee was properly directed to perform or which he
voluntarily elected to perform in protecting a Participating
Company's property or interest. The Benefit Committee must
further determine that such injury resulted in the Eligible
Employee's death and that, based on administrative and
interpretative guidelines used by the Benefit Committee, the use
of illegal drugs, the consumption of alcohol, involvement in
illegal acts, failure to use seat belts or suicide did not
contribute to or cause the death. In any case where an Eligible
Employee's death is determined to result from either (a) an
infection of a cut, abrasion, scratch, puncture, or other wound
which was not immediately disabling and which was not reported at
the time of the occurrence or (b) sunstroke or frostbite, the
Accidental Death Benefit shall not be payable unless otherwise
determined by the Benefit Committee. In any case where an
Accidental Death Benefit is paid following the disability of the
Eligible Employee, the amount of the Accidental Death Benefit
shall not exceed the amount which could have been paid if the
disabled Eligible Employee had died on the day he ceased to be an
Employee of a Participating Company.
9.02 Sickness Death Benefit. In any case where the
Accidental Death Benefit provided under Paragraph 9.01 is not
payable upon the death of an Eligible Employee, there shall be
paid to the Eligible Employee's beneficiary, as determined under
Paragraph 9.04, a Sickness Death Benefit not to exceed one year's
wages.
9.03 Pensioner Death Benefit.
(a) Upon the death of any Participant who retired
from service pursuant to a service pension or
disability pension under a predecessor plan or the
Prior Plan, or terminated employment after becoming
eligible for a service pension under Paragraph 4.01
(hereinafter referred to as a "Pensioner"), and such
retirement occurred on or after the date specified in
such plan for the payment of an unreduced death
benefit, there shall be paid a Pensioner Death Benefit
to the beneficiary of the Pensioner, as determined
under Paragraph 9.04, provided (i) the Pensioner was
receiving or entitled to receive the pension at the
time of his death and neither the Accidental Death
Benefit nor the Sickness Death Benefit is payable and
(ii) all of the Pensioner's Vesting Service Credit was
with a Former Affiliate and one or more Participating
Companies. The total amount of Pensioner Death Benefit
shall not exceed the maximum amount which could have
been paid as a Sickness Death Benefit under Paragraph
9.02 if the Pensioner had died on his last day of
active service before retirement or, in the case of a
Pensioner who retired after the last day of the month
in which his 65th birthday occurred and whose pension
was effective during the period from January 2, 1979 to
August 10, 1980, inclusive, the maximum Sickness Death
Benefit which could have been paid if the Pensioner had
died on the last day of the month in which his 65th
birthday occurred. In no event, however, shall the
amount of the Pensioner Death Benefit payable on
account of a participant in the Prior Plan or a
predecessor plan who retired prior to January 1, 1988,
be less than the annual pension allowance as determined
under paragraph 2 of Section 4 of the Prior Plan or, if
applicable, twelve (12) times the monthly lifetime
pension determined under subparagraph 6.02(a) or (b).
(b) If the Pensioner has satisfied the
requirements of paragraph (a) above but retired under a
predecessor plan or the Prior Plan prior to the date
specified in such plan for the payment of an unreduced
death benefit subsequent to retirement, the Pensioner
Death Benefit shall not be less than the amount
specified in paragraph (a) above reduced by 10 percent
for each full year which has elapsed since his
retirement. In no event shall the Pensioner Death
Benefit be less than the annual pension allowance as
determined under paragraph 2 of Section 4 of the Prior
Plan.
(c) In any case where the Pensioner transferred
from a Participating Company to an Affiliate which is
not a Participating Company or from such an Affiliate
to a Participating Company and who at the time of death
was receiving either a service pension or disability
pension under a predecessor plan or the Prior Plan, or
who was receiving or entitled to receive a pension
benefit under this Plan after satisfying the
requirements of either Paragraph 4.01 or Paragraph
4.02, the Pensioner Death Benefit shall not exceed a
pro rata portion of the Sickness Death Benefit which
could have been paid if the Pensioner had died on his
last day of active service with a Participating
Company. The pro rata amount shall be based upon the
Pensioner's years of Vesting Service Credit as follows:
Years of Percentage
of
Vesting Service Credit Death Benefit Paid
0 - less than 10 years 0%
10 - less than 15 years 25%
15 - less than 20 years 50%
20 - less than 25 years 75%
25 or more years 100%
(d) In the case of a Pensioner described in
subparagraph 9.03(a), (b), or (c) above, who retires on
or after January 1, 1988, no Pensioner Death Benefit
shall be payable upon the death of such a person if
such person's Vesting Service Credit as of January 1,
1988 (including periods of employment prior to such
date which may be included subsequent to such date
under the Plan bridging rules), is less than ten years.
In any case where such a pensioner completed 20 or more
years of Vesting Service Credit as of January 1, 1988
(including periods of employment occurring prior to
such date which may be included subsequent to such date
under the Plan bridging rules), the Pensioner Death
Benefit amount shall equal one year's wages of such
person determined as of December 31, 1987. In any case
where such a Pensioner completed at least ten years of
Vesting Service Credit but less than 20 years of
Vesting Service Credit as of January 1, 1988 (including
periods of employment occurring prior to such date
which may be included subsequent to such date under the
Plan bridging rules), the Pensioner Death Benefit shall
equal 50 percent of one year's wages of such person
determined as of December 31, 1987.
9.04 Beneficiaries Eligible to Receive Death Benefits.
(a) The Accidental Death Benefit, Sickness Death
Benefit and Pensioner Death Benefit shall be payable to
any one or more of the following individuals, who shall
be the Eligible Employee's "mandatory beneficiaries":
the spouse of the deceased Participant or Pensioner if
living with him at the time of his death; the unmarried
child or children of the deceased Participant or
Pensioner under the age of 23 years (or over that age
if they become physically or mentally incapable of self
support prior to age 23) who were actually supported in
whole or in part by the deceased Participant or
Pensioner at the time of death; or a dependent parent
who lives in the same household with the Participant or
Pensioner or who lives in a separate household which is
provided for the parent by the Participant or
Pensioner. If the Participant or Pensioner is survived
by two or more mandatory beneficiaries, the Benefit
Committee shall pay the applicable Death Benefit to or
for any one or more of such possible beneficiaries in
such portions as it may determine, taking into
consideration the degree of dependency and such other
facts as it may deem pertinent.
(b) If the Participant or Pensioner is not
survived by any spouse, child or parent, as herein
described, the Death Benefit may be paid to a
"discretionary beneficiary" who may be any other
relative who is receiving or is entitled to receive
support from the deceased Participant or Pensioner at
the time of his death.
(c) In making its determinations hereunder, the
Benefit Committee may take into account, but shall not
be bound by, any beneficiary designation made by the
Participant or Pensioner specifying the person or
persons to whom benefits shall be paid and the amount
payable to each. In any case where no beneficiary
survives the Participant or Pensioner or if the amount
of the death benefit authorized by the Benefit
Committee is less than the maximum award payable, the
Benefit Committee may authorize that payment be made to
defray the necessary expenses incident to the death of
the Participant or Pensioner and any disability
immediately preceding death, together with, in the case
of the Sickness Death Benefit, the necessary expenses
of burial not in excess of $500.
9.05 Method of Payment.
(a) The Benefit Committee shall have the
discretion to determine whether death benefits are
payable in a lump sum or installments and, if paid in
installments, the frequency of payments as well as the
period over which payments are made. Any Participant
or Pensioner may file a written Death Benefit Direction
with the Benefit Committee requesting that death
benefits be paid in equal monthly installments over a
period which does not exceed five years (ten years in
the case of a written request filed with the Committee
prior to January 1, 1984). Death Benefits, if payable,
shall be paid in accordance with such Death Benefit
Direction. In the event a beneficiary who is receiving
or is entitled to receive installment payments
hereunder dies prior to the receipt of all such
payments, the Benefit Committee may direct that the
remaining portion of such payments be payable to any
other eligible beneficiary or to the estate of the
deceased beneficiary in a manner determined by it,
subject, however, to the requirement that payments be
completed within five years of the death of the
Participant or Pensioner. Any installment payments
hereunder shall be credited with interest at a rate
determined by the Benefit Committee, which rate may be
redetermined no more than once in any calendar year.
No interest shall be credited beyond the date of death
of the initial beneficiary unless the Benefit Committee
determines to pay the unpaid balance of such benefit to
another beneficiary in installments.
(b) The Benefit Committee may pay, before finally
selecting a beneficiary or beneficiaries, a portion of
any death benefit to the spouse of the deceased
Participant or Pensioner, or some other person
designated by the Benefit Committee, which is
equivalent to the wages, disability benefits or pension
which the deceased person would have received. Such
payment shall be made for the balance of the payroll
period in which death occurs. In addition, the Benefit
Committee may authorize payment of a portion of the
death benefit not in excess of $1,500 to meet urgent
expenses incident to the death and the immediately
preceding disability of the deceased or the burial of
the deceased. Any such payments shall reduce the
balance of the death benefit.
9.06 Source of Payment. Sickness Death Benefits and
Pensioner Death Benefits when paid due to the death of a service
or disability Pensioner, together with interest thereon, shall be
payable from the assets of the Plan if payment is made to a
mandatory beneficiary. Accidental Death Benefits in excess of
the maximum Sickness Death Benefit which could have been payable
to the Participant or, if greater, $50,000, shall be paid through
insurance maintained by such Participating Company on the life of
such Participant or Pensioner. All other death benefits shall be
paid from the assets of the Participating Company which last
employed the Participant or Pensioner. Notwithstanding anything
above to the contrary, any death benefit payable under Paragraph
9.03 with respect to a Participant who has received a lump sum
settlement pursuant to Paragraph 7.08, and any interest thereon,
shall be paid from the assets of the Participating Company that
last employed the Participant or from a trust established by such
Participating Company to fund a voluntary employees' beneficiary
association under which such benefit is payable.
9.07 Special Rules.
(a) The death benefits payable under this Section
9 are in addition to any pre-retirement surviving
spouse benefits payable under Section 8 and any
survivor annuity payable under Section 7. In no event,
however, shall more than one death benefit described in
this Section 9 be payable upon the death of any
Participant or Pensioner, nor shall any such death
benefit be payable from more than one Plan. If a
Participant or Pensioner who has been a Participant in
more than one Plan becomes eligible for a death benefit
under this Section 9, such death benefit shall be
payable from the Plan of the Participating Company that
last employed the Participant or Pensioner.
(b) No death benefits shall be payable under this
Section 9 in any case where a claim is presented or
suit brought against any Participating Company,
Affiliate or Former Affiliate for damages resulting
from the death of a Participant or Pensioner until such
time as such claims are withdrawn or such suit is
discontinued. No Accidental Death Benefit shall be
payable hereunder until such time as the Benefit
Committee receives a written release of all claims and
demands which the Participant, his beneficiaries and
heirs may have had against a Participating Company,
Affiliate, Interchange Company, or any other entity
determined by the Benefits Committee, which claims and
demands arise out of the accident which resulted in the
Participant's death.
(c) For purposes of this Section 9, the term
"wages" shall mean wages, including contributions made
under a "cafeteria plan" or a "cash or deferred
arrangement" pursuant to Sections 125 or 401(k) of the
Code for full-time service (not including overtime),
computed at the Participant's annual rate of pay which
was in effect at the time of death or other date
specified in this Section 9 or, if greater, the basic
rate of pay at the date of death or other date
specified in this Section 9, as determined in
accordance with Paragraph 1.09. The "rate of pay""rate
of pay" is the annualized base salary rate plus lump
sum payments (including, for expample, team or
equivalent awards, commissions, marketing incentive
payments, differentials, and salary transition
payments, but excluding any executive short-term
awards) paid during the 12 months prior to the time of
death or retirement. No payments made after the death
of the employee are included. "Rate of pay" includes
increases in the basic pay approved before a disability
absence began, a position rate increase approved after
a disability absence began or basic rate increases
scheduled to be effective but withheld during a
disability absence. No lump sum payments are included.
In any case where a Participant's Years of Service are
split between two or more Participating Companies or
Affiliates, "wages" shall be computed based on the
Participant's rate of pay on the last day in which he
was on the payroll of a Participating Company. In any
case where a Participant was working on a part-time
basis, the death benefits under this Section 9 shall be
computed on the basis of the time constituting the
Participant's normal service under his contract of
hire, except that Accidental Death Benefits shall be
computed on the basis of full-time service (not
including overtime) in the case of any Participant who
has been continuously in the service of a Participating
Company or an Interchange Company since December 31,
1980.
(d) Participants who have been authorized to
waive death benefits by the Participating Company,
Former Affiliate, or Bell Communications Research, Inc.
which employed them are permitted to waive the Sickness
and Pensioner Death Benefits provided under this
Section 9. Any such waiver shall remain in effect
until revoked by the Participant, provided such
revocation has been authorized by the Participating
Company, Former Affiliate or Bell Communications
Research, Inc., as applicable.
(e) Except for the Pensioner Death Benefit, a
Death Benefit shall not be payable in the case of any
person who dies after he has ceased to be an employee
of either a Participating Company or an Affiliate,
unless such person became disabled by reason of
accident or sickness while an employee and continued
disabled, until death, to such degree as to be unable
to engage in any gainful occupation. In such a case, a
Death Benefit may be paid upon approval of the Benefit
Committee.
(f) All claims for Death Benefits must be made
within one year of the death on which the claim is
based. If the Benefit Committee is made aware of a
mandatory or discretionary beneficiary after one year,
the Benefit Committee shall not be required to
recognize any claim made by or in behalf of such
beneficiary.
SECTION 10
COMPUTATION OF SERVICE
10.01 Hour of Service. An Hour of Service shall be
determined in accordance with the following rules:
(a) An Hour of Service is each hour for which an
Employee is paid, or entitled to payment, by a
Participating Company or an Affiliate either for the
performance of duties or on account of a period of time
during which no duties are performed (irrespective of
whether the employment relationship has terminated) due
to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty, or leave
of absence.
(b) Except as may otherwise be provided in
Paragraphs 10.06 and 10.07, only the first 501 Hours of
Service shall be recognized for any single continuous
period during which the Employee performs no duties.
(c) No Hour of Service shall be recognized if
payment for such hour is made or due under a plan
maintained solely for the purpose of complying with
applicable workers' compensation or unemployment
compensation or disability insurance laws.
(d) No Hour of Service shall be recognized for
any payments which solely reimburse an Employee for
medical or medically related expenses incurred by the
Employee.
(e) Hours of Service also include hours for which
back pay, irrespective of mitigation of damages, is
either awarded or agreed to by a Participating Company
or Affiliate, except for hours already recognized in
accordance with the preceding rules.
(f) An Hour of Service need not have occurred
prior to termination of employment.
(g) A part-time Employee or an Occasional
Employee is deemed to have completed 10 Hours of
Service for each day in which he completed one or more
Hours of Service. Any full-time Employee is deemed to
have completed 45 Hours of Service for each week in
which he completed one or more Hours of Service.
(h) Any Eligible Employee who is recalled as a
regular employee following a temporary layoff within
six months of the date of such layoff shall be credited
with the same number of Hours of Service which would
otherwise normally have been credited to such Employee
under Paragraph (g) above but for such layoff unless
the layoff began within twelve months of a prior
layoff, and the total layoff period during the twelve
month period exceeds six months.
(i) For purposes of determining whether a
Participant has incurred a Statutory Break in Service,
the Participant shall be credited with the Hours of
Service with which he would have been credited but for
such absence for each week during an absence from work
for any period by reason of the Participant's
pregnancy, the birth of the Participant's child, the
placement of a child with the Participant in connection
with the adoption of such child by the Participant, or
caring for such child for a period beginning
immediately following such birth or placement;
provided, no hours shall be credited for such absence
unless such Participant timely furnishes to the Benefit
Committee such evidence of the nature and duration of
such absence as may be required by the Benefit
Committee. The hours to be credited for such a child-
related absence shall be credited (to the extent of
such absence in a calendar year) exclusively to the
calendar year in which the absence from work begins,
but only to the extent such credit is necessary to
prevent such Participant from incurring a Statutory
Break in Service in such period or, if no credit is
necessary to prevent a Statutory Break in Service in
such period, the hours shall be credited (to the extent
of such absence in the immediately following calendar
year) exclusively to the immediately following calendar
year.
10.02 Net Credited Service. A Participant's Net
Credited Service is the number of years and fractions thereof he
has been continuously employed by Participating Companies and
Affiliates. Net Credited Service shall include service
creditable pursuant to Paragraph 11.05 of the Plan or under the
provisions of an Interchange Agreement or acquisition or merger
agreement. Net Credited Service also may include service
creditable under the term of a court order, arbitration award or
settlement agreement; provided, however, that the service so
credited shall not exceed the period from the Participant's
termination to his reemployment under the terms of the order,
award or agreement. If the Participant has had a break in
service, the Net Credited Service is adjusted in accordance with
the bridging rules in effect at the time he returns to work. If
a Participant was hired or rehired on or after January 1, 1990,
and has been classified as a part-time employee at any time after
his hire or rehire, the Net Credited Service is credited on a
prorated basis in accordance with Paragraph 10.04.
Effective beginning January 1, 1996, any service by a
Participant with
American Cellular Communications Corporation
Bakersfield Cellular Telephone Company
Gulf Coast Cellular Telephone Company
Honolulu Cellular Telephone Company
Houston Cellular Corporation
Los Angeles Cellular Telephone Company
Madison Cellular Telephone Company
MCTA
Richmond Cellular Telephone Company
Westel-Indianapolis Company
Westel-Milwaukee Company, Inc.
during the period beginning May 1, 1989, or such later date on
which an Affiliate acquired an interest in such entity, through
December 31, 1995, will be recognized for Net Credited Service.
10.03 Vesting Service Credit. A Participant's
Vesting Service Credit is the number of years and fractions
thereof he has been employed by Participating Companies. Vesting
Service Credit shall include service creditable pursuant to
Paragraph 11.05 of the Plan or under the provisions of an
Interchange Agreement or acquisition or merger agreement.
Vesting Service Credit may also include such periods as are
included in a Participant's Net Credited Service pursuant to the
terms of a court order, arbitration award or settlement
agreement. The same part-time service rules applied to Net
Credited Service also apply to Vesting Service Credit. Except as
provided in Paragraph 10.05, Vesting Service Credit shall be
bridged automatically at time of rehire following a break-in-
service for the purposes of this Plan.
Effective beginning January 1, 1996, any service by a
Participant with
American Cellular Communications Corporation
Bakersfield Cellular Telephone Company
Gulf Coast Cellular Telephone Company
Honolulu Cellular Telephone Company
Houston Cellular Corporation
Los Angeles Cellular Telephone Company
Madison Cellular Telephone Company
MCTA
Richmond Cellular Telephone Company
Westel-Indianapolis Company
Westel-Milwaukee Company, Inc.
during the period beginning May 1, 1989, or such later date on
which an Affiliate acquired an interest in such entity, through
December 31, 1995, will be recognized for Vesting Service Credit.
10.04 Part-time Service. Employees hired or
rehired on or after January 1, 1990, who are classified as part-
time employees at any time after hire or rehire accrue Net
Credited Service and Vesting Service Credit on a prorated monthly
basis. The proration is determined by the number of hours worked
per week as a percent of 37.5 hours. Vesting Service Credit is
adjusted, and Net Credited Service may be adjusted, for any other
part-time service at the time a service, disability or deferred
vested pension is computed.
10.05 Breaks in Service. The continuity of a
Participant's Net Credited Service is broken by any absence
without pay from the service of a Participating Company or an
Affiliate, except as provided in this Section 10. Such
continuity is broken upon transfer of employment to an
Interchange Company or Former Affiliate unless an applicable
Interchange Agreement provides to the contrary. If a Participant
is reemployed after a break in service, his Net Credited Service
shall be determined based on his employment after such break
unless and until his service before such break is recognized
under the Company bridging rules.
Prior Net Credited Service shall be credited upon
reemployment if the Participant returns to active service after
an absence of six months or less. Otherwise the prior Net
Credited Service is credited when the Participant completes three
years of continuous employment after such absence. The period of
absence, however, shall not be recognized as a period of
employment for purposes of computing Net Credited Service.
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.
10.06 Leaves of Absence. A leave of absence does
not constitute a break in continuity of Net Credited Service if
formally granted in conformity with the rules of a Participating
Company or Affiliate, and either (a) is so granted prior to the
commencement of such leave or (b) is for attendance at an
educational institution.
A leave of absence must be approved by the Benefit Committee
if it is for a period of more than one month.
If required to be approved by the Benefit Committee, such
approval must indicate whether or not such period is deemed to be
a period of employment for purposes of computing Net Credited
Service and Vesting Service Credit. A Participant shall be
deemed to have been employed during the period of any leave that
does not need Benefit Committee approval for purposes of
computing his Net Credited Service and Vesting Service Credit,
and such Participant's account shall be credited with interest
credits upon his reemployment, retroactive to the date such leave
of absence commenced, as if he had been actively employed during
such leave of absence.
10.07 Layoffs. In the case of a Participant, other
than a Temporary or Occasional Employee, a layoff (which for
purposes of this Paragraph shall mean termination under a force
surplus condition) on account of reduction in force does not
constitute a break in continuity of Net Credited Service provided
such Participant is reemployed as a Regular Employee within three
years of such layoff. For purposes of computing his Net Credited
Service and Vesting Service Credit, a Participant, other than a
Temporary or Occasional Employee, shall be deemed to have been
employed during any layoff of less than six months and such
Participant's account shall be credited with interest credits
upon his reemployment retroactive to the date of his layoff as if
he had been actively employed during such layoff. If a layoff or
layoffs aggregate more than six months in any twelve-month
period, only the layoff or layoffs which in aggregate did not
exceed six months shall be included in his Net Credited Service
and Vesting Service Credit, and no subsequent periods of layoff
shall be so included until such Participant is continuously
employed for twelve months.
10.08 Vesting Eligibility Year. A Vesting Eligibility
Year is any calendar year in which an Employee completes 1,000 or
more Hours of Service, whether or not that service is performed
as an Eligible Employee. If an Employee transfers to or from an
Interchange Company and the applicable Interchange Agreement so
provides, Vesting Eligibility Years shall include years of
vesting service recognized under the Plan of the Interchange
Company. Vesting Eligibility Years also shall include years
creditable pursuant to Paragraph 11.05 of the Plan. All Vesting
Eligibility Years shall be taken into account under the Plan with
the exception of (a) any Vesting Eligibility Year completed in a
calendar year which ends prior to the calendar year in which the
Employee's eighteenth birthday occurs, and (b) any Vesting
Eligibility Years completed before a period of 5 consecutive
Statutory Breaks in Service if the Participant had less than 5
Vesting Eligibility Years at the time such period of Breaks
commences.
SECTION 11
INTERCHANGE OF BENEFIT OBLIGATIONS
AND TRANSFERS AMONG AFFILIATES
11.01 Transfers from Interchange Company or
BellSouth Pension Plan. If an Eligible Employee's accrued
benefit is transferred to this Plan from the plan of an
Interchange Company or the BellSouth Pension Plan, an account
shall immediately be established for such Eligible Employee in
accordance with Appendix A.
Basic service, and, if applicable, additional and
supplemental credits shall be added to such account based on the
Eligible Employee's Compensation after the date the Eligible
Employee becomes a Participant.
In no event shall the Eligible Employee's accrued benefit
under this Plan be less than the benefit so transferred.
11.02 Transfers to Interchange Company. If a
Participant leaves employment with a Participating Company or an
Affiliate for employment with an Interchange Company, he shall
not be eligible to retire under this Plan if the applicable
Interchange Agreement provides for transfer of his accrued
benefit obligation to a defined benefit pension plan of the
Interchange Company.
Upon the transfer of the Participant's accrued benefit to
the plan of the Interchange Company, he shall not be entitled to
any further benefits under this Plan.
11.03 Transfers to BellSouth Pension Plan. If a
Participant's position changes so that he becomes covered under
the BellSouth Pension Plan, his account shall be maintained and
credited with interest as if he were not actively employed.
11.04 Prior Benefits.
(a) Former Interchange Company Plan Lump Sum.
Notwithstanding any other Plan provision, in the case of any
individual who becomes a Participant in the Plan after receiving
a lump sum distribution of his accumulated plan benefit under an
Interchange Company pension plan and whose service otherwise
would be recognized by the Plan under an Interchange Agreement,
such individual's service with the Interchange Company shall not
be recognized by the Plan for purposes other than eligibility to
participate in or to vest any pension benefit under the Plan,
unless and until such individual satisfies the provisions of the
Interchange Company pension plan for the repayment or other
treatment of such previous lump sum distribution. If the
Interchange Company pension plan does not require repayment of a
lump sum distribution by reemployed participants as a condition
to recognizing prior pension service credit, but instead provides
for an offset in benefits to reflect a prior lump sum
distribution, the Plan shall recognize such individual's service
with the Interchange Company and provide a benefit offset as
determined by such company in accordance with the provisions of
its plan, provided that the such company transfers assets under
the Interchange Agreement sufficient to provide for the plan
benefits to be so recognized.
(b) Repayment of Plan Lump Sum Benefits.
Notwithstanding any other Plan provision, if a Participant
becomes a covered employee under an Interchange Company pension
plan subsequent to receiving a lump sum distribution of his
accumulated plan benefit under the Plan and if such Interchange
Company pension plan requires the repayment of such lump sum to
the Plan, and corresponding transfer of assets from the Plan to
such Interchange Company pension plan as a condition of
recognizing such individual's service under the Plan, such
individual shall have the right under the Plan to repay to the
Plan, within two years after becoming a covered employee subject
to interchange or portability treatment under an Interchange
Agreement, or such earlier date as it established under the
Interchange Company pension plan, the lump sum amount distributed
by the Plan plus interest permitted under Section 411(c)(2)(C) of
the Code.
(c) Offset for Periodic Distributions.
Notwithstanding any other Plan provisions, if a Participant
during any period receives periodic annuity benefits under the
Plan, or under an Interchange Company pension plan for which the
benefit obligation has been or will be transferred to the Plan
pursuant to an Interchange Agreement, and if such Participant
subsequently receives service credit for such period pursuant to
a court order, arbitration award, settlement agreement or
otherwise, the pension subsequently payable to such Participant
under the Plan shall be adjusted actuarially to reflect such
periodic benefits using (i) the PBGC Interest Rate for immediate
annuities on the first day of the Plan Year in which such credit
is made and (ii) mortality rates equal to the unisex rates
published in the Unisex Pension Mortality Table - 1984 (UP-1984).
11.05 Transfers Between Certain Affiliates.
This Paragraph 11.05 is intended to apply only to a
Participant who transfers employment between Participating
Companies or who transfers employment from an Affiliate that
sponsors a defined benefit pension plan in which the Participant
is an active participant to a Participating Company. In all
other transfer of employment situations, the Participant shall be
treated as a new hire as of the effective date of transfer except
as may otherwise be provided in the Plan (e.g., with respect to
Vesting Eligibility Years). For purposes of this Paragraph
11.05, a Participant shall be deemed to transfer employment if
his termination of employment with one Affiliate is followed
immediately by his employment with another Affiliate such that,
counting employment with both Affiliates, his employment is
continuous.
(a) If a Participant transfers employment from a
Participating Company that maintains a PRA Plan (for purposes of
this subparagraph, the "Former Plan") to a Participating Company
that maintains another PRA Plan (for purposes of this Paragraph,
the "Successor Plan"), the Participant's accrued benefit under
the Former Plan and an amount of assets with respect to such
accrued benefit as determined in accordance with Code Section
414(l) shall be transferred to the Successor Plan, and an account
shall be established, effective the first day of the month
following the effective date of the Participant's transfer, in an
amount equal to his account balance under the Former Plan as
calculated under Section 3.06. For the Plan Year in which the
transfer occurs, the Participant's account shall be credited with
an interest credit equal to the product of (i) and (ii), where
(i) is the Participant's account balance under the Former Plan as
of the first day of the Plan Year multiplied by the interest
credit rate under the Successor Plan, and (ii) is a fraction of
the numerator of which is the number of months for which the
Participant has an account under and is an active participant in
the Successor Plan for the Plan Year of transfer and the
denominator of which is 12. The Participant's Basic Service
Credit, Additional Credit and Supplemental Credit, if any, for
the year of transfer shall be based on his post-transfer
Compensation. The Participant's Vesting Service Credit, Net
Credited Service and Vesting Eligibility Years under the Former
Plan immediately prior to his transfer shall carry over to the
Successor Plan.
(b) If (i) a Participant transfers employment
from an Affiliate that is not a Participating Company but that
maintains a defined benefit pension plan (for purposes of this
subparagraph, the "Former Pension Plan") in which the Participant
is an active participant as of the date of transfer to a
Participating Company, and (ii) the Former Pension Plan provides
for the transfer of (A) the Participant's accrued benefit and (B)
an amount of assets with respect to such accrued benefit as
determined in accordance with Code Section 414(l) to the
Successor Plan, an account shall be established for the
Participant under the Successor Plan effective as of the first
day of the month in which the Participant's transfer occurs, with
an opening account balance determined in accordance with
Paragraph 5 of Appendix A. Effective as of the date of transfer,
the Participant's Vesting Service Credit, Net Credited Service
and Vesting Eligibility Years shall equal the number of years of
service, however defined, with which the Participant was
credited for benefit accrual, pension eligibility and vesting
purposes, respectively, under the Former Pension Plan immediately
prior to such transfer.
(c) If a Participant transfers employment more
than once in a Plan Year and more than one such transfer is
covered under the provisions of this Paragraph 11.05, the
provisions of this Paragraph 11.05 shall be applied successively
to each such transfer.
SECTION 12
ADMINISTRATION
12.01 Plan Administrator. BellSouth is the Plan
Administrator for each Plan hereunder, and the sponsor of the
Plan for its Eligible Employees, as those terms are defined in
ERISA. The plan sponsor of each Plan shall be set forth on
Schedule 1.
12.02 Benefit Committees. Each Benefit Committee
shall consist of three to seven persons. Each Benefit Committee
shall have the administrative responsibilities set forth in this
Paragraph and have such powers as may be necessary to enable them
to administer the Plan, except for powers expressly provided to
others in this Plan document.
Each Benefit Committee shall adopt such by-laws and uniform
and nondiscriminatory rules of procedure as it may find
appropriate. The by-laws and rules of procedure of any Benefit
Committee may not be inconsistent with the by-laws and rules of
procedure of the BellSouth Benefit Committee.
Each Benefit Committee may employ a Secretary and such
assistants as may be required in the administration of the Plan.
The Secretaries are hereby designated as agents for service of
legal process with respect to any claims arising under the Plan.
Each Benefit Committee shall grant or deny claims for
benefits under the Plan and authorize disbursements according to
the Plan.
12.03 Claim Review Committee. The Claim Review
Committee shall have the exclusive right and authority to
determine benefits under the Plan and to interpret the provisions
of the Plan, and its determinations and interpretations shall be
final and conclusive.
12.04 Named Fiduciary. The Claim Review Committee,
each Participating Company and each Participating Company
Committee is each a named fiduciary, as that term is used in
ERISA, with respect to the particular duties and responsibilities
allocated to it in this Plan document, including the duties and
responsibilities that may be specifically allocated to BellSouth
under the instrument of trust creating any group, commingled,
common or master trust fund in which Plan assets are invested.
American Telephone and Telegraph Company ("AT&T") is a named
fiduciary with respect to any assets of the Plan (or any trust or
trusts associated with the Plan) which are held in the Telephone
Real Estate Equity Trust, whether or not the Plan's allocable
share in the assets of such trusts is determinable at any
particular time. Until such time as any assets of the Plan with
respect to which AT&T is the named fiduciary are distributed to
the Plan and/or its associated trust or trusts from the Telephone
Real Estate Equity Trust, AT&T shall, consistent with the terms
of the Telephone Real Estate Equity Trust and the Asset
Management Agreement between BellSouth and AT&T, with respect to
such trust, have sole authority over the selection, retention and
supervision of any trustees or investment managers with respect
to such assets. As a named fiduciary, AT&T shall have the same
rights as any other named fiduciary of the Plan to allocate or
delegate any of its responsibilities to others, including the
right to delegate the responsibility to select, retain and
supervise trustees and investment managers and the right to
establish the terms and conditions with respect to which such
individuals or entities shall perform their responsibilities.
AT&T, to the extent it accepts and acknowledges such in
writing, shall also be the named fiduciary with respect to, and
all other provisions of this paragraph shall apply to it in such
capacity, any assets of the Plan and/or its associated trust or
trusts, including assets previously distributed to the Plan
and/or its trust or trusts from the Bell System Trust or the Bell
System Pension Plan Trust or any successor to such trust or
trusts, including the Telephone Real Estate Equity Trust with
respect to which BellSouth or any person or entity to which
BellSouth has delegated the authority designates AT&T as the
named fiduciary.
AT&T shall have no rights or responsibilities nor shall it
be the named fiduciary with respect to any assets of the Plan
which are held in a trust or trusts (other than the Telephone
Real Estate Equity Trust) or any account thereunder with respect
to which AT&T has no designated responsibility.
12.05 Allocation of Responsibilities. BellSouth
may allocate responsibilities for the operation and
administration of the Plan consistent with the Plan's terms,
including allocation of responsibilities to Participating
Companies or Benefit Committees.
12.06 Delegation of Responsibilities. BellSouth
and other named fiduciaries may delegate any of their
responsibilities by designating in writing other persons to carry
out their respective responsibilities under the Plan. BellSouth
may employ persons to advise them with regard to any such
responsibilities.
BellSouth may delegate or allocate, as applicable, to
another fiduciary the responsibility to appoint, retain and
terminate trustees and investment managers and to define the
authorities and responsibilities of each. The provisions of this
paragraph shall apply to the responsibilities of BellSouth or any
other named fiduciary under the Plan relating to any trusts
associated with the Plan, including any group, commingled, common
or master trust associated with the Plan and with respect to
which BellSouth or any other named fiduciary under the Plan has
responsibilities.
12.07 Plan Expenses. The expenses of the Claim
Review Committee in administering the Plan shall be borne by
BellSouth. The expenses of each Benefit Committee shall be borne
by the applicable Participating Company. All other expenses
relating to the administration of the Plan may be paid from Plan
assets, to the extent permitted under ERISA. Any expenses not
paid from plan assets shall be paid by a Participating Company.
12.08 Miscellaneous. Any person or group of
persons may serve in more than one fiduciary capacity with
respect to the Plan (including service both as a trustee and as
an administrator).
SECTION 13
RIGHTS AND CLAIMS
13.01 Notice to Employees. The Benefit Committee
shall notify all Participants of their eligibility to retire as
they become eligible and shall notify each vested Participant who
leaves the employ of a Participating Company of his eligibility
for a deferred pension. In the latter case, such notice shall be
mailed, within a reasonable time of leaving, to his last known
address as shown on the Participating Company's records.
13.02 Claims Procedure. Any person claiming
benefits under the Plan must do so by delivering a written notice
of his claim to the person designated by the Benefit Committee to
initially determine claims for Plan benefits. The notice must
set forth all of the facts necessary to permit such person to
determine whether or not the Claimant is entitled to the benefit
claimed.
Within 90 days following receipt of such written notice, the
Claimant shall be informed in writing as to whether the claim
will be allowed or wholly or partially denied. If the claim is
wholly or partially denied, the notice must include the specific
reason or reasons for the denial. It must also include specific
reference to the pertinent Plan provisions on which the denial is
based, a description of any material and information necessary to
perfect the claim, an explanation of why such material and
information is necessary, and an explanation of the Plan's claim
review procedure.
If a claim for benefits is denied, in whole or in part, the
Claimant is entitled to have such denial reviewed by the Claim
Review Committee, provided he files a written request for such
review with the Claim Review Committee within 60 days after he
receives or is notified of the denial of his claim.
Upon receipt of such request, the Claim Review Committee
shall make a full and fair review of the Benefit Committee's
decision. In connection with such review, the Claimant is
entitled to review pertinent documents and to submit issues and
comments in writing.
The Claim Review Committee shall make a decision with
respect to such claim within 60 days after it receives the
Claimant's written request for review, or within an additional 60
days, provided the Claimant is notified of the delay and the
reasons for requiring such additional time.
The Claim Review Committee shall notify the Claimant of the
review decision. Such notice must be in writing and must include
specific reasons for its decision and specific references to the
provisions of the Plan on which its decision was based.
The Claims Review Committee is the fiduciary to which the
Plan grants full discretion, with the advice of counsel, to
interpret the Plan; to determine whether a Claimant is eligible
for benefits; to decide the amount, form and timing of benefits;
and to resolve any other matter under the Plan which is raised by
a Claimant or identified by the Claims Review Committee. All
questions arising from or in connection with the provisions of
the Plan and its administration shall be determined by the Claims
Review Committee, and any determination so made shall be
conclusive and binding upon all persons affected thereby.
13.03 Non-assignability. Benefits under this Plan
may not be assigned or alienated, except (a) as required under
Section 206(d) of ERISA or (b) in accordance with the applicable
requirements of a "qualified domestic relations order" as that
term is defined in Section 414(p) of the Code.
The Benefit Committee shall (a) promptly notify the Employee
and any "alternate payee," as that term is defined in Section
414(p)(8) of the Code, of the receipt of a domestic relations
order and the Plan's procedures for determining the qualified
status of such order, (b) determine the qualified status of such
order, and (c) administer any distributions under this Plan
pursuant to such order in accordance with the rules set forth in
Section 414(p) of the Code.
Any such determination or payment shall be final and binding
on all parties.
13.04 Payment to Others. Any benefits payable to a
Participant or surviving spouse, but not actually paid to such
person at the time of his death, may be paid to a suitable person
selected by the Benefit Committee if permitted under applicable
law. Any such payment shall be for use in payment of expenses
incident to the death of the deceased person or for the benefit
of any one or more persons who were dependent upon him at the
time of his death.
Any benefits payable to a Participant or surviving spouse
who is unable to execute a proper receipt may be paid to a
suitable person selected by the Benefit Committee to use for the
benefit of such Participant or surviving spouse. The receipt of
such suitable person shall be sufficient discharge.
13.05 Forfeiture of Benefits by Killers. No
survivor or death benefit shall be paid under any provision of
the Plan to any individual who, by virtue of his involvement in
the death of a Participant with respect to whom such survivor or
death benefits would otherwise be payable, would be denied
entitlement to an interest in assets of the deceased (whether or
not there is in fact any such entitlement) under any applicable
law, state or federal, including without limitation laws
governing intestate succession, wills, jointly-owned property,
bonds, and life insurance policies.
The Benefit Committee may withhold distribution of benefits
otherwise payable under the Plan for such period of time as is
necessary or appropriate under the circumstances to make a
determination with regard the application of this provision.
13.06 Recovery of Overpayment. If for any reason
the benefits paid on account of a Participant from the Pension
Fund exceed the amount payable on account of such Participant
pursuant to the terms of the Plan, the amount of such overpayment
may be recovered from the payee by the Benefit Committee on
behalf of the Pension Fund. The Benefit Committee may recover
such overpayment by (i) the payee's direct payment to the Pension
Fund, (ii) set-off against the future benefits otherwise payable
to such payee on account of the Participant, or (iii) a
combination of (i) and (ii).
13.07 No Review by Former Affiliate Plan or
Predecessor Plan Committee. No claim for benefits under this
Plan is subject to review by any committee of any Former
Affiliate plan or any committee of any plan which preceded this
Plan.
13.08 No Claims Against a Participating Company.
Neither the establishment of this Plan nor any action taken by
the Board or by the Committees or any Participating Company gives
any officer, agent or employee a right to be retained by a
Participating Company or any Affiliate, or any right or claim to
any benefits under the Plan or to the assets of the Pension Fund,
except as expressly provided in this document.
SECTION 14
PENSION FUND
14.01 Establishment of Pension Fund. BellSouth has
established the Pension Fund for the payment of all Plan benefits
(other than excess plan benefits described in Paragraph 6.05,
disability pension payments before January 1, 1994, payments to
mandatory beneficiaries payable on account of the deaths of
disability pensioners before October 1, 1994, and certain death
benefits under Section 9, all of which are paid by the
Participating Company that last employed the individuals with
respect to whom the benefits are due). The Pension Fund shall be
held by the trustee for the exclusive purpose of providing
benefits to Participants and their beneficiaries and defraying
reasonable expenses of administering the Plan. Except as
provided in Paragraph 14.03, no part of the Pension Fund shall at
any time inure to the benefit of any Participating Company or
Affiliate.
Any assets related to the Plan held under any group,
commingled, common or master trust shall be considered as part of
and held under the Pension Fund.
The Pension Fund shall be disbursed as directed by the
applicable Participating Company. All pensions shall be paid
from the Pension Fund either directly, or through the purchase of
annuities from an insurance company, as BellSouth shall
determine.
14.02 Appointment of Trustees and Investment
Managers. BellSouth shall appoint one or more trustees which are
responsible for holding and managing assets of the Plan and
paying benefits from such assets, except as otherwise set forth
in this Section 14.
BellSouth may appoint one or more investment managers to
manage all or portions of the assets of the Plan.
BellSouth may issue general or specific investment
directions and guidelines to trustees and investment managers and
may also issue specific directions to them for investment in
investment companies or trusts and companies or trusts that hold
or propose to hold two or more parcels of real property or
interests therein or hold non-marketable interests in companies
or trusts which hold interests in debt or equity obligations.
By notice to a trustee, BellSouth may assume responsibility
for management of all or a designated portion of the assets held
by such trustee, in which event BellSouth shall issue specific
investment directions to the trustee with respect to such assets.
BellSouth may invest, or direct a trustee to invest, all or
a portion of the Plan's assets in contracts issued by insurance
companies, including contracts under which the insurance company
holds Plan assets in a separate account or commingled separate
account managed by the insurance company.
The Company may direct or authorize a trustee to invest all
or a portion of the Plan's assets in a group, commingled, common
or master trust fund or funds (including specifically the
Telephone Real Estate Equity Trust, which is hereby designated,
regardless of any further direction or authorization of the
Company, to hold any Plan assets allocable to the Plan and which
related to the division of such trusts as of January 1, 1984,
until such time assets become subject to a physical allocation)
established for the purpose of commingling assets of
participating trusts, including such fund or funds managed in
whole or in part by the Company or by a trustee or trustees or
investment manager or managers appointed by the Company or with
respect to which the Company has authority to issue general
investment directions and guidelines, in which event the
instrument of trust creating any such group, commingled, common
or master trust fund, to the extent the Plan's equitable share
thereof, shall be deemed to have been adopted as a part of the
Plan for purposes of Section 401(a) of the Internal Revenue Code
of 1986 or any corresponding provision of any subsequent federal
tax law. The Company may authorize a trustee to invest part of
the Plan's assets in deposits with such trustee bearing a
reasonable interest rate. The Company may invest, or direct a
trustee to invest, or if the Company has appointed an investment
manager to manage all or a portion of the assets of the plan, an
investment manager may invest, or direct a trustee to invest, all
or a portion of the assets of the Plan in any other investment,
whether or not specifically expressed herein, so long as any such
investment is not prohibited by or inconsistent with the
requirements of ERISA, any applicable trust agreement (including
the Telephone Real Estate Equity Trust) or any asset management
agreement relating to such trust.
BellSouth shall establish and carry out appropriate funding
policies and methods.
14.03 Contributions Subject to Tax-Deductibility.
All payments to the Pension Fund are made on the condition that
current tax deductions are allowed for such payments under
Section 404 of the Code.
To the extent a deduction would not be allowed for payments
for a taxable year, the amount so disallowed shall be repaid to
BellSouth within one year after such disallowance.
Any contribution made pursuant to a mistake of fact, within
the meaning of Section 403(c)(2)(A) of ERISA, shall be returned
to BellSouth within one year from the date of such contribution.
14.04 Forfeitures. If the interest of any
Participant is forfeited or unclaimed, such interest shall be
applied as soon as practicable to reduce contributions. In the
case of any Participant, spouse, or beneficiary whose whereabouts
are unknown, the Benefit Committee shall notify the Participant,
spouse, or beneficiary at his last known address by certified
mail with return receipt requested advising him of his right to
benefits under the Plan. If the Participant, spouse, or
beneficiary cannot be located in this manner, the accrued benefit
shall be forfeited and the proceeds used to reduce Participating
Company contributions for subsequent years. If a claim for
forfeited benefits is subsequently made by the Participant,
spouse, or beneficiary, the forfeited benefits shall be restored.
No amounts forfeited or unclaimed shall escheat to any state or
revert to any party. Such amounts shall be applied solely to
reduce contributions to the Plan.
14.05 Separate Plan Accounting. Notwithstanding
any other provision to the contrary, the assets of each Plan
shall be accounted for separately under the Pension Fund, and
only the assets allocable to a Plan shall be available to pay the
benefits of the Participants and beneficiaries of that Plan.
Unless assets are specifically segregated and allocated to a
Plan, each Plan shall have a proportionate undivided interest in
the Pension Fund. If assets of a Plan are segregated, any
earnings, losses or other adjustments attributable to such assets
shall be allocable to that Plan.
SECTION 15
PLAN CHANGES
15.01 Plan Amendments. The Claim Review Committee
may, from time to time, amend the Plan so long as such amendment
(i) is not of a material nature or is required by or advisable in
order to comply with the provisions of ERISA, the Code or other
applicable law, and (ii) does not materially increase the
required contribution of a Participating Company. The Directors'
Nominating and Compensation Committee of the Board must authorize
or consent to any amendment that the Claim Review Committee is
not authorized to make under the above rule. The foregoing
notwithstanding, no amendment is permitted that would:
(a) cause any part of the Pension Fund to be used
for or diverted to any purpose other than the exclusive
benefit of the Participants or their beneficiaries;
(b) cause any reduction in the amount of any
Participant's accrued benefit in violation of Section
411(d)(6) of the Code; or
(c) change any vesting schedule in violation of
Section 411(a)(10) of the Code unless, in the case of
an Employee who is a Participant on --
(i) the date the amendment is adopted, or
(ii) the date the amendment is effective, if
later, the vested percentage of such Participant's
right to his accrued benefit is not less than his
percentage computed under the Plan without regard
to such amendment. Furthermore, no such amendment
shall otherwise change any vesting schedule unless
each Participant having three or more Vesting
Eligibility Years is permitted to elect, in
accordance with the Code and applicable
regulations, to have the vested percentage of his
accrued benefit determined under the Plan without
regard to such amendment; provided that no
election shall be given to any Participant whose
vested percentage under the Plan as amended cannot
at any time be less than such percentage
determined without regard to such amendment.
15.02 Plan Termination.
(a) The Board may terminate the Plan at any time
as to any particular group of persons who have or may
become entitled to benefits under the Plan or all such
persons. In the event of termination or partial
termination of the Plan, the rights of all participants
to benefits accrued to the date of such termination or
partial termination, to the extent funded as of such
date, shall be nonforfeitable.
(b) Upon termination of the Plan in its entirety,
BellSouth shall allocate the Pension Fund among all
persons entitled to benefits under the Plan in
accordance with Section 4044 of ERISA. Any assets
remaining after providing for all accrued benefits of
all persons entitled to benefits under the Plan shall
be applied solely for pension purposes in an equitable
manner consistent with the purposes of the Plan.
(c) If this Plan is terminated, the benefit of
any highly compensated Participant (as defined under
Section 414(q) of the Code and the regulations and
other guidance issued thereunder) and any highly
compensated former Participant shall be limited to a
benefit that is nondiscriminatory under Section
401(a)(4) of the Code. In addition, the annual benefit
payments to each of the 25 highest paid Participants
shall be restricted to an amount equal to the payments
that would be made on behalf of such Participant under
a single life annuity that is the actuarial equivalent
of the Participant's benefits under the Plan. The
foregoing restrictions shall not apply, however, if:
(1) after payment to an affected Participant
of all benefits, the value of Plan assets equals
or exceeds 110 percent of the value of current
liabilities (as defined in Section 412(1)(7) of
the Code), or
(2) the value of the benefits for the
affected Participants is less than one percent of
the value of current liabilities.
For purposes of the foregoing subparagraphs (1)
and (2), the term "benefits" includes any periodic
income, withdrawal values payable to a living
Participant, and any uninsured death benefits which are
payable from Plan assets.
(d) Nothing herein shall be construed to permit
the assets of this Plan to be utilized to provide any
benefits under any other plan.
15.03 Consolidation, Merger, or Sale of Property.
No merger or consolidation with, or transfer of assets or
liabilities to, any other pension or retirement plan shall be
made unless the benefit each Participant and beneficiary would
receive, if the Plan were terminated immediately after such
merger, consolidation or transfer, would be at least as great as
the benefit he would have received had the Plan terminated
immediately before such merger, consolidation or transfer.
15.04 Top-Heavy Provisions. If required, the Plan
shall be administered in accordance with Appendix F.
SECTION 16
ADOPTION OF THE PLAN BY A PARTICIPATING COMPANY
16.01 Adoption Agreement. Any entity may, by
action of its board of directors or comparable governing body and
with the consent of the Claim Review Committee or its delegate,
adopt this Plan and the Pension Fund as a Participating Company
on behalf of such entity, or one or more divisions or
subdivisions thereof, by executing an adoption agreement and by
delivering such adoption agreement to BellSouth. The name of
such Participating Company and the Effective Date of its adoption
of the Plan shall be set out on Schedule 1.
Such Participating Company may elect to modify the terms of
the Plan as such terms apply to the Participating Company and its
employees with the consent of the Claim Review Committee or its
delegate and, to the extent the terms of the Plan are so
modified, such modifications (a) shall be set out on a schedule
to the adoption agreement and on Schedule 1 to the Plan and (b)
shall control as to the Plan of such Participating Company.
Schedule 1 also shall designate one Participating Company in each
Plan that shall have the authority to modify the terms of such
Plan on behalf of all of the Participating Companies in such Plan
with the consent of the Claim Review Committee or its delegate.
16.02 Separate Plans. Except as may otherwise be
provided in an adoption agreement, each adoption agreement shall
create a separate and distinct plan within the meaning of Code
Section 414(l) for the exclusive benefit of the Eligible
Employees of the Participating Company or Companies with respect
to which such Plan is adopted, and each such Plan shall be set
forth on Schedule 1, as it may be amended from time to time. The
assets of each Plan shall be used only for the benefit of
Participants and beneficiaries under that Plan, and any
forfeitures under a Plan shall reduce the contributions, if any,
only of the Participating Company or Companies under that Plan.
16.03 Amendment. Any amendment of the Plan
automatically shall be effective as to each Participating Company
without any further action by a Participating Company.
APPENDIX A - CALCULATION OF OPENING ACCOUNT
1. Calculate the Participant's annual accrued benefit
under the Prior Plan as of June 30, 1993, without giving credit
for 5 years of age and service added by VEER.
2. Convert annuity in 1. to a lump sum at age 62 by
multiplying the annuity by the age 62 single life annuity factor
in Appendix C, which is 9.331015.
If the Participant has attained age 62 as of June 30,
1993, use the annuity factor determined using the same mortality
and interest rate assumptions for his age on such date.
3. If the Participant has not attained age 62 on such
date, calculate the present value of the lump sum in 2. at July
1, 1993, by using a 4 percent discount rate and discounting for
the period from the date that will be the Participant's 62nd
birthday to July 1, 1993. The resulting amount is the
Participant's opening account balance.
4. If a Participant is on a leave of absence or has been
laid off temporarily (for six months or less) as of the
Effective Date, establish an account for the Participant upon his
reemployment in accordance with Paragraphs 1 through 3 above
retroactive to the Effective Date, and credit such account with
interest as if the Participant were actively employed from the
Effective Date to the date of his reemployment. For a
Participant who is on a leave of absence as of the Effective Date
and who terminates employment before returning to active
employment, treat the Participant as if he were reemployed on the
Effective Date and terminated employment that same day.
5. If an individual first becomes a Participant after June
30, 1993, and his benefit under another plan is transferred to
the Plan, use such benefit in lieu of the Prior Plan benefit in
1. and use the date on which such individual becomes a
Participant in lieu of July 1, 1993, in 3.
6. Upon his rehire, establish an account for an Eligible
Employee who (a) is receiving or under the Prior Plan is
entitled to receive (either at the time of rehire or upon
attaining the applicable age under the Prior Plan) a service or
deferred vested pension, (b) has not attained age 65 upon his
reemployment and (c) does not elect to waive participation in
the Plan pursuant to Paragraph 2.02. Determine the amount
credited to such account by multiplying the amount of the
Eligible Employee's annual annuity, if he is receiving a single
life annuity or his benefit has not commenced, or the amount of
his annual annuity divided by 0.9, if he is receiving a joint
and 50% survivor annuity, by the factor in Appendix C
corresponding to the Eligible Employee's age when he is
reemployed.
7. For an Eligible Employee who received a lump sum
settlement under the Plan or the Prior Plan and who elects to buy
back into the Plan, his account is the product of his annual
accrued benefit immediately prior to the lump sum settlement
multiplied by the factor in Appendix C corresponding to the
Eligible Employee's age on the date of the buy-back.
APPENDIX D - PRIOR PLAN BENEFIT
The monthly pension benefit amount payable to a Participant
who is entitled to a service pension under the BellSouth
Management Pension Plan is calculated as follows:
The monthly pension benefit amount shall equal the greater
of the monthly amounts determined in the two paragraphs below:
1) 1/12th of 1.6 percent multiplied by the
Participant's adjusted career income, as defined below;
2) 1/12th of the sum of (a) the product of (1) 1.6
percent of the Participant's annual adjusted career income, as
defined below, multiplied by (2) the Participant's term of
employment, as defined below, plus ( b) the product of (1) .
3 percent of the amount, if any, by which such Participant's
annual adjusted career income exceeds 200 percent of the average
Social Security covered wage base, as defined below, multiplied
by (2) such Participant's term of employment or 35 years,
whichever is less; provided , however, that if a Participant had
compensation in excess of $150,000 in any pre-1994 plan year
that is taken into account under the integrated formula (the
"Formula") in this subparagraph 2), his accrued benefit will be
the sum of (i) his accrued benefit under the Formula frozen as
of December 31, 1993, plus (ii) his benefit under the Formula
using his annual adjusted career income after 1993 and his total
service (not in excess of 35 years) minus his service as of
December 31, 1993.
For Participants who were eligible for such treatment under
the Voluntary Enhanced Early Retirement Plan ("VEER"), such
pension amount described above shall be calculated by
adding five years to such employees's age and term of employment.
The monthly pension allowance of a Participant who elects to
commence a service pension prior to age 65 shall be reduced as
follows:
(1) If determined according to Paragraph 1), above, the
monthly pension benefit shall be reduced by 0.5 percent for each
calendar month or part thereof by which the Participant's annuity
starting date precedes his 56th birthday, except that for each
Participant retired with a term of employment of 30 or more
years, "0.25" shall be substituted for "0.5" above. Effective
July 1, 1991, the age before which a Participant's monthly
pension benefit is reduced due to early retirement shall be
determined from the following table:
January 1 of Retirement Prior to Age
1994 58
1997 59
2000 60
2003 61
2006 62
In no event shall the discount that would apply to the
benefit of a Participant who retires during a transition year in
the above table be greater than the discount that would have
applied to such benefit had the Participant retired on December
31 of the prior year.
(2) If determined according to Paragraph 2) , above, the
monthly pension benefit shall be reduced by 0.5 percent for each
calendar month or part thereof by which the Participant's annuity
starting date precedes his 62nd birthday.
Definitions:
Adjusted career income shall mean the greater of
(1) the sum of (i) the product of the Participant's
average annual compensation
for the period from January 1, 1980, to December 31, 1992,
inclusive, and such Participant's term of employment as of
December 31, 1992, plus (ii) such Participant's compensation
for all periods after December 31, 1992, which are included in
the Participant's term of employment; or
(2) the sum of (i) the product of the Participant's
average annual compensation for the period from April 1, 1979, to
March 31, 1988, inclusive, and such Participant's term of
employment as of March 31, 1988, plus (ii) such Participant's
compensation for all periods after March 31, 1988, which are
included in the Participant's term of employment; or
(3) the sum of (i) the product of the Participant's
average annual compensation for the period from April 1, 1979, to
March 31, 1985, inclusive, and such Participant's term of
employment as of March 31, 1985, plus (ii) such Participant's
compensation for all periods after March 31, 1985, which are
included in the Participant's term of employment; or
(4) the sum of (i) the product of the Participant's
average annual compensation for the period from April 1, 1978, to
March 31, 1983, inclusive, and such Participant's term of
employment as of March 31, 1983, plus (ii) such Participant's
compensation for all periods after March 31, 1983, which are
included in the Participant's term of employment; or
(5) the sum of (i) the product of the Participant's
average annual compensation for the period from October 1, 1977,
to September 30, 1982, inclusive, and such Participant's term of
employment as of September 30, 1982, plus (ii) such
Participant's compensation for all periods after September 30,
1982, which are included in the Participant's term of employment;
or
(6) the sum of (i) the product of the Participant's
average annual compensation for the period from October 1, 1976,
to September 30, 1981, inclusive, and such Participant's term of
employment as of September 30, 1981, plus (ii) such
Participant's compensation for all
periods after September 30, 1981, which are included in the
Participant's term of employment; or
(7) the sum of (i) the product of the
Participant's average annual compensation for the period from
January 1, 1975, to December 31, 1979, inclusive, and such
Participant's term of employment as of December 31, 1979, plus
(ii) such Participant's compensation for all periods after
December 31, 1979, which are included in the Participant's term
of employment.
The period referred to in clause (i) of (1), (2), (3),
(4), (5), (6), or (7) above shall hereinafter be referred to
as the "averaging period."
For any Participant who has no service prior to the
applicable averaging period which is included in the
Participant's term of employment, the "adjusted career income"
shall equal such Participant's compensation for all periods
included in the Participant's term of employment.
For purposes of determining a Participant's average annual
compensation for the applicable averaging period:
(1) if during such averaging period there was any
period included in the Participant's term of employment
for which the Participant received no compensation, the
Participant shall be considered to have earned compensation
during such non- compensated period at the same annual
basic rate of pay which he earned immediately preceding such
period;
(2) if during such averaging period there was a period
not included in the Participant's term of employment,
the Participant shall be considered to have earned
compensation during such excluded period equal to the amount
of compensation which he earned for the most recent
equivalent period of time, preceding the applicable
averaging period, for which he did earn compensation; and
(3) if during the applicable averaging period the
Participant was employed on a part-time basis, the
compensation of such Participant for any such period of part-time
employment shall be considered to be the compensation such
Participant would have received had such Participant been
employed on a full-time basis during such period of part-time
employment.
Annual adjusted career income shall mean the Participant's
adjusted career income divided by the Participant's term of
employment; provided, however, that if a Participant had
compensation in excess of $150,000 in any pre-1994 plan year that
is taken into account under the Formula, his "annual adjusted
career income after 1993" for purposes of clause (ii) of the
Formula shall be his adjusted career income after 1993
[(determined in accordance with Code Section 401(a)(17)] divided
by (b)(i) his total service minus (ii) his service as of
December 31, 1993.
Average social security covered wage base shall mean the
lesser of (a) the average of the social security covered wage
base (as determined under Code Section 3121(a) (1)) for the 35
years prior to and ending with such Participant's normal social
security retirement year and (b) the social security covered
wage base (as determined under Code Section 3121(a) (1)) for the
then current year.
Compensation shall mean a Participant's (1) basic pay,
differentials paid for night tours, differentials paid for
temporary work in a higher classification, lump sum merit wage
payments, incentive compensation for Directory or Marketing
employees, Team Management Incentive Compensation, special
project allowances for assignments which began on or before
November 30, 1983, and area differentials, and (2) basic pay,
commissions, differentials, wage incentives,
and other special payments used in computing a Participant's
monthly pension benefit under the BellSouth Pension Plan for any
period of service a Participant was covered by such plan if such
service is included in the term of employment in computing such
Participant's monthly pension benefit under this Plan. For a
Participant who has any period of time during or after the
applicable averaging period during which such Participant
received sickness or accident disability benefits under a
Participating Company's Sickness and Accident Disability Benefit
Plan (or any predecessor of such plan), such Participant's
basic pay on any day during such period on disability benefits
shall be considered as an amount which bears the same
relationship to the position rate of the Participant's job for
such day, as the Participant's basic pay immediately prior to the
disability period bore to the position rate of such Participant's
job immediately prior to the disability period. For a
Participant who has any period of time during or after the
applicable averaging period during which such Participant is on a
leave of absence to an Affiliate or a subsidiary of BellSouth or
such other entity as a Participating Company's Board of Directors
may designate in which a Participating Company has a substantial
interest and during such period the Participant receives service
credit, such Participant's compensation for the period on such a
leave shall be the compensation, as defined in this paragraph,
from such Affiliate or subsidiary company or such other entity.
The term "compensation" shall be limited to the first $200,000
(as adjusted for changes in the cost of living as provided in
Code Section 415(d)) of each Participant's compensation.
Term of employment shall mean, effective for periods prior
to January 1, 1990, for any employee, however classified, and
effective for periods beginning on or after January 1, 1990, for
full-time employees, a period of continuous employment in the
service of one or more
Participating Companies, Interchange Companies or Portability
Companies (to the extent that an Interchange or Portability
Agreement is applicable to a person at the time such person
becomes an employee under the Plan or with respect to any person
who was an employee of a Former Affiliate on December 31, 1983,
and became an employee under the Plan on January 1, 1984) or in
the service of an Affiliate (solely for purposes of determining
eligibility for service pension) or a Former Affiliate before
1984 provided employment with a Participating Company commenced
after the completion of such service with a Former Affiliate but
before January 1, 1984, with no intervening period of employment
with any Former Affiliate prior to January 1, 1984. A
Participant's term of employment shall not include any period for
which an election was in effect under Section 4.1.h of the
BellSouth Management Pension Plan.
Term of employment shall not include any period of
employment which is included in a Participant's computation of
term of employment under an Interchange Company Pension Plan or a
Portability Company Pension Plan if the applicable Interchange or
Portability Agreement is not in force and effect at the time an
individual becomes employed or reemployed by a Participating
Company or if such agreement does not provide for the recognition
of such individual's term of employment by a Participating
Company.
The term of employment of a Participant who was employed on
a part-time basis during or prior to the applicable averaging
period shall be pro-rated for such period of part-time
employment, based on a ratio which shall be determined by
dividing the number of such Participant's regular scheduled work
hours, excluding any overtime hours, during such periods of part-
time employment by the number of hours, excluding overtime hours,
the Participant would have worked had such Participant been a
regular full-time employee during such period of
part-time employment.
APPENDIX F - TOP-HEAVY PROVISIONS
Definitions
The following terms and definitions shall apply if required
for qualification under Section 416 of the Code:
Top-Heavy Plan means (i) a plan if, as of the
Determination Date, the present value of the accumulated pension
plan benefits for Participants who are Key Employees for the Plan
Year exceeds 60 percent of the present value of the accumulated
accrued benefits for all Participants under the Plan, or (ii) a
plan which is part of a Top-Heavy Group. For purposes of
determining the present value of the cumulative accrued benefits
of Participants, the present value of the accrued benefit shall
be increased by the aggregate payments to any Participant or
beneficiary during the five-year period ending on the
Determination Date, notwithstanding that the Plan may have
terminated within the five-year period of the terminated plan
would have been required to be included in an aggregation group
but for its termination. If a Participant has not received
Earnings at any time during the five-year period ending on the
Determination Date, then his Pension Plan benefit shall not be
included in determining the present value of the cumulative
Pension Plan benefits for all Participants. There is also
excluded, from the computation of the aggregate Pension Plan
benefits of Participants, the Pension Plan benefit of any
Participant who was formerly a Key Employee.
A Super Top-Heavy Plan is any plan that would be a Top-Heavy
Plan as defined above if 90 percent were substituted for 60
percent.
Top-Heavy Group means, as of any Determination Date, an
aggregation group of plans in
which any of the Key Employees participate and plans which are
grouped by BellSouth to meet the coverage and nondiscrimination
tests of Section 401(a) (4) and 410(b) of the Code. An
aggregation group is a Top-Heavy Group if the accumulated accrued
benefits for Key Employees exceed 60 percent of the same amount
determined for all Employees under all plans included in the
aggregation group.
If an aggregation group is a Top-Heavy Group, each plan
required to be included in the Top-Heavy Group is a Top-Heavy
Plan. BellSouth may permissively aggregate plans not required to
be in the aggregation group if the group as so aggregated
continues to meet the requirements of Section 401(a) (4) and 410
(b) of the Code. When aggregating plans, the value of accrued
benefits and account balances, if any, shall be calculated with
reference to the Determination Dates that fall within the same
calendar year.
Key Employee means an Employee who, at any time during the
calendar year containing the Determination Date or the four
previous Plan Years, was:
(1) an officer of a Participating Company having
Earnings greater than 150 percent of the dollar limitation in
effect under Section 415 (c) (1) (A) of the Code for any such
Plan Year,
(2) one of the ten Employees having Earnings greater
than the dollar limitation in effect under Section 415
(c) (1) (A) of the Code and who owns (or who is considered
to own within the meaning of Section 318 of the Code) the
largest interest in any Participating Company (if two (2)
or more Employees have equal ownership interests, the one
with the larger annual Earnings has the larger interest),
(3) a 5 percent owner of any Participating Company,
or a 1 percent owner of any Participating Company whose
Earnings is greater than $150,000. The beneficiary of a Key
Employee or a former Key Employee shall be treated
respectively as a Key Employee or a former Key Employee. A
Non-Key Employee is any Employee who is not a Key Employee.
Determination Date means, for any Plan Year, the last day of
the preceding Plan Year.
For purposes of Section 416 of the Code, the present value
of a Participant's accumulated accrued benefit shall be
determined using the assumed mortality rates equal to unisex
rates for pensioners in 1984 as published in Unisex Pension
Mortality Table - 1984 (UP-1984) and a 5 percent interest
assumption. The term "Earnings" shall include all wages,
salaries, fees for services and other amounts received for
personal services rendered in the course of employment with a
Participating Company or Affiliate, including, but not limited to
commissions paid salesmen, earnings for services on the basis of
a percentage of profits, commissions on insurance premiums, tips
and bonuses. Earnings shall not include contributions by a
Participating Company or Affiliate to a plan qualified under
Sections 401(a) or 403 (a) of the Code to the extent that such
contributions are excludable from the Participant's gross
income.. Earnings shall not include amounts realized (i) from
the exercise of a nonqualified stock option, (ii) when
restricted property held by a Participant either becomes freely
transferable or is no longer subject to a substantial risk or
forfeiture, or (iii) from the sale or other disposition on
stock acquired under a qualified stock option.
Defined Benefit Plan and Defined Contribution Plan Fractions
If for any calendar year the Plan does not satisfy the
provisions of Section 416 (h) (2) of the Code, the defined
benefit plan fraction and the defined contribution plan fraction
applicable to determining the limits of Section 415 (c) of the
Code shall be computed by replacing 125 percent by 100 percent
where applicable.
Minimum Benefit Requirement
For any calendar year in which this Plan is Top-Heavy, the
accrued benefit of each Non-Key Employee who is otherwise
entitled to a Pension Plan benefit shall not be less than the
lesser of (i) 20 percent of the Employee's Highest Average
Earnings or (ii) 2 percent of the Employee's Highest Average
Earnings multiplied by his years of service beginning on and
after January, 1984 as of the date of determination.
An Employee's "Highest Average Earnings" shall be determined
by aggregating his Earnings for the five consecutive calendar
years (or such lesser number of Plan Years during which the
Employee is covered under the Pension Plan) during which the
Employee had the greatest aggregate Earnings, and dividing this
aggregate amount by the number of calendar years in such period.
The minimum Pension Plan benefit shall be provided solely by
employer contributions and expressed as a life annuity commencing
at Normal Retirement Age. If the form of benefit payable is
other than a single life annuity, or commences on a date other
than Normal Retirement Age, the Employee must receive at least an
amount that is the actuarial equivalent of the minimum single
life annuity benefit commencing at Normal Retirement Age.
No duplication of minimum benefits shall be required if Non-
Key Employees participate in both a defined contribution plan and
a defined benefit plan maintained by a Participating Company,
however, the required benefit provided by a Participating Company
cannot be reduced or eliminated on account of benefits
attributable to taxes paid by a Participating Company under the
Social Security Act.
If a Non-Key Employee participates in both a defined benefit
plan and a defined contribution plan maintained by a
Participating Company, the minimum benefit required under this
Section shall be provided in the first of the following plans in
which the Non-Key Employee participates: (a) BellSouth Personal
Retirement Account Pension Plan; (b) BellSouth Pension Plan;
(c) Any other defined benefit plan maintained by an affiliated
company; (d) BellSouth Management Savings and Employee Stock
Ownership Plan; (e) BellSouth Savings and Security Plan; (f)
BellSouth Employee Stock Ownership Plan; and (g) any other
defined contribution plan maintained by an affiliated company.
Vesting
For any calendar year in which this Plan is Top-Heavy, a Non-
Key Employee who completes three Vesting Eligibility Years shall
be entitled to a fully vested Plan benefit.
BELLSOUTH RETIREMENT SAVINGS PLAN
AS AMENDED AND RESTATED EFFECTIVE AS OF JULY 1, 1996
BELLSOUTH RETIREMENT SAVINGS PLAN
This Plan represents the amendment and restatement of the
BellSouth Retirement Savings Plan. Except as otherwise provided
herein or by applicable law, the effective date of this amendment
and restatement is July 1, 1996.
This Plan consists of two parts--(l) a profit sharing plan which
includes a qualified cash or deferred arrangement and which is
intended to qualify as such under Code sections 401(a), 401(k)
and 401(m) and related sections of the Code and (2) an employee
stock ownership plan which is designed as a stock bonus plan to
invest primarily in BellSouth Shares and which is intended to
qualify as such under Code sections 401(a), 401(m) and 4975(e)(7)
and related sections of the Code.
Further, this Plan is intended to comply with the applicable
provisions of the Code and ERISA and accordingly will be
interpreted in accordance with those provisions, including any
official reports, announcements or temporary or final regulations
issued thereunder, and will be amended retroactively, if
necessary, to satisfy such provisions as of their effective
dates.
BELLSOUTH RETIREMENT SAVINGS PLAN
AS AMENDED AND RESTATED EFFECTIVE AS OF APRIL 1, 1996
TABLE OF CONTENTS
Page
Section 1. Purpose. 1
Section 2. Definitions; Construction. 2
Section 3. Participation. 18
Section 4. Contributions. 21
Section 5. Allocation and Crediting of Contributions. 29
Section 6. Limitation Rules. 33
Section 7. Investment Directions. 38
Section 8. Maintenance and Valuation of Accounts; ESOP
Loan Allocations. 41
Section 9. Distribution; Withdrawal. 43
Section 10. Loans 53
Section 11. Restorals of Forfeited Amounts. 56
Section 12. Administration By Trustee. 58
Section 13. Election to Voluntarily Suspend Contributions. 59
Section 14. Leave of Absence; Layoff; Absence on Account
of Sickness or Disability. 60
Section 15. Change to Non-Management Employee; Transfer
to Another Participating Company; Transfer
to an Affiliate or Subsidiary Not a
Participating Company; Change to Separate
Participating Company; Change to Consolidated
Participating Company; Other Interchange
Employees. 61
Section 16. Designation of Beneficiaries; Spousal Consent;
Definition of Spouse; Distributions upon Death.63
Section 17. Benefits Not Assignable; Qualified Domestic
Relations Orders. 65
Section 18. Expenses. 66
Section 19. Modification or Merger of Plan. 67
Section 20. Termination of Contributions under Plan;
Liquidation of the Plan. 68
Section 21. Notices to Participating Employees;
Administrative Notices. 70
Section 22. Adoption of the Plan by a Participating Company.71
Section 23. Administration and Interpretation of Plan. 73
Section 24. Top-Heavy Provisions. 75
Section 25. Special Rules Applicable In Event of Certain
Natural Disasters. 77
Section 1. Purpose.
The purpose of the BellSouth Retirement Savings Plan is to
provide a convenient way for Employees of Participating
Companies, first, to save for their retirement on a regular and
long-term basis and, second, to acquire an ownership interest in
BellSouth.
This Plan is not a contract of employment. Thus, participation in
this Plan shall not give any person either the right to be
retained as an Employee or, upon his termination of employment,
the right to any interest in the Trust Fund other than his
interest as expressly set forth in this Plan.
Section 2. Definitions; Construction.
1. Definitions For purposes of this Plan, the following
terms shall have the following meanings:
"Account" shall mean the separate account maintained for
each Participating Employee which represents his total
proportionate interest in the Trust Fund as of any Business Day.
Each Participating Employee's Account shall consist of an
After-Tax Basic Account, an After-Tax Supplemental Account, a
Before-Tax Basic Account, a Before-Tax Supplemental Account, a
Matching Account, an ESOP Account, a Profit Sharing Account, a
Qualified Non-Elective Contributions Account and a Rollover
Account, all as described in this Plan, as applicable, and such
other subaccounts as the Committee shall deem necessary or
appropriate for the proper administration of this Plan.
"ACP" shall mean for each Plan Year the average contribution
percentage as calculated under Code section 401(m)(3) and,
generally, means as to (a) the group of Eligible Employees who
are Highly Compensated Employees for such Plan Year and (b) the
group of all other Eligible Employees for such Plan Year, the
average (expressed as a percentage) of the Contribution
Percentages of the Eligible Employees in each such group.
"ACP Limit" shall mean for each Plan Year the same as the
ADP Limit, except such limit shall be applied subject to the
regulations under Code sections 401(k) and 401(m) regarding the
multiple use of the alternative limitations and the term ACP
shall be substituted for ADP in such definition.
"Actual Deferral Percentage" shall mean for each Plan Year
the ratio (expressed as a percentage) of Before-Tax Contributions
made on behalf of an Eligible Employee and, to the extent
designated by the Committee, Qualified Non-Elective Contributions
(excluding any Qualified Non-Elective Contributions counted for
purposes of the ACP) paid to the Trustee for such Plan Year, to
the Eligible Employee's Compensation for such Plan Year. For
purposes of determining the Actual Deferral Percentage of an
Eligible Employee who is a Highly Compensated Employee described
in Code section 414(q)(6)(A), the Before-Tax Contributions and
Compensation of the Eligible Employee shall include the
Before-Tax Contributions and Compensation of his family members
(as defined in Code section 414(q)(6)(B)), and such family
members shall not be taken into account in determining the ADP
for Eligible Employees who are not Highly Compensated Employees
except to the extent required by the regulations under Code
section 401(k).
AAdoption Agreement@ shall mean the agreement by which,
subject to approval by the Senior Officer for Human Resources of
BellSouth, either (a) one or more Affiliates join the
Consolidated Plan and become Consolidated Participating
Companies, or (b) one or more Affiliates or a Subsidiary (and its
affiliates) adopt a Separate Plan and become Separate
Participating Companies. In lieu of using an actual Adoption
Agreement, the Senior Officer for Human Resources of BellSouth,
in his sole discretion, may provide for a Consolidated
Participating Company's adoption of the Consolidated Plan through
the use of resolutions and schedules attached to the Consolidated
Plan document, and the term "Adoption Agreement" as used herein
shall be deemed to reference and include such documents;
provided, however, if a Consolidated Participating Company wishes
to adopt any terms and conditions which differ from those as set
forth in this amended and restated Plan document, such
Consolidated Participating Company must adopt the Consolidated
Plan using a formal Adoption Agreement.
The term AAdoption Agreement@ shall include and incorporate
herein, as part of the Plan, all existing Adoption Agreements
entered into as part of the Retirement Savings Plan.
Notwithstanding the foregoing, however, such existing Adoption
Agreements (i) shall remain in effect only with respect to
Participating Companies= elections as to the definition of
Eligible Compensation and any Schedules of withdrawal,
distribution and vesting provisions attached to such Adoption
Agreements, and (ii) shall be invalidated with respect to
Participating Companies= elections as to Normal Retirement Age,
Plan loans and the ability to make Profit Sharing Contributions
for Plan Years on and after January 1, 1996. With respect to
such invalidated elections, the terms and conditions of this
amended and restated Plan document shall control; provided,
however, that Participating Companies may, with the consent of
the Committee, enter into a new Adoption Agreement to provide for
Profit Sharing Contributions on and after January 1, 1996.
Nothing contained herein shall prevent a Participating Company
from amending (with the consent of the Committee) an Adoption
Agreement with respect to those provisions which are not
invalidated above.
"ADP" shall mean for each Plan Year the average actual
deferral percentage as calculated under Code section 401(k)(3)
and, generally, means as to (a) the group of Eligible Employees
who are Highly Compensated Employees and (b) the group of all
other Eligible Employees for such Plan Year, the average
(expressed as a percentage) of the Actual Deferral Percentages of
the Eligible Employees in each such group.
"ADP Limit" shall mean for each Plan Year that (a) the ADP
for Eligible Employees who are Highly Compensated Employees for
such Plan Year does not exceed 125% of the ADP for all other
Eligible Employees for such Plan Year, or (b) the excess of the
ADP for Eligible Employees who are Highly Compensated Employees
for such Plan Year over the ADP for all other Eligible Employees
for such Plan Year is not more than two percentage points, and
the ADP for Eligible Employees who are Highly Compensated
Employees for such Plan Year is not more than twice the ADP for
all other Eligible Employees for such Plan Year; provided, the
ADP Limit shall be determined (as a group) with respect to all
Consolidated Participating Companies (as a group) and,
separately, with respect to each Subsidiary (and its Affiliates)
that is a Participating Company.
"Affiliate" shall mean at any time (a) BellSouth, (b) any
corporation which at such time is a member of a controlled group
of corporations as defined in Code section 414(b) which includes
BellSouth, (c) any trade or business, whether incorporated or
unincorporated, which at such time is considered to be under
common control as defined in Code section 414(c) with BellSouth,
(d) any person or organization which at such time is a member of
an affiliated service group as defined in Code section 414(m)
with BellSouth, and (e) any other entity required to be
aggregated with BellSouth pursuant to regulations under Code
section 414(o). A similar determination of "Affiliate" shall be
made for each Subsidiary that is a Participating Company and,
when used herein, shall be specifically identified as a
Subsidiary's Affiliate.
"After-Tax Basic Account" shall mean the subaccount
established to account for the After-Tax Basic Contributions made
by a Participating Employee and the investment earnings and
losses on such contributions.
"After-Tax Basic Contributions" shall mean the contributions
made by a Participating Employee under Section 4.1(b)(i) of this
Plan.
"After-Tax Contributions" shall mean the After-Tax Basic
Contributions and the After-Tax Supplemental Contributions made
by a Participating Employee.
"After-Tax Supplemental Account" shall mean the subaccount
established to account for the After-Tax Supplemental
Contributions made by a Participating Employee and the investment
earnings and losses on such contributions, and which shall also
include amounts transferred to the Plan from the Participating
Employee=s After-Tax Account under the Retirement Savings Plan.
"After-Tax Supplemental Contributions" shall mean the
contributions made by a Participating Employee under Section
4.1(b)(ii) of this Plan.
"Before-Tax Basic Account" shall mean the subaccount
established to account for the Before-Tax Basic Contributions
made on behalf of a Participating Employee and the investment
earnings and losses on such contributions, and which shall also
include amounts transferred to the Plan from the Participating
Employee=s Before-Tax Basic Account under the Retirement Savings
Plan.
"Before-Tax Basic Contributions" shall mean the
Contributions made by a Participating Company on behalf of a
Participating Employee under Section 4.1(a)(i) of this Plan.
"Before-Tax Contributions" shall mean the Before-Tax Basic
Contributions and the Before-Tax Supplemental Contributions made
on a Participating Employee's behalf.
"Before-Tax Supplemental Account" shall mean the subaccount
established to account for the Before-Tax Supplemental
Contributions made on behalf of a Participating Employee and the
investment earnings and losses on such contributions, and which
shall also include amounts transferred to the Plan from the
Participating Employee=s Before-Tax Supplemental Account under
the Retirement Savings Plan.
"Before-Tax Supplemental Contributions" shall mean the
contributions made by a Participating Company on behalf of a
Participating Employee under Section 4.1(a)(ii) of this Plan.
"BellSouth" shall mean BellSouth Corporation, a Georgia
corporation, and any successor to BellSouth Corporation.
"BellSouth Shares" shall mean shares of the common stock of
BellSouth.
"BellSouth Shares Fund" shall mean the investment fund
described in the Trust Agreement consisting of BellSouth Shares
other than the ESOP Fund.
"Break in Service" shall mean (a) for eligibility purposes,
any 12-consecutive month period beginning on an Employee's
employment commencement date or an anniversary of such employment
commencement date during which the Employee does not complete
more than 500 Hours of Service and (b) for purposes of Section
11, (i) each Plan Year beginning after December 31, l988 during
which an Employee does not complete more than 500 Hours of
Service and (ii) each Plan Year beginning before January 1, 1989
during which (A) class year vesting was in effect under this Plan
and (B) an Employee was not performing services for an Affiliate
or Subsidiary on the last day of such Plan Year. Solely for
purposes of determining whether an Employee has incurred a Break
in Service after December 31, 1988, each Employee will be
credited with 45 Hours of Service for each week during an absence
from work for any period by reason of
(1) the Employee's pregnancy,
(2) the birth of the Employee's child,
(3) the placement of a child with the Employee in
connection with the adoption of such child by the
Employee, or
(4) caring for such child for a period beginning
immediately following such birth or placement;
provided, no hours will be credited for such absence unless such
Employee timely furnishes to the Committee such evidence of the
nature and duration of such absence as may be required by the
Committee. The hours to be credited for such a child related
absence shall be credited (to the extent of such absence in such
Plan Year or 6-consecutive month eligibility period) exclusively
to the Plan Year, with respect to Section 11, or to the
6-consecutive month eligibility period, with respect to
eligibility, in which the absence from work begins, but only to
the extent such credit is needed to prevent such Employee from
incurring a Break in Service in such period under the rules set
forth as part of this definition, or, if no such credit is needed
to prevent a Break in Service in that period, the hours to be
credited for such a child related absence shall be credited (to
the extent of such absence in such immediately following Plan
Year or 6-consecutive month eligibility period) exclusively to
such immediately following Plan Year or 6-consecutive month
eligibility period, as the case may be.
"Business Day" shall mean each day on which the Trustee
operates and is open to the public for its business. If more than
one trust is used as a funding vehicle for the Plan, Business Day
shall be determined by reference to the institutional Trustee;
provided, if there is more than one institutional Trustee, the
Committee shall designate and specify the institutional Trustee
with respect to which Business Day shall be determined.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Committee" shall mean the Savings Plan Committee described
in Section 23.2 of this Plan.
"Compensation" shall mean, with respect to a Participating
Employee, the lesser of the amounts described in clauses (a) and
(b), as follows: (a) the total of (1) all of the Participating
Employee's wages, as defined in Code section 3401(a), that are
reportable by BellSouth and the other Affiliates for federal
income tax purposes on IRS Form W-2, plus (2) all before-tax,
salary deferral or reduction contributions made to the Plan and
other Code section 401(k) and section 125 plans of the Affiliates
on behalf of the Participating Employee for such Plan Year
(including any contributions made under Code section 402(e)(3),
402(h) or 403(b)); provided, on a plan year-by-plan year basis,
the Committee may elect to use any other definition of
"Compensation" that satisfies the nondiscrimination requirements
of Code section 414(s); and (b) for Plan Years (or other
applicable periods) beginning after December 31, 1993, $150,000
($200,000 for Plan Years beginning after December 31, 1988 and
prior to January 1, 1994), as adjusted by the Secretary of the
Treasury under Code section 401(a)(17) for cost-of-living
increases. In determining the Compensation of a Participating
Employee for purposes of the $150,000 (or $200,000, as
applicable) limitation, the rules of Code section 414(q)(6) shall
apply; provided, for purposes of applying said rules, the term
"family" shall include only the spouse of the Participating
Employee and lineal descendants of the Participating Employee who
have not attained age 19 before the close of the year.
Compensation shall be determined on a plan-by-plan basis and,
within each plan, with respect to all Affiliates (as a group)
and, separately, with respect to each Subsidiary (and its
Affiliates).
"Consolidated Participating Company" shall mean each
Affiliate that adopts this Plan pursuant to the terms of Sections
22.1 and 22.2, such that it participates in the Consolidated
Plan.
"Consolidated Plan" shall mean the BellSouth Retirement
Savings Plan, as in effect from time to time and as adopted and
maintained (pursuant to the terms of Sections 22.1 and 22.2) by
BellSouth and other Affiliates and Subsidiaries as one single
plan (within the meaning of Code section 414(1)). The
Consolidated Plan shall consist of (a) a copy of this Plan
document and all schedules hereto, and (b) the Adoption
Agreements of all of the Affiliates participating in the
Consolidated Plan, reflecting the special terms applicable to the
Consolidated Participating Companies' participation in the Plan.
"Contribution Percentage" shall mean for each Plan Year the
ratio (expressed as a percentage) of After-Tax Contributions and
Matching Contributions (and, if elected by the Committee under
Code section 401(m)(3), Before-Tax Contributions and/or Qualified
Non-Elective Contributions) made by or on behalf of an Eligible
Employee for such Plan Year to the Eligible Employee's
Compensation for such Plan Year. For purposes of determining the
Contribution Percentage of an Eligible Employee who is a Highly
Compensated Employee described in Code section 414(q)(6)(A), the
contributions and Compensation of the Eligible Employee shall
include the contributions and Compensation of his family members
(as defined in Code section 414(q)(6)(B)), and such family
members shall not be taken into account in determining the ACP
for Eligible Employees who are not Highly Compensated Employees
except to the extent required by the regulations under Code
section 401(m).
"Disability" shall mean, for purposes of Section 9.5(a)(i),
the inability of a Participating Employee to engage in any
substantially gainful activity at his customary level of
compensation or competence and responsibility as an Employee due
to any medically determined physical or mental impairment which
may be expected to result in death or to be permanent. The
Committee shall have exclusive responsibility for determining
whether a person is disabled based on a consideration of all the
facts and circumstances which in its absolute discretion it deems
pertinent and its determination shall be conclusive.
AEligibility Service@ shall mean the number of months that a
Participating Employee has been employed by a Participating
Company, Affiliate or a Subsidiary which has adopted the Plan.
For these purposes, an Employee shall be credited with one month
of service if he is credited with one Hour of Service during that
month. Eligibility Service may include service creditable under
the provisions of an Interchange Agreement or acquisition or
merger agreement. In the event an Employee terminates employment
or has an unpaid leave of absence, and is subsequently reemployed
or returns to active service, prior Eligibility Service shall be
credited upon reemployment if the Participant returns to active
service before experiencing a Break in Service.
"Eligible Compensation" shall mean for each Eligible
Employee of a Participating Company, (a) the sum of such
Employee's base salary, lump sum merit awards and incentive
compensation (other than awards under any long or short term
incentive plan for senior management) received from the
Participating Company as determined from the Participating
Company's payroll records prior to any deferrals under Section
4.1(a) of this Plan, excluding overtime, shift differentials and
other premium pay, or (b) such other meaning as set forth in the
applicable Adoption Agreement. Notwithstanding anything
contained herein to the contrary, (1) the Eligible Compensation
which is taken into account under this Plan for any Plan Year
beginning after December 31, 1993 shall not exceed $150,000
($200,000 for Plan Years beginning after December 31, 1988 and
prior to January 1, 1994), as adjusted in accordance with the
family attribution rules under Code section 401(a)(17) and for
cost of living increases in accordance with Code section
401(a)(17); and (2) for purposes of allocating Profit Sharing
Contributions, AEligible Compensation@ shall have the same
meaning as is attributed to the term ACompensation@ under this
Section 2.1, or such other definition of AEligible Compensation@
that satisfies the nondiscrimination requirements of Code
Section 414(s).
"Eligible Employee" shall mean an Employee (a) who has
attained age 21, (b) who is a regular Employee in the active
service of a Participating Company (on a full-time or part-time
basis) and (c) who has completed at least 6 months of Eligibility
Service with one or more than one, (i) Participating Company,
Affiliate or a Subsidiary which has adopted the Plan, (ii) an
Interchange Company (if the applicable Interchange Agreement
covers such Employee and provides that this Plan shall recognize
such Employee's service with that Interchange Company),
(iii) Houston Cellular Telephone Company (after April 4, 1989),
and (iv) Los Angeles Cellular Telephone Company (after April 4,
1989). An Employee shall be deemed an Eligible Employee for the
purpose of participation in this Plan if, (1) at any time prior
to January 1, 1984, such Employee was eligible to participate in
the Bell System Savings Plan for Salaried Employees or the Bell
System Savings and Security Plan, or (2) at any time prior to the
adoption of this Plan by the Employee's Participating Company,
such Employee was eligible to participate in a Predecessor Plan
or any other qualified defined contribution plan sponsored by the
Employee's Participating Company and he is an Employee of such
Participating Company immediately before its adoption of this
Plan. Notwithstanding the foregoing, (A) any Non-Management
Employee employed by a Participating Company which has adopted
the Savings and Security Plan shall not be eligible to
participate in this Plan; (B) any Management Employee who was
employed by a Participating Company on March 31, 1996 and who had
not yet attained age 21, shall become an Eligible Employee as of
the first date he meets the other requirements of this Section,
without regard to his age on such date; and (C) an Employee shall
not be an Eligible Employee if he is (i) a "leased employee"
within the meaning of Code section 414(n), (ii) otherwise paid by
a leasing organization rather than by a Participating Company,
(iii) treated as an independent contractor by his Participating
Company, (iv) a nonresident alien employed outside the United
States who receives no U.S. source income, or (v) unless
otherwise provided in the Adoption Agreement, included in a unit
of Employees covered by a collective bargaining agreement between
employee representatives and an Affiliate or Subsidiary. An
Eligible Employee who has terminated employment and who is
reemployed by a Participating Company shall become an Eligible
Employee upon his reemployment.
"Eligible Participant" shall mean for each Plan Year each
Eligible Employee employed by a Participating Company on the last
day of such Plan Year.
"Employee" shall mean any person employed as an employee by
an Affiliate or Subsidiary, including an individual who is a
"leased employee" within the meaning of Code section 414(n).
"Enrollment Date" shall mean the first day of each calendar
month.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time.
"ESOP" shall mean the part of this Plan which is intended to
qualify as an employee stock ownership plan under Code sections
401(a) and 4975(e)(7) and related sections of the Code.
"ESOP Account" shall mean the subaccount established to
account for each Participating Employee's interest in the ESOP
Fund.
"ESOP Company" shall mean a Participating Company which
participates in the ESOP, as set forth on Schedule A, which shall
be amended from time to time.
"ESOP Dividends" shall mean the cash dividends on BellSouth
Shares which are applied to repay an ESOP Loan.
"ESOP Fund" shall mean the investment fund which consists of
BellSouth Shares which have been released from the ESOP Loan
Suspense Account for periods beginning after June 30, 1989 or
which otherwise have been purchased with Matching Contributions
for periods beginning after December 31, 1989, or both, the
investment earnings on such BellSouth Shares and any cash set
aside to purchase BellSouth Shares and the investment earnings
thereon, for periods beginning after December 31, 1989.
"ESOP Loan" shall mean a loan or other extension of credit
to the Trustee which satisfies the requirements of Code section
4975(d)(3), ERISA section 408(b)(3) and the regulations related
to such sections, the proceeds of which are used by the Trustee
(a) to purchase BellSouth Shares for the ESOP, (b) to refinance
another ESOP Loan or (c) to repay another ESOP Loan.
"ESOP Loan Suspense Account" shall mean a separate fund
within the Trust Fund established by the Trustee which consists
of the BellSouth Shares acquired with the proceeds of an ESOP
Loan which have not been released to the ESOP Fund and the income
other than ESOP Dividends) on such shares.
"Excess Aggregate Contributions" shall mean for each Plan
Year the excess of (a) the aggregate amount of After-Tax
Contributions and Matching Contributions (and, if elected by the
Committee under Code section 401(m)(3), Before-Tax Contributions)
paid into this Plan for such Plan Year and allocated to the
Accounts of Highly Compensated Employees over (b) the maximum
amount that could be allocated to the Accounts of Highly
Compensated Employees for such Plan Year without violating the
ACP Limit, all as described in Code section 401(m)(2).
"Excess Contributions" shall mean for each Plan Year the
excess of (a) the aggregate amount of Before-Tax Contributions
paid into the Plan for such Plan Year and allocated to the
Accounts of Highly Compensated Employees over (b) the maximum
amount of Before-Tax Contributions that could be allocated to the
Accounts of Highly Compensated Employees for such Plan Year
without violating the ADP Limit, all as described in Code section
401(k)(3).
"Highly Compensated Employee" shall be determined for all
Consolidated Participating Companies (as a group) and,
separately, for each Subsidiary (and its Affiliates) which is a
Participating Company and shall mean each Employee of an
Affiliate who is described in subsections (a)(1), (2), (3) or (4)
below, as modified by subsections (b), (c), (d) and (e) hereof:
a. General Rule.
(1) An Employee who at any time during the current
Plan Year or the immediately preceding Plan Year owned (or
was considered as owning within the constructive ownership
rules of Code '318 as modified by Code '416(i)(1)(B)(iii))
more than 5 percent of the outstanding stock of a corporate
Affiliate or stock possessing more than 5 percent of the
total combined voting power of all stock of a corporate
Affiliate or more than 5 percent of the capital or profits
interest in a noncorporate Affiliate; or
(2) An Employee who at any time during the immediately
preceding Plan Year:
(i) received Compensation from an Affiliate in
excess of $75,000 (as adjusted by the Secretary of
Treasury under Code '414(q) (which references Code
'415(d)) and the regulations promulgated thereunder for
cost of living increases); or
(ii) received Compensation from an Affiliate in
excess of $50,000 (as adjusted by the Secretary of
Treasury under Code '414(q) (which references Code
'415(d)) and the regulations promulgated thereunder for
cost of living increases) and during the same Plan Year
was within the group consisting of the most highly
compensated 20 percent of the Employees of all
Affiliates;
provided, BellSouth may elect with respect to any Plan Year
(A) to change the "$75,000" dollar amount in subsection
(a)(2)(i) to "$50,000", and (B) to disregard subsection
(a)(2)(ii) in its entirety, as long as at all times during
such Plan Year BellSouth and its Affiliates maintain
significant business activities and employ employees in at
least two significantly separate geographical areas, and
BellSouth and its Affiliates satisfy such other conditions
as may be required under Code '414(q)(12) and regulations
promulgated thereunder; or
(3) An Employee who at any time during the immediately
preceding Plan Year was an officer of an Affiliate whose
Compensation for the Plan Year was greater than 50 percent
of the dollar limitation in effect under Code '415(b)(1)(A)
for the calendar year in which the Plan Year ends, where the
term "officer" means an administrative executive in regular
and continual service with an Affiliate; provided, in no
event shall the number of officers exceed the lesser of
subsections (i) or (ii) of this subsection (a)(3), where:
(i) equals 50; and
(ii) equals the greater of 3 employees or 10
percent of the number of Employees (including leased
employees as defined in Code '414(n)) of any Affiliate
during the Plan Year.
If for any year no officer meets the requirements of this
subsection (a)(3), the highest paid officer for the Plan
Year shall be considered a person who satisfies the
requirements of this subsection (a)(3); or
(4) An Employee who at any time during the current
Plan Year meets the requirements of subsection (a)(2) or (3)
above and whose Compensation for the current Plan Year is
such that the Employee was in the group of the 100 Employees
being paid the greatest amount of Compensation by all
Affiliates.
b. Excluded Employees. For purposes of subsections
(a)(2)(ii) and (a)(3) hereof, the following may be excluded when
determining the most highly compensated 20 percent of the
Employees and the total number of officers, respectively, of an
Affiliate:
(1) Employees who have not completed 6 months of
service;
(2) Employees who normally work fewer than 17-1/2
hours per week;
(3) Employees who normally work during not more than 6
months during any Plan Year; and
(4) Employees who have not attained age 21.
c. Family Rules. For purposes of this Section, if any
Employee is a member of the family of a 5 percent owner as
defined in subsection (a)(1) hereof or a member of the family of
a Highly Compensated Employee whose Compensation is such that he
is among the ten Highly Compensated Employees receiving the
greatest amount of Compensation from all Affiliates during the
Plan Year, then (1) the Employee shall not be considered a
separate employee, and (2) any Compensation paid to the Employee,
and any applicable contribution or benefit on behalf of the
Employee, shall be treated as if it were paid to, or on behalf
of, the 5 percent owner or the Employee who is among the ten
Highly Compensated Employees receiving the greatest amount of
Compensation from all Affiliates during the Plan Year. For
purposes of this subsection (c), the term "family" means with
respect to any Employee, the Employee's spouse, lineal
descendants or ascendants and the spouses of such lineal
descendants or ascendants.
d. Former Employees. For purposes of this Section, a
former Employee shall be treated as a Highly Compensated Employee
if (1) the former Employee was a Highly Compensated Employee at
the time the Employee separated from service with all Affiliates
or (2) the former Employee was a Highly Compensated Employee at
any time after he attained age 55.
e. Nonresident Aliens. For purposes of this Section,
nonresident aliens who receive no earned income from an Affiliate
which constitutes income from sources within the United States
(as described in Code '414(q)(11)) shall not be treated as
Employees.
f. Compliance with Code '414(q). The determination of who
is a "Highly Compensated Employee", including all of the parts of
that definition, shall be made in accordance with Code '414(q)
and the regulations promulgated thereunder.
"Hour of Service" shall mean each hour for which an Employee
is entitled to credit in accordance with Section 2530.200b-2(a)
of the U.S. Department of Labor Rules and Regulations for Minimum
Standards for Employee Pension Benefit Plans for working and
nonworking hours for which he is paid as determined in accordance
with Section 2530.200b-2(b) and (c) of such rules and
regulations. For example:
a. An Hour of Service shall be each hour for which an
Employee is paid, or entitled to payment, for the performance of
duties for a Participating Company, an Affiliate or Subsidiary
during the applicable computation period;
b. An Hour of Service shall be each hour (1) for which an
Employee is paid, or entitled to payment, by a Participating
Company, an Affiliate or Subsidiary on account of a period of
time during which no duties are performed (irrespective of
whether the employment relationship has terminated) due to
holiday, illness, incapacity (including disability), layoff, jury
duty, military duty or leave of absence, and (2) for which an
Employee is required to be provided leave under the Uniformed
Services Employment and Reemployment Rights Act of 1994.
Notwithstanding the preceding sentence, (i) no more than 501
Hours of Service are required to be credited under this clause
(b) to an Employee on account of any single continuous period
during which the Employee performs no duties (whether or not such
period occurs in a single computation period); (ii) an hour for
which an Employee is directly or indirectly paid, or entitled to
payment, on account of a period during which no duties are
performed is not required to be credited to the Employee if such
payment is made or due under a plan maintained solely for the
purpose of complying with applicable workmen's compensation or
unemployment compensation or disability insurance laws; and (iii)
Hours of Service are not required to be credited for a payment
which solely reimburses an Employee for medical or medically
related expenses incurred by the Employee
c. An Hour of Service is each hour for which back pay,
irrespective of mitigation of damages, is either awarded or
agreed to by a Participating Company, an Affiliate or Subsidiary.
The same Hours of Service shall not be credited both under
Paragraph (a) or Paragraph (b), as the case may be, and under
this Paragraph (c).
In lieu of actually recording each Hour of Service which is
completed by an Employee whose hours are not required to be
counted and reported under any Federal law, such as the Fair
Labor Standards Act, each Employee will be credited with 45 Hours
of Service for each week in which he completes at least one Hour
of Service.
"Interchange Agreement" shall mean any agreement between a
Participating Company and an Interchange Company which provides
for the interchange of benefit obligations between the
Participating Company and such Interchange Company.
"Interchange Company" shall mean a company, other than a
Participating Company, which is a party to an Interchange
Agreement and any affiliate or subsidiary of such company
identified in that Interchange Agreement.
"Management Employee" shall mean an Employee (a) who is
classified as a "salaried employee" under the personnel policies
and practices of BellSouth or the Affiliate or Subsidiary which
employs such individual, (b) whose pay is determined based on a
monthly or annual rate, and (c) whose position is not subject to
automatic wage progression.
AManagement Savings Plan@ shall mean the BellSouth
Management Savings and Employee Stock Ownership Plan adopted
effective April 1, 1985, last amended and restated effective
January 1, 1994, into which the Retirement Savings Plan was
merged, effective as of April 1, 1996. The Management Savings
Plan survives in the form of the Plan.
"Matching Account" shall mean the subaccount established to
account for the Matching Contributions made on behalf of a
Participating Employee and the investment earnings and losses on
such contributions which are not allocable to the Participating
Employee=s ESOP Account, and which shall also include amounts
transferred to the Plan from the Company Matching Contributions
Account under the Retirement Savings Plan.
"Matching Contributions" shall mean contributions to this
Plan made in cash or BellSouth Shares by each Participating
Company on behalf of each Participating Employee under Section
4.2(a) of this Plan.
"Non-ESOP Company" shall mean a Participating Company which
does not participate in the ESOP, as set forth on Schedule A,
which shall be amended from time to time.
"Non-Management Employee" shall mean an Employee (a) who is
not classified as a "salaried employee" under the personnel
policies and practices of BellSouth or the Affiliate or
Subsidiary which employs such individual, (b) whose pay is not
determined based on a monthly or annual rate, or (c) whose
position is subject to automatic wage progression.
"Normal Retirement Age" for each Eligible Employee shall
mean age 65 or, for a Participant in a Separate Plan, such
earlier age as is specified in the applicable Adoption Agreement.
"Participating Company" shall mean BellSouth and each
Affiliate or Subsidiary which shall have determined by resolution
of its Board of Directors or equivalent governing body to adopt
this Plan pursuant to Section 22. "Participating Company" shall
include and refer to either and/or both a Consolidated
Participating Company and a Separate Participating Company, as
set forth on Schedule A, which shall be amended from time to
time.
"Participating Employee" shall mean each individual (a)(i)
who is an Eligible Employee (or former Eligible Employee) who has
elected to participate in this Plan, (ii) who is an Employee (or
former Employee) on whose behalf amounts held in a Predecessor
Plan shall have been transferred to an Account in this Plan under
Section 3.3 or (iii) solely for purposes of Sections 9.2, 9.3, 10
and 15, who is an employee of Bell Communications Research, Inc.,
or (iv) for whom contributions have been made for a Plan Year,
and (b) whose Account has not been fully distributed.
"Plan" shall mean this BellSouth Retirement Savings Plan as
in effect from time to time and, where the context requires, the
Plan or Predecessor Plan as previously in effect. Unless
otherwise specified or clear from the context, APlan@ shall
include and refer to either and/or both the Consolidated Plan and
a Separate Plan.
"Plan Rules" shall mean those rules and procedures
established from time to time by the Committee, or administrative
practice.
"Plan Year" shall mean the calendar year or, for a Separate
Plan, such other period specified in such Plan=s Adoption
Agreement.
"Predecessor Plan" shall mean (a) the BellSouth Savings Plan
for Salaried Employees, (b) the BellSouth Enterprises Retirement
Savings Plan, and (c) any Qualified Savings Plan sponsored by a
Participating Company, the assets of which are transferred to
this Plan in accordance with Plan Rules as a result of the
acquisition of the Participating Company by BellSouth, an
Affiliate or a Subsidiary or as a result of the Participating
Company's adoption of this Plan.
"Processing Date" shall mean the Business Day established by
administrative practice for the purpose of processing
distributions and withdrawals, even if actual processing is made
at a later date due to delays in the valuation, administration or
any other procedure.
"Profit Sharing Account" shall mean the subaccount
established to account for Profit Sharing Contributions made by a
Participating Company on behalf of an Eligible Participant and
the investment earnings and losses on such contributions, and
which shall include those amounts transferred to the Plan from a
Participating Employee=s Profit Sharing Account under the
Retirement Savings Plan.
"Profit Sharing Contributions" shall mean contributions to
this Plan made in accordance with the terms of Section 4.2(b), by
a Participating Company on behalf of each Eligible Employee
employed by such Participating Company.
"Qualified Non!Elective Contributions" shall mean
contributions to this Plan made by a Participating Company under
Section 4.2(c) of this Plan.
"Qualified Non!Elective Contributions Account" shall mean
the subaccount established to account for the Qualified
Non!Elective Contributions made by a Participating Company on
behalf of an Eligible Participant and the investment earnings and
losses on such contributions, and which shall also include those
amounts transferred to the Plan from a Participating Employee=s
Qualified Non-Elective Contributions Account under the Retirement
Savings Plan.
"Qualified Savings Plan" shall mean a defined contribution
plan qualified under Code section 401(a) whose trust or other
funding arrangement is exempt from tax under Code section 501,
and which is acceptable to the Committee, in its discretion, for
purposes of the transfer of assets from such plan to this Plan or
the transfer of assets from this Plan to such plan.
"Retirement Savings Plan" shall mean the BellSouth
Enterprises Retirement Savings Plan which was adopted effective
January 1, 1989, last amended and restated effective January 1,
1994, and merged into and with the Management Savings Plan,
effective as of April 1, 1996.
"Rollover Account" shall mean the subaccount established to
account for the rollover contributions made by a Participating
Employee under Section 3.5 of this Plan and the investment
earnings and losses on such rollover contributions, and which
shall also include amounts transferred to the Plan from the
Participating Employee=s Rollover Account under the Retirement
Savings Plan.
"Savings and Security Plan" shall mean the BellSouth Savings
and Security Plan adopted effective January 1, 1984, as in effect
from time to time.
"Separate Participating Company" shall mean each Affiliate
(other than BellSouth) or Subsidiary that adopts this Plan
pursuant to the terms of Section 22.1 and 22.3, such that it
participates in a Separate Plan.
"Separate Plan" shall mean the BellSouth Retirement Savings
Plan, as in effect from time to time and as adopted and
maintained (pursuant to the terms of Sections 22.1 and 22.3) by
one or more Affiliates (other than BellSouth) or a Subsidiary and
its affiliates, as a single plan (within the meaning of Code
Section 414(l)) separate and distinct from the Consolidated Plan.
A Separate Plan shall consist of (a) a copy of this Plan document
and (b) the Adoption Agreement(s) of all of the Affiliates, or of
the Subsidiary and its affiliates, participating therein.
"Subsidiary" shall mean any corporation (other than an
Affiliate) of which more than 50% of the voting stock is owned
directly or indirectly by BellSouth, or a partnership, joint
venture or other trade or business of which 50% of the profits or
capital interest is owned directly or indirectly by BellSouth.
"Trust Agreement" shall mean the trust agreement between
BellSouth and the Trustee referred to in Section 12 of this Plan,
or any successor to such agreement.
"Trustee" shall mean the trustee or trustees serving from
time to time under the Trust Agreement.
"Trust Fund" shall mean the assets of every kind and
description held under the Trust Agreement.
"Trust-To-Trust Transfer" shall mean a transfer made in
accordance with procedures approved by the Committee of assets or
cash proceeds from the sale of assets, other than amounts deemed
to be accumulated deductible employee contributions within the
meaning of Code Section 72(o)(5), (1) from the trust or other
funding arrangement of a Qualified Savings Plan or the BellSouth
Employee Stock Ownership Plan to the Trust Fund, which assets
shall be held under this Plan in the name of the Participating
Employee whose interest is being transferred, or (2) from the
Trust Fund to the trust or other funding arrangement of a
Qualified Savings Plan, which assets thereafter shall be held
under the terms of such Qualified Savings Plan.
"Units" shall mean the Units referred to in Section 8.2 of
this Plan.
"Year of Vesting Service" shall mean a Plan Year during
which an Employee completes at least 1,000 Hours of Service. For
purposes of determining an Employee=s Years of Vesting Service,
the term "Hours of Service" shall be deemed to include (1) such
hours attributable to employment with a Participating Company,
Affiliate or Subsidiary, (2) such hours attributable to
employment with an Interchange Company (if the applicable
Interchange Agreement covers such Employee and provides that the
Plan shall recognize such Employee's service with that
Interchange Company), (3) such hours attributable to employment
with Houston Cellular Telephone Company after April 4, 1989, and
(4) such hours attributable to employment with Los Angeles
Cellular Telephone Company after April 4, 1989.
2. Construction. Unless the context clearly requires
otherwise, the masculine pronoun whenever used shall include the
feminine and neuter pronoun, and the singular shall include the
plural and the plural shall include the singular. Section
headings are included for convenience of reference and are not
intended to add to or subtract from the terms of the Plan. All
references to Sections and to Paragraphs shall be to Sections and
Paragraphs of this Plan unless another reference is specified.
Section 3. Participation.
1. Election to Participate.
a. An Eligible Employee may elect in advance to become a
Participating Employee in this Plan, effective as of the
Enrollment Date immediately following the date on which he became
an Eligible Employee, by authorizing contributions under Section
4.1 and directing the investment of such contributions under
Section 7 in accordance with Plan Rules.
b. An Eligible Employee who, on June 30, 1996, actively
participated in the Plan shall continue to be a Participating
Employee in this amended and restated Plan. Each such Eligible
Employee's authorized contributions and investment directions as
in effect on June 30, 1996 shall remain in effect for this
amended and restated Plan until changed.
2. Election Not to Participate. An Employee may make an
election not to participate in the Plan. Such election may be
made by virtue of an employment agreement or other written
document.
3. Transfers from a Predecessor Plan. An individual with
respect to whom amounts held in a Predecessor Plan shall have
been transferred to an Account in this Plan shall become a
Participating Employee in this Plan upon such transfer with
respect to such transferred amounts; however, no such individual
shall be eligible to elect contributions under Section 4.1 or to
receive an allocation of contributions under Section 4.2 unless
he is also an Eligible Employee and he satisfies the requirements
for such elections and allocations. A Participating Employee's
vested interest in such transferred amounts shall be determined
in accordance with the terms of this Plan or such Predecessor
Plan, whichever is more favorable.
4. Trust-to-Trust Transfers.
a. Change From Non-Management to Management Status. An
Employee who was a participant in the Savings and Security Plan
and who becomes an Eligible Employee shall have the value of his
account in such plan, if any, automatically transferred to this
Plan in accordance with the terms of such plan and Plan Rules
through a Trust-to-Trust Transfer.
b. Transfer From Interchange Company, Affiliate or
Subsidiary not a Participating Company. An Eligible Employee who
commences employment with a Participating Company within a period
of 30 days following his termination of employment with an
Interchange Company or an Affiliate or Subsidiary which is not a
Participating Company and who has elected to participate in this
Plan in accordance with Section 3.1 may further elect a
Trust-To-Trust Transfer to this Plan from a Qualified Savings
Plan maintained by such Interchange Company, Affiliate or
Subsidiary, and any such election shall be effective if made in
accordance with Plan Rules, and any Interchange Agreement which
may be applicable. A Participating Employee's vested interest in
such transferred amounts shall be determined in accordance with
the terms of this Plan unless otherwise specified in any
applicable Interchange Agreement.
c. Transfer from PAYSOP. A Participating Employee who is
a participant in the BellSouth Employee Stock Ownership Plan may,
upon his termination of employment with a Participating Company,
elect a Trust-to-Trust Transfer to this Plan from the BellSouth
Employee Stock Ownership Plan of not less than the entire amount
credited to his account under such plan, and any such election
shall be effective if made in accordance with Plan Rules.
5. Rollover Contributions. A Participating Employee may
contribute in accordance with Plan Rules the following amounts to
the Plan:
a. part or all of a distribution, or the cash proceeds
from the sale of distributed property, acceptable to the Trustee
which qualifies as an "eligible rollover distribution" within the
meaning of Code section 402(c)(4) or 403(a)(4), either from a
trust described in Code section 401(a) and exempt from tax under
Code section 501 or from a Code section 403(a) annuity plan, less
any amounts considered to be after-tax employee contributions or
accumulated deductible employee contributions; or
b. a distribution from an individual retirement account or
annuity or the redemption of retirement bonds, the entire amount
of which distribution or redemption is from a source described in
subparagraph (a) of this Section 3.5.
Such contribution must be paid to this Plan on or before the
60th day after receipt by the Participating Employee of the
distribution. Amounts so contributed thereafter shall be held in
the Trust Fund under this Plan as a completely separate Rollover
Account in accordance with Plan Rules. Such Rollover Account
shall at all times be fully vested and nonforfeitable. No
contributions made under this Section 3.5 shall be taken into
account to determine a Participating Company's obligation to make
contributions under Section 4.2.
6. Transfers from a Qualified Savings Plan. From time to
time the Plan may accept the transfer of assets (and the
corresponding benefit liabilities) from any Qualified Savings
Plan sponsored by any entity or division or subdivision thereof
which becomes a part of a Participating Company in accordance
with Plan Rules. An individual with respect to whom amounts held
in a Qualified Savings Plan shall have been transferred to an
Account in this Plan shall become a Participating Employee in
this Plan upon such transfer with respect to such transferred
amounts; however, no such individual shall be eligible to elect
contributions under Section 4.1 or to receive an allocation of
contributions under Section 4.2 unless he is also an Eligible
Employee and he satisfies the requirements for such elections and
allocations. A Participating Employee's vested interest in such
transferred amounts shall be determined in accordance with the
most favorable terms of this Plan and such Qualified Savings
Plan, the vested interest to be determined at each relevant point
in time by reference to the terms of the plan which, at that
point in time, would provide the greater vested percentage;
provided, however, if the transfer is intended to satisfy the
elective transfer rules of Code section 411(d)(6), then such
Participating Employee shall be fully vested in the amounts
transferred to this Plan.
Section 4. Contributions.
1. Employee Contributions from Eligible Compensation.
a. Before-Tax Contributions.
(i) Before-Tax Basic Contributions. An Eligible
Employee who becomes a Participating Employee in accordance
with Section 3.1 may elect Before-Tax Basic Contributions on
his behalf in 1% increments from 2% to 6% of his Eligible
Compensation.
(ii) Before-Tax Supplemental Contributions. If a
Participating Employee's Before-Tax Basic Contributions for
any period equals 6% of his Eligible Compensation, he may
further elect, in accordance with Plan Rules, that his
Participating Company make Before-Tax Supplemental
Contributions on his behalf for that same period in 1%
increments from 1% to 9% of his Eligible Compensation. The
sum of a Participating Employee's Before-Tax Basic
Contributions and Before-Tax Supplemental Contributions
elected for any period shall not exceed 15% of his Eligible
Compensation.
(iii) Description. An election of Before-Tax
Contributions shall mean that the Participating Employee has
entered into a "qualified cash or deferred arrangement" as
described in Code section 401(k)(2) so that such
contributions made on a Participating Employee's behalf by a
Participating Company are not currently includable in his
gross income by reason of the application of Code section
402(e)(3).
b. After-Tax Contributions.
(i) After-Tax Basic Contributions. A Participating
Employee may elect, in accordance with Plan Rules, to make
After-Tax Basic Contributions in 1% increments from 1% to 6%
of his Eligible Compensation. However, the sum of a
Participating Employee's Before-Tax Basic Contributions
elected under Section 4.1(a)(i) and his After-Tax Basic
Contributions elected under this Section 4.1(b)(i) for any
period shall be at least 2% and shall not exceed 6% of his
Eligible Compensation for such period.
(ii) After-Tax Supplemental Contributions. If the sum
of a Participating Employee's Before-Tax Basic Contributions
and After-Tax Basic Contributions elected for any period
equals 6% of his Eligible Compensation, he may further
elect, in accordance with Plan Rules, to make After-Tax
Supplemental Contributions for the same period in 1%
increments from 1% to 9% of his Eligible Compensation.
However, a Participating Employee's total combined Before-
Tax Contributions elected under Section 4.1(a) and After-Tax
Contributions elected under this Section 4.1(b) for any
period may not exceed 15% of his Eligible Compensation for
such period. Moreover, a Participating Employee's actual
combined Before-Tax Contributions and After-Tax
Contributions for any period may not exceed 15% of his
Eligible Compensation.
(iii) Description. After-Tax Contributions shall
mean contributions which are includable when made in the
Participating Employee's compensation which is required to
be reported by his Participating Company to the Internal
Revenue Service for inclusion as taxable wages on the
Participating Employee's Form W-2.
c. Effective Date. Contributions will begin as soon as
practicable after the Enrollment Date on which the Eligible
Employee begins his participation in this Plan under Section 3
and elects that contributions be made on his behalf under this
Section 4 (generally, with respect to Eligible Compensation paid
for the first payroll period beginning after such Enrollment
Date). Any change in contribution percentages elected by a
Participating Employee shall be made effective in accordance with
Section 4.1(d).
d. Changes. A Participating Employee may elect, in
accordance with Plan Rules, not more than once in each calendar
month, to change his contribution percentages for his Before-Tax
Basic Contributions, Before-Tax Supplemental Contributions,
After-Tax Basic Contributions and After-Tax Supplemental
Contributions. These changes shall be processed and made
effective at such frequency and in such manner as is consistent
with Plan Rules.
e. Timing of Contributions. Contributions shall be
remitted by each Participating Company to the Trustee as of the
earliest date (not to exceed 90 days from the date on which such
amounts otherwise would have been payable to its Participating
Employees in cash) on which such contributions can reasonably be
segregated from such Participating Company=s general assets. Due
to the Participating Companies= numerous payroll systems and
large number of employees, this standard shall not be deemed to
require the processing and crediting of contributions before (at
the earliest) the end of the calendar month following the
calendar month in which such contributions were made or deferred,
unless changes in applicable law specifically require an earlier
contribution time.
f. Vesting. Subject to the limitations in Section 6, net
investment gains or losses and any other proper charges and
credits to the Trust Fund, a Participating Employee's Before-Tax
Contributions and After-Tax Contributions shall be
nonforfeitable.
g. Payroll Deductions. A Participating Employee shall
make contributions to this Plan under this Section 4.1 only
through payroll deductions and such contributions shall come only
from his Eligible Compensation.
h. Insufficient Eligible Compensation. No contributions
under this Section 4.1 shall be made for a payday for a
Participating Employee if his Eligible Compensation is
insufficient (after all deductions required by law and authorized
deductions for insurance and loan repayments under Section 10 of
this Plan) to permit the making of the full amount of such
contributions for such payday; provided, however, such an event
shall not be treated as a voluntary suspension under Section 13
and such Participating Employee's Contributions under this
Section 4.1 shall resume as soon as his Eligible Compensation is
sufficient to make the full amount of such contributions.
2. Employer Contributions.
a. Matching Contributions.
(i) Amount.
(A) General. Before-Tax Basic Contributions and
After-Tax Basic Contributions made for a Participating
Employee under Section 4.1 from his Eligible
Compensation from each Participating Company shall be
matched in accordance with this Section 4.2(a)(i), in
an amount equal to the match percentage of such Before-
Tax Basic Contributions and After-Tax Basic
Contributions as determined under Paragraph (B) below.
(I) ESOP Company. In the case of an ESOP
Company, such match shall be made in Units
representing an investment in BellSouth Shares
which Units have a fair market value as of the
last Business Day of such calendar month equal to
such match amount. Such match in Units
representing an investment in BellSouth Shares
shall be made to the ESOP Fund (1) through a
release of BellSouth Shares to such Fund from the
ESOP Loan Suspense Account(s) as a result of
payments made on any ESOP Loan(s) from any
combination of Matching Contributions and ESOP
Dividends (and the income thereon) and any income
on ESOP Loan proceeds pending investment in
BellSouth Shares, as provided in Section 8.3 and
(2) from Matching Contributions to such Fund that
constitute top-up contributions under Section
4.2(a)(iv) (and the income thereon).
(II) Non-ESOP Company. In the case of a Non-
ESOP Company, such match shall be made in the form
of a cash Matching Contribution which shall be
credited as provided in Paragraph (ii)(B) below
and invested as provided in Section 7.2.
(B) Match Percentage. The match percentage for
each Participating Company shall be that percentage, or
combination of percentages, which is set out on
Schedule B. The Committee shall determine such
percentages, and amend Schedule B, as necessary, for
each 12 month period beginning on April 1, according to
the following formula:
(I) The match percentage shall be 100% on
each Participating Employee=s Before-Tax Basic
Contributions and After-Tax Basic Contributions
made from the first 2% of the Participating
Employee=s Eligible Compensation from the
Participating Company for a month.
(II) The match percentage of a Participating
Employee=s Before-Tax Basic Contributions and
After-Tax Basic Contributions made from the next
4% of the Participating Employee=s Eligible
Compensation from the Participating Company for a
month shall equal the sum of such Participating
Company=s Financial Performance Percentage and the
Additional ESOP Percentage, both as set forth
below:
(a) Financial Performance Percentage.
The Financial Performance Percentage for a
Participating Company shall be the percentage
determined below based upon the financial
component of the BellSouth Team Excellence
Award for Managers (T.E.A.M.), or any
successor award, for the Participating
Company=s line of business, all as determined
by the Committee:
Financial Performance
(as a percentage of Matching
standard performance) Percentage
0% - 75% 0%
75% - 95% 30%
95% - 120% 40%
120% - 150% 50%
150% - 185% 55%
more than 185% 65%
(b) Additional ESOP Percentage. The
Additional ESOP Percentage shall be
determined by the Committee, for so long as
ESOP Dividends are deductible for federal
income tax purposes under Code section
404(k), based upon increases in the per
share average price of BellSouth Shares, if
any, for the preceding calendar year, as
follows:
Annual Share Points Added
Percentage to Matching
Price Increase Percentage
2% or less 8%
3% 10%
4% 12%
5% 14%
6% 16%
7% 18%
8% or more 20%
The per share average price change for each
calendar year shall be the average of the
daily closing share price of BellSouth Shares
traded on the New York Stock Exchange for
each trading day of the year compared to such
average of the daily closing share prices for
the immediately preceding year. The average
per share price may be adjusted
administratively by the Committee in its sole
discretion to reflect changes in the
capitalization of BellSouth, including
without limitation stock dividends, stock
splits, mergers, consolidation,
reorganization, division and sales of assets.
(III) The BellSouth Board of Directors,
in its sole discretion, may provide for an
increase in the percentages otherwise determined
under Paragraph (I) and/or (II) above for one or
more Participating Companies for any period if the
Board of Directors deems it advisable in light of
participation levels, the price of BellSouth
Shares or other factors. The Committee shall
revise Schedule B, as necessary, to reflect any
such increased percentages declared by the Board
of Directors.
(ii) Vesting. Subject to the limitations in Section 6,
the net investment gains and losses and any other proper
charges and credits to the Trust Fund, a Participating
Employee's interest in his ESOP Account and/or Matching
Account shall be nonforfeitable. Notwithstanding the
foregoing, amounts held in a Participating Employee=s
Matching Account which were merged into the Plan from the
Retirement Savings Plan,
(A) shall become nonforfeitable as of April 1,
1996 if such Participating Employee was employed by a
Participating Company on April 1, 1996, or
(B) shall remain subject to the vesting and
forfeiture provisions set forth in the Retirement
Savings Plan (as in effect on March 31, 1996) if such
Participating Employee was not employed by a
Participating Company on April 1, 1996.
(iii) Limitation. No Matching Contributions shall
be made, or matching Units of any kind granted, with respect
to Before-Tax Supplemental Contributions or After-Tax
Supplemental Contributions.
(iv) Top-Up Contributions. If Units representing an
investment in BellSouth Shares which are released from the
ESOP Loan Suspense Account(s) from the application of
Matching Contributions and ESOP Dividends (and the income
thereon) and any income on ESOP Loan proceeds pending
investment in BellSouth Shares, as provided in Section
8.3(b), are insufficient to satisfy the allocation
requirements under Section 8.3(c) and the matching
requirements described in Section 4.2(a)(i), additional
Matching Contributions shall be made by each ESOP
Participating Company, to the extent the Committee
determines necessary, to satisfy both such requirements.
(v) Excess BellSouth Shares. In the event the value
of the BellSouth Shares released from the ESOP Loan Suspense
Account and transferred to the ESOP Fund for any Plan Year
exceeds the amount required to satisfy the allocation
requirements under Section 8.3(c) and the matching
requirements described in Section 4.2(a)(i) for such Plan
Year (after taking into account any top-up contributions
made earlier during the Plan Year under Section 4.2(a)(iv)),
such excess amount shall be referred to as AExcess BellSouth
Shares@ and shall be allocated pursuant to the terms of
Section 5.2(d).
b. Profit Sharing Contributions.
(i) Election. A Participating Company may elect to
participate in the profit sharing plan described in this
Section 4.2(b) for its Eligible Participants, with the
approval of the Senior Officer for Human Resources of
BellSouth.
(ii) Profit Sharing Contributions. A Participating
Company which has elected to participate in the profit
sharing plan may (but shall not be required to) make a
Profit Sharing Contribution for allocation to Eligible
Participants as of the end of each Plan Year.
(iii) Limitations on Profit Sharing Contributions.
In no event shall Profit Sharing Contributions be greater
than the amount permissible under Section 6 or deductible
for federal income tax purposes.
(iv) Vesting. Subject to the limitations in Section 6,
net investment gains and losses and any other proper charges
and credits to the Trust Fund, a interest in a Participating
Employee=s Profit Sharing Account shall be nonforfeitable as
follows:
(A) with respect to Profit Sharing Contributions
allocated to a Participating Employee=s Profit Sharing
Account for a Plan Year ending before January 1, 1996,
the Participating Employee=s interest shall be
nonforfeitable; and
(B) with respect to Profit Sharing Contributions
allocated to a Participating Employee=s Profit Sharing
Account for a Plan Year ending on and after January 1,
1996, the Participating Employee=s interest shall
become nonforfeitable after the Participating Employee
is credited with 3 Years of Vesting Service; provided,
however, a Participating Company may, with the consent
of the Senior Officer for Human Resources of BellSouth,
elect in an Adoption Agreement to have all Profit
Sharing Contributions allocated to a Participating
Employee=s Profit Sharing Account for a Plan Year
ending on and after January 1, 1996, be fully vested
and nonforfeitable.
c. Qualified Non!Elective Contributions. In lieu of or in
connection with the action required under Section 6.4 or 6.5, or
for any other reason, a Participating Company may (but shall not
be required to) make, for any Plan Year, Qualified Non!Elective
Contributions to the Accounts of its Eligible Participants who
are not Highly Compensated Employees in such amount, if any, as
may be deemed appropriate by such Participating Company with the
prior approval of the Committee; provided, Qualified Non-Elective
Contributions shall be allocated in accordance with Section 5.4
to a Qualified Non-Elective Contributions Account which shall at
all times be fully vested and nonforfeitable and which shall be
subject to the withdrawal rules of Section 9 applicable to Before-
Tax Contributions.
d. Timing of Contributions. All Matching Contributions,
Profit Sharing Contributions and Qualified Non-Elective
Contributions generally shall be paid to the Trustee no later
than (i) the date for filing the Participating Company=s federal
income tax return (including extensions thereof) for the tax year
to which such Matching Contributions, Profit Sharing
Contributions and Qualified Non-Elective Contributions relate, or
(ii) such other date as shall be within the time allowed to
permit the Participating Company to properly deduct, for federal
income tax purposes and for the tax year of the Participating
Company in which the obligation to make such Contributions was
incurred, the full amount of such Matching Contributions, Profit
Sharing Contributions and Qualified Non-Elective Contributions;
provided, if necessary to satisfy any discrimination test
requirements, Qualified Non-Elective Contributions may be made at
a later time.
e. Refund of Contributions. Notwithstanding that no part
of the Trust Fund shall be used for or diverted to purposes other
than the exclusive benefit of the Participating Employees and
their beneficiaries, Matching Contributions to the Trust Fund may
be refunded to the Participating Company under the following
circumstances and subject to the following limitations:
(i) Permitted Refunds. If and to the extent permitted
by the Code and other applicable laws and regulations
thereunder, upon the Participating Company's request, a
contribution which is (A) made by a mistake in fact, (B)
conditioned upon initial qualification of the Plan with the
Plan receiving an adverse determination even though the
application for determination is submitted to the Internal
Revenue Service for review within the remedial amendment
period respecting the Plan, or (C) conditioned upon the
deductibility of the contribution under Code section 404,
shall be returned to the Participating Company making the
contribution within one year after the payment of the
contribution, the denial of the qualification, or the
disallowance of the deduction (to the extent disallowed),
whichever is applicable.
(ii) Payment of Refund. If any refund is paid to a
Participating Company hereunder, such refund shall be made
without interest or other investment gains, shall be reduced
by any investment losses attributable to the refundable
amount and shall be apportioned among the Accounts of the
Participating Employees as an investment loss, except to the
extent that the amount of the refund can be attributed to
one or more specific Participating Employees (for example,
as in the case of certain mistakes of fact), in which case
the amount of the refund attributable to each such
Participating Employee's Account shall be charged directly
to such Account.
(iii) Limitation on Refund. No refund shall be made
to a Participating Company as to a Participating Employee's
Account if such refund would cause the balance in such
Participating Employee's Account to be less than the balance
would have been had the refunded contribution not been made
to the Plan.
f. Errors and Omissions in Accounts. If an error or
omission is discovered in the Account of a Participating Employee
or beneficiary, the Committee shall cause appropriate, equitable
adjustment to be made as soon as administratively feasible after
the discovery of such error or omission.
g. Contributions Following Military Service. To the
extent and in the manner required by the Uniformed Services
Employment and Reemployment Rights Act of 1994, the Committee
shall provide for applicable contributions to be made by and on
behalf of persons entitled to reemployment following uniformed
service. To the extent such contributions constitute Matching
Contributions, they shall be made with respect to such period of
uniformed service only to the extent that the Participating
Employee makes Before-Tax or After-Tax Contributions with respect
to such period in the manner prescribed by the Committee in
accordance with the Uniformed Services Employment and
Reemployment Rights Act of 1994.
Section 5. Allocation and Crediting of Contributions.
1. Before-Tax Contributions and After-Tax Contributions.
Before-Tax Contributions and After-Tax Contributions shall be
allocated, for the period in which or for which such
contributions are deferred or made on behalf of a Participating
Employee, directly to the appropriate Before-Tax and After-Tax
Accounts, respectively, of such Participating Employee.
2. Matching Contributions.
a. Participating Employees of ESOP Companies. The Units
representing an investment in BellSouth Shares which are released
from an ESOP Loan Suspense Account to the ESOP Fund, as set forth
in Section 8.3(d), shall be allocated to a Participating
Employee=s ESOP Account for the period for which such
contributions are made on behalf of a Participating Employee, as
such Units are available and required, to meet the ESOP Companies
match obligation under Section 4.2(a)(i)(A)(I).
b. Participating Employees of Non-ESOP Companies.
Matching Contributions made to meet the match obligation of a
Participating Employee of a Non-ESOP Company shall be allocated
to such Participating Employee=s Matching Account for the period
for which such contributions are made on behalf of such
Participating Employee.
c. Top-Up Contributions. Units representing an investment
in BellSouth Shares, other than as set forth in Subsection (a)
above, which are attributable to top-up contributions made to
meet the match obligation under Section 4.2(a)(iv) on behalf of a
Participating Employee, shall be allocated to the Participating
Employee=s ESOP Account for the period for which such
contributions are made on behalf of such Participating Employee.
d. Excess BellSouth Shares. In the event that Excess
BellSouth Shares are released and transferred for a Plan Year as
described in Section 4.2(a)(v), Units representing an investment
in such Excess BellSouth Shares shall be allocated as of the last
day of the Plan Year to those Participating Employees of ESOP
Companies for such Plan Year who both (i) have made an After-Tax
Basic Contribution and/or a Before-Tax Basic Contribution for
such Plan Year, and (ii) have an Account as of the last day of
such Plan Year. The number of Units allocated to each such
Participating Employee=s ESOP Account shall be equal to the
product of (A) and (B) where (A) is the total Units representing
the value of such Excess BellSouth Shares and (B) is the quotient
determined by dividing (1) such Participating Employee=s Before-
Tax Basic Contributions and After-Tax Basic Contributions made
from Eligible Compensation paid by an ESOP Company for the Plan
Year, by (2) the Before-Tax Basic Contributions and After-Tax
Basic Contributions for all such Participating Employees made
from Eligible Compensation paid by ESOP Companies for such Plan
Year.
3. Profit Sharing Contributions. Profit Sharing
Contributions and forfeitures available under Section 11 to
offset the Profit Sharing Contributions, if any, for each Plan
Year shall be allocated as follows as of the last day of such
Plan Year:
a. Non!Integrated. If the applicable Adoption Agreement
provides that a Participating Company's profit sharing plan is
not to be integrated with Social Security, then the Committee
shall cause a portion of such Participating Company's Profit
Sharing Contribution for a Plan Year to be allocated to the
Profit Sharing Account of each Eligible Participant who is an
Employee of such Participating Company in the same proportion
that (i) such Eligible Participant's Eligible Compensation for
such Plan Year, bears to (ii) the total of all such Eligible
Participants' Eligible Compensation for such Plan Year.
b. Integrated. If the applicable Adoption Agreement
provides that a Participating Company's profit sharing plan is to
be integrated with Social Security, then the Profit Sharing
Contribution shall be allocated as follows:
(i) An amount equal to the product of the integration
tax rate multiplied by the total excess Eligible
Compensation of the Participating Company's Eligible
Participants for such Plan Year shall be allocated to the
Profit Sharing Account of each such Eligible Participant in
the same proportion that (A) his excess Eligible
Compensation for such Plan Year, bears to (B) the total
excess Eligible Compensation of all such Eligible
Participants for such Plan Year; and
(ii) The remainder of such Profit Sharing Contribution
shall be allocated to the Profit Sharing Account of each
such Eligible Participant in the same proportion that (A)
the Eligible Compensation of each such Eligible Participant
for such Plan Year, bears to (B) the total Eligible
Compensation of all such Eligible Participants for such Plan
Year; provided, in no event shall the amount of the Profit
Sharing Contribution allocated to each Eligible
Participant's Profit Sharing Account pursuant to the terms
of Subsection (a) hereof constitute a percentage of excess
Eligible Compensation which exceeds the percentage of
Eligible Compensation allocated to each Eligible
Participant's Profit Sharing Account pursuant to the terms
of Subsection (b) hereof; and the amount of Profit Sharing
Contribution allocated pursuant to the terms of Subsection
(a) hereof shall be reduced and reallocated pursuant to the
terms of Subsection (b) hereof to the extent necessary to
satisfy this maximum limitation.
c. Special Definitions. For purposes of Section 5.3(b):
(i) "excess Eligible Compensation" shall mean, with
respect to any Plan Year (or specified portion thereof), the
amount by which an Eligible Participant's Eligible
Compensation exceeds the taxable wage base for such Plan
Year;
(ii) "integration tax rate" shall mean, with respect to
any Plan Year, the greater of (1) 5.7 percent, or (2) the
percentage equal to the portion of the rate of tax under
Code section 3111(a) that is applicable at the beginning of
the Plan Year and that is attributable to old-age; and
(iii) "taxable wage base" shall mean with respect
to any Plan Year, the contribution and benefit base under
section 230 of the Social Security Act (42 U.S.C.'430) as in
effect at the beginning of such Plan Year.
4. Qualified Non-Elective Contributions. In the event a
Participating Company makes Qualified Non-Elective Contributions
for a Plan Year in accordance with Section 4.2(c), such Qualified
Non-Elective Contributions shall be allocated to the Qualified
Non-Elective Contributions Account of each Eligible Participant
who is employed by such Participating Company and who is eligible
to receive an allocation of such Qualified Non-Elective
Contribution as of the last day of such Plan Year, in accordance
with the terms of Paragraph (a), (b), (c) or (d) of this Section
5.4, whichever is applicable.
a. To the extent that the Participating Company designated
all or any portion of the Qualified Non-Elective Contribution for
a Plan Year as a "Proportional Qualified Non-Elective
Contribution," such contribution shall be allocated to the
Qualified Non-Elective Contributions Account of each Eligible
Participant who is employed by such Participating Company and who
is not a Highly Compensated Employee in the same proportion that
(i) the Compensation of such Eligible Participant bears to (ii)
the total Compensation of all Eligible Participants for such Plan
Year.
b. To the extent that the Participating Company designates
all or any portion of the Qualified Non-Elective Contribution for
a Plan Year as a "Proportional NHCE Qualified Non-Elective
Contribution", such contribution shall be allocated to the
Qualified Non-Elective Contributions Account of each Eligible
Participant who is employed by such Participating Company and who
is not a Highly Compensated Employee in the same proportion that
(i) the Compensation of such Eligible Participant for such Plan
Year bears to (ii) the total Compensation of all such Eligible
Participants for such Plan Year.
c. To the extent that the Participating Company designates
all or any portion of the Qualified Non-Elective Contribution for
a Plan Year as a "Per Capita NHCE Qualified Non-Elective
Contribution", such contribution shall be allocated to the
Qualified Non-Elective Contributions Accounts of all Eligible
Participants who are not Highly Compensated Employees on a per
capita basis (that is, the same dollar amount shall be allocated
to the Qualified Non-Elective Contributions Account of each
Eligible Participant who is not a Highly Compensated Employee).
d. To the extent that the Participating Company designates
all or a portion of the Qualified Non-Elective Contributions for
a Plan Year as a "NHCE Section 415 Qualified Non-Elective
Contribution", such contribution shall be allocated to the
Qualified Non-Elective Contributions Accounts of some or all
Eligible Participants who are employed by such Participating
Company and who are not Highly Compensated Employees, (i)
beginning with such Eligible Participant(s) who have the lowest
Compensation, until such Participant(s) reach their annual
addition limits (as described in Section 6.2), or the amount of
the Qualified Non-Elective Contribution is fully allocated, and
then (ii) continuing with successive individuals who are Eligible
Participants and not Highly Compensated Employees or groups of
such Eligible Participants in the same manner until the amount of
the Qualified Non-Elective Contribution is fully allocated.
5. Trust-To-Trust Transfers and Rollover Contributions.
Trust-to-Trust Transfers and Rollover contributions shall be
allocated, as soon as administratively feasible based on and in
accordance with Plan Rules, directly to the appropriate Account
of the Participating Employee for whom such transfer or
contribution was made.
6. Crediting of Accounts. Notwithstanding anything
contained in this Section 5 to the contrary, while contributions
may be allocated to a Participating Employee=s Account as of a
particular date or for a particular period(as specified in this
Section 5), such contributions shall actually be credited to a
Participating Employee=s Account and shall be credited with
investment experience only from the date such contributions are
received and credited to the Participating Employee=s Account by
the Trustee.
Section 6. Limitation Rules.
1. General Rule. Contributions described in Section 4
shall be made subject to the limitations of this Section 6. The
Committee may reduce under this Section 6 any distributions
otherwise required in order to satisfy such limitations in any
manner it deems necessary or appropriate to satisfy tax
withholding obligations.
2. Section 415 Limits.
a. General Limit. The Plan shall comply with the limits of
Code section 415, taking into account all applicable transitional
rules, which section hereby is incorporated in full in this
Section 6.2 by this reference. The "limitation year" for this
purpose shall be the calendar year.
b. Combined Plan Limitation. If an Employee is a
Participating Employee in the Plan and any one or more defined
benefit plans, welfare benefit funds (as defined in Code section
419(d)) or individual medical accounts (as defined in Code
section 415(1)(2)), maintained by BellSouth, a Subsidiary or any
of their Affiliates, and any corrective adjustments in any
Participating Employee's benefits are required to comply with
this section, such adjustments first shall be made under any such
defined benefit plans. If an Employee is a Participating Employee
in the Plan and any one or more other defined contribution plans
maintained by BellSouth, a Subsidiary or any of their Affiliates
and a corrective adjustment in such Participating Employee's
benefits is required to comply with this section, such adjustment
shall be made under this Plan.
c. Correction of Excess Annual Additions. If, as a result
of either the allocation of forfeitures to an Account, a
reasonable error in estimating a Participating Employee's
Compensation, Eligible Compensation or elective deferrals, or
such other occurrences as the Internal Revenue Service permits to
trigger this subsection, the annual addition (within the meaning
of Code section 415(c)(2)) made on behalf of a Participating
Employee exceeds the limitations as incorporated by this section,
the Committee shall direct the Trustee to take such of the
following actions as such Committee shall deem appropriate,
specifying in each case the amount of contributions involved:
(i) A Participating Employee's annual addition
first shall be reduced by reducing his After-Tax
Contributions to the extent of any such excess, up to the
total amount of After-Tax Contributions made on behalf of
such Participating Employee, and the amount of the reduction
(plus any investment earnings thereon) shall be returned to
such Participating Employee. In addition, any Matching
Contributions (and earnings thereon) attributable to the
returned After-Tax Contributions shall be forfeited and
allocated in a manner similar to that described in Paragraph
(iii) of this Section 6.2(c); provided, that if no Profit
Sharing Contributions are made for such Plan Year, such
forfeited Matching Contributions shall be allocated as
additional Matching Contributions.
(ii) If further reduction is necessary, a Participating
Employee's annual addition shall be reduced by reducing his
Before-Tax Contributions to the extent of any such excess,
up to the total amount of Before-Tax Contributions made on
behalf of such Participating Employee, and the amount of the
reduction (plus any investment earnings thereon) shall be
returned to such Participating Employee. In addition, any
Matching Contributions (and earnings thereon) attributable
to the returned Before-Tax Contributions shall be forfeited
and allocated in a manner similar to that described in
Paragraph (iii) of this Section 6.2(c); provided, that if no
Profit Sharing Contributions or Qualified Non-Elective
Contributions are made for such Plan Year, such forfeited
Matching Contributions shall be allocated as additional
Matching Contributions.
(iii) If further reduction is necessary, the Profit
Sharing Contribution allocated to the Participating
Employee's Account (including, if applicable, any
forfeitures allocated as such contribution) shall be reduced
in the amount of the remaining excess. The amount of the
reduction shall be reallocated to the Profit Sharing
Accounts and Qualified Non-Elective Contribution Accounts of
Eligible Participants who otherwise are eligible for
allocations of contributions and who are not affected by
such limitations, in the same manner as Profit Sharing and
Qualified Non-Elective Contributions otherwise are allocated
to such Accounts, disregarding the Eligible Compensation of
those Eligible Participants whose annual addition equals or
exceeds the limitations hereunder.
(iv) If the reallocation to the Accounts of other
Participating Employees in the then current limitation year
(as described in Paragraph (iii) of this Section 6.2(c)) is
impossible without causing them or any of them to exceed the
annual addition limitations incorporated by this section,
the amount that cannot be reallocated without exceeding such
limitations shall be held in a suspense account and shall be
applied to reduce permissible contributions in each
successive year until such amount is fully allocated;
provided, so long as any suspense account is maintained
pursuant to this section: (A) no contributions shall be
made to the Plan which would be precluded by this section;
(B) investment gains and losses of the Trust Fund shall not
be allocated to such suspense account; and (C) amounts in
the suspense account shall be allocated in the same manner
as contributions as of the earliest date possible, until
such suspense account is exhausted. If, at the time that
this Plan terminates, any amount that cannot then be
allocated remains in such suspense account, such amount
shall automatically revert to the Participating Company.
3. Code Section 402(g) Limit on Before-Tax Contribution.
a. Maximum Elective Deferrals Under Affiliates' Plans. The
aggregate amount of a Participating Employee's elective deferrals
made for any calendar year under the Plan and any other plans,
contracts or arrangements with the Affiliates (or, if the Plan is
maintained by a Subsidiary that is not an Affiliate, by the
Subsidiary and its Affiliates) shall not exceed $7,000 (as
adjusted from time to time in accordance with Code section
402(g)(5)) (the "maximum deferral amount"). To the extent that
the amount of a Participating Employee's Before-Tax Contributions
made for a calendar year would exceed the maximum deferral amount
if such Before-Tax Contributions are continued, then, to the
extent determined by the Committee, those Before-Tax
Contributions will be deemed to be After-Tax Contributions and
will be treated as if such Participating Employee elected to make
such After-Tax Contributions in accordance with, and subject to
the terms and limitations of, Section 4.2. If the Committee
permits, such Participating Employee may modify his election form
to change from Before-Tax Contributions, and such modifications
shall not count as a change in contribution percentage under
Section 4.
b. Return of Excess Before-Tax Contributions. If the
aggregate amount of a Participating Employee's Before-Tax
Contributions made for any calendar year, when considered alone,
exceed the maximum deferral amount, the Participating Employee
shall be deemed to have notified the Committee of such excess,
and the Committee shall cause the Trustee to distribute to such
Participating Employee, on or before April 15 of the next
succeeding calendar year, the total of (i) the amount by which
such Before-Tax Contributions exceed the maximum deferral amount,
plus (ii) any earnings allocable thereto. In addition,
Participating Employer Contributions made on behalf of the
Participating Employee which are attributable to the distributed
Before-Tax Contributions shall be forfeited.
c. Return of Excess Elective Deferrals Provided by Other
Affiliate Arrangements. If after the reduction described in
Section 6.3(b), a Participating Employee's aggregate before-tax
contributions under plans, contracts and arrangements with
Affiliates (or, if applicable, a Subsidiary and its Affiliates)
still exceed the maximum deferral amount, the Participating
Employee shall be deemed to have notified the Committee of such
excess, and, unless the Committee directs otherwise, such excess
shall be reduced by distributing to the Participating Employee
before-tax contributions that were made for the calendar year
under such plans, contracts and/or arrangements with Affiliates,
(or, if applicable, a Subsidiary and its Affiliates) other than
the Plan. However, if the Committee decides to make any such
distributions from Before-Tax Contributions made to the Plan,
such distributions (including forfeiture of Matching
Contributions) shall be made in a manner similar to that
described in Section 6.3(b).
d. Discretionary Return of Elective Deferrals. If after
the reductions described in Sections 6.3(b) and (c), (i) a
Participating Employee's aggregate before-tax contributions made
for any calendar year under the Plan and any other plans,
contracts or arrangements with Affiliates, (or, if applicable, a
Subsidiary and its Affiliates) and any other employers still
exceed the maximum deferral amount, and (ii) such Participating
Employee submits to the Committee, on or before March 1 following
the end of such calendar year, a written request that the
Committee distribute to such Participating Employee all or a
portion of his remaining Before-Tax Contributions made for such
calendar year, and any earnings attributable thereto, then the
Committee may, but shall not be required to, cause the Trustee to
distribute such amount to such Participating Employee on or
before the following April 15. However, if the Committee decides
to make any such distributions from Before-Tax Contributions made
to the Plan, such
distributions (including the forfeiture of Matching
Contributions) shall be made in a manner similar to that
described in Section 6.3(b).
e. Return of Excess Annual Additions. Any Before-Tax
Contributions returned to a Participating Employee to correct
excess annual additions shall be disregarded for purposes of
determining whether the maximum deferral amount has been
exceeded.
4. Code section 401(k) Average Actual Deferral Percentage
Limit. If at any time during the Plan Year the Committee
determines that Highly Compensated Employees' Before-Tax
Contributions elections as then in effect possibly could cause
Highly Compensated Employees' Before-Tax Contributions for such
Plan Year to exceed the ADP Limit for such Plan Year, the
Committee shall have the right to reduce or cease Highly
Compensated Employees' future Before-Tax Contributions for such
Plan Year or to convert such future contributions to After-Tax
Contributions to the extent it deems necessary or appropriate to
keep such contributions from exceeding the ADP Limit; provided
that, in making such reductions, cessations or conversions, all
similarly situated Highly Compensated Employees shall be treated
the same and the Committee may take into account any adjustments
required by other limits of this Section 6.
If the Committee determines that Highly Compensated
Employees' Before-Tax Contributions actually paid into this Plan
for the Plan Year, if allowed to remain in such Highly
Compensated Employees' Accounts, would cause this Plan to exceed
the ADP Limit for such Plan Year, then the Excess Contributions
made on behalf of Highly Compensated Employees for such year
shall be distributed in accordance with the rules set forth in
this Section 6.4.
The amount of the Excess Contributions and the Highly
Compensated Employees to whom Excess Contributions will be
distributed under this Section 6.4 shall be determined by
reducing the Before-Tax Contributions of Highly Compensated
Employees in the order of their Actual Deferral Percentages
beginning with the highest Actual Deferral Percentages, until
such contributions no longer exceed the ADP Limit. Any such
Excess Contributions (together with any income allocable to such
contributions) shall be distributed to the affected Highly
Compensated Employees on the basis of the respective portions of
the Excess Contributions attributable to each such Highly
Compensated Employee as required by Code section 401(k)(8). In
addition, any Matching Contributions that are made on behalf of a
Highly Compensated Employee and that are attributable to the
distributed Before-Tax Contributions shall be forfeited. Such
distributions shall be made before the end of the Plan Year
following the Plan Year for which the Excess Contributions were
made in accordance with Plan Rules; provided, however, if so
elected by the Committee (or, if applicable, by a Participating
Company in its Adoption Agreement), no distribution shall be made
to the extent such Excess Contributions may be recharacterized to
After-Tax Contributions in accordance with regulations under Code
section 401(k).
The corrections described herein shall be applied with
respect to the Consolidated Participating Companies (as a group)
and, separately, with respect to each Subsidiary (and its
Affiliates) that is a Participating Company.
5. Code section 401(m) Average Contribution Percentage
Limit. If at any time during the Plan Year the Committee
determines that Highly Compensated Employees' elections of After-
Tax Contributions (and, if elected by the Committee under Code
section 401(m)(3), Before-Tax Contributions) together with
Matching Contributions as then in effect possibly could cause
Highly Compensated Employees' allocations for such Plan Year to
exceed the ACP Limit for such Plan Year, the Committee shall have
the right to automatically reduce Highly Compensated Employees'
elected future contributions for such Plan Year to the extent it
deems necessary or appropriate to keep such contributions from
exceeding the ACP Limit. Any such reduction shall be made first
to Highly Compensated Employees' After-Tax Supplemental
Contributions, then to Highly Compensated Employees' After-Tax
Basic Contributions, then to Highly Compensated Employees' Before-
Tax Supplemental Contributions, and finally to Highly Compensated
Employees' Before-Tax Basic Contributions provided, that, in
making such reductions, all similarly situated High Compensated
Employees shall be treated the same and the Committee may take
into account any adjustments required by other limits of this
Section 6.
If the Committee determines that Highly Compensated
Employees' After-Tax Contributions and Matching Contributions
(and, if elected by the Committee under Code section 401(m)(3),
Before-Tax Contributions) actually paid into this Plan for the
Plan Year, if allowed to remain in such Employees' Accounts,
would cause this Plan to exceed the ACP Limit for such Plan Year,
then the Excess Aggregate Contributions made by or on behalf of
Highly Compensation Employees for such year shall be forfeited or
distributed in accordance with the rules set forth in this
Section 6.5.
The amount of the Excess Aggregate Contributions and the
Highly Compensated Employees who have forfeitable or
distributable Excess Aggregate Contributions shall be determined
by reducing the contributions of Highly Compensated Employees in
the order of their Contribution Percentages, beginning with the
highest Contribution Percentages, until such contributions no
longer exceed the ACP Limit. Any such Excess Aggregate
Contributions (together with any income allocable to such
contributions) shall be distributed to (or, if forfeitable,
forfeited by) the affected Highly Compensated Employees on the
basis of the respective portion of the Excess Aggregate
Contributions attributable to each such Highly Compensated
Employee as required by Code section 401(m). In addition, any
Matching Contributions that are made on behalf of a Highly
Compensated Employee and that are attributable to the distributed
Before-Tax Contributions shall be forfeited. Such distributions
(or if applicable, forfeitures) shall be made before the end of
the Plan Year following the Plan Year for which the Excess
Aggregate Contributions were made in accordance with Plan Rules,
and any such forfeitures shall offset the Participating Company's
obligation to make Matching Contributions under this Plan until
such forfeitures have been exhausted through such offsets, but in
no event shall such forfeitures be allocated to Highly
Compensated Employees whose contributions have been reduced under
this Section 6.5.
The corrections described herein shall be applied with
respect to the Consolidated Participating Companies (as a group)
and separately, with respect to each Subsidiary (and its
Affiliates) that is a Participating Company.
Section 7. Investment Directions.
1. Investment of Participating Employee Contributions.
Each Participating Employee shall have the right to direct that
contributions under Section 3, Section 4.1 and Section 4.2(c)
made by the Participating Employee, or on the Participating
Employee's behalf, be invested in any then permitted combination
in the investment funds described in the Trust Agreement as in
effect from time to time, subject to the rules set forth in this
Section 7. Initial, investment directions shall become effective
as of the Participating Employee=s Enrollment Date, in accordance
with Plan Rules.
2. Investment of Matching Contributions.
a. Matching Contributions allocated to a Participating
Employee=s ESOP Account shall be made in, or invested directly
in, BellSouth Shares in the ESOP Fund or shall be applied by the
Trustee to the extent required under an ESOP Loan to make
principal and interest payments on such ESOP Loan when such
payments are due in order to release BellSouth Shares to the ESOP
Fund. A Participating Employee may not direct the investment of
his ESOP Account.
b. Matching Contributions allocated to the Matching
Account of a Participating Employee who is employed by a Non-ESOP
Company, but who is permitted to direct the investment of his
Account in the BellSouth Shares Fund (as designated by the
Committee on Schedule A) shall be made in, or invested directly
in, BellSouth Shares in the BellSouth Shares Fund. Once
contributed to the Plan, a Participating Employee may direct the
investment of his Matching Account in accordance with Section 7.4
below. New investment directions shall become effective as of any
Business Day, in accordance with Plan Rules.
c. Matching Contributions allocated to the Matching
Account of a Participating Employee who is employed by a Non-ESOP
Company, and who is not permitted to direct the investment of his
Account in the BellSouth Shares Fund (as designated by the
Committee on Schedule A) shall be made in cash. A Participating
Employee may direct the investment of Matching Contributions in
accordance with Section 7.4 below. New investment directions
shall become effective as of any Business Day, in accordance with
Plan Rules.
3. Investment of Profit Sharing Contributions. Each
Participating Employee shall have the right to direct that Profit
Sharing Contributions under Section 4.2(b) made on the
Participating Employee=s behalf, be invested either (a) according
to his then current investment direction made under Section 7.1
(for contributions under Section 3 and Section 4.1), in effect at
the time the Profit Sharing Contributions are made, or (b)
separately from such then current investment direction under
Section 7.1 in any then permitted combination in the investment
funds described in the Trust Agreement as in effect from time to
time, subject to the rules set forth in this Section 7. New
investment directions shall become effective as of any Business
Day, in accordance with Plan Rules.
4. Changes in Investment Direction. Any investment
direction made by a Participating Employee shall continue in
effect until changed by the Participating Employee. A
Participating Employee may make the following changes in
accordance with Plan Rules:
a. A Participating Employee may, effective as of any
Business Day, change an investment direction as to future
contributions under Section 3, Section 4.1, Section 4.2(b),
Section 4.2(c) and Section 5.2, by directing that such
contributions be invested in one of the other investment funds or
any then permitted combination of such funds.
b. A Participating Employee may, effective as of any
Business Day, direct that all or a portion of the Units credited
to his Account (excluding a Participating Employee=s ESOP
Account) in any one or more of the investment funds be
transferred, in accordance with Plan Rules, to any one or more of
the other investment funds in any then permitted combination,
based upon the value of such Units representing each investment
fund as of such Business Day; provided, that no such transfer
shall result in amounts being transferred to and from the same
fund.
c. Notwithstanding the foregoing, Participating Employees
employed by certain Non-ESOP Companies shall not be permitted
direct the investment of their Accounts in the BellSouth Shares
Fund. These Participating Companies shall be designated by the
Committee on Schedule A, as amended from time to time.
d. All amounts transferred from the Retirement Savings
Plan shall remain subject to the investment directions made by a
Participating Employee under this amended and restated Plan until
changed by the Participating Employee hereunder.
5. ESOP Account Diversification. Each Participating
Employee may elect within 90 days after the close of the Plan
Year in which he first is at least age 55 and has completed at
least ten years of participation in the ESOP, and within 90 days
after the close of each of the immediately following four Plan
Years, that (1) 25% of the BellSouth Shares credited to his ESOP
Account be transferred to any one, or more than one, of the
investment funds available under Section 7.1, based on the value
of the Units representing each such investment fund as of the
Business Day on which such transfer is made or , if there are
less than three such funds, that (2) 25% of the BellSouth Shares
credited to his ESOP Account be distributed to him. After the end
of such five consecutive Plan Year period such an Eligible
Employee shall have one additional Plan Year, the Plan Year which
immediately follows the end of such five year period, to make
such an election, and the percentage for such election shall be
50%. All elections, transfers and distributions required under
this section shall be made in accordance with Plan Rules intended
to satisfy the requirements under Code section 401(a)(28).
6. Transition Rule. For purposes of effecting the change
to a daily valuation system, and notwithstanding anything
contained in this Section 7 to the contrary, Participating
Employees may not direct the investment of their Account pursuant
to this Section 7 during the period beginning on June 28, 1996
and ending on July 7, 1996, or such other dates as may be
necessary to complete such change. Investment directions in
effect on June 28, 1996, shall remain in effect until the later
of July 8, 1996 (or, if later, the date this black-out period
ends), or the date a Participating Employee submits a change in
investment direction pursuant to Section 7.4 hereof.
Section 8. Maintenance and Valuation of Accounts; ESOP Loan
Allocations.
1. Maintenance of Separate Accounts. Each Participating
Employee shall be furnished a statement of his Account at least
annually and shall receive a confirmation statement as soon as
practicable after any investment transfer, distribution,
withdrawal or restoral or at such other time as may be determined
by the Committee.
2. Valuation of Accounts. The interest of a Participating
Employee's Account in each investment fund shall be represented
by Units. The value of a Unit in each investment fund shall be
determined as of each Business Day by dividing the total number
of Units in each investment fund credited to the Accounts of all
Participating Employees into the then value of all the assets
then held by the Trustee with respect to such investment fund.
Following such determination of the value of the Units in
each investment fund, the Account of each Participating Employee
who has selected such investment fund shall be credited, as of
each Business Day, with a number of Units in such investment fund
determined by dividing the value of such a Unit into the amount
of additional contributions credited to his Account as of such
Business Day in such investment fund.
The ESOP Fund for recordkeeping purposes shall be divided
into a subfund for BellSouth Shares attributable to top up
contributions as described in Section 4.2(a)(iv) and a separate
subfund for BellSouth Shares released from each ESOP Loan
Suspense Account as described in Section 8.3(b). A separate Unit
value shall be maintained for each such subfund. The value of
Units for a subfund for BellSouth Shares released from an ESOP
Loan Suspense Account shall be determined under this Section 8.2
without regard to Matching Contributions and ESOP Dividends (or
the earnings thereon) to be used to repay the applicable ESOP
Loan, and such Units shall be credited to Participating
Employees' ESOP Accounts as provided in Section 8.3(c) and
8.3(d). All such subfunds shall start with an initial Unit value
of 1.0.
All investment funds shall be invested and valued in the
manner set forth in the Trust Agreement.
3. ESOP Loan Allocations.
a. ESOP Loan Payment. The repayment of principal and
interest on each ESOP Loan shall be made by the Trustee when due
in accordance with directions from BellSouth.
b. Release From ESOP Loan Suspense Account. The total
number of BellSouth Shares released from an ESOP Loan Suspense
Account as a result of a principal and interest payment made on
an ESOP Loan shall equal the number of BellSouth Shares held in
the ESOP Loan Suspense Account with respect to such ESOP Loan
multiplied by a fraction. The numerator of such fraction shall be
the amount of such principal and interest payment. The
denominator of such fraction shall be the sum of the numerator
plus the principal and interest remaining to be paid on such ESOP
Loan under the amortization schedule for such ESOP Loan. The
number of future payments under such ESOP Loan must be definitely
ascertainable and shall be determined without taking into account
any possible extensions or renewal periods. If the effective
interest rate under the ESOP Loan is variable, the interest to be
paid in future periods shall be computed for purposes of
determining such fraction by using the interest rate then in
effect. The BellSouth Shares which are released from the ESOP
Loan Suspense Account in accordance with the rules in this
Section 8.3(b) shall be transferred to the ESOP Fund, and Units
representing an investment in such BellSouth Shares shall be
allocated to Participating Employees' individual ESOP Accounts in
the manner specified in subparagraphs (c) and (d) of this Section
8.3.
c. ESOP Account Dividend Allocation. If ESOP Dividends on
BellSouth Shares credited to a Participating Employee's ESOP
Account are used to make a principal or interest payment on an
ESOP Loan, Units representing the value of the BellSouth Shares
released as a result of such payment from the ESOP Loan Suspense
Account and transferred to the ESOP Fund first shall be credited
to such Participating Employee's ESOP Account. The Units so
credited shall be determined by dividing the ESOP Dividends from
such Participating Employee's ESOP Account used to make such
principal or interest payment by the fair market value of a
BellSouth Share on the date as of which the credit is made in a
manner which satisfies the requirements of Code section 404(k).
d. Match Allocation. After the requirements of paragraph
(c) of this Section 8.3 have been satisfied with respect to an
ESOP Loan payment made in whole or in part with ESOP Dividends,
Units representing an investment in all remaining BellSouth
Shares that have been released from the ESOP Loan Suspense
Account to the ESOP Fund as a result of such payment shall be
allocated to the ESOP Account of each Participating Employee as
of such dates and in such amounts as specified in Section
4.2(a)(i) and, if applicable, Section 4.2(a)(v).
e. Leveraged ESOP Protections. No BellSouth Shares
acquired with the proceeds of an ESOP Loan shall be subject to a
put, call or other option or other similar arrangement while held
by and when distributed from this Plan except to the extent
permissible under Code section 4975, and BellSouth shall have no
right to amend this Section 8.3(e) absent the receipt of a
favorable determination letter from the Internal Revenue Service
with respect to such amendment. Similarly, BellSouth Shares are
traded on the New York Stock Exchange, and this Plan contemplates
that such shares will continue to be traded on such exchange or
in some other established stock exchange. If purchases and sales
of BellSouth Shares through an established stock exchange stop
(other than temporarily), this Plan shall be amended as of the
date such trading stops to satisfy the requirements under the
Code for an employee stock ownership plan which invests in stock
which is not readily tradable on an established market or is not
registered under Section 12 of the Securities Exchange Act of
1934, as amended.
Section 9. Distribution; Withdrawal.
1. Method of Payment. Any distribution or withdrawal from
a Participating Employee=s Account under this Section 9 shall be
effective as of the Processing Date, and payment to the
Participating Employee shall be processed periodically, in
accordance with Plan Rules, but in no event less frequently than
monthly. Any distribution or withdrawal under Section 9.2,
Section 9.3 or Section 9.5 shall be made in accordance with the
following paragraphs.
a. BellSouth Shares. With respect to Units representing
investments in the ESOP Fund and in the BellSouth Shares Fund,
payment shall be made at the Participating Employee's election
either completely in BellSouth Shares or in cash; except that, in
the case of any fraction of a BellSouth Share, payment shall be
in cash on the basis of the value per share as of the Processing
Date. For the purposes of distributions there shall be deemed to
be in a Participating Employee's Account, as of such Processing
Date, a number of BellSouth Shares determined by dividing the
total value of the Units representing investment in BellSouth
Shares in such Participating Employee's Account as of such
Processing Date by the value per share of BellSouth Shares as of
such Processing Date.
b. Other Investments. With respect to Units representing
investments other than in the ESOP Fund and the BellSouth Shares
Fund, payment shall be made as follows:
(i) With respect to Participating Employees
employed by ESOP Companies, at the Participating Employee=s
election either completely in BellSouth Shares or in cash,
except that, in the case of any fraction of a BellSouth
Share, payment shall be in cash on the basis of the value
per share as of the Processing Date. For the purposes of
distributions in BellSouth Shares, there shall be deemed to
be in a Participating Employee's Account, as of such
Processing Date, a number of BellSouth Shares determined by
dividing the total value of the Units in such Participating
Employee's Account as of such Processing Date by the value
per share of BellSouth Shares as of such Processing Date.
(ii) With respect to Participating Employees employed
by Non-ESOP Companies, in cash on the basis of the
respective Unit values as of the Processing Date.
c. Form of Distribution. The form in which distributions
under the Plan shall be made shall be determined as follows:
(i) Except as otherwise provided in Paragraph (d)
below, the payment of any distribution to a Participating
Employee from the Plan shall be in the form selected by the
Participating Employee by written notice delivered to the
Committee, subject to the terms and limitations set forth in
this Paragraph (c). The Participating Employee may choose
between (A) a single lump-sum payment and (B) equal annual
installments (adjusted for investment earnings and losses
between payments) paid over a term certain.
(ii) Unless the value of the Units in the Participating
Employee's Account exceeds (or at the time of any prior
distribution exceeded) $3,500, or if the payment constitutes
a withdrawal, payment of the Units shall be made in the form
of a single lump-sum payment without the consent of the
Participating Employee.
(iii) If a Participating Employee selects payment
in the form of annual installments over a term certain, the
Participating Employee must select payments over a period of
either (A) 10 years or (B) the life expectancy of such
Participating Employee. If a distribution is to be made to a
Participating Employee in the form of annual installments
payable over his life expectancy, the life expectancy of
such Participating Employee shall be calculated at the time
distributions commence and shall not thereafter be
recalculated. The Committee, in its sole discretion, shall
decide whether the Plan shall make the installment payments
directly from the Trust Fund or by purchasing an annuity
contract that is distributed to the Participating Employee.
Notwithstanding anything herein to the contrary,
distributions from the Plan must satisfy the requirements of
Code section 401(a)(9)(G). This means that the incidental
benefit rules as described in Treasury Regulation section
1.401(a)(9)-2 shall be satisfied.
(iv) If a Participating Employee selects payment in the
form of annual installments over a term certain, the
Participating Employee may later elect to receive a single
lump-sum payment of the remaining Units in his Account.
(v) Upon the death of a Participating Employee, any
Units credited to his Account shall be distributed as
follows:
(A) If the Participating Employee=s beneficiary
is his surviving Spouse (as defined in Section 16.3),
and
(I) the Participating Employee dies after
distribution of his Account has begun, payment of
the remaining portion of the Account shall
continue to be distributed in the form chosen by
the Participating Employee; provided, however, the
surviving Spouse may elect to have the remaining
portion of the Participating Employee=s Account
distributed in the form of a single lump sum
payment as soon as practicable following the
Participating Employee=s death, or
(II) the Participating Employee dies before
distribution of the Account has begun, the
surviving Spouse may elect to receive payment of
the Account in any of the forms permitted under
this Section 9.1(c) as if the surviving Spouse
were the Participating Employee, including
deferral of such benefit until such benefit
otherwise would have been payable to the
Participating Employee under Paragraph (vi) below.
(B) If the Participating Employee=s beneficiary
is not his surviving Spouse (as defined in Section
16.3), any Units credited to the Participating
Employee=s Account shall be distributed in the form of
a single lump sum payment as soon as practicable
following the Participating Employee=s death.
(vi) If a Participating Employee is to receive or begin
receiving benefits on or before April 1 of one calendar year
as a result of his attaining age 702 during the preceding
calendar year (as provided in Section 9.6), the distribution
shall be paid in the form of a single lump-sum payment
unless, on or before November 1 of the calendar year in
which the Participating Employee attains age 702 (or such
other date as the Committee may provide), he elects to
commence receiving his distribution in the form of annual
installments as permitted in Paragraph (c)(iii) above and in
Code section 401(a)(9) and the regulations issued
thereunder.
d. Other Distributions. In the event that the Committee
determines that a form of benefit other than the single lump-sum
payment or installments described in Section 9.1(c) is required
for a particular Participating Employee by ERISA, by the Code
(including Code section 409(o) or 411(d)(6)) or by any other
applicable law, the distribution to such Participating Employee
shall be made in accordance with such determination; provided,
however, that this Section 9.1(d) shall not create any right to
an alternate form of benefit for Participating Employees
generally or for any Units credited to the Account of a
particular Participating Employee which are not subject to such
requirements.
2. Withdrawals Without Hardship. Not more than once in any
consecutive six-calendar month period, a Participating Employee
(including a Participating Employee who is a former Employee) may
make a withdrawal by giving notice to the Committee or its
designated representative in the manner prescribed in Plan Rules.
Such notice shall specify the amount to be withdrawn, which
amount may equal all or any portion of the vested Units credited
to such person's Account (excluding for this purpose the Profit
Sharing Account and ESOP Account of a Participating Employee who
is an Employee, but including the Profit Sharing Account and ESOP
Account of a Participating Employee who is a former Employee);
provided, that in the case of a Participating Employee who is an
Employee, who has not attained age 59-1/2, or who is not disabled
as of the valuation date with respect to such withdrawal, no
withdrawal may be made with respect to Units in his Before-Tax
Basic Account, Before-Tax Supplemental Account (except as
otherwise provided in Section 9.3) and Qualified Non-Elective
Contributions Account.
a. Payment of any withdrawal under this Section 9.2 shall
be made in cash on the basis of the respective Unit Values as of
the Processing Date. If the value of all Units with respect to
which a withdrawal may be made is less than $500.00, no
withdrawal less than the full amount available for withdrawal
shall be permitted.
b. If a Participating Employee makes more than one
withdrawal pursuant to this Section 9.2 in any Plan Year,
Matching Contributions made on behalf of such Participating
Employee shall be suspended for a three-calendar month period
commencing on the first day of the month following the valuation
date of such subsequent withdrawal. Such three month period of
suspension of Matching Contributions shall not constitute a
period of suspension for purposes of Section 13.
c. Unless the Participant directs otherwise, any
withdrawal under this Section 9.2 shall be made from a
Participant=s Account in the following order:
(i) After-Tax Supplemental Account;
(ii) After-Tax Basic Account;
(iii) Rollover Account;
(iv) Matching Account;
(v) Profit Sharing Account (but only if the
Participating Employee is a former Employee on or before the
effective date of the withdrawal);
(vi) ESOP Account (but only if the Participating
Employee is a former Employee on or before the effective
date of the withdrawal);
(vii) Qualified Non-Elective Contributions Account
(but only if the Participating Employee has attained age
592, is a former Employee or is disabled, on or before the
effective date of withdrawal);
(viii) Before-Tax Supplemental Account (but only if
the Participating Employee has attained age 592, is a former
Employee or is Disabled, on or before the effective date of
withdrawal); and
(ix) Before-Tax Basic Account (but only if the
Participating Employee has attained age 592, is a former
Employee or is Disabled, on or before the effective date of
withdrawal).
3. Hardship Withdrawals of Before-Tax Contributions. A
Participating Employee who is an Employee and who has not reached
age 59-1/2 and is not disabled may request a cash withdrawal of
his Before-Tax Contributions and the earnings applicable to his
Before-Tax Contributions credited to his Account through December
31, 1988 only if the withdrawal is because of a financial
hardship. A request for a withdrawal for a financial hardship
will be granted only if the Committee determines (on the basis of
all the relevant facts and circumstances and in accordance with
the regulations under Code section 401(k)) that the withdrawal is
necessary to satisfy an "immediate and heavy financial" need of
the Participating Employee.
An "immediate and heavy financial" need shall mean:
a. the payment of expenses for medical care described in
Code section 213(d) incurred by the Participating Employee, his
spouse, or his dependents (as defined in Code section 152) or
amounts necessary for those persons to obtain such medical care,
b. the purchase (excluding mortgage payments) of a
principal residence for the Participant,
c. the payment of tuition and related educational fees for
the next 12 (twelve) months of post-secondary education for the
Participating Employee, his spouse, his children or his
dependents (as defined in Code section 152),
d. the prevention of the eviction of the Participating
Employee from his principal residence or foreclosure on the
mortgage on the Participating Employee's principal residence, or
e. the need to meet such other conditions as set forth in
the Code or as the Internal Revenue Service officially states is
permissible under Code section 401(k).
A withdrawal generally shall be determined to be necessary to
satisfy such immediate and heavy financial need only if the
Participating Employee demonstrates to the Committee that the
need cannot be relieved:
a. through reimbursement or compensation by insurance or
otherwise,
b. by reasonable liquidation of the Participating
Employee's assets and the assets of the Participating Employee's
spouse and minor children which are reasonably available to the
Participating Employee, to the extent such liquidation would not
in itself cause an immediate and heavy financial need,
c. by cessation of the Participating Employee's
contributions under Section 4.1,
d. by other distributions or nontaxable loans (at the time
the loans are made) from this Plan and all other plans maintained
by his Participating Company or any other employer, or
e. by borrowing from commercial sources on reasonable
commercial terms.
The Committee in its discretion may rely on the participating
Employee's representation that such resources are not available
in lieu of independently ascertaining such facts.
A request for a withdrawal shall be submitted to the
Committee or its delegate in accordance with Plan Rules and shall
be accompanied or supplemented by such evidence as it may
reasonably require. If the Committee grants a request for a
hardship withdrawal, such withdrawal shall be made first from the
Participating Employee's Before-Tax Supplemental Account and
thereafter from his Before-Tax Basic Account to the extent that
the Committee deems necessary to relieve such hardship. Payment
of a hardship withdrawal shall be made in cash on the basis of
the respective Unit values as of the Processing Date.
The amount of such withdrawal may include any amounts
necessary to pay any federal, state or local income taxes or
penalties reasonably anticipated to result from such withdrawal.
4. Withdrawal of Profit Sharing Account. Withdrawals from
a Participating Employee=s Profit Sharing Account prior to a
termination of employment shall not be permitted.
5. Distribution on Termination of Employment.
a. Retirement or Other Termination of Employment Except
Death or Transfer. If a Participating Employee separates from
service as an Employee (on or after the effective date of this
restated Plan) for any reason other than death:
(i) all nonvested Units in his Account shall be
forfeited as soon as practicable following his separation
from service, provided that no Units will be forfeited if
such Participating Employee:
(A) separates from service because of Disability,
(B) separates from service on or after his Normal
Retirement Age,
(C) separates from service pursuant to the
provisions of a severance pay plan sponsored by his
Participating Company and approved by the Committee
which is treated as a welfare plan in accordance with
ERISA and DOL Regulations section 2510.3-2(b) and which
provides for payment of severance benefits (other than
payment in lieu of vacation) to Employees (including
Employees who are not Highly Compensated Employees) on
account of termination of employment or in accordance
with a Participating Company=s plans or practices with
respect to technological displacements or force surplus
reduction, or
(D) has at least 3 Years of Vesting Service;
(ii) subject to the terms of Section 9.1 and Paragraph
(c) below, the distribution of all of the vested Units in
such Participating Employee's Account shall be made or
commenced as soon as practicable following the date on which
such separation is effective; provided, however, that in the
event such Participating Employee has no vested interest in
his Account at the time of such separation, he shall be
deemed to have received a cash-out distribution at the time
of his separation; provided, further, if the value of such
Units exceeds (or at the time of any prior distribution
exceeded) three thousand five hundred dollars ($3,500.00),
such Participating Employee's Account shall not be
distributed before age 65 without his written consent; and
provided, further, a Participating Employee may elect to
defer distribution or the commencement of distributions
until a later date, but not later than April of the calendar
year following the calendar year in which the Participating
Employee attains age 70; and
(iii) contributions made by or on behalf of a
Participating Employee under Section 4.1, which have not yet
been allocated and credited to his Account pursuant to
Section 5, shall be refunded to him in accordance with Plan
Rules except to the extent such contributions are reflected
in the value of Units distributable to him under Section
9.5(a)(ii).
b. Death. If a Participating Employee dies while an
Employee, all of the Units in his Account shall be distributed as
soon as practicable following his death, pursuant to Sections 9.1
and 16. Contributions made by or on behalf of such Participating
Employee under Section 4.1, which have not yet been allocated and
credited to his Account pursuant to Section 5, will be refunded
to his beneficiary in accordance with Plan Rules except to the
extent such contributions are reflected in the value of the Units
distributable to his beneficiary under Sections 9.1(c) and 16.
c. Delay Upon Reemployment. If a Participating Employee
becomes eligible to receive or begins receiving a benefit payment
in accordance with the terms of paragraph (a) above and
subsequently is reemployed by an Affiliate or Subsidiary prior to
the time his entire Account has been distributed, the
distribution to such Participating Employee shall be delayed or
cease until such Participating Employee again becomes eligible to
receive a distribution from the Plan pursuant to the terms of the
Plan. Notwithstanding the foregoing, if a Participating
Employee's benefit payments have commenced in the form of
installment payments for which an annuity contract has been
purchased and distributed, payments under such annuity contract
shall not cease but shall continue during the period of his
reemployment.
6. Required Distribution. Unless a Participating Employee
elects otherwise under the provisions of Section 9.5(a)(ii),
distribution of all of the Units in a Participating Employee's
Account shall be made or commenced to the Participating Employee
upon receipt of a written election form provided by the
Committee; provided, however, distributions in any event shall
begin no later than the April 1 of the calendar year following
the calendar year in which the Participating Employee attains age
70-1/2 even if the Participating Employee has not retired under
this Plan, and, unless a contrary election is in effect under
Section 9.1(c), all of the Units in a Participating Employee's
Account (other than Units representing nonvested amounts) shall
be distributed in a lump sum to the Participating Employee
whenever any distribution (in addition to amounts otherwise
distributable) is required in order to satisfy the minimum
distribution rules under Code section 401(a)(9). Notwithstanding
anything to the contrary in this Plan,
a. all distributions under this Plan will be made in
accordance with applicable regulations issued under Code section
401(a)(9), including without limitation any applicable regulation
interpreting Code section 401(a)(9)(G), and Code section 409(o);
b. any distribution required under the minimum incidental
death benefit requirements of Code section 401(a)(9)(G) shall be
treated as a distribution required under this Section 9.6 and
c. the provisions of this Section 9.6 will control in the
event that any distribution required under Section 9.1(d) is
inconsistent with Code section 401(a)(9) or Code section 409(o).
7. Undeliverable Amounts. In the event the Committee is
unable to locate a Participating Employee or, in the case of a
deceased Participating Employee, the designated beneficiary,
surviving Spouse, or beneficiary of the Participating Employee's
estate, as the case may be, after written notice to the last
known mailing address of the payee and such additional effort, if
any, as the Committee deems reasonable under the circumstances,
and no claim is filed for the amount so payable within a
reasonable time after the payments are to commence to such
missing payee, the amount so payable may be treated as abandoned.
The amount of such abandoned Account shall be applied to reduce
future Profit Sharing Contributions and Matching Contributions by
a Participating Company as described in Section 11 of the Plan.
Notwithstanding the foregoing, the amount of such abandoned
Account shall be reinstated and paid to such Participating
Employee, designated beneficiary, surviving Spouse or beneficiary
of the Participating Employee's estate, as the case may be, in
the event that such person thereafter files a claim for the
benefit while the Plan is in effect and demonstrates to the
satisfaction of the Committee that such person is in fact the
missing payee. Notwithstanding anything to the contrary contained
herein, such reinstatement and payout shall be made prior to any
reduction of Profit Sharing Contributions or Matching
Contributions under Section 11 of the Plan and shall be made
first from forfeitures, if any, next from Plan earnings and, if
such amounts are insufficient to satisfy the reinstatement
required by this Section, from current Profit Sharing
Contributions and Matching Contributions, if any.
8. Participating Employee Consents. Effective as of the
date of a determination letter first issued by the Internal
Revenue Service stating that the Plan, as amended by this Section
9.8, is qualified under Code section 401(a), any written notice,
election or consent requirement applicable to distributions and
withdrawals under this Section 9 may be deemed satisfied in
accordance with Plan Rules if a Participating Employee uses a
personal identification number in conjunction with a telephonic
request for a distribution or withdrawal and follows such other
procedures (which shall not include the requirement of a written
application or any other form of written consent within the 90-
day period preceding the day on which the loan is made) as are
established by the Committee.
9. Rollover Distributions
a. General. Notwithstanding any provision of the Plan to
the contrary that would otherwise limit a distributee's election
under this Section, a distributee may elect, at the time and in
the manner prescribed by the Committee, to have any portion of an
eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover
and may waive his right to any minimum prior notice of his
rollover rights.
b. Definitions.
(i) Eligible Rollover Distribution. An eligible
rollover distribution is any distribution of all or any
portion of the balance to the credit of the distributee,
except that an eligible rollover distribution does not
include: any distribution that is one of a series of
substantially equal periodic payments (made not less
frequently than annually) made for the life (or life
expectancy) of the distributee or the joint lives (or joint
life expectancies) of the distributee and the distributee's
designated beneficiary, or for a specified period of ten
years or more; any distribution to the extent such
distribution is required under Code section 401(a)(9); the
portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer
securities); and distributions which do not represent all of
the balance to the credit of the distributee and which total
less than $200 during the Plan Year.
(ii) Eligible Retirement Plan. An eligible
retirement plan is an individual retirement account
described in Code section 408(a), an individual retirement
annuity described in Code section 408(b), an annuity plan
described in Code section 403(a), or a qualified trust
described in Code section 401(a), that accepts the
distributee's eligible rollover distribution. However, in
the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement
annuity.
(iii) Distributee. A distributee includes an
Employee or former Employee. In addition, the Employee's or
former Employee's surviving spouse and the Employee's or
former Employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations order,
as defined in Code section 414(p), are distributees with
regard to the interest of the spouse or former spouse.
(iv) Direct Rollover. A direct rollover is a
payment by the Plan to the eligible retirement plan
specified by the distributee.
(c) Waiver of Notice. Notwithstanding anything to the
contrary in this section, if a distribution is one to which Code
sections 401(a)(11) and 417 do not apply, such distribution may
commence less than 30 days after receiving the notice required
under section 1.411(a)-11(c) of the Income Tax Regulations is
given, provided that:
(i) the Committee clearly informs the Participating
Employee that the Participating Employee has a right to a
period of at least 30 days after receiving the notice to
consider the decision of whether or not to elect a
distribution (and, if applicable, a particular distribution
option), and
(ii) the Participating Employee, after receiving the
notice, affirmatively elects a distribution.
10. Transition Rule. For purposes of effecting the change
to a daily valuation system, and notwithstanding anything
contained in this Section 9 to the contrary, distributions and
withdrawals shall not be made from a Participating Employee=s
Account during the period beginning on June 28, 1996, and ending
on July 7, 1996, or such other dates as may be necessary to
complete such change.
Section 10. Loans.
1. Adoption of Loan Provisions. With respect to the
Consolidated Plan, and a Separate Plan if a Separate
Participating Company so elects in its Adoption Agreement, a
Participating Employee who is a party in interest (as defined in
Section 3(14) of ERISA) with respect to the Consolidated Plan or
a Separate Plan, as applicable, may request a loan from the Plan
in accordance with such procedures as the Committee establishes
from time to time. The Committee shall grant all such loan
requests on a reasonably equivalent basis, subject to the
following conditions:
a. The principal amount of a loan made under this Section
10 (when added to the outstanding balance of all other loans from
the Plan) to a Participating Employee shall not exceed the lesser
of (i) $50,000 as reduced by the excess, if any, of (A) the
highest outstanding balance of loans from the Plan during the one-
year period ending on the day before the date as of which such
loan is made over (B) the outstanding balance of loans from the
Plan on the date as of which such loan is made, or (ii) 50% of
the sum of the Participating Employee's Before-Tax Basic Account,
Before-Tax Supplemental Account and Rollover Account at the time
the loan is made (where, for purpose of this Paragraph (a), this
Plan and all other plans described in Code section 401 which are
maintained by an Affiliate or a Subsidiary shall be treated as
one plan).
b. The loan is secured by no more than 50% of the
Participating Employee's nonforfeitable interest in his Account
immediately after the origination of the loan.
c. The loan provides for the repayment (which for a
Participating Employee who is an active Employee shall be made
only through payroll deductions unless otherwise provided by Plan
Rules) of principal and interest in substantially level
installments not less frequent than quarterly over a period of at
least two years but no more than five years. Prepayment of the
loan in a lump-sum amount may be made after the initial one year
installment period. The payroll deductions for loan repayments to
the Plan shall be made prior to the collection of any
contributions.
d. The interest rate for the loan shall be the base rate
on corporate loans at large U.S. money center commercial banks
(APrime Rate@) as reported in the Wall Street Journal for the
last Business Day of the calendar quarter immediately preceding
the calendar quarter in which the loan is granted plus any
premium and minus any discount which the Committee deems
appropriate and commercially reasonable under the circumstances
and consistent with applicable law. The Committee's determination
of the applicable interest rate shall be final.
e. The loan, if made to a Participating Employee who is an
Employee, shall become due and payable in full in the event that
the Participating Employee's employment terminates for any reason
other than a transfer (which does not involve a Trust-to-Trust
Transfer or a distribution) in accordance with Section 15 prior
to the complete repayment of such loan and, further, the Trustee
shall have the right to deduct any amount due under the loan from
any amount which becomes distributable under this Plan to, or on
behalf of, the Participating Employee.
f. The principal amount of the loan is at least $1,000.00.
g. The administrative expenses for the loan shall be paid
by the Participating Employee.
h. If a Participating Employee with an outstanding loan
balance requests a withdrawal under Section 9.3, the Committee
shall grant such withdrawal in accordance with the terms of
Section 9, provided such withdrawal does not result in the
Participating Employee's outstanding loan balance exceeding his
remaining Before-Tax Basic Account and Before-Tax Supplemental
Account balances in the aggregate, or, to the extent not
prohibited by Code section 401(k)(2)(B), the Committee may reduce
the Participating Employee's outstanding loan balance by
designating such reduction as a distribution if the Committee
deems it advisable to meet the financial needs of the
Participating Employee and, in such event, no limitation on
prepayment shall apply.
i. A Participant may have no more than two outstanding
loans from the Plan at any time.
j. If required under the Code or ERISA, the Participating
Employee and, if applicable, his spouse (at the time the loan is
made) must consent in writing to such loan. Such written consent
shall be made in accordance with such procedures as the Committee
establishes from time to time. Effective as of the date of a
determination letter first issued by the Internal Revenue Service
stating that the Plan, as amended by this sentence, is qualified
under Code section 401(a), the Committee may deem this written
consent requirement to be satisfied if a Participating Employee
uses a personal identification number in conjunction with a
telephonic request for a loan and follows such other procedures
(which shall not include the requirement of a written application
or any other form of written consent within the 90-day period
preceding the day on which the loan is made) as are established
by the Committee.
k. The loan shall become due and payable in full if the
Participating Employee's obligation to repay the loan has been
discharged through a bankruptcy or any other legal process or
action which did not actually result in payment in full.
l. The loan shall be in default at such time as the
Participating Employee (i) fails to make three consecutive
months' loan repayments; (ii) fails to repay the loan in full
either (A) before the end of the five-year maximum loan period
set forth in Section 10.1(c) or (B) at such earlier time as the
loan becomes due and payable under this Section 10; or (iii)
satisfies any other default condition set forth in the terms and
conditions of the promissory note that accompanies the loan.
Upon default of the loan, the Trustee shall cause the portion of
the borrower's Account which has been pledged to secure the loan
to be used to repay such loan; provided, although the Committee
may treat any portion of the loan balance that remains
outstanding after a default as taxable income to the borrower in
accordance with the terms of Code Section 72(p), no portion of
such outstanding loan balance may be treated as a reduction of a
Participating Employee's Account balance until such time as such
reduction, if treated as a distribution, will not breach the
special distribution restrictions of Code Section 401(k)(2)(B).
m. The Participating Employee agrees to such other terms
and conditions as the Committee deems appropriate under the
circumstances.
If a loan is authorized, the Committee or its designee,
as soon as administratively practicable following authorization
and in accordance with Plan Rules, shall direct the transfer of
the principal amount of such loan from the Participating
Employee's subaccounts proportionately from the investments of
each subaccount, to a special loan Account for such Participating
Employee, in accordance with a procedure which the Committee
deems appropriate under the circumstances. The loan shall be
made from such loan Account, and principal and interest payments
on the loan shall be credited when made to such loan Account.
Payments so credited shall be transferred back to the
Participating Employee's Account in such a manner as the
Committee deems appropriate under the circumstances and shall be
reinvested in the same manner as a current contribution in
accordance with the Participating Employee's current investment
election.
2. Transition Rule. For purposes of effecting the change
to a daily valuation system, and notwithstanding anything
contained in this Section 10 to the contrary, loans shall not be
made to Participating Employees during the period beginning on
June 28, 1996, and ending on July 7, 1996, or such other dates as
may be necessary to complete such change.
Section 11. Restorals of Forfeited Amounts.
1. Application of Forfeitures.
a. Reduction of Profit Sharing and Matching Contributions.
To the extent not used to satisfy the Participating Company=s
restoration obligation set forth in Section 11.2, nonvested
amounts forfeited by a Participating Employee shall be applied
when available against the obligation of the Participating
Company which made the related contributions to make its
contributions under Section 4.2; provided, if the nonvested
amounts forfeited and available with respect to a Consolidated
Participating Company exceed such company=s contribution
obligation for a Plan Year, the excess of such nonvested amounts
forfeited shall be used to reduce the contribution obligations of
the other Consolidated Participating Companies for such Plan
Year. Nonvested amounts forfeited in a Participant=s Profit
Sharing Account shall be first applied to reduce the obligation,
if any, of the Participating Company which made the related
contributions to make Profit Sharing Contributions and may be
applied to reduce its Matching Contributions only after the
obligation, if any, to make Profit Sharing Contributions is
completely satisfied. Nonvested amounts forfeited in a
Participating Employee=s Matching Account shall be first applied
to reduce the obligation of the Participating Company which made
the related contributions to make Matching Contributions and may
be applied to reduce its Profit Sharing Contributions obligation,
if any, only after the obligation to make Matching Contributions
is completely satisfied. No Matching Contribution or Profit
Sharing Contribution, as the case may be, shall be made directly
by a Participating Company to the extent that forfeitures are
available to satisfy such contribution obligation. All amounts
forfeited shall be applied as a credit to reduce subsequent
contributions of the Participating Company which made the related
contributions at the time of forfeiture.
b. Plan Termination. Notwithstanding the terms of
subsection (a) hereof, in the event this Plan is terminated, any
forfeitures not applied prior thereto to satisfy the
Participating Company=s restoration obligation as set forth in
Section 11.2 or to reduce a Participating Company=s obligation
under Section 4.2(a) shall be credited, subject to the limits of
Section 6, ratably to the Accounts of its Employees who are
Participating Employees on the date of such termination in
proportion to the amounts of the Matching Contributions credited
to their Accounts for the last month with respect to which such
contributions were made; provided, if such crediting of
forfeitures would cause impermissible discrimination under the
Consolidated Plan, the forfeitures that may not be so credited
because of such discrimination shall be credited in a similar,
nondiscriminatory manner to the Accounts of other Participating
Employees participating in the Consolidated Plan.
2. Restoral of Forfeited Amounts.
a. How Restored. If there was a forfeiture of Units
representing nonvested amounts in a Participating Employee's
Account for an Employee or a former Employee, the amount
forfeited shall subsequently be restored to such Account, subject
to the conditions of this Section 11, through contributions of
the Participating Company if:
(i) for an individual who received a withdrawal under
Section 9.2 or a distribution in the form of a single lump-
sum payment under Section 9.5(a), such individual makes a
lump-sum payment to the Committee in cash within the time
period provided for such payment under Section 11.2 in an
amount equal to the amount of cash plus the value on the
date of withdrawal or distribution of shares which the
Participating Employee received in the withdrawal or
distribution; or,
(ii) for an individual who terminated employment but
who did not receive a distribution in the form of a single
lump-sum payment under Section 9.5(a), such individual is
reemployed as an Employee before he has five consecutive
Breaks in Service.
b. Deadline For Repayment. Any repayment made under this
Section 11.2 must be made at a time when the individual is an
Eligible Employee in the active service of a Participating
Company and on or before the earlier of (1) five years after the
first date on which the individual is subsequently reemployed by
a Participating Company, (2) the end of a period of five
consecutive Breaks in Service commencing after the distribution,
if the Employee separates from service (for any reason other than
transfer in accordance with Section 15) following the withdrawal
or distribution, or (3) in the case of a withdrawal under Section
9.2, five years after the date of such withdrawal.
c. How Repayments and Restorals Are Invested and Credited.
Repaid amounts shall be nonforfeitable and repaid and restored
amounts shall be invested according to the Participating
Employee's investment direction in effect at the time of the
repayment or restoral. The number of Units credited to the
Participating Employee's Account through the investment of the
repaid amounts and restored amounts shall be based on the value
of the Units representing each type of investment as of the
Business Day on which such repayment or restoral is received by
the Trustee and credited to the Participating Employee=s Account.
Section 12. Administration By Trustee.
1. Trust Agreement. BellSouth has entered into the Trust
Agreement with the Trustee, and the Trust Agreement shall be a
part of this Plan. The Trust Agreement shall provide, among other
things, that all funds received by the Trustee thereunder will be
held by the Trustee or an insurance company or companies, or by
other financial institutions, and that no part of the corpus or
income of the Trust Fund held by the Trustee shall be used for,
or diverted to, purposes other than for the exclusive benefit of
Participating Employees or their beneficiaries and shall set
forth the rules on how BellSouth Shares shall be voted and, if
there is a tender offer for such shares, how such shares shall be
tendered. BellSouth shall have authority to remove such Trustee
or any successor Trustee, and any Trustee or any successor
Trustee may resign. Upon removal or resignation of a Trustee,
BellSouth shall appoint a successor Trustee. BellSouth also shall
have authority to direct that there shall be more than one
Trustee under the Trust Agreement and to determine the portion of
the assets under the Trust Agreement to be held by each such
Trustee. If such a direction is given, BellSouth shall appoint
the additional Trustee or Trustees, and each Trustee shall hold
and administer and keep records with respect to the portion of
such assets held by it. BellSouth also shall have such other
powers and duties under the Trust Agreement as set forth from
time to time in such agreement.
2. Commingled Trust. The Trustee may, but shall not be
required to, commingle, hold and invest as one trust all
contributions made by all Participating Companies under this Plan
and other qualified plans of Affiliates or Subsidiaries.
3. Audit. BellSouth shall select a firm of independent
certified public accountants to examine and report on the
financial position and the results of operation of the Trust
Fund.
Section 13. Election to Voluntarily Suspend Contributions.
1. Voluntary Suspension of Contributions. A Participating
Employee may elect to voluntarily suspend contributions under
Section 4 in accordance with Plan Rules.
2. Limitations on Voluntary Suspension. A Participating
Employee may voluntarily suspend contributions under Section 4
only once in any Plan Year and no suspension shall be for a
period of less than three months. These limitations shall not
apply in case of a suspension in the event the Participating
Employee is absent on account of sickness or disability in
accordance with Section 14.
3. Resumption of Contributions. A Participating Employee
may elect to resume making contributions under Section 4 as of
any Enrollment Date succeeding the minimum three-month period of
suspension.
Section 14. Leave of Absence; Layoff; Absence on Account of
Sickness or Disability.
1. Leave of Absence. If a Participating Employee is
granted a paid leave of absence by his Participating Company,
there shall be no contributions made under Section 4.1 from any
compensation paid during the period of such leave, and
contributions automatically shall be deemed to be suspended
during such period.
2. Layoffs. If a Participating Employee is laid off, there
shall be no contributions made under Section 4.1 from any
compensation paid during such period of layoff, and contributions
automatically shall be deemed to be suspended during such period.
If at the end of 12 months the Participating Employee has not
returned as an Eligible Employee in active service, then,
notwithstanding any other provision of this Plan, his employment
shall be deemed to have been terminated for purposes of
distribution under this Plan, and such Participating Employee's
Account shall become nonforfeitable at such time; provided,
however, no distribution of such Participating Employee's Account
shall be made until otherwise permissible under Code section
401(k). The layoff of the Participating Employee in accordance
with any comparable provisions of a Predecessor Plan shall be
considered as a layoff for the purposes of the provisions of this
Section 14.2.
3. Absences on Account of Sickness or Disability.
a. If a Participating Employee is absent on account of
sickness or disability and is receiving short-term sickness
payments or disability benefit payments under his Participating
Company's short term disability plan or anticipated disability
program, contributions under Section 4 will be made from such
payments to the extent such payments constitute Eligible
Compensation, and reference to contributions from compensation in
this Plan shall include contribution from such payments. The
Participating Employee may at any time elect to suspend
contributions from such payments without penalty in accordance
with Section 13 and Plan Rules.
b. Contributions from Eligible Compensation may be resumed
following the end of the period during which the Participating
Employee is absent (in accordance with Section 14.3(a)) on
account of sickness or disability in accordance with Plan Rules.
c. If immediately following the end of the period during
which a Participating Employee is absent on account of sickness
or disability the Participating Employee is not in active service
or on a leave of absence, his employment shall be deemed to have
been terminated for purposes of distribution under this Plan, and
such Participating Employee's Account shall become nonforfeitable
at such time; provided, however, no distribution of such
Participating Employee's Account shall be made until otherwise
permissible under Code section 401(k).
Section 15. Change to Non-Management Employee; Transfer to
Another Participating Company; Transfer to an Affiliate
or Subsidiary Not a Participating Company; Change to
Separate Participating Company; Change to Consolidated
Participating Company; Other Interchange Employees.
1. Change to Non-Management Employee. If a Participating
Employee ceases to be an Eligible Employee as a result of a
change in status from Management Employee to Non-Management
Employee for a period of more than thirty days, contributions by
or on behalf of such Participating Employee under Section 4.1
shall be suspended during such period. If such Participating
Employee remains a Non-Management Employee, he may elect within
the six-calendar month period beginning with the end of the month
in which he became a Non-Management Employee and in accordance
with Plan Rules, a Trust-To-Trust Transfer from this Plan (other
than amounts in his ESOP Account) to the Savings and Security
Plan. If no such election is made within such six-month period,
the Committee shall automatically transfer the value of his
Account in this Plan (other than amounts in his ESOP Account) to
such plan as soon as practicable after the end of such six-month
period in accordance with the terms of such plan.
2. Transfer to Another Participating Company. The effect
under this Plan of a transfer of a Participating Employee from
one Participating Company to another Participating Company shall
be determined under Plan Rules and Interchange Agreements, if
any, which address such transfers.
3. Transfer to an Affiliate or Subsidiary Not a
Participating Company. A Participating Employee who terminates
employment with a Participating Company and who within a period
of 30 days from the date of such termination commences employment
with an Affiliate or a Subsidiary which is not a Participating
Company shall be deemed to have transferred to such Affiliate or
Subsidiary in accordance with this Section 15 and may elect (1)
that the Participating Employee's Account remain in this Plan
until his employment with such Affiliate or Subsidiary
terminates, (2) that a Trust-To-Trust Transfer be made (except
for his ESOP Account) from this Plan to a Qualified Savings Plan
maintained by such Affiliate or Subsidiary, or (3) that his
Account in this Plan be immediately distributed without
forfeiture, provided such distribution is permissible under Code
section 401(k) and the rules respecting the ESOP. Such elections
shall be made in accordance with Plan Rules and the provisions of
any applicable Interchange Agreement.
4. Change to Separate Participating Company; Change to
Consolidated Participating Company.
a. If a Consolidated Participating Company changes status
to a Separate Participating Company, that Participating Company
shall, effective as of the date of such change, no longer be
eligible to participate in the Consolidated Plan (including the
ESOP portion of the Plan ). All amounts contributed by the
Participating Company on and after the date of such change will
be contributed to a Separate Plan. All amounts contributed by
the Participating Company prior to the date of such change shall
remain in the Consolidated Plan; provided, however, that the
Committee, in its sole discretion, may elect to transfer such
amounts to the Separate Plan.
b. If a Separate Participating Company changes status to a
Consolidated Participating Company, that Participating Company
shall, effective as of the date of such change, become eligible
to participate in the Consolidated Plan (including the ESOP
portion of the Plan ). All amounts contributed by the
Participating Company on and after the date of such change will
be contributed to the Consolidated Plan. All amounts contributed
by the Participating Company prior to the date of such change
shall remain in the Separate Plan; provided, however, that the
Committee, in its sole discretion, may elect to transfer such
amounts to the Consolidated Plan.
5. Other Interchange Employees. Unless Section 15.2 or
Section 15.3 applies, a Participating Employee covered by an
Interchange Agreement who terminates employment with a
Participating Company and within a period of 30 days from the
date of such termination commences employment with an Interchange
Company shall be deemed under this Section 15 to have transferred
to the Interchange Company and such Participating Employee's
Account shall remain in this Plan during the three-month period
beginning with the effective date of such transfer to the
Interchange Company, and at the end of such three-month period,
the distribution of the Participating Employee's Account shall be
made as soon as practicable after such distribution is
permissible under Code section 401(k) and the rules respecting
the ESOP. Notwithstanding the preceding sentence, the
Participating Employee may within such three-month period elect a
Trust-To-Trust Transfer (except for his ESOP Account) from this
Plan to a Qualified Savings Plan maintained by the Interchange
Company. Such transfer shall be made in accordance with Plan
Rules and only if such a transfer is specifically provided for by
the applicable Interchange Agreement.
6. Value Transferred. If a Participating Employee elects a
Trust-To-Trust Transfer from this Plan to a Qualified Savings
Plan in accordance with the provisions of this Section 15, the
Trustee shall transfer assets or cash equal to the value of his
Account to the trustee as of any Business Day. The value of such
Trust-to-Trust Transfer shall be determined on the basis of the
respective Unit values as of the Business Day on which such
transfer is processed. The value credited to the Participating
Employee's account in the Qualified Savings Plan shall be the
same as the value credited to the Participating Employee's
Account in this Plan immediately prior to the transfer (each of
which shall be equal to the value as of the Business Day on which
such transfer is processed); provided, however, that
notwithstanding anything to the contrary, the Participating
Employee's account in such Qualified Savings Plan shall
thereafter be governed entirely by the terms and conditions of
such Qualified Savings Plan.
Section 16. Designation of Beneficiaries; Spousal Consent;
Definition of Spouse; Distributions upon Death.
1. Designation of Beneficiaries.
a. Except as provided in Section 16.1(b) and Section 16.2,
a Participating Employee may designate a beneficiary or
beneficiaries to receive all or part of the Participating
Employee's Account in case of his death, and may change or revoke
such designation at any time in accordance with Plan Rules.
b. If the Participating Employee's beneficiary designation
includes a trust or other person (other than an individual) as
either the primary or a contingent beneficiary, the Committee
shall have the right at its discretion to disregard such
designation for purposes of this Plan.
c. A beneficiary designation in effect under the
comparable provisions of a Predecessor Plan shall be accepted by
the Committee if no designation has been made under this Plan and
if such designation satisfies the requirements of applicable law.
2. Spousal Consent. Notwithstanding Section 16.1, if a
Participating Employee has a surviving "Spouse" (as defined in
Section 16.3) at his death, his surviving Spouse shall be deemed
to be his designated beneficiary for the entire nonforfeitable
amount in his Account, unless:
a. such Spouse has consented (or consents) in writing as
to the designation of a specific person or persons (including a
trust) as beneficiary of all or part of the Participating
Employee's Account, and such consent is witnessed by a notary
public and acknowledges the effect of such designation; or
b. the Participating Employee before his death has
established to the satisfaction of the Committee that such
consent may not be obtained because there is no Spouse, the
Spouse cannot be located or because of any other circumstances as
may be described in regulations under Code section 417 under
which spousal consent is not required.
3. Definition of Spouse. For purposes of this Section 16,
the term "Spouse" shall mean the individual who the Committee
determines, in accordance with the laws of the state of which the
Participating Employee was a resident on the date of his death,
is the Participating Employee's lawful husband or wife on the
date of the Participating Employee's death, which determination
shall be final and binding on all parties.
4. Distribution upon Death. In case of the death of a
Participating Employee, the amount in the Participating
Employee's Account with respect to which a designation of
beneficiary has been made (to the extent it is valid and
enforceable under applicable law) shall be distributed in
accordance with this Plan to the designated beneficiary or
beneficiaries. If no beneficiary is so designated or no such
designated beneficiary survives the Participating Employee, the
amount in the Participating Employee's Account distributable upon
his death shall be distributed to the Participating Employee's
surviving Spouse, if any, or, if there is no surviving Spouse, to
the Participating Employee's estate. If the Committee determines
that there is any bona fide question as to the legal right of any
beneficiary to receive a distribution under this Plan, the amount
in question may be paid to the surviving Spouse, if any, or, if
there is no surviving Spouse, to the estate of the Participating
Employee, or in either case to a court of competent jurisdiction,
in which event the Trustee, BellSouth and the Participating
Company shall have no further liability to anyone with respect to
such amount.
5. Forfeiture of Benefits by Killers.
Notwithstanding anything to the contrary in the Plan, no
distribution of benefits shall be made under any provision of the
Plan to any individual who kills the Participating Employee in
the Plan with respect to whom such distribution would otherwise
be payable. An individual shall be deemed to have killed a
Participating Employee for purposes of this Section 16.5 if, by
virtue of such individual's involvement in the death of the
Participating Employee, such individual's entitlement to an
interest in assets of the deceased could be denied (whether or
not there is in fact any such entitlement) under any applicable
law, state or federal, including without limitation laws
governing intestate succession, wills, jointly-owned property,
bonds, and life insurance. For purposes of the Plan, any such
killer shall be deemed to have predeceased the Participating
Employee. The Committee may withhold distribution of benefits
otherwise payable under the Plan for such period of time as is
necessary or appropriate under the circumstances to make a
determination with regard to the application of this Section
16.5.
Section 17. Benefits Not Assignable; Qualified Domestic
Relations Orders.
1. Benefits not Assignable. Except as otherwise provided
by law and Section 17.2, no benefit, payment or distribution
under this Plan shall be subject either to the claim of any
creditor of a Participating Employee or beneficiary or to
attachment, garnishment, levy, execution or other legal or
equitable process by any creditor of such person, and no such
person shall have any right to alienate, commute, anticipate or
assign (either at law or equity) all or any portion of any
benefit, payment or distribution under this Plan.
2. Qualified Domestic Relations Orders.
a. Notwithstanding Section 17.1, this Plan shall provide
for payment of benefits in accordance with the applicable
requirements of a "qualified domestic relations order" as that
term is defined in Code section 414(p). The Committee, in
accordance with uniform and nondiscriminatory procedures
established by the Committee, shall determine the qualified
status of such order and administer any distributions under this
Plan pursuant to such order in accordance with the rules set
forth in Code section 414(p), and any such determination or
payment shall be final and binding on all parties.
b. If any payments were being made under a Predecessor
Plan on January 1, 1985 pursuant to a domestic relations order,
such order shall be treated for all purposes under this plan as a
qualified domestic relations order within the meaning of Code
section 414 (p) with respect to that portion of an Account
subject to such order.
c. Any interest in a Participating Employee's Account
which is payable to an alternate payee (as described in Code
section 414(p)) under a qualified domestic relations order before
the date such interest is payable under Section 9.5 to such
Participating Employee nevertheless shall be payable under this
Section 17.2 to such alternate payee in accordance with the terms
of such order without regard to the distribution events described
in Section 9.5.
Section 18. Expenses.
Expenses of administering the Plan may be paid from Plan
assets, and certain expenses of administering the Plan may be
charged to the Accounts of Participants, in accordance with Plan
Rules and the Trust Agreement. Brokerage fees, transfer taxes and
other expenses incident to the purchase or sale of securities by
the Trustee shall be deemed to be part of the cost of such
securities or deducted in computing the proceeds therefrom, as
the case may be. Transfer taxes in connection with distribution
of BellSouth Shares to Participating Employees or their
beneficiaries shall be borne by the Participating Company which
last employed the Participating Employee on whose behalf the
distribution was made. Taxes, if any, or income received on any
assets held by the Trustee shall be charged appropriately against
the Accounts of a Participating Employee as the Committee shall
determine. Any expenses not paid from Plan assets shall be paid
by a Participating Company.
Section 19. Modification or Merger of Plan.
1. Modification. BellSouth by action of its Board of
Directors or its delegate may modify the Consolidated Plan and/or
any Separate Plan, provided that no part of the corpus or income
attributable to any funds received by the Trustee for the
purposes of this Plan shall be used for, or diverted to, purposes
other than for the exclusive benefit of Participating Employees
or their beneficiaries, and no modification shall eliminate an
optional form of benefit or deprive a Participating Employee of
the nonforfeitable percentage of his Account balance accrued to
the date of such modification except to the extent permissible
under Code section 411(d)(6). BellSouth by action of its Board of
Directors may delegate authority to the Committee with respect to
the modification of the Consolidated Plan and/or any Separate
Plan. Any modification shall be effective at such date as
BellSouth or the Committee, whichever is applicable, may
determine, except that no such modification may apply to any
period prior to the adoption of the modification by BellSouth or
the Committee, whichever is applicable, unless, in the opinion of
BellSouth or Committee, whichever is applicable, such
modification is necessary or advisable in order to comply with
the provisions of the Code (including any rulings thereunder)
relating to the qualification of this Plan or relating to the
income tax exemption of the Trust Fund and would not adversely
affect the rights of Participating Employees in respect of this
Plan. Notice of any modification of this Plan shall be given to
the Trustee and to all Participating Companies and, except for
changes which the Committee determines to be of a minor nature
and, in the Committee's judgment, which do not adversely affect
their interests and which are not required to be disclosed under
the Code or ERISA, shall also be given to all Participating
Employees. A modification may affect current Participating
Employees as well as future Participating Employees.
2. Merger or Consolidation. There shall be no merger or
consolidation of this Plan with, or transfer of assets or
liabilities of this Plan to, any other plan unless each
Participating Employee would (if such other plan then terminated)
receive a benefit immediately after such merger, consolidation or
transfer which is equal to or greater than the benefit the
Participating Employee would have been entitled to receive
immediately before such merger, consolidation or transfer (if
this Plan had then terminated).
Section 20. Termination of Contributions under Plan;
Liquidation of the Plan.
BellSouth, by action of its Board of Directors, may at any
time terminate contributions under Section 4.1 for all
Participating Employees and all contributions under Section 4.2
by all Participating Companies. BellSouth may terminate the
Consolidated Plan, one or more Separate Plans, and/or a
Participating Company's participation in the Plan. Furthermore,
if a Participating Company ceases to be a Subsidiary or an
Affiliate (other than through a merger or consolidation into
another Participating Company), such Participating Company's
participation in this Plan shall terminate. Except with respect
to the Consolidated Plan or a Separate Plan, or except to the
extent required under the Code, any such termination of a
Participating Company's participation in this Plan shall not be
deemed to be a termination or partial termination of the Plan. No
termination shall have the effect of diverting the amounts held
by the Trustee to purposes other than as provided in this Plan.
Upon a termination of all contributions by a Participating
Company, this Plan shall nevertheless remain in effect as to such
Participating Company in other respects, except that (1) no
Participating Employee under this Plan as adopted by such
Participating Company shall thereafter forfeit any amounts in his
Account and (2) instead of the withdrawal and distribution rights
specified in Section 9, each such Participating Employee shall,
by giving written notice on a form to be provided for this
purpose and delivered to the Committee or its designated
representative prior to a termination of his Participating
Company's participation in this Plan, elect either (a) to leave
all Units credited to the Participating Employee's Account in the
Trust Fund held by the Trustee and distributed in a single
distribution upon the Participating Employee's separation from
service, death, disability, attainment of age 59-1/2, or other
permissible distribution events under Code section 401(k),
whichever occurs first, or (b) to have all Units credited to the
Participating Employee's Account, excluding the Participating
Employee's Before-Tax Account and ESOP Account, distributed in a
single distribution as soon as practicable after the last date
for making such an election and to have all Units credited to a
Participating Employee's Before-Tax Accounts distributed in a
single sum distribution upon the Participating Employee's
separation from service, death, disability, attainment of age 59-
1/2 or other permissible distribution events under Code section
401(k), whichever occurs first. The Participating Employee=s
ESOP Account shall remain in the Plan and continue to be
administered in accordance with the terms of the Plan.
Notwithstanding the foregoing, following such a termination
of all contributions by a Participating Company, such
Participating Company may, at any time after such termination,
determine that this Plan and the Trust Fund shall be liquidated
as to such Participating Company, in which event distribution
shall be made as soon as permissible under Code section 401(k)
and Code section 411(a)(11) to each of its Participating
Employees (or any other person or persons entitled to such
distribution under this Plan) of all Units in each such
Participating Employee's Account.
BellSouth shall have the right to completely terminate this
Plan, and, as soon as practicable after the complete termination
of this Plan, all Participating Employees who are then Employees
shall be fully vested and all Participating Employees shall
receive a distribution in the form of a single lump-sum payment
of all the vested Units in their Accounts as soon as permissible
under Code section 401(k) and Code section 411(a)(11). BellSouth
also shall have the right to make the ESOP portion of this Plan a
separate and distinct plan for Participating Employees and, if
BellSouth exercises that right, this Plan shall continue without
interruption and the ESOP portion shall continue without
interruption as separate and distinct plans within this documents
or, at BellSouth's option, in separate documents.
Section 21. Notices to Participating Employees; Administrative
Notices.
1. Notices to Participating Employees. Notices, reports
and statements to be given, made or delivered to Participating
Employees shall be deemed duly given, made or delivered when
addressed to them and delivered by ordinary mail, or by company
mail, to their last known business or home address.
2. Administrative Notices. Authorizations, designations,
directions, elections or other administrative notices required by
this Plan shall be made to the Savings Plan Administrators (as
described in Section 23.3 of this Plan) or their designated
representative or to the Committee or its designated
representative in accordance with Savings Plan Administrator
rules or Plan Rules, whichever are applicable under the
circumstances.
Section 22. Adoption of the Plan by a Participating Company.
1. General. Any Affiliate or Subsidiary may, by action of
its Board of Directors or equivalent governing body and with the
consent of the Senior Officer for Human Resources of BellSouth,
adopt this Plan and the Trust Agreement either as a Consolidated
Participating Company (pursuant to the provisions of Section 22.2
below) or as a Separate Participating Company (pursuant to the
provisions of Section 22.3 below).
2. Consolidated Participating Companies. Any Affiliate or
Subsidiary may become a Consolidated Participating Company by
executing an Adoption Agreement specifying the terms of
participation and by delivering such Adoption Agreement to
BellSouth and the Trustee. In lieu of, or in addition to,
executing a formal Adoption Agreement, the Consolidated
Participating Company=s resolutions adopting and approving the
adoption of the Consolidated Plan may be considered the adoption
thereof; provided, however, if a Consolidated Participating
Company wishes to adopt any terms and conditions which differ
from those as set forth in this amended and restated Plan
document, such Consolidated Participating Company must adopt the
Consolidated Plan using a formal Adoption Agreement. In the
event the Consolidated Participating Company uses resolutions to
adopt the Consolidated Plan, the resolutions shall, at a minimum,
set out the names of the Consolidated Participating Companies and
the dates that their participation in the Consolidated Plan
commenced.
The Consolidated Plan shall be considered a single plan for
purposes of Code section 414(l). All assets contributed to the
Consolidated Plan by Consolidated Participating Companies shall
be available to pay benefits to all Participating Employees
therein and their beneficiaries irrespective of which
Consolidated Participating Company is the employer of such
Participating Employees; provided, however, assets held in the
ESOP shall be available only to pay benefits to Participating
Employees in the ESOP portion of the Consolidated Plan and their
beneficiaries. Available assets held in the ESOP shall not be
used to pay benefits under the non-ESOP portion of the
Consolidated Plan. Nothing contained herein shall be construed
to prohibit the separate accounting for assets contributed by
Consolidated Participating Companies to the Consolidated Plan for
purposes of cost allocation, contributions, forfeitures or other
purposes, pursuant to the terms of the Plan and as directed by
the Committee.
3. Separate Participating Companies. Any Affiliate or
Subsidiary may become a Separate Participating Company by
executing an Adoption Agreement specifying the terms of
participation and by delivering such Adoption Agreement to
BellSouth and the Trustee. The Separate Participating Company=s
resolutions may not be used to adopt a Separate Plan. In
addition, more than one Affiliate or more than one Subsidiary (as
long as all such Subsidiaries are part of the same controlled
group under Code section 414(b) or (c) or affiliated service
group under Code section 414(m) or (o)) may together adopt this
Plan and Trust Agreement as a Separate Plan, by jointly entering
into an Adoption Agreement and executing the procedures described
hereinabove; provided, for purposes of this Plan, all of such
Affiliates and Subsidiaries shall be treated as a single
employer, and the term AParticipating Company@ shall refer
collectively to such group of Affiliates or Subsidiaries.
Each Separate Participating Company adopting a Separate Plan
shall designate such Plan as a separate and distinct plan for the
exclusive benefit of its Employees, or the Employees of the
division(s) or subdivision(s) with respect to which such Separate
Plan is adopted, as the case may be. The contributions made by a
Separate Participating Company to each Separate Plan and any
forfeiture attributable to such contributions shall be used only
for the benefit of Participating Employees and beneficiaries
under such Separate Plan. Notwithstanding any contrary
provisions in this Plan or Trust Agreement, each Separate Plan
established pursuant to this Section 22.3 is intended to be a
separate and distinct plan for purposes of Code section 414(l),
and the assets of each such Separate Plan shall be available
solely for the benefit of the Participating Employees and
beneficiaries covered under such Separate Plan. The
disqualification of any such Separate Plan shall not affect the
qualified status of any other Separate Plan adopted hereunder or
the tax-exempt status of the trust created by the Trust
Agreement.
4. Amendment. Any amendment to the Consolidated Plan or a
Separate Plan by BellSouth or its delegate automatically shall be
effective as to each Participating Company without any further
action by any Participating Company.
5. Committee Actions. All actions and decisions by the
Committee automatically shall be binding upon any Participating
Company.
6. Discontinuance of Participation. Any Participating
Company shall be allowed to discontinue participation in this
Plan upon sixty (60) days written notice to BellSouth, the
Committee and the Trustee.
Section 23. Administration and Interpretation of Plan.
1. Plan Sponsor. BellSouth shall be the sponsor of the
Consolidated Plan and, exclusively for reporting and disclosure
purposes, shall be the sponsor of each Separate Plan. For all
other purposes, each Participating Company shall be the sponsor
of the Plan that it adopts; provided, if more than one Affiliate
or Subsidiary collectively adopts the Plan, the Affiliate or
Subsidiary that serves as the plan sponsor shall be specified in
the Adoption Agreement.
3. Savings Plan Committee. BellSouth shall appoint a
Savings Plan Committee (the ACommittee@) to serve as plan
administrator (as defined in Code section 414(g)) which shall
have such powers as may be necessary to enable it to administer
all claims for Plan benefits for all Participating Companies,
except for powers expressly vested in BellSouth, the Trustee or
any investment managers appointed under the terms of the Trust
Agreement. BellSouth shall adopt rules for operation of the
Committee. BellSouth and the Committee may each employ persons to
render advice or to perform administrative or recordkeeping
services with regard to any of its responsibilities under this
Plan. The Committee shall have the exclusive right and authority
to determine benefits under the Plan and to interpret the
provisions of the Plan, and its determinations and
interpretations shall be final and conclusive.
4. Administrative Committees. BellSouth and the Committee
may delegate authority with respect to certain matters to
officers or employees of BellSouth and the Participating
Companies. BellSouth and the Committee may also provide for the
appointment of one or more persons in each Participating Company
to be known as the Administrative Committee of such Participating
Company, which, in addition to the authority and responsibilities
otherwise specifically provided to such committee under the Plan,
shall have authority (i) to grant or deny claims for benefits
under the Plan, (ii) to develop administrative procedures and
rules of operation, and (iii) to administer the Plan for the
Eligible Employees of such Participating Company, to the extent
that such authority does not exceed the limits of the authority
reserved by BellSouth and the Committee, or limitations of the
Plan; provided, if there is more than one Administrative
Committee (or divisions of a single Administrative Committee)
operating independently with respect to one or more Participating
Companies= participation in the Consolidated Plan or a Separate
Plan, the Committee shall take such actions and establish such
guidelines to assist the various Administrative Committees in
administering the applicable Plan in an internally consistent
manner. If no Administrative Committee shall be appointed with
respect to any one or more Plan, the authorities and
responsibilities allocated to the Administrative Committee
hereunder shall be exercised by the Committee.
5. Plan Rules. The Committee and each Administrative
Committee shall establish such reasonable nondiscriminatory rules
and procedures as it deems appropriate under the circumstances
for the proper administration of this Plan and such rules and
procedures shall be communicated to all affected Participating
Employees and beneficiaries.
6. Claims and Claim Processing. Claims will be processed
in accordance with ERISA and regulations thereunder and the
claims processing procedures (as set forth in the summary plan
description for this Plan) shall include, but not be limited to,
the following:
a. Claims shall be presented to the Administrative
Committee which shall either arrange for payment of the claim or
deny the claim. Adequate and timely notice shall be provided in
writing to any person whose claim has been denied by the
Administrative Committee, setting forth the specific reasons for
such denial.
b. Any person whose claim for benefits has been denied
may, within 60 days after receipt of notice of denial, submit a
written request for review of the decision denying the claim to
the Committee. In such case, the Committee shall make a full and
fair review of such decision within 60 days (or such longer
period of time as is allowed by applicable regulations) after
receipt of a request for review and notify the claimant in
writing of the review decision, specifying the reasons for such
decision.
7. Named Fiduciaries. BellSouth, the Committee and each
Administrative Committee are each a named fiduciary, as that term
is used in ERISA, with respect to their particular duties and
responsibilities set forth in this Plan. Any person, any group of
persons or any entity may serve in more than one fiduciary
capacity with respect to this Plan (including service both as a
trustee and as an administrator). BellSouth and the Committee may
allocate any of their respective responsibilities for the
operation and administration of this Plan consistent with this
Plan's terms, including allocation of responsibilities to a
Participating Company and the Participating Company's
Administrative Committee. Named fiduciaries may delegate any of
their responsibilities under this Plan by designating in writing
other persons to carry out any such responsibilities (other than
trustee responsibilities, the delegation of which may be limited
by law) under this Plan, and may employ persons to advise them
with regard to any such responsibilities.
8. Communications to the Committee; Service of Process.
Communications to the Committee should be addressed to BellSouth
Corporation, Secretary, Savings Plan Committee, at BellSouth
Corporation's primary business address, or to such other person
or address as set forth in the summary plan description for this
Plan. The Secretary of the Committee is hereby designated as
agent for service of legal process with respect to any claims
arising under this Plan.
9. Applicable Law. This Plan shall be governed by the
applicable laws of the state of Georgia to the extent not
preempted by applicable Federal law.
10. Special Rule Regarding Prior Amendment. The Accounts
of all Participating Employees employed by MobileMedia
Communications Corporation of America, to the extent not
liquidated and transferred out of the Plan prior to April 1,
1996, shall be governed in accordance with the provisions of the
amendments adopted to the Retirement Savings Plan made on January
4, 1996 and January 31, 1996, respectively.
Section 24. Top-Heavy Provisions.
In the event that the Plan is a "Top-Heavy Plan" as defined
in this Section 24 with respect to any Plan Year, the following
provisions shall apply with respect to such Plan Year,
notwithstanding any other plan provisions to the contrary:
1. Minimum Benefits. Matching Contributions under Section
4.2(a) allocated to the Account of each "Non-Key Employee" for
each Plan Year in which the Plan is "Top-Heavy" shall equal the
lesser of (1) 3% of the "Non-Key Employee's" compensation
(within the meaning of Code section 415) for such Plan Year or
(2) the largest percentage of compensation (within the meaning of
Code section 415) provided through Before-Tax Contributions under
Section 4.1(a) and Matching Contributions under Section 4.2(a) on
behalf of any "Key Employee" for such Plan Year. For this
purpose, a "Non-Key Employee" shall mean any Employee of a
Participating Company who is not a "Key Employee" (as defined in
Code section 416(i)), and who is an Eligible Employee on the last
day of such Plan Year.
The preceding paragraph shall not apply to any "Non-Key
Employee" who is also covered by any other defined contribution
plan or a defined benefit plan sponsored by a Participating
Company during a Plan Year in which this Plan is "Top-Heavy" if
such Employee is entitled for such Plan Year to a minimum
contribution or minimum benefit accrual under such other defined
contribution plan or defined benefit plan in accordance with Code
section 416(c)(1).
If a Non-Key Employee participates in both a defined benefit
plan or plans and a defined contribution plan or plans maintained
by BellSouth or any of its Affiliates, the minimum contribution
or minimum benefit required under Code section 416 (c)(1) shall
be provided in the first of the following plans in which the Non-
Key Employee participates:
a. BellSouth Personal Retirement Account Pension Plan;
b. BellSouth Pension Plan;
c. any other defined benefit plan maintained by an
Affiliate;
d. BellSouth Savings and Security Plan;
e. BellSouth Employee Stock Ownership Plan;
f. any other defined contribution plan maintained by an
Affiliate.
2. Section 415 Limits. If the Plan does not satisfy the
provisions of Code section 416(h)(2), the defined benefit plan
fraction and the defined contribution plan fraction for purposes
of Code section 415(e) shall be calculated using a factor of 1.0
rather than 1.25.
3. Top-Heavy Determination. This Plan shall be deemed a
"Top-Heavy Plan" only with respect to any Plan Year in which, as
of the "Determination Date", the aggregate of the Accounts of
"Key Employees" under the Plan exceeds 60% of the aggregate of
the Accounts of all Participating Employees under the Plan.
For purposes of this Section 24, the term "Determination
Date" shall mean, with respect to any Plan Year, the last day of
the preceding Plan Year. In determining whether or not this Plan
is a "Top-Heavy Plan" with respect to any Plan Year, the term
"Key Employee" shall have the meaning assigned to such term under
Code section 416(i). For purposes of determining the amount of
the Account of any Participating Employee, such amount shall be
increased by the aggregate distributions (if any) made with
respect to such Participating Employee under this Plan during the
five-year period ending on the "Determination Date."
4. Aggregation. Each plan of a Participating Company
required to be included in an "Aggregation Group" shall be
treated as a "Top-Heavy Plan" if such group is a "Top-Heavy
Group."
For purposes of this Section 24.4, "Aggregation Group" shall
mean: (1) each plan of a Participating Company in which a "Key
Employee" is a participant and (2) each other plan of a
Participating Company which enables the plan or plans described
in clause (1) to meet the requirements of Code sections 401(a)(4)
or 410. Any plan of a Participating Company that is not required
to be included in an "Aggregation Group" may be treated as part
of such group if such group would continue to meet the
requirements of Code sections 401(a)(4) or 410.
For purposes of this Section 24.4, "Top-Heavy Group" means
any "Aggregation Group" if the sum (as of the "Determination
Date") of the present value of the cumulative accrued benefits
(as determined under Code section 414 (g)) for "Key Employees"
under all defined benefit plans included in such group and the
aggregate of the accounts of "Key Employees" under all defined
contribution plans included in such group exceeds 60% of a
similar sum determined for all Employees.
5. Transfers. If a distribution made from this Plan is
deemed an "Unrelated Transfer", such distribution shall be
recognized pursuant to the final sentence of Section 24.4. If a
distribution made from this Plan is deemed a "Related Transfer",
such distribution shall not be recognized pursuant to the final
sentence of Section 24.5 of this Section 24. For purposes of this
Section 24, an "Unrelated Transfer" shall mean a plan-to-plan
transfer that is both (1) initiated by the Employee and (2) made
from a plan maintained by one employer to a plan maintained by
another employer. A "Related Transfer" shall mean a plan-to-plan
transfer that is either (a) not initiated by the Employee or (b)
is made to a plan maintained by the same employer. For purposes
of determining whether the employer is the same employer, all
employers aggregated under Code section 414(b), (c) and/or (m)
shall be treated as the same employer.
Section 25. Special Rules Applicable In Event of Certain
Natural Disasters.
1. In General.
a. In the event that the President of the United States
declares that an area in which Participating Employees reside
warrants assistance by the Federal Government under the Disaster
Relief Act of 1974, Pub. L. No. 93-288, as amended, the Committee
shall have the authority to declare this Section 25 effective.
Upon such declaration by the Committee, the special rules and
procedures hereinafter described in this Section 25 shall apply
with respect to each Participating Employee whose principal
residence is located within an area covered by the President's
declaration (hereinafter referred to as "Designated Participating
Employees").
b. A Designated Participating Employee may request a
withdrawal, a hardship withdrawal, and/or a loan, as the case may
be, in the manner established for this purpose from time to time
and communicated to Designated Participating Employees. In order
to facilitate payments to Designated Participating Employees, any
such withdrawal or loan shall be made based on the most recent
valuation date for which processing has been completed on the
date payment is to be made. Actual payment of amounts
distributable to a Designated Participating Employee shall be
made as soon as practicable.
c. The special rules and procedures of this Section 25
shall remain in effect for such period of time as is specified by
the Committee, which may be for any period the Committee deems
appropriate not to exceed one hundred eighty (180) days. If the
Committee, having declared this Section 25 effective, fails to
specify the period of time for which it shall remain in effect,
these special rules shall remain in effect for one hundred eighty
(180) days from the date of such declaration.
2. Withdrawals Without Hardship. Notwithstanding the
limitations of Section 9.2, a Designated Participating Employee
may make one (1) withdrawal in an amount equal to all or any
portion of the vested Units credited to such person's Account
(excluding for this purpose a Designated Participating Employee's
ESOP Account); provided, that in the case of a Designated
Participating Employee who has not attained age 59-1/2 and who is
not disabled as of the date of such withdrawal, no withdrawal may
be made with respect to Units in his Before-Tax Basic Account and
Before-Tax Supplemental Account, except as otherwise provided in
Section 9.3 and 25.3. A withdrawal hereunder shall not be taken
into account for purposes of applying the limitations of Section
9.2.
3. Hardship Withdrawals of Before-Tax Contributions. In
the case of a Designated Participating Employee, the definition
of "immediate and heavy financial" need shall include, in
addition to the items specified in Section 9.3, damages to the
Designated Participating Employee's principal residence (and the
contents thereof) attributable to the disaster referred to in
Section 25.1(a).
4. Loans. In the case of a Designated Participating
Employee who is a party in interest (as defined in Section 3 (14)
of ERISA) with respect to the Plan and who suffers damage to his
principal residence (and the contents thereof) attributable to
the disaster referred to in Section 25.1(a), the rules contained
in Section 10 relating to Plan loans shall be modified as
follows:
a. Section 10.1(a) shall be modified to read: "the lesser
of (i) 50% of the Designated Participating Employee's
nonforfeitable interest in the Plan (where, for purposes of this
Section 10.1, this Plan and all other plans described in Code
section 401 which are maintained by an Affiliate or a Subsidiary
shall be treated as one plan), or (ii) the sum of the Designated
Participating Employee's Before-Tax Basic Account and Before-Tax
Supplemental Account at the time the loan is made in his
Account"; and
b. loans shall be available to Designated Participating
Employees hereunder notwithstanding the limitation of Section
10.1(i).
BELLSOUTH CORPORATION
OFFICER SHORT TERM INCENTIVE AWARD PLAN
(Effective 1996)
1.0 Purpose.
The purpose of the BellSouth Corporation Officer Short Term
Incentive Award Plan is to provide Officers with incentive
compensation, in the discretion of the Committee, based upon a
combination of the achievement of financial, customer service,
shareholder return, individual strategic or other objectives as
the Committee may determine in its discretion, but subject to the
achievement of an overall shareholder-approved performance goal
based on Consolidated Earnings in order that payments are
deductible under Section 162(m) of the Code.
2.0 Definitions.
Each term set forth in this Section 2.0 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.
"Beneficiary" means the person designated by an Officer to
receive any award paid following the Officer's death as
determined pursuant to Section 8.2.
"Board" means the Board of Directors of the Company.
"Chief Executive Officer" means the Chief Executive Officer of
the Company .
"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
satisfies the requirement of Section 162(m)(4)(C)(i) of the Code.
"Company" means BellSouth Corporation, a Georgia corporation.
"Consolidated Earnings" means consolidated net income for the
year for which a bonus is paid, as shown on the audited
consolidated statement of income of the Company, adjusted to omit
the effects of extraordinary items, gain or loss on the disposal
of a business segment (other than provisions for operating losses
or income during the phase-out period), unusual or infrequently
occurring events and transactions that have been publicly
disclosed and the cumulative effects of
changes in accounting principles, all as determined in accordance
with generally accepted accounting principles.
"Officer" means any executive of the Company or any Subsidiary
who is a member of the executive compensation group under the
Company's compensation practices.
"Plan" means this BellSouth Corporation Officer Short Term
Incentive Award Plan, as effective for 1996 and as thereafter
amended from time to time.
"Subsidiary" means any corporation, joint venture or partnership
in which the Company owns directly or indirectly (i) with respect
to a corporation, stock possessing at least ten percent (10%) of
the total combined voting power of all classes of stock in the
corporation, or (ii) in the case of a joint venture or
partnership, a ten percent (10%) or more interest in the capital
or profits of such joint venture or partnership.
3.0 Effective Date.
The Plan shall be effective beginning for Awards granted for 1996
and shall remain in effect until terminated by the Committee.
This Plan replaces the BellSouth Corporation Short Term Incentive
Plan as previously in effect. Notwithstanding the above, this
Plan is subject to approval by Company shareholders on April 22,
1996, and will be null and void if not approved on such date.
4.0 Administration.
This Plan shall be administered by the Committee. The Committee
shall (a) determine who is an eligible Officer under the Plan,
(b) determine the amount of any Awards under the Plan, (c)
determine the terms and conditions of all election and other
forms under the Plan, (d) interpret the Plan, and (e) make all
other decisions relating to the operation of the Plan. The
Committee's actions and determinations under the Plan shall be
completely at its sole, absolute and final discretion, and all
such Committee actions and determinations shall be final and
binding on all persons. No member of the Committee shall be
personally liable for any action, determination, or
interpretation with respect to the Plan or Awards. All members
of the Committee shall be protected by the Company, to the
fullest extent permitted by applicable law, in respect of any
such action, determination or interpretation. The Committee may
adopt such regulations and guidelines as it deems are necessary
or appropriate for the administration of the Plan.
5.0 Eligibility.
Only Officers shall be eligible for Awards under this Plan.
Officers are not rendered ineligible by reason of being a member
of the Board. The Committee may establish such additional rules
for eligibility as it determines are appropriate. The actual
payment of an Award to any eligible
Officer shall be at the discretion of the Committee as provided
in Section 6.0 and related sections of the Plan.
6.0 Awards
6.1 Committee Discretion. The amount of any Award to be paid to
an eligible Officer shall be determined by the Committee in its
discretion, subject only to the limits of Section 6.2. The
Committee in making its determination shall take into
consideration the recommendations of the Chief Executive Officer,
except in the case of an Award to the Chief Executive Officer;
the Officer's contribution to the achievement of Company
objectives; the achievement of financial, service, shareholder
return or other objectives which the Committee may establish for
this purpose; or such additional or replacement factors as the
Committee may deem relevant. The Committee from time to time
may establish written objectives, weightings and other guidelines
for its use in exercising its discretion under this Section 6.1.
6.2. Performance-Based Limit. Awards only shall be payable
under this Plan for a year if the Company has positive
Consolidated Earnings for the year. Furthermore, the maximum
Award that may be payable under this Plan for a year (i) to an
individual who is Chief Executive Officer for any part of the
year, (ii) to each Officer who is not Chief Executive Officer for
any part of the year but who is in a position of Executive Vice
Present or Group President, or higher, and (iii) to each other
Officer will be (i) .15%, (ii) .1% and (iii) .05%, respectively,
of Consolidated Earnings for the year. This resulting amount for
any year shall be the limit established for purposes of Section
162(m) of the Code, and the actual amount paid to any Officer
shall only be that amount, if any, determined by the Committee
under Section 6.1 and related sections of the Plan.
6.3. Committee Certification. Prior to payment of any Award for
a year and following receipt of a report from the Company's
independent accountants of the Consolidated Earnings for the
year, the Committee shall determine the maximum amounts that may
be paid under Section 6.2 for the year to any Officer and shall
certify that any awards determined under Section 6.1 are within
such limits.
6.4. Payments. All Awards for a year determined by the
Committee under this Section 6.0 shall be paid by the Company
and its Subsidiaries in cash as soon as is practicable following
Committee certification as provided in Section 6.3. Such
payment, however, may be subject to deferral under the BellSouth
Incentive Award Deferral Plan or any replacement plan or program
the Committee may establish for this purpose, provided that any
additional amounts credited under any such deferral plan or
program during the period of deferral shall be determined based
either on a reasonable rate of interest or on a specific
investment or deemed investment, including Company stock, as may
be determined by the Committee within the limits of the
regulations under Section 162(m) of the Code.
7.0 Special Awards and Other Plans. Nothing in this Plan shall
prevent the Company and its Subsidiaries from maintaining other
incentive compensation plans providing for the payment of special
awards of incentive compensation to employees or from paying
special performance or recognition awards to employees, including
in each case Officers, provided that no such awards to any
Officer shall be contingent upon the Company's failure to meets
its Consolidated Earnings goal in Section 6.2 or otherwise
compensate an Officer for the restriction of any Award arising
from the application of the Consolidated Earnings limit described
in Section 6.2.
8.0 Miscellaneous Administrative Provisions.
8.1. Amendment and Termination. The Committee shall have the
right to amend, modify, suspend or terminate the Plan at any time
for any purpose; provided, that approval by Company shareholders
shall be required as provided in the regulations under Section
162(m) of the Code for any amendment that would have the effect
of changing the class of employees eligible for consideration for
Awards under Section 5.0, materially changing the definition of
Consolidated Earnings, changing the formula in Section 6.2 for
determining the maximum amount of Awards paid to any Officer or
changing the provisions of Section 6.4 regarding the credit of
additional amounts on deferred Awards.
8.2. Beneficiary. The payment of an Award for any Officer under
this Plan shall be made only to the Officer, a personal
representative of the Officer for the benefit of the Officer, or
to the Officer's Beneficiary following death, all as determined
by the Committee. No attempted assignment or alienation of an
Award will be recognized by the Committee. An Officer 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 the Plan. Each designation shall be on a form
prescribed by the Committee, will be effective only when
delivered to the Company, and when effective will revoke all
prior designations by the Officer. If an Officer dies with no
such beneficiary designation in effect, or if the Committee
determines that there is any question about the legal right of
the designated beneficiary, such Officer's Beneficiary shall be
his or her estate.
8.3. No Right to Awards. No person shall have any claim to be
paid an Award under the Plan and there is no obligation for
uniformity of treatment of eligible Officers under the Plan. The
selection of Officers to receive Awards and the amount of Awards
rests completely in the absolute and final discretion of the
Committee. The Committee's discretion is limited only by the
maximum amount of an Award that it may pay as provided in Section
6.2. Neither the existence of this maximum, nor any prior
practice by the Committee as to the payment or amount of Awards,
creates an obligation by the Committee to pay any Award for any
year or to pay an Award equal to the maximum or any other amount.
Furthermore, neither the Plan nor any action taken hereunder
shall give any Officer the right to be retained in the employ of
the Company or a Subsidiary.
8.4. No Funding. This Plan shall be unfunded and no assets of
the Company or a Subsidiary shall be segregated for the purpose
of paying any Awards.
8.5. Taxes. The Company or any Subsidiary shall withhold from
any payment under the Plan such taxes as it deems are sufficient
to cover any withholding taxes which may become required with
respect to such payment. The Company or any Subsidiary shall
have the right to require the payment to it of any such taxes and
require that any person furnish information deemed necessary by
such company to meet any tax reporting obligation before making
any payment under the Plan.
8.6 Governing Law. This Plan shall be governed by the laws of
the State of Georgia.
BELLSOUTH CORPORATION
NON-EMPLOYEE DIRECTOR STOCK PLAN
EFFECTIVE APRIL 24, 1995
ARTICLE I. PURPOSE
The purpose of this Plan is to promote the interest of BellSouth
by granting Options and Stock Appreciation Rights to Non-Employee
Directors, and providing Non-Employee Directors an election to
receive compensation in the form of Stock Payments in order
(1) to attract and retain Non-Employee Directors,
(2) to provide Non-Employee Directors with long term financial
incentives to increase the value of BellSouth, and
(3) to provide each Non-Employee Director with a stake in the
future of BellSouth which corresponds to the stake of each of
BellSouth's shareowners.
Only Non-Employee Directors 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.
"Additional Option" means an Option granted to a Non-Employee
Director pursuant to Section 6.2 based upon his or her level of
Stock ownership.
"Agreement" means the written agreement which sets forth the
Option Price, grant date, expiration date, and number of Shares
with respect to an Option and any SAR granted in tandem with such
Option to a Non-Employee Director under this Plan and which
contains such other terms and conditions not inconsistent with
this Plan as the Committee determines are appropriate.
"Award" means an Option, SAR or Stock Payment.
"BellSouth" means BellSouth Corporation, a Georgia corporation.
"Basic Option" means an Option granted to a Non-Employee Director
pursuant to Section 6.1.
"Beneficiary" means the person entitled to receive any payments
or exercise any rights following the death of a Non-Employee
Director as determined pursuant to Section 9.2.
"Board" means the Board of Directors of BellSouth.
"Change in Control" means (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 which administers this Plan
as provided in Article V.
"Compensation" means all cash compensation payable to a Non-
Employee Director for service to BellSouth as a director, other
than reimbursement for expenses, including retainer fees for
service on, and fees for attendance at meetings of, the Board and
any committees thereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"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.
"Non-Employee Director" means a member of the Board who is not an
officer or employee of BellSouth or its affiliates.
"Option" means an option granted under this Plan to purchase
Stock, which shall constitute a nonqualified or nonstatutory
stock option and not an incentive stock option satisfying the
requirements of Code section 422.
"Option Price" means the price determined in accordance with
Section 6.3 which shall be paid to purchase one Share upon the
exercise of an Option granted under this Plan.
"Plan" means this BellSouth Corporation Non-Employee Director
Stock Plan as effective April 24, 1995 and as thereafter amended
from time to time.
"Prior Plan" means the BellSouth Corporation Non-Employee
Director Stock Option Plan.
"SAR" or "Stock Appreciation Right" means the contractual right
granted to a Non-Employee Director 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 Option Price for the related Option.
"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 at the election of a Non-Employee Director pursuant to
Section 6.6.
2.2 Gender and Number.
Unless the context clearly requires otherwise, the masculine
pronoun whenever used shall include the feminine and neuter
pronouns, the singular shall include the plural and the plural
shall include the singular.
ARTICLE III. SHARES SUBJECT TO PLAN
The aggregate number of Shares with respect to which the grant of
Options, including Options in tandem with SARs, (collectively
referred to as "Grants" in this Article III) may be made shall be
300,000. Any Shares subject to a Grant after the exchange,
cancellation, forfeiture or expiration of such Grant thereafter
shall again become available for use under this Article III as if
such Shares had never been subject to a Grant. The aggregate
number of Shares with respect to which Stock Payments may be made
shall be 175,000. The limitations of this Article III shall be
subject to adjustment pursuant to Article X. 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 the Prior Plan. No further grants of
stock options or stock appreciation rights shall be made under
the Prior Plan beginning on April 24, 1995, subject to this Plan
becoming effective. Options and stock appreciation rights
outstanding under the 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 Option or SAR
shall be granted, and no Stock Payment shall be made, after the
date this Plan terminates. The applicable terms of this Plan,
and any terms and conditions as applicable to Options or SARs
granted prior to such date, shall survive the termination of the
Plan and continue to apply to such Option and SARs.
ARTICLE V. ADMINISTRATION
5.1 Committee.
The Plan shall be administered by the Committee. 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
(or its successor) under the Exchange Act. A Non-Employee
Director shall not fail to be "disinterested" solely because he
or she receives an Option or SAR grant or makes an election to
receive Stock Payments described in Section 8.1.
5.2 Committee Responsibilities.
The Committee shall (a) make all grants of Options and SARS as
provided in this Plan, (b) determine the terms and conditions of
grant Agreements, Stock Payment elections under Article VIII and
all other 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 Committee may adopt such rules or guidelines as it
deems appropriate to implement the Plan. The Committee's
determinations under the Plan shall be final and binding on all
persons.
5.3 Determinations.
All actions taken and all interpretations and determinations made
by the Committee in good faith shall be final and binding upon
the Non-Employee Directors, BellSouth and all other interested
persons. 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.
ARTICLE VI. OPTIONS
6.1 Grant of Basic Options.
On the date of each BellSouth annual shareholders' meeting,
beginning with and including the 1995 annual shareholders'
meeting, each individual who is at that time serving as a Non-
Employee Director, whether or not such individual is first
elected as a Board member at that meeting or whether or not such
individual is standing for re-election as a Board member at that
meeting, shall automatically be granted an Option to purchase
1,000 Shares. Each grant of such an Option, referred to in this
Plan as a Basic Option, will include the grant of a tandem SAR as
provided in Article VII and will be evidenced by an Agreement
which shall reflect the terms and conditions of Options and
tandem SARs as provided in this Plan and such additional terms
and conditions, not inconsistent with this Plan, as are
determined by the Committee.
6.2 Grant of Additional Options.
Each Non-Employee Director who receives a grant of a Basic Option
under Section 6.1 on the date of an annual shareholders' meeting
shall be granted an Additional Option on such date if (i) the
number of Shares beneficially owned by such Non-Employee Director
as of the immediately preceding December 31 (as determined under
this Section 6.2) exceeds (ii) the sum of (A) the number of
Shares determined by dividing five times the amount of the annual
retainer for Board members in effect on such December 31 by the
representative Share price on such December 31 (as determined
under this Section 6.2) and (B) the number of Shares subject to
Additional Options previously granted to such Non-Employee
Director under this Section 6.2 (whether or not any such
previously granted Additional Option has been exercised or
expired). Such Additional Option shall be for the number of
Shares equal to one-half (rounded to the next highest whole
number) of the number by which (i) exceeds (ii) above, limited to
a maximum annual grant of 1,000 Shares. For purposes of this
Section 6.2 only, a Non-Employee Director shall be deemed to
beneficially own the number of Shares equal to (i) those Shares,
whether registered in the owner's name or in nominee name, which
(A) are owned by the Non-Employee Director or his spouse (or
jointly) or (B) are owned by a trust to which the Non-Employee
Director or his spouse (or both) contributed the Shares (or the
money or other property used by the trustee to purchase the
Shares) and also holds the power to vote and dispose of the
Shares, and (ii) the number of stock units (i.e., a bookkeeping
unit which reflects the price changes and dividends on a Share)
credited to the Non-Employee Director pursuant to any deferred
compensation plan maintained by the Company. [MARCY-DOES THIS
"OWNERSHIP/NOMINEE" LANGUAGE WORK? RAY-DO WE WANT BOTH POWER TO
VOTE AND INVESTMENT? HOW ABOUT SHARED POWER?] For purposes of
this Section 6.2 only, the representative price of a Share on any
December 31 will equal the average of the Fair Market Value of a
Share for the last five trading days on the New York Stock
Exchange for the year ending that December 31 and the first five
such trading days in the next succeeding year. Such grant shall
be evidenced by an Agreement which shall reflect the terms and
conditions of Options as provided in this Plan and such
additional terms and conditions, not inconsistent with this Plan,
as are determined by the Committee. SARs will not be granted in
tandem with Additional Options.
6.3 Option Price; Form of Payment.
The Option Price for each Share subject to an Option shall be 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.
6.4 Date Exercisable.
An Option shall become exercisable on the first anniversary of
the Grant Date; provided, however, that, if any of the following
shall occur prior to the first anniversary of the Grant Date, an
Option shall become immediately exercisable upon the later to
occur of (A) the expiration of the 6-month period following the
Grant Date, (B) the date the Non-Employee Director terminates his
service on the Board by reason of (i) death, (ii) disability, or
(iii) retirement (which shall mean termination of service on the
Board after the Non-Employee Director has attained age 55 and
completed at least 5 years of service as a director on the Board)
or (C) a Change in Control. Subject to the foregoing, an Option
shall be exercisable at any time in whole or in part (but if in
part, in an amount equal to at least 100 Shares or, if less, the
number of Shares remaining to be exercised under the Option) on
any business day of BellSouth before the date such Option expires
under Section 6.5.
6.5 Expiration.
An Option shall expire on the earlier of
(a) the first date on or after the Grant Date and prior to a
Change in Control on which the Non-Employee Director (i) resigns
from or is not re-elected to the Board prior to being eligible
for retirement under clause B(iii) of Section 6.4; (ii) resigns
for the purpose of accepting, or retires and subsequently
accepts, a directorship or employment, or becomes associated
with, employed by or renders service to, or owns an interest in
(other than as a shareholder with a less than 5% interest in a
publicly traded company) any business that is competitive with
any BellSouth company or with any other business in which the
BellSouth companies have a substantial direct or indirect
interest; or (iii) resigns as a result of an interest or
affiliation which would prohibit continued service as a director;
(b) the date the Option (or a tandem SAR) has been exercised in
full; or
(c) one day after the expiration of the 10-year period which
begins on the Option Grant Date or, in the case of a Non-Employee
Director who dies within six months prior to such day, the last
day of the 6-month period which begins on the date of the Non-
Employee Director's death.
6.6 Method of Exercise.
An Option may be exercised by properly completing and actually
delivering to BellSouth an exercise form prescribed by the
Committee for this purpose, together with payment in full of the
Option Price for the shares of Stock the Non-Employee Director
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 of Stock, or a combination of cash and shares of stock.
Any shares of Stock which are tendered shall be valued at their
Fair Market Value on the date as of which the exercise is
effective.
ARTICLE VII. STOCK APPRECIATION RIGHTS
7.1 Grant of SARs.
SARs shall be granted to Non-Employee Directors in tandem with
the grant of Basic Options. Each such grant shall be evidenced
by the same Agreement as the Basic Option which is granted in
tandem with such SAR and such SAR shall relate to the same number
of Shares as such Basic Option. An SAR shall be exercisable only
if and to the extent the tandem Basic Option is exercisable.
7.2 Payment at Exercise.
An SAR may be exercised by properly completing and actually
delivering to BellSouth an exercise form prescribed by the
Committee for this purpose. Upon the exercise of an SAR the Non-
Employee Director shall 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 shall be made in whole Shares. Such
Shares shall be valued for this purpose at the SAR Exercise Price
on the date the SAR is exercised, and any payment for a
fractional Share automatically shall be paid in cash based on
such valuation.
7.3 Special Terms and Conditions.
An SAR shall be exercisable only when the tandem Basic Option is
exercisable. The Non-Employee Director's right to exercise an
SAR shall be forfeited to the extent that he exercises the tandem
Basic Option and the right to exercise the tandem Basic Option
shall be forfeited to the extent he exercises the tandem SAR, but
any such forfeiture shall not count as a forfeiture for purposes
of making the Shares subject to such Basic Option and SAR again
available for use under Article III.
ARTICLE VIII. STOCK PAYMENTS
8.1 Election to Receive Stock Payments.
Each Non-Employee Director may elect to receive all or fifty
percent of his or her Compensation in the form of Stock Payments.
Any such election, or any modification or termination of such an
election, shall be filed with BellSouth on a form prescribed by
the Committee for this purpose. Any such election, or any
modification or termination thereof, shall apply only to annual
retainers, meeting fees or other elements of Compensation payable
(i) at least six months after such form is received by BellSouth.
8.2 Stock Payments.
During such time as an election by a Non-Employee Director to
receive Stock Payments in lieu of cash compensation is effective,
BellSouth shall issue Shares to such director for each date any
retainer or meeting fee or other element of Compensation
otherwise is due and payable equal to the percent of such
Compensation elected to be paid in the form of Stock Payments
based upon Fair Market Value for such date. Certificates
evidencing such whole Shares shall be delivered promptly
following such date. Any payment for a fractional Share
automatically shall be paid in cash.
ARTICLE IX. TRANSFERABILITY.
9.1 Transferability During Lifetime.
During the lifetime of a Non-Employee Director to whom an Award
is granted, only the Non-Employee Director (or such Non-Employee
Director's legal representative or a permitted transferee of an
Option or SAR as provided below if such transfers become
permitted) may exercise an Option or tandem SAR or receive
payments of Stock Awards. No Award (other than Stock Payments
upon receipt) may be sold, assigned, transferred, 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. The foregoing sentence
notwithstanding, from and after the earlier of (i) the effective
date of an amendment to Exchange Act Rule 16b-3 which removes the
prohibitions on such transfers as a condition to application of
such Rule or (ii) the time that the Non-Employee Director
terminates service with the Board and is no longer subject to the
reporting requirements of Section 16 of the Exchange Act, such
Non-employee Director may transfer a Stock Option and any tandem
SARs granted pursuant to this Plan on a form prescribed by the
Committee for this purpose to any member of such Non-employee
Director's "immediate family" (as such term is defined in Rule
16a-1(e) promulgated under the Exchange Act, or any successor
rule or regulation) or to one or more trusts whose beneficiaries
are members of such Non-Employee Director's "immediate family" or
partnerships in which such family members are the only partners,
provided, however, that (i) the transferor receives no
consideration for the transfer, (ii) such transferred Stock
Option and any tandem SAR shall continue to be subject to the
same terms and conditions as were applicable to such Stock Option
and any tandem SAR immediately prior to its transfer, and (iii)
such transfer is irrevocable and the transferee shall have no
rights to effect a further transfer.
9.2 Transfers to Death Beneficiary.
In the event of a Non-Employee Director's death, all of such
person's outstanding Stock Options and any tandem SARs and 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 previously
was made pursuant to Section 9.1). Each Non-Employee Director
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 Committee, will be effective only
when delivered to BellSouth and when effective will revoke all
prior designations by the Non-Employee Director. If a Non-
Employee Director 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.
ARTICLE X. ADJUSTMENTS
In the event that the Committee 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 Non-Employee Directors under this Plan, then the
Committee, 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 Committee, 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, however, (1) that this
Plan may not be amended more than once every six months, other
than to comport with changes in the Code, the Employee Retirement
Income Security Act of 1974, or the rules thereunder and (2),
except with the approval of shareholders, this Plan may not be
amended 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 of the
Exchange Act) 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 Article X of this Plan does
not affect any right of the holder of an Award.
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 Non-Employee Director under this
Plan shall not obligate BellSouth to provide that Non-Employee
Director upon the termination of his or her service on the Board
with any benefit whatsoever except as provided under the terms
and conditions of that Award or obligate the Non-Employee
Director to remain a member of the Board.
12.3 No Shareholder Rights.
No Award shall confer on any Non-Employee Director, or anyone
claiming on his behalf, any of the rights of a stockholder of
BellSouth unless and until Shares are duly issued or transferred
and delivered to such person 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
Committee, 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 Non-Employee Director or anyone claiming on
his or her behalf. To the extent a Non-Employee Director 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 may withhold from any payment of cash or Shares to a
Non-Employee Director or other person under this Plan an amount
sufficient to cover any withholding taxes which may become
required with respect to such payment. BellSouth shall have the
right to require the payment of any such taxes and require that
any person furnish information deemed necessary by BellSouth 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 Non-Employee Director 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
Committee 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.
AGREEMENT
THIS AGREEMENT is made this _____ day of ____________, 19__, by
and between BellSouth Corporation (the "Company") and
_________________ (the "Executive");
W I T N E S S E T H:
WHEREAS, the Executive is employed by the Company, or a
subsidiary or affiliate of the Company (each, a "BellSouth
Company"), and has been assigned to a Band [A] [AA] executive
compensation level or comparable level as defined in the
Company's compensation guidelines; and
WHEREAS, the Executive elects to retire under the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the above premises and the
mutual covenants and agreements contained herein, the parties
hereto agree as follows:
1. Retirement Date. The Executive shall terminate employment
and resign from any position Executive holds with the Company and
any BellSouth Company on a date (the "Retirement Date") selected
by the Executive which occurs during the calendar year in which
the Executive's sixtieth (60th) birthday occurs. The Executive
shall give written notice to the Company of the Retirement Date
so selected. If the Executive fails to give such notice to the
Company on or before the date one hundred twenty (120) days prior
to the last day of the calendar year in which the Retirement Date
may occur, the Retirement Date shall be the date selected by the
Chief Executive Officer of the Company as the Executive's
Retirement Date.
2. Separation Allowance. On the Executive's Retirement Date, or
as soon thereafter as is reasonably practicable, the Company
shall pay to the Executive as a separation allowance a single
lump-sum cash payment equal to the sum of (1) twice the
Executive's Base Salary in effect on the Retirement Date plus (2)
[twice] the amount of the Standard Award applicable to the
Executive under the BellSouth Corporation Short Term Incentive
Plan ("STIP") for the Award Year in which his Retirement Date
occurs, less withholdings, or so much of such sum as shall not be
the subject of a deferral agreement between the parties hereto.
For purposes of this Agreement, (i) "Base Salary" shall refer to
the gross annual base salary payable to the Executive including
the amount of any before-tax contributions made by the Executive
from such salary to the BellSouth Management Savings and Employee
Stock Ownership Plan, any other qualified cash or deferred
arrangement sponsored by the Company or a BellSouth Company, or a
successor to any such plan, as the case may be, and the amount of
any other deferrals of such salary under any nonqualified
deferred compensation plans maintained by the Company or a
BellSouth Company, and (ii) the terms "Standard Award" and "Award
Year" shall have the meanings ascribed to such terms under STIP.
3. Short Term Incentive Award. The Executive shall be entitled
to an award under the STIP based on performance results for the
Award Year in which the Executive's Retirement Date occurs,
prorated to the Executive's Retirement Date. The payment
described in this Section 3 shall be subject to all other terms
and conditions of STIP.
4. Supplemental Executive Retirement Plan. The Executive shall
be entitled to benefits under the BellSouth Corporation
Supplemental Executive Retirement Plan ("SERP") equal to the
greater of (a) the benefits to which such Executive would be
entitled under SERP without regard to this Agreement, and (b) the
benefits to which such Executive would be entitled under SERP
with the following adjustments:
(i) the aggregate annual benefit being based on seventy percent
(70%) of Included Earnings (as such term is defined in SERP)
instead of the formula described in section 4(a)(i) of SERP; and
(ii) the benefit so determined being reduced by the retirement
benefit (unreduced for survivor annuity) payable to the Executive
under any tax-qualified defined benefit pension plan maintained
by any prior employer of the Executive, in addition to the
reductions described in section 4(a)(i) of SERP.
5. Stock Options/Shareholder Return Cash Plan. The Executive
shall be entitled to (i) a grant of Options to purchase shares of
Stock under the BellSouth Corporation Stock Option Plan ("SOP")
and (ii) a grant of Units under the BellSouth Corporation
Executive Shareholder Return Cash Plan ("SRCP"), as of the
Executive's Retirement Date, equal to [twice] the number of
Options and twice the number of Units, respectively, granted to
the Executive as part of the grant most recently preceding his
Retirement Date. Benefits described in this Section 5 shall be
subject to all other terms and conditions of SOP and SRCP,
respectively. For purposes of this Section 5, the terms
"Options" and "Units" shall have the meanings ascribed to such
terms in SOP and SRCP, respectively.
6. Financial Counseling. The Executive shall be entitled to
benefits described in the BellSouth Corporation Financial
Counseling Plan through his sixty-seventh (67th) birthday, such
benefits to be provided by the Company as if eligibility therefor
extended to such date under the terms of such plan. Benefits
described in this Section 6 shall be subject to all other terms
and conditions of the Financial Counseling Plan.
7. Company Automobile. The Executive may, at his election,
purchase from the Company (or BellSouth Company) any
Company-owned automobile provided to him for its wholesale price
determined by the Company as of his Retirement Date, if the
Executive notifies the Company of his intention to do so within
thirty (30) days of his Retirement Date.
8. Death of Executive. If the Executive shall die prior to the
Executive's Retirement Date, this Agreement shall be null and
void and neither the Executive nor his estate or other successors
shall be entitled to any of the benefits described herein.
9. Termination of Employment. If the Executive's employment with
the Company and each BellSouth Company is terminated for any
reason prior to the Executive's Retirement Date, this Agreement
shall be null and void and the Executive shall be entitled to
none of the benefits described herein; provided, that this
Section 9 shall not apply if, upon termination of employment, the
Executive is transferred to or immediately reemployed by the
Company or any BellSouth Company.
10. Nondisclosure. The Executive represents and agrees that he
will keep the existence of this Agreement, and all of the terms
hereof, completely confidential and that he will not disclose any
information concerning this Agreement to anyone, other than his
immediate family, investment advisor, tax advisor, accountant or
attorney, provided that they agree to keep this information
confidential; provided that these restrictions on disclosure
shall not apply to the extent that the existence of this
Agreement and the terms hereof are disclosed by the Company or
any BellSouth Company as part of its periodic public filings and
disclosures or otherwise. In the event the Executive breaches or
violates any of the terms or provisions of this Section 10, all
payments under this Agreement and further right to benefits
described in this Agreement will cease. The Executive shall
thereafter be entitled only to such benefits as are payable under
the plans referred to herein without regard to this Agreement.
In addition to all other remedies provided at law or in equity
for damages or otherwise, the Company shall be entitled to a
temporary restraining order and a permanent injunction to prevent
a breach of any of the terms or provisions of this Section.
11. Release. Prior to signing this Agreement, the Executive has
had a period of at least twenty-one (21) days in which to review
this document. At the outset of that 21-day period, the
Executive was advised to discuss the terms of the Agreement with
an attorney. The Executive acknowledges that he has had a
sufficient opportunity to do so or, alternatively, to confer with
individuals of his choice who are not associated with the Company
or any BellSouth Company.
The Executive further acknowledges that the separation incentives
that are provided under the terms of the Agreement represent
valuable consideration in addition to other forms of compensation
or benefits to which he presently is entitled. The Executive
fully understands the binding nature of the Agreement, and
affirms that his decision to enter into the Agreement has been
made voluntarily.
By entering into the Agreement, the Executive agrees to waive,
discharge, and release any and all claims and demands of whatever
nature, known or unknown, that existed prior to the date of the
Agreement (other than the Executive's right to enforce the terms
of the Agreement or the Executive's entitlement to benefits not
expressly waived in the Agreement), arising out of his employment
with the Company or a BellSouth Company, including specifically
the Executive's decision to terminate employment under the
Agreement, that the Executive might have pursued against the
Company, or other BellSouth Company, their past, current, or
future subsidiaries, divisions and affiliates, and their
directors, officers, employees, attorneys, and agents (both in
their personal and official capacities), whether under common
law, state law, federal law, including but not limited to the Age
Discrimination in Employment Act of 1967, as amended, or
otherwise. This paragraph is not intended to affect benefits to
which Executive may be entitled under the Consolidated Omnibus
Budget Reconciliation Act ("COBRA") or any pension or benefit
plan in which Executive is a participant.
12. Employment Rights. The Company and the Executive understand
that this Agreement constitutes a binding commitment to provide
the benefits set forth herein upon the Executive's retirement.
The Agreement does not constitute, and should not be construed as
an employment contract. The Executive acknowledges that he is
and shall remain an employee at will who may be terminated by the
Company or a BellSouth Company for any reason and at any time
prior to the Retirement Date. Similarly, the Company
acknowledges that the Executive may resign for any reason at any
time prior to his Retirement Date, subject to forfeiting the
benefits described in the Agreement. The Executive understands
that he, like any other employee, has been and will be subject to
the Company's performance standards as well as its disciplinary
rules.
13. Severability. In the event one or more of the provisions of
this Agreement shall for any reason be held to be invalid,
illegal or unenforceable in any respect, the same shall not
affect any other provisions of this Agreement, but this Agreement
shall be construed as if such invalid or illegal or unenforceable
provisions had never been contained herein.
14. Entire Agreement. This Agreement embodies the entire
agreement of the parties hereto relating to the subject matter
hereof. No amendment or modification of this Agreement shall be
valid or binding upon the parties unless made in writing and
signed by the parties hereto.
15. Responsibility; Binding Effect. The Company shall be
responsible for all payments and benefits described in this
Agreement; provided that, if at the Executive's Retirement Date,
the Executive is not employed by the Company but is employed by a
BellSouth Company, such BellSouth Company shall be responsible
for all payments and benefits described in this Agreement and
thereafter all references in this Agreement to the "Company"
shall be deemed to be references to such BellSouth Company. This
Agreement shall be binding upon the parties hereto and their
respective heirs, representatives, successors, transferees and
assigns.
16. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall constitute an original and
all of which, when taken together, shall constitute one
agreement.
17. Governing Law. This Agreement shall be governed by and
construed in accordance with laws of the State of Georgia.
18. Revocation. The Executive may revoke the Agreement by
giving written notice to the Company within seven (7) calendar
days following the Executive's execution of the Agreement. The
Agreement will become binding and irrevocable following the
expiration of that time period.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date set forth above.
EXECUTIVE: COMPANY:
By:
Signature Signature
Name Title
EXHIBIT 11
BellSouth Corporation
Computation of Earnings Per Share
For the Three Month For the Nine Month
Periods Ended Periods Ended
September 30, September 30,
1996 1995 1996 1995
Earnings Per Common Share:
Income Before
Extraordinary
Losses $ 631 $ 559 $ 2,230 $ 1,663
Extraordinary
Loss for
Discontinuance of
SFAS No.71, net of
tax -- -- -- (2,718)
Extraordinary Loss
on Early
Extinguishment of
Debt, net of tax -- -- -- (16)
Net Income (Loss) $ 631 $ 559 $ 2,230 $(1,071)
Weighted average
shares outstanding 994 993 994 993
Earnings per Common
Share Before
Extraordinary
Losses $ .63 $ .56 $ 2.24 $ 1.67
Extraordinary
Loss for
Discontinuance of
SFAS No.71, net of
tax -- -- -- (2.73)
Extraordinary Loss
on Early
Extinguishment of
Debt, net of tax -- -- -- (.02)
Earnings (Loss) Per
Common Share $ .63 $ .56 $ 2.24 $ (1.08)
EXHIBIT 11
BellSouth Corporation
Computation of Earnings Per Share (continued)
For the Three Month For the Nine Month
Periods Ended Periods Ended
September 30, September 30,
1996 1995 1996 1995
Primary Earnings Per Common Share:
Income Before
Extraordinary
Losses $ 631 $ 559 $ 2,230 $ 1,663
Extraordinary
Loss for
Discontinuance of
SFAS No.71, net of
tax -- -- -- (2,718)
Extraordinary Loss
on Early
Extinguishment of
Debt, net of tax -- -- -- (16)
Net Income (Loss) $ 631 $ 559 $ 2,230 $(1,071)
Weighted average
shares outstanding 994 993 994 993
Incremental shares
from assumed
exercise of stock
options and
payment of
performance share
awards 2 2 2 1
Total Shares 996 995 996 994
Earnings per Common
Share Before
Extraordinary
Losses $ .63 $ .56 $ 2.24 $ 1.67
Extraordinary
Loss for
Discontinuance of
SFAS No.71, net of
tax -- -- -- (2.73)
Extraordinary Loss
on Early
Extinguishment of
Debt, net of tax -- -- -- (.02)
Earnings (Loss) Per
Common Share $ .63 $ .56 $ 2.24 $ (1.08)
EXHIBIT 11
BellSouth Corporation
Computation of Earnings Per Share (continued)
For the Three Month For the Nine Month
Periods Ended Periods Ended
September 30, September 30,
1996 1995 1996 1995
Fully Diluted Earnings Per Common Share:
Income Before
Extraordinary
Losses $ 631 $ 559 $ 2,230 $ 1,663
Extraordinary
Loss for
Discontinuance of
SFAS No.71, net of
tax -- -- -- (2,718)
Extraordinary Loss
on Early
Extinguishment of
Debt, net of tax -- -- -- (16)
Net Income (Loss) $ 631 $ 559 $ 2,230 $(1,071)
Weighted average
shares outstanding 994 993 994 993
Incremental shares
from assumed
exercise of stock
options and
payment of
performance share
awards 2 2 2 2
Total Shares 996 995 996 995
Earnings per Common
Share Before
Extraordinary
Losses $ .63 $ .56 $ 2.24 $ 1.67
Extraordinary
Loss for
Discontinuance of
SFAS No.71, net of
tax -- -- -- (2.73)
Extraordinary Loss
on Early
Extinguishment of
Debt, net of tax -- -- -- (.02)
Earnings (Loss) Per
Common Share $ .63 $ .56 $ 2.24 $ (1.08)
EXHIBIT 12
BellSouth Corporation
Computation Of Earnings To Fixed Charges
(Dollars In Millions)
For the Nine
Months Ended
September 30,
1996
1. Earnings
(a) Income from continuing operations
before deductions for taxes and interest $4,098
(b) Portion of rental expense
representative of interest factor 67
(c) Equity in losses from less-than-50%
owned investments (accounted for under the
equity method of accounting) 49
(d) Excess of earnings over distributions
of less-than-50%-owned investments
(accounted for under the equity method of
accounting) (29)
TOTAL $4,185
2. Fixed Charges
(a) Interest $545
(b) Portion of rental expense
representative of interest factor 67
TOTAL $612
Ratio (1 divided by 2) 6.8
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<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,338
<SECURITIES> 44
<RECEIVABLES> 4,008
<ALLOWANCES> 162
<INVENTORY> 416
<CURRENT-ASSETS> 6,048
<PP&E> 49,232
<DEPRECIATION> 27,625
<TOTAL-ASSETS> 32,068
<CURRENT-LIABILITIES> 6,247
<BONDS> 7,878
0
0
<COMMON> 1,009
<OTHER-SE> 12,049
<TOTAL-LIABILITY-AND-EQUITY> 32,068
<SALES> 322
<TOTAL-REVENUES> 13,990
<CGS> 563
<TOTAL-COSTS> 7,243
<OTHER-EXPENSES> 3,175
<LOSS-PROVISION> 180
<INTEREST-EXPENSE> 531
<INCOME-PRETAX> 3,567
<INCOME-TAX> 1,337
<INCOME-CONTINUING> 2,230
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,230
<EPS-PRIMARY> 2.24
<EPS-DILUTED> 2.24
</TABLE>
