SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the fiscal year ended December 31, 1995.
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 1-9157
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
Connecticut 06-1157778
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
227 Church Street, New Haven, CT 06510
(Address of principal executive offices) (Zip Code)
(203) 771-5200
(Registrant's telephone number,
including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on
which registered
Common stock-par value $1 per share New York and Pacific Stock Exchanges
Rights to purchase common stock New York and Pacific Stock Exchanges
(Currently traded with common stock)
Securities registered pursuant to Section 12(g) of the Act: None
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 .
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
At February 29, 1996, 65,261,643 common shares were outstanding.
At February 29, 1996, the aggregate market value of the voting stock
held by non-affiliates was $2,665,600,545.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's combined Proxy Statement and 1995 Annual
Report to Shareholders dated March 20, 1996 issued in connection with
the 1996 Annual Meeting of Shareholders [Part II and Part III]
1
TABLE OF CONTENTS
Item Page
PART I
1. Business......................................................... 3
2. Properties....................................................... 12
3. Legal Proceedings................................................ 13
4. Submission of Matters to a Vote of Security Holders.............. 13
PART II
5. Market for the Registrant's Common Stock and Related
Stockholder Matters............................................ 15
6. Selected Financial Data......................................... 15
7. Management's Discussion and Analysis of Financial Condition
and Operating Results.......................................... 15
8. Financial Statements and Supplementary Data..................... 15
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure............................ 15
PART III
10. Directors and Executive Officers of the Registrant.............. 15
11. Executive Compensation.......................................... 15
12. Security Ownership of Certain Beneficial Owners and Management.. 15
13. Certain Relationships and Related Transactions.................. 15
PART IV
14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K. 16
See page 14 for "Executive Officers of the Registrant"
2
PART I
Item 1. Business
GENERAL
Southern New England Telecommunications Corporation
("Corporation") was incorporated in 1986 under the laws of the
State of Connecticut and has its principal executive offices at
227 Church Street, New Haven, Connecticut 06510 (telephone number
(203) 771-5200). The Corporation is a holding company engaged
through its subsidiaries in operations principally in Connecticut
with expanded cellular services in Rhode Island and certain areas
in Massachusetts. The Corporation has business units in the
following telecommunications product groups: wireline; wireless;
and information and entertainment. Wireline includes The
Southern New England Telephone Company's telecommunications
services; SNET America, Inc. (providing national and
international long-distance services to Connecticut customers);
and SNET Diversified Group, Inc. (providing premium
telecommunications services and the selling and leasing of
communications equipment to residential and business customers).
Wireless includes SNET Cellular, Inc., SNET Mobility, Inc. and
SNET Paging, Inc. (providing cellular (wholesale and retail),
personal communications and paging resale services). Information
and entertainment includes directory publishing, advertising and
multimedia services. Non-telecommunications services include
SNET Real Estate, Inc. (engaging in leasing commercial real
estate) and the holding company (engaging in financial and
strategic planning).
WIRELINE
The Southern New England Telephone Company's Telecommunications
Services
The Southern New England Telephone Company ("Telephone Company"),
a local exchange carrier ("LEC"), was incorporated in 1882 under
the laws of the State of Connecticut and is engaged in providing
telecommunications services in Connecticut, most of which are
subject to various degrees of rate regulation. These
telecommunications services include: local and intrastate toll
services; network access service, which links customers' premises
to the facilities of other carriers; and other services such as
digital transmission of data and transmission of radio and
television programs, packet switched data network and private
line services.
In 1995, approximately 70% of the Corporation's consolidated
revenues and sales were derived from the Telephone Company's rate
regulated telecommunications services. The remainder was derived
principally from the Corporation's other subsidiaries, directory
publishing operations, and activities associated with the
provision of facilities and non-access services to interexchange
carriers. About 71% of the operating revenues from rate
regulated services were attributable to intrastate operations,
with the remainder attributable to interstate access services.
The Telephone Company is subject to the jurisdiction of the
Federal Communications Commission ("FCC") with respect to
interstate rates, services, access charges and other matters,
including the prescription of a uniform system of accounts. The
FCC also prescribes the principles and procedures (referred to as
"separations procedures") used to separate investments, revenues,
expenses, taxes and reserves between the interstate and
intrastate jurisdictions. In addition, the FCC has adopted
accounting and cost allocation rules for the separation of costs
of regulated from non-regulated telecommunications services for
interstate ratemaking purposes. The Telephone Company's
interstate services have been
3
subject to price cap regulation since January 1991. Price caps
are a form of incentive regulation to limit prices and improve
productivity. The price cap plan sets maximum limits on prices and
requires LECs to share earnings in excess of authorized levels.
The Telephone Company, in providing telecommunications services
in Connecticut, is subject to regulation by the Connecticut
Department of Public Utility Control ("DPUC"), which has
jurisdiction with respect to intrastate rates and services and
other matters such as the approval of accounting procedures and
the issuance of securities. The DPUC has adopted accounting and
cost allocation rules for intrastate ratemaking purposes, similar
to those adopted by the FCC, for the separation of costs of
regulated from non-regulated activities. The Telephone Company's
intrastate services have been subject to the traditional rate of
return regulation. In 1996, the DPUC issued a decision that
replaces traditional rate of return regulation with alternative
(price based) regulation to be employed during the transition to
full competition [see State Regulatory Initiatives].
Competition
Connecticut's telecommunications industry continues to move
toward a fully competitive marketplace brought about by
legislative and regulatory initiatives during recent years. As a
result of these initiatives, the Corporation is experiencing
increased competition from interexchange carriers and competitive
access providers with respect to the wireline's (Telephone
Company's) existing services. Management supports bringing to
customers the benefits of competition and affording all
competitors the opportunity to compete fairly. As demand
increases for telecommunications services in an increasingly
competitive environment, the Corporation continues to seek growth
opportunities beyond its traditional services.
In May 1994, the State of Connecticut Legislature enacted Public
Act 94-83 ("Act"), providing a new regulatory framework for the
Connecticut telecommunications industry. The Act, which took
effect on July 1, 1994, represents a broad strategic response to
the changes facing the telecommunications industry in Connecticut
based on the premise that broader participation in the
Connecticut telecommunications market will be more beneficial to
the public than will broader regulation. The Act opens
Connecticut telecommunications services to full competition,
including local exchange service currently provided primarily by
the Telephone Company, and encourages the DPUC to adopt
alternative forms of regulation for telephone companies,
including the Telephone Company.
The DPUC has conducted, and is conducting, a number of
proceedings, in phases, to implement the Act. In the competitive
phase, the DPUC addressed competition in the areas of: local
exchange service; alternative operator services and customer
owned coin operated telephone service; universal service and
lifeline program policy issues; unbundling of LECs' local
networks; and reclassification of LECs' products and services
into non-competitive, emerging competitive and competitive
categories. During the alternative regulation phase, the DPUC
issued a decision replacing traditional rate of return regulation
with alternative (price based) regulation to be employed during
the transition to full competition. In addition, the alternative
regulation phase involved a complete financial review of the
Telephone Company and addressed cost of service, capital recovery
and service standards [see State Regulatory Initiatives].
The Telephone Company's regulated services are subject to
competition from companies and carriers, including competitive
access providers, that construct and operate their own
communications systems and networks, as well as from companies
that resell the telecommunications systems and networks of
underlying carriers. Over 85 telecommunications providers have
received approval from the DPUC to
4
offer "10XXX" or other competitive intrastate long-distance services.
In addition, over 35 companies have filed for initial certificates of
public convenience and necessity and are awaiting DPUC approval. The
reduction in intrastate toll rates, and the increasingly
competitive intrastate toll market continue to place significant
downward pressure on intrastate toll revenues. Also contributing
to lower intrastate toll revenues is the implementation of
intrastate equal access for all dual preferred interexchange
carrier ("PIC") capable switches by December 1, 1996. Although
the DPUC ordered the Telephone Company to bear its proportionate
share of the costs to deploy the dual PIC technology, the DPUC
added the estimated 1996 average net toll revenue loss to the
cost recovery formula. These costs will be recovered through an
intrastate equal access rate element on the presubscribed lines
of all carriers.
Since the introduction of "10XXX" competition, major carriers
have increased their marketing efforts in Connecticut to sell
intrastate long-distance services to Connecticut customers. In
response to competitors' efforts, the Telephone Company has
undertaken a number of initiatives. The Telephone Company
remains focused on providing excellent customer service and
quality products and has made several changes to its product
lines.
Throughout 1995, the Telephone Company, with its affiliate, has
enhanced several discount calling plans in its High Volume
Discount Toll service offering and realigned its discount and
rate structures to provide Connecticut customers with SNET All
Distance[SM], a seamless toll service product line which includes a
discount structure that combines intrastate, interstate and
international calling. One such product, SNET All Distance
Simple Solutions[SM], was made available to small business and
residence customers beginning in September 1995. This easy-to-
understand calling plan provides simple, competitive rates with a
sliding discount based on calling volume.
Concerning competition for local exchange service, seven
telecommunications providers have been granted a certificate of
public convenience and necessity for local service and one
additional application is pending before the DPUC. The effect of
increased competition on the Corporation's operating results
cannot be predicted at this time. While some customers may
purchase services from competitors, the Corporation expects that
most competitors will utilize the Telephone Company's network and
that increased network access revenues will offset a portion of
local service revenues lost to competition. The Corporation's
ability to compete continues to depend upon regulatory reform
that will allow pricing flexibility to meet competition and
provide a level playing field with similar regulation for similar
services and with reduced regulation to reflect an emerging
competitive marketplace. Local service competition began in
early 1996.
Regulatory Matters
State Regulatory Initiatives
In March 1996, the DPUC issued a decision that replaces
traditional rate of return regulation with alternative (price
based) regulation to be employed during the transition to full
competition. The decision contains the following major items:
price cap regulation for non-competitive services; a five year
monitoring period on financial results; and a price cap formula
on services categorized as non-competitive (utilizing an
inflation factor, a 5% productivity offset, a narrowly defined
exogenous factor, a potential service quality adjustment and
various pricing bands). In addition, basic local service rates
for residence, business and coin are frozen until January 1,
1998, at which time the price cap formula becomes effective for
these services. The decision also authorized a rate of return on
the Telephone Company's common equity of 11.90% during the
monitoring period. The impact of these changes on the Telephone
Company's operating results will depend on the timing of
classifying the various products and services into categories
(non-competitive, emerging competitive and competitive) for
pricing (banding)
5
changes. As of December 31, 1995, the Telephone Company's rate of return
was below the 11.90% threshold.
On July 5, 1995, the Telephone Company filed a tariff with the
DPUC to offer wholesale local service and certain related
features. The service provides competitive local exchange
carriers with an alternative to building facilities or
constructing a ubiquitous network to meet their local service
coverage obligations. On December 20, 1995, the DPUC, in a final
decision, established interim rates for unbundled network
elements and wholesale local service. The rates will remain in
effect until the Telephone Company files revised cost studies
during the second quarter of 1996.
Federal Regulatory Initiatives
On February 1, 1996, the U.S. Congress passed legislation that
created broad changes in telecommunications law and regulation
nationwide. The primary thrust of this legislation opens local
telecommunications markets to competition and allows the Regional
Bell Operating Companies to provide long-distance services. In
addition, the legislation permits telecommunications companies to
enter the cable television business and eases cable regulation.
The FCC is required to adopt terms and conditions to implement
the legislation in the near term.
The majority of the federal legislation is consistent with
legislation enacted by the State of Connecticut in 1994. Public
Act 94-83 opened the Connecticut telecommunications market to
competition, and the DPUC is nearing completion of the
implementation proceedings. Certain provisions of the federal
legislation relating to the prices the Telephone Company charges
competitors for services could, however, have the effect of
producing below cost prices, therefore necessitating the
development of a significantly larger universal service fund than
previously anticipated. If there are conflicts between state and
federal law for LECs, including the Telephone Company, with less
than 2% of the nationwide access lines, federal law prevails
subject to a waiver and modification process included in the
federal legislation. The DPUC may grant a waiver or modification
of the federal law that is consistent with the public interest
and avoids a significant adverse economic impact on users or a
requirement that is unduly economically burdensome or technically
infeasible.
Under price cap regulation, the FCC adopted an interim plan in
1995 for interstate access rates, requiring LECs to incorporate
higher productivity targets into their rates. The interim plan
requires LECs to choose from among three productivity factors:
4.0%, 4.7% or 5.3%. The selected factor is subtracted from
inflation-based price increases allowed each year to account for
increasing productivity. If either the 4.0% or 4.7% factor is
chosen, LECs must share 50% of earnings above a 12.25% rate of
return. In addition, all earnings above 13.25% and 16.25%,
respectively, will be returned. If the 5.3% factor is chosen,
all earnings can be retained without sharing. In addition,
companies are required to reinitialize their price cap index
("PCI") on a one-time basis by reducing the PCI by 0.7% for each
prior year in which they elected the 3.3% factor. The maximum PCI
reduction over the four year price cap period would therefore be
2.8%. The Telephone Company has elected a 3.3% productivity
factor each year since entering price cap regulation in 1991.
Accordingly, the Telephone Company is required to reinitialize
its PCI downward by 2.8%. The Telephone Company has joined a
number of other LECs in filing an appeal with the D.C. Circuit
Court of Appeals challenging the lawfulness of this interim plan.
A decision on this appeal is expected in 1996.
In September 1995, the FCC released two further notices of
proposed rulemaking that sought comment on changes to the
established price cap plan including productivity measurements,
sharing, common line formula, exogenous costs and necessary price
cap rule changes to respond to a competitive environment for
LECs. In response to the FCC, the Telephone Company commented
that rule changes are required to
6
allow price cap LECs to compete with alternate providers. The FCC
is expected to adopt new price cap rules in 1996.
The Telephone Company's 1995 annual interstate access tariff
filing under price cap regulation took effect August 1, 1995.
The Telephone Company elected a 4.0% productivity factor and was
allowed to earn up to a 12.25% interstate rate of return annually
before any sharing is required. This filing, which was approved
by the FCC, incorporated rate reductions of approximately $10
million in decreased interstate network access revenues for the
period August 1, 1995 to June 30, 1996. Management expects this
decrease to be partially offset by increased demand. As of
December 31, 1995, the Telephone Company's interstate rate of
return was below the 12.25% threshold.
The Telephone Company's 1994 annual interstate access tariff
filing under price cap regulation took effect July 1, 1994. The
Telephone Company elected a 3.3% productivity factor and was
allowed to earn up to a 12.25% interstate rate of return annually
before any sharing is required. This filing, which was approved
by the FCC, incorporated rate reductions of approximately $7
million in decreased annual interstate network access revenues
for the period July 1, 1994 to June 30, 1995. This decrease was
offset by increased demand.
The Telephone Company will file its 1996 annual interstate access
tariff on April 2, 1996 to become effective July 1, 1996. The
filing will adjust interstate access rates for an experienced
rate of inflation, the FCC's productivity target and exogenous
cost changes, if any. The Telephone Company does not anticipate
changing its 4.0% productivity factor election for the next
tariff period.
Since January 1, 1988, the Telephone Company has utilized an FCC
approved, company-specific Cost Allocation Manual ("CAM"), which
apportions costs between regulated and non-regulated activities,
and describes transactions between the Telephone Company and its
affiliates. In addition, the FCC requires larger LECs, including
the Telephone Company, to undergo an annual independent audit to
determine whether the LEC is in compliance with its approved CAM.
The Telephone Company has received audit reports for 1988 through
1994 indicating it is in compliance with its CAM, and is
currently undergoing an audit for the year 1995.
Capital Expenditures
The network access lines provided by the Telephone Company to
customers' premises can be interconnected with the access lines
of other telephone companies in the United States and with
telephone systems in most other countries. The following table
sets forth, for the Telephone Company, the number of network
access lines in service at the end of each year:
1995 1994 1993 1992 1991
Network Access Lines in
Service (thousands) 2,073 2,009 1,964 1,937 1,922
7
The Telephone Company has been making, and expects to continue to
make, significant capital expenditures to meet the demand for
regulated telecommunications services and to further improve such
services [see discussion of I-SNET[SM] in Item 2. Properties].
The total gross investment in telephone plant increased from
approximately $3.6 billion at December 31, 1990 to approximately
$4.2 billion at December 31, 1995, after giving effect to
retirements, but before deducting accumulated depreciation at
either date. Since 1991, cash expended for capital additions was
as follows:
Dollars in millions,
For the Years Ended 1995 1994 1993 1992 1991
Cash Expended for
Capital Additions $280 $235 $232 $269 $296
In 1995, the Telephone Company funded its cash expenditures for
capital additions entirely through cash flows from operations.
In 1996, capital additions are expected to be approximately $349
million. The Telephone Company expects to fund substantially all
of its 1996 capital additions through cash flows from operations.
SNET America, Inc.
SNET America, Inc. ("SNET America") was incorporated in 1993
under the laws of the State of Connecticut. SNET America resells
a complete range of interstate and international long-distance
services to Connecticut customers, including calling card and
"800" service, along with volume discount plans such as SNET All
Distance Simple Solutions[SM], a calling plan for small business
and residence customers. SNET America began offering service in
the third quarter of 1993.
On April 13, 1994, the DPUC approved a joint marketing
arrangement between the Telephone Company and SNET America
enabling the Telephone Company to sell SNET America's interstate
and international services, and SNET America to sell the
Telephone Company's intrastate products and services. This
arrangement enabled the Corporation to satisfy its customers'
long-distance calling needs with a single point of contact
through the SNET All Distance[SM] service offerings.
SNET Diversified Group, Inc.
SNET Diversified Group, Inc. ("Diversified") was incorporated in
1986 under the laws of the State of Connecticut in order to
identify and develop new, non-regulated business opportunities.
The majority of Diversified's activities is the offering of
premium services, such as information and enhanced network-
related services. Another activity is leasing and selling
customer premises equipment ("CPE") to residential and small
business customers. Key telephone systems and related products
are offered and maintained which are complementary to the
Telephone Company's central office-based solutions.
Diversified faces significant competition from numerous
department store, discount store, and business equipment
retailers that carry CPE. Diversified has differentiated its
product line from its competitors by offering a wide array of
quality products including leasing options.
8
WIRELESS
The Corporation provides cellular (wholesale and retail),
personal communications and paging resale services in
Connecticut, Rhode Island and certain areas in Massachusetts,
through its subsidiaries SNET Cellular, Inc. ("Cellular"), SNET
Mobility, Inc. ("Mobility") and SNET Paging, Inc. ("Paging").
SNET Cellular, Inc.
Cellular was incorporated in 1985 under the laws of the State of
Connecticut. In 1990, Cellular formed the Springwich Cellular
Limited Partnership ("Springwich") with four other partners.
Springwich is authorized to provide wholesale cellular radio
telecommunications services in the Hartford, New Haven, New
London, and Fairfield, Connecticut New England County
Metropolitan Areas ("NECMAs") and in the Springfield,
Massachusetts NECMA. Springwich also is licensed to provide
cellular wholesale service in three Rural Service Areas, Windham
and Litchfield Counties in Connecticut and Franklin County in
Massachusetts.
In July 1995, Cellular purchased from Bell Atlantic Corporation
("Bell Atlantic"), NYNEX Corporation ("NYNEX") and Richmond
Telephone Company, for approximately $456 million in aggregate,
certain cellular properties in Rhode Island and New Bedford and
Pittsfield, Massachusetts, and an increased interest in
Springwich. In total, these acquisitions expanded the cellular
service area by approximately 2.3 million POPs (population
equivalents) to approximately 5.5 million POPs along the Boston
to New York corridor. Under the new partnership structure,
Cellular holds a 98.6% partnership interest in Springwich.
Cellular has "roamer agreements" with other carriers which allow
the carriers' subscribers access to Cellular's network and allow
Cellular's subscribers access to other networks throughout the
United States and Canada.
Cellular is currently subject to FCC jurisdiction. During 1994,
the Massachusetts Department of Public Utility deregulated
cellular services pursuant to congressional legislative action.
In August 1994, the DPUC filed a petition with the FCC to
continue rate regulation of wholesale cellular services. The FCC
denied the DPUC petition on May 19, 1995 and state regulation
effectively ended June 19, 1995. However, the DPUC and the
Attorney General of Connecticut filed on July 13, 1995
a petition for review with the U.S. Court of Appeals.
In its filings, the DPUC claimed that the FCC had made its
decision to end regulation based on a set of factors that were
inconsistent with the standards that states were told would
govern their petitions. In late July 1995, Cellular filed a
motion for intervention with the U.S. Court of Appeals ("Court")
stating that the reinstitution of the DPUC's regulatory authority
at a time when Cellular is subject to increasing competition from
firms that are not subject to DPUC rate regulation, would hamper
Cellular's ability to respond to such competition. Briefs on the
petition for review were filed with the Court and a hearing was
held on October 31, 1995 and a final decision is expected in
early 1996.
During 1994, the FCC issued a spectrum plan allocating radio
spectrum to be licensed for the provision of new personal
communications services ("PCS"). As a result of the plan,
licenses for separate blocks of spectrum were auctioned to
potential PCS providers in geographic areas of the United States
through 1996. Various telecommunications groups, including
primarily all the nation's largest telephone companies, competed
for licenses to offer PCS in markets including Cellular's
coverage area. These blocks of spectrum could be used to provide
a range of wireless services including advanced paging, wireless
data services and two-way voice communications. The Corporation
did not participate in these auctions since it had adequate
spectrum to provide competitive services.
9
In July 1995, Bell Atlantic and NYNEX completed the merger of
their cellular service properties. This combination created the
largest wireless service provider on the East Coast and the
second largest provider in the United States.
Cellular expects increasing competition from new alliances and
the impact from auctions of PCS licenses. Cellular has made and
will continue to make investments in network expansion and
enhancements in order to effectively meet the needs of its
subscribers.
SNET Mobility, Inc.
Mobility was incorporated in 1985 under the laws of the State of
Connecticut under its predecessor's name SNET MobileCom, Inc.
Mobility purchases wholesale cellular communications service from
Springwich and resells cellular communications service to the
retail market under the registered trademark LINX[R] in Springwich's
service area.
During 1995, Mobility conducted various market trials of personal
communication services. This service incorporates a Local
Service Area (LSA) concept where subscribers may choose their
county of service at a favorable rate in contrast to traditional
cellular service, which is made available at peak and offpeak
rates for entire cellular markets. Included was a trial for the
SNET Personal Phone Service[SM] in Hartford and Fairfield,
Connecticut counties with approximately 1,000 participants.
Based on trial results, a formal product launch took place in
February 1996. Mobility is the first to market this service in
its franchise area.
Mobility markets its services through its internal sales force
and through agreements with third-party distributors and dealers.
Mobility anticipates continuing competition from local, regional
and national resellers. Over the past few years, intense
competition for new subscribers has led to increases in selling
and promotional costs. Mobility anticipates that this trend will
continue into the foreseeable future. In response to this
competition, Mobility continues to increase the number and
quality of its distribution channels, price aggressively and
introduce both creative customer acquisition programs and
differentiated value-added services.
SNET Paging, Inc.
Paging was incorporated in February 1990 under the laws of the
State of Connecticut. Paging launched service on April 1, 1991.
On June 30, 1995, Paging and a subsidiary completed the sale of
substantially all of its paging network assets and the
subsidiary's reseller accounts, to Paging Network of New York,
Inc. Paging will retain its retail accounts and will continue,
as a reseller, to market paging services under its Page 2000[R]
brand name.
INFORMATION AND ENTERTAINMENT
Publishing Operations
The Telephone Company's publishing operations produces and
distributes traditional paper products including White and Yellow
Pages directories throughout Connecticut and adjacent
communities. To strategically widen its business focus and
position itself for the future, the publishing operations is
introducing new electronic publishing services, such as SNET
Access[SM], Consumer Tips and Electronic Yellow Pages. On June 30,
1994, the DPUC lifted a restriction which prohibited the
Telephone
10
Company from developing and providing electronic information
services, including electronic publishing services.
Key trends affecting publishing revenues include the Connecticut
economy and competition. Publishing revenues, a significant
portion of which reflect directory contracts entered into in the
prior year, continue to remain sensitive to the Connecticut
economy, which is in the early stages of recovery. In addition,
the Connecticut advertising marketplace is undergoing major
structural changes and is becoming increasingly more fragmented
and competitive. The publishing division faces increased
competition from non-traditional services such as on-line
services, desktop publishing, electronic shopping services, CD-
ROM and the expansion of cable television. Furthermore,
additional competition may arise from the Regional Bell Operating
Companies' ability to offer information services.
SNET Personal Vision, Inc.
On January 25, 1996, SNET Personal Vision, Inc. ("Personal
Vision"), a newly formed subsidiary, filed an application with
the DPUC for a certificate of public convenience and necessity to
offer cable television service throughout Connecticut. Personal
Vision will use I-SNET, a hybrid fiber coaxial network, to reach
customers with programming and pay-per-view services. I-SNET is
currently under construction and will be completed by 2009.
Service, pending regulatory approval, is expected to reach in
excess of 20% of Connecticut households by the end of 1997.
OTHER SERVICES
SNET Real Estate, Inc.
SNET Real Estate, Inc. ("Real Estate") was incorporated in 1983
under the laws of the State of Connecticut. Real Estate is the
owner of commercial property which it leases under operating
leases and is a 99% partner in a limited liability company that
also leases commercial property. Currently, Real Estate is
managing its existing portfolio and is not actively pursuing
additional real estate investments.
Real Estate faces a risk that real estate markets in which its
properties are located, primarily Connecticut, may further
deteriorate from their current value. This risk is minimized by
the conservative nature of Real Estate's portfolio, a majority of
which is leased to affiliates.
Holding Company
On February 15, 1995, the DPUC provided the Corporation greater
flexibility to diversify into new markets by lifting to 40% a
nine-year-old restriction that prevented the Corporation from
investing more than 25% of its total assets in unregulated
diversified activities without approval of the DPUC.
11
EMPLOYEE RELATIONS
The Corporation and its subsidiaries employed approximately 9,111
persons at February 29, 1996, of whom approximately 63% are
represented by the Connecticut Union of Telephone Workers, Inc.
("CUTW"), an unaffiliated union.
On April 12, 1995, a new labor contract was ratified by members
of the CUTW. As part of the new contract, a voluntary early-out
offer ("EOO"), which provided incentives in the form of enhanced
pension benefits, was available to bargaining-unit employees
during July 1995. Approximately 2,700 bargaining-unit employees,
or 40.7% of the total bargaining-unit work force, accepted the
offer at that time. As of December 31, 1995, 2,050 employees had
left the Corporation, with the remaining 650 employees to leave
no later than June 1996. CUTW members who remain with the
Corporation received a combination of basic wage and lump sum
increases to their wages or cash balance plan account totaling
4.0% in January 1996. In both January 1997 and January 1998,
they will receive a combination of basic wage and lump sum
increases totaling 3.0%. In addition, the contract also provides
a sign-on bonus and health benefit and pension enhancements. The
new labor agreement will expire on August 8, 1998. The contract
is intended to keep layoffs to a minimum while enabling the
Corporation to position itself to meet increasing competition.
In December 1993, the Corporation recorded a restructuring charge
to provide for a comprehensive restructuring program designed to
reduce costs and improve delivery of service. The program
included incremental costs to be incurred for employee
separations. Total employee separations under the restructuring
program are expected to approximate up to 4,000 employees.
Through December 1995, approximately 3,165 employees (715
management and 2,450 bargaining-unit employees, or 20.0% and
35.9% of the respective total work force at the inception of the
restructuring program) had left the Corporation. Total employee
separations through the end of 1995 were offset partially by an
increase in provisional employees and growth in the business
resulting in a net reduction in the Corporation's work force of
1,406 employees from 10,476 employees at year-end 1993 to 9,070
employees at year-end 1995.
Item 2. Properties
The principal properties of the Corporation do not lend
themselves to a detailed description by character and location.
The majority of telecommunications property, plant and equipment
of the Corporation is owned by the Telephone Company. Of the
Corporation's investment in telecommunications property, plant
and equipment at December 31, 1995, central office equipment
represented 40%; connecting lines not on customers' premises, the
majority of which are on or under public roads, highways or
streets and the remainder on or under private property,
represented 35%; land and buildings (occupied principally by
central offices) represented 12%; telephone instruments and
related wiring and equipment, including private branch exchanges,
substantially all of which are on the premises of customers,
represented 2%; and other, principally vehicles and general
office equipment, represented 11%.
Substantially all of the central office equipment installations
and administrative offices are located in Connecticut in
buildings owned by the Telephone Company situated on land which
it owns in fee. Many garages, service centers and some
administrative offices are located in rented quarters.
The Corporation has a significant investment in the properties,
facilities and equipment necessary to conduct its business with
the overwhelming majority of this investment relating to
telephone operations. Management believes that the Corporation's
facilities and equipment are suitable and adequate for the
business.
12
The buildout of I-SNET, a $4.5 billion investment over 15 years,
is expected to be completed by 2009. I-SNET, a statewide
telephony and information superhighway, is an advanced network
capable of delivering voice, video and a full range of
information and interactive multimedia services. I-SNET passed
approximately 170,000 households by December 1995 and brought
service to its first customer in October 1995. The Telephone
Company expects I-SNET to pass approximately 230,000 households
and provide telephony service on up to 80,000 lines by December
1996. The Telephone Company plans to support this investment
primarily through increased productivity from the new technology
deployed, ongoing cost-reduction initiatives and customer demand
for the new services offered.
Item 3. Legal Proceedings
The Corporation and certain of its subsidiaries are involved in
various claims and lawsuits that arise in the normal conduct of
their business. In the opinion of management, upon advice of
counsel, these claims will not have a material adverse effect on
the financial position, operating results or cash flows of the
Corporation or its subsidiaries.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders in the
fourth quarter of the fiscal year covered by this report.
13
Executive Officers of the Registrant (1)
(as of February 29, 1996)
Executive
Officer
Name Age(2) Position Since
Daniel J. Miglio 55 Chairman, President and
Chief Executive Officer 1/86
Jean M. LaVecchia 43 Senior Vice President-
Organization Development 8/94
Fred T. Page 49 Senior Vice President-
Network Services 2/96
Ronald M. Serrano 40 Senior Vice President-Communication,
Information and Entertainment Group 1/93
Donald R. Shassian 40 Senior Vice President and Chief
Financial Officer 12/93
(1) Executive officers subject to Section 16 of the Securities Exchange Act
of 1934.
(2) As of December 31, 1995.
Mr. Miglio, Ms. LaVecchia and Mr. Page have held high level
managerial positions with the Corporation or its subsidiaries for
more than the past five years. Mr. Serrano was a Vice President
of Mercer Management Consulting, Inc., (formerly Strategic
Planning Associates) for more than five years prior to joining
the Corporation. Mr. Shassian was a partner with Arthur Andersen
& Co., independent accountants, for more than five years prior to
joining the Corporation.
14
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters
The common stock of the Corporation is listed on the New York and
Pacific stock exchanges and the number of holders of record,
computed on the basis of registered accounts, was 52,962 as of
February 29, 1996. Information with respect to the quarterly
high, low and closing sales price for the Corporation's common
stock and quarterly cash dividends declared is included in the
registrant's Annual Report to Shareholders on page 47 under the
caption "Market and Dividend Data" and is incorporated herein by
reference pursuant to General Instruction G(2).
Items 6 through 8.
Information required under Items 6 through 8 is included in the
registrant's combined Proxy Statement and 1995 Annual Report to
Shareholders dated March 20, 1996 on pages 22 through 46 in their
entirety and is incorporated herein by reference pursuant to
General Instruction G(2).
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
No changes in or disagreements with accountants on any accounting
or financial disclosure occurred during the period covered by
this report.
PART III
Items 10 through 13.
Information required under Items 10 through 13 is included in the
registrant's combined Proxy Statement and 1995 Annual Report to
Shareholders dated March 20, 1996 on pages 1 (commencing under
the caption "Proxy Information") through 5 and pages 8 through
11. Such information is incorporated herein by reference
pursuant to General Instruction G(3).
Information regarding executive officers of the registrant
required by Item 401(b) and (e) of Regulation S-K is included in
Part I of this Annual Report on Form 10-K, following Item 4.
15
PART IV
Item 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K
(a) Documents filed as part of the report: Page
(1) Report on Consolidated Financial Statements *
Report of Audit Committee *
Report of Independent Accountants *
Consolidated Financial Statements:
Consolidated Statements of (Loss) Income - for the years
ended December 31, 1995, 1994 and 1993 *
Consolidated Balance Sheets - as of
December 31, 1995 and 1994 *
Consolidated Statements of Changes in Shareholders'
Equity - for the years ended December 31, 1995,
1994 and 1993 *
Consolidated Statements of Cash Flows - for the years
ended December 31, 1995, 1994 and 1993 *
Notes to Consolidated Financial Statements *
(2) Consolidated Financial Statement Schedule for the year
ended December 31, 1995
Report of Independent Accountants 21
II - Valuation and Qualifying Accounts 22
Schedules other than those listed above have been omitted
because the required information is contained in the financial
statements and notes thereto, or because such schedules are
not applicable.
* Incorporated herein by reference to the appropriate portions
of the registrant's combined Proxy Statement and 1995
Annual Report to Shareholders dated March 20, 1996 [see Part II].
16
(3) Exhibits:
Exhibits identified in parentheses below, on file with the SEC,
are incorporated herein by reference as exhibits hereto. Exhibits
numbered 10(iii)(A)1 through 10(iii)(A)15 are management contracts
or compensatory plans required to be filed as exhibits pursuant to
Item 14 (c) of Form 10-K.
Exhibit
Number
3a Amended and Restated Certificate of Incorporation
of the registrant as filed June 14, 1990 (Exhibit
3-A to Form SE dated 3/15/91, File No. 1-9157).
3b By-Laws of the registrant as amended and restated
through October 10, 1990 (Exhibit 3 to Form 8-K
dated 10/10/90, File No. 1-9157).
4a Rights Agreement dated February 11, 1987 between
Southern New England Telecommunications
Corporation and The State Street Bank and Trust
Company, as Rights Agent (Exhibit 1 to Form SE
dated 2/13/87-1, File No. 1-9157). Amendment No.
1 dated December 13, 1989 (Exhibit 4 to Form SE
dated 12/28/89, File No. 1-9157). Amendment No. 2
dated October 10, 1990 (Exhibit 4 to Form SE dated
10/12/90, File No. 1-9157).
4b Indenture dated December 13, 1993 between the
registrant and Fleet National Bank of Connecticut,
Trustee, issued in connection with the sale of
$200,000,000 of 6 1/8% Medium-Term Notes, Series C,
due December 15, 2003 and $245,000,000 of 7 1/4%
Medium-Term Notes, Series C, due December 15, 2033
(Exhibit 4b to 1994 Form 10-K dated 3/10/95, File No.
1-9157).
4c Indenture dated July 10, 1991 between the
registrant and Fleet National Bank of Connecticut,
Trustee, issued in connection with the sale of
$100,000,000 of 6 1/2% Medium-Term Notes, Series 2,
due August 15, 2000 and $200,000,000 of 7%
Medium-Term Notes, Series 2, due August 15, 2005.
10(iii)(A)1 SNET Short Term Incentive Plan as amended February
8, 1995 (Exhibit 10(iii)(A)1 to 1994 Form 10-K
dated 3/10/95, File No. 1-9157).
10(iii)(A)2 SNET Long Term Incentive Plan as amended March 1,
1993 (Exhibit 10(iii)(A)2 to 1992 Form 10-K dated
3/23/93, File No. 1-9157).
10(iii)(A)3 SNET Financial Counseling Program as amended
January 1987 (Exhibit 10-D to Form SE dated
3/23/87-1, File No. 1-9157).
10(iii)(A)4 Group Life Insurance Plan and Accidental Death and
Dismemberment Benefits Plan for Outside Directors
of SNET as amended July 1, 1986 (Exhibit 10-E to
Form SE dated 3/23/87-1, File No. 1-9157).
17
(3) Exhibits (continued):
Exhibit
Number
10(iii)(A)5 SNET Pension Benefit Plan as amended November 1,
1991 (Exhibit 10-A to Form SE dated 3/20/92, File
No. 1-9157). Amendment dated December 8, 1993
(Exhibit 10 (iii)(A)5 to 1993 Form 10-K dated
3/23/94, File No. 1-9157). Amendment dated
February 8, 1995 (Exhibit 10(iii)(A)5 to 1994 Form
10-K dated 3/10/95, File No. 1-9157). Amendments
effective December 13, 1995 and January 1, 1996 .
10(iii)(A)6 SNET Management Pension Plan as amended March 31,
1995. Amendments effective December 20, 1995
through April 1, 1996.
10(iii)(A)7 SNET Incentive Award Deferral Plan as amended
March 1, 1993 (Exhibit 10(iii)(A)7 to 1992 Form 10-K
dated 3/23/93, File No. 1-9157).
10(iii)(A)8 SNET Mid-Career Pension Plan as amended November
1, 1991 (Exhibit 10-D to Form SE dated 3/20/92,
File No. 1-9157). Amendment dated December 8,
1993 (Exhibit 10 (iii)(A)8 to 1993 Form 10-K dated
3/23/94, File No. 1-9157).
10(iii)(A)9 SNET Deferred Compensation Plan for Non-Employee
Directors as amended January 1, 1993 (Exhibit
10(iii)(A)9 to 1992 Form 10-K dated 3/23/93, File
No. 1-9157).
10(iii)(A)10 Change-in-Control Agreements (Exhibit 10-F to Form
SE dated 3/15/91, File No. 1-9157).
10(iii)(A)11 SNET 1986 Stock Option Plan as amended March 1,
1993 (Exhibit 10(iii)(A)11 to 1992 Form 10-K dated
3/23/93, File No. 1-9157).
10(iii)(A)12 SNET Retirement and Disability Plan for Non-
Employee Directors as amended April 14, 1993 (Exhibit
10(iii)(A)12 to 1993 Form 10-K dated 3/23/94, File No.
1-9157). Amendment dated January 1, 1994 (Exhibit
10(iii)(A)12 to 1994 Form 10-K dated 3/10/95, File No. .
1-9157).
10(iii)(A)13 SNET Non-Employee Director Stock Plan effective
January 1, 1994 (Exhibit 4.4 to Registration No.
33-51055, File No. 1-9157).
10(iii)(A)14 Description of SNET Executive Retirement Savings
Plan (Exhibit 10(iii)(A)14 to 1993 Form 10-K dated
3/23/94, File No. 1-9157).
10(iii)(A)15 SNET 1995 Stock Incentive Plan (Exhibit 4.4 to
Registration No. 33-64975, File No. 1-9157).
18
(3) Exhibits (continued):
Exhibit
Number
12 Computation of Ratio of Earnings to Fixed Charges.
13 Pages 22 through 47 of the registrant's combined
Proxy Statement and 1995 Annual Report to
Shareholders for the fiscal year ended December
31, 1995.
21 Subsidiaries of the Corporation.
23 Consent of Independent Accountants.
24a Power of Attorney.
24b Board of Directors' Resolution.
27 Financial Data Schedule.
99a Annual Report on Form 11-K for the plan year ended
December 31, 1995 for the SNET Management
Retirement Savings Plan will be filed as an
amendment prior to June 30, 1996.
99b Annual Report on Form 11-K for the plan year ended
December 31, 1995 for the SNET Bargaining Unit
Retirement Savings Plan will be filed as an
amendment prior to June 30, 1996.
The Corporation will furnish, without charge, to a shareholder
upon request a copy of the combined Proxy Statement and 1995
Annual Report to Shareholders, portions of which are incorporated
by reference, and will furnish any other exhibit at cost.
(b) Reports on Form 8-K:
On October 24, 1995, the Corporation and the Telephone Company
filed, separately, reports on Form 8-K, dated October 23, 1995
announcing the Corporation's financial results for the third
quarter of 1995.
On January 22, 1996, the Corporation and the Telephone Company
filed, separately, reports on Form 8-K, dated January 22,
1996, announcing the Corporation's 1995 financial results
including the fact that it discontinued the use of Statement
of Financial Accounting Standards No. 71, "Accounting for the
Effects of Certain Types of Regulation."
19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
By /s/ Donald R. Shassian
Donald R. Shassian, Senior Vice President
and Chief Financial Officer March 20, 1996
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the date
indicated.
PRINCIPAL EXECUTIVE OFFICER:
Daniel J. Miglio*
Chairman, President, Chief Executive Officer
and Director
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER:
Donald R. Shassian By /s/ Donald R. Shassian
Senior Vice President and (Donald R. Shassian,as attorney-
Chief Financial Officer in-fact and on his own behalf)
DIRECTORS:
William F. Andrews*
Richard H. Ayers*
Zoe Baird*
Robert L. Bennett*
Barry M. Bloom* March 20, 1996
Frank J. Connor*
William R. Fenoglio*
Claire L. Gaudiani*
James R. Greenfield*
Ira D. Hall*
Burton G. Malkiel*
Frank R. O'Keefe, Jr.* * by power of attorney
20
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of
Southern New England Telecommunications Corporation:
Our report on the consolidated financial statements of Southern
New England Telecommunications Corporation has been incorporated
by reference in this Form 10-K from the combined Proxy Statement
and 1995 Annual Report to Shareholders of Southern New England
Telecommunications Corporation on page 29 therein. In connection
with our audits of such financial statements, we have also
audited the related financial statement schedule for each of the
three years in the period ended December 31, 1995 listed in Item
14 (a) (2) of this Form 10-K.
In our opinion, the financial statement schedule referred to
above, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all
material respects, the information required to be included
therein.
Hartford, Connecticut COOPERS & LYBRAND L.L.P.
January 22, 1996
21
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(Dollars in Millions)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Additions
Balance at Balance at
beginning Charged to Charged to end of
Description of period expense other accounts Deductions period
Allowance for Uncollectible
Accounts Receivable:
Year 1995 $29.8 $23.1 $3.6 (a) $22.3 (b) $34.2
Year 1994 27.9 20.7 7.5 (a) 26.3 (b) 29.8
Year 1993 23.5 28.4 4.9 (a) 28.9 (b) 27.9
Allowance for Uncollectible
Direct-Financing Lease Notes Receivable:
Year 1995 $ 8.4 $ 1.4 $ - $ 0.1 (b) $ 9.7
Year 1994 11.7 1.7 - 5.0 (b) 8.4
Year 1993 8.2 15.6 - 12.1 (b) 11.7
Restructuring Charge:
Year 1995 $264.9 $ - $ - $187.9 (c) $ 77.0
Year 1994 355.0 - - 90.1 (c) 264.9
Year 1993 - 355.0 - - 355.0
(a) Includes amounts previously written off that were credited directly to
this account when recovered and miscellaneous amounts.
(b) Includes amounts written off as uncollectible.
(c) Includes non-cash amounts charged against the restructuring reserve of
$98.8 in 1995 and $26.5 in 1994, primarily net pension and postretirement
curtailment losses.
22
Exhibit Index
Exhibits identified in parentheses below, on file with the SEC,
are incorporated herein by reference as exhibits hereto.
Exhibit
Number
3a Amended and Restated Certificate of Incorporation
of the registrant as filed June 14, 1990 (Exhibit
3-A to Form SE dated 3/15/91, File No. 1-9157).
3b By-Laws of the registrant as amended and restated
through October 10, 1990 (Exhibit 3 to Form 8-K
dated 10/10/90, File No. 1-9157).
4a Rights Agreement dated February 11, 1987 between
Southern New England Telecommunications
Corporation and The State Street Bank and Trust
Company, as Rights Agent (Exhibit 1 to Form SE
dated 2/13/87-1, File No. 1-9157). Amendment No.
1 dated December 13, 1989 (Exhibit 4 to Form SE
dated 12/28/89, File No. 1-9157). Amendment No. 2
dated October 10, 1990 (Exhibit 4 to Form SE dated
10/12/90, File No. 1-9157).
4b Indenture dated December 13, 1993 between the
registrant and Fleet National Bank of Connecticut,
Trustee, issued in connection with the sale of
$200,000,000 of 6 1/8% Medium-Term Notes, Series C,
due December 15, 2003 and $245,000,000 of 7 1/4%
Medium-Term Notes, Series C, due December 15, 2033
(Exhibit 4b to 1994 Form 10-K dated 3/10/95, File No.
1-9157).
4c Indenture dated July 10, 1991 between the
registrant and Fleet National Bank of Connecticut,
Trustee, issued in connection with the sale of
$100,000,000 of 6 1/2% Medium-Term Notes, Series 2,
due August 15, 2000 and $200,000,000 of 7%
Medium-Term Notes, Series 2, due August 15, 2005.
10(iii)(A)1 SNET Short Term Incentive Plan as amended February
8, 1995 (Exhibit 10(iii)(A)1 to 1994 Form 10-K
dated 3/10/95, File No. 1-9157).
10(iii)(A)2 SNET Long Term Incentive Plan as amended March 1,
1993 (Exhibit 10(iii)(A)2 to 1992 Form 10-K dated
3/23/93, File No. 1-9157).
10(iii)(A)3 SNET Financial Counseling Program as amended
January 1987 (Exhibit 10-D to Form SE dated
3/23/87-1, File No. 1-9157).
10(iii)(A)4 Group Life Insurance Plan and Accidental Death and
Dismemberment Benefits Plan for Outside Directors
of SNET as amended July 1, 1986 (Exhibit 10-E to
Form SE dated 3/23/87-1, File No. 1-9157).
10(iii)(A)5 SNET Pension Benefit Plan as amended November 1,
1991 (Exhibit 10-A to Form SE dated 3/20/92, File
No. 1-9157). Amendment dated December 8, 1993
(Exhibit 10 (iii)(A)5 to 1993 Form 10-K dated
3/23/94, File No. 1-9157). Amendment dated
February 8, 1995 (Exhibit 10(iii)(A)5 to 1994 Form
10-K dated 3/10/95, File No. 1-9157). Amendments
effective December 13, 1995 and January 1, 1996 .
10(iii)(A)6 SNET Management Pension Plan as amended March 31,
1995. Amendments effective December 20, 1995
through April 1, 1996.
10(iii)(A)7 SNET Incentive Award Deferral Plan as amended
March 1, 1993 (Exhibit 10(iii)(A)7 to 1992 Form 10-K
dated 3/23/93, File No. 1-9157).
10(iii)(A)8 SNET Mid-Career Pension Plan as amended November
1, 1991 (Exhibit 10-D to Form SE dated 3/20/92,
File No. 1-9157). Amendment dated December 8,
1993 (Exhibit 10 (iii)(A)8 to 1993 Form 10-K dated
3/23/94, File No. 1-9157).
10(iii)(A)9 SNET Deferred Compensation Plan for Non-Employee
Directors as amended January 1, 1993 (Exhibit
10(iii)(A)9 to 1992 Form 10-K dated 3/23/93, File
No. 1-9157).
10(iii)(A)10 Change-in-Control Agreements (Exhibit 10-F to Form
SE dated 3/15/91, File No. 1-9157).
10(iii)(A)11 SNET 1986 Stock Option Plan as amended March 1,
1993 (Exhibit 10(iii)(A)11 to 1992 Form 10-K dated
3/23/93, File No. 1-9157).
10(iii)(A)12 SNET Retirement and Disability Plan for Non-
Employee Directors as amended April 14, 1993 (Exhibit
10(iii)(A)12 to 1993 Form 10-K dated 3/23/94, File No.
1-9157). Amendment dated January 1, 1994 (Exhibit
10(iii)(A)12 to 1994 Form 10-K dated 3/10/95, File No. .
1-9157).
10(iii)(A)13 SNET Non-Employee Director Stock Plan effective
January 1, 1994 (Exhibit 4.4 to Registration No.
33-51055, File No. 1-9157).
10(iii)(A)14 Description of SNET Executive Retirement Savings
Plan (Exhibit 10(iii)(A)14 to 1993 Form 10-K dated
3/23/94, File No. 1-9157).
10(iii)(A)15 SNET 1995 Stock Incentive Plan (Exhibit 4.4 to
Registration No. 33-64975, File No. 1-9157).
12 Computation of Ratio of Earnings to Fixed Charges.
13 Pages 22 through 47 of the registrant's combined
Proxy Statement and 1995 Annual Report to
Shareholders for the fiscal year ended December
31, 1995.
21 Subsidiaries of the Corporation.
23 Consent of Independent Accountants.
24a Power of Attorney.
24b Board of Directors' Resolution.
27 Financial Data Schedule.
99a Annual Report on Form 11-K for the plan year ended
December 31, 1995 for the SNET Management
Retirement Savings Plan will be filed as an
amendment prior to June 30, 1996.
99b Annual Report on Form 11-K for the plan year ended
December 31, 1995 for the SNET Bargaining Unit
Retirement Savings Plan will be filed as an
amendment prior to June 30, 1996.
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
TO
THE CONNECTICUT NATIONAL BANK,
Trustee
Indenture
Dated as of July 10, 1991
DEBT SECURITIES
<PAGE>
TABLE OF CONTENTS*
PAGE
Parties ........................................................... 1
Recitals of the Issuer ............................................ 1
ARTICLE ONE
DEFINITIONS
SECTION 1.01. Certain terms defined; other terms defined in Trust
Indenture Act of 1939, as amended, or by reference
therein in Securities Act of 1933, as amended, to
have meanings therein assigned ................... 1
Authenticating Agent ............................... 2
Board of Directors ................................. 2
Board Resolution ................................... 2
Business Day ....................................... 2
Commission ......................................... 2
Company ............................................ 2
Corporate Trust Office or principal office of the
Trustee .......................................... 2
Depository ......................................... 2
Event of Default ................................... 2
Global Security .................................... 2
Holder, Holder of Securities, securityholders or
Registered Holder ................................ 3
include ............................................ 3
Indenture .......................................... 3
Issuer or Company .................................. 3
Issuer Order ....................................... 3
Officers' Certificate .............................. 3
Opinion of Counsel ................................. 3
Outstanding ........................................ 3
Paying Agent ....................................... 4
person ............................................. 4
responsible officer ................................ 4
Security or Securities ............................. 4
Securities Register ................................ 4
Trust Indenture Act ................................ 4
Trustee ............................................ 4
SECTION 1.02. Other defined terms ................................ 4
* This Table of Contents shall not, for any purpose, be deemed to be
part of the Indenture or to have any bearing upon the interpretation of
any of its terms or provisions.
i
<PAGE>
ARTICLE TWO
SECURITY FORMS
PAGE
SECTION 2.01. Forms generally .................................... 4
SECTION 2.02. Form of Trustee's certificate of authentication .... 5
SECTION 2.03. Form of Trustee's certificate of authentication
by an Authenticating Agent ....................... 5
SECTION 2.04. Securities issuable in the form of Global Securities 5
ARTICLE THREE
THE SECURITIES
SECTION 3.01. Amount unlimited; issuable in series ............... 7
SECTION 3.02. Form and denominations ............................. 9
SECTION 3.03. Authentication, dating and delivery of Securities .. 10
SECTION 3.04. Execution of Securities ............................ 12
SECTION 3.05. Exchange of Securities ............................. 13
Registration of transfer of Securities to be
endorsed or accompanied instruments of transfer .. 13
Charges upon exchange or transfer of Securities .... 13
Restrictions on issue and registration of transfer
or exchange at time of redemption ................ 13
SECTION 3.06. Temporary Securities, if any ....................... 13
SECTION 3.07. Mutilated, destroyed, lost or stolen Securities .... 14
SECTION 3.08. Cancellation of surrendered Securities ............. 15
SECTION 3.09. Provisions of the Indenture and Securities for the
sole benefit of the parties and the
securityholders .................................. 15
SECTION 3.10. Computation of Interest ............................ 15
ARTICLE FOUR
COVENANTS OF THE ISSUER
SECTION 4.01. Payment of principal of (and premium, if any) and
interest on Securities ........................... 15
SECTION 4.02. Maintenance of office or agency for transfer,
exchange and payment of Securities ............... 15
SECTION 4.03. Not to secure indebtedness with lien or other
encumbrance on common stock of principal
subsidiaries ..................................... 16
SECTION 4.04. Not to dispose of common stock of principal
subsidiaries or to reduce ownership percentage
of a principal subsidiary below eighty percent ... 16
SECTION 4.05. Appointment to fill a vacancy in the office of
Trustee .......................................... 17
SECTION 4.06. (a) Duties of Paying Agent ......................... 17
(b) Company as Paying Agent ........................ 17
(c) Turnover to Trustee by Paying Agent or Company . 17
(d) Holdings sums in trust ......................... 17
SECTION 4.07. Written Statement to Trustee ....................... 18
ii
<PAGE>
ARTICLE FIVE
SECURITYHOLDERS' LISTS AND REPORTS BY THE ISSUER
AND THE TRUSTEE
PAGE
SECTION 5.01. Company to furnish Trustee information as to names
and addresses of securityholders ................. 18
SECTION 5.02. (a) Trustee to preserve information as to names and
addresses of securityholders ................... 18
(b) Trustee to make information as to names and
addresses of securityholders available to
"applicants" or mail communications to
securityholders in certain circumstances ....... 18
Procedure if Trustee elects not to make
information available to "applicants" .......... 19
(c) Company and Trustee not accountable for
disclosure of information ...................... 19
SECTION 5.03. (a) Annual and other reports to be filed by Company
with Trustee ................................... 19
(b) Additional information and reports to be filed
with Trustee and Commission .................... 20
(c) Summaries of information and reports to be
transmitted by Company to securityholders ...... 20
SECTION 5.04. (a) Trustee to transmit reports to securityholders . 20
(b) Trustee to transmit certain further reports to
securityholders ................................ 21
(c) Securityholders to be mailed reports ........... 21
(d) Copies of reports to be filed with stock
exchanges and Commission ....................... 21
ARTICLE SIX
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON
EVENT OF DEFAULT
SECTION 6.01. Events of Default defined .......................... 21
Acceleration of maturity upon Event of Default ..... 23
Waiver of default and rescission of declaration of
maturity ......................................... 24
Restoration of former position and rights .......... 24
SECTION 6.02. Covenant of Company to pay to Trustee upon demand
whole amount due on Securities on default in
payment of interest or principal (or premium,
if any) .......................................... 24
Trustee may recover judgment for whole amount due on
Securities on failure of Company to pay .......... 25
Filing of proof of claim by Trustee in bankruptcy,
reorganization, receivership, or other judicial
proceedings ...................................... 25
Rights of action and to assert claims may be enforced
by Trustee without possession of Securities ...... 26
Trustee may enforce rights vested in it by Indenture
by appropriate judicial proceedings .............. 26
SECTION 6.03. Application of moneys collected by Trustee ......... 26
SECTION 6.04. Limitation on suits by holders of Securities ....... 27
iii
<PAGE>
PAGE
SECTION 6.05. Remedies cumulative ................................ 27
Delay or omission in exercise of rights not a waiver
of default ....................................... 28
SECTION 6.06. Rights of holders of majority in principal amount of
Securities to direct Trustee and to waive defaults 28
SECTION 6.07. Trustee to give notice of defaults known to it, but
may withhold in certain circumstances ............ 28
SECTION 6.08. Requirement of an undertaking to pay costs in
certain suits under this Indenture or against the
Trustee .......................................... 29
ARTICLE SEVEN
CONCERNING THE TRUSTEE
SECTION 7.01. Upon Event of Default occurring and continuing,
Trustee shall exercise such powers vested in it,
and use same degree of care and skill in their
exercise, as a prudent man would use ............. 29
Trustee not relieved from liability for negligence
or wilful misconduct except as provided in this
Section .......................................... 30
(a) Prior to Event of Default and after the curing
of all Events of Default which may have occurred 30
(1) Trustee not liable except for performance
of duties specifically set forth ........... 30
(2) In absence of bad faith, Trustee may
conclusively rely on certificates or opinions
furnished it hereunder, subject to duty to
examine the same if specifically required to
be furnished to it ......................... 30
(b) Trustee not liable for error of judgment made in
good faith by responsible officer unless Trustee
negligent ...................................... 30
(c) Trustee not liable for action or non-action in
accordance with direction of holders of majority
in principal amount of Securities .............. 30
SECTION 7.02. Except as otherwise provided in Section 7.01:
(a) Trustee may rely on documents believed genuine
and properly signed or presented ............... 30
(b) Sufficient evidence by certain instruments
provided for ................................... 31
(c) Trustee may act on Opinion of Counsel .......... 31
(d) Trustee may require indemnity from
securityholders ................................ 31
(e) Trustee not liable for action in good faith
believed to be authorized ...................... 31
SECTION 7.03. Trustee not liable for recitals in Indenture or
in Securities .................................... 31
No representations by Trustee as to validity of
Indenture or of Securities ....................... 31
Trustee not accountable for use of Securities or
proceeds ......................................... 31
iv
<PAGE>
PAGE
SECTION 7.04. Trustee, Authenticating Agent, Paying Agent or
Securities registrar may own Securities .......... 31
SECTION 7.05. Moneys received by Trustee to be held in trust;
interest not payable except by agreement ......... 32
SECTION 7.06. Trustee entitled to compensation, reimbursement
and indemnity .................................... 32
Obligations to Trustee to be secured by lien prior
to Securities .................................... 32
SECTION 7.07. Right of Trustee to rely on certificate of officers
of Company where no other evidence specifically
prescribed ....................................... 32
SECTION 7.08. (a) Trustee acquiring conflicting interest to
eliminate conflict or resign ................... 33
(b) Notice to securityholders in case of failure to
comply with subsection (a) ..................... 33
(c) Securityholder may petition for Trustee removal 33
SECTION 7.09. Requirements of eligibility of Trustee ............. 33
SECTION 7.10. (a) Resignation of Trustee ......................... 33
(b) Removal of Trustee by Company or by court on
securityholder's application ................... 34
(c) Removal of Trustee by holders of majority in
principal amount of Securities ................. 34
(d) Time when resignation of removal of Trustee
effective ...................................... 34
SECTION 7.11. Acceptance by successor to Trustee ................. 34
Successor to be qualified and eligible ............. 35
Mailing of notice of succession of a Trustee ....... 35
SECTION 7.12. Successor to Trustee by merger, conversion,
consolidation or succession to business .......... 35
SECTION 7.13. Appointment and qualifications of Authenticating
Agent ............................................ 35
Succession of Authenticating Agent without further
act .............................................. 36
Resignation of Authenticating Agent or termination
of agency ........................................ 36
Compensation of Authenticating Agent ............... 36
ARTICLE EIGHT
CONCERNING THE HOLDERS OF SECURITIES
SECTION 8.01. (a) Form and effectiveness of securityholder action 36
(b) Proof of execution of instruments .............. 36
(c) Proof of holding of Securities ................. 37
SECTION 8.02. Who may be deemed owners of Securities ............. 37
SECTION 8.03. Securities owned by Company or controlled or
controlling companies disregarded for certain
purposes ......................................... 37
SECTION 8.04. Revocation of action by securityholder; action by
securityholder binds future holders .............. 37
v
<PAGE>
ARTICLE NINE
REDEMPTION OF SECURITIES
PAGE
SECTION 9.01. Redemption prices of Securities (as set forth
in form of Security) ............................. 38
SECTION 9.02. Giving of notice of redemption ..................... 38
Selection of Securities in case less than all
Securities to be redeemed ........................ 39
SECTION 9.03. When Securities called for redemption become due and
payable .......................................... 39
Securities redeemed in part ........................ 39
ARTICLE TEN
SUPPLEMENTAL INDENTURES
SECTION 10.01. Purposes for which supplemental indentures may be
entered into without consent of securityholders .. 39
SECTION 10.02. Modification of Indenture with consent of holders of
66 2/3% in principal amount of Securities ........ 41
SECTION 10.03. Effect of supplemental indentures .................. 42
Opinion of Counsel ................................. 42
SECTION 10.04. Securities may bear notation of changes by
supplemental indentures .......................... 42
ARTICLE ELEVEN
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 11.01. Consolidation and merger of Company and sale or
conveyance permitted ............................. 42
Assumption of obligations of Company by successor
corporation or transferee ........................ 42
SECTION 11.02. Rights and duties of successor corporation ......... 42
Appropriate changes may be made in form of
Securities ....................................... 43
Company may merge or acquire properties of other
corporations ..................................... 43
SECTION 11.03. Opinion of Counsel ................................. 43
ARTICLE TWELVE
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
SECTION 12.01. Satisfaction and discharge of Indenture ............ 43
SECTION 12.02. Application by Trustee of funds deposited for
payment of Securities ............................ 44
SECTION 12.03. Repayment of moneys held by Paying Agent ........... 44
SECTION 12.04. Repayment of moneys held by Trustee ................ 44
vi
<PAGE>
ARTICLE THIRTEEN
MISCELLANEOUS PROVISIONS
PAGE
SECTION 13.01. Immunity of incorporators, shareholders, officers
and directors .................................... 44
SECTION 13.02. Successors and assigns of Company bound by Indenture 45
SECTION 13.03. Acts of board, committee or officer of successor
corporation valid ................................ 45
SECTION 13.04. Surrender of powers by Company ..................... 45
SECTION 13.05. Required notices or demands may be served by mail .. 45
SECTION 13.06. Officers' Certificate and Opinion of Counsel to be
furnished upon applications or demands by the
Company .......................................... 45
Statements to be included in each certificate or
opinion with respect to compliance with a
condition or covenant ............................ 45
SECTION 13.07. Payments due on non-business days .................. 46
SECTION 13.08. Provisions required by Trust Indenture Act to
control .......................................... 46
SECTION 13.09. Indenture may be executed in counterparts .......... 46
SECTION 13.10. Governing law ...................................... 46
Testimonium ........................................................ 47
Signature and Seals ................................................ 47
Acknowledgments .................................................... 48
Form of Global Security ........................................ Exhibit A
Form of Note ................................................... Exhibit B
vii
<PAGE>
INDENTURE, dated as of July 10, 1991, between SOUTHERN NEW ENGLAND
TELECOMMUNICATIONS CORPORATION, a Connecticut corporation (hereinafter,
subject to Article Eleven, called the "Issuer" or the "Company"), having its
principal office at 227 Church Street, New Haven, Connecticut 06510, and THE
CONNECTICUT NATIONAL BANK, a national banking association (hereinafter,
subject to Article Seven, called the "Trustee").
Recitals of the Issuer
The Issuer has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its notes,
debentures or other evidences of indebtedness (hereinafter generally called
the "Securities"), to be issued in one or more series, authenticated and
delivered, as in this Indenture provided.
All things necessary have been done to make this Indenture a valid
agreement of the Issuer, in accordance with its terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the persons acquiring the same, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders of the
Securities or of the Securities of any series, without any priority of any
one Security or series over any other, except as otherwise expressly
provided herein, as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.01. The terms defined in this Section 1.01 (except as
otherwise expressly provided or unless the context otherwise requires) for
all purposes of this Indenture, including any indenture supplemental hereto,
have the respective meanings specified in this Section 1.01. All other
terms used in this Indenture which are defined in the Trustee Indenture Act
of 1939, as amended, or which are by reference therein defined in the
Securities Act of 1933, as amended, shall (except as herein otherwise
expressly provided or unless the context otherwise requires) have the
meanings assigned to such terms in said Trust Indenture Act and in said
Securities Act as in force at the date on which this Indenture was
originally executed (subject to Sections 10.01 and 10.02). All accounting
terms used herein and not expressly defined have the meanings assigned to
such terms in accordance with generally accepted accounting principles, and
the term "generally accepted accounting principles" means such accounting
principles as are applicable to the financial statement of the Issuer at the
time of any computation. The words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision. All references herein
to "Articles" or other subdivisions are to the corresponding Articles or
other subdivisions of this Indenture. The terms defined in this Article
have the meanings assigned to them in this Article and include the plural as
well as the singular.
1
<PAGE>
"Authenticating Agent" means, with respect to any series of Securities,
the agent of the Trustee, if any, with respect to that series of Securities,
which at the time shall be appointed and acting pursuant to Section 7.13.
"Board of Directors" means either the Board of Directors of the Issuer
or any committee of the Board or any other body designated by such Board as
duly authorized to act.
"Board Resolution" means a copy of a resolution certified by the
Secretary or any Assistant Secretary of the Issuer to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of
such certification, and delivered to the Trustee.
"Business Day" means, with respect to any Security, any day, other than
a Saturday or Sunday, that is not a day on which banking institutions are
authorized or required by law or regulation to be closed in The City of New
York or the State of Connecticut.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, or
if at any time after the date on which this Indenture was originally
executed such Commission is not existing and performing the duties assigned
to it under the Trust Indenture Act on such date or original execution, then
the body performing such duties at such time.
"Company": See "Issuer."
"Corporate Trust Office" or "principal office of the Trustee" or similar
term, means the principal office of the Trustee at which at any particular
time its corporate trust business shall be principally administered, which
office at the date hereof is located at 777 Main Street, Hartford,
Connecticut 06115, Attn. Corporate Trust Administration.
"Depository" means, with respect to the Securities of any series which,
in accordance with the determination of the Issuer, will be issued in whole
or in part in the form of one or more Global Securities, The Depository
Trust Company, New York, New York, another clearing agency or any successor
registered under the Securities Exchange Act of 1934, or other applicable
statute or regulation, which, in each case, shall be designated by the
Issuer pursuant to either Section 2.04 or 3.01. If at any time there is
more than one such person, "Depository" as used with respect to the
Securities of any such series means the Depository with respect to the
Securities of that series.
"Event of Default" means any event or condition specified as such in
Section 6.01, continued for the period of time, if any, therein designated.
"Global Security" means, with respect to all or any part of any series
of Securities, a Security executed by the Issuer and authenticated and
delivered by the Trustee to the Depository or pursuant to the Depository's
instruction, all in accordance with this Indenture and pursuant to an Issuer
Order, which shall be registered in the name of the Depository or its
nominee and the ownership of which will be registered in a "book-entry" or
other system maintained by the Depository.
2
<PAGE>
"Holder", "Holder of Securities", "securityholders" or "Registered
Holder" or other similar terms mean, with respect to a Security, the person
in whose name at the time such Security is registered in the Securities
Register (which terms, in the case of a Global Security, mean the
Depository, notwithstanding that the Depository maintains a "book-entry" or
other system for identification of ownership in respect of such Global
Security).
The term "include" (and other forms of such term) means "include,
without limitation."
"Indenture" means this instrument as originally executed and delivered
or, if amended or supplemented as herein provided, as so amended or
supplemented, and includes the forms and/or terms of particular series of
Securities established as contemplated hereunder.
"Issuer" or "Company" means Southern New England Telecommunications
Corporation, a Connecticut corporation, and, subject to Article Eleven, its
successors and assigns.
"Issuer Order" means a written order signed in the name of the Issuer by
the Chairman of the Board of Directors or a Vice Chairman of the Board of
Directors or its President or a Vice President and by its Treasurer or an
Assistant Treasurer.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board of Directors or a Vice Chairman of the Board of Directors or the
President or a Vice President and by the Comptroller, an Assistant
Comptroller, or any other accounting officer of the Issuer. Each such
certificate shall include the statements provided for in Section 13.06, if
and to the extent required by the provisions thereof.
"Opinion of Counsel" means an opinion in writing signed by legal counsel
who may be an employee of or counsel to the Issuer or who may be other
counsel satisfactory to the Trustee. Each such opinion shall include the
statements provided for in Section 13.06, if and to the extent required
thereby.
"Outstanding" (subject to Section 8.03) means, with reference to
Securities as of any particular time, all Securities authenticated and
delivered under this Indenture, except
(a) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or redemption
of which moneys in the necessary amount shall have been deposited in
trust with the Trustee or with any Paying Agent (other than the Issuer)
or shall have been set aside and segregated in trust by the Issuer (if
the Issuer shall act as its own Paying Agent); provided that, if such
Securities, or portions thereof, are to be redeemed, notice of such
redemption shall have been given as in Article Nine provided, or
provision satisfactory to the Trustee shall have been made for giving
such notice; and
3
<PAGE>
(c) Securities in substitution for which other Securities shall have
been authenticated and delivered, or which shall have been paid,
pursuant to the terms of Section 3.07, unless proof satisfactory to the
Trustee is presented that any such Security is held by a Holder as to
whom such Security is a valid, binding and legal obligation of the
Issuer.
"Paying Agent" means any person authorized by the Issuer to pay the
principal of, or premium, if any, or interest, if any, on, any Securities on
behalf of the Issuer.
The term "person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
The term "responsible officer" means, with respect to the Trustee, any
corporate trust officer, trust officer, vice president or assistant vice
president in its Corporate Trust Office, or any other officer or assistant
officer of the Trustee customarily performing functions similar to those
performed by the persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred because of
his knowledge of and familiarity with the particular subject.
"Security" or "Securities" has the meaning stated in the recitals of
this Indenture.
"Securities Register" means the register or registers kept by the Issuer
as provided in Section 3.05.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
(except as otherwise provided herein) at the date on which this Indenture
was originally executed.
"Trustee" means the person identified as "Trustee" in the first
paragraph hereof until a successor trustee becomes such pursuant to the
provisions of Article Seven hereof, and then shall mean such successor
trustee.
SECTION 1.02. Certain other terms are defined in Article Seven and other
Articles of this Indenture.
ARTICLE TWO
SECURITY FORMS
SECTION 2.01. The Securities of each series shall be in substantially
such form as shall be established pursuant to Section 3.01, in each case
with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as the Issuer may deem appropriate and as are
not contrary to the provisions of this Indenture, or as may be required
to comply with any law or with any rules made pursuant thereto or with any
rules of any securities exchange or of any automated quotation system, or to
4
<PAGE>
conform to usage, all as determined by the officers executing such
Securities, as conclusively evidenced by their execution of the Securities.
The definitive Securities of each series shall be printed, lithographed
or engraved on steel-engraved borders, or may be produced in any other
manner, all as determined by the officers executing such Securities, as
conclusively evidenced by their execution of such Securities, subject, with
respect to the Securities of any series, to the rules of any securities
exchange or automated quotation system on which the Securities of such
series are listed or quoted and (with respect to Global Securities of any
series) to the rules of the Depository.
SECTION 2.02. The Trustee's certificate of authentication on all
Securities shall be in substantially the following form:
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
THE CONNECTICUT NATIONAL BANK,
as Trustee
By
Authorized Signatory
SECTION 2.03. If at any time there shall be an Authenticating Agent
appointed with respect to any series of Securities, then the Trustee's
certificate of authentication by such Authenticating Agent on all Securities
of each such series shall be in substantially the following form:
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
THE CONNECTICUT NATIONAL BANK
as Trustee
By (NAME OF AUTHENTICATING
AGENT),
Authenticating Agent
By
Authorized Signatory
SECTION 2.04. (a) If the Issuer shall establish pursuant to Section 3.01
that the Securities of a particular series are to be issued in whole or in
part as one or more Global Securities, then the Issuer shall execute, and
the Trustee shall, in accordance with Section 3.03 and the Issuer Order
delivered to the Trustee thereunder, authenticate and deliver, one or more
Global Securities, substantially in the form of Exhibit A hereto or in such
form as the Issuer may otherwise establish, which (i) shall represent an
aggregate principal amount equal to the aggregate principal amount of the
Outstanding Securities of such series to be represented by one or more
Global Securities, (ii) shall be registered in the name of the Depository or
its nominee, (iii) shall be delivered by the Trustee to the Depository or
pursuant to the Depository's instruction and (iv) shall bear a legend sub-
5
<PAGE>
stantially to the following effect: "Except as otherwise provided in
Section 2.04 of the Indenture, this Security may be transferred, in whole
but not in part, only to another nominee of the Depository or to a successor
Depository or to a nominee of such successor Depository."
(b) Notwithstanding any provision of Section 3.05, subject to the
provisions of paragraph (c) below, any Global Security of a series may be
transferred, in whole but not in part, and in the manner provided in Section
3.05, only to another nominee of the Depository for such series, or to a
successor Depository for such series selected or approved by the Issuer or
to a nominee of such successor Depository.
(c) If at any time the Depository for Securities of a series notifies
the Issuer that it is unwilling or unable to continue as Depository for
Securities of such series or if at any time the Depository shall no longer
be registered or in good standing under the Securities Exchange Act of 1934,
or other applicable statute or regulation, and a successor Depository is not
appointed by the Issuer within 90 days after the Issuer received such notice
or becomes aware of such condition, as the case may be, this Section 2.04
shall no longer be applicable to the Securities of such series and the
Issuer will execute, and the Trustee, upon receipt of an Issuer Order for
the authentication and delivery of individual Securities of such series,
will authenticate and deliver, Securities of such series, in authorized
denominations, and in an aggregate principal amount equal to the aggregate
principal amount of the Global Security or Global Securities of such series
in exchange for such Global Security or Global Securities, provided,
however, that no such exchange may occur during a period beginning at the
opening of business 15 days before any selection of Securities of such
series for redemption and ending on the relevant date fixed for redemption.
The Issuer may at any time determine that Securities of any series shall
no longer be represented by one or more Global Securities and that the
provisions of this Section 2.04 shall no longer apply to the Securities of
such series. In such event the Issuer will execute, and the Trustee, upon
receipt of an Issuer Order for the authentication and delivery of individual
Securities of such series, will authenticate and deliver, Securities of such
series, in authorized denominations, and in an aggregate principal amount
equal to the aggregate principal amount of the Global Security or Global
Securities of such series in exchange for such Global Security or Global
Securities, provided, however, that no such exchange may occur during a
period beginning at the opening of business 15 days before any selection of
Securities of such series for redemption and ending on the relevant date
fixed for redemption.
If specified by the Issuer pursuant to Section 3.01 with respect to a
series of Securities, the Depository for such series of Securities may
surrender a Global Security for such series of Securities in exchange in
whole or in part for individual Securities of such series on such terms as
are acceptable to the Issuer as evidenced by an Issuer Order and such
Depository. Thereupon, the Issuer shall execute, and the Trustee shall
authenticate and deliver, without service charge,
(i) to each person specified by such Depository a new individual
Security or Securities of the same series, of any authorized denomina-
6
<PAGE>
tion as requested by such person in aggregate principal amount equal to
and in exchange for such person's beneficial interest in the Global
Security; and
(ii) to such Depository a new Global Security in a denomination
equal to the difference, if any, between the principal amount of the
surrendered Global Security and the aggregate principal amount of
individual Securities delivered to Holders thereof.
In any exchange provided for in any of the preceding paragraphs of this
Section 2.04(c), the Issuer will execute, and the Trustee will authenticate
and deliver, individual Securities in registered form in authorized
denominations.
Upon the exchange of a Global Security for individual Securities, such
Global Security shall be cancelled by the Trustee. Individual Securities
issued in exchange for a Global Security pursuant to this Section shall be
registered in such names and in such authorized denominations as the
Depository for such Global Security, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the Trustee.
The Trustee shall deliver such Securities to the persons in whose names such
Securities are so registered.
ARTICLE THREE
THE SECURITIES
SECTION 3.01. The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in, or pursuant to, the authority granted in a resolution of the
Board of Directors (delivered to the Trustee in the form of a Board
Resolution) or established in one or more indentures supplemental hereto,
prior to the issuance of Securities of any series, except as provided in
this Section 3.01:
(1) the form of the Securities of any series, which shall be
substantially in the form of Exhibit B hereto or in such other form as
the Issuer may establish for Securities that are issuable other than as
Global Securities;
(2) the title of the Securities of the series (which shall
distinguish the Securities of the series from all other Securities);
(3) any limit upon the aggregate principal amount of the Securities
of the series that may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon
registration or transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to Section 2.04, 3.05, 3.06, 3.07 and
9.03);
(4) the date or dates on which the Securities of such series may be
issued;
7
<PAGE>
(5) the date or dates, which may be serial, on which the principal
of, and premium, if any, on, the Securities of such series are payable;
(6) the rate or rates, or the method of determination thereof, at
which the Securities of such series shall bear interest, the date or
dates from which such interest shall accrue, the interest payment dates
on which such interest shall be payable and the record dates, if other
than as set forth in Section 3.02, for the determination of Holders to
whom interest is payable;
(7) the place or places where the principal of, and premium, if any,
and interest on, the Securities of the series shall be payable (if other
than provided in Section 4.02);
(8) the provisions, if any, establishing the price or prices at
which, the period or periods within which and the terms and conditions
upon which Securities of the series may be redeemed, in whole or in
part, at the option of the Issuer, pursuant to any sinking fund or
otherwise;
(9) the obligation, if any, of the Issuer to redeem, purchase or
repay Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof and the price or prices
at which, and the period or periods within which, and the terms and
conditions upon which, Securities of the series shall be redeemed,
purchased or repaid, in whole or in part, pursuant to such obligation;
(10) if other than denominations of $1,000, and any integral
multiple thereof, the denominations in which Securities of the series
shall be issuable;
(11) any Events of Default or restrictive covenants provided for
with respect to the Securities of the series, if not set forth herein;
(12) if other than the rate of interest stated in the title of the
Securities of the series, the applicable rate;
(13) if other than as set forth in Section 12.01 hereof, provisions
for the satisfaction and discharge of the Securities of said series and
this Indenture;
(14) any trustees, authenticating or paying agents, transfer agents
or registrars with respect to the Securities of the series;
(15) whether the Securities of the series are issuable in whole or
in part as one or more Global Securities and, in such case, the identity
of the Depository for such Global Security or Global Securities;
(16) if the amount of payment of principal of, and premium, if any,
or interest, on, the Securities of the series may be determined with
reference to an index, formula or other method, the manner in which such
amounts shall be determined; and
(17) any other terms of the series (which terms shall not be
contrary to the provisions of this Indenture).
8
<PAGE>
With respect to any Securities (and without limiting the generality of
the foregoing provisions of this Section 3.01), such Board Resolution or
indenture supplemental hereto may provide general terms or parameters and
may provide that the specific terms of particular Securities, and the
persons authorized to determine such terms or parameters, may be determined
in accordance with or pursuant to the Issuer Order referred to in Section
3.03.
All Securities of any one series shall be substantially identical except
as to denomination and except as may otherwise be provided in, or pursuant
to, the authority granted in such Board Resolution or in any such indenture
supplemental hereto.
SECTION 3.02. In the absence of any specification pursuant to Section
3.01 with respect to the Securities of any series, the Securities of such
series shall be issuable as registered Securities without coupons and in
denominations of $1,000 and any integral multiple thereof.
Except as otherwise provided pursuant to Section 3.01 with respect to
the series of which such Security is a part, each Security shall be dated
the date of its authentication, and shall bear interest from the applicable
date, and payable semiannually on the dates specified in the supplemental
indenture, Issuer Order or Board Resolution relating to such series or as
specified in such Security.
The person in whose name any Security of any series is registered at the
close of business on any record date applicable to a particular series with
respect to any interest payment date shall be entitled to receive the
interest payable on such interest payment date notwithstanding the
cancellation of such Security upon any transfer or exchange thereof
subsequent to such record date and prior to such interest payment date, and,
in the case of a Security issued between a record date and the interest
payment date relating to such record date, if provided for in the
supplemental indenture, Issuer Order or Board Resolution pursuant to Section
3.01 or as specified in such Security, the person to whom such Security
shall have been originally issued shall be entitled to receive interest for
the period beginning on the date of issue and ending on such initial
interest payment date; provided, however, that if and to the extent the
Issuer shall default in the payment of interest due on an interest payment
date, such defaulted interest shall be paid to the persons in whose names
the Securities are registered at the close of business on a record date
established for such payment by notice by or on behalf of the Issuer to the
Holders of the Securities mailed by first class mail not less than 15 days
prior to such record date to their last addresses as they shall appear upon
the Securities Register, such record date to be not less than 5 days
preceding the date of payment of such defaulted interest. Except as
otherwise specified as contemplated by Section 3.01 for Securities of a
particular series, the term "record date" as used with respect to any
interest payment date shall mean, if such interest payment date is the first
day of a calendar month, the fifteenth day of the preceding calendar month
and shall mean, if such interest payment date is the fifteenth day of a
calendar month, the first day of such calendar month unless the record date
as so determined would not be a Business Day, in which event the Business
Day next preceding. At the option of the Issuer, payment of interest on any
9
<PAGE>
Security may be made by check mailed to the address of the person entitled
thereto (which shall be the Depository in the case of Global Securities)
as such address shall appear in the Securities Register. The Issuer and the
Trustee understand that interest on any Global Securities will be disbursed
or credited by the Depository to the persons having ownership interests in
respect thereof pursuant to a "book-entry" or other system maintained by the
Depository.
SECTION 3.03. At any time and from time to time after the original
execution and delivery of this Indenture, the Issuer may deliver Securities
of any series, executed by the Issuer, to the Trustee for authentication.
Except as otherwise provided in this Article Three, the Trustee shall
thereupon authenticate and deliver, or cause to be authenticated and
delivered, said Securities to or upon an Issuer Order, without any further
action by the Issuer; provided, however, that the Trustee shall authenticate
and deliver Securities of such series for original issue from time to time
in the aggregate principal amount established for such series pursuant to
such procedures, acceptable to the Trustee, as may be specified from time to
time by an Issuer Order. The maturity dates, original issue dates, interest
rates and any other terms of the Securities of such series shall be
determined by or pursuant to such Issuer Order and procedures.
If provided for in such procedures, such Issuer Order may authorize
authentication and delivery pursuant to oral or electronic instructions from
the Issuer or its duly authorized agent, which instructions shall be
promptly confirmed in writing.
In authenticating such Securities and accepting the responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive, prior to the initial authentication of such Securities,
and (subject to Section 7.01) shall be fully protected in relying upon:
(1) a Board Resolution relating thereto;
(2) an executed supplemental indenture, if any, relating thereto;
(3) an Officers' Certificate which shall state that all conditions
precedent provided for in this Indenture relating to the issuance of
such Securities have been complied with, that no Event of Default with
respect to any series of Securities has occurred and is continuing and
that the issuance of such Securities does not constitute and will not
result in (i) any Event of Default or any event or condition, which,
upon the giving of notice or the lapse of time or both, would become an
Event of Default or (ii) any default under the provisions of any other
instrument or agreement by which the Company is bound; and
(4) an Opinion of Counsel, which shall state:
(a) that the forms of such Securities have been duly authorized
by the Issuer and have been established in conformity with the
provisions of this Indenture;
(b) that the terms of such Securities have been duly authorized
by the Issuer and have been established in conformity with the
provisions of this Indenture;
10
<PAGE>
(c) that such Securities when authenticated and delivered by the
Trustee and issued and delivered by the Issuer in the manner and
subject to any conditions specified in such Opinion of Counsel, will
have been duly issued under this Indenture and will constitute valid
and legally binding obligations of the Company, entitled to the
benefits provided by this Indenture, and enforceable in accordance
with their terms, subject, as to enforcement, to such matters as
such opinion of counsel shall specify;
(d) that the Issuer has the corporate power to issue such
Securities and has duly taken all necessary corporate action with
respect to such issuance;
(e) that the issuance of such Securities will not contravene the
charter or by-laws of the Issuer or result in any violation of any
of the terms or provisions of any law or regulation or of any
indenture, mortgage or other instrument or agreement known to such
counsel by which the Issuer is bound; and
(f) that all laws and requirements in respect of the execution
and delivery by the Issuer of the Securities, and the related
supplemental indenture, if any, have been complied with and that
authentication and delivery of such Securities and the execution and
delivery of the related supplemental indenture, if any, by the
Trustee will not violate the terms of the Indenture;
provided, however, that, with respect to Securities of a series issued on a
periodic basis, the Trustee shall be entitled to receive such Opinion of
Counsel only once at or prior to the time of the first authentication of
Securities of such series and that the opinions described in clauses (b) and
(c) above may state, respectively,
(x) that, when the terms of such Securities shall have been
established pursuant to an Issuer Order or pursuant to such procedures
as may be specified from time to time by an Issuer Order, all as
contemplated by and in accordance with a Board Resolution or an
Officers' Certificate pursuant to a Board Resolution or supplemental
indenture, as the case may be, such terms will have been duly authorized
by the Issuer and will have been established in conformity with the
provisions of this Indenture; and
(y) that such Securities, when (1) executed by the Issuer, (2)
completed, authenticated and delivered by the Trustee in accordance with
this Indenture, (3) issued and delivered by the Issuer and (4) paid for,
all as contemplated by and in accordance with the aforesaid Issuer Order
or specified procedures, as the case may be, will have been duly issued
under this Indenture and will constitute valid and legally binding
obligations of the Issuer, entitled to the benefits provided by the
Indenture, and enforceable in accordance with the terms, subject, as to
enforcement, to such matters as such opinion of counsel shall specify.
Notwithstanding the provisions of Section 3.01 and of this Section 3.03,
if all the Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Board Resolution or
supplemental indenture otherwise required pursuant to Section 3.01 or the
11
<PAGE>
Issuer Order, Officers' Certificate, Opinion of Counsel and other documents
required pursuant to this Section 3.03 at or prior to the time of
authentication of each Security of such series if such documents are
delivered at or prior to the time of authentication upon original issuance
of the first Security of such series to be issued; provided, however, that
any subsequent request by the Issuer to the Trustee to authenticate
Securities of such series shall constitute a representation and warranty by
the Issuer that as of the date of such request the statements made in the
Officers' Certificate delivered pursuant to Section 3.03(3) shall be true
and correct on the date thereof as if made on and as of the date thereof.
In connection with the authentication and delivery of Securities of a series
subject to issuance on a periodic basis, the Trustee shall be entitled to
assume that the Issuer's instructions to authenticate and deliver such
Securities do not violate any rules, regulations or orders of any
governmental agency or commission having jurisdiction over the Issuer.
The Trustee shall have the right to decline to authenticate and deliver
any Securities under this Section if the issuance of such Securities
pursuant to this Indenture will materially affect the Trustee's own rights,
duties or immunities under the Securities and this Indenture.
If any Security shall have been authenticated and delivered hereunder
but never issued and sold by the Issuer, and the Issuer shall deliver such
Security to the Trustee for cancellation together with a written statement
(which need not comply with Section 13.06 and need not be accompanied by an
Opinion of Counsel) stating that such Security has never been issued and
sold by the Issuer, for all purposes of this Indenture such Security shall
be deemed never to have been authenticated and delivered hereunder and shall
never be entitled to the benefits hereof.
SECTION 3.04. The Securities shall be signed on behalf of the Issuer by
its Chairman of the Board of Directors or a Vice Chairman of the Board of
Directors or its President or a Vice President and by its Treasurer or an
Assistant Treasurer or its Secretary or an Assistant Secretary, under its
corporate seal which may, but need not, be attested. Each such signature
upon the Securities may be in the form of a facsimile signature of any such
officer and may be imprinted or otherwise reproduced on the Securities and
for that purpose the Issuer may adopt and use the facsimile signature of any
person who has been or is or shall be such officer, and in case any such
officer of the Issuer signing any of the Securities shall cease to be such
officer before the Securities so signed shall have been authenticated and
delivered by the Trustee or by the Authenticating Agent on its behalf, or
disposed of by the Issuer, such Securities nevertheless may be authenticated
and delivered or disposed of as though such person had not ceased to be such
officer of the Issuer. The seal of the Issuer may be in the form of a
facsimile thereof and may be impressed, affixed, imprinted or otherwise
reproduced on the Securities.
Only such Securities as shall bear thereon a certificate of
authentication, substantially in the form hereinbefore recited, duly
executed by the Trustee or by the Authenticating Agent on its behalf shall
be entitled to the benefits of this Indenture or be valid or obligatory for
any purpose. Such certificate by the Trustee or by the Authenticating Agent
on its behalf upon any Security executed by the Company shall be conclusive
12
<PAGE>
evidence that the Security so authenticated has been duly authenticated and
delivered hereunder and that the holder is entitled to the benefits of this
Indenture.
SECTION 3.05. Subject, with respect to Global Securities, to Section
2.04, Securities of any series may be exchanged for a like aggregate
principal amount of Securities of the same series and having the same terms
but in other authorized denominations. Securities to be exchanged shall be
surrendered at the office or agency to be maintained by the Issuer as
provided in Section 4.02 (or at either of said offices or agencies if more
than one) and the Issuer shall execute and register and the Trustee or the
Authenticating Agent on its behalf shall authenticate and deliver in
exchange therefor the Security or Securities which the securityholder making
the exchange shall be entitled to receive.
The Issuer shall keep, at the office or agency to be maintained as
provided in Section 4.02 (or at least one of said offices or agencies, if
more than one), a register or registers for each series of Securities issued
hereunder (hereinafter collectively referred to as the "Securities
Register") in which, subject to such reasonable regulations as it may
prescribe, the Issuer shall, subject to the provisions of Section 2.04,
register Securities of such series and shall register the transfer of
Securities of such series as in this Article Three provided. The Securities
Register shall be in written form or in any other form capable of being
converted into written form within a reasonable time. At all reasonable
times the information contained in such register or registers shall be
available for inspection by the Trustee. Subject to the provisions of
Section 2.04, upon due presentment for registration of transfer of any
Security of any series at such office or agency, the Issuer shall execute
and register and the Trustee or the Authenticating Agent on its behalf shall
authenticate and deliver in the name of the transferee or transferees a new
Security or Securities of the same series for an equal aggregate principal
amount.
All Securities presented for registration of transfer or for exchange,
redemption or payment shall (if so required by the Issuer or the Trustee) be
duly endorsed by, or be accompanied by a written instrument or instruments
of transfer in form satisfactory to the Issuer duly executed by, the Holder
or his attorney duly authorized in writing.
The Issuer may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any
transfer or exchange of Securities. No service charge shall be made for any
such transaction.
The Issuer shall not be required (a) to issue, register the transfer of
or exchange any Securities of any series for a period of 15 days next
preceding any selection of Securities to be redeemed, or (b) to register the
transfer of or exchange any Securities selected, called or being called for
redemption as a whole or the portion being redeemed of any Securities
selected, called or being called for redemption in part.
SECTION 3.06. Pending the preparation of definitive Securities of any
series, the Issuer may execute and register and the Trustee shall authenti-
13
<PAGE>
cate and deliver temporary Securities for such series (printed,
lithographed, typewritten or otherwise reproduced). Temporary Securities of
any series may be of any denomination and substantially in the form of the
definitive Securities of such series in lieu of which they are issued, but
with such omissions, insertions and variations as may be appropriate for
temporary Securities, all as may be determined by the Issuer. Temporary
Securities may contain such reference to any provisions of this Indenture as
may be appropriate. Every temporary Security shall be executed and
registered by the Issuer and be authenticated by the Trustee or by the
Authenticating Agent on its behalf upon the same conditions and in
substantially the same manner, and with like effect, as the definitive
Securities. Without unreasonable delay the Issuer shall execute and
register and shall furnish definitive Securities of such series and
thereupon temporary Securities of such series may be surrendered in exchange
therefore at the office or agency to be maintained by the Company as
provided in Section 4.02 (or at any of said offices or agencies, if more
than one), and the Trustee or the Authenticating Agent on its behalf shall
authenticate and deliver in exchange for such temporary Securities a like
aggregate principal amount of definitive Securities of authorized
denominations of the same series. Until so exchanged, the temporary
Securities of any series shall be entitled to the same benefits under this
Indenture as definitive Securities of such series.
SECTION 3.07. In case any temporary or definitive Security of a series
shall become mutilated or be destroyed, lost or stolen, the Issuer in its
discretion may execute and register, and upon its request, the Trustee or
the Authenticating Agent shall authenticate and deliver, a new Security of
such series, bearing a number not contemporaneously outstanding, in exchange
and substitution for the Security so mutilated, or in lieu of and
substitution for the Security so destroyed, lost or stolen. In every case
the applicant for a substituted Security shall furnish to the Issuer and the
the Trustee such security or indemnity as may be required by them to save
each of them harmless, and, in every case of destruction, loss or theft, the
applicant shall also furnish to the Issuer and to the Trustee evidence to
their satisfaction of the destruction, loss or theft of such Security and of
the ownership thereof. The Trustee may authenticate any such substituted
Security and deliver the same upon the written request or authorization of
any officer of the Company.
Upon the issuance of any substituted Security, the Issuer may require
the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
connected therewith and in addition a further sum not exceeding ten dollars
for each Security issued in substitution.
In case any Security of a series which has matured or is about to mature
shall become mutilated or be destroyed, lost or stolen, the Issuer may,
instead of issuing a substitute Security of such series for such Security,
pay or authorize the payment of such Security (without surrender thereof
except in the case of a mutilated Security) if the applicant for such
payment shall furnish to the Issuer such security or indemnity as it may
require to save it and the Trustee harmless, and, in every case of
destruction, loss or theft, evidence to the satisfaction of the Issuer and
the Trustee of the destruction, loss or theft of such Security and of the
ownership thereof.
14
<PAGE>
Every substituted Security of any series issued pursuant to the
provisons of this Section 3.07 by virtue of the fact that any such Security
is destroyed, lost or stolen shall, with respect to such Security,
constitute an additional contractual obligation of the Issuer, whether or
not the destroyed, lost or stolen Security shall at any time be enforceable
by anyone, and shall be entitled to all the benefits of this Indenture
equally and proportionately with any and all other Securities of such series
issued under this Indenture. All Securities shall be held and owned upon
the express condition that (to the extent lawful) the foregoing provisions
shall be exclusive with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities and shall preclude any and all other
rights or remedies, notwithstanding any law or statute now existing or
hereafter enacted to the contrary with respect to the replacement or payment
of negotiable instruments or other securities without their surrender.
SECTION 3.08. All securities surrendered for payment, redemption,
exchange or registration of transfer shall, if surrendered to the Issuer,
the Authenticating Agent or any Paying Agent, be delivered to the Trustee
for cancellation or, if surrendered to the Trustee, be cancelled by it, and
no Securities shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Indenture. On request of the Issuer, the
Trustee shall deliver to the Issuer cancelled Securities held by the
Trustee. As directed by an Issuer Order, the Trustee may destroy cancelled
Securities and deliver a certificate of such destruction to the Issuer. If
the Issuer shall acquire any of the Securities, such acquisition shall not
operate as a redemption or satisfaction of the indebtedness represented by
such Securities unless and until the same are delivered to the Trustee or
surrendered to the Trustee for cancellation.
SECTION 3.09. Nothing in this Indenture or in the Securities of any
series, expressed or implied, shall give or be construed to give to any
person other than the parties hereto and their successors and the Holders of
the Securities of any series any legal or equitable right, remedy or claim
under or in respect of this Indenture, or under any covenant, condition or
provision herein contained, all the covenants, conditions and provisions
hereof being for the sole benefit of the parties hereto and their successors
and of the Holders of the Securities of any series.
SECTION 3.10. Except as otherwise specified as contemplated by Section
3.01 for Securities of any series, interest on the Securities of each series
shall be computed on the basis of a 360-day year of twelve 30-day months.
ARTICLE FOUR
COVENANTS OF THE ISSUER
SECTION 4.01. The Issuer will duly and punctually pay or cause to be
paid the principal of (and premium, if any) and interest on each of the
Securities of any series, to or upon the written order of the holders
thereof, at the place or places, at the respective times and in the manner
provided in such Securities and in this Indenture.
SECTION 4.02. As long as any of the Securities of any series remain
Outstanding, the Issuer will maintain an office or agency in the Borough of
15
<PAGE>
Manhattan, The City of New York, State of New York (and at such other place,
if any, as shall be specified in the form of Security as a place for payment
of principal and interest), where the Securities of such series may be
presented for registration of transfer and for exchange as in this Indenture
provided, and where notices and demands to or upon the Issuer in respect of
the Securities of such series or of this Indenture may be served and where
the Securities of such series may be presented for payment. The Issuer will
give to the Trustee notice of the location of each such office and of any
change in the location thereof. Unless otherwise specified in accordance
with Section 3.01, the Issuer hereby initially designates Shawmut Trust
Company, 40 Broad Street, New York, NY 10004 as the office to be maintained
for each such purpose. In case the Issuer shall fail to maintain any such
office or shall fail to give such notice of the location or of any change in
the location thereof, presentations may be made and demands may be served at
the Corporate Trust Office of the Trustee.
SECTION 4.03. The Issuer will not issue, assume, incur or guarantee any
indebtedness for borrowed money secured by a mortgage, pledge, lien or other
encumbrance, directly or indirectly, on any of the common stock of a
principal subsidiary (as defined in Section 4.04 hereof) unless the
Outstanding Securities and, if the Issuer so elects, any other indebtedness
of the Issuer ranking on a parity with the Outstanding Securities, shall be
secured equally and ratably with, or prior to, such secured indebtedness for
borrowed money so long as it is outstanding.
SECTION 4.04. The Issuer will not, and will not permit a principal
subsidiary (as defined in this Section 4.04) to, issue, sell, assign,
transfer or otherwise dispose of, directly or indirectly, any of the common
stock of such principal subsidiary (except to the Issuer or for the purpose
of qualifying directors); provided, however, that this covenant shall not
apply if (i) the entire common stock of such principal subsidiary then owned
by the Issuer is disposed of in a single transaction, or in a series of
related transactions, for a consideration consisting of cash or other
property which is at least equal to the fair value of such common stock, as
determined in good faith by the Board of Directors; or (ii) the issuance,
sale, assignment transfer or other disposition is required to comply with
the order of a court or regulatory authority of competent jurisdiction,
other than an order issued at the request of the Issuer or such principal
subsidiary; or (iii) after giving effect to the issuance, sale, assignment,
transfer or other disposition, the Issuer would own directly or indirectly
at least 80% of the issued and outstanding common stock of such principal
subsidiary and such issuance, sale, assignment, transfer or other
disposition is made for a consideration consisting of cash or other property
which is at least equal to the fair value of such common stock, as
determined in good faith by the Board of Directors.
For purposes of Section 4.03 and Section 4.04 of this Article IV, a
"principal subsidiary" is any subsidiary of the Issuer whose consolidated
tangible assets comprise in excess of 25% of consolidated tangible assets of
the Issuer and its consolidated subsidiaries. "Consolidated tangible
assets" with respect to any entity and its subsidiaries means the amount at
which the assets, other than goodwill, patents, trademarks, and other assets
classified as intangible assets in accordance with generally accepted
accounting principles, would be shown on its consolidated balance sheet at
16
<PAGE>
such time. A "subsidiary" of the Issuer is a corporation of which a
majority of the outstanding shares of stock of each class having ordinary
voting power is owned by the Issuer and/or by one or more subsidiaries of
the Issuer.
SECTION 4.05. The Issuer, whenever necessary to avoid or fill a vacancy
in the office of Trustee, will appoint, in the manner provided in Section
7.10, a Trustee, so that there shall at all times be a Trustee hereunder.
SECTION 4.06. (a) Whenever the Issuer shall appoint a Paying Agent other
than the Trustee with respect to the Securities of any series, it will cause
such Paying Agent to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the
provisions of this Section 4.06,
(1) that it will hold all sums received by it as such Agent for the
payment of the principal of (and premium, if any) or interest on the
Securities of such series (whether such sums have been paid to it by the
Issuer or by any other obligor on the Securities of such series) in
trust for the benefit of the respective Holders of the Securities of
such series entitled thereto and will notify the Trustee of the receipt
of sums to be so held,
(2) that it will give the Trustee notice of any failure by the
Issuer (or by any other obligor on the Securities of such series) to
make any payment of the principal of (or premium, if any) or interest on
the Securities of such series when the same shall be due and payable, and
(3) at any time during the continuance of any failure referred to in
clause (2) above upon the written request of the Trustee, forthwith pay
to the Trustee all sums so held in trust by such Paying Agent.
(b) If the Issuer shall act as its own Paying Agent with respect to
the Securities of any series, it will, on or before each due date of the
principal of (and premium, if any) or interest on the Securities of such
series, set aside, segregate and hold in trust for the benefit of the
Holder of the Securities of such series entitled thereto a sum
sufficient to pay such principal (and premium, if any) or interest so
becoming due. The Issuer will promptly notify the Trustee of any
failure to take such action.
(c) Anything in this Section 4.06 to the contrary notwithstanding,
the Issuer may, at any time, for the purpose of obtaining a satisfaction
and discharge with respect to one or more or all series of Securities
hereunder, or for any other reason, pay or cause to be paid to the
Trustee all sums held in trust for any such series by the Issuer or any
Paying Agent hereunder as required by this Section 4.06, such sums to be
held by the Trustee upon the trusts herein contained.
(d) Anything in this Section 4.06 to the contrary notwithstanding,
the agreement to hold sums in trust as provided in this Section 4.06 is
subject to the provisions of Sections 12.03 and 12.04.
17
<PAGE>
SECTION 4.07. The Issuer will deliver to the Trustee, within 120 days
after the end of each fiscal year, a brief certificate (which need not
comply with Section 13.06), from the principal executive, financial or
accounting officer of the Issuer as to his or her knowledge of the Issuer's
compliance with all conditions and covenants under the Indenture (such
compliance to be determined without regard to any period of grace or
requirement of notice provided hereunder).
ARTICLE FIVE
SECURITYHOLDER LISTS AND REPORTS BY THE
ISSUER AND THE TRUSTEE
SECTION 5.01. The Issuer covenants and agrees that it will furnish or
cause to be furnished to the Trustee a list in such form as the Trustee may
reasonably require of the names and addresses of the Holders of the
Securities of each series;
(a) semiannually not more than 15 days after each record date for
the payment of interest on such Securities of such series, as specified
in such Securities, as of such record date, and
(b) at such other times as the Trustee may request in writing,
within 30 days after receipt by the Issuer of any such request, as of a
date not more than 15 days prior to the time such information is
furnished;
provided, however, that so long as the Trustee is the Securities registrar,
no such list need be provided.
SECTION 5.02. (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
Holders of each series of the Securities contained in the most recent list
furnished to it as provided in Section 5.01 and the names and addresses of
the Holders of the Securities of each series received by the Trustee in the
capacity of Securities registrar, if so acting. The Trustee may destroy any
list furnished to it as provided in Section 5.01 upon receipt of a new list
so furnished.
(b) In case three or more Holders of Securities (hereinafter referred to
as "applicants") apply in writing to the Trustee and furnish to the Trustee
reasonable proof that each such applicant has owned a Security of any series
for a period of at least six months preceding the date of such application,
and such application states that the applicants desire to communicate with
other Holders of Securities of a particular series (in which case at least
three of the applicants must all hold Securities of such series) or with
Holders of all Securities with respect to their rights under this Indenture
or under such Securities and is accompanied by a copy of the form of proxy
or other communication which such applicants propose to transmit, then the
Trustee shall, within five Business Days after the receipt of such
application, at its election, either
(i) afford to such applicants access to the information preserved at
the time by the Trustee in accordance with the provisions of subsection
(a) of this Section 5.02, or
18
<PAGE>
(ii) inform such applicants as to the approximate number of Holders
of Securities of such series or all Securities, as the case may be,
whose names and addresses appear in the information preserved at the
time by the Trustee, in accordance with the provisions of subsection (a)
of this Section 5.02, and as to the approximate cost of mailing to such
securityholders the form of proxy or other communication, if any,
specified in such application.
If the Trustee shall elect not to afford to such applicants access to
such information, the Trustee shall, upon the written request of such
applicants, mail to each Holder of Securities of such series or all Holders
of Securities, as the case may be, whose names and addresses appear in the
information preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 5.02 a copy of the form of
proxy or other communication which is specified in such request, with
reasonable promptness after a tender to the Trustee of the material to be
mailed and of payment, or provision for the payment, of the reasonable
expenses of mailing, unless within five days after such tender, the Trustee
shall mail to such applicants and file with the Commission, together with a
copy of the material to be mailed, a written statement to the effect that,
in the opinion of the Trustee, such mailing would be contrary to the best
interests of the Holders of Securities of such series or all Holders of
Securities, or would be in violation of applicable law. Such written
statement shall specify the basis of such opinion. If said commission,
after opportunity for a hearing upon the objections specified in the written
statement so filed, shall enter an order refusing to sustain any of such
objections or if, after the entry of an order sustaining one or more of such
objections, the Commission shall find, after notice and opportunity for
hearing, that all the objections so sustained have been met, and shall enter
an order so declaring, the Trustee shall mail copies of such material to all
such Holders of Securities with reasonable promptness after the entry of
such order and the renewal of such tender; otherwise, the Trustee shall be
relieved of any obligation or duty to such applicants respecting their
application.
(c) Each and every Holder of Securities, by receiving and holding the
same, agrees with the Issuer and the Trustee that neither the Issuer nor the
Trustee nor any Paying Agent shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the
Holders of Securities in accordance with the provisions of subsection (b) of
this Section 5.02, regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of
mailing any material pursuant to a request made under such subsection (b).
SECTION 5.03. The Issuer covenants:
(a) to file with the Trustee, within 15 days after the Issuer is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as said Commission may from
time to time by rules and regulations prescribe) which the Issuer may be
required to file with the Commission pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934; or, if the Issuer is not
required to file information, documents or reports pursuant to either of
19
<PAGE>
such Sections, then to file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by
said Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of
the Securities Exchange Act of 1934 in respect of a security listed and
registered on a national securities exchange as may be prescribed from
time to time in such rules and regulations;
(b) to file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission,
such additional information, documents and reports with respect to
compliance by the Issuer with the conditions and covenants provided for
in this Indenture as may be required from time to time by such rules and
regulations; and
(c) to transmit by mail to the Holders of Securities in the manner
and to the extent provided in subsection (c) of Section 5.04 within 30
days after the filing thereof with the Trustee, such summaries of any
information, documents and reports required to be filed by the Issuer
pursuant to subsections (a) and (b) of this Section 5.03 as may be
required to be transmitted to such Holders by rules and regulations
prescribed from time to time by the Commission.
SECTION 5.04. (a) On or before July 15 in each year following the date
of original execution of this Indenture, so long as any Securities are
Outstanding, the Trustee shall transmit by mail as provided below to the
securityholders of each series, as provided in subsection (c) of this
Section 5.04, a brief report, dated as of a date 60 days prior thereto with
respect to:
(i) any change to its eligibility under Section 7.09 and its
qualification under Section 310(b) of the Trust Indenture Act;
(ii) the creation of or any material change to a relationship
specified in clauses (1) through (10) of Section 310(b) of the Trust
Indenture Act;
(iii) the character and amount of any advances (and if the Trustee
elects so to state, the circumstances surrounding the making thereof)
made by the Trustee (as such) which remain unpaid on the date of such
report and for the reimbursement of which it claims or may claim a lien
or charge, prior to that of the Securities of any series, on any
property or funds held or collected by it as Trustee, except that the
Trustee shall not be required (but may elect) to report such advances if
such advances so remaining unpaid aggregate not more than 1/2 of 1% of
the principal amount of the Securities of such series Outstanding on the
date of such report;
(iv) any change to the amount, interest rate and maturity date of
all other indebtedness owing by the Issuer (or by any other obligor on
the Securities of such series) to the Trustee in its individual capacity
on the date of such report, with a brief description of any property
held as collateral security therefor, except any indebtedness based upon
a creditor relationship arising in any manner described in paragraphs
(2), (3), (4) or (6) of subsection (b) of Section 311 of the Trust
Indenture Act;
20
<PAGE>
(v) any change to the property and funds, if any, physically in the
possession of the Trustee (as such) on the date of such report;
(vi) any additional issue of Securities of any series which the
Trustee has not previously reported; and
(vii) any action taken by the Trustee in the performance of its
duties under this Indenture which it has not previously reported and
which in its opinion materially affects the Securities of any series,
except action in respect of a default, notice of which has been or is to
be withheld by it in accordance with the provisions of Section 6.07.
(b) The Trustee shall transmit to the securityholders of each series, as
provided in subsection (c) of this Section 5.04, a brief report with respect
to the character and amount of any advances (and if the Trustee elects so to
state, the circumstances surrounding the making thereof) made by the Trustee
as such since the date of the last report transmitted pursuant to the
provisions of subsection (a) of this Section 5.04 (or if no such report has
yet been so transmitted, since the date of execution of this Indenture), for
the reimbursement of which it claims or may claim a lien or charge, prior to
that of the Securities of any series, on property or funds held or collected
by it as Trustee and which it has not previously reported pursuant to this
subsection (b), except that the Trustee shall not be required (but may
elect) to report such advances if such advances remaining unpaid at any time
aggregate 10% or less of the principal amount of Securities of such series
Outstanding at such time, such report to be transmitted within 90 days after
such time.
(c) Reports pursuant to this Section 5.04 shall be transmitted by mail
to all Holders of Securities, as the names and addresses of such Holders
appear in the Securities Register; to such Holders of Securities as have,
within the two years preceding such transmission, filed their names and
addresses with the Trustee for that purpose; and, except in the case of
reports pursuant to subsection (b) of this Section 5.04, to all Holders of
Securities whose names and addresses have been furnished to or received by
the Trustee pursuant to this Article Five.
(d) A copy of each such report shall, at the time of such transmission
to the securityholders of any series, be filed by the Trustee with each
national securities exchange upon which the Securities of such series are
listed and also with the Commission. The Issuer agrees to notify the
Trustee promptly when and as the Securities of any series are listed on any
national securities exchange.
ARTICLE SIX
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 6.01. "Event of Default", with respect to the Securities of any
series, where used herein, means each one of the following events which
shall have occurred and be continuing (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
21
<PAGE>
or any order, rule or regulation of any administrative or governmental
body), unless it is either inapplicable to a particular series or it is
specifically deleted or modified in the applicable resolution of the Board
of Directors or in the supplemental indenture under which such series of
Securities is issued, as the case may be, as contemplated by Section 3.01:
(a) default in the payment of any installment of interest upon any
of the Securities of such series as and when the same shall become due
and payable, and continuance of such default for a period of 90 days; or
(b) default in the payment of all or any part of the principal of
(or premium, if any) on any of the Securities of such series as and when
the same shall become due and payable either at maturity, upon
redemption, by declaration or otherwise, or
(c) failure on the part of the Issuer duly to observe or perform any
other of the covenants or agreements on the part of the Issuer in the
Securities of such series or in this Indenture contained for a period of
90 days after the date on which written notice of such failure,
requiring the Issuer to remedy the same, shall have been given to the
Issuer by the Trustee by registered mail or to the Issuer and the
Trustee by the Holders of at least 25% in aggregate principal amount of
the Securities of all series affected thereby at the time Outstanding; or
(d) a decree or order by a court having jurisdiction in the premises
shall have been entered adjudging the Issuer a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization of the
Issuer under the Federal Bankruptcy Code or any other similar applicable
Federal or State law, and such decree or order shall have continued
undischarged and unstayed for a period of 60 days; or a decree or order
of a court having jurisdiction in the premises for the appointment of a
receiver or liquidator or trustee or assignee in bankruptcy or
insolvency of the Issuer or of its property, or for the winding up or
liquidation of its affairs, shall have been entered, and such decree or
order shall have continued undischarged and unstayed for a period of 60
days; or
(e) the Issuer shall institute proceedings to be adjudicated a
voluntary bankrupt, or shall consent to the filing of a bankruptcy
proceeding against it, or shall file a petition or answer or consent
seeking reorganization under the Federal Bankruptcy Code or any other
similar applicable Federal or State law, or shall consent to the filing
of any such petition, or shall consent to the appointment of a receiver
or liquidator or trustee or assignee in bankruptcy or insolvency of it
or of its property, or shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts
generally as they become due, or corporate action shall be taken by the
Issuer in furtherance of any of the aforesaid purposes; or
(f) an event of default, as defined in any other indenture or
instrument evidencing or under which the Issuer has at the date of this
Indenture or shall hereafter have outstanding at least $100,000,000
aggregate principal amount of indebtedness for borrowed money, shall
happen and be continuing and such indebtedness shall have been accelera-
22
<PAGE>
ted so that the same shall be or become due and payable prior to the
date on which the same would otherwise have become due and payable, and
such acceleration shall not be rescinded or annulled within ten days
after notice thereof shall have been given to the Issuer by the Trustee
(if such event be known to it), or to the Issuer and the Trustee by the
holders of at least 25% in aggregate principal amount of all of the
Securities at the time Outstanding (treated as one class); provided that
if such event of default under such indenture or instrument shall be
remedied or cured by the Issuer or waived by the holders of such
indebtedness, then the Event of Default hereunder by reason thereof
shall be deemed likewise to have been thereupon remedied, cured or
waived without further action upon the part of either the Trustee or any
of the securityholders, and provided further however that, subject to
the provisions of Section 7.01 and 7.02, the Trustee shall not be
charged with knowledge of any such default unless written notice thereof
shall have been given to the Trustee by the Issuer, by the holder or an
agent of the holder of any such indebtedness, by the trustee then acting
under any indenture or other instrument under which such default shall
have occurred, or by the holders of not less than 25% in the aggregate
principal amount of the Securities at the time Outstanding; or
(g) any other Event of Default established by or pursuant to a
resolution of the Board of Directors or one or more indentures
supplemental hereto as applicable to the Securities of such series.
If an Event of Default described in clause (a), (b), (c) or (g) above (if
the Event of Default under clause (c) or (g) is with respect to fewer than
all series of Securities then outstanding) occurs and is continuing, then
and in each and every such case, unless the principal of all the Securities
of such series shall have already become due and payable, either the Trustee
or the Holders of not less than 25% in aggregate principal amount of the
Securities of such series then Outstanding hereunder (each such series
voting as a separate class) by notice in writing to the Issuer (and to the
Trustee, if given by securityholders), may declare the entire principal of
all the Securities of such series and the interest accrued thereon, if any,
to be due and payable immediately, and upon any such declaration the same
shall become and shall be immediately due and payable, anything in this
Indenture or in the Securities of such series contained to the contrary
notwithstanding. If an Event of Default described in clause (c), (d), (e),
(f) or (g) above (if the Event of Default under clause (c) or (g) is with
respect to all series of Securities then Outstanding) occurs and is
continuing, then and in each and every case, unless the principal of all the
Securities shall have already become due and payable, either the Trustee or
the Holders of not less than 25% in aggregate principal amount of all the
Securities then Outstanding hereunder (treated as one class), by notice in
23
<PAGE>
writing to the Issuer (and to the Trustee, if given by securityholders), may
declare the entire principal of all the Securities then Outstanding and the
interest accrued thereon, if any, to be due and payable immediately, and
upon any such declaration the same shall become immediately due and
payable. The foregoing provisions, however, are subject to the condition
that if, at any time after the principal of the Securities of such series
(or all of the Securities, as the case may be) shall have been so declared
due and payable, and before any judgment or decree for the payment of the
moneys due shall have been obtained or entered as hereinafter provided, the
Issuer shall pay, or shall deposit with the Trustee a sum sufficient to pay,
all matured installments of interest upon all the Securities of such series
(or upon all the Securities, as the case may be) and the principal of (and
premium, if any, on) any and all Securities of such series (or all of the
Securities, as the case may be) which shall have become due otherwise than
by declaration, with interest upon such principal (and premium, if any) and
(to the extent that payment of such interest is enforceable under applicable
law) upon any overdue installments of interest at the same rate as the rate
of interest specified in the Securities of such series to the date of such
payment or deposit, and such amount as shall be sufficient to cover
reasonable compensation to the Trustee, its agents and counsel, and all
other expenses and liabilities incurred, and all advances made, by the
Trustee, or amounts otherwise due the Trustee under Section 7.06, except as
a result of its negligence or bad faith, and if any and all defaults under
this Indenture, other than the nonpayment of the principal of and all
matured installments of interest upon all the Securities of such series
which shall have become due by declaration, shall have been remedied -- then
and in every such case the Holders of a majority in aggregate principal
amount of the Securities of such series (each series voting as separate
class), or, of all the Securities (voting as a single class), as the case
may be, then Outstanding by written notice to the Issuer and to the Trustee
may waive all defaults with respect to that series (or with respect to all
the Securities, as the case may be) and rescind and annul such declaration
and its consequences; but no such waiver or rescission or annulment shall
extend to or shall affect any subsequent default or shall impair any right
consequent thereon.
In case the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned
because of such waiver or rescission or annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such
case the Issuer, the Trustee and the Holders of the Securities shall be
restored respectively to their former positions and rights hereunder, and
all rights, remedies and powers of the Issuer, the Trustee and the Holders
of the Securities shall continue as though no such proceedings had been
taken.
SECTION 6.02. The Issuer covenants that (1) in case default shall be
made in the payment of any installment of interest on any of the Securities
of any series, as and when the same shall become due and payable, and such
default shall have continued for a period of 90 days or (2) in case default
shall be made in the payment of all or any part of the principal of (or
premium, if any, on) any of the Securities of any series when the same shall
have become due and payable, whether upon maturity of the Securities of such
series or upon redemption or upon declaration or otherwise -- then, upon
24
<PAGE>
demand of the Trustee, the Issuer will pay to the Trustee for the benefit of
the Holder of any such Security the whole amount that then shall have become
due and payable on any such Security for the principal (and premium, if any)
and interest, with interest upon any overdue principal (and premium, if
any), and (to the extent that payment of such interest is enforceable under
applicable law) upon any overdue installments of interest, at the same rate
as the rate of interest specified in the Securities of such series, and, in
addition thereto, such further amount as shall be sufficient to cover
reasonable compensation to the Trustee, its agents and counsel, and all
other expenses and liabilities incurred, and all advances made, by the
Trustee, or otherwise due the Trustee under Section 7.06 except as a result
of its negligence or bad faith.
In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust,
shall be entitled and empowered to institute any action or proceedings at
law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceedings to judgment or final decree, and
may enforce any such judgment or final decree against the Issuer or other
obligor upon such Securities and collect in the manner provided by law out
of the property of the Issuer or other obligor upon the Securities wherever
situated, the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy or for the
reorganization of the Issuer or any other obligor upon the Securities under
the Federal Bankruptcy Code or any other applicable law, or in case a
receiver or trustee shall have been appointed for the property of the Issuer
or such other obligor, or in the case of any other judicial proceedings
relative to the Issuer or other obligor upon the Securities or to the
creditors or property of the Issuer or such other obligor, the Trustee,
irrespective of whether the principal of the Securities shall then be due
and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand pursuant to
the provisions of this Section 6.02, shall be entitled and empowered, by
intervention in such proceedings or otherwise, to file and prove a claim or
claims for the whole amount of principal and interest owing and unpaid in
respect of the Securities and to file such other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee
(including any claim for reasonable compensation to the Trustee, its agents
and counsel, and for reimbursement of all expenses and liabilities incurred,
and all advances made, by the Trustee or amounts otherwise due the Trustee
under Section 7.06 except as a result of its negligence or bad faith) and of
the securityholders allowed in any judicial proceedings relative to the
Issuer or other obligor upon the Securities, or to the creditors or property
of the Issuer or such other obligor, and to collect and receive any moneys
or other property payable or deliverable on any such claims and to
distribute all amounts received with respect to the claims of the
securityholders and of the Trustee on their behalf; and any receiver,
assignee or trustee in bankruptcy or reorganization is hereby authorized by
each of the securityholders to make payments to the Trustee and, in the
event that the Trustee shall consent to the making of payments directly to
the securityholders, to pay to the Trustee such amount as shall be
sufficient to cover reasonable compensation to the Trustee, its agent and
25
<PAGE>
counsel, and all other expenses and liabilities incurred, and all advances
made, by the Trustee or amounts otherwise due the Trustee under Section 7.06
except as a result of its negligence or bad faith.
All rights of action and to assert claims under this Indenture or under
any of the Securities, may be enforced by the Trustee without the possession
of any of the Securities or the production thereof on any trial or other
proceedings relative thereto, and any such action or proceedings instituted
by the Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment shall be for the ratable benefit of the
Holders of the Securities.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a
Security any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof or to authorize
the Trustee to vote in respect of the claim of any Holder of a Security in
any such proceeding.
In case of a default hereunder the Trustee may in its discretion proceed
to protect and enforce the rights vested in it by this Indenture by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any of such rights, either at law or in equity or in
bankruptcy or otherwise, whether for the specific enforcement of any
covenant or agreement contained in this Indenture or in aid of the exercise
of any power granted in this Indenture, or otherwise, and the Trustee may
enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.
SECTION 6.03. Any moneys collected by the Trustee pursuant to this
Article in respect of any series of the Securities shall be applied in the
order following at the date or dates fixed by the Trustee and, in case of
the distribution of such moneys on account of principal (or premium, if any)
or interest, upon presentation of the several Securities and stamping
thereon the payment if only partially paid, and upon surrender thereof if
fully paid:
FIRST: To the payment of costs and expenses of collection,
reasonable compensation to the Trustee its agents and attorneys, and all
expenses and liabilities incurred, and all advances made, by the
Trustee, or amounts otherwise due the Trustee under Section 7.06, except
as a result of its negligence or bad faith;
SECOND: In case the principal of the Securities of such series
shall not have become due, to the payment of interest on the Securities
of such series in default in the order of the maturity of the
installments of such interest, with interest (to the extent that such
interest has been collected by the Trustee), to the extent that payment
of such interest is enforceable under applicable law, upon the overdue
installments of interest at the same rate as the rate of interest
specified in the Securities of such series, such payments to be made
ratably to the persons entitled thereto;
THIRD: In case the principal of the Securities of such series shall
26
<PAGE>
have become due by declaration or otherwise, to the payment of the whole
amount then owing and unpaid upon all the Securities of such series for
principal (and premium, if any) and interest, with interest upon the
overdue principal (and premium, if any) and (to the extent that such
interest has been collected by the Trustee), to the extent that payment
of such interest is enforceable under applicable law, upon overdue
installments of interest at the same rate as the rate of interest
specified in the Securities of such series; and in case such moneys
shall be insufficient to pay in full the whole amount so due and unpaid
upon the Securities of such series, then to the payment of such
principal (and premium, if any) and interest without preference or
priority, ratably according to the aggregate of such principal (and
premium, if any) and interest.
SECTION 6.04. No Holder of any Security of any series shall have any
right by virtue or by availing of any provision of this Indenture to
institute any action or proceeding at law or in equity or in bankruptcy or
otherwise upon or under or with respect to the Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder,
unless such Holder previously shall have given to the Trustee written notice
of an Event of Default and unless also the Holders of not less than 25% in
aggregate principal amount of the Securities of such series then Outstanding
shall have made written request upon the Trustee to institute such action or
proceeding in its own name as Trustee hereunder and shall have offered to
the Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby and the Trustee,
for 60 days after its receipt of such notice, request and offer of
indemnity, shall have failed to institute any such action or proceeding and
no direction inconsistent with such written request shall have been given to
the Trustee pursuant to Section 6.06; it being understood and intended and
being expressly covenanted by the taker and Holder of every Security with
every other taker and Holder of any Security and the Trustee, that no one or
more Holders of Securities of any series shall have any right in any manner
whatever by virtue or by availing of any provision of this Indenture to
affect, disturb or prejudice the rights of any other Holder of Securities,
or to obtain to seek to obtain priority over or preference to any other such
Holder or to enforce any right under this Indenture, except in the manner
herein provided and for the equal, ratable and common benefit of all Holders
of Securities of such series. For the protection and enforcement of the
provisions of this Section 6.04, each and every securityholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Notwithstanding any other provision in this Indenture, however, the
right of any Holder of any Security of any series to receive payment of the
principal of, or premium, if any, or interest on such Security, on or after
the respective due dates expressed in such Security, or to institute suit
for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
SECTION 6.05. All powers and remedies given by this Article Six to the
Trustee or to the securityholders shall, to the extent permitted by law, be
deemed cumulative and not exclusive of any thereof or of any other powers
and remedies available to the Trustee or the securityholders, by judicial
27
<PAGE>
proceedings or otherwise, to enforce the performance or observance of the
covenants and agreements contained in this Indenture, and no delay or
omission of the Trustee or of any holder of any of the Securities in
exercising any right or power accruing upon any default occurring and
continuing as aforesaid shall impair any such right or power or shall be
construed to be a waiver of any such default or an acquiescence therein;
and, subject to the provisions of Section 6.04, every power and remedy given
by this Article Six or by law to the Trustee or to the securityholders may
be exercised from time to time, and as often as shall be deemed expedient,
by the Trustee or by the securityholders.
SECTION 6.06. The Holders of a majority in aggregate principal amount of
the Securities of each series affected (with each series voting as a
separate class) at the time Outstanding shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred on the Trustee
with respect to the Securities of such series by this Indenture, provided
that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture;
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction; and
(3) the Trustee may decline any such direction that a committee of
responsible officers of the Trustee reasonably determines, based upon a
written opinion of independent counsel, will cause the Trustee to incur
any personal liability for which it shall not have been adequately
indemnified pursuant to Section 7.02.
Prior to the declaration of the acceleration of the maturity of the
Securities of any series as provided in Section 6.01, the Holders of a
majority in aggregate principal amount of the Securities of such series at
the time Outstanding may on behalf of the Holders of all the Securities of
such series waive any past default described in clause (c) or (g) of Section
6.01 which relates to fewer than all series of Securities then Outstanding,
and the Holders of a majority in aggregate principal amount of the
Securities then Outstanding affected thereby (each series voting as a
separate class) may waive any such default or, in the case of an event
specified in clause (c) or (g) (if the event specified under clause (c) or
(g) relates to all series of Securities then Outstanding) or (d), (e) or (f)
of Section 6.01, the Holders of a majority in aggregate principal amount of
all the Securities then Outstanding (voting as one class) may waive any such
default, and its consequences, except a default in the payment of the
principal of (or premium, if any) or interest on any of the Securities of
such series. In the case of any such waiver, the Issuer, the Trustee and
the Holders of the Securities of such series shall be restored to their
former positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other default or impair any right
consequent thereon.
SECTION 6.07. The Trustee shall, within 90 days after the occurrence of
a default, give to all securityholders of any series, as the names and
addresses of such Holders appear on the Securities Register, notice by mail
28
<PAGE>
of all defaults known to the Trustee to have occurred with respect to such
series, unless such defaults shall have been cured before the giving of such
notice (the term "default" or "defaults" for the purposes of this Section
6.07 being hereby defined to mean any event or events, as the case may be,
specified in clauses (a), (b), (c), (d), (e), (f) and (g) of Section 6.01,
not including periods of grace, if any, provided for therein, and
irrespective of the giving of written notice specified in clause (c) of
Section 6.01); provided that, except in the case of a default in the payment
of the principal of (or premium, if any) or interest on any of the
Securities of such series, the Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive
committee or a trust committee of directors and/or responsible officers of
the Trustee in good faith determines that the withholding of such notice is
in the interests of the securityholders of such series.
SECTION 6.08. All parties to this Indenture agree, and each Holder of
any Security by his acceptance thereof shall be deemed to have agreed, that
any court may in its discretion require, in any suit for the enforcement of
any right or remedy under this Indenture or in any suit against the Trustee
for any action taken, suffered or omitted by it as Trustee, the filing by
any party litigant in such suit of an undertaking to pay the costs of such
suit and that such court may in its discretion assess reasonable costs,
including reasonable attorney's fees, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or
defenses made by such party litigant; but the provisions of this Section
6.08 shall not apply to any suit instituted by the Trustee, to any suit
instituted by any securityholder or group of securityholders of any series
holding in the aggregate more than 10% in aggregate principal amount of the
Securities of such series Outstanding or in the case of any suit relating to
or arising under clause (c) or (g) of Section 6.01 (if the suit relates to
Securities of more than one but fewer than all series), 10% in aggregate
principal amount of Securities Outstanding affected thereby, or, in the case
of any suit relating to or arising under clause (c) or (g) (if the suit
under clause (c) or (g) relates to all the Securities then Outstanding),
(d), (e) or (f) of Section 6.01, 10% in aggregate principal amount of all
Securities Outstanding, or to any suit instituted by any Holder of
Securities for the enforcement of the payment of the principal of (or
premium, if any) or interest on, any Security on or after the due date
expressed in such Security.
ARTICLE SEVEN
CONCERNING THE TRUSTEE
SECTION 7.01. The Trustee, prior to the occurrence of an Event of
Default and after the curing or waiving of all Events of Default which may
have occurred, undertakes to perform such duties and only such duties as are
set forth in this Indenture. In case an Event of Default with respect to
the Securities of any series has occurred (which has not been cured) the
Trustee shall with respect to such Securities exercise such of the rights
and powers vested in it by this Indenture, and use the same degree of care
and skill in their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
29
<PAGE>
No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to
act or its own wilful misconduct, except that
(a) prior to the occurrence of an Event of Default with respect to
the Securities of any series and after the curing of all Events of
Default with respect to such series which may have occurred:
(1) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Indenture, and
the Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read
into this Indenture against the Trustee; and
(2) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to
the requirements of this Indenture; but in the case of any such
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made
in good faith by a responsible officer, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a majority in
aggregate principal amount of the Securities of each series affected
(with each series voting as a separate class) at the time Outstanding
(determined as provided in Section 8.03) relating to the time, method
and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions
of this Section.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if there shall be reasonable
grounds for believing that the repayment of such funds or adequate indemnity
against such liability is not reasonably assured to it.
SECTION 7.02. Except as otherwise provided in Section 7.01:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
30
<PAGE>
instrument opinion, report, notice, request, consent, order, bond,
debenture, note, coupon, security or other paper or document believed by
it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request, direction, order or demand or other communication
of the Issuer mentioned herein shall be sufficiently evidenced by an
Officers' Certificate (unless other evidence in respect thereof be
herein specifically prescribed); and any resolution of the Board of
Directors may be evidenced to the Trustee by a copy thereof certified
by the Secretary or any Assistant Secretary of the Issuer;
(c) the Trustee may consult with counsel and any Opinion of Counsel
shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted to be taken by it hereunder in
good faith and in accordance with such Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Indenture at the request, order or
direction of any of the securityholders pursuant to the provisions of
this Indenture, unless such securityholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and believed by it to be authorized or
within the discretion, rights or powers conferred upon it by this
Indenture;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, coupon, other evidence of indebtedness or other
paper or document, but the Trustee, in its discretion, may investigate
such fact or matters as it may reasonably see fit; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence of any agent or attorney appointed with due care by it
hereunder; provided, however, that any appointment of any agent by the
Trustee hereunder shall be made with prior notice to and in consultation
with the Issuer.
SECTION 7.03. The recitals contained herein and in the Securities
(except in the certificates of authentication) shall be taken as the
statements of the Issuer, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representation as to the
validity or sufficiency of this Indenture or of the Securities. The Trustee
shall not be accountable for the use or application by the Issuer of any of
the Securities or of the proceeds thereof.
SECTION 7.04. The Trustee or the Authenticating Agent or any Paying
Agent or Securities Registrar, in its individual or any other capacity, may
31
<PAGE>
become the owner or pledgee of Securities with the same rights it would have
if it were not the Trustee, Authenticating Agent, Paying Agent or Securities
Registrar.
SECTION 7.05. Subject to the provisions of Section 12.04, all money
received by the Trustee shall, until used or applied as herein provided, be
held in trust for the purposes for which they were received, but need not be
segregated from other funds except to the extent required by law. The
Trustee shall be under no liability for interest on any moneys received by
it hereunder except such as it may agree with the Issuer to pay thereon. so
long as no Event of Default shall have occurred and be continuing, all
interest allowed on any such moneys shall be paid from time to time upon the
written order of the Company signed by its Chairman of the Board of
Directors or a Vice Chairman of the Board of Directors or its President or a
Vice President or its Treasurer or an Assistant Treasurer.
SECTION 7.06. The Issuer covenants and agrees to pay the Trustee from
time to time, and the Trustee shall be entitled to, reasonable compensation
(which compensation shall not be limited to by any provision of law in
regard to the compensation of a trustee of an express trust) and, except as
otherwise expressly provided, the Issuer will pay or reimburse the Trustee
upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the provisions of
this Indenture (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its
employ), except any such expense, disbursement or advance as may arise from
its negligence or bad faith. The Issuer also covenants to indemnify the
Trustee for, and hold it harmless against, any loss, liability, damage,
claims or expense, incurred without negligence or bad faith on the part of
the Trustee, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim or liability in the premises. The obligations of
the Issuer under this Section 7.06 to compensate the Trustee and to pay or
reimburse the Trustee for expenses, disbursements and advances shall
constitute additional indebtedness hereunder. Such additional indebtedness
shall be a senior claim to that of the Securities upon all property and
funds held or collected by the Trustee as such, except funds held in trust
for the benefit of the Holders of particular Securities.
SECTION 7.07. Except as otherwise provided in Section 7.01, whenever in
the administration of the trusts of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, such matter (unless
other evidence in respect thereof be herein specifically prescribed) may, in
the absence of negligence or bad faith on the part of the Trustee, be deemed
to be conclusively proved and established by a certificate signed by the
Chairman of the Board of Directors or a Vice Chairman of the Board of
Directors or the President or a Vice President and by the Treasurer or an
Assistant Treasurer and delivered to the Trustee, and such certificate, in
the absence of negligence or bad faith on the part of the Trustee, shall be
full warrant to the Trustee for any action taken, suffered or omitted by it
under the provisions of this Indenture upon the faith thereof.
32
SECTION 7.08. (a) If the Trustee has or shall acquire any
conflicting interest, as defined in Section 310(b) of the
Trust Indenture Act, it shall, within 90 days after
ascertaining that it has such conflicting interest, either
eliminate such conflicting interest or resign in the manner
and with the effect specified in Section 7.10.
(b) In the event that the Trustee shall fail to comply
with the provisions of subsection (a) of this Section 7.08,
the Trustee shall, within 10 days after the expiration of
such 90-day period, transmit notice of such failure to all
securityholders as the names and addresses of such Holders
appear on the Securities Register.
(c) Subject to the provisions of Section 6.08, any
securityholder who has been a bona fide holder of Securities
for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the
appointment of a successor, if the Trustee fails after
written request thereof by such Holder to comply with the
provisions of paragraph (a) above.
SECTION 7.09. The Trustee shall at all times be a
corporation organized and doing business under the laws of
the United States or of any State or Territory or the
District of Columbia having a combined capital and surplus
of at least $10,000,000 and which is authorized under such
laws to exercise corporate trust powers, and is subject to
supervision or examination by Federal, State, Territorial or
District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising
or examining authority, then for the purposes of this
Section 7.09, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition
so published. In case at any time the Trustee shall cease
to be eligible in accordance with the provisions of this
Section 7.09, the Trustee shall resign immediately in the
manner and with the effect specified in Section 7.10.
SECTION 7.10. (a) The Trustee may at any time resign by
giving written notice of resignation to the Issuer and by
mailing notice thereof to all Holders of the Securities as
the names and addresses of such Holders shall appear on the
Securities Register.
Upon receiving such notice of resignation, the Issuer shall
promptly appoint a successor trustee by written instrument
in duplicate, executed by order of the Board of Directors,
one copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor trustee. If
no successor trustee shall have been so appointed and have
accepted appointment within 60 days after the mailing of
such notice of resignation to the securityholders, the
resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee, or
any securityholder who has been a bona fide Holder of a
Security or Securities for at least six months may, subject
to the provisions of Section 6.08, on behalf of himself and
all others similarly situated, petition any such court for
the appointment of a successor trustee. Such court may
thereupon, after such notice, if any, as it may deem proper
and prescribe, appoint a successor trustee.
33
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with the
provisions of subsection (a) of Section 7.08 after
written request therefor by the Issuer or by any
securityholder who has been a bona fide Holder of a
Security or Securities for at least six months, or
(2) the Trustee shall cease to be eligible in
accordance with the provisions of Section 7.09 and shall
fail to resign after written request therefor by the
Issuer or by any such securityholder, or
(3) the Trustee shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or a receiver
of the Trustee or of its property shall be appointed, or
any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any case, the Issuer may remove the Trustee and
appoint a successor trustee by written instrument, in
duplicate, executed by order of the Board of Directors of
the Issuer, one copy of which instrument shall be delivered
to the Trustee so removed and one copy to the successor
trustee, or, subject to the provisions of Section 6.08, any
securityholder who has been a bona fide Holder of a Security
or Securities for at least six months may, on behalf of
himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor trustee. Such
court may thereupon, after such notice, if any, as it may
deem proper and prescribe, remove the Trustee and appoint a
successor trustee.
(c) The Holders of a majority in aggregate principal
amount of the Securities at the time Outstanding may at any
time remove the Trustee and nominate a successor trustee
unless within 10 days after such nomination the Issuer
objects thereto, in which case the Trustee so removed or any
securityholder, upon the terms and conditions and otherwise
as in subdivision (a) of this Section 7.10 provided, may
petition any court of competent jurisdiction for an
appointment of a successor trustee.
(d) Any resignation or removal of the Trustee and any
appointment of a successor trustee pursuant to any of the
provisions of this Section 7.10 shall become effective upon
acceptance of appointment by the successor trustee as
provided in Section 7.11.
SECTION 7.11 Any successor trustee appointed as provided
in Section 7.10 shall execute, acknowledge and deliver to
the Issuer and to its predecessor trustee an instrument
accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall
become effective and such successor trustee, without any
further act, deed or conveyance, shall become vested with
all rights powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as
trustee herein; but, nevertheless, on the written request of
the Issuer or of the successor trustee, the trustee ceasing
to act shall, upon payment of any amounts then due it
pursuant to the provisions of Section 7.06, execute and
deliver an instrument transferring to such successor trustee
all such rights and powers of the trustee so ceasing to act.
Upon request of any successor trustee, the Issuer shall
execute any and all instruments in writing for more
34
fully and certainly vesting in and confirming to such
successor trustee all such rights and powers. Any trustee
ceasing to act, shall nevertheless, retain a prior claim
upon all property or funds held or collected by such trustee
to secure any amounts then due it pursuant to the provisions
of Section 7.06 and be entitled to the indemnification
provided for in Section 7.06.
No successor trustee shall accept appointment as provided
in this Section 7.11 unless at the time of such acceptance
such successor trustee shall be qualified under the
provisions of Section 7.08 and eligible under the provisions
of Section 7.09.
Upon acceptance of appointment by any successor trustee
as provided in this Section 7.11, the Issuer shall mail
notice of the succession of such trustee to all Holders of
Securities as the names and addresses of such Holders appear
on the Securities Register. If the Issuer fails to mail
such notice in the prescribed manner within 10 days after
acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at
the expense of the Issuer.
SECTION 7.12. Any corporation into which the Trustee may
be merged or converted or with which it may be consolidated,
or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any
corporation succeeding to the corporate trust business of
the Trustee, shall be the successor of the Trustee
hereunder, provided that such corporation shall be qualified
under the provisions of Section 7.08 and eligible under the
provisions of Section 7.09, without the execution of filing
of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary
notwithstanding.
SECTION 7.13. So long as any Securities remain
Outstanding, if the Corporate Trust Office of the Trustee is
not located in the Borough of Manhattan, The City of New
York, the Trustee may appoint an Authenticating Agent to act
on its behalf and subject to its direction in connection
with the authentication and delivery of Securities as set
forth in Articles Two and Three and Securities so
authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes
as if authenticated by the Trustee hereunder. Wherever
reference is made in this Indenture to the authentication
and delivery of Securities by the Trustee and to the
certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of
the Trustee by an Authenticating Agent and a certificate of
authentication executed on behalf of the Trustee by an
Authenticating Agent. Such Authenticating Agent shall at
all times be a corporation organized and doing business
under the laws of the United States or of any State or
Territory or of the District of Columbia authorized under
such laws to act as authenticating agent, having a combined
capital and surplus of at least $10,000,000 (unless an
affiliate of the Trustee in which case it need not have such
a capital and surplus) and subject to supervision or
examination by Federal, State, Territorial or District of
Columbia authority, and, willing and able to act as
Authenticating Agent on reasonable and customary terms,
having its principal office and place of business in the
Borough of Manhattan, The City of New York. If such
corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the
aforesaid supervising
35
or examining authority, then for the purposes of this
Section 7.13, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition
so published.
Any corporation into which any Authenticating Agent may
be merged or converted, or with which it may be
consolidated, or any corporation resulting from any merger,
conversion or consolidation to which any Authenticating
Agent shall be a party, or any corporation succeeding to the
corporate agency business of any Authenticating Agent, shall
continue to be the Authenticating Agent without the
execution or filing of any paper or any further act on the
part of the Trustee or such Authenticating Agent.
Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Trustee and to the
Issuer. The Trustee may at any time terminate the agency of
any Authenticating Agent by giving written notice of
termination to such Authenticating Agent and to the Issuer.
Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent
shall cease to be eligible in accordance with the provisions
of this Section 7.13, the Trustee promptly shall appoint a
successor Authenticating Agent, if the terms of this Section
7.13 require that there shall be an Authenticating Agent,
shall give written notice of such appointment to the Issuer
and shall mail notice of such appointment to all Holders of
Securities as the names and addresses of such Holders appear
upon the Securities Register. Any successor Authenticating
Agent upon acceptance of its appointment hereunder shall
become vested with all rights, powers, duties and
responsibilities of its predecessor hereunder, with like
effect as if originally named as Authenticating Agent
herein. No successor Authenticating Agent shall be
appointed unless eligible under the provisions of this
Section 7.13.
The Trustee agrees to pay to the Authenticating Agent
from time to time reasonable compensation for its
services,and the Trustee shall be entitled to be reimbursed
for such payment, subject to the provisions of Section 7.06.
ARTICLE EIGHT
CONCERNING THE HOLDERS OF SECURITIES
SECTION 8.01. (a) Any request, demand, authorization,
direction, notice, consent, waiver, vote or other action
provided by this Indenture to be given or taken by
securityholders may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by
such securityholders in person or by agent duly appointed in
writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or
instruments are delivered to the Trustee, and, where it is
hereby expressly required, to the Issuer. Proof of
execution of any such instrument or of a writing appointing
any such agent shall be sufficient for any purpose of this
Indenture and (subject to Sections 7.01 and 7.02) conclusive
in favor of the Trustee and the Issuer, if made in the
manner provided in this section.
(b) Subject to Sections 7.01 and 7.02, the execution of
any instrument by a securityholder or his agent or proxy may
be proved in accordance with such reasonable rules and
regulations as may be prescribed by the Trustee or in such
manner as shall be satisfactory to the Trustee.
36
(c) The holding of Securities shall be proved by the
Securities Register or by a certificate of the registrar
thereof.
(d) The Issuer may set a record date for purposes of
determining the identity of Holders of Securities of any
series entitled to vote or consent to any action referred to
in subsection (a) of this Section 8.01, which record date
may be set at any time or from time to time by notice to the
Trustee, for any date or dates (in the case of any
adjournment or reconsideration) not more than 60 days nor
less than five days prior to the proposed date of such vote
or consent, and thereafter, notwithstanding any other
provisions hereof, only Holders of Securities of such series
of record on such record date shall be entitled to so vote
or to give such consent or to revoke such vote or consent.
SECTION 8.02. The Issuer, the Trustee, any
Authenticating Agent, any Paying Agent and any Securities
registrar may deem and treat the person in whose name any
Security shall be registered upon the Securities Register as
the absolute owner of such Security (whether or not such
Security shall be overdue and notwithstanding any notation
of ownership or other writing thereon) for the purpose of
receiving payment of or on account of the principal of (and
premium, if any) and, subject to the provisions of this
Indenture, interest on, such Security and for all other
purposes; and neither the Issuer, the Trustee nor any
Authenticating Agent nor any Paying Agent nor any Securities
registrar shall be affected by any notice to the contrary.
All such payments so made to any such person, or upon his
order, shall be valid, and, to the extent of the sum or sums
so paid, effectual to satisfy and discharge the liability
for moneys payable upon any such Security.
SECTION 8.03. In determining whether the holders of the
requisite aggregate principal amount of Securities of any
series have concurred in any demand or request, the giving
of any notice, direction, consent or waiver or the taking of
any other action under this Indenture, Securities which are
owned by the Issuer or any other obligor on the Securities
or by any person directly or indirectly controlling or
controlled by or under direct or indirect common control
with the Issuer or any other obligor on the Securities shall
be disregarded and deemed not to be outstanding for the
purpose of any such determination, except that for the
purpose of determining whether the Trustee shall be
protected in relying on any such demand, request, notice,
direction, consent or waiver only Securities which the
Trustee knows are so owned shall be so disregarded.
SECTION 8.04. At any time prior to (but not after) the
evidencing to the Trustee, as provided in Section 8.01, of
the taking of any action by the Holders of the percentage in
aggregate principal amount of the Securities of any or all
series, as the case may be, specified in this Indenture in
connection with such action, any Holder of Security, the
serial number, letter or other distinguishing symbol of
which is shown by the evidence to be included in the
Securities the Holders of which have joined in such action
may, by filing written notice with the Trustee at its office
and upon proof of ownership as provided in Section 8.01,
revoke such action so far as concerns such Security. Except
as aforesaid, any such action taken by the Holder of any
Security shall be conclusive and binding upon such Holder
and upon all future Holders and owners of such Security
and of any Securities
37
issued upon the transfer thereof or in exchange or
substitution therefor, irrespective of whether or not any
notation in regard thereto is made upon any such Security or
such other Security. Any action taken by the Holders of the
percentage in aggregate principal amount of the Securities
of any or all series, as the case may be, specified in this
Indenture in connection with such action shall be
conclusively binding upon the Issuer, the Trustee and the
Holder of all the Securities affected by such action.
ARTICLE NINE
REDEMPTION OF SECURITIES
SECTION 9.01. The Issuer may, at its option, redeem all
or from time to time any part of the Securities of any
series at the applicable times and redemption prices as may
be specified in the Board Resolution or supplemental
indenture contemplated by Section 3.01 for Securities of
such series, or the Securities of such series, together with
accrued interest to the date fixed for redemption.
SECTION 9.02. In case the Issuer shall desire to exercise
the right to redeem all or any part of the Securities of any
series, as the case may be, in accordance with the right
reserved so to do, it shall provide notice of such
redemption to the Holder of Securities of such series to be
redeemed as a whole or in part by mailing a notice of such
redemption by first class mail not less than 30 nor more
than 90 days prior to the date fixed for redemption to their
last addresses as they shall appear upon the Securities
Register. Any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly
given, whether or not the Holder receives the notice. In
any case, failure to give such notice by mail, or any defect
in the notice, to the Holder of any Security of a series
designated for redemption as a whole or in part shall not
affect the validity of the proceedings for the redemption of
any other Security of such series. In the case of any
redemption of Securities (i) prior to the expiration of any
restriction on such redemption provided in the terms of such
Securities or elsewhere in this Indenture, or (ii) pursuant
to an election of the Issuer which is subject to a condition
specified in the terms of such Securities, the Issuer shall
furnish the Trustee with an Officers' Certificate evidencing
compliance with such restriction or condition.
Each such notice of redemption shall specify the date
fixed for redemption, and the redemption price at which
Securities are to be redeemed, and shall state that payment
of the redemption price of the Securities or portions
thereof to be redeemed will be made at the office or agency
to be maintained by the Issuer as provided in Section 4.02
(or any of said offices or agencies, if more than one) upon
presentation and surrender of such Securities, that interest
accrued to the date fixed for redemption will be paid as
specified in said notice, and that on and after said date
any interest thereon or on the portions thereof to be
redeemed will cease to accrue. If less than all the
Securities of any series are to be redeemed the notice of
redemption shall specify the principal amount of the
Securities of such series and the identification of the
particular series to be redeemed. In case any Security of
any series is to be redeemed in part only, the notice of
redemption shall state the portion of the principal
38
amount thereof to be redeemed and shall state that on and
after the date fixed for redemption, upon presentation and
surrender of such Security, a new Security or Securities of
such series in principal amount equal to the unredeemed
portion thereof and having the same maturity date, interest
rate and redemption provisions will be issued.
If less than all the Securities of a series are to be
redeemed, the Issuer will give the Trustee at least 45-days'
notice (unless a shorter notice shall be satisfactory to the
Trustee), as to the aggregate principal amount of Securities
to be redeemed, and thereupon the Trustee shall select, in
such manner as in its sole discretion it shall deem
appropriate and fair, the Securities of such series or
portions thereof to be redeemed and shall thereafter
promptly notify the Issuer in writing which of the
Securities or portions thereof are to be redeemed.
SECTION 9.03. If the giving of notice of redemption shall
have been completed as above provided, the Securities or
portions of Securities of the series identified in such
notice shall become due and payable on the date, and at the
place or places stated in such notice at the applicable
redemption price, together with interest accrued to the date
fixed for redemption, and unless the Issuer shall default in
the payment of such Securities at the redemption price,
together with any interest accrued to said date, interest on
the Securities or portions of Securities of any series so
called for redemption shall cease to accrue on and after
said date. On presentation and surrender of such Securities
at said place or places of payment in said notice specified,
such Securities or the portions thereof to be redeemed shall
be paid and redeemed by the Issuer at the applicable
redemption price, together with interest accrued thereon to
the date fixed for redemption.
Upon presentation and surrender of any Security which is
redeemed in part only, the Issuer shall execute and register
and the Trustee or the Authenticating Agent on its behalf
shall authenticate and deliver, at the expense of the
Issuer, a new Security or Securities of such series, of
authorized denominations, in principal amount equal to the
unredeemed portion of the Security so presented and having
the same maturity date, interest rate and redemption
provisions.
ARTICLE TEN
SUPPLEMENTAL INDENTURES
SECTION 10.01 The Issuer, when authorized by a Board
Resolution, and the Trustee may from time to time and at any
time enter into an indenture or indentures supplemental
hereto (which shall conform to the provisions of the Trust
Indenture Act as in force at the date of the execution
thereof) for one or more of the following purposes:
(a) to evidence the succession of another corporation
to the Issuer, or successive successions, and the
assumption by the successor corporation of the
covenants, agreements and obligations of the Issuer
pursuant to Article Eleven hereof;
(b) to add to the covenants of the Issurer such
further covenants,
39
restrictions, conditions or provisions as the Board of
Directors shall consider to be for the protection of the
Holders of any series of Securities, and to make the
occurrence or the occurrence and continuance of a
default in any such additional covenants, restrictions,
conditions or provisions a default or an Event of
Default permitting the enforcement of all or any of the
several remedies provided in this Indenture; provided,
however, that in respect of any such additional
covenant, restriction, condition or provision such
supplemental indenture may provide for a particular
period of grace after default (which period may be
shorter or longer than that allowed in the case of other
defaults) or may provide for an immediate enforcement
upon such default or may limit the remedies available to
the Trustee upon such default or may limit the right of
the Holders of a majority in aggregate principal amount
the Securities of such series to waive such default;
(c) to cure any ambiguity or to correct or supplement
any provision contained herein or in any supplemental
indenture which may be defective or inconsistent with
any other provision contained herein or in any
supplemental indenture, to convey, transfer, assign,
mortgage or pledge any property to or with the Trustee
or to make such other provisions in regard to matters or
questions arising under this Indenture as shall not
adversely affect the interests of the Holders of any
Securities;
(d) to establish the form or terms of Securities of
any series as permitted by Section 3.01;
(e) to provide for the issuance under this Indenture
of Securities in coupon form (including Securities
registrable as to principal only), to provide for
interchangeability of such Securities with the
Securities issued hereunder in fully registered form of
the same series and to make all appropriate changes for
such purposes, or to permit or facilitate the issuance
of Securities of any series in uncertificated form;
(f) to provide for the issuance under this Indenture
of Securities denominated or payable in currency other
than Dollars and to make all appropriate changes for
such purpose;
(g) to evidence and provide for the acceptance of
appointment hereunder by a successor trustee with
respect to the Securities, pursuant to Section 7.11, or
to add to or to change any of the provisions of this
Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by
more than one Trustee;
(h) to add to or change or eliminate any provision of
this Indenture as shall be necessary or desirable to
conform to provisions of the Trust Indenture Act as at
the time in effect, provided, that such action shall not
materially adversely affect the interests of the Holders
of the Securities of any series; and
(i) otherwise to change or eliminate any of the
provisions of this Indenture, provided however, that any
such change or elimination may only be effected when no
Outstanding Security of any series created prior to the
execution of such supplemental indenture is entitled to
the benefit of such provision.
40
The Trustee is hereby authorized to join with the Issuer
in the execution of any such supplemental indenture, to make
any further appropriate agreements and stipulations which
may be therein contained and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property
thereunder, but the Trustee shall not be obligated to enter
into any such supplemental indenture which adversely affects
the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
Any supplemental indenture authorized by the provisions
of this Section 10.01 may be executed by the Company and the
Trustee without the consent of the Holders of any of the
Securities at the time Outstanding.
SECTION 10.02. With the consent (evidenced as provided in
Section 8.01) of the Holders of not less than 66 2/3% in
aggregate principal amount of the Securities at the time
Outstanding of all series affected by such supplemental
indenture (voting as one class), the Issuer, when authorized
by a Board Resolution, and the Trustee may, from time to
time and at any time, enter into an indenture or indentures
supplemental hereto (which shall conform to the provisions
of the Trust Indenture Act as in force at the date of such
supplemental indenture) for the purpose of adding any
provisions to or changing in any manner or eliminating any
of the provisions of this Indenture or of any supplemental
indenture or of modifying in any manner the right of the
Holders of the Securities of each such series; provided,
however, that no such supplemental indenture shall (i)
extend the fixed maturity of any Security, or reduce the
principal amount thereof or reduce the rate or extend the
time of payment of interest thereon, or reduce any premium
payable on redemption thereof without the consent of the
Holder of each Security so affected, or (ii) reduce the
aforesaid percentage of Securities of any series, the
consent of the Holders of which is required for any such
supplemental indenture, without the consent of the Holders
of all such Securities of such series then outstanding.
Upon the request of the Issuer, accompanied by a Board
Resolution authorizing the execution of any such
supplemental indenture, and upon the filing with the Trustee
of evidence of the consent of securityholders as aforesaid,
the Trustee shall join with the Issuer in the execution of
such supplemental indenture unless such supplemental
indenture affects the Trustee's own rights, limitations of
rights, obligation, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such
supplemental indenture.
It shall not be necessary for the consent of the
securityholders under this Section 10.02 to approve the
particular form of any proposed supplemental indenture, but
it shall be sufficient if such consent shall approve the
substance thereof.
Promptly after the execution by the Issuer and the
Trustee of any supplemental indenture pursuant to the
provisions of this Section 10.02, the Issuer shall mail a
notice setting forth in general terms the substance of such
supplemental indenture, to all Holders of Securities of each
series affected thereby as the names and addresses of such
Holders appear on the Securities Register. Any failure of
the Issuer to mail such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of
any such supplemental indenture.
41
SECTION 10.03. Upon the execution of any supplemental
indenture pursuant to the provisions of this Article Ten,
this Indenture shall be and be deemed to be modified and
amended in accordance therewith, but only with regard to the
Securities of each series affected by such supplemental
indenture, and the respective rights, limitations of rights,
obligations, duties and immunities under this Indenture of
the Trustee, the Issuer and the Holders of any Securities of
such series affected thereby shall thereafter be determined,
exercised and enforced hereunder subject in all respects to
such modifications and amendments, and all the terms and
conditions of any such supplemental indenture shall be and
be deemed to be part of the terms and conditions of this
Indenture for any and all purposes with regard to the
Securities of such series.
The Trustee, subject to the provisions of Section 7.01
and 7.02, may receive an Opinion of Counsel as conclusive
evidence that any supplemental indenture executed pursuant
to this Article complies with the provisions of this Article
Ten.
SECTION 10.04. Securities of any series which are
authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this
Article Ten may bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental
indenture. New Securities of any series so modified as to
conform, in the opinion of the Board of Directors, to any
modification of this Indenture contained in any such
supplemental indenture may be prepared by the Issuer,
authenticated by the Trustee or the Authenticating Agent on
its behalf and delivered in exchange for the Securities of
such series then Outstanding.
ARTICLE ELEVEN
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 11.01. Nothing contained in this Indenture or in
any of the Securities shall prevent any consolidation of the
Issuer with, or the merger of the Issuer into, any other
corporation or corporations (whether or not affiliated with
the Issuer), or successive consolidations or mergers to
which the Issuer or its successor or successors shall be a
party or parties, or shall prevent any sale or conveyance of
the property of the Issuer as an entirety or substantially
as an entirety to any other corporation (whether or not
affiliated with the Issuer) authorized to acquire and
operate the same; provided, however, and the Issuer hereby
covenants and agrees, that upon any such consolidation,
merger, sale or conveyance the due and punctual payment of
the principal of (and premium, if any) and interest on, all
the Securities of each series according to their tenor, and
the due and punctual performance and observance of all the
covenants and conditions of this Indenture to be performed
or observed by the Issuer, shall be expressly assumed by a
supplemental indenture satisfactory in form to the Trustee
and executed and delivered to the Trustee by the corporation
formed by such consolidation, or into which the Issuer shall
have been merged or which shall have acquired such property
and provided, further, that immediately after giving effect
to such transaction, no Event of Default shall have occurred
and be continuing.
SECTION 11.02. In case of any consolidation, merger, sale
or conveyance, and following such an assumption by the
successor corporation, such successor
42
corporation shall succeed to and be substituted for the
Issuer with the same effect as if it had been named herein.
Such successor corporation may cause to be signed, and
may issue either in its own name or in the name of the
Issuer prior to such succession, any or all of the
Securities of any series issuable hereunder which
theretofore shall not have been signed by the Issuer and
delivered to the Trustee; and, upon the order of such
successor corporation instead of the Issuer and subject to
all the terms, conditions and limitations in this Indenture
prescribed, the Trustee shall authenticate and shall deliver
any Securities of any series which previously shall have
been signed and delivered by the officers of the Issuer to
the Trustee for authentication pursuant to such provisions
and any Securities of any series which such successor
corporation thereafter shall cause to be signed and
delivered to the Trustee on its behalf for that purpose
pursuant to such provisions. All the Securities so issued
shall in all respects have the same legal rank and benefit
under this Indenture as the Securities theretofore or
thereafter issued in accordance with the terms of this
Indenture as though all of such Securities had been issued
at the date of the execution hereof.
In case of any such consolidation, merger, sale or
conveyance, such changes in phraseology and form may be made
in the Securities of any series thereafter to be issued as
may be appropriate.
Nothing contained in this Indenture or in any of the
Securities of any series shall prevent the Company from
merging into itself any other corporation (whether or not
affiliated with the Company) or acquiring by purchase or
otherwise all or part of the property of any other
corporation (whether or not affiliated with the Company).
SECTION 11.03. The Trustee, subject to the provisions of
Section 7.01 and 7.02, may receive an Opinion of Counsel as
conclusive evidence that any consolidation, merger, sale or
conveyance and any such assumption complies with the
provisions of this Article Eleven.
ARTICLE TWELVE
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
SECTION 12.01. Except as otherwise provided for the
Securities of any series, if at any time (a) the Issuer
shall have delivered to the Trustee cancelled or for
cancellation all Securities of any series theretofore
authenticated (other than any Securities of such series
which shall have been destroyed, lost or stolen and which
shall have been replaced or paid as provided in Section
3.07), or (b) all Securities of any series not theretofore
delivered to the Trustee cancelled or for cancellation shall
have become due and payable, or are by their terms to become
due and payable within one year or are to be called for
redemption within one year under arrangements satisfactory
to the Trustee for the giving of notice of redemption, and
the Issuer shall deposit or cause to be deposited with the
Trustee as trust funds the entire amount sufficient to pay
at maturity or upon redemption all such Securities of such
series not theretofore delivered to the Trustee cancelled or
for cancellation, including principal (and premium, if any)
and interest due or to become due to such date of maturity
43
or date fixed for redemption, as the case may be, but
excluding, however, the amount of any moneys for the payment
of principal of (and premium, if any) or interest on the
Securities of such series (1) theretofore deposited with the
Trustee and repaid by the Trustee to the Issuer in
accordance with the provisions of Section 12.04, or (2) paid
to any State or to the District of Columbia pursuant to its
unclaimed property or similar laws, and if in either case
the Issuer shall also pay or cause to be paid all other sums
payable hereunder by the Issuer, then this Indenture shall
cease to be of further effect (except as to the provisions
applicable to transfers and exchanges of Securities of such
series) and the Trustee, on demand of and at the cost and
expense of the Issuer, shall execute proper instruments
acknowledging satisfaction of and discharging this
Indenture. Notwithstanding the satisfaction and discharge
of this Indenture, the obligations of the Issuer to the
Trustee under Section 7.06 and the obligations of the
Trustee to any Authenticating Agent under Section 7.13 shall
survive.
SECTION 12.02. All moneys deposited with the Trustee
pursuant to Section 12.01 shall be held in trust and applied
by it to the payment, either directly or through any Paying
Agent (including the Issuer acting as its own Paying Agent),
to the holders of the particular Securities of any series
for the payment or redemption of which such moneys have been
deposited with the Trustee, of all sums due and to become
due thereon for principal (and premium, if any) and
interest.
SECTION 12.03. In connection with the satisfaction and
discharge of this Indenture all moneys then held by any
Paying Agent under the provisions of this Indenture shall,
upon demand of the Issuer, be repaid to it or paid to the
Trustee and thereupon such Paying Agent shall be released
from all further liability with respect to such moneys.
SECTION 12.04. Any monies deposited with or paid to the
Trustee or any Paying Agent pursuant to any provision of
this Indenture for payment of the principal of (and premium,
if any) or interest on Securities of any series and not
applied but remaining unclaimed by the Holders of Securities
of such series for two years after the date upon which the
principal of (and premium, if any) or interest on such
Securities, as the case may be, shall have become due and
payable, shall be repaid to the Issuer by the Trustee or
such Paying Agent on demand; and the Holder of any of the
Securities shall thereafter look only to the Issuer for any
payment which such Holder may be entitled to collect.
ARTICLE THIRTEEN
MISCELLANEOUS PROVISIONS
SECTION 13.01. No recourse under or upon any obligation,
covenant or agreement of this Indenture, or of any Security,
or for any claim based thereon or otherwise in respect
thereof, shall be had against any incorporator, shareholder,
officer or director, as such, past, present or future, of
the Issuer, either directly or through the Issuer whether by
virtue of any constitution, statute or rule of law, or by
the enforcement of any assessment or penalty or otherwise,
it being expressly understood that all such liability is
hereby expressly waived and released as a condition of, and
as a consideration for, the issue of the Securities.
44
SECTION 13.02. All the covenants, stipulations, promises
and agreements in this Indenture contained by or on behalf
of the Issuer shall bind its successors and assigns, whether
so expressed or not.
SECTION 13.03. Any act or proceeding by any provision of
this Indenture authorized or required to be done or
performed by any board, committee or officer of the Issuer
shall and may be done and performed with like force and
effect by the like board, committee or officer of the
corporation that shall at the time be the lawful sole
successor of the Issuer.
SECTION 13.04. The Issuer by instrument in writing
executed by authority of two-thirds of the Board of
Directors and delivered to the Trustee may surrender any of
the powers or rights reserved to the Issuer and thereupon
such power or right so surrendered shall terminate both as
to the Issuer and as to any successor corporation.
SECTION 13.05. Any notice or demand which by any
provision of this Indenture is required or permitted to be
given or served except as provided in Section 6.01(c) by the
Trustee or by the Holders of Securities to or on the Issuer
may be given or served by being deposited first class,
postage prepaid in a post office letter box addressed (until
another address is filed by the Issuer with the Trustee) as
follows: Treasurer, Southern New England Telecommunications
Corporation, 227 Church Street, New Haven, Connecticut
06510. Any notice, direction, request or demand by any
securityholder to or upon the Trustee shall be deemed to
have been sufficiently given or made for all purposes if
given or made in writing at the principal office of the
Trustee.
In case by reason of the suspension of regular mail
service or reason of any other cause it shall be
impracticable to give such notice to Holders of Securities
by mail, then such notification as shall be made with
approval of the Trustee shall constitute a sufficient
notification for every purpose hereunder. In any case where
notice to Holders of Securities is given by mail, neither
the failure to mail such notice, nor any defect in any
notice mailed, to any particular Holder of a Security shall
affect the sufficiency of such notice with respect to other
Holders of Securities.
SECTION 13.06. Upon any application or demand by the
Issuer to the Trustee to take any action under any of the
provisions of this Indenture, the Issuer shall furnish to
the Trustee an Officers' Certificate stating that all
conditions precedent provided for in this Indenture relating
to the proposed action have been complied with and an
Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent have been complied
with except that in the case of any such application or
demand as to which the furnishing of such documents is
specifically required by any provision of this Indenture
relating to such particular application or demand, no
additional certificate or opinion need be furnished.
Each certificate or opinion provided for in this
Indenture and delivered to the Trustee with respect to
compliance with a condition or convenant provided for in
this Indenture shall include (1) a statement that the person
making such certificate or opinion has read such covenant or
condition; (2) a brief statement as to the nature and scope
of the examination or investigation upon which the
statements or opinions contained in such certi-
45
ficate or opinion are based; (3) a statement that, in the
opinion of such person, he has made such examination or
investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or
condition has been complied with; and (4) a statement as to
whether or not, in the opinion of such person, such
condition or covenant has been complied with.
SECTION 13.07. If the date of maturity of interest on or
principal of the Securities of any series or the date fixed
for redemption of any Security shall not be a Business Day,
then payment of interest or principal (and premium, if any)
need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if
made on the date of maturity or the date fixed for
redemption, and no interest shall accrue for the period
after such date.
SECTION 13.08. If and to the extent that any provision of
this Indenture limits, qualifies or conflicts with any
provision of Sections 310 to 317, inclusive, of the Trust
Indenture Act, such provision of the Trust Indenture Act
shall control.
SECTION 13.09. The Indenture may be executed in any
number of counterparts, each of which shall be an original;
but such counterparts shall together constitute but one and
the same instrument.
SECTION 13.10. This Indenture and each Security shall be
deemed to be a contract under the laws of the State of
Connecticut, and for all purposes this Indenture shall be
constructed in accordance with the laws of said State.
46
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective seals to
be hereunto affixed and attested (the date of this
instrument being the date of execution by the Trustee, as
indicated in its Acknowledgment).
SOUTHERN NEW ENGLAND
TELECOMMUNICATIONS CORPORATION
BY /s/ W. H. Monteith, Jr.
Name: Walter H.Monteith, Jr.
Title: Chairman, President and
Chief Executive Officer
(Seal)
Attest:
/s/Madelyn M. DeMatteo
Name: Madelyn M. DeMatteo
Title: Secretary
THE CONNECTICUT NATIONAL BANK
BY /s/ Kathy A. Larimore
Name:Kathy A. Larimore
Title:Corporate Trust Officer
(Seal)
Attest:
/s/ D.K. Cawley
Name: Donald K. Cawley
Title: Authorized Person
47
STATE OF CONNECTICUT
COUNTY OF NEW HAVEN
At New Haven, on this 9th day of July, 1991 before me, a
Notary Public in and for the County of New Haven and State
of Connecticut, personally appeared Walter H. Monteith, Jr.,
the Chairman, President and Chief Executive Officer of
Southern New England Telecommunications Corporation, to me
personally known, who executed the foregoing instrument on
behalf of said corporation, and acknowledged the same to be
his free act and deed in his said capacity and the free act
and deed of Southern New England Telecommunications
Corporation.
NOTARIAL SEAL
/s/ Regina A. Nicoletti
Regina A. Nicoletti
Notary Public
My Commission Expires: March 31, 1995
STATE OF CONNECTICUT
COUNTY OF HARTFORD
At the city of Hartford, on this 10th day of July, 1991,
before me, a Notary Public in and for the County of Hartford
and State of Connecticut, personally appeared
Kathy A. Larimore, a Corporate Trust Officer of The Connecticut
National Bank, to me personally known, who executed the
foregoing instrument on behalf of said national banking
association and acknowledged the same to be his free act
and deed in his said capacity and the free act and deed of
The Connecticut National Bank.
NOTARIAL SEAL
/s/ Kathleen P. O'Sullivan
Kathleen P. O'Sullivan
Notary Public
My Commission Expires: March 31, 1993
48
EXHIBIT A
CUSIP No.
(FORM OF GLOBAL NOTE1)
FACE
Except as otherwise provided in Section 2.04 of the
Indenture referred to below, this Security may be
transferred in whole, but not in part, only to another
nominee of the Depository or to a successor Depository or to
a nominee of such successor Depository. Unless this
certificate is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New
York) to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository
Trust Company and any payment is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL since the registered owner
hereof, Cede & Co., has an interest herein.
$
No.
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
MEDIUM TERM NOTE, SERIES
Original Issue Date: Maturity Date:
Interest Rate: Initial
Redemption Date:
Principal Amount:
The Optional Redemption Price shall initially be %
of the principal amount of this Note to be redeemed and
shall decline at each anniversary of the Initial Redemption
Date by % of the principal amount to be redeemed until
the Optional Redemption Price is 100% of such principal
amount.
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION, a
Connecticut corporation (herein referred to as the
"Company"), for value received hereby promises to pay to
, or registered assigns, the principal sum of $ on the
Maturity Date shown above and to pay interest thereon at the
rate per annum shown above until the principal amount is
paid or made available for payment. The Company will pay
interest semi-annually on and (each an
"Interest Payment Date"), commencing with the Interest
Payment Date immediately following the Original Issue Date
shown above, and on the Maturity Date shown above. Interest
on this Note will accrue from the most recent Interest
Payment Date to which interest has been paid or duly
provided for or, if no interest has been paid or duly
provided for, from the Original Issue Date shown above. The
amount of interest payable on any Interest Payment Date
shall be computed on the basis of a 360-day year of twelve
30-day months. The interest so payable on any Interest
Payment Date will, subject to certain exceptions provided
1 The Company may elect to use a different title (i.e.,
debentures) and, in such case, conforming changes would be
made throughout the text of this form.
A-1
in the Indenture referred to below, be paid to the person in
whose name this Note is registered at the close of business
on the Record Date for such interest, which shall be the
or , as the case may be, next preceding such
Interest Payment Date, unless such Record Date shall not be
a Business Day, as defined below, in which case the Record
Date shall be the Business Day next preceding. (If the
Original Issue Date of this Note is between a Record Date
and the corresponding Interest Payment Date, the first
payment of interest on this Note shall be payable to the
person to whom this Note shall have been issued.) Payment of
the principal of and interest on this Note will be made at
the office or agency of the Company maintained for that
purpose in the Borough of Manhattan, The City of New York,
State of New York, in such coin or currency in the United
States of America as at the time of payment shall be legal
tender for payment of public and private debts; provided
however, that, at the option of the Company payment of
interest may be made by check mailed to the address of the
person entitled thereto as such address shall appear in the
Securities register. "Business Day" means any day, other
than a Saturday or Sunday, that is not a day on which
banking institutions are authorized or required by law or
regulation to be closed in The City of New York or the State
of Connecticut.
Reference is hereby made to the further provisions of
this Note set forth on the reverse hereof and such further
provisions shall for all purposes have the same effect as
though fully set forth at this place.
This Note shall not be valid or become obligatory for any
purpose until the appropriate certificate of authentication
hereon shall have been executed by or on behalf of the
Trustee under the Indenture referred to on the reverse
hereof.
IN WITNESS WHEREOF, SOUTHERN NEW ENGLAND
TELECOMMUNICATIONS CORPORATION has caused this Instrument to
be signed by its duly authorized officers, each by a
facsimile of his signature, and has caused a facsimile of
its corporate seal to be affixed hereunto or imprinted
hereon.
Date
SOUTHERN NEW ENGLAND
TELECOMMUNICATIONS
CORPORATION
By
(Corporate Seal) Name:
Title:
Name:
Title:
(FORM OF CERTIFICATE OF AUTHENTICATION)
This is one of the Securities of the series designated
therein referred to in the within mentioned Indenture.
THE CONNECTICUT NATIONAL
BANK,
as Trustee
By
Authorized Signatory
A-2
(FORM OF NOTE)
(REVERSE)
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
This Note is one of a duly authorized issue of unsecured
debt securities (hereinafter called the "Securities") of the
Company of the series hereinafter specified, all such
Securities issued or to be issued under and pursuant to an
indenture dated as of (herein called the
"Indenture"), between the Company and The Connecticut
National Bank, Trustee (herein called the "Trustee"), to
which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities
thereunder of the Trustee, the Company and the holders (the
words "holders" or "holder" meaning the registered holders
or registered holder) of the Securities. The Securities may
be issued in one or more series, which different series may
be issued in various aggregate principal amounts, may mature
at different times, may bear interest at different rates,
may be subject to different redemption provisions (if any),
may be subject to different sinking, purchase or analogous
funds (if any), may be subject to different covenants and
Events of Default and may otherwise vary as in the Indenture
provided. This Note is one of a series designated as the
Series Notes of the Issuer (herein called the
"Series Notes"), limited in aggregate
principal amount to $ . The Series Notes
may be issued at various times with different maturity dates
and different principal repayment provisions, may bear
interest at different rates, and may otherwise vary, all as
provided in the Indenture.
In case an Event of Default with respect to the Series
Notes shall have occurred and be continuing, the principal
hereof may be declared, and upon such declaration shall
become, due and payable, in the manner, with the effect and
subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company
and the Trustee, with the consent of the holders of not less
than 66 2/3% in aggregate principal amount of the Securities
at the time Outstanding, as defined in the Indenture, of all
series to be affected (voting as one class) evidenced as in
the Indenture provided, to execute supplemental indentures
adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any
supplemental indenture or modifying in any manner the rights
of the holders of the Securities of each such series;
provided, however, that no such supplemental indenture shall
(i) extend the fixed maturity of any Security, or reduce the
principal amount thereof, or reduce the rate or extend the
time of payment of interest thereon, or reduce any premium
payable on redemption thereof, without the consent of the
holder of each Security so affected, or (ii) reduce the
aforesaid percentage of Securities, the consent of the
holders of which is required for any such supplemental
indenture, without the consent of the holders of all
Securities then outstanding. It is also provided in the
Indenture that, with respect to certain defaults or Events
of Default regarding the Securities of any
A-3
series, prior to any declaration of the maturity of such
Securities, the holders of a majority in aggregate principal
amount of the Securities of such series (or in the case of
certain defaults or Events of Default, all or certain series
of the Securities) at the time outstanding may on behalf of
the holders of all of the Securities of such series (or all
or certain series of Securities, as the case may be) waive
any past default or Event of Default under the Indenture and
its consequences, except a default in the payment of
principal (or premium, if any) or interest. Any such
consent or waiver by the holder of this Note (unless revoked
as provided in the Indenture) shall be conclusive and
binding upon such holder and upon all future holders and
owners of this Note and of any Note issued upon the transfer
thereof or in exchange or substitution therefor,
irrespective of whether or not any notation of such consent
or waiver is made upon this Note or such other Note.
No reference herein to the Indenture and no provision of
this Note or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and
unconditional, to pay the principal of (and premium, if any)
and interest on this Note at the places, at the respective
times, at the rate and in the coin or currency herein
prescribed.
The Series Notes may be redeemed, at the option of
the Company, as a whole or from time to time in part, on or
after the Initial Redemption Date, set forth on the face
hereof, and prior to maturity, upon the notice referred to
below, all as provided in the Indenture, at the related
Optional Redemption Prices (expressed in percentages of the
principal amount) set forth on the face hereof, together in
each case with accrued interest to the date fixed for
redemption. As provided in the Indenture, notice of
redemption to the holders of the Notes to be redeemed as a
whole or in part shall be given by mailing a notice of such
redemption not less than thirty nor more than ninety days
prior to the date fixed for redemption to their last
addresses as they shall appear upon the Securities register.
The Series Notes are issuable as registered
Notes without coupons in denominations of $1,000 or any
multiple thereof. Upon due presentment for exchange or
registration of transfer of this Note at the office or
agency of the Company in the Borough of Manhattan, The City
of New York, a new Note or Notes having the same maturity,
interest rate, redemption provisions, if any, and Original
Issue Date, of authorized denominations, for an equal
aggregate principal amount, will be issued in the manner and
subject to the limitations provided in the Indenture. No
service charge shall be made for any such exchange or
transfer, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto.
The Company, the Trustee, any authenticating agent, any
payment agent and any Securities registrar may deem and
treat the holder hereof as the absolute owner hereof
(whether or not this Note shall be overdue and
notwithstanding any notation of ownership or other writing
hereon) for the purpose of receiving payment of or on
account of the principal hereof (and premium, if any) and,
subject to the provisions on the face hereof, interest
hereon, and for all other purposes, and neither the Company
nor the Trustee nor any authenticating agent nor any payment
agent nor any securities registrar shall be affected by any
notice to the contrary.
A-4
No recourse shall be had for the payment of the principal
of (or premium, if any) or the interest on this Note or for
any claim based hereon, or otherwise in respect hereof, or
based on or in respect of the Indenture or any indenture
supplemental thereto, against any incorporator, shareholder,
officer or director, as such past, present or future, of the
Company or of any successor corporation, either directly or
through the Company or any successor corporation, whether by
virtue of any constitution, statute or rule of law or by the
enforcement of any assessment of penalty or otherwise, all
such liability being, by the acceptance hereof and as part
of the consideration for the issue hereof, expressly waived
and released.
This Note shall be deemed a contract under the laws of
the State of Connecticut and for all purposes shall be
governed by and construed in accordance with the laws of
said State.
A-5
EXHIBIT B
(FORM OF NOTE1)
FACE
$ No.
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
MEDIUM TERM NOTES
Original Issue Date: Maturity Date:
Interest Rate: Initial
Redemption Date:
Principal
Amount:
The Optional Redemption Price shall initially be %
of the principal amount of this Note to be redeemed and
shall decline at each anniversary of the Initial Redemption
Date by % of the principal amount to be redeemed until
the Optional Redemption Price is 100% of such principal
amount.2
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION, a
Connecticut corporation (herein referred to as the
"Company"), for value received hereby promises to pay to
, or registered assigns, the principal sum of $ on the
Maturity Date shown above and to pay interest thereon at the
rate per annum shown above until the principal amount is
paid or made available for payment. The Company will pay
interest semi-annually on and (each an
"Interest Payment Date"), commencing with the Interest
Payment Date immediately following the Original Issue Date
shown above, and on the Maturity Date shown above. Interest
on this Note will accrue from the most recent Interest
Payment Date to which interest has been paid or duly
provided for or, if no interest has been paid or duly
provided for, from the Original Issue Date shown above. The
amount of interest payable on any Interest Payment Date
shall be computed on the basis of a 360-day year of twelve
30-day months. The Interest so payable on any Interest
Payment Date will, subject to certain exceptions provided in
the Indenture referred to below, be paid to the person in
whose name this Note is registered at the close of business
on the Record Date for such interest, which shall be the
or , as the case may be, next preceding such
Interest Payment Date, unless such Record Date shall not be
a Business Day, as defined below, in which case the Record
Date shall be the Business Day next preceding. (If the
Original Issue Date of this Note is between a Record Date
and the corresponding Interest Payment Date, the first
payment of interest on this Note shall be payable to the
person to whom this Note shall have been issued.) Payment of
the principal of and interest on this Note will be made at
the office or agency of the Company maintained for that
purpose in the Borough of Manhattan, The City of New York,
State of New York, in such coin or currency in the United
States of America as at the time of payment shall be legal
tender for payment of public and private debts; provided,
however, that, at the option of the company payment of
1 The Company may elect to use a different title (i.e.,
debentures) and, in such case, conforming changes would be
made throughout the text of this form.
2 If the security is offered pursuant to a firm committee
underwriting, the provisions relating to redemption would be
set forth in the text contained on the reverse of this form.
B-1
interest may be made by check mailed to the address of the
person entitled thereto as such address shall appear in the
Securities register. "Business Day" means any day, other
than a Saturday or Sunday, that is not a day on which
banking institutions are authorized or required by law or
regulation to be closed in The City of New York or the State
of Connecticut.
Reference is hereby made to the further provisions of
this Note set forth on the reverse hereof and such further
provisions shall for all purposes have the same effect as
though fully set forth at this place.
This Note shall not be valid or become obligatory for any
purpose until the appropriate certificate of authentication
hereon shall have been executed by or on behalf of the
Trustee under the Indenture referred to on the reverse
hereof.
IN WITNESS WHEREOF, SOUTHERN NEW ENGLAND
TELECOMMUNICATIONS CORPORATION has caused this Instrument to
be signed by its duly authorized officers, each by a
facsimile of his signature, and has caused a facsimile of
its corporate seal to be affixed hereunto or imprinted
hereon.
Date
SOUTHERN NEW ENGLAND
TELECOMMUNICATIONS
CORPORATION,
By
(Corporate Seal) Name:
Title:
Name:
Title:
(FORM OF CERTIFICATE OF AUTHENTICATION)
This is one of the Securities of the series designated
therein referred to in the within mentioned Indenture.
THE CONNECTICUT NATIONAL
BANK,
as Trustee
By
Authorized Signatory
B-2
(FORM OF NOTE)
(REVERSE)
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
This Note is one of a duly authorized issue of unsecured
debt securities (hereinafter called the "Securities") of the
Company of the series hereinafter specified, all such
Securities issued or to be issued under and pursuant to an
indenture dated as of (herein called the
"Indenture"), between the Company and The Connecticut
National Bank, Trustee (herein called the "Trustee"), to
which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities
thereunder of the Trustee, the Company and the holders (the
words "holders" or "holder" meaning the registered holders
or registered holder) of the Securities. The Securities may
be issued in one or more series, which different series may
be issued in various aggregate principal amounts, may mature
at different times, may bear interest at different rates,
may be subject to different redemption provisions (if any),
may be subject to different sinking, purchase or analogous
funds (if any), may be subject to different covenants and
Events of Default and may otherwise vary as in the Indenture
provided. This Note is one of a series designated as the
Series Notes of the Issuer (herein called the
"Series Notes"), limited in aggregate
principal amount to $ . The Series Notes
may be issued at various times with different maturity dates
and different principal repayment provisions, may bear
interest at different rates, and may otherwise vary, all as
provided in the Indenture.
In case an Event of Default with respect to the Series
Notes shall have occurred and be continuing, the principal
hereof may be declared, and upon such declaration shall
become, due and payable, in the manner, with the effect and
subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company
and the Trustee, with the consent of the holders of not less
than 66 2/3% in aggregate principal amount of the Securities
at the time Outstanding, as defined in the Indenture, of all
series to be affected (voting as one class) evidenced as in
the Indenture provided, to execute supplemental indentures
adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any
supplemental indenture or modifying in any manner the rights
of the holders of the Securities of each such series;
provided, however, that no such supplemental indenture shall
(i) extend the fixed maturity of any Security, or reduce the
principal amount thereof, or reduce the rate or extend the
time of payment of interest thereon, or reduce any premium
payable on redemption thereof, without the consent of the
holder of each Security so affected, or (ii) reduce the
aforesaid percentage
B-3
of Securities, the consent of the holders of which is
required for any such supplemental indenture, without the
consent of the holders of all Securities then outstanding.
It is also provided in the Indenture that, with respect to
certain defaults or Events of Default regarding the
Securities of any series, prior to any declaration of the
maturity of such Securities, the holders of a majority in
aggregate principal amount of the Securities of such series
(or in the case of certain defaults or Events of Default,
all or certain series of the Securities) at the time
outstanding may on behalf of the holders of all of the
Securities of such series (or all or certain series of
Securities, as the case may be) waive any past default or
Event of Default under the Indenture and its consequences,
except a default in the payment of principal (or premium, if
any) or interest. Any such consent or waiver by the holder
of this Note (unless revoked as provided in the Indenture)
shall be conclusive and biding upon such holder and upon all
future holders and owners of this Note and of any Note
issued upon the transfer thereof or in exchange or
substitution therefor, irrespective of whether or not any
notation of such consent or waiver is made upon this Note or
such other Note.
No reference herein to the Indenture and no provision of
this Note or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and
unconditional, to pay the principal of (and premium, if any)
and interest on this Note at the places, at the respective
times, at the rate and in the coin or currency herein
prescribed.
The Series Notes may be redeemed, at the option of
the Company, as a whole or from time to time in part, on or
after the Initial Redemption Date, set forth on the face
hereof, and prior to maturity, upon the notice referred to
below, all as provided in the Indenture, at the related
Optional Redemption Prices (expressed in percentages of the
principal amount) set forth on the face hereof, together in
each case with accrued interest to the date fixed for
redemption. As provided in the Indenture, notice of
redemption to the holders of the Notes to be redeemed as a
whole or in part shall be given by mailing a notice of such
redemption not less than thirty nor more than ninety days
prior to the date fixed for redemption to their last
addresses as they shall appear upon the Securities register.
The Series Notes are issuable as registered
Notes without coupons in denominations of $1,000 or any
amount in excess thereof which is a multiple of $1,000.
Upon due presentment for exchange or registration of
transfer of this Note at the office or agency of the Company
in the Borough of Manhattan, The City of New York, a new
Note or Notes having the same maturity, interest rate,
redemption provisions, if any, and Original Issue Date, of
authorized denominations, for an equal aggregate principal
amount, will be issued in the manner and subject to the
limitations provided in the Indenture. No service charge
shall be made for any such exchange or transfer, but the
Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in
relation thereto.
The Company, the Trustee, any authenticating agent, any
payment agent and any Securities registrar may deem and
treat the holder hereof as the absolute owner hereof
(whether or not this Note shall be overdue and
notwithstanding any notation of ownership or other writing
hereon) for the purpose of receiving payment of or on
account of the principal hereof ( and premium, if any) and,
subject to the provisions on the face hereof, interest
hereon, and for all other purposes, and neither the Company
nor the Trustee nor any authenticating agent nor any payment
agent nor any securities registrar shall be affected by any
notice to the contrary.
B-4
No recourse shall be had for the payment of the principal
of (or premium, if any) or the interest on this Note or for
any claim based hereon, or otherwise in respect hereof, or
based on or in respect of the Indenture or any indenture
supplemental thereto, against any incorporator, shareholder,
officer or director, as such past, present or future, of the
Company or of any successor corporation, either directly or
through the Company or any successor corporation, whether by
virtue of any constitution, statute or rule of law or by the
enforcement of any assessment of penalty or otherwise, all
such liability being, by the acceptance hereof and as part
of the consideration for the issue hereof, expressly waived
and released.
This Note shall be deemed a contract under the laws of
the State of Connecticut and for all purposes shall be
governed by and construed in accordance with the laws of
said State.
B-5
EX. 10(iii)(A)5
SNET EXECUTIVE NON-QUALIFIED PENSION PLAN AND EXCESS BENEFIT
PLAN
As approved by the Board of Directors on December 8, 1993, the
purpose of the proposed redesign of the executive pension
plans is to have the same pension formula apply for executives
and management employees, and maximize the benefits which may
be payable from the Pension Trust Fund. The redesign replaces
the pension formula and Minimum Pension Benefit provisions of
the Executive Non-Qualified Pension Plan (ENQPP) component of
the SNET Executive Non-Qualified Pension Plan and Excess
Benefit Plan (Plan). The provisions of the Excess Benefit
Plan component of the Plan will be modified to be consistent
with the changes to the SNET Management Pension Plan (MPP).
Therefore, it is recommended that the name of the Plan be
renamed to the SNET Pension Benefit Plan (PBP). The
redesigned formula will facilitate the company's ability to
recruit executives and ensure that SNET remains a competitive
employer of choice.
The amendments to the Plan are as follows:
1. Effective December 13, 1995, the ENQPP adjusted
career income formula shall be calculated, in accordance
with the Plan provisions, for all eligible executives who
are on the active payroll as of December 13, 1995, and
the accrued vested pension benefit payable under the
ENQPP shall be frozen. Such frozen benefit shall be
included with the accrued pension benefits calculated for
each such executive effective January 1, 1996 under the
career income average formula of the MPP for purposes of
ensuring that the total SNET pension benefit shall never
be less than the amount to which each such executive was
previously entitled before application of any plan
amendments adopted hereunder; provided, however, that in
the event that such comparison of pension benefit amounts
indicates for any such executive that the frozen ENQPP
benefit is included in the higher amount, each such
executive's opening account under the provisions of the
MPP or Pension Benefit Plan component of the Plan shall
be determined using such higher pension benefit, and such
frozen ENQPP pension benefit will not be separately
available under the ENQPP provisions of the Plan.
The Minimum Pension Benefit provisions of the ENQPP
component of the Plan have been replaced by the
redesigned MPP Cash Balance Plan formula, and shall not
be included in the determination of the accrued pension
benefits payable as of January 1, 1996.
2. Effective December 13, 1995, the Plan is amended to
provide that upon the last payment of ENQPP pension
benefits, the ENQPP component of the Plan shall
terminate.
3. Effective January 1, 1996, the Plan shall be renamed
to the SNET Pension Benefit Plan (PBP).
- 2 -
4. The PBP is amended effective January 1, 1996 to
provide for the establishment of a Cash Balance Plan
(CBP) account, and annual pay related and interest
credits commencing January 1, 1997, with such CBP
provisions determined in accordance with the MPP
amendments outlined in Exhibit A based on eligible
compensation (as defined in the MPP) in excess of the
maximum amount of compensation which may be included in
the MPP under Section 401(a)(17) of the Code. The
provisions regarding the MPP benefit which exceed the
maximum "annual benefit" payable to participants under
the MPP in accordance with Section 415 of the Internal
Revenue Code (Code) will continue. At the time an
employee leaves the company on or after January 1, 1996,
the distribution election decision made by an employee
under the MPP shall apply to any pension benefit that may
be payable under the PBP.
SNET MANAGEMENT PENSION PLAN
Effective October, 1980 with amendments
up to and including the amendments effective
through March 31, 1995
Published March 25, 1995
TABLE OF CONTENTS
Page
SECTION 1. PURPOSE................................................... 1
SECTION 2. DEFINITIONS............................................... 2
SECTION 3. ADMINISTRATION............................................ 8
SECTION 4. PENSIONS
1. Eligibility................................................... 12
a. Service Pension........................................... 12
b. Deferred Vested Pension................................... 12
vi. 1991 Special Early Commencement....................... 15
c. Disability Pension........................................ 16
d. Conversion from Disability to Service Pension............. 17
e. Pension Plan Participation................................ 17
f. Normal Retirement Age..................................... 17
g. Mandatory Retirement Age.................................. 17
h. Pension Benefits at the Expiration of Sickness Disability
Benefits.................................................. 18
i. Disability Service Pension................................ 18
j. Transitional Retirement Status............................ 21
k. Service Beyond Age 70 1/2; Minimum Distributions.......... 24
2. Pension Amounts............................................... 24
a. Effective Date............................................ 24
b. Calculation of Monthly Pension Benefit.................... 25
i. Pension Benefit Formula............................... 25
ii. Adjusted Career Income................................ 25
iii.Compensation.......................................... 27
c. Coverage Under the SNETPP................................. 30
d. Coverage Under Predecessor Plan or Prior Service Under
This Plan or in accordance with the Mandatory Portability
Agreement................................................. 31
e. Early Retirement Discount................................. 32
i. Pension Deferral Option............................... 32
f. Deferred Vested Pension Amount............................ 33
g. No Reductions............................................. 34
h. Pension Benefits Under Other Plans........................ 34
i. Service Beyond Normal Retirement Age...................... 34
j. 1989 Special Increase..................................... 35
k. Minimum Benefit........................................... 35
l. 1987 Special Increase..................................... 36
m. Extension of Minimum Benefit Eligibility Provisions....... 37
n. 1991 Special Increase..................................... 38
3. Survivor Annuities............................................ 40
i. Spousal Consent Requirement............................... 40
ii. 90 Day Election Period.................................... 40
iii. Written Explanation of Election and Consent............... 40
iv. Annuity Starting Date; Consent to Receive Distributions... 41
v. Alternate Payee........................................... 41
a. Fifty Percent Annuity Option - Service Pensions........... 41
b. Survivor Annuity Option - Disability Pensions............. 43
c. Revoking Election, Restoring Pension...................... 47
d. Automatic Survivor Annuity - Prior to Commencement of
Pension Benefits.......................................... 49
TABLE OF CONTENTS
Page
SECTION 4. PENSIONS (Continued)
e. Deferred Vested Pension Joint and Survivor Annuity ....... 50
ii. Surviving Annuitant of a Deferred Vested Pensioner.... 52
viii. 1991 Special Early Commencement....................... 56
f. 1989 Special Increase .................................... 57
g. Survivor Annuity Option for Employees Eligible for
Disability Service Pension................................ 58
h. Retirees Electing the Pension Deferral Option............. 59
4. Monthly Payments ............................................. 60
5. Duration of Payments; Commencement of Benefits................ 60
6. Treatment During Subsequent Participating Company Employment.. 61
7. Treatment During Employment Covered By Mandatory Portability
Agreement................................................. 65
8. Notice of Retirement Eligibility.............................. 66
9. Pension Funding Policy and Method............................. 66
10. Maximum Pensions.............................................. 68
11. Pension Plan Termination Arrangements......................... 78
12. Disability Pension Payments................................... 85
SECTION 5. DEATH BENEFITS
1. Active Employee Death Benefit................................. 86
2. Retiree Death Benefit......................................... 86
3. Eligible Beneficiaries........................................ 88
a. Mandatory Beneficiaries................................... 89
b. Discretionary Beneficiaries............................... 89
c. Beneficiary Designation................................... 90
d. Payment of Final Expenses................................. 90
4. Method of Payment............................................. 90
a. Payment on Death of Employee or Pensioner................. 90
b. Payment on Death of Beneficiary........................... 91
c. Advance Payment........................................... 91
d. Payment of Interest....................................... 92
5. Death After Termination of Employment......................... 93
6. Claims........................................................ 93
7. Definition of Basic Annual Rate of Pay........................ 93
8. Charging of Payments.......................................... 94
9. Waiver of Death Benefit....................................... 94
TABLE OF CONTENTS
Page
SECTION 6. GENERAL PROVISIONS
l. Rights to Pensions or Benefits................................ 96
2. Assignment or Alienation; Qualified Domestic Relations Orders. 96
3. Determination of Eligibility.................................. 99
4. Breaks in Service.............................................100
a. General Provisions - Except for Pension
Participation and Vested Pensions.........................100
b. Pension Plan Participation................................103
c. Vesting Eligibility.......................................103
d. Accrual of Vested Pension.................................104
5. Leave of Absence..............................................106
FMLA Provisions........................................... 99
6. Layoff or Separation from Service under the Provisions of the
SNET Management Severance Pay Plan........................108
7. Special Classification........................................109
8. Method of Payment.............................................109
9. Amounts Accrued Prior to Death................................109
l0. Payment to Others.............................................110
ll. Pension or Benefit Option During Disability...................110
l2. Multiple Participating Company Employment.....................111
l3. Merger or Consolidation.......................................111
l4. Annual Report.................................................111
15. Predecessor Plan Provisions...................................111
16. Prior Provisions of Plan......................................112
17. Unclaimed Benefits............................................112
18. Top Heavy Provisions..........................................112
19. Unemployment Compensation Act of 1992.........................117
SECTION 7. TRANSFER PROVISIONS WITH THE SNETPP.......................120
SECTION 8. CHANGES IN PLAN; TERMINATION OF PLAN......................121
SECTION l. PURPOSE
The purpose of the SNET Management Pension Plan is to provide for
the payment of definite amounts to employees of the Corporation and
its participating Subsidiaries when they are retired from service,
or, in the event of death, to their dependent relatives, or, in
certain cases, to their annuitants, or to former employees when
they become entitled to deferred vested pension payments, or in
certain cases, to their annuitants.
Page 1
SECTION 2. DEFINITIONS
SNETMPP
1. The term "ADEA" shall mean the Age Discrimination in Employment
Act of 1967 as amended in 1978 and as it may be amended from time
to time.
2. The words "bargaining unit employee" shall mean an employee who
is a member of the bargaining unit.
3. The words "Chairman of the Board", "President", "Chief
Executive Officer" and "Board of Directors" or "Board" shall mean
the Chairman of the Board of Directors, President, Chief Executive
Officer and the Board of Directors, respectively, of the Company.
4. The word "Committee" shall mean the Employees' Benefit
Committee appointed by the Company to administer the Plan or any
Predecessor Plan.
5. The word "Company" shall mean The Southern New England
Telephone Company, a Connecticut corporation, or its successors;
and where applicable, the Board, a committee thereof, or its
authorized representatives.
6. The word "Corporation" shall mean Southern New England
Telecommunications Corporation.
7. The words "defined benefit pension plan" shall mean a pension
plan as defined in Section 3(35) of the Pension Act.
8. The word "employee" shall mean any individual, who receives a
regular and stated compensation, other than a pension or retainer,
from a Participating Company, and who is classified as a regular or
provisional regular management employee (other than a bargaining
unit employee temporarily promoted to a management employee
position for one year or less), or who prior to January 1, 1993 was
classified as a temporary management employee. Any individual who
is employed on or after January 1, 1993 on a temporary basis
through the SNET Job Bank Program (herein referred to as a "job
bank employee") shall not be considered an employee under this
Paragraph 8, Paragraph 1(e) of Section 4, or any other provision of
this Plan, except as otherwise provided in Paragraph 6 of Section 4
or Paragraph 4(c) and (d) of Section 6. Any individual who is
Page 2
SECTION 2. DEFINITIONS (Continued) SNETMPP
treated as an employee solely because of the provisions of Section
414(n) of the Internal Revenue Code or any regulations
thereunder, shall not be considered an employee under this
Paragraph 8, Paragraph 1(e) of Section 4, or any other provision of
this Plan.
9. The words "Former Interchange Company" shall mean any company
with which the Company had an interchange agreement either directly
or indirectly prior to January 1, 1985.
10. The expression "hour of service" shall mean an hour for which
an employee is paid, 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, which provides:
(l) An hour of service is each hour for which an employee is
paid, or entitled to payment, for the performance of duties for
the employer during the applicable computation period.
(2) An hour of service is each hour for which an employee is
paid, or entitled to payment, by the employer 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. Notwithstanding the preceding sentence:
(i) No more than 50l hours of service are required to be
credited under this paragraph (2) 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
Page 3
SECTION 2. DEFINITIONS (Continued) SNETMPP
with applicable workers' 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.
(3) An hour of service is each hour for which back pay,
irrespective of mitigation of damages, is either awarded or
agreed to by the employer. The same hours of service shall not
be credited both under Paragraph (l) or Paragraph (2), as the
case may be, and under this Paragraph (3); and
in accordance with Section 2530.200b-2(b) and (c) of such Rules and
Regulations; except where a more liberal benefit provision may
apply.
11. The words "management employee" shall mean an employee who is
not a member of the bargaining unit.
12. The words "Management Pension Fund Account" shall mean the
account in the SNET Pension Trust Fund reflecting the equitable
interest of the SNET Management Pension Plan.
13. The words "Mandatory Portability Agreement" or "MPA" shall
mean the agreement dated January 1, 1985 entered into by American
Information Technologies Corporation, American Telephone and
Telegraph Company, Bell Atlantic Corporation, Bell Communications
Research, Inc., BellSouth Corporation, Cincinnati Bell Telephone
Company, NYNEX Corporation, Pacific Telesis Group, The Southern New
England Telephone Company, Southwestern Bell Corporation, and U S
West, Inc. which is intended to assure compliance with the
provisions of the Mandatory Portability Legislation in Section 559
of the Tax Reform Act of 1984.
14. The term "Normal Retirement Age" shall mean the later of age
65 or the fourth anniversary of the time the participant commenced
participation in the Plan. There shall be no mandatory retirement
age for employees except as
Page 4
SECTION 2. DEFINITIONS (Continued) SNETMPP
otherwise provided by applicable state law (to the extent not
preempted by the ADEA), and except for those employees referred to
in Section 12(c)(l) of the ADEA for whom the mandatory retirement
age shall be age 65 or at such later time as may be permissible
under such section of the ADEA and except for those employees for
whom age is a bona fide occupational qualification within the
meaning of Section 4(f)(1) of the ADEA for whom the mandatory
retirement age shall be at such time as may be applicable under the
ADEA.
15. The term "Participating Company" shall mean the Corporation,
or any Subsidiary of the Corporation which shall have requested and
received approval by the Board of Directors of the Company, to
participate in the Plan.
16. The words "Pension Act" shall mean the Employee Retirement
Income Security Act of 1974, as it may be amended from time to
time.
17. The words "Pension Fund Account" shall mean the account in the
SNET Pension Trust Fund reflecting the equitable interest of the
SNET Pension Plan.
18. The word "Plan" shall mean this SNET Management Pension Plan
(SNETMPP). The words "Pension Plan" shall mean that part of the
Plan which deals with service, disability and deferred vested
pensions. The words "Death Benefit Plan" shall mean those parts of
the Plan which deal with such death benefits. The words "Plan
Year" shall mean a calendar year which begins January 1 and ends
December 31.
19. The words "Predecessor Plan" shall mean the Pension Plan
and/or Death Benefit Plan provisions of the Company's Plan for
Employees' Pensions, Disability Benefits and Death Benefits as such
plan existed from time to time prior to October l, l980.
20. The words "Review Committee" shall mean the Employees' Benefit
Claim Review Committee, consisting of one or more persons who are
not members of the Employees' Benefit Committee.
21. The term "SNETPP" shall mean the SNET Pension Plan.
Page 5
SECTION 2. DEFINITIONS (Continued) SNETMPP
22. The word "Subsidiary" shall mean any corporation, partnership
or other entity of which at least 50% of the voting stock is owned
directly or indirectly by the Corporation. "Voting Stock" shall
mean securities (or other ownership interest) of which the holders
are ordinarily entitled to vote for the election of directors (or
similar board, if not a corporation) of the entity.
23. The expression "term of employment" or "credited service",
except as expressly limited or stated elsewhere in the Plan, shall
mean 1) a period of continuous employment of an employee in the
service of one or more Participating Companies, or 2) a period of
continuous employment of an employee, in the service of one or more
interchange companies or non-covered companies as defined in the
Mandatory Portability Agreement (MPA), whether before or after
January 1, 1985, as determined in accordance with the MPA, provided
employment with a Participating Company commenced on or after
January 1, 1985; or 3) a period of continuous employment of an
employee in the service of one or more Former Interchange Companies
before January 1, 1985 provided employment with a Participating
Company commenced after the completion of such service but before
January 1, 1985 with no subsequent period of employment with any
Former Interchange Company prior to January 1, 1985.
24. The expression "year of service," for determining Pension Plan
participation and eligibility for a deferred vested pension, shall
mean a computation period in which an employee completes l000 hours
of service. For the purpose of determining l000 hours of service,
an employee (including a job bank employee) will be deemed to have
completed 45 hours of service for each week in which he completes
one or more hours of service on each business day of that week;
except that in the case of any employee (including a job bank
employee) who is a part-time employee, or who was hired prior to
January 1, 1993 for a period not exceeding three consecutive weeks
and who was not
Page 6
SECTION 2. DEFINITIONS (Continued) SNETMPP
employed for more than 30 days in a year (previously referred to as
an occasional employee), such employee will be deemed to have
completed l0 hours of service for each day in which he completes
one or more hours of service. For the purpose of determining a
year of service, there shall be counted an employee's service (i)
included in the term of employment as defined in Paragraph 23 of
this Section 2, and (ii) with any company, not referred to in
Paragraph 22, of which 80 percent or more of the voting stock is
owned directly or indirectly by the Corporation. In addition, for
the purpose of determining a year of service for vesting
eligibility only, there shall also be counted an employee's service
with a Participating Company which is not otherwise included in the
term of employment as defined in Paragraph 23 of this Section 2.
25. The use in this Plan of personal pronouns of the masculine
gender is intended to include both the masculine and feminine
genders.
Page 7
SECTION 3. ADMINISTRATION SNETMPP
l. The Company shall be Plan Administrator and the Sponsor of the
Plan as those terms are defined in the Pension Act. The Board
shall appoint (a) an Employees' Benefit Committee (herein referred
to as "Committee") consisting of not less than three or more than
eight persons, having the administrative responsibilities in this
Section 3, and (b) an Employee Benefits Funding and Investment
Committee (herein referred to as "EBFIC"), having the
responsibilities described below, and (c) one or more trustees
which, except as otherwise provided herein, shall be responsible
for holding and managing assets of the Plan and paying pensions and
death benefits payable therefrom. The EBFIC may appoint one or
more investment managers to manage all or portions of the assets of
the Plan. The EBFIC 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. The EBFIC 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 EBFIC may direct or
authorize a trustee to invest all or a portion of the Plan's assets
in a group trust fund or funds established for the purpose of
commingling assets of participating trusts, in which event the
instrument of trust creating any such group trust fund, to the
extent of the Plan's equitable share thereof, shall be deemed to
have been adopted as a part of the Plan for purposes of Section
40l(a) of the Internal Revenue Code of l986 or any corresponding
provision of any subsequent federal tax law. The EBFIC may
authorize a trustee to invest part of the Plan's assets in deposits
with such trustee bearing a reasonable interest rate. The EBFIC
shall establish and carry out funding policies and methods.
Page 8
SECTION 3. ADMINISTRATION (Continued) SNETMPP
2. a. The Committee shall have the specific powers elsewhere herein
granted to it and shall have such other powers as may be
necessary in order to enable it to adminster the Plan, except
for powers herein granted or provided to be granted to others.
b. The Committee shall adopt such By-Laws and rules of procedure
as it may find appropriate, subject to the approval of the
Chairman of the Board or, at any time there is no Chairman, the
President.
c. The Committee shall be empowered to employ a Secretary and
such assistants as may be required in the administration of the
Plan. The Secretary is hereby designated as agent for service
of legal process with respect to any claims arising under the
Plan.
d. The Committee may appoint one or more Departmental or Area
Benefit Committees or a Secretary or any individual of the
Committee's choosing which shall have such authority with
respect to claims for benefits of employees of the Participating
Companies as may be delegated by the Committee.
e. The Committee or Departmental or Area Benefit Committee or
Secretary or any individual, to the extent such authority has
been delegated, shall grant or deny claims for benefits under
the Plan with respect to employees of the Participating
Companies and authorize disbursements according to this Plan.
All claims for benefits must be submitted in writing. Adequate
notice, pursuant to applicable law and prescribed Company
practices, shall be provided in writing to any participant or
beneficiary whose claim has been denied, setting forth the
specific reasons for such denial.
3. a. The Committee shall serve as the final review committee,
under the Plan and the Pension Act, for the review of all appeal
claims by participants whose initial claims for benefits have
been denied, in whole or part, by the Committee or a
Departmental or Area Benefit Committee or Secretary or
individual appointed by the Committee as provided above.
Page 9
SECTION 3. ADMINISTRATION (Continued) SNETMPP
b. Any participant whose claim for benefits has been denied, in
whole or part, may, (and must for the purpose of seeking any
further review, including judicial review, of a decision or for
the purpose of determining any entitlement to a benefit under
the Plan), within 60 days after receipt of notice of denial,
submit a written request for review of the decision denying the
claim. In such case, the Committee, shall:
(i) make a full and fair review of such decision within 60
days after receipt of the 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; and
(ii) notify the claimant in writing of the review decision,
specifying the reasons for such decision.
c. Any participant whose claim for benefits has been denied
shall have such further rights of review as are provided in
Section 503 of the Pension Act and regulations promulgated
thereunder, and the Committee, or any Departmental or Area
Benefit Committee or Secretary or any other individual, as
applicable, appointed by them shall retain such right, authority
and discretion as is provided in or not expressly limited by
said Section 503 of the Pension Act and the regulations
thereunder.
4. The Employees' Benefit Claim Review Committee for decisions made
prior to July 13, 1994, and the Employees' Benefit Committee for
decisions made on or after July 13, 1994, shall have such powers as
may be necessary to determine conclusively for all parties any and
all questions arising from the administration of the Plan and shall
have sole and complete discretionary authority and control to
manage the operation and administration of the Plan, including, but
not limited to, the determination of all questions relating to
eligibility for participation and benefits, interpretation of all
Plan provisions, determination of the amount and kind of benefits
payable to any participant, spouse or beneficiary, and
Page 10
SECTION 3. ADMINISTRATION (Continued) SNETMPP
construction of disputed or doubtful terms. Such decision shall be
conclusive and binding on all parties and not subject to further
review.
5. The expenses of the Committee, the EBFIC, or the Departmental or
Area Benefit Committee or the Secretary, or any other individual
appointed by the Committee as provided above, in administering the
Plan shall be charged in accordance with Company practices.
6. The Company, the Committee, the EBFIC and the Secretary are each
a named fiduciary as that term is used in the Pension Act with
respect to the particular duties and responsibilities herein
provided to be allocated to it.
7. The Company may allocate responsibilities for the operation and
administration of the Plan consistent with the Plan's terms. The
Company and other named fiduciaries may delegate any of their
responsibilities hereunder by designating in writing other persons
to carry out their respective responsibilities (other than trustee
responsibilities the delegation of which may be limited by law)
under the Plan, and may employ persons to advise them with regard
to any such responsibilities.
8. 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).
Page 11
SECTION 4. PENSIONS SNETMPP
l. Eligibility
a. Service Pension
All employees who have reached the age of sixty-five years
and whose terms of employment have been at least ten years, all
employees who have reached the age of fifty-five years and whose
terms of employment have been at least twenty years, all
employees who have reached the age of fifty years and whose
terms of employment have been at least twenty-five years, and
all employees regardless of age whose terms of employment have
been at least thirty years shall, if they leave the service of a
Participating Company for any reason other than transfer to
another Participating Company, be retired from active service
and, upon such retirement, shall be granted service pensions.
b. Deferred Vested Pension
(i) Except as otherwise specified in this Paragraph l(b) and
in Paragraph 6 of this Section 4 and in Section 6, any
participant as defined in Paragraph l(e) of this Section 4
who has completed five or more years of service, computed in
accordance with Paragraph 3 (c) of Section 6, beginning with
the calendar year in which the participant attained the age
referred to in Section 203(b)(l)(A) of the Pension Act,
namely age eighteen and any participant who is in the service
of a Participating Company at the Normal Retirement Age or
later, who leaves the service of a Participating Company on
or after January 1, 1989 for any reason other than transfer
to another Participating Company, and who is not eligible for
a service pension under Paragraph 1(a) of this Section 4 on
account of the same period of employment, shall be eligible
for a pension which shall commence upon his sixty-fifth
birthday or the day following the termination of his
employment with a Participating Company, whichever is later,
and shall be referred to in the Plan as a deferred vested
pension. Employees whose participation in this Plan
terminated on the Closing Date
Page 12
SECTION 4. PENSIONS (Continued) SNETMPP
of the sale of SNET Fibercom, Inc. and LIGHTNET shall be
vested in any accrued pension benefit for which each such
employee is entitled, with such benefit calculated and
distributed in accordance with the provisions of this Plan.
(ii) In lieu of using the rule of eligibility for a deferred
vested pension stated above in this Paragraph l(b)(i), any
employee is permitted to elect to use any rule of eligibility
previously in effect, under the Predecessor Plan, during any
part of his term of employment.
(iii) A person who leaves the service of a Participating
Company and who is eligible for a deferred vested pension at
normal retirement age and whose term of employment has been
twenty or more years may elect in writing to have his
deferred vested pension payable early in reduced amounts. An
election once made to have a deferred vested pension payable
early in reduced amounts shall be irrevocable. In the event
of such an election, the amount of deferred vested pension
otherwise payable at normal retirement age under this Plan to
such person shall be reduced by multiplying such amount of
deferred vested pension otherwise payable by the applicable
early retirement factor in the table set forth in this
Subparagraph 1(b)(iii). If the term of employment has been
twenty or more years but less than twenty-five years,
eligibility for such early payment shall commence upon his
fifty-fifth birthday, and if the term of employment has been
twenty-five or more years, eligibility for such early payment
shall commence upon his fiftieth birthday.
Page 13
SECTION 4. PENSIONS (Continued)
SNETMPP
Early Retirement Factors Based Upon
Completed Years and Months of Age
Completed At Commencement of Deferred Vested Pension
Years Completed Months of Age
of Age 0 l 2 3 4 5 6 7 8 9 10 11
50 .24 .24 .24 .25 .25 .25 .25 .25 .25 .26 .26 .26
5l .26 .26 .26 .27 .27 .27 .27 .27 .27 .28 .28 .28
52 .28 .28 .29 .29 .29 .29 .30 .30 .30 .30 .31 .31
53 .31 .31 .32 .32 .32 .32 .33 .33 .33 .33 .34 .34
54 .34 .34 .35 .35 .35 .35 .36 .36 .36 .36 .37 .37
55 .37 .37 .38 .38 .38 .38 .39 .39 .39 .39 .40 .40
56 .40 .40 .41 .41 .41 .42 .42 .42 .43 .43 .43 .44
57 .44 .44 .45 .45 .45 .46 .46 .46 .47 .47 .47 .48
58 .48 .48 .49 .49 .50 .50 .5l .5l .5l .52 .52 .53
59 .53 .53 .54 .54 .55 .55 .56 .56 .56 .57 .57 .58
60 .58 .59 .59 .60 .60 .6l .62 .62 .63 .63 .64 .64
61 .65 .66 .66 .67 .67 .68 .69 .69 .70 .70 .7l .7l
62 .72 .73 .73 .74 .75 .75 .76 .77 .77 .78 .79 .79
63 .80 .8l .82 .82 .83 .84 .85 .85 .86 .87 .88 .88
64 .89 .90 .9l .92 .93 .94 .95 .95 .96 .97 .98 .99
65 l.00
(iv) The Committee shall notify each employee who leaves the
employ of such Participating Company (except to take
employment without a break in service with another
Participating Company) of his eligibility, if any, for a
deferred vested pension by mailing, within a reasonable time
after his leaving, a notice to his last known address as
shown on the Participating Company's records.
(v) It shall be the responsibility of each person eligible
to receive payment of a deferred vested pension to file
written request therefor with the Committee not earlier than
one hundred fifty days prior to a prospective date for
commencement of payment specified therein. Except for months
Page 14
SECTION 4. PENSIONS (Continued) SNETMPP
following termination of employment which are after the
normal retirement age, no deferred vested pension payment
shall be made for any month prior to the month in which the
Committee receives such written request.
(vi) 1991 Special Early Commencement of Deferred Vested
Pension Notwithstanding any other provision of the Plan, the
pension benefit of any participant who elects, during the
period July 31, 1991 through September 13, 1991, inclusive,
to terminate employment and who terminates employment during
the period July 8, 1991 through October 18, 1991, inclusive,
with eligibility for a deferred vested pension at normal
retirement age may elect in writing to have his deferred
vested pension commence upon the termination of employment in
reduced amounts. An election once made under this
Subparagraph (vi) to receive a deferred vested pension
payable early in reduced amounts shall be irrevocable;
provided, however, that should more than a specified number
or percentage, as determined by the Company with the
concurrence of the Committee, of any group of employees in
the same department, the same level, the same job title and
classification, or the same geographical location elect to
retire or terminate employment in accordance with the
provisions of this Subparagraph (vi) during the period from
July 31, 1991 through September 13, 1991, inclusive, the
Company, may, with the concurrence of the Committee,
determine that a specified number of such participants, the
identity of whom shall be based on seniority, may delay their
termination of employment for a period ending no later than
December 20, 1991 and retain eligibility for the 1991 Special
Early Commencement provisions of this Subparagraph (vi). In
the event of an election under this Subparagraph (vi), the
amount of deferred vested pension otherwise payable at normal
retirement age under this Plan to such participant shall be
reduced by multiplying the amount of deferred vested pension
otherwise
Page 15
SECTION 4. PENSIONS (Continued) SNETMPP
payable by the applicable 1991 special early retirement factor
specified in the following table.
1991 SPECIAL EARLY COMMENCEMENT OF DEFERRED VESTED PENSION
FACTORS BASED UPON
COMPLETED YEARS AND MONTHS OF AGE AT COMMENCEMENT OF DEFERRED
VESTED PENSION
Completed Completed Months of Age
Years
of Age 0 1 2 3 4 5 6 7 8 9 10 11
Prior
to 58 .50
58 .50 .50 .50 .50 .50 .50 .51 .51 .51 .52 .52 .53
59 .53 .53 .54 .54 .55 .55 .56 .56 .56 .57 .57 .58
60 .58 .59 .59 .60 .60 .61 .62 .62 .63 .63 .64 .64
61 .65 .66 .66 .67 .67 .68 .69 .69 .70 .70 .71 .71
62 .72 .73 .73 .74 .75 .75 .76 .77 .77 .78 .79 .79
63 .80 .81 .82 .82 .83 .84 .85 .85 .86 .87 .88 .88
64 .89 .90 .91 .92 .93 .94 .95 .95 .96 .97 .98 .99
65 1.00
c. Disability Pension
Each employee who terminated employment prior to January 1,
1993 and whose term of employment had been fifteen or more years
shall be a participant for the purposes of the disability
pension provisions of the Plan. Any such participant who became
totally disabled as a result of sickness or of injury, other
than by accidental injury arising out of and in the course of
employment by a Participating Company, shall upon leaving the
service of such Participating Company by reason of such
disability be granted a pension, which pension is designated a
"disability pension"; provided, that if, at the time of such
cessation of service, the employee is qualified for a service
pension under Subparagraph (a) of this Paragraph l, a service
pension shall be granted instead of a disability pension.
Subject to the provisions of Subparagraph (d) of this Paragraph
l, a disability
Page 16
SECTION 4. PENSIONS (Continued) SNETMPP
pension shall continue so long as the employee is prevented by
such disability from resuming active service with a
Participating Company. If the employee recovers sufficiently to
resume active service, the disability pension shall be
discontinued and if the employee reenters the service of a
Participating Company at that time, the period of absence on
disability pension shall be considered a leave of absence and
not as a break in the continuity of the employee's service.
d. Conversion from Disability to Service Pension
Any person who attains normal retirement age while receiving
a disability pension which commenced on or after January 1, 1976
shall be granted and retired with, in lieu of any other pension,
a pension designated a service pension, in the same amount as
the disability pension subject to the provisions of Paragraph
3(a) of this Section 4, with all the benefits under this Plan
appertaining to service pensioners, and the disability pension
shall be discontinued.
e. Pension Plan Participation
All employees who have reached the age referred to in Section
202(a)(l)(A)(i) of the Pension Act, namely age twenty-one, and
whose years of service have been one year or more, shall be
participants in the Pension Plan.
f. Normal Retirement Age
"Normal retirement age" is the later of age 65 or the fourth
anniversary of the time the participant commenced participation
in the Plan.
g. Mandatory Retirement Age
There shall be no mandatory retirement age for employees
except as otherwise provided by applicable state law and except
for those employees referred to in Section 12(c)(1) of the ADEA
for whom the mandatory retirement age shall be age 65 and except
for those employees for whom age
Page 17
SECTION 4. PENSIONS (Continued) SNETMPP
is a bona fide occupational qualification within the meaning of
Section 4(f)(1) of the ADEA for whom the mandatory retirement
age shall be at such time as may be applicable under ADEA.
h. Pension Benefits at the Expiration of Sickness Disability
Benefits
Pension benefits for an employee who terminates employment at
the expiration of Sickness Disability Benefits and is eligible
to receive an immediate pension payable under the provisions of
this Plan (including service, disability, disability service,
and deferred vested pensions) shall not commence unless such an
employee submits an Application for Pension form within 90 days
of termination of employment; provided, further, that if such
employee does not submit the Application form within such 90 day
period, the employee will be treated as a deferred vested
pensioner for the period from the termination of employment date
until an Application form is submitted ("deferral") for all
purposes (which means, for example, that such employee shall not
be eligible for ad hoc pension increases and retiree benefit
coverages), but in no event shall such deferral continue beyond
such employee's consent to the receipt of the pension through
submission of an Application form or attainment of age 65,
whichever is earlier. At the time such employee either consents
to the receipt of the pension or attains age 65, the employee
shall be eligible to receive a service, disability or disability
service pension and applicable retiree benefit coverages in
accordance with the provisions of Section 4, or, if applicable,
a deferred vested pension with no retiree benefit coverages
unless such employee is otherwise eligible for such benefit
coverages under the SNET disability benefit plans.
i. Disability Service Pension
Each employee who terminates employment on or after January
1, 1993 and whose actual term of employment had been fifteen or
more years as of the
Page 18
SECTION 4. PENSIONS (Continued) SNETMPP
employee's termination of employment date shall be a participant
for the purposes of the disability service pension provisions of
the Plan, subject to the provisions of paragraph 1(h) of this
Section 4.
1. Any such participant who has become totally disabled as a
result of sickness or of injury, other than by accidental
injury arising out of and in the course of employment by a
Participating Company, shall upon leaving the service of
such Participating Company by reason of such disability be
eligible to commence receipt of a disability service
pension beginning when such participant reaches age 65;
provided, that if, at the time of such termination of
employment, the employee is qualified for a service
pension under this Plan, a service pension shall be
granted upon termination of employment instead of
eligibility for a disability service pension; and provided
further that if such employee is eligible for the
transitional retirement status provisions in Paragraph
1(j) of this Section 4, such employee shall be eligible to
commence receipt of a disability service pension beginning
when the transitional retirement status ends due to the
attainment of the age and credited service requirements
for a service pension. Eligibility for a disability
service pension shall continue so long as the employee
continues to be totally disabled under the provisions of
the SNET sickness, accident or long term disability "LTD"
plans for the period beginning upon termination of
employment and ending on the employee's 65th birthdate (or
at the end of the transitional retirement status where
applicable), at which time such disability service pension
shall become payable. The disability service pension will
be calculated using the formula in effect at the date of
termination plus any pension increases granted for retired
employees receiving service pensions during the period in
which LTD payments are
Page 19
SECTION 4. PENSIONS (Continued) SNETMPP
payable (i.e., the period following the employee's
termination of employment date in which the employee
continues to be disabled) until the disability service
pension becomes payable, and such pension shall not be
subject to the early retirement discount provisions of
Paragraph 2(e) of this Section 4. If prior to the
employee's 65th birthday, the employee is determined to be
no longer totally disabled under the provisions of the
SNET LTD plans, the employee will remain eligible for all
provisions relating to the deferred vested pension under
Subparagraph b of this Paragraph 1, and shall not be
eligible for the disability service pension provisions.
If the employee reenters the service of a Participating
Company upon said determination that LTD benefits are no
longer payable, the period of absence shall be considered
a leave of absence and not as a break in the continuity of
the employee's service.
2. Any such participant who has become totally disabled as a
result of accidental injury or illness arising out of and
in the course of employment by a Participating Company,
shall upon leaving the service of such Participating
Company by reason of such disability be eligible to
commence receipt of a disability service pension beginning
when such participant reaches age 65 or an earlier age,
which age when combined with the employee's actual years
of credited service at the termination of employment date
would meet the service pension eligibility provisions of
Paragraph 1(a) of this Section; provided, that if, at the
time of such termination of employment, the employee is
qualified for a service pension under this Plan, a service
pension shall be granted upon termination of employment
instead of eligibility for a disability service pension.
Eligibility for a disability service pension shall
continue so long as the employee continues to be
Page 20
SECTION 4. PENSIONS (Continued) SNETMPP
totally disabled (and prevented by such disability from
resuming active service with a Participating Company or
any company) for the period beginning upon termination of
employment and ending on the employee's 65th birthdate or
earlier commencement of such disability service pension
payments. The disability service pension will be
calculated using the formula in effect at the date of
termination plus any pension increases granted for retired
employees receiving service pensions during the period
beginning on the employee's termination of employment date
and ending when such disability service pension commences.
If prior to the employee's commencement of a disability
service pension, the employee is deemed no longer disabled
pursuant to the Sickness and Accident Disability Benefit
Plan or Workers' Compensation law, the employee will
remain eligible for all provisions relating to the
deferred vested pension under Subparagraph b of this
Paragraph 1, and shall not be eligible for the disability
service pension provisions. If the employee reenters the
service of a Participating Company upon said determination
that total disability benefits are no longer payable, the
period of absence shall be considered a leave of absence
and not as a break in the continuity of the employee's
service.
(j) Transitional Retirement Status
Any employee who voluntarily or involuntarily
terminates employment with a Participating Company between
September 8, 1993 through December 31, 1995, inclusive,
and who, based on the criteria described in Paragraph 1(a)
of this Section 4, would have become eligible for a
service pension after the termination of employment date
but no later than December 31, 1995 if such employment had
not terminated, shall be granted a transitional retirement
status ("TRS") for the period
Page 21
SECTION 4. PENSIONS (Continued) SNETMPP
commencing on the day following the termination date and
ending on the earlier of:
(a) the date the employee would have first become
eligible to retire with such service pension based upon
the attainment of the age and/or credited service
requirements;
(b) death of the employee (with Automatic Survivor
Annuity payments);
(c) the date of rehire by a Participating Company
(excluding periods of temporary employment through the
SNET Job Bank Program), or, the date of hire by a
company when such employment is covered under the
Mandatory Portability Agreement; or
(d) election by the employee to commence receipt of a
Cash Balance Account distribution based on the SNET
Pension Plan provisions, where applicable, effective
prior to the end date of the TRS.
The employee shall be eligible for retiree benefits
otherwise accorded to those employees who are eligible to
retire with a service pension in accordance with Paragraph
1(a) of this Section 4 for the continuous period
commencing on the termination of employment date to the
date the TRS is ended for any reason; provided, however
that any service pension payments for which the employee
may become eligible shall not commence until the day
following the end date of the TRS.
(i) In the event the TRS ends due to Subparagraph (a)
above, the calculation of the service pension payable
at end of the TRS shall be based on the employee's
actual age at the end of the TRS, and the credited
service and pension formula in effect as of the
termination of employment date; provided, however,
that for purposes of determining the early retirement
discount for pensions commencing prior to age 55, the
employee's age will be based on
Page 22
SECTION 4. PENSIONS (Continued) SNETMPP
the employee's actual age as of the date the pension
becomes payable (i.e., the end of the TRS), and the
employee's actual credited service as of the
termination of employment date. The former employee
will not be eligible for pension formula changes,
downsizing offers, or pension increases, if any, which
are approved while on the TRS. If such employee was
receiving disability benefits under the Sickness and
Accident Disability Benefit Plan or Workers'
Compensation benefits when such employee terminated
employment with SNET, and such employee remains
totally disabled until the end of the TRS pursuant to
the provisions of Subparagraph (a) above, such
employee shall become eligible for the disability
service pension provisions of Paragraph 1(i) of this
Section 4.
(ii) In the event the TRS is cancelled due to Subparagraph
(b) above and prior to commencement of pension
payments, the automatic survivor annuity pension
benefits provided in Paragraph 3(d) of this Section 4
shall be payable immediately upon the employee's death
to an eligible surviving spouse, with such pension
payments calculated as if the employee had died on the
last day of employment.
(iii) In the event the TRS is cancelled due to Subparagraph
(c) or (d) above, the employee shall immediately cease
to be eligible for any retiree benefits, and any
remaining benefit or pension entitlements shall be
those accorded former employees eligible to receive a
deferred vested pension as of the employee's
termination of employment date.
Page 23
SECTION 4. PENSIONS (Continued) SNETMPP
(k) Service Beyond Age 70 1/2; Minimum Distribution Provisions
Notwithstanding any provision of the Plan to the contrary,
the distribution of an employee's Service or Deferred
Vested Pension shall commence not later than April 1 of
the calendar year following the calendar year in which
such employee attains age 70 1/2 in accordance with the
minimum distribution provisions of Code Section 401(a)(9)
and the regulations thereunder, the provisions of which
are incorporated herein by reference. An employee who is
employed beyond age 70 1/2 and commences receipt of a
pension under the provisions of this Paragraph (k) shall
elect in writing during the 90 Day Election Period
(described in Paragraph 3 of this Section 4) upon a form
prescribed by the Committee, whether or not to have his
pension made payable in reduced amounts to him for life
and in lesser amounts thereafter to a surviving annuitant
for life, subject to the Spousal Consent Requirement
(described in Paragraph 3 of this Section 4). Such
pension payments shall be payable in accordance with the
provisions of Paragraph 5 of this Section 4.
2. Pension Amounts
a. Effective Date
Effective October 1, 1980, the monthly pension benefit for
each employee who, on or after October 1, 1980, is retired on a
pension under the provisions of Paragraph 1(a) or 1(c) of this
Section, or who, on or after August 10, 1980, was retired on a
pension under the provisions of Paragraph 1(a) or 1(c) of
Section 4 of the Predecessor Plan shall be determined in
accordance with the provisions set forth in this Paragraph 2.
Page 24
SECTION 4. PENSIONS (Continued) SNETMPP
b. Calculation of Monthly Pension Benefit
(i) Pension Benefit Formula: The monthly pension benefit
of each employee shall be determined by multiplying such
employee's adjusted career income, as determined in
Subparagraph 2(b)(ii), by one and six-tenths percentum
(1.6%), and dividing the product of such calculation by
twelve.
(ii) Adjusted Career Income:
1. Except as provided hereinbelow, effective
July 8, 1991 for retirements on or after July 8, 1991,
the "adjusted career income," referred to in
Subparagraph b(i), of each employee shall equal the
greater of (A), (B), (C), (D), (E) or (F):
(A) the sum of (i) the product of the
employee's average annual compensation paid during the
period from January 1, 1986 to December 31, 1990,
inclusive, and such employee's term of employment as of
December 31, 1990, plus (ii) such employee's
compensation paid during all periods after December 31,
1990 which are included in the employee's term of
employment; or
(B) the sum of (i) the product of the
employee's average annual compensation paid during the
period from January 1, 1982 to December 31, 1986,
inclusive, and such employee's term of employment as of
December 31, 1986, plus (ii) such employee's
compensation paid during all periods after December 31,
1986 which are included in the employee's term of
employment; or
(C) the sum of (i) the product of the
employee's average annual compensation paid during the
period from January 1, 1979 to December 31, 1983,
inclusive, and such employee's term of employment as of
December 31, 1983, plus (ii) such employee's
compensation paid during all periods after December 31,
1983 which
Page 25
SECTION 4. PENSIONS (Continued) SNETMPP
are included in the employee's term of employment; or
(D) the sum of (i) the product of the
employee's average annual compensation paid during the
period from October 1, 1977 to September 30, 1982,
inclusive, and such employee's term of employment as of
September 30, 1982, plus (ii) such employee's
compensation paid during all periods after September
30, 1982 which are included in the employee's term of
employment; or
(E) the sum of (i) the product of the
employee's average annual compensation paid during the
period from October 1, 1976 to September 30, 1981,
inclusive, and such employee's term of employment as of
September 30, 1981, plus (ii) such employee's
compensation paid during all periods after September
30, 1981 which are included in the employee's term of
employment; or
(F) the sum of (i) the product of the
employee's average annual compensation paid during the
period from January 1, 1975 to December 31, 1979,
inclusive, and such employee's term of employment as of
December 31, 1979, plus (ii) such employee's
compensation paid during all periods after December 31,
1979 which are included in the employee's term of
employment.
The period referred to in clause (i) of (A), (B),
(C), (D), (E) or (F) above shall hereinafter be referred
to as the "averaging period".
Notwithstanding any other provision of this
Subparagraph 2(b)(ii)(1) above, for an employee who has no
service prior to the applicable averaging period which is
included in the employee's term of employment, the
"adjusted career income" shall equal such employee's
compensation for all periods included in the employee's
term of employment.
Page 26
SECTION 4. PENSIONS (Continued) SNETMPP
2. For purposes of determining an employee's average
annual compensation for the applicable averaging period, as
determined in accordance with Subparagraph 2(b)(ii)(1) above:
(A) if during such averaging period there was any
period included in the employee's term of employment for
which the employee received no compensation, the employee
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;
(B) if during such averaging period there was any
period not included in an employee's term of employment,
the employee shall be considered to have earned
compensation during such non-included 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.
3. For purposes of determining an employee's compensation
for all periods after the applicable averaging period, as
determined in accordance with Subparagraph 2(b)(ii)(1), if
after such applicable averaging period there was any period
included in the employee's term of employment for which the
employee received no compensation, the employee 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.
(iii) Compensation: For purposes of this Paragraph 2, the term
"compensation" shall mean an employee's (1) basic pay,
differentials paid for night tours, differentials paid for
temporary work in a higher classification, special project
allowances if assignment commenced on or before November 30, 1983,
area differentials, and the following incentive compensation
actually paid before the employee's termination of employment date:
Page 27
SECTION 4. PENSIONS (Continued) SNETMPP
Earned for services performed during or before 1988
. Lump sum merit wage payments;
. Incentive compensation for Directory or Marketing
employees;
. Payments under the SNET Management Short Term Incentive
Plan;
. Incentive compensation for the Company's Publishing
employees;
. Annual bonus payments for the Company's Network Marketing
employees;
. Quarterly bonus payments for the Company's Business
Services employees;
. Incentive compensation for SNET Cellular, Inc. and SNET
MobileCom, Inc. employees; and
. 1988 Corporate Performance Award.
Earned for services performed after 1988: for management
employees at or below the director or equivalent level of
management of all Participating Companies except LIGHTNET and
SNET Fibercom, the actual payment for all performance incentive
compensation plans; and for those management employees above the
director or equivalent level of management who terminate
employment on or after December 8, 1993, the actual award earned
and granted for services performed after 1988 under the SNET
Executive Short Term Incentive Plan, and
(2) basic pay, success sharing awards, differentials, wage
incentives, commissions and other special payments used in
computing an employee's monthly pension benefit under the SNETPP
for any period of service an employee was covered by such plan
if such service is included in the term of employment in
computing such employee's monthly pension benefit under this
Plan. For an employee who has any period of time during or
after the applicable averaging period determined in accordance
with Subparagraph 2(b)(ii) (1) above during which such employee
receives sickness or accident disability benefits under the
Sickness and Accident Disability Benefit Plan (or the
predecessor of such plan), such employee'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 employee's job for such day, as the employee's basic pay
immediately prior to the disability period bore to the position
rate of such employee's job
Page 28
SECTION 4. PENSIONS (Continued) SNETMPP
immediately prior to the disability period. For an employee who
has any period of time during or after the applicable averaging
period determined in accordance with Subparagraph 2(b)(ii)(1)
above during which such employee is on a Committee-approved
leave of absence to a company which is not a Participating
Company of SNETMPP during such period, such employee's
compensation for the period on such a leave shall be the
compensation, as defined in this Subparagraph 2(b)(iii), from
such company.
Non-cash awards such as trips, appliances, gift certificates,
etc., and associated tax gross-up payments where applicable,
which may be mandated by the Internal Revenue Code to be imputed
to employees as taxable income, do not meet this Plan's
definition of Compensation eligible for inclusion in pension
calculations and shall be excluded from pension calculations.
In addition, cash payments made to employees which do not meet
the requirements of incentive compensation payments under the
departmental incentive compensation payment plans are not
eligible for inclusion in pension calculations.
(iv) Notwithstanding any other provision of this Paragraph 2,
if during any period or periods of time on or after October 1,
l980 and during or prior to the applicable averaging period,
determined in accordance with Subparagraph 2(b)(ii)(1) above, an
employee was employed on a part-time basis, the compensation, as
defined in Subparagraph 2(b)(iii) above, of such an employee for
any period of part-time employment during the applicable
averaging period shall be considered to be the compensation such
employee would have been eligible to receive as an equivalent
full-time employee during such period of part-time employment;
and provided, further, that the term of employment of an
employee who was employed on a part-time basis during any period
or periods of time on or after October 1, l980 and during or
prior to the applicable averaging period shall be prorated, for
such
Page 29
SECTION 4. PENSIONS (Continued) SNETMPP
period or periods of part-time employment, based on a ratio
which shall be determined by dividing the number of such
employee's regular work hours as noted on the Participating
Company's official service record card, excluding any overtime
hours, during such period of part-time employment by the number
of hours, excluding any overtime hours, the employee would have
worked had such employee been a regular full-time employee
during such period of part-time employment; and provided,
further, that for purposes of determining the adjusted career
income under Subparagraph 2(b)(ii)(l)(C), the employee's average
annual compensation shall equal the greater of (l) the amount
determined using the rule set forth above in this Subparagraph
2(b)(iv) or (2) the amount determined without reference to the
rule set forth above in this Subparagraph 2(b)(iv).
c. Coverage Under SNETPP
The monthly pension benefit of an employee who was previously
covered under the SNETPP shall equal the sum of (l) the pension
benefit determined, for all credited service under such other
plan, in accordance with the provisions of such other plan, as
in effect on the last date such employee was covered by such
other plan, plus (2) the pension benefit determined, for all
credited service such employee was covered by this Plan, in
accordance with the provisions of this Plan. Upon completion of
three years continuous employment under this Plan, such employee
shall receive the greater of the pension benefit determined
pursuant to the preceding sentence or the pension benefit
determined solely in accordance with the provisions of this Plan
for all credited service under both plans. An employee's Cash
Balance Account ("CBA") shall continue to be available for
distribution in accordance with the interest rate and
distribution provisions of the SNETPP; provided, however, the
monthly pension benefit payable under this plan shall be reduced
by the annuity value of such CBA at the time of the CBA
Page 30
SECTION 4. PENSIONS (Continued) SNETMPP
distribution, whether such CBA is payable in a lump sum payment
or as an annuity, to the extent required to provide that such
employee receives the pension benefit payable in accordance with
the provisions of this Plan and the SNETPP. For purposes of
determining an employee's term of employment under such other
plan, there shall be counted only the term of employment under
such other plan as of the last date the employee was covered by
such other plan, which would have been counted by such other
plan had the employee been covered by such other plan during the
period the employee is covered by this Plan.
d. Coverage Under Predecessor Plan or Prior Service Under
this Plan or in accordance with the Mandatory Portability
Agreement
The pension benefit of an employee who was previously covered
by the Predecessor Plan, or by a different formula or provision
previously available under this Plan, or, if eligible for the
Mandatory Portability Agreement ("MPA"), by a plan maintained by
a company subject to the MPA, shall equal the sum of (l) the
pension benefit determined, for all prior credited service under
such other plan or under a previous formula or provision of this
Plan, in accordance with the provisions of such other plan or
formula, as in effect on the last date such employee was covered
by such other plan or formula, plus (2) the pension benefit
determined, for all credited service during which such employee
was covered by this Plan, in accordance with the provisions of
this Plan. Upon completion of three years of continuous
employment under this Plan, such employee shall receive the
greater of the pension benefit determined pursuant to the
preceding sentence or the pension benefit determined solely in
accordance with the provisions of this Plan for all credited
service under this plan and all credited service under such
other plan, or all credited service under a previous formula or
provisions of this plan.
Page 31
SECTION 4. PENSIONS (Continued) SNETMPP
e. Early Retirement Discount
The monthly pension benefit, determined in accordance with
the provisions of this Paragraph 2, for each employee who is
granted a service pension for reasons other than total
disability as a result of sickness or injury, shall be reduced
by one-half percentum (0.5%) for each calendar month or part
thereof by which his age at time of retirement is less than 55
years, except that each employee retired with thirty (30) or
more years of credited service shall receive a monthly pension
allowance reduced by one-quarter percentum (0.25%) for each
calendar month or part thereof by which such employee's age at
the time of retirement is less than 55 years.
(i) Pension Deferral Option (PDO): An employee who terminates
employment on or after September 8, 1993 and whose
pension payments will be reduced in accordance with the
early retirement discount provisions are eligible for the
pension deferral option (PDO) provisions. The PDO
automatically begins on the day following an eligible
employee's termination of employment date, and ends on
the earliest of: 1) the date the employee voluntarily
elects to begin receiving his discounted service pension,
2) the employee's 55th birthday, 3) the date the employee
is rehired by SNET as a regular or provisional regular
employee or by a former Bell System Company if such
employee is covered by the Mandatory Portability
Agreement, 4) the date of the employee's death, or 5) the
date an employee elects to commence receipt of a Cash
Balance Account distribution. For employees who are
eligible for the transitional retirement status ("TRS")
and whose TRS ends pursuant to Subparagraph (a) of
Paragraph 1(j) of this Section 4, the election of whether
to begin or defer commencement of the pension payments
shall be made at the end of the TRS when such individual
attains eligibility for a discounted service pension. If
Page 32
SECTION 4. PENSIONS (Continued) SNETMPP
an employee does not meet the eligibility criteria for a
discounted service pension as described in this Paragraph
2(e), such employee shall not be eligible for the PDO.
While the PDO is in effect, the employee shall be treated
as a retiree for all retiree benefit coverages except
that the monthly pension payments will not be payable
until the retiree elects to begin receiving such
payments, or reaches age 55, whichever comes first.
Pension payments shall be payable beginning the day
following the employee's termination of employment date
if the employee notifies SNET in writing of his election
to commence such pension payments, on a form to be
provided for such purpose, prior to the termination of
employment date or within the 90 day election period (as
defined in Section 4, Paragraph 3(ii)), whichever is
later. If the employee elects to begin receiving his
pension payments after the 90 day election period, the
pension payments shall be payable beginning the day SNET
receives the election form. If the retiree should die
prior to commencement of the pension payments, survivor
annuity pension benefits shall be payable immediately
upon the death of the employee to the spouse, if any, to
which the employee was legally married on the date of
employee's death. The surviving spouse's pension
payments will be calculated as if the employee had
elected to commence receipt of the pension payments on
the date of employee's death, and the early retirement
discount will apply based on the employee's actual age on
that date.
f. Deferred Vested Pension Amount
The monthly pension benefit for each person eligible for a
deferred vested pension under the provisions of Paragraph 1(b)
of this Section 4 shall be calculated exclusively in accordance
with the provisions specified
Page 33
SECTION 4. PENSIONS (Continued) SNETMPP
as applicable to those receiving a pension under Paragraph 1(a)
or 1(c) of this Section 4 effective as of the date such person
leaves the service of a Participating Company other than for
reasons of transfer to another Participating Company, and, in
any case, as if such person had retired on such date and no
recomputation of the pension shall be made after such date or as
a result of amendments made to this Plan subsequent to such
date. An employee who leaves the service of a Participating
Company with eligibility for a deferred vested pension in
accordance with Paragraph l(b) of this Section but is not
entitled to any other class of pension shall not be considered a
pensioner or a retired employee.
g. No Reductions
Regardless of the application of any of the provisions of
this Paragraph 2 of Section 4, in no event shall the total
monthly pension benefit of any employee determined as of any
time be less than the total monthly pension benefit of such
employee determined as of any earlier time under this Plan, the
SNETPP, any Predecessor Plan, or to the extent an employee's
service with a company covered by the Mandatory Portability
Agreement ("MPA") is recognized, the plan maintained by such
company.
h. Pension Benefits Under Other Plans
The pension benefit otherwise determined under this Paragraph
2 with respect to an employee shall be reduced by such
employee's pension allowance under the SNETPP or a plan
maintained by a company covered by the MPA.
i. Service Beyond Normal Retirement Age
Service after the last day of the month in which an employee
attains the Normal Retirement Age shall be credited in
determining entitlement to or computation of the amount of a
pension under this Plan.
Page 34
SECTION 4. PENSIONS (Continued) SNETMPP
j. 1989 Special Increase
(i) Effective January 1, 1989, the monthly service and
disability pension payments, as determined under this Paragraph
2 and, if applicable, Paragraph 3 of this Section 4, of persons
retired prior to December 31, 1988 shall be increased by one
forty-second of 6.25% for each calendar month or part thereof
from July 1, 1985 or the effective date of their pension,
whichever is later, to December 31, 1988, inclusive. No
increase shall be made in deferred vested pensions under
Paragraph 1(b) of this Section 4.
(ii) For purposes of this Subparagraph (j), references to
provisions of this Plan shall also be deemed to refer to
comparable provisions of the Predecessor Plan.
k. Minimum Benefit
Notwithstanding any other provision of the Plan and only for
purposes under the Plan of (i) determining a participant's
eligibility for a service pension, or a disability pension, and
for participants with five years of service or more as of
November 1, 1987, eligibility for a deferred vested pension,
(ii) calculating the amount of a participant's pension, and
(iii) determining the application and amount, if any, of the
early retirement discount under Subparagraphs 2(e) or 1(b)(iii)
of Section 4, a participant's eligibility for a pension (in
accordance with (i) above) shall be based on, and the amount of
a participant's pension benefit shall equal, the greater of the
eligibility and benefit determined on the basis of either (A)
the provisions of the Plan as of any applicable time, without
reference to this Subparagraph 2(k), or (B) the participant's
years of service, term of employment and age as of November 1,
1987 (including service after the last day of the month in which
an employee attains the Normal Retirement Age) increased by five
years, not taking into account any Plan amendments or any
compensation paid to the participant on or after November 1,
1987; provided,
Page 35
SECTION 4. PENSIONS (Continued) SNETMPP
however, that this Subparagraph 2(k) shall not apply to any
individual who is not a participant in the Plan as of November
1, 1987 nor any individual who is at the department level or
equivalent fifth level of management or above on November 1,
1987.
l. 1987 Special Increase
Notwithstanding any other provision of the Plan, the pension
benefit of any participant who elects, during the period October
1, 1987 through November 16, 1987, inclusive, to retire and
retires with a service pension during the period of November 1,
1987 through December 30, 1987, inclusive, shall, as of the
pension effective date, be increased by five percent from what
such pension benefit would be without reference to this
Subparagraph l; provided, however, that should more than a
specified number or percentage, as determined by the Company
with the concurrence of the Committee, of any group of employees
in the same department, the same level, the same job title and
classification, or the same geographical location elect to
retire in accordance with the provisions of this Subparagraph
2(l) during the period from November 1, 1987 through December
30, 1987, inclusive, the Company, may, with the concurrence of
the Committee, determine that a specified number of such
participants, the identity of whom shall be based on seniority,
may delay their retirement for a period ending no later than
September 30, 1988 and retain eligibility for the five percent
increase. A participant may elect with spousal consent, in lieu
of receiving the five percent supplemental monthly pension
benefit as described above, a lump sum amount, payable within
ninety days of the date of retirement, equal to the actuarial
present value of such five percent single life supplemental
monthly benefit (without reference to whether such supplemental
monthly benefit would be payable as a joint and survivor
annuity). The lump sum amount described in the immediately
preceding sentence shall be determined
Page 36
SECTION 4. PENSIONS (Continued) SNETMPP
by multiplying the supplemental monthly benefit amount by the
applicable factor in the table set forth below in this
Subparagraph 2(l). This Subparagraph 2(l) shall not apply to
any individual who is at the department level or equivalent
fifth level of management or above on November 1, 1987 or later.
LUMP SUM CONVERSION FACTORS
Applied to Supplemental Monthly Benefit Amount determined in
Subparagraph 2(l) using an Interest Rate Basis of 7.50%.
Actual Years of Age As Of
Pension Effective Date Factor
40 148.99
41 147.95
42 146.84
43 145.66
44 144.43
45 143.14
46 141.79
47 140.37
48 138.88
49 137.32
50 135.67
51 133.92
52 132.07
53 130.12
54 128.08
55 125.94
56 124.94
57 123.78
58 122.45
59 120.93
60 119.28
61 117.48
62 115.52
63 113.44
64 111.23
65 108.95
66 106.56
67 104.01
68 101.38
69 98.72
70 95.96
m. Extension of Minimum Benefit Eligibility Provisions
Notwithstanding any other provision of the Plan and only for
purposes under the Plan of determining a participant's
eligibility for a service pension, discounted service pension or
disability pension for retirements effective on or
Page 37
SECTION 4. PENSIONS (Continued) SNETMPP
after July 8, 1991, a participant's eligibility for a pension
shall be based on the greater of the eligibility determined on
the basis of either (A) the provisions of the Plan as of any
applicable time, without reference to this Subparagraph 2(m), or
(B) the participants's years of service, term of employment and
age as of November 1, 1987 (including service after the last day
of the month in which an employee attains the Normal Retirement
Age) increased by five years; provided, however, that this
Subparagraph 2(m) shall not apply to any individual who is not a
participant in the Plan as of July 8, 1991 nor any individual
who is at the department level or equivalent fifth level of
management or above as of such date.
n. 1991 Special Increase
Notwithstanding any other provision of the Plan, the pension
benefit of any participant who elects, during the period July
31, 1991 through September 13, 1991, inclusive, to retire and
retires with a service or discounted service pension during the
period of July 8, 1991 through October 18, 1991, inclusive,
shall have his service pension increased by ten percent from
what such pension benefit would have been without reference to
this Subparagraph 2(n) and without any reduction for early
retirement; provided, however, that should more than a specified
number or percentage, as determined by the Company with the
concurrence of the Committee, of any group of employees in the
same department, the same level, the same job title and
classification, or the same geographical location elect to
retire in accordance with the provisions of this Subparagraph
2(n) during the period from July 31, 1991 through September 13,
1991, inclusive, the Company may, with the concurrence of the
Committee, determine that a specified number of such
participants, the identity of whom shall be based on seniority,
may delay their retirement for a period ending no later than
December 20, 1991 and retain eligibility for the 1991 Special
Increase; and provided further that this Subparagraph 2(n) shall
not apply to any individual who is not a participant
Page 38
SECTION 4. PENSIONS (Continued) SNETMPP
in the Plan as of July 8, 1991 nor any individual who holds the
title of senior vice president or above. A participant may
elect with spousal consent, in lieu of receiving the ten percent
lifetime increase in the monthly pension benefit (and any
associated survivor annuity benefit) as described above, a
benefit (which is the actuarial equivalent of the 10% lifetime
annuity) of either (i) a twenty-five percent supplemental
monthly pension benefit payable commencing at retirement for a
maximum of sixty months or (ii) a forty percent supplemental
monthly pension benefit payable commencing at retirement for a
maximum of 36 months; provided, however, that if a participant
elects (i) or (ii) above and dies prior to receiving the maximum
monthly payments, a lump sum payment shall be made to the
participant's estate equal to the difference between the
supplemental monthly pension benefits paid as of the date of the
participant's death, and the maximum supplemental monthly
pension benefit the participant was eligible to receive.
The pensions herein specified in this Paragraph 2 are subject to
all applicable provisions of this Plan.
Page 39
SECTION 4. PENSIONS (Continued) SNETMPP
3. Survivor Annuities
Unless otherwise noted, the following provisions apply to the
survivor annuities provisions in this Paragraph 3.
i. Spousal Consent Requirement: An election to waive the
survivor annuity provisions shall not take effect unless (1)
the spouse consents in writing to waive the spouse's rights
to a pension under the Plan and such waiver is notarized by
a notary public or witnessed by a Plan representative, or
(2) it is established to the satisfaction of the Committee
that the spouse's consent cannot be obtained because of such
circumstances as prescribed in the Internal Revenue Code and
in regulations under the Internal Revenue Code.
ii. 90 Day Election Period: The election period shall be the 90-
day period prior to annuity starting date (commencement of
pension payments), or the 90-day period following the date
of mailing or personal delivery of a description of the
survivor annuity to the employee, if later.
iii. Written Explanation of Election and Consent: Upon notice of
a participant's termination of employment, but no earlier
than 90 days prior to such termination of employment, a
participant shall be supplied with a written explanation of
(a) the terms and conditions of the reduced 50 percent joint
and survivor annuity, (b) the participant's right to elect a
single-life pension in lieu of the reduced 50 percent joint
and survivor annuity subject to the spouse's consent, (c)
the participant's right to reinstate coverage under the
reduced 50 percent joint and survivor annuity prior to the
pension commencement date by revoking an election of a
single-life pension, (d) the amount of the single-life and
reduced joint and survivor annuities, and (e) the
participant's right to defer receipt of pension
distributions until attainment of normal retirement age.
Page 40
SECTION 4. PENSIONS (Continued) SNETMPP
iv. Annuity Starting Date; Consent to Receive Distributions: The
annuity starting date is the first day of the first period for
which an amount is paid as an annuity or any other form. For
purposes of this plan, pension payments shall be payable
beginning the day following the employee's termination of
employment date if the employee notifies SNET in writing of his
election to commence such pension payments and his survivor
annuity election decision, on a form to be provided for such
purpose, prior to the termination of employment date or within
the 90 day election period, whichever is later. If the
employee notifies SNET in writing of his election to begin
receiving his pension payments after the 90 day election
period, the pension payments shall be payable beginning the day
SNET receives the election form.
v. Alternate Payee: If a former spouse has been designated as
an Alternate Payee through a qualified domestic relations
order ("Order") for purposes of the survivor annuity
provisions, the term 'spouse' as used in this Paragraph 3
shall incorporate such former spouse, unless otherwise noted
herein.
a. Fifty Percent Annuity Option - Service Pensions
Applicability: An employee who retires and commences
receipt of a service pension under the provisions of
Paragraphs l(a) or 1(d) (regardless of any elections made at
the time of retirement with a disability pension) or 1(i) or
1(j) of this Section 4, or who is employed beyond age 70 1/2
and commences receipt of a service pension under the
provisions of Paragraph 1(k) of this Section 4 shall elect in
writing during the 90 Day Election Period upon a form
prescribed by the Committee, whether or not to have his
service pension made payable in reduced amounts to him for
life and in lesser amounts thereafter to a surviving annuitant
for life, subject to the Spousal Consent Requirement.
Page 41
SECTION 4. PENSIONS (Continued) SNETMPP
Eligible Annuitant: The surviving annuitant may only be a
spouse married to the employee on the pension commencement
date or a parent, and shall be described in such affirmative
election by name, date of birth, and address of residence.
Reduced 50 Percent Joint and Survivor Annuity: In the event
of an affirmative election within the 90 Day Election Period,
or in the absence of any valid election, if the employee had a
spouse on both the date of retirement and the pension
commencement date, as required by law, the survivor annuity
shall be deemed to have been elected, and the amount of
service pension otherwise payable under this Plan to the
retired employee shall be reduced to ninety percentum (90%) of
such amount. The amount to be paid the annuitant for as long
as such annuitant survives such employee shall be computed as
of the time of retirement of such employee as an amount equal
to fifty percentum (50%) of the reduced service pension
payable to the employee.
Continuation of Survivor Annuity Upon Conversion from
Disability to Service Pension (Pursuant to Paragraph 1(d) of
Section 4): Notwithstanding any other provision of the Plan,
if such election is consistent with a previous election made
at the time of retirement with a disability pension, the
amount of disability pension payable to such employee on the
day prior to reaching age 65 shall be the amount of the
service pension payable upon the employee's 65th birthdate,
and the amount to be paid the annuitant for as long as such
annuitant survives such employee shall be the amount which
would have been payable to such annuitant had the disability
pensioner attained age 65 on the date of his death after
conversion of his disability pension to a service pension
pursuant to Paragraph 1(d) of this Section 4.
Page 42
SECTION 4. PENSIONS (Continued) SNETMPP
b. Survivor Annuity Option - Disability Pensioners
(i) For terminations effective August 8, 1977 through December
31, 1992:
Applicability: Any person who leaves the service of a
Participating Company on or after August 8, 1977 and prior
to January 1, 1993 and who is entitled to receive a
disability pension pursuant to the provisions of Paragraph
l(c) of this Section 4, shall elect in writing during the 90
Day Election Period prior to the commencement of such
disability pension whether or not to have his pension made
payable in reduced amounts for each month commencing at
retirement and ending on the earlier of the retiree's 65th
birthdate, recovery or death, subject to the Spousal Consent
Requirement.
Eligible Annuitant: The surviving annuitant may only be a
spouse married to the disability pensioner on the pension
commencement date or a parent, and shall be described in
such affirmative election by name, date of birth, and
address of residence.
Reduced 50 Percent Joint and Survivor Annuity: In the
event of an affirmative election within the applicable
election period, or in the absence of any valid election, if
the disability pensioner had a spouse on both the date of
retirement and the pension commencement date, and
accordingly, the survivor annuity is deemed to have been
elected, the amount of pension otherwise payable under this
Plan to the disability pensioner upon his retirement on
disability pension shall be reduced to ninety percentum
(90%) of such amount. The amount to be paid the annuitant
for as long as such annuitant survives such pensioner until
the pensioner's 65th birthdate shall be computed as of the
termination of employment date as an amount equal to fifty
percentum (50%) of the reduced pension payable to the
pensioner.
Page 43
SECTION 4. PENSIONS (Continued) SNETMPP
Pre-Retirement Survivor Annuity - Death Before Paid From
Trust Fund:
- When continuously married to the same spouse: An
election of the survivor annuity provisions which is made
when the disability pension commences will provide the
surviving annuitant with 50% of the retiree's pension
amount payable from Company funds immediately upon the
death of the retiree until the retiree's 65th birthdate;
provided, however, that if the surviving annuitant is the
spouse who was living with the retiree on both the
retiree's disability pension commencement date and the
retiree's date of death, the surviving annuitant's pension
payments shall be payable from the Management Pension Fund
Account beginning on the retiree's 65th birthday in the
same amount as the annuitant's pension payable from
Company funds.
- In the event of a divorce:
If the retiree should obtain a divorce from the named
annuitant after the disability pension is effective, the
named annuitant remains eligible for the annuitant pension
payments from Company funds for the period from the
retiree's date of death until the retiree's 65th
birthdate, subject to Paragraph 3(c) of this Section 4.
- In the event of a waiver of
the survivor annuity: In the event of the death of a
disability pensioner who made an election to waive this
option and who leaves a surviving spouse who had been
married to the disability pensioner for at least the one
year period prior to and ending on the pensioner's date of
death, such surviving spouse shall be eligible to receive
a pre-retirement survivor annuity commencing when the
pensioner would have become eligible to commence payment
of a deferred vested pension pursuant to Paragraph 1(b) of
this Section 4 or the date of the pensioner's death if
later, or at the spouse's election, deferred to when the
pensioner would have attained age 65.
Page 44
SECTION 4. PENSIONS (Continued) SNETMPP
In such event, the pre-retirement survivor annuity shall
be determined in accordance with Paragraph 3(e)(vii) of
this Section 4.
(ii) For terminations September 2, 1974 through December 31,
1975:
Applicability: Any person who left the service of the
Company with a disability pension pursuant to the provisions
of Paragraph 1(c) of this Section 4 during the period
September 2, 1974 to December 31, 1975, inclusive, and who
had attained the age of forty at the time the disability
pension commenced, and who was receiving a disability
pension on August 23, 1984, shall elect in writing during
the 90 Day Election Period whether or not to have his
pension made payable in reduced amounts, commencing at age
sixty-five, for life and in lesser amounts thereafter to a
surviving annuitant for life in the event of his death,
subject to the Spousal Consent Requirement.
Eligible Annuitant: The surviving annuitant may only be a
spouse married to the disability pensioner on the date said
pensioner attains age sixty-five, and shall be described in
such affirmative election by name, date of birth, and
address of residence.
Reduced 50 Percent Joint and Survivor Annuity: In the
event of an affirmative election, or in the absence of any
valid election during the aforesaid election period, if the
disability pensioner had a spouse on his sixty-fifth
birthdate, and accordingly, the survivor annuity is deemed
to have been elected, the amount of pension otherwise
payable under this Plan to the disability pensioner upon his
sixty-fifth birthdate shall be reduced to ninety percentum
(90%) of such amount. The amount to be paid the annuitant
for as long as such annuitant survives such pensioner shall
be computed as of the date of such disability pensioner's
sixty-fifth birthdate as an amount equal to fifty percentum
(50%) of the reduced pension payable to the pensioner. If
he
Page 45
SECTION 4. PENSIONS (Continued) SNETMPP
is not living on his sixty-five birthday, there shall be no
survivor annuity.
(iii) For terminations effective January 1, 1976 through August 7,
1977, if pensioner was receiving disability pension on
August 23, 1984 and died prior to being eligible to elect
the survivor annuity provisions - Eligible for Pre-
Retirement Survivor Annuity: In the event of the death of
any person who left the service of the Company with a
disability pension pursuant to the provisions of Paragraph
1(c) of this Section 4 during the period January 1, 1976 to
August 7, 1977, inclusive, and who was receiving such
disability pension on August 23, 1984, and whose death
occurred prior to being eligible to elect or decline the
survivor annuity provision under Paragraph 3(b), and who
leaves a surviving spouse, such surviving spouse shall be
eligible to receive a preretirement survivor annuity
commencing at such time as the disability pensioner would
have been eligible to elect the survivor annuity provision
and payable for as long as such annuitant survives such
pensioner. Such disability pensioner would have been
eligible to elect or decline the survivor annuity provision
on his fifty-fifth birthdate if the term of employment had
been twenty or more years on the effective date of pension,
or on his sixty-fifth birthdate if the term of employment
had been less than twenty years on the effective date of
pension.
Reduced 50 Percent Survivor Annuity: The amount of the
preretirement survivor annuity shall be calculated as
follows: the pension payable under this Plan as determined
at the date of death shall be reduced to ninety percentum
(90%) of such amount; the amount to be paid the annuitant
shall be an amount equal to fifty percentum (50%) of such
reduced pension.
Page 46
SECTION 4. PENSIONS (Continued) SNETMPP
(iv) Irrevocable Decision: An election once in effect under this
Paragraph 3(b) whether affirmative or negative, and whether
express or constructive, shall, unless such pensioner
recovers or returns to the service of a Participating
Company, be irrevocable, except as provided in Paragraphs
1(d) or 3(c) of this Section 4. Except as expressly
provided in this Paragraph 3(b), there shall be no annuity
to any survivor of a disability pensioner.
(v) Conversion of Survivor Annuity at age 65: In the event of
the death of a disability pensioner prior to attainment of
age 65 and subsequent to an election for a survivor annuity
or, in the absence of such an election, such time, if any,
that a survivor annuity option is deemed elected pursuant to
Subparagraph 3(b)(i) above, the survivor annuity paid to
such deceased disability pensioner's annuitant after the
date on which such pensioner would have attained age 65, had
he survived, shall be the survivor annuity which would have
been payable had the disability pensioner attained age 65 on
the date of his death after conversion of his disability
pension to a service pension pursuant to Paragraph 1(d) of
this Section 4 while a survivor annuity election under
Subparagraph (i) of this Paragraph 3(b) was in effect.
c. Revoking Election, Restoring Pension
Within 90 Day Election Period: A survivor annuity election
(including but not limited to a deferred vested pension joint
and survivor annuity) once made in accordance with Paragraph 3
of this Section 4, whether affirmative or negative, may be
revoked in writing at any time prior to its effective date or
the end of the 90 Day Election Period, if later; otherwise,
except as herein provided, it shall be irrevocable.
Revocation in Qualified Domestic Relations Order ("Order"): In
the event an Order which explicitly provides for an irrevocable
waiver of the survivor
Page 47
SECTION 4. PENSIONS (Continued) SNETMPP
annuity benefit is received, such election shall be deemed to be
revoked effective with the date of said Order; provided,
however, that upon such revocation of the survivor annuity
benefit, (1) the participant's service, disability or disability
service pension shall be restored to the full amount before
reduction for this election, starting with the pension payment
for the month following the date of said Order, and (2) a
participant's deferred vested pension shall not be restored to
the full amount before reduction for this election.
Revocation of Survivor Annuity for Parent: A retiree who has
previously elected a survivor annuity naming a parent as the
annuitant may have his pension restored to the full amount
before reduction for this election upon submission of a
notarized, irrevocable waiver of the survivor annuity benefit by
the named parent; provided that such restoral shall be effective
commencing the first day of the month following the month in
which the waiver is received.
Revocation Due to Death of Annuitant: In the event of the death
of a designated annuitant prior to the effective date of an
election to have a reduced pension with a survivor annuity, such
election shall be deemed to be revoked, in which event, subject
to the conditions and limitations specified in this Paragraph 3,
the participant may designate another qualified annuitant. In
the event the annuitant predeceases a service, disability or
disability service pensioner after the commencement of the
retiree's pension payments, the retiree's pension shall be
restored to the full amount before reduction for this election
starting with the pension payment for the month following the
death of the annuitant. If an annuitant predeceases a deferred
vested pensioner, his pension shall not be restored to the full
amount.
Page 48
SECTION 4. PENSIONS (Continued) SNETMPP
d. Automatic Survivor Annuity - Prior to Commencement of Pension
Benefits
For active employees with 10 or more years of service, or former
employees in the transitional retirement status or prior to
commencement of a disability service pension: In the event of
the death of an employee who leaves a surviving spouse and
a) who has completed 10 or more years of service and is
eligible for a deferred vested pension under paragraph 1(b)
of this Section 4, or
b) who is eligible for a service pension under paragraph 1(a),
or
c) who terminated employment and is in the transitional
retirement status under paragraph 1(j) of this Section 4 at
the time of his death, or
d) who terminated employment and who was continuously disabled
in accordance with the provisions of eligibility for a
disability service pension under paragraph 1(i) of this
Section 4 and who leaves a surviving spouse who has been
married to the employee continuously from the termination of
employment date,
such surviving spouse shall receive a survivor annuity in the
amount which would have been payable to such spouse had such
employee retired on a service pension, regardless of his actual
eligibility therefore, on the date of his death (or his earlier
termination of employment date, if applicable), and had elected
the survivor annuity option pursuant to the terms of Paragraph
3(a) of this Section 4.
For active employees with less than 10 years of service and
eligible for a deferred vested pension; Cash out provisions: In
the event of the death of an employee who leaves a surviving
spouse, who has completed less than 10 years of service and who
is eligible for a deferred vested pension under Paragraph 1(b)
of this Section 4 as of his date of death, the present value of
the automatic survivor annuity provided under this Paragraph
3(d) shall be paid to a surviving spouse, if such spouse has
been married to the employee
Page 49
SECTION 4. PENSIONS (Continued) SNETMPP
throughout the one year period ending on the date of the
employee's death, in a single lump sum. If such present value
is greater than $3,500 (or the limit allowable under the Code),
the surviving spouse shall receive a monthly annuitant's pension
at such time as the employee would have been eligible to
commence receipt of a deferred vested pension in lieu of a lump
sum distribution, unless the surviving spouse elects to receive
a lump sum distribution.
Interest Rates for Cashouts: Lump sum pension payments for
surviving spouses payable by reason of this Paragraph 3(d) shall
be equal to the present value of the annuitant's pension payable
to the spouse using a discount rate equal to the Pension Benefit
Guaranty Corporation's immediate and deferred annuity rate for
Plans terminated as of January 1 of the year in which the lump
sum is paid and in accordance with the UP84 mortality table.
Miscellaneous Provisions for Paragraph 3(d): Early retirement
provisions do not apply; exclusions from eligibility for
survivor annuity benefits: For purposes of the automatic
survivor annuity provided in this Paragraph 3(d), the early
retirement discount in Subparagraph 2(e) shall not apply.
Except as provided in this Paragraph 3(d), and in Subparagraph
3(e)(v), no pension payment shall be made to an annuitant of an
employee if such employee dies prior to termination from
service. Notwithstanding any other provisions of the Plan, the
automatic survivor annuity provisions of this sub-paragraph
shall not apply to an employee receiving pension payments
following the attainment of age 70 1/2.
e. Deferred Vested Pension Joint and Survivor Annuity
(i) Applicability - Terminated Employee Reaching Age 65:
A person who has left the service of a Participating Company
before the first day of the first month commencing after the
month of the sixty-fifth birthday, who is eligible upon
making an election pursuant to Paragraph 1(b) of this
Page 50
SECTION 4. PENSIONS (Continued) SNETMPP
Section 4 to receive payment of a deferred vested pension,
and who has filed a written request therefor with the
Committee, specifying a prospective date (on or after
attainment of the age of his eligibility) for commencement
of payment, or who is employed beyond age 70 1/2 and
commences receipt of a deferred vested pension under the
provisions of Paragraph 1(k) of this Section 4, shall during
the 90 Day Election Period elect in writing whether or not
to have his deferred vested pension made payable in reduced
amounts to him for life and in amounts equivalent to 50% of
such reduced amounts thereafter to a surviving annuitant for
life in the event of his death after the commencement date,
subject to the Spousal Consent Requirements.
Early Retirement Reduction Factors with Joint and Survivor
Annuity: In the event of such an affirmative election, the
amount of pension otherwise payable at normal retirement age
under this Plan to such person shall be reduced by
multiplying the amount of the deferred vested pension
otherwise payable by the applicable early retirement factor
in the table set forth on the next page in this Subparagraph
3(e)(i).
Page 51
SECTION 4. PENSIONS (Continued) SNETMPP
Early Retirement Factors (With Joint and Survivor Annuity Election)
Based Upon Completed Years and Months of Age At Commencement of
Deferred Vested Pension
Completed Completed Months of Age
Years
of Age 0 l 2 3 4 5 6 7 8 9 10 11
50 .20 .20 .20 .20 .21 .21 .21 .21 .21 .22 .22 .22
51 .22 .22 .22 .22 .23 .23 .23 .23 .23 .24 .24 .24
52 .24 .24 .24 .24 .25 .25 .25 .25 .25 .26 .26 .26
53 .26 .26 .26 .27 .27 .27 .28 .28 .28 .28 .29 .29
54 .29 .29 .30 .30 .30 .30 .31 .31 .31 .31 .32 .32
55 .32 .32 .32 .33 .33 .33 .33 .33 .33 .34 .34 .34
56 .34 .34 .35 .35 .35 .35 .36 .36 .36 .36 .37 .37
57 .37 .37 .38 .38 .38 .39 .39 .39 .40 .40 .40 .41
58 .41 .41 .42 .42 .42 .43 .43 .43 .44 .44 .44 .45
59 .45 .45 .46 .46 .46 .47 .47 .47 .48 .48 .48 .49
60 .49 .50 .50 .5l .5l .52 .52 .53 .53 .54 .54 .55
6l .55 .56 .56 .57 .57 .58 .58 .59 .59 .60 .60 .6l
62 .6l .62 .62 .63 .63 .64 .65 .65 .66 .66 .67 .67
63 .68 .69 .69 .70 .7l .7l .72 .73 .73 .74 .75 .75
64 .76 .77 .78 .78 .79 .80 .8l .8l .82 .83 .84 .84
65 .85
(ii) Eligible Surviving Annuitant of a Deferred Vested Pensioner:
The Surviving Annuitant of a deferred vested pensioner may
only be a spouse who has been married to the participant
throughout the one-year period ending on the earlier of (a)
the participant's pension starting date, or (b) the date of
the participant's death; provided, however, if the
participant marries within one year before the pension start
date and the participant and the participant's spouse in
such marriage have been married for at least a one-year
period ending on or before the date of the participant's
death, such participant and such spouse shall be treated as
having been married throughout the one-year period ending on
the participant's pension starting date. The Surviving
Annuitant shall be described in such election by name, date
of birth, and address of residence.
Page 52
SECTION 4. PENSIONS (Continued) SNETMPP
Reduced 50 Percent Joint and Survivor Annuity: After
such a written request, and if the former employee is living
after reaching the prospective date for commencement of
payments so specified in the request, and unless within the
aforementioned reasonable period he has made a valid
election in writing not to take the joint and survivor
annuity, or if it is established that he had no spouse on
such date, he shall be deemed to have elected such joint and
survivor annuity. In cases where a valid election in
writing not to take such joint and survivor annuity has not
been received prior to the participant's sixty-fifth
birthday, the joint and survivor annuity shall be deemed to
have been elected, effective on his sixty-fifth birthday
unless it is established that the participant had no spouse
on that date. The Alternate Payee provisions apply to
deferred vested pensions.
(iii) Election for Active Employee Working Past Age 65: An
employee who continues in the service of a Participating
Company after the end of the month in which his sixty-fifth
birthday occurs and who is eligible for a deferred vested
pension pursuant to Paragraph l(b) of this Section 4 and who
has filed a written request therefor with the Committee,
specifying a prospective date for commencement of payment,
shall during the 90 Day Election Period, elect in writing
whether or not to have his deferred vested pension made
payable in reduced amounts to him for life and in amounts
equivalent to 50% of such reduced amounts thereafter to a
Surviving Annuitant for life in the event of his death after
leaving the active service of a Participating Company,
subject to the Spousal Consent Requirement. In the absence
of any valid election at the end of the election period, the
joint and survivor annuity shall be deemed to have been
elected unless it is established that the employee had no
spouse on the date his employment terminated.
Page 53
SECTION 4. PENSIONS (Continued) SNETMPP
(iv) Irrevocable Election: An election once made under this
Subparagraph (e), whether affirmative or negative, and
whether express or constructive, shall be irrevocable except
as provided in Paragraph 3(c); and unless pursuant to this
Paragraph 3(e) there shall be no annuity payable to the
surviving spouse.
(v) Automatic Survivor Annuity for Active Employee Who Dies
After Reaching Age 65: In the event of the death after
normal retirement age of an employee who is eligible for a
deferred vested pension and who leaves a surviving spouse
who has been married to the employee throughout the one-year
period ending on the date of the employee's death, a
survivor annuity, which would have been payable under
Subparagraph 3(e)(iii) of this Section 4 had the employee
left the service of the Participating Company on the date of
his death and elected a joint and survivor annuity, shall be
payable to said spouse.
(vi) Survivor Annuity Elections at age 65 for employees who
terminated employment September 2, 1974 through December 31,
1975 and whose pension had not commenced prior to August 23,
1984: Any person who left the service of the Company during
the period September 2, 1974 to December 31, 1975,
inclusive, and who is eligible upon making an election
pursuant to Paragraph 1(b) of this Section 4 to receive
payment of a deferred vested pension, and who had not filed
a written request therefor with the Committee specifying a
prospective commencement of pension payment date of prior to
August 23, 1984, shall elect in writing during the 90 Day
Election Period whether or not to have his deferred vested
pension made payable commencing at age sixty-five in reduced
amounts to him for life and in amounts equivalent to 50% of
such reduced amounts thereafter to a Surviving Annuitant for
life in the event of his death after the commencement date,
subject to the Spousal Consent
Page 54
SECTION 4. PENSIONS (Continued) SNETMPP
Requirement. In cases where a valid election in writing not
to take such joint and survivor annuity has not been
received prior to the participant's sixty-fifth birthday,
the joint and survivor annuity shall be deemed to have been
elected, effective on his sixty-fifth birthday unless it is
established that the participant had no spouse on that date.
If he is not living on his sixty-fifth birthday, there shall
be no survivor annuity.
(vii) Pre-Retirement Survivor Annuity for vested employees who
terminated employment after December 31, 1975 and whose
pension had not commenced prior to August 23, 1984: In the
event of the death of any person who left the service of a
Participating Company after December 31, 1975, and who is
eligible upon making an election pursuant to Paragraph 1(b)
of this Section 4 to receive payment of a deferred vested
pension, and who had not filed a written request therefor
with the Committee specifying a prospective commencement of
pension payment date of prior to August 23, 1984, and who
leaves a surviving spouse who had been married to the former
employee for at least the one year period prior to and
ending on the date of death of said former employee, such
surviving spouse shall be eligible to receive a
preretirement survivor annuity commencing at such time as
the former employee would have become eligible to file a
written request pursuant to Paragraph 1(b) of this Section 4
to commence payment of a deferred vested pension, or the
date of death of said former employee if later, and payable
for as long as such annuitant survives such former employee.
When Pre-Retirement Survivor Annuity Becomes Payable: Such
former employee would have become eligible to file a written
request pursuant to Paragraph 1(b) of this Section 4 to
commence payment of a deferred vested pension on his
fiftieth birthdate if the term of employment had
Page 55
SECTION 4. PENSIONS (Continued) SNETMPP
been twenty-five or more years on the date his employment
terminated, on his fifty-fifth birthdate if the term of
employment had been twenty or more years but less than
twenty-five years on the date his employment terminated, or
on his sixty-fifth birthdate if the term of employment had
been less than twenty years on the date his employment
terminated.
Reduced 50 Percent Survivor Annuity: The amount of pension
otherwise payable at normal retirement age under this Plan
to the former employee shall be reduced by multiplying such
amount of deferred vested pension otherwise payable by the
applicable early retirement factor in the table set forth in
Subparagraph 3(e)(i) of this Section 4, based on the age the
former employee would have attained as of the date of the
commencement of the preretirement survivor annuity, and the
amount of the preretirement survivor annuity shall be
equivalent to 50% of such reduced amount.
(viii) 1991 Special Early Commencement-Deferred Vested Pension
Survivor Annuity
Notwithstanding any other provision of the Plan, any
participant who is eligible for a deferred vested pension at
normal retirement age and who elects, during the period July
31, 1991 through September 13, 1991, inclusive, to terminate
employment with a Participating Company, and who terminates
employment during the period July 8, 1991 through October
18, 1991, inclusive, (or through December 20, 1991 if
extended in accordance with Section 4, Paragraph 1(b) (vi)),
and who elects in writing to have his deferred vested
pension commence upon the termination of employment in
reduced amounts, shall within the 90 Day Election Period
elect in writing whether or not to have his deferred vested
pension made payable in reduced amounts to him for life and
in amounts equivalent to 50% of such reduced amounts
thereafter to a Surviving Annuitant for life in the event of
his death after the commencement date, subject to the
Spousal
Page 56
SECTION 4. PENSIONS (Continued) SNETMPP
Consent Requirement. In the event of such an affirmative
election, or in the absence of any valid election, the
amount of pension otherwise payable at normal retirement age
under this Plan to such person shall be reduced by
multiplying the amount of the deferred vested pension
otherwise payable by the applicable early retirement factor
in the table set forth below.
1991 SPECIAL EARLY COMMENCEMENT OF DEFERRED VESTED PENSION
FACTORS (WITH JOINT AND SURVIVOR ANNUITY ELECTION)
BASED UPON COMPLETED YEARS AND MONTHS OF AGE
AT COMMENCEMENT OF DEFERRED VESTED PENSION
Completed Completed Months of Age
Years
of Age 0 1 2 3 4 5 6 7 8 9 10 11
Prior
to 58 .43
58 .43 .43 .43 .43 .43 .43 .43 .43 .44 .44 .44 .45
59 .45 .45 .46 .46 .46 .47 .47 .47 .48 .48 .48 .49
60 .49 .50 .50 .51 .51 .52 .52 .53 .53 .54 .54 .55
61 .55 .56 .56 .57 .57 .58 .58 .59 .59 .60 .60 .61
62 .61 .62 .62 .63 .63 .64 .65 .65 .66 .66 .67 .67
63 .68 .69 .69 .70 .71 .71 .72 .73 .73 .74 .75 .75
64 .76 .77 .78 .78 .79 .80 .81 .81 .82 .83 .84 .84
65 .85
f. 1989 Special Increase
(i) Effective January 1, 1989, the present and/or future monthly
payment of a surviving annuitant: (1) of a person retired
prior to December 31, 1988 under the provisions of
Subparagraph (a) of Paragraph 1 of this Section 4; (2) of a
person who died prior to December 31, 1988 while in active
service; (3) of a person retired prior to December 31, 1988
under the provisions of Subparagraph (c) of Paragraph 1 of
this Section 4 who
Page 57
SECTION 4. PENSIONS (Continued) SNETMPP
has made an election under the provisions of Subparagraph
(b) of this Paragraph 3 inclusive, shall be increased by the
same percentage as the related pension was or would have
been increased under the provisions of Paragraph 2(j) of
this Section 4. No increase shall be made in the present or
future monthly payment to an annuitant who derives
entitlement to such annuity under the provisions of
Subparagraph (e) of this Paragraph 3.
(ii) For purposes of this Subparagraph (f), references to
provisions of this Plan shall also be deemed to refer to
comparable provisions of the Predecessor Plan.
g. Survivor Annuity Option for Employees Eligible for Disability
Service Pension
(1) Election of Joint and Survivor Annuity When Pension Payments
Commence: Any employee who leaves the service of a
Participating Company and who is eligible to receive a
disability service pension pursuant to the provisions of
Paragraph l(i)(1) or (2) of this Section 4, shall elect in
writing during the 90 Day Election Period (which shall be
prior to the commencement of such disability service pension
payments, in accordance with Paragraph 3(ii) of this Section
4) whether or not to have his pension made payable in
reduced amounts for each month commencing when such pension
becomes payable and ending on the retiree's death to provide
a survivor annuity pursuant to and in accordance with the
provisions of Paragraph 3(a) of this Section 4, subject to
the Spousal Consent Requirement.
(2) Automatic Survivor Annuity Benefits If Dies Prior to Pension
Commencement and Continuously Married to Same Spouse: If an
employee remains eligible for a disability service pension
pursuant to the provisions of Paragraph l(i)(1) or (2) of
this Section 4 and dies prior to commencement of such
pension, and was married to the same spouse continuously
from the
Page 58
SECTION 4. PENSIONS (Continued) SNETMPP
termination of employment date through the date of the
employee's death, the automatic survivor annuity of
Paragraph 3(d) of this Section 4 shall be payable. Such
automatic survivor annuity shall be calculated in the same
manner as would have been calculated if such employee had
died on the last day on the active payroll, and would
include any pension increases granted for service pensioners
during the period from the termination of employment date to
the date of the former employee's death. An automatic
survivor annuity pursuant to the provisions of this
Subparagraph 2 shall not be eligible for designation as
payable to an Alternate Payee pursuant to a domestic
relations order.
(3) Pre-Retirement Survivor Annuity Benefits If Employee Dies
Prior to Pension Commencement and Marries After Termination
of Employment Date: If an employee remains eligible for a
disability service pension pursuant to the provisions of
Paragraph l(i)(1) or (2) of this Section 4, and he marries
or remarries following the termination of employment date,
and such employee dies prior to commencement of such
disability service pension, a surviving spouse living with
the employee as of the date of death shall be eligible for
an annuitant pension pursuant to the Deferred Vested Pension
Joint and Survivor Annuity provisions of Paragraph 3(e) and
payable when the employee would have reached age 65. An
Alternate Payee of an employee who was married on or before
the employee's termination of employment date may, pursuant
to a qualified domestic relations order, be entitled to
benefits pursuant to this Subparagraph 3.
h. Survivor Annuity Option for Retirees Electing the Pension
Deferral Option
(1) Election of Joint and Survivor Annuity When Pension Payments
Commence: Any employee who leaves the service of a
Participating Company and who is eligible to receive a
discounted service pension pursuant to the provisions of
Paragraph l(a) and 2(e) of this Section 4, and who elects
Page 59
SECTION 4. PENSIONS (Continued) SNETMPP
the Pension Deferral Option (PDO) provisions of Paragraph
2(e)(i), shall elect in writing during the 90 Day Election
Period (which shall be prior to the commencement of such
service pension payments, in accordance with Paragraph
3(ii)) whether or not to have his pension made payable in
reduced amounts for each month commencing when such pension
becomes payable and ending on the retiree's death to provide
a survivor annuity pursuant to and in accordance with the
provisions of Paragraph 3(a) of this Section 4, subject to
the Spousal Consent Requirement.
(2) Automatic Election of Joint and Survivor Annuity If Dies
Prior to Pension Commencement: If the retiree should die
prior to commencement of the pension payments, survivor
annuity pension benefits shall be payable immediately upon
the death of the employee to a spouse to which the employee
was legally married on the date of employee's death. The
surviving spouse's pension payments will be calculated as if
the employee had elected to commence receipt of the pension
payments on the date of employee's death, and the early
retirement discount will apply based on the employee's
actual age on that date.
4. Monthly Payments
Pensions shall be payable monthly or at such shorter periods as
the Committee may determine in each case.
5. Duration Of Payments; Commencement of Benefits
Except as provided in Paragraphs 1(h), 1(i), 1(j) and 1(k),
Paragraph 2(e)(i), Paragraph 3 and Paragraph 6 of this Section,
service and deferred vested pensions granted shall continue from
the date the employee elects to commence receipt of such service
pension or deferred vested pension payments to death of the
employee, or, in cases where a payment is made prior to
notification of death, through the end of the month in which death
occurs.
Page 60
SECTION 4. PENSIONS (Continued) SNETMPP
Unless the participant elects otherwise, distribution of the
benefits will begin no later than the 60th day after the latest of
the close of the plan year in which (1) the participant attains the
Normal Retirement Age); (2) the tenth anniversary of the year in
which the participant commenced participation in the Plan; or (3)
the participant terminates service with the Company.
Notwithstanding the foregoing, the failure of a participant and
spouse to consent to a distribution while a benefit is immediately
distributable shall be deemed to be an election to defer
commencement of payment of any benefit, pursuant to the provisions
of Paragraph 3(iv) of Section 4 of this Plan.
6. Treatment During Subsequent Participating Company Employment
a. Employment classification as a regular or provisional regular
employee with any Participating Company shall suspend the right
of a retired employee, a person receiving a deferred vested
pension, or a person otherwise entitled to receive a service or
deferred vested pension, to pension payments during the period
he continues in such employment; provided, however, that such
suspension shall not apply to the pension of an employee who is
reemployed and during any calendar month completes less than 40
hours of service. Any such suspension imposed in accordance
with this Paragraph 6(a) shall constitute a permanent
withholding of the amount so suspended. Notwithstanding any
other provision of the Plan, such suspension shall not apply to
the pension of a retired employee, a person receiving a deferred
vested pension, or a person otherwise entitled to receive a
service or deferred vested pension, when such person is
reemployed by a Participating Company prior to January 1, 1990
for one hour or more in ten weeks or less in any calendar year;
provided, however, that such person shall be treated as a
retired employee or a person receiving a deferred vested pension
for all other purposes under the Plan including but not limited
to payment or accrual of any benefit. Notwithstanding any other
Page 61
SECTION 4. PENSIONS (Continued) SNETMPP
provision of the Plan, such suspension shall not apply to the
pension of a retired employee receiving a Service Pension under
the provisions of Section 4, paragraph 1(a) who is rehired by a
Participating Company during the period January 1, 1990 through
December 31, 1992, inclusive; provided, however, that such
person shall be treated as a retired employee for all other
purposes under the Plan including but not limited to payment or
accrual of any benefit. Employment with any Participating
Company on a temporary basis through the SNET Job Bank Program
on or after January 1, 1993 shall not suspend the pension
benefits of any service or deferred vested pensioner who is
receiving pension payments.
b. If, during any subsequent employment of an employee in any
Participating Company, the employee's prior service with the
Participating Company or any other Participating Company or
service credited in accordance with the SNETPP or the Mandatory
Portability Agreement is included in his term of employment for
purposes of computation of pension, any previous eligibility for
a pension hereunder shall cease; provided, however, that if such
prior pension benefits or a portion of such prior pension
benefits were previously distributed in a lump sum payment, upon
subsequent termination of employment, the pension benefits will
be recalculated using the pension formula in effect as of the
termination date and all credited service (including vesting
service), and the annuity value of the pension benefits
previously distributed in a lump sum payment shall be deducted
from the recalculated pension amount with the difference, if
any, payable in accordance with the service or deferred vested
pension provisions and provided, further, that if such prior
pension benefits commenced early in accordance with the
provisions of Paragraph 1(b)(vi) of this Section 4 or similar
provisions under the SNETPP, the pension benefits will be
recalculated using the pension formula in effect as of the
termination date
Page 62
SECTION 4. PENSIONS (Continued) SNETMPP
and all credited service (including vesting service), to
determine the deferred vested pension payable at age 65; which
value shall be compared to the value of resuming the pension
payments payable in accordance with such Paragraph 1(b)(vi) or
SNETPP provisions, and the greater value in pension benefits
shall be payable as described below.
(i) If the prior pension benefit provides a greater value
in pension benefits, that pension amount shall
immediately resume upon subsequent termination of
employee, with no additional pension benefits for
service accrued during the current period of
employment.
(ii) If the recalculated deferred vested pension
payable at age 65 provides a greater value in pension
benefits, the prior pension benefit calculated in
accordance with Paragraph 1(b)(vi) shall be rescinded
unless such employee irrevocably elects to have such
prior pension benefit resume immediately upon
subsequent termination of employment, thereby waiving
additional pension benefits for service accrued during
the current period of employment.
(iii) If the employee accrues enough service credit
to become eligible for a service pension, the prior
pension benefit will be rescinded and the service
pension will be payable upon such subsequent
termination of employment, in accordance with the
provisions of this Plan.
c. If, during any subsequent employment of an employee in
any Participating Company, the obligation with respect to the
employee's pension benefits has been transferred to the
SNETPP, any eligibility for a pension hereunder shall cease.
The obligation with respect to an employee's pension benefits
shall be transferred to the SNETPP on the
Page 63
SECTION 4. PENSIONS (Continued) SNETMPP
earlier of (l) March 3l of the year following the year which
includes the date as of which the employee's prior service
with any Participating Company is included in his term of
employment for purposes of computation of pension under the
SNETPP, or (2) the last day of the first month following the
month in which the employee dies or retires, if such death or
retirement occurs after the date as of which the employee's
service with a Participating Company is included in his term
of employment for purposes of computation of pension under
the SNETPP.
d. Notwithstanding any other provision of the Plan, the
pension benefit of an individual who previously left the
service of a Participating Company with a deferred vested
pension, discounted in accordance with Paragraph 1(b) of this
Section 4, and who returns to the service of a Participating
Company shall be recomputed to reflect an adjustment for the
period of suspension of pension benefits imposed in
accordance with Paragraph 6(a) of this Section 4. Any such
adjustment shall be determined in accordance with the
following formula:
BXCXD
A= E
Where
A = adjusted benefit;
B = reduction factor at age of initial early commencement of
pension payments in accordance with the table set forth in
Subparagraph 1(b) (iii) or 3(e)(i), as applicable;
C = accrued benefit at initial early commencement of pension
payments;
D = reduction factor at age of final commencement of pension
payments with respect to which pension is being computed, in
accordance with the table set forth in Subparagraph 1(b)(iii) or
3(e)(i), as applicable; and
E = reduction factor at age of reemployment in accordance with
the table set forth in subparagraph 1(b)(iii) or 3(e)(i), as
applicable.
The adjusted benefit determined in accordance with the formula
above shall be added to the amount of any benefit accrued during
the period of reemployment and such sum shall equal the
individual's total pension benefit
Page 64
SECTION 4. PENSIONS (Continued) SNETMPP
to be paid subsequent to the individual's final termination from
service date.
e. If the pension benefit of an individual has been suspended in
accordance with the provisions of Paragraph 6(a) above, such
pension benefit shall resume no later than the first day of the
third calendar month after the calendar month in which the
individual was last employed for 40 or more hours of service by
a Participating Company. The initial payment upon the
resumption of pension benefits in accordance with this Paragraph
6(e) shall include the pension benefit amount for the month
during which such payments resume and any additional amounts
withheld during the period between the cessation of employment
and the resumption of payments, less any amounts which are
subject to offset in accordance with Paragraph 6(f).
f. The amount of any payment to be made in accordance with
Paragraph 6(e) shall be reduced by the amount of any payment
previously made to the individual for a period of time during
which the individual was employed by a Participating Company, if
such previous payment was subject to suspension under Paragraph
6(a).
7. Treatment During Employment Covered by Mandatory Portability
Agreement
a. Employment which is covered by the terms of the Mandatory
Portability Agreement (MPA) shall suspend the right of a retired
employee, a person receiving a deferred vested pension, or a
person otherwise entitled to receive a service or deferred
vested pension, to pension payments during the period he
continues in such employment as provided in the MPA; provided,
however, that, subject to the provisions of the MPA, such
suspension shall not apply to the pension of an employee who
during any calendar month completes less than 40 hours of
service. Any such suspension imposed in accordance with this
Paragraph 7(a) shall constitute a permanent withholding of the
amount so suspended.
Page 65
SECTION 4. PENSIONS (Continued) SNETMPP
b. Employment which is covered by the MPA and is subsequently
bridged by a company other than a Participating Company pursuant
to the terms of the MPA shall cause a cessation of pension
eligibility hereunder.
c. Notwithstanding any other provision of the Plan, the terms
and provisions of the MPA as it may change from time to time
will govern the treatment of an employee with employment which
is covered by the MPA.
8. Notice of Retirement Eligibility
The Committee shall notify all employees of their eligibility to
retire on service pensions as they become eligible.
9. Pension Funding Policy and Method
The Company has established a fund held in a trust separate from
the assets of the Participating Companies known as the "SNET
Pension Trust Fund" for payment of service pensions, deferred
vested pensions and related survivor annuities (defined in
Paragraphs l(a), l(b) and 3 of this Section, respectively) and for
payment of certain death benefits (as set forth in Paragraph 9 of
Section 5) as provided under the Death Benefit provisions of the
Plan. All of the Plan assets held in the SNET Pension Trust Fund
which are allocable to this Plan are available to pay benefits to
all employees and their beneficiaries covered by this Plan; and to
pay for any reasonable compensation to the Trustee and the
Investment Managers, all expenses of the Trustee and Investment
Managers relating to the aquisition, service and disposition of
investments constituting part of the SNET Pension Trust Fund, and
all taxes of any and all kinds whatsoever that may be levied or
assessed under existing or future laws upon or in respect of the
SNET Pension Trust Fund or the income thereof; and to pay for any
reasonable expenses of administering the SNET Pension Trust Fund
and the Plan properly and actually incurred by the Trustee, the
Company or the Participating Company, to the extent such expenses
are directed by the Company to be charged against and paid from the
SNET Pension
Page 66
SECTION 4. PENSIONS (Continued) SNETMPP
Trust Fund, in accordance with the SNET Pension Trust Agreement.
The corpus or income of the trust or custodial account may not be
diverted to or used for other than the exclusive benefit of the
participants or their beneficiaries, or reasonable expenses of
administration of the Plan and the Trust. The Plan is a single
plan for purposes of Code Sections 401(a)(26), 401(a)(4) and
410(b).
The Participating Companies undertake to maintain the SNET
Pension Trust Fund so long as the said Plan shall continue, by
periodic charges to operating expenses and payments to the SNET
Pension Trust Fund which meet the requirements of the law and which
are in such amounts that there will be available in the SNET
Pension Trust Fund amounts sufficient to provide for the service
pensions, deferred vested pensions, payments to annuitants in
accordance with Paragraph 3 of this Section, and death benefits
payable from the SNET Pension Trust Fund under the Plan, in the
amounts stated in the Plan. The amounts of these periodic charges
to operating expenses and payments to the SNET Pension Trust Fund
will be determined on the basis of an annual actuarial valuation
using the aggregate cost method. This method determines an
estimated level percentage applicable to payroll such that
contributions made by the Participating Companies at that level
percentage applied to basic payroll of current active employees
during their remaining working lives plus the present trust fund
plus the future investment earnings are predicted to be just
sufficient to pay all future benefits expected to become payable
from the SNET Pension Trust Fund to current employees and
pensioners and their future beneficiaries, persons eligible for
deferred vested pensions, and annuitants.
If it should appear to the Company in the future that such
funding method is no longer appropriate, it shall institute another
method that it deems appropriate, after obtaining any required
governmental approvals.
The SNET Pension Trust Fund shall be held by a trustee or
trustees or an insurance company or companies as permitted by law
for pension and death
Page 67
SECTION 4. PENSIONS (Continued) SNETMPP
benefit purposes only and shall be disbursed as directed by the
Company from time to time. The Company undertakes to preserve the
integrity of the SNET Pension Trust Fund as a fund held in trust or
by an insurance company or companies as permitted by law to be
applied solely to pension and death benefit purposes (and payment
of eligible expenses) and to take such action as may be necessary
or appropriate to insure the application of the entire fund, to
such purposes. All service pensions, and deferred vested pensions
or commuted values thereof, shall, except when not permitted by the
Pension Act, be paid from the SNET Pension Trust Fund either
directly or through the purchase of annuities from an insurance
company as the Company may determine.
For purposes of this Paragraph 9, the transfer of Management
Pension Fund Account assets, as required by and as determined in
accordance with applicable Internal Revenue Service Regulations in
connection with the transfer of the obligation with respect to
employee pension benefits, (pursuant to Paragraph 6 of this Section
4) and as directed by the Company, from time to time, to the
Pension Fund Account, shall be considered to be an application of
the Management Pension Fund Account for pension purposes.
10. Maximum Pensions: Notwithstanding any other provision of the
Plan, a pension computed under this Section 4, Paragraph 10 shall
be subject to the following:
(a) Maximum Pensions: For purposes of this paragraph, the term
monthly pension shall mean the pension benefit payable as a
single life annuity. When expressed as a monthly pension,
the pension benefit shall not exceed the lesser of (1)
$7,500 (the "Dollar Limitation"), or (2) 100% of the
participant's average monthly compensation as defined in
Section 1.415-2(d) of the Income Tax Regulations during the
three consecutive calendar years when the total compensation
paid to him was the highest (the "Compensation Limitation"),
subject to the following:
Page 68
SECTION 4. PENSIONS (Continued) SNETMPP
(i) In determining whether the monthly pension payable to
the participant exceeds the maximum, the maximum shall
apply to (1) the single life annuity payable to the
participant if the joint and survivor annuity is
waived; or (2) the monthly pension payable to the
participant after reduction for the joint and survivor
annuity if elected; or (3) the actuarial equivalent of
the single life pension if the pension is payable in a
form other than the foregoing.
(ii) If benefits begin prior to a participant's Social
Security Retirement Age (as defined in Code Section
415(b)(8)), the Dollar Limitation applicable to such
pension shall be equal to the actuarial equivalent of
the Dollar Limitation where the Dollar Limitation is
deemed to be a pension commencing at the participant's
Social Security Retirement Age.
(iii) If a pension begins after the participant's Social
Security Retirement Age, the maximum Dollar Limitation
applicable to such pension shall be equal to the
actuarial equivalent of the Dollar Limitation where the
Dollar Limitation is deemed to be a pension commencing
at the participant's Social Security Retirement Age.
(iv) If the participant has fewer than 10 years of Plan
participation, the Dollar Limitation shall be
multiplied by a fraction, the numerator of which is the
number of years (computed to fractional parts of a
year) of participation in the Plan, and the denominator
of which is 10. If the participant has fewer than 10
years of service, the Compensaiton Limitation shall be
multiplied by a fraction, the numerator of which is the
participant's years of service (computed to fractional
parts of a year) divided by a denominator of 10.
Page 69
SECTION 4. PENSIONS (Continued) SNETMPP
(v) For all purposes of this Plan, the maximum Dollar
Limitation of $7,500 shall be automatically increased
as permitted by Treasury Department regulations to
reflect cost-of-living adjustments. Further, the
maximum Dollar Limitation applicable to a retired or
terminated participant shall be increased in accordance
with the cost-of-living adjustments. As a result of
such an adjustment, a pension which had been limited by
these provisions in a previous plan year may be
increased with respect to future payments to the lesser
of the adjusted Dollar Limitation amount or the amount
of pension which would have been payable under this
Plan without regard to the provisions of this Section
4, Paragraph 10.
For purposes of this Section 4, Paragraph 10, the Dollar
Limitation shall be based on the table in Subparagraph (b) of this
Paragraph 10 related to the participant's completed years and
months of age when the pension payment commences, and the
participant's actual year of birth.
Notwithstanding the foregoing, the otherwise permissible
annual benefits for any participant under the Plan may be further
reduced to the extent necessary, as determined by the Committee or
the Secretary to prevent disqualification of the Plan under Section
415 of the Code, which imposes the following additional limitations
on the benefits payable to participants who also may be
participating in (1) the SNET Management Retirement Savings Plan
(the "Savings Plan"), (2) the SNET Bargaining Unit Retirement
Savings Plan (the "Bargaining Unit Savings Plan"), SNET Bargaining
Unit Retirement Savings Plan (the "Bargaining Unit Savings Plan"),
and (3) the Tax Reduction Act Stock Ownership Plan (the "TRASOP").
If an individual is a participant at any time in both a defined
benefit plan and a defined contribution plan, the sum of the
defined benefit plan fraction and the defined contribution plan
fraction for
Page 70
SECTION 4. PENSIONS (Continued) SNETMPP
any plan year may not exceed 1.0.
The defined benefit plan fraction for any plan year is a
fraction, the numerator of which is the participant's projected
annual benefit under the Plan (determined as of the close of the
plan year) and the denominator of which is the lesser of (a) 1.25
multiplied by the larger of the Dollar Limitation on an annual
basis and as adjusted, or (b) 1.4 multiplied by the Compensation
Limitation on an annual basis.
The defined contribution plan fraction for any plan year is a
fraction, the numerator of which is the sum of the annual additions
to the participant's accounts in such plan year and for all prior
plan years and the denominator of which is the sum of the
applicable maximum accounts of annual additions which could have
been made under Section 415(c) of the Code for such plan year and
for all prior years of such participant's employment (assuming for
this purpose, that said Section 415(c) had been in effect during
such prior years).
The applicable maximum amount for any plan year shall be
equal to the lesser of 1.25 multiplied by the Dollar Limitation in
effect for such plan year under subsection 415(c)(1)(A) of the
Code, or 1.4 multiplied by 25% of the participant's total
compensation for such plan year.
For purposes of this Section 4, Paragraph 10, "Compensation"
means all earned income, wages, salaries and other amounts received
for employment with a Participating Company but shall not include
contributions that qualify under Internal Revenue Code Section
401(k) or other contributions to plans of deferred compensation
that are not includable in a participant's gross income for the
taxable year in which contributed, amounts realized in connection
with stock option or stock purchase plans, or other amounts that
receive special tax benefits.
For purposes of the above limitation, all defined benefit
plans, whether or not terminated, are to be treated as one defined
benefit plan, and all
Page 71
SECTION 4. PENSIONS (Continued) SNETMPP
defined contribution plans, whether or not terminated, are to be
treated as one defined contribution plan. To the extent a
reduction in benefits is required in order to achieve compliance
with the limitations of Section 415 of the Code, such reduction
shall be made in the annual benefit payable under this Plan. The
Committee or Secretary shall advise affected participants of any
additional limitation on their annual benefits required by this
paragraph.
The above limitations are intended to comply with the
provisions of Section 415 of the Code, as amended, so that maximum
benefits shall be exactly equal to the maximum amounts allowed
under Section 415 of the Code and regulations thereunder. If there
is any discrepancy between the provisions of this Section 4,
Paragraph 10 and the provisions of Section 415 of the Code and
regulations thereunder, such discrepancy shall be resolved in such
a way as to give full effect to the provisions of Section 415 of
the Code. 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
directly to the participant or beneficiary entitled thereto and
shall be charged to its operating expense accounts when and as
paid.
Compensation Limitations under Section 401(a)(17) - Prior to
January 1, 1994: In addition to other applicable limitations which
may be set forth in the Plan and notwithstanding any other contrary
provisions of the Plan, for pension amounts calculated prior to
January 1, 1994 annual compensation taken into account under the
Plan shall not exceed $200,000, adjusted for changes in the cost of
living as provided in Section 415(d) of the Internal Revenue Code,
for the purpose of calculating a Plan participant's accrued benefit
(including the right to any optional benefit provided under the
Plan) for any plan year commencing after December 31, 1988.
However, the accrued benefit determined in accordance with this
provision shall not be less than the accrued benefit determined on
May 31, 1989 without regard to this provision.
Page 72
SECTION 4. PENSIONS (Continued) SNETMPP
Notwithstanding the preceding sentence, the accrued benefit
of any Plan participant who is a highly compensated employee,
within the meaning of Section 414(q) of the Code, is reduced to the
extent a benefit has accrued with respect to compensation in excess
of $200,000 during the 1989 plan year before the later of the
adoption or effective date of this provision. The $200,000
limitation set forth in this Paragraph 10 shall be applied in
accordance with Code Section 401(a)(17) and regulations thereunder,
using the extended wear-away method for transitioning pension
benefits to the lower compensation limitations.
Compensation Limitations under Section 401(a)(17) - On and After
January 1, 1994:
For pension amounts calculated for pension effective dates on
or after January 1, 1994, in addition to other applicable
limitations set forth in the Plan and notwithstanding any other
contrary provisions of the Plan, the annual compensation of each
employee taken into account under the Plan shall not exceed the
Omnibus Budget Reconciliation Act of 1993 "OBRA '93" annual
compensation limit. The OBRA '93 annual compensation limit is
$150,000, as adjusted by the Commissioner for increases in the cost
of living in accordance with Section 401(a)(17)(B) of the Internal
Revenue Code. The cost of living adjustment in effect for a
calendar year applies to any period, not exceeding 12 months, over
which compensation is determined (determination period) beginning
in such calendar year. If a determination period consists of fewer
than 12 months, the OBRA '93 annual compensation limit will be
multiplied by a fraction, the numerator of which is the number of
months in the determination period and the denominator of which is
12.
For plan years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Section 401(a)(17)
of the Code shall mean the OBRA '93 annual compensation limit set
forth in this provision. If compensation for any prior
determination period is taken into account in determining an
employee's benefits accruing in the current plan year, the
compensation for the
Page 73
SECTION 4. PENSIONS (Continued) SNETMPP
prior determination period is subject to the OBRA '93 annual
compensation limit in effect for that prior determination period.
For this purpose, for determination periods beginning before the
first day of the first plan year beginning on or after January 1,
1994, the OBRA '93 annual compensation limit is $150,000. The Plan
has selected the extended wear-away method as provided in the
Internal Revenue Service Procedure 94-13 for transitioning pension
benefits to the lower compensation limitations.
Page 74
SECTION 4. PENSIONS (Continued) SNETMPP
<TABLE>
MAXIMUM ANNUAL PENSION BENEFIT FOR 1994
Based Upon Completed Years and Months of Age at Retirement or Termination
<CAPTION>
Completed Completed Months of Age
Years of Age
0 1 2 3 4 5 6 7 8 9 10 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
40 17,816 17,935 18,055 18,174 18,294 18,413 18,533 18,652 18,772 18,891 19,011 19,130
41 19,250 19,378 19,506 19,635 19,763 19,891 20,020 20,148 20,276 20,405 20,533 20,661
42 20,790 20,927 21,065 21,202 21,340 21,478 21,615 21,753 21,891 22,028 22,166 22,303
43 22,441 22,588 22,736 22,883 23,031 23,178 23,325 23,473 23,620 23,767 23,915 24,062
44 24,210 24,367 24,525 24,682 24,840 24,997 25,155 25,313 25,470 25,628 25,785 25,943
45 26,100 26,269 26,437 26,605 26,773 26,941 27,110 27,278 27,446 27,614 27,782 27,951
46 28,119 28,298 28,478 28,657 28,837 29,016 29,196 29,376 29,555 29,735 29,914 30,094
47 30,273 30,465 30,657 30,849 31,041 31,233 31,425 31,617 31,809 32,001 32,193 32,385
48 32,577 32,783 32,989 33,195 33,400 33,606 33,812 34,017 34,223 34,429 34,635 34,840
49 35,046 35,267 35,488 35,709 35,930 36,151 36,372 36,593 36,814 37,034 37,255 37,476
50 37,697 37,935 38,173 38,411 38,649 38,886 39,124 39,362 39,600 39,838 40,075 40,313
51 40,551 40,808 41,064 41,321 41,578 41,834 42,091 42,348 42,604 42,861 43,118 43,374
52 43,631 43,909 44,186 44,464 44,742 45,019 45,297 45,575 45,853 46,130 46,408 46,686
53 46,963 47,265 47,566 47,867 48,169 48,470 48,771 49,072 49,374 49,675 49,976 50,278
54 50,579 50,907 51,234 51,562 51,890 52,217 52,545 52,873 53,201 53,528 53,856 54,184
55 54,511 54,869 55,226 55,584 55,941 56,298 56,656 57,013 57,370 57,728 58,085 58,442
56 38,800 59,191 59,581 59,972 60,363 60,753 61,144 61,535 61,925 62,316 62,707 63,098
57 63,488 63,917 64,345 64,773 65,201 65,630 66,058 66,486 66,914 67,343 67,771 68,199
58 68,627 69,098 69,569 70,040 70,511 70,982 71,452 71,923 72,394 72,865 73,336 73,806
59 74,277 74,796 75,315 75,835 76,354 76,873 77,392 77,911 78,430 78,949 79,468 79,988
60 80,507 81,081 81,655 82,229 82,803 83,377 83,951 84,525 85,099 85,674 86,248 86,822
61 87,396 88,033 88,670 89,307 89,944 90,581 91,218 91,855 92,492 93,129 93,766 94,403
62 95,040 95,700 96,360 97,020 97,680 98,340 99,000 99,660 100,320 100,980 101,640 102,300
63 102,960 103,620 104,280 104,940 105,600 106,260 106,920 107,580 108,240 108,900 109,560 110,220
64 110,880 111,540 112,200 112,860 113,520 114,180 114,840 115,500 116,160 116,820 117,480 118,140
65 118,800 119,759 120,718 121,678 122,637 123,596 124,555 125,514 126,473 127,433 128,392 129,351
66 130,310 131,394 132,478 133,563 134,647 135,731 136,815 137,899 138,984 140,068 141,152 142,236
67 143,321 144,552 145,783 147,014 148,245 149,477 150,708 151,939 153,170 154,402 155,633 156,864
68 158,095 159,500 160,904 162,308 163,713 165,117 166,521 167,925 169,330 170,734 172,138 173,543
69 174,947 176,556 178,166 179,775 181,385 182,994 184,603 186,213 187,822 189,432 191,041 192,651
70 194,260
<FN>
* For use with employees who reach age 62 before January 1, 2000 (Date of Birth occurring before 1938)
</TABLE>
Page 75
SECTION 4. PENSIONS (Continued) SNETMPP
<TABLE>
MAXIMUM ANNUAL PENSION BENEFIT FOR 1994
Based Upon Completed Years and Months of Age at Retirement or Termination
<CAPTION>
Completed Completed Months of Age
Years of Age
0 1 2 3 4 5 6 7 8 9 10 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
40 l6,702 16,814 16,926 17,039 17,151 17,263 17,375 17,487 17,599 17,711 17,823 17,935
41 18,047 18,167 18,287 18,408 18,528 18,648 18,768 18,889 19,009 19,129 19,250 19,370
42 19,400 19,619 19,748 19,877 20,006 20,135 20,264 20,393 20,522 20,651 20,780 20,909
43 21,038 21,177 21,315 21,453 21,591 21,729 21,867 22,006 22,144 22,282 22,420 22,558
44 22,696 22,844 22,992 23,140 23,287 23,435 23,583 23,730 23,878 24,026 24,174 24,321
45 24,469 24,627 24,784 24,942 25,100 25,258 25,415 25,573 25,731 25,888 26,046 26,204
46 26,361 26,530 26,698 26,866 27,035 27,203 27,371 27,540 27,708 27,876 28,045 28,213
47 28,381 28,561 28,741 28,921 29,101 29,281 29,461 29,641 29,821 30,001 30,181 30,361
48 30,541 30,734 30,927 31,120 31,313 31,506 31,699 31,891 32,084 32,277 32,470 32,663
49 32,856 33,063 33,270 33,477 33,684 33,891 34,098 34,306 34,513 34,720 34,927 35,134
50 35,341 35,564 35,787 36,010 36,233 36,456 36,679 36,902 37,125 37,348 37,571 37,794
51 38,017 38,257 38,498 38,738 38,979 39,220 39,460 39,701 39,942 40,182 40,423 40,663
52 40,904 41,164 41,425 41,685 41,945 42,206 42,466 42,726 42,987 43,247 43,507 43,768
53 44,028 44,311 44,593 44,876 45,158 45,440 45,723 46,005 46,288 46,570 46,853 47,135
54 47,418 47,725 48,032 48,339 48,647 48,954 49,261 49,568 49,876 50,183 50,490 50,797
55 51,104 51,439 51,775 52,110 52,445 52,780 53,115 53,450 53,785 54,120 54,455 54,790
56 55,125 55,491 55,857 56,224 56,590 56,956 57,323 57,689 58,055 58,421 58,788 59,154
57 59,520 59,922 60,323 60,725 61,126 61,528 61,929 62,331 62,732 63,134 63,535 63,937
58 64,338 64,780 65,221 65,662 66,104 66,545 66,987 67,428 67,869 68,311 68,752 69,194
59 69,635 70,122 70,608 71,095 71,582 72,068 72,555 73,042 73,528 74,015 74,502 74,988
60 75,475 76,013 76,551 77,090 77,628 78,166 78,704 79,243 79,781 80,319 80,857 81,395
61 81,934 82,531 83,128 83,725 84,322 84,920 85,517 86,114 86,711 87,308 87,906 88,503
62 89,100 89,595 90,090 90,585 91,080 91,575 92,070 92,565 93,060 93,555 94,050 94,545
63 95,040 95,700 96,360 97,020 97,680 98,340 99,000 99,660 100,320 100,980 101,640 102,300
64 102,960 103,620 104,280 104,940 105,600 106,260 106,920 107,580 108,240 108,900 109,560 110,220
65 110,880 111,540 112,200 112,860 113,520 114,180 114,840 115,500 116,160 116,820 117,480 118,140
66 118,800 119,788 120,776 121,764 122,752 123,740 124,728 125,716 126,704 127,692 128,680 129,667
67 130,655 131,777 132,899 134,021 135,143 136,265 137,387 138,508 139,630 140,752 141,874 142,996
68 144,118 145,397 146,677 147,956 149,236 150,515 151,795 153,074 154,354 155,633 156,913 158,192
69 159,471 160,938 162,404 163,870 165,337 166,803 168,269 169,735 171,202 172,668 174,134 175,600
70 177,067
<FN>
* For use with employees who reach age 62 after December 31, 1999 and before January 1,2017 (Date of birth occurring
1938 through 1954)
</TABLE>
Page 76
SECTION 4. PENSIONS (Continued) SNETMPP
<TABLE>
MAXIMUM ANNUAL PENSION BENEFIT FOR 1994
Based Upon Completed Years and Months of Age at Retirement or Termination
<CAPTION>
Completed Completed Months of Age
Years of Age
0 1 2 3 4 5 6 7 8 9 10 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
40 15,589 15,693 15,798 15,903 16,007 16,112 16,216 16,321 16,425 16,530 16,634 16,739
41 16,844 16,956 17,068 17,180 17,293 17,405 17,517 17,630 17,742 17,854 17,966 18,079
42 18,191 18,311 18,432 18,552 18,673 18,793 18,913 19,034 19,154 19,275 19,395 19,515
43 19,636 19,765 19,894 20,023 20,152 20,281 20,410 20,539 20,668 20,796 20,925 21,054
44 21,183 21,321 21,459 21,59? 21,735 21,873 22,011 22,148 22,286 22,424 22,562 22,700
45 22,838 22,985 23,132 23,279 23,427 23,574 23,721 23,868 24,015 24,162 24,310 24,457
46 24,604 24,761 24,918 25,075 25,232 25,389 25,546 25,704 25,861 26,018 26,175 26,332
47 26,489 26,657 26,825 26,993 27,161 27,329 27,497 27,665 27,833 28,001 28,169 28,337
48 28,505 28,685 28,865 29,045 29,225 29,405 29,585 29,765 29,945 30,125 30,305 30,485
49 30,665 30,859 31,052 31,245 31,439 31,632 31,825 32,019 32,212 32,405 32,598 32,792
50 32,985 33,193 33,401 33,609 33,817 34,026 34,234 34,442 34,650 34,858 35,066 35,274
51 35,482 35,707 35,931 36,156 36,380 36,605 36,830 37,054 37,279 37,503 37,728 37,952
52 38,177 38,420 38,663 38,906 39,149 39,392 39,635 39,878 40,121 40,364 40,607 40,850
53 41,093 41,357 41,620 41,884 42,147 42,411 42,675 42,938 43,202 43,466 43,729 43,993
54 44,257 44,543 44,830 45,117 45,404 45,690 45,977 46,264 46,551 46,837 47,124 47,411
55 47,698 48,010 48,323 48,636 48,948 49,261 49,574 49,886 50,199 50,512 50,824 51,137
56 51,450 51,792 52,134 52,475 52,817 53,159 53,501 53,843 54,185 54,527 54,868 55,210
57 55,552 55,927 56,302 56,676 57,051 57,426 57,801 58,175 58,550 58,925 59,300 59,674
58 60,049 60,461 60,873 61,285 61,697 62,109 62,521 62,933 63,345 63,757 64,169 64,581
59 64,993 65,447 65,901 66,355 66,809 67,264 67,718 68,172 68,626 69,081 69,535 69,989
60 70,443 70,946 71,448 71,950 72,453 72,955 73,457 73,960 74,462 74,964 75,467 75,969
61 76,471 77,029 77,586 78,144 78,701 79,258 79,816 80,373 80,930 81,488 82,045 82,603
62 83,160 83,655 84,150 84,645 85,140 85,635 86,130 86,625 87,120 87,615 88,110 88,605
63 89,100 89,595 90,090 90,585 91,080 91,575 92,070 92,565 93,060 93,555 94,050 94,545
64 95,040 95,700 96,360 97,020 97,680 98,340 99,000 99,660 100,320 100,980 101,640 102,300
65 102,960 103,620 104,280 104,940 105,600 106,260 106,920 107,580 108,240 108,900 109,560 110,220
66 110,880 111,540 112,200 112,860 113,520 114,180 114,840 115,500 116,160 116,820 117,480 118,140
67 118,800 119,820 120,839 121,859 122,878 123,898 124,917 125,937 126,956 127,976 128,995 130,015
68 131,034 132,197 133,360 134,522 135,685 136,848 138,010 139,173 140,336 141,498 142,661 143,824
69 144,986 146,319 147,651 148,983 150,316 151,648 152,980 154,313 155,645 156,977 158,310 159,642
70 160,974
<FN>
*For use with employees who reach age 62 after December 31, 2016 (Date of Birth occurring after 1954)
</TABLE>
Page 77
SECTION 4. PENSIONS (Continued) SNETMPP
11. Pension Plan Termination Arrangements
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. In the event of termination of
the Plan, the balances in the Management Pension Fund Account, or
in the event of a partial termination of the Plan the portion of
the Management Pension Fund Account allocable to the partial
termination, shall be applied first among the participants and the
beneficiaries of the Plan in the order and to the extent required
by Section 4044 of the Pension Act. Thereafter this Management
Pension Fund Account shall be applied, insofar as that Act permits,
as follows, with proper adjustment in each case for any portion of
the benefit already provided for under a prior allocation under
that Act or under this Paragraph 11:
First: To making adequate provision for the payment of the full
amounts of the service pensions previously granted to retired
employees (including the full amounts payable to designated
annuitants of retired employees) and deferred vested pensions to
former employees if such employees, such annuitants or former
employees are on the pension roll as of the termination date;
for the payment of the full amounts which may be payable in the
future to designated annuitants of employees who have retired
and who are on the pension roll as of the termination date; for
the payment of the full amounts of the service pensions or
deferred vested pensions which employees, as of the termination
date, have then become entitled to receive upon terminating
service, such pensions to start upon the employee's retirement
or separation from active service, including the payment of the
full amounts which may be payable to designated annuitants of
such employees, following the death of such employees after
their retirement or separation from service, such amounts to be
computed in accordance with the provisions of Paragraph 3(a) or
3(e) of
Page 78
SECTION 4. PENSIONS (Continued) SNETMPP
this Section on the basis of the pensions to which such eligible
employees have become entitled as of the termination date; and
for the payment of the full amounts payable in accordance with
the provisions of Paragraphs 3(d) or 3(e)(v) of this Section to
the surviving spouses of employees if such employees die while
in active service, such amounts to be computed in accordance
with the provisions of Paragraphs 3(a) and 3(e) of this Section
on the basis of the pensions to which such employees have become
entitled as of the termination date.
Second: To making provision for the payment of death benefits
attributable to deaths occurring prior to the date of
termination which would have been payable from the Management
Pension Fund Account, and for the payment, upon the deaths of
retired employees who are on the pension roll as of the date of
termination and of employees eligible as of that date for
retirement, of death benefits which would have been payable from
the Management Pension Fund Account, had the Plan not been so
terminated.
Third: To making provision, to the extent permitted by the balance,
if any, remaining in the Management Pension Fund Account after
the foregoing provision shall have been made, for the payment of
deferred vested pensions starting at age sixty-five and
continuing until the death of the former employee, computed as
hereinafter specified, to all former employees who left the
service of the Company after May 3l, l969 and before September
30, 1971 and at the time of termination of their employment were
eligible for retirement on service pension with the approval of
the Committee under the Predecessor Plan, but not at their own
request. If the remaining balance in the Management Pension
Fund Account shall be insufficient, in the judgment of the
Company, to provide the full amount of the computed deferred
vested pensions to employees in this group, the amount of the
pension payment from the Management Pension Fund Account to each
person in the group shall be
Page 79
SECTION 4. PENSIONS (Continued) SNETMPP
reduced pro rata.
Fourth: To making provision, to the extent permitted by the
balance, if any, remaining in the Management Pension Fund
Account after the foregoing provision shall have been made, for
the payment of deferred vested pensions starting at age sixty-
five and continuing until the death of the former employee,
computed as hereinafter specified, to all employees who, as of
the termination date, were not eligible for retirement on
service pension but had reached the age of forty years and whose
term of employment was fifteen or more years and all former
employees who left the service of a Participating Company after
May 3l, l969 at a time when they had reached the age of forty
years and whose term of employment was fifteen or more years but
who were not eligible for retirement on service pension with the
approval of the Committee under this Plan or the Predecessor
Plan. If the remaining balance in the Management Pension Fund
Account shall be insufficient, in the judgment of the Company,
to provide the full amount of the computed deferred vested
pensions to employees in this group, the amount of pension
payment from the Management Pension Fund Account to each person
in the group shall be reduced pro rata.
Fifth: To making provision, to the extent permitted by the balance,
if any, remaining in the Management Pension Fund Account after
the foregoing provision shall have been made, for the payment of
deferred vested pensions starting at age sixty-five and
continuing until the death of the former employee, computed as
hereinafter specified, to all employees who, as of the
termination date, were not eligible for retirement on service
pension but whose calendar years of service after age twenty-two
were ten or more and all former employees who left the service
of a Participating Company after January l, l976 at a time when
their calendar years of service after age twenty-two were ten or
more but who were not eligible for retirement on
Page 80
SECTION 4. PENSIONS (Continued) SNETMPP
service pension. If the remaining balance in the Management
Pension Fund Account shall be insufficient in the judgment of
the Company, to provide the full amount of the computed deferred
pensions to employees in this group, the amount of pension
payment from the Management Pension Fund Account to each person
in the group shall be reduced pro rata.
Sixth: To making provision, to the extent permitted by the balance,
if any, remaining in the Management Pension Fund Account after
the foregoing provision shall have been made, for the payment of
deferred vested pensions starting at age sixty-five and
continuing until the death of the former employee, computed as
hereinafter specified, to all employees who, as of the
termination date, were not eligible for retirement on service
pension but whose calendar years of service after age eighteen
were ten or more and all former employees who left the service
of a Participating Company after January 1, 1985 at a time when
their calendar years of service after age eighteen were ten or
more but who were not eligible for retirement on service
pension. If the remaining balance in the Management Pension
Fund Account shall be insufficient in the judgment of the
Company, to provide the full amount of the computed deferred
pensions to employees in this group, the amount of pension
payment from the Management Pension Fund Account to each person
in the group shall be reduced pro rata.
Seventh: To making provision, to the extent permitted by the
balance, if any, remaining in the Management Pension Fund
Account after the foregoing provision shall have been made, for
the payment of deferred pensions starting at age sixty-five and
continuing until the death of the former employee, computed as
hereinafter specified, to all employees not referred to in the
preceding paragraphs who are participants in the Management
Pension Plan and whose calendar years of service after age
eighteen were five or more years on the termination date. If the
remaining balance in the
Page 81
SECTION 4. PENSIONS (Continued) SNETMPP
Management Pension Fund Account shall be insufficient, in the
judgment of the Company, to provide the full amount of the
computed deferred pensions to employees in this group, the
amount of the pension to each employee in the group shall be
reduced pro rata.
Eighth: No Reversion of Pension Assets: In the event that there
is any remaining balance in the Management Pension Fund
Account after making provision deemed adequate for the
full amount of the pensions hereinbefore specified as
payable in case of termination of the Plan, such balance
shall be applied solely for pension purposes in an
equitable manner consistent with the purposes of the Plan.
The deferred vested pensions, specified in this Paragraph 11 as
payable to employees who have not yet reached normal retirement age
and who have not yet become eligible as of the termination date for
retirement on service pension, and to former employees shall be
computed, without allowance for any payment upon the death of the
employee, in accordance with the provisions of Paragraph 2 of
Section 4, subject to the provisions of Paragraph 16 of Section 6,
except that the term of employment used in the computation shall
end as of the date of termination of the Plan, the average annual
pay, if applicable, used in the computation shall in every case be
the average annual pay for the applicable five consecutive year
period prior to the date of termination of the Plan, or termination
of employment if earlier during which the employee was paid the
highest rate of wages and any provisions relating to minimum
pensions shall not apply. The payment of such deferred vested
pension shall not be contingent upon the employee's being in the
service of a Participating Company after the termination of the
Plan. In all cases such deferred vested pensions shall be computed
on the basis of the employee's age and term of employment, as of
the termination date as shown by the records of the Participating
Company which last employed such individual. The Company reserves
the right to make provision
Page 82
SECTION 4. PENSIONS (Continued) SNETMPP
out of the Management Pension Fund Account for any or all pensions
specified in this paragraph through the purchase of annuities from
an insurance company or in such other manner as the Company may
determine. In the case of all pensions for which provision is made
through the purchase of annuities from an insurance company, the
delivery of an annuity contract to each person to whom such
pensions are payable shall serve to absolve the Company, any other
Participating Company, and the Management Pension Fund Account from
any further obligations for the payment of such pensions. In the
case of all pensions for which provision is not made through the
purchase of annuities from an insurance company, the Company's
judgment as to the adequacy of the alternative provision made shall
be final. If such alternative provision made, as of the
termination date, for deferred vested pensions to persons not then
on the pension roll or eligible to receive a pension at their own
request should thereafter at any time appear, in the judgment of
the Company, to be inadequate or more than sufficient to continue
the payment of the amounts previously estimated to be payable, the
remaining payments on all such pensions shall be adjusted pro rata
in accordance with the remaining provision available. In lieu of
the deferred vested pensions starting at age sixty-five as provided
for in this paragraph, the Company reserves the right to offer to
all or specified groups of persons the option of a reduced pension
starting at an earlier age, or such other form of payment as may be
consistent with the equities involved. The Company's judgment as
to the amounts and methods of such alternative payments and the
groups to which such options are to be offered shall be final.
Pre-termination restrictions:
(i) In the event of termination of the Plan, the benefit of any
highly compensated employee (as that term is defined in
Section 414(q) of the Internal Revenue Code and the
regulations thereunder), and any former highly compensated
employee (as that term is defined in the regulations
Page 83
SECTION 4. PENSIONS (Continued) SNETMPP
under Internal Revenue Code section 414(q)) shall be limited
to a benefit that is nondiscriminatory under Section
401(a)(4) of the Internal Revenue Code.
(ii) The payments of benefits to or on behalf of a "restricted
employee" (as that term is defined in paragraph (iii) below)
shall not exceed an amount equal to the payments that would
be made to or on behalf of the restricted employee in that
year under a straight life annuity that is the actuarial
equivalent of the accrued benefit and other benefits to
which the restricted employee is entitled under the Plan
(other than a social security supplement), as well as a
social security supplement, if any, that the restricted
employee is entitled to receive.
(iii) A "restricted employee" means any highly compensated employee
or former highly compensated employee (as those terms are
defined under Internal Revenue Code Section 414(q) and the
regulations thereunder). However, a highly compensated or
former highly compensated employee need not be treated as a
restricted employee in the current year if the highly- or
former highly-compensated employee is not one of the 25
nonexcludable (within the meaning of Section 401(a)(4) and
the regulations thereunder) employees and former employees
with the largest amount of compensation in the current or any
prior year.
(iv) The restrictions in this Section 4 shall not apply, however,
if any one of the following requirements is satisfied:
(A) After taking into account payment to or on behalf of the
restricted employee of all benefits payable to or on behalf
of that restricted employee under the Plan, the value of
Plan assets equals or exceeds 110 percent of the value of
current liabilities, as defined in Internal Revenue Code
Section 412(l)(7).
Page 84
SECTION 4. PENSIONS (Continued) SNETMPP
(B) The value of the benefits payable to or on behalf of the
restricted employee must be less than one percent of the
value of current liabilities before distribution.
(C) The value of the benefits payable to or on behalf of the
restricted employee does not exceed $3,500.
12. Disability Pension Payments
All disability pensions (defined in Paragraph l(c) of this
Section) and related payments to annuitants except as otherwise
provided in Sub-paragraph 3(b)(iii) of this Section, shall be a
charge to the operating expense accounts of the Participating
Company, when and as paid.
Page 85
SECTION 5. DEATH BENEFITS SNETMPP
l. Active Employee Death Benefit
a. All employees on the payroll as of September 17, 1989 shall
be eligible for the Active Employee Death Benefit ("eligible
employees"); employees hired or rehired after September 17, 1989
shall not be eligible. In the event of the death of any
eligible employee resulting from sickness or injury, including
injuries arising out of and in the course of employment by a
Participating Company, there may be paid (and in the
circumstances described in Subparagraph 3(a) of this Section,
there shall be paid) an Active Employee Death Benefit, equal to
the eligible employee's basic annual rate of pay (based on such
employee's regular scheduled work hours) in effect as of the
earlier of the employee's date of death or January 1, 1992.
Payment of the Active Employee Death Benefit, subject to the
conditions imposed in Paragraph 4 of this Section and elsewhere
in this Plan shall be made to the employee's beneficiaries as
provided in Paragraph 3 of this Section.
2. Retiree Death Benefit
a. In the event of the death of any person who 1) retired prior
to September 17, 1989 and at the time of death is receiving a
pension granted under Paragraph l(a) or l(c) of Section 4 of
this Plan or the Predecessor Plan; or 2) was eligible to retire
with a service pension under the provisions of this Plan or the
SNETPP as of September 17, 1989, and who retired on or after
September 17, 1989, there may be paid (and in the circumstances
described in Subparagraph 3(a) of this Section, there shall be
paid) a Retiree Death Benefit in an amount described in
Subparagraph 2(b) of this Section.
Notwithstanding any other provision of the Plan and only for
purposes under the Plan of determining a participant's
eligibility for a Retiree Death Benefit for retirements
effective on or after July 8, 1991, a participant's
Page 86
SECTION 5. DEATH BENEFITS (Continued) SNETMPP
eligibility for a service or discounted service pension as of
September 17, 1989 shall be based on the greater of the
eligibility determined on the basis of either (A) the provisions
of the Plan as of September 17, 1989, without reference to this
Subparagraph, or (B) the participant's years of service, term of
employment and age as of November 1, 1987 (including service
after the last day of the month in which an employee attains the
Normal Retirement Age) increased by five years; provided,
however, that this Subparagraph shall not apply to any
individual who is not a participant in the Plan as of July 8,
1991 nor any individual who is at the department level or
equivalent fifth level of management or above as of such date.
b. If such pensioner leaves any beneficiary bearing the
relationship to the deceased and conforming to the other
conditions stated with respect to the death of an employee in
Subparagraph 3(a) of this Section, such Death Benefit shall be
paid in accordance with the following:
(i) If the Pensioner retired under this Plan or under any
Predecessor Plan on or after September 30, 1963, the date
specified in such Predecessor Plan for the payment of an
unreduced death benefit subsequent to retirement, the Death
Benefit shall be the amount of the maximum Active Employee
Death Benefit that could have been paid if he had died on his
last day of active service before retirement on pension;
provided, however, that in the case of a pensioner who
retired after the last day of the month in which his sixty-
fifth birthday occurred, and whose pension was effective
during the period from January 2, l979 to August l0, l980,
inclusive, the Death Benefit shall not exceed the maximum
Active Employee Death Benefit which could have been paid if
the pensioner had died on the last day of the month in which
his sixty-fifth birthday occurred.
Page 87
SECTION 5. DEATH BENEFITS (Continued) SNETMPP
(ii) If the pensioner retired under a Predecessor Plan prior
to September 30, 1963, the date specified in such Predecessor
Plan for the payment of an unreduced death benefit subsequent
to retirement, the Death Benefit shall be not less than the
amount specified in Subparagraph (i) of this Paragraph 2(b)
reduced by ten percentum (l0%) of such amount for each full
year which has elapsed since his retirement.
(iii) The Death Benefit payable under either Subparagraphs
(i) or (ii) of this Paragraph 2(b) shall not be less than the
annual pension allowance as determined under Paragraph 2 of
Section 4 for employees who retired before September 17,
1989.
No Death Benefit shall be payable upon the death of an annuitant
receiving a payment under Paragraph 3 of Section 4 or upon the
death of a former employee eligible for a deferred vested
pension under Paragraph l(b) of Section 4 of this Plan, unless
Paragraph 5 of this Section 5 applies.
3. Eligible Beneficiaries
The persons who may be beneficiaries of the Active Employee
Death Benefit or the Retiree Death Benefit on the death of a
pensioner hereunder are limited to the spouse living with the
employee or pensioner at the time of death, and the dependent
children and other dependent relatives of the deceased. Former
spouses and children who are not dependent upon the deceased as
defined in this Paragraph 3 are not eligible to receive a death
benefit under this Plan, and cannot be designated as an Alternate
Payee pursuant to a domestic relations order for purposes of
eligibility for the death benefits provided by this Plan. The
amount to be paid in each case and the beneficiary or beneficiaries
who shall receive the same, and the share which each shall receive,
shall be determined by the Committee, subject to the following
provisions and to the provisions of Paragraphs 2 and 4 of this
Section.
Page 88
SECTION 5. DEATH BENEFITS (Continued) SNETMPP
a. Mandatory Beneficiaries
In the event of death of an eligible active employee, the
maximum Active Employee Death Benefit specified in Paragraph 1
of this Section 5 shall be paid, subject to the provisions of
Subparagraph (c) of this Paragraph 3, to the spouse of the
deceased employee if living with him at the time of his death,
or to the unmarried child or children of the deceased employee
under the age of 23 years (or over that age if physically or
mentally incapable of self-support) who were actually supported
in whole or in part by the deceased employee at the time of
death, or a dependent parent who lives in the same household
with the employee or who lives in a separate household in the
vicinity which is provided for the parent by the employee. If
the employee leaves two or more of a spouse, a child or
children, or a parent, as herein described, the Committee or the
Secretary, in its discretion, may pay the Death Benefit to or
for any one or more of such possible beneficiaries in such
portions as it may determine.
b. Discretionary Beneficiaries
If there be no beneficiary of the deceased employee or
pensioner, as described in Subparagraph (a) of this Paragraph 3,
then an Active Employee Death Benefit in an amount not to exceed
the amount specified in Paragraph 1, or a Retiree Death Benefit
in an amount not to exceed the amount specified in Paragraph 2
of this Section, may be paid to any other person or persons who
may be beneficiaries, as defined in the first sentence of this
Paragraph 3, and be receiving or entitled to receive support
from the deceased employee or pensioner at the time of his
death.
Subject to the limitations expressed in this Subparagraph (b)
the Committee or the Secretary shall have full authority to
determine to whom payments shall be made and the amount of the
payments, taking into consideration the degree of dependency and
such other facts as it may deem
Page 89
SECTION 5. DEATH BENEFITS (continued) SNETMPP
pertinent.
c. Beneficiary Designation
If the employee or pensioner shall have made written request
and shown good cause therefor, the Committee or the Secretary
may pay all or a portion of the Death Benefit to a person or
persons included in Subparagraph (b) of this Paragraph 3, and
reduce, by the amount thus paid, the amount which is payable to
the persons included in Subparagraph (a), provided in the
opinion of the Committee or the Secretary, good cause for such
action still exists at the time of the employee's or pensioner's
death.
d. Payment of Final Expenses
Upon the death of an employee eligible for the Active
Employee Death Benefit or pensioner eligible for the Retiree
Death Benefit and receiving pension payments under Paragraph
l(a) or l(c) of Section 4, if there be no beneficiary qualified
to receive an award under the provisions of this Section, or if
the amount of such award authorized by the Committee or the
Secretary, be less than the maximum specified in Paragraph l or
2 of this Section, as the case may be, the Committee or the
Secretary may authorize such payments as may be required to
defray the necessary expenses incident to the death of the
employee or pensioner and the disability immediately preceding,
provided, however, that the amount so paid shall not exceed the
maximum benefits specified in said paragraphs.
4. Method of Payment
a. Payment on Death of Employee or Pensioner
At the death of an employee or pensioner the Death Benefit
may be paid in a lump sum or installment payments, the number
and size of which may be varied in accordance with the
circumstances, at the discretion of the Committee or the
Secretary, provided, however, that all such payments shall be
completed within five (5) years after the death of the employee
or
Page 90
SECTION 5. DEATH BENEFITS (Continued) SNETMPP
pensioner, and provided further that a beneficiary who has
previously requested to receive the death benefit in installment
payments may request a lump sum distribution of the remaining
balance by submitting said request in writing to the Secretary.
Notwithstanding the foregoing and subject to the provisions
hereinafter included in this Paragraph 4, an employee or
pensioner may file with the Secretary, a written direction that
a death benefit which may become payable to a beneficiary
qualified under Paragraph 3(a) shall be paid, when such amount
has been determined, to said beneficiary in equal monthly
installments over a period to be specified in such written
direction but such period may not extend beyond ten years in the
case of a written direction filed prior to January 1, 1984 and
such period may not extend beyond five years after the death of
an employee or pensioner in the case of a written direction
filed on or after January 1, 1984, and benefits shall be paid in
accordance with such direction.
b. Payment on Death of Beneficiary
In the event of the death of a beneficiary who is receiving
or is entitled to receive payments under this Section, the
remainder of the amount previously determined shall be payable,
in a manner determined by the Secretary, to any remaining
beneficiary or beneficiaries pursuant to Paragraph 3,
Subparagraph (a) or Subparagraph (b), or to the estate of the
deceased beneficiary, provided, however, that all such payments
shall be completed within five years of the death of the
employee or pensioner.
c. Advance Payment
Upon the death of an employee or pensioner, the Secretary,
without awaiting determination of the beneficiary or
beneficiaries, if any, to whom the award will be made, may pay
an amount equivalent to the wages, disability benefits or
pension which the deceased was receiving, to the end of the
month in which the death occurs, and such payment may be made to
the
Page 91
SECTION 5. DEATH BENEFITS (Continued) SNETMPP
spouse of the deceased, or to some other suitable person
selected by the Secretary. Such payment, if made, shall
constitute a part of the award. In addition the Secretary, in
its discretion, may authorize payment, before the final
settlement, of a part of the award not exceeding One Thousand
Five Hundred Dollars ($1500), to meet urgent expenses incident
to the death and the immediately preceding disability of the
deceased. If any of the persons to whom an award may be payable
cannot be found or cannot be conveniently communicated with or
are incompetent to authorize use of any part thereof for the
burial of the deceased and the payment of necessary expenses
incident to his death and preceding disability, the Secretary,
in his discretion, may make such payments, as a part of the
award, as in its judgment may be reasonable for the proper
burial of the deceased and the payment of necessary expenses
incident to his death and disability immediately preceding.
d. Payment of Interest
In the event that a death benefit is paid in installments
pursuant to the written direction of the employee or pensioner,
or in the discretion of the Committee or the Secretary, under
this Paragraph 4, such death benefit shall be credited with a
rate of interest from the date of the first installment, and
such portion of the death benefit which remains unpaid after any
installment shall be credited with a rate of interest from the
date of such installment and such interest shall be paid as part
of the next installment. The rate of interest shall be
determined or redetermined solely in the discretion of the Plan
Administrator, but the rate of interest shall not be
redetermined more often than once in any calendar year.
Notwithstanding the foregoing, no interest shall be credited
beyond the date of death of the initial beneficiary who is
receiving the death benefit in installments unless the Secretary
determines to pay any unpaid balance to
Page 92
SECTION 5. DEATH BENEFITS (Continued) SNETMPP
another beneficiary in installments.
5. Death After Termination of Employment
Except as provided in Paragraph 2, a Death Benefit shall not be
payable in the case of any person who dies after he has ceased to
be an employee of a Participating Company, unless such person
became disabled by reason of accident or sickness while an employee
and continued disabled, until death, to such a degree as to be
unable to engage in any gainful occupation. In such cases a Death
Benefit may be paid, in the discretion of the Committee or the
Secretary, provided it has been furnished from time to time with
such proof of continued disability as it may have required and
provided it has been permitted to make, or have made by a
physician, such examinations of the disabled person as it has
deemed necessary in order to ascertain his condition. The amount
of the Death Benefit, if any, shall not exceed the amount which
could have been paid if the disabled person had died on the day he
ceased to be an employee of a Participating Company.
6. Claims
All claims for Death Benefits should be made within one year of
the death on which the claim is based. In case notice of the
existence of a spouse, child or other dependent relative of a
deceased employee or pension shall not be served on the Secretary
within one year after such employee's or pensioner's death, the
Committee or the Secretary shall not be required to recognize any
claim made by or in behalf of any such person provided such death
benefit would not otherwise have been payable pursuant to Paragraph
1 or 2 of this Section 5.
7. Definition of Basic Annual Rate of Pay
"Basic annual rate of pay" for the purposes of this Section 5
shall mean wages for full time service (not including overtime),
computed at the employee's rate of pay at the date of retirement,
death or as of January 1, 1992 if earlier; provided, however, that
if the employee normally serves a
Page 93
SECTION 5. DEATH BENEFITS (Continued) SNETMPP
Participating Company on less than a full time basis, benefits in
case of death shall be computed on the basis of the time
constituting the employee's normal service under his contract of
hiring. For purposes of this Section 5, basic annual rate of pay
will be no greater than the compensation allowable under the
Internal Revenue Code Section 401(a)(17) and regulations
thereunder, which includes the OBRA '93 provisions.
8. Charging of Payments
Active Employee Death Benefits payable pursuant to Paragraph 1
of this Section 5 and any interest payable pursuant to Paragraph
4(d) of this Section 5 to the initial beneficiary or beneficiaries
on account of deaths of employees who are participants in the
Pension Plan pursuant to Paragraph l(e) of Section 4 and who leave
beneficiaries bearing the relationship to the deceased and
conforming to the other conditions stated in Paragraph 3(a) of this
Section 5 and Retiree Death Benefits payable pursuant to Paragraph
2(b) of this Section 5 to the initial beneficiary or beneficiaries
on account of deaths of service pensioners, exclusive of any amount
payable under Subparagraph (ii) of Paragraph 2(b) in excess of the
minimum set forth in Subparagraph (iii) of said Paragraph 2(b)
shall be paid from the Management Pension Fund Account either
directly or through the purchase of annuities from an insurance
company as the Company may determine. All other amounts, including
any interest thereon, payable pursuant to this Section 5 which are
not paid from the Management Pension Fund Account, shall be a
charge to the operating expense accounts of the Participating
Company when and as paid.
9. Waiver of Death Benefit
No death benefit shall be payable under the provisions of
Paragraph 1 or 2 of this Section 5 with respect to any employee who
is or was a member of a group of employees designated by the Board
of Directors as eligible to waive such benefit, if such employee
has waived such benefit under this Plan or the
Page 94
SECTION 5. DEATH BENEFITS (Continued) SNETMPP
Predecessor Plan, unless the Board of Directors has authorized the
Page 95
SECTION 6. GENERAL PROVISIONS SNETMPP
l. Rights to Pensions or Benefits
Neither the action of the Board of Directors in establishing
this Plan nor any action hereafter taken by the Company, the Board,
the Committee or any Participating Company shall be construed as
giving to any officer, agent or employee a right to be retained in
the service of any Participating Company or any right or claim to
any pension or other benefit or allowance after discharge from the
service of any Participating Company, unless the right to such
pension or benefit has accrued prior to such discharge. Except in
the event of termination of the Plan, no employee or annuitant
shall have any right to a service, disability service or deferred
vested pension unless he meets the conditions specified in
Paragraph l(a) or l(b) or 1(d) or 1(i) or 1(j) of Section 4 of the
Plan, nor any right in the SNET Management Pension Trust Fund
unless a pension authorized by the Committee under the Plan has not
been paid, nor any right against any Participating Company to any
benefit under the Plan other than the amount to which the employee
or annuitant has theretofore become entitled and which the
Committee has directed be paid to that employee or annuitant under
the Plan. In the event of termination of the Plan, no employee or
annuitant shall have any right in the SNET Management Pension Trust
Fund or against any Participating Company except as herein provided
or as otherwise provided by law.
2. Assignment or Alienation; Qualified Domestic Relations Orders
Except as otherwise provided by law, 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 (other than a Federal tax levy under
Internal Revenue Code Section 6331), 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
Page 96
SECTION 6. GENERAL PROVISIONS (Continued) SNETMPP
distribution under this Plan.
Notwithstanding the foregoing sentence, the Plan shall provide
for payment of pension benefits in accordance with the applicable
requirements of a "qualified domestic relations order (QDRO or
Order)" as that term is defined in Code Section 414(p). The Death
Benefit provisions in Section 5 and the Automatic Survivor Annuity
benefits in Section 4, Paragraph 3(g)(2) are not available for
assignment to Alternate Payees under a domestic relations order.
The remaining Survivor Annuity benefits provided in Section 4,
Paragraph 3 are available for assignment to an Alternate Payee as
described in that Section, subject to the divorce related
provisions described in Paragraph 3(b). The Secretary, in
accordance with uniform and nondiscriminatory procedures
established by the Secretary, shall determine the qualified status
of any domestic relations order submitted to the Plan Administrator
and administer any distributions under this Plan pursuant to a QDRO
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. Unless otherwise prohibited by law, upon written notice
that a Participant is in a divorce proceeding or another type of
domestic relations proceeding with which this Plan's assets may be
subject to a payment to an Alternate Payee, the Plan shall
segregate any such pension amounts for a reasonable period of time
as determined by the Secretary. Any necessary actuarial
computation relating to the determination or application of a
qualified domestic relations order shall be ascertained by using
the PBGC immediate and deferred annuity rates for Plans terminated
as of January 1 of the year in which the order is entered by a
court and in accordance with applicable mortality tables set forth
on the next page:
Page 97
SECTION 6. GENERAL PROVISIONS (Continued) SNETMPP
Mortality Table for
Actives, Retirees, and Alternate Payees
Age Rate Age Rate
16 0.001437 64 0.018685
17 0.001414 65 0.020517
18 0.001385 66 0.022562
19 0.001351 67 0.024847
20 0.001311 68 0.027232
21 0.001267 69 0.029634
22 0.001219 70 0.032073
23 0.001167 71 0.034743
24 0.001149 72 0.037667
25 0.001129 73 0.040871
26 0.001107 74 0.044504
27 0.001083 75 0.048504
28 0.001058 76 0.052913
29 0.001083 77 0.057775
30 0.001111 78 0.063142
31 0.001141 79 0.068628
32 0.001173 80 0.074648
33 0.001208 81 0.081256
34 0.001297 82 0.088518
35 0.001398 83 0.096218
36 0.001513 84 0.104310
37 0.001643 85 0.112816
38 0.001792 86 0.122079
39 0.001948 87 0.132174
40 0.002125 88 0.143179
41 0.002327 89 0.155147
42 0.002556 90 0.168208
43 0.002818 91 0.182461
44 0.003095 92 0.198030
45 0.003410 93 0.215035
46 0.003769 94 0.232983
47 0.004180 95 0.252545
48 0.004635 96 0.273878
49 0.005103 97 0.297152
50 0.005616 98 0.322553
51 0.006196 99 0.349505
52 0.006853 100 0.378865
53 0.007543 101 0.410875
54 0.008278 102 0.445768
55 0.009033 103 0.483830
56 0.009875 104 0.524301
57 0.010814 105 0.568365
58 0.011863 106 0.616382
59 0.012952 107 0.668696
60 0.014162 108 0.725745
61 0.015509 109 0.786495
62 0.017010 110 0.852659
63 0.018685
Page 98
SECTION 6. GENERAL PROVISIONS (Continued) SNETMPP
3. Determination of Eligibility
a. In all questions relating to age and service for eligibility
to become a participant or eligibility for a deferred vested
pension, or relating to term of employment and rates of pay for
determining service pensions and other benefits, the decision of
the Committee, based upon this Plan and upon the records of the
Participating Company last employing such individual and insofar
as permitted by applicable law, shall be final.
b. The computation period for determining eligibility to become
a participant in the Pension Plan, under Paragraph l(e) of
Section 4 shall be the first of the following computation
periods in which the employee completes l000 hours of service:
(l) the l2-consecutive-month period beginning with the
employment commencement date and the succeeding such periods
beginning on the anniversaries of the employment commencement
date; or, (2) the l2-month period of the calendar year which
includes the first anniversary of the employment commencement
date and succeeding calendar years. When a conversion to
calendar years is made, or when both anniversary and calendar
years are utilized, the participant who completes 1000 hours of
service in both the initial employment year and the initial
calendar year will be credited with two years of eligibility
service credit.
c. The computation period for determining eligibility for a
deferred vested pension under Paragraph l(b) of Section 4, is
the calendar year.
d. The computation of "term of employment" or "credited
service" for the accrual of pensions and calculation of benefits
provided in Sections 4 and 5 of the Plan shall be as defined in
Paragraph 22 of Section 2, and shall not be dependent on the
completion of any given amount of service during any computation
periods.
Page 99
SECTION 6. GENERAL PROVISIONS (Continued) SNETMPP
4. Breaks in Service
a. General Provisions-except for Pension Participation and
Vested Pensions
(i) Any absence from the service without pay other than
absence during a period of disability benefits, or leave of
absence or temporary layoff as defined in Paragraphs 5 and 6
of this Section, shall be considered as a break in the
continuity of service and if any person is reemployed as a
regular or provisional regular employee after such a break in
the continuity of his service, his term of employment shall
be reckoned from the date of such reemployment; provided,
however, that 1) any break in the continuity of or absence
from the service that does not exceed six months shall be
eligible to have his prior service restored (herein referred
to as a service bridging) if return to active service from
such an absence occurs on or after October 1, 1980 and 2)
effective November 1, 1986, any break in the continuity of or
absence from service shall be eligible for a service bridging
upon completion by an employee (who has previous periods of
credited service which is eligible to be restored, which does
not include the first period of service if its duration was
less than six months) of four years of continuous credited
service after the termination of the absence and prior to
attaining the age of sixty-five years and 3) effective
January 1, 1988, any break in the continuity of or absence
from service shall be eligible for a service bridging upon
completion by an employee, who has previous periods of
credited service, but exclusive of the first period of
service if less than six months, of four years of continuous
credited service after the termination of the absence. This
Paragraph 4(a) shall apply for determination of "term of
employment" or "credited service" in all cases under the
Plan, except as a more liberal rule may be provided in
Subparagraph (d) of this Paragraph 4. It does not apply to
the
Page 100
SECTION 6. GENERAL PROVISIONS (Continued) SNETMPP
measurement of "years of service" to become a participant in
the Pension Plan (Paragraph 4(b)) or to "calendar years of
service" after age eighteen for determining eligibility for
deferred vested pensions (Paragraph 4(c)).
Any break in continuity of service referred to in this
Paragraph 4 will not impair any pension for which the
employee may have previously become eligible.
(ii) Notwithstanding any other provision of the Plan, the
term of employment of an individual who is reemployed by a
Participating Company in accordance with the terms of a
settlement, award or order involving litigation relating to a
prior termination from employment of such individual shall
include, immediately upon such reemployment, any time
relating to the following periods:
(1) Any period of time, determined in accordance with
the provisions of Subparagraph (iii) below for which back
pay or a lump sum settlement award is made,
(2) Any 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 individual was
terminated to a suspension, or
(3) Any period of time between the date of the prior
termination and the date of the reemployment as is
specified to be included in the individual's service or
term of employment by a court order or court award or in
accordance with the terms of a settlement which results in
the individual's reemployment; and
(4) All periods of credited service which were
included in the individual's term of employment as of the
date of his prior termination if the termination is
converted to a suspension on the
Page 101
SECTION 6. GENERAL PROVISIONS (Continued) SNETMPP
records of the Participating Company from which he was
previously terminated, the period of absence from the date
of termination was six months or less, or the provisions
of a settlement agreement or court order or court award
provide for such inclusion.
(iii) The period of time, as directed by Subdivision (ii)(1)
above, for which a back pay award, order or settlement or
lump sum payment relates shall be such period as specified in
such award, order or settlement. If no period of time is
specified in such award, order or settlement, the period of
time with respect to which a back pay award or lump sum
payment shall be considered to relate shall equal the number
of weeks determined by dividing the full amount of such award
or payment by the employee's basic weekly wage rate in effect
at the time of the individual's prior termination. In any
such case, the amount of the back pay award or lump sum
payment shall be deemed to include any amount of compensation
or other payment received by the individual from other
sources which has been offset against the amount awarded or
paid to the individual in accordance with the award, order or
settlement. Notwithstanding any other provision of this
subparagraph, in no event shall the period of time included
in an individual's term of employment, in accordance with the
provisions of Subparagraph a(ii) 1-3 of this Paragraph 4,
exceed the actual amount of time from the date of the
employee's termination to the date of the employee's
reemployment.
(iv) Notwithstanding any other provision of this Plan, any
individual hired as a regular or provisional regular employee
shall be eligible to have any prior periods of temporary or
job bank employment bridged to such regular periods of
employment, in accordance with the standard service bridging
provisions (i.e., immediately upon rehire if within six
months of termination from regular or provisional regular
employment; or upon
Page 102
SECTION 6. GENERAL PROVISIONS (Continued) SNETMPP
completion of four consecutive years of credited service as a
regular or provisional regular employee).
b. Pension Plan Participation
For purposes of determining the required service of an
employee to be a participant in the Pension Plan under Paragraph
l(e) of Section 4 any consecutive calendar years during which
there is an absence without pay (other than absence during a
period of disability benefits or leave of absence or temporary
layoff as defined in Paragraph 5 and 6 of this Section) and
during which an employee is not credited with more than 500
hours of service with one or more Participating Companies
(constituting a "one-year break in service" within the meaning
of Section 4ll(a) (6) of the Internal Revenue Code) shall be
considered as a break in the continuity of service, and if the
employee is already a participant, also a break in the
continuity of participation. If any non-vested person is
reemployed during or after a calendar year in which such a break
in continuity occurs, and if said break equals or exceeds the
greater of (a) the number of years of service prior to such
break or (b) five years, his "years of service" to meet the
participation test of said Paragraph l(e) shall be reckoned from
the date of such reemployment, and no benefits which result from
amendments to the Pension Plan during the break in service will
be effective for such person until his participation is renewed
with a "year of service".
c. Vesting Eligibility
For purposes of determining eligibility for a deferred vested
pension under Paragraph l(b) of Section 4 any calendar year
during which there is an absence without pay (other than absence
during a period of disability benefits or leave of absence or
temporary layoff as defined in Paragraphs 5 and 6 of this
Section) and during which an employee is not credited with more
than 500 hours of service with one or more Participating
Companies
Page 103
SECTION 6. GENERAL PROVISIONS (Continued) SNETMPP
(constituting a "one-year break in service" within the meaning
of Section 4ll(a) (6) of the Internal Revenue Code) shall be
considered as a break in the continuity of service, and if any
non-vested person is reemployed during or after a calendar year
in which such a break in the continuity of his service occurs,
his "years of service" shall be reckoned (by calendar years)
from after such reemployment, unless:
(i) he completes one calendar year of service after
reemployment, in the case of a person who at the time of
commencement of the absence was eligible for a deferred vested
pension; or
(ii) the aggregate number of years of service prior to such
break exceeds the number of consecutive one-year breaks in
service, or, unless the Plan is permitted to disregard years of
service that were disregarded under Plan provisions satisfying
Sections 410(a)(5)(D) and 411(a)(6)(D) of the Internal Revenue
Code (as in effect on August 22, 1984) as of December 31, 1984,
the number of consecutive one-year breaks in service is fewer
than five, and he completes one calendar year of service after
reemployment (and after age 18) in the case of a person who at
the time of commencement of the absence was not eligible for a
deferred vested pension.
d. Accrual of Vested Pension
A break occurring on or after January l, l976, in the
continuity of service of an employee who has already become a
participant in the Plan under Paragraph l(e) of Section 4 or who
had become a participant in the Predecessor Plan insofar as it
results in the exclusion of service prior to the break from the
"term of employment", used in determining the amount of a
deferred vested pension, shall be considered to occur only when
it is a "one-year break in service" within the meaning of
Paragraphs 4(b) and 4(c) of this Section. If any such person is
reemployed during or after a calendar year in which such "one-
year break in service" occurs, his term of
Page 104
SECTION 6. GENERAL PROVISIONS (Continued) SNETMPP
employment for such purpose shall be reckoned from the date of
such reemployment unless:
(i) he completes a twelve month period of service after the
date of such reemployment, in the case of a person who at the
time of commencement of the absence was eligible for a
deferred vested pension; or
(ii) the aggregate number of years of service before such
break exceeds the number of consecutive one-year breaks in
service, or, unless the Plan is permitted to disregard years
of service that were disregarded under Plan provisions
satisfying Sections 410(a)(5)(D) and 411(a)(6)(D) of the Code
(as in effect on August 22, 1984) as of December 31, 1984,
regardless of the aggregate number of years of service prior
to such break the number of consecutive one-year breaks in
service is fewer than five, and he completes a twelve month
period of service after the date of such reemployment in the
case of a person who at the time of commencement of the
absence was not eligible for a deferred vested pension.
Whether or not it is a "one-year break in service," the period
of a break in the continuity of service is not part of the "term
of employment."
Notwithstanding any other provision of this Paragraph 4(d),
an employee's years of service shall include any previous
periods of service (but not the first period of service if its
duration was less than six months) prior to a break in service
if the employee completes four years of continuous credited
service after the break in service.
(e) Effective January 1, 1988, any credited service after the
last day of the month in which a person reaches normal
retirement age shall be considered in applying the provisions of
Paragraphs 4(b), 4(c) and 4(d) of this Section 6.
(f) The provisions of Paragraphs 4(c)(ii) and 4(d)(ii)
effective January 1, 1985, shall not be construed to require the
Plan to recognize any
Page 105
SECTION 6. GENERAL PROVISIONS (Continued) SNETMPP
employee's service prior to a break in service if such prior
service would not have been recognized on December 31, 1984,
pursuant to the Plan's break in service rules in effect on
August 22, 1984.
(g) Notwithstanding any other provision of the Plan, if any
individual accrues five years of vesting service while working
on a temporary basis through the SNET Job Bank Program and such
service is not otherwise recognized for purposes of pension
eligibility or accrual, such periods of job bank service shall
be bridged solely for purposes of determining eligibility for a
deferred vested pension, and such individual shall be eligible
to receive a deferred vested pension calculated based on job
bank service only and payable at age 65 in accordance with the
deferred vested pension provisions of Section 4.
5. Leave of Absence
Leave of absence shall not constitute a break in the continuity
of service. Leave of absence, for the purposes of this Plan, shall
mean leave formally granted in conformity with the rules of the
Committee, as adopted from time to time, and, except in the case of
leave on account of continued disability following the expiration
of a period of disability benefits, or a leave on account of an
individual's attendance at an educational institution, such leave
must be obtained at or before the time the absence begins. A leave
of absence for a period not exceeding one month, except a leave
following expiration of disability benefits, may be granted in
accordance with the rules of the Participating Company which
employs the individual granted such a leave, without approval by
the Secretary, and the period of absence shall be credited in
computing term of employment, and the employee shall retain
eligibility to benefits during the absence. Leave of absence for
any period in excess of one month shall not be effective unless
approved in writing by the Secretary, and in any case in which such
approval is given, the Secretary shall indicate, in
Page 106
SECTION 6. GENERAL PROVISIONS (Continued) SNETMPP
accordance with applicable legal requirements and the rules and
regulations of the Company, whether or not the period of absence is
to be deducted in computing term of employment and whether during
the absence the employee shall be eligible to benefits under this
Plan.
For employees whose termination of employment was prior to
January 1, 1993, absence following the expiration of a period of
disability benefits (including a termination of employment with
eligibility for a disability pension or long term disability
benefits or workers' compensation benefits) shall be considered as
a break in the continuity of service unless the employee is granted
a leave of absence by the Committee; provided, however, that in its
discretion, the Committee may consider any such absence as a leave
of absence, either on a prospective or retrospective basis, if
satisfactory evidence is furnished that the disability was
continuous during the entire period of absence. If the Committee
has decided to consider any such absence as a leave of absence, a
determination of the former employee's pension eligibility would be
based on the employee's actual credited service as of the actual
termination of employment date, and the employee's age as of the
date of the Committee's decision, and in accordance with the
pension eligibility provisions in Paragraph 1 of Section 4.
Maternity/Paternity Leave Provisions: To the extent that an
employee's absence for any period (i) by reason of the employee's
pregnancy, (ii) by reason of the birth of the employee's child,
(iii) by reason of the placement of a child with the employee in
connection with the employee's adoption of the child, or (iv) for
purposes of caring for such child for a period beginning
immediately after such birth or placement is not considered a leave
of absence under the foregoing provisions, the employee shall be
credited with the hours of service which would normally have been
credited but for such absence up to a maximum of 501 hours. Such
hours shall be credited to the calendar year following the
Page 107
SECTION 6. GENERAL PROVISIONS (Continued) SNETMPP
year in which the absence begins, unless the employee would have a
one-year break in service for the year in which the absence begins,
in which case such hours shall instead be credited to that year.
Family and Medical Leave Act Provisions: For periods commencing
after August 4, 1993, if an employee is eligible under the Family
and Medical Leave Act of 1993 to take an unpaid leave to care for
the employee's child after birth, or placement for adoption or
foster care; to care for the employee's spouse, son or daughter, or
parent, who has a serious health condition; or if the employee has
a serious health condition that makes the employee unable to
perform the employee's job, the employee shall be credited with up
to 501 hours of service either in the year the absence began or in
the following year, as necessary to prevent a break in vesting
service. The service to be credited shall not be counted toward
vesting service for purposes of a year of service or eligibility to
participate; nor will the credited service be included in term of
employment. The crediting of up to 501 hours of service for any
period in this paragraph shall run concurrently with the crediting
of hours of service in the event that an unpaid leave is taken by
an eligible employee for maternity or paternity leave. The
crediting of service for any year in this paragraph in addition to
any service credited for maternity or paternity leave shall not
exceed 501 hours or such lesser number of hours as is necessary for
the employee to avoid a break in service in the year of
recognition.
6. Layoff or Separation from Service Under the Provisions of the
SNET Management Severance Pay Plan
A period of layoff, or a separation from service where the
employee received benefits under the provisions of the SNET
Management Severance Pay Plan (herein referred to as the 'temporary
layoff date'), shall be considered as a temporary layoff for
purposes of this plan if the employee is reemployed as a regular or
provisional regular employee (under such conditions as the rules of
the
Page 108
SECTION 6. GENERAL PROVISIONS (Continued) SNETMPP
Participating Company which employs such individual as adopted from
time to time may require) as follows: a) within two years of the
temporary layoff date if such employee completed less than six
years' service as of the termination of employment date, or b)
within four years of the temporary layoff date if such employee
completed six or more years' service as of the termination of
employment date. If the employee is thus reemployed, the
continuity of his service shall not be broken, and such employee
shall be eligible to have his prior periods of service bridged
(including periods of temporary SNET employment subsequent to the
first six month period following the temporary layoff date) with
service credit for up to the first six months of such absence; the
remaining period of the temporary layoff absence will be deducted
in computing term of employment. If the employee is not thus
reemployed, the continuity of his service shall be deemed to have
been broken, and such employee shall not receive service credit
under the provisions of this Paragraph 6 for any period of such
absence.
7. Special Classification
Death resulting from infection of a cut, abrasion, scratch,
puncture, or other wound not immediately disabling and not reported
at the time of the occurrence causing the injury, or from sunstroke
or frostbite, shall not be classed as due to accident, except at
the discretion of the Committee.
8. Method of Payment
Payments under the Plan shall be made in conformity with the
financial methods of the Company and on orders of or bills prepared
by the Committee or such other persons as may be designated by the
Committee.
9. Amounts Accrued Prior to Death
Pension payments accrued but not actually paid at the time of
death of a former employee, pensioner or annuitant may, if
permissible under applicable law and, if so, in the discretion of
the Secretary, be paid to the spouse of
Page 109
SECTION 6. GENERAL PROVISIONS (Continued) SNETMPP
the deceased person or to some other suitable person selected by
the Secretary, 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. In
cases where a participant's pension payment has been mailed or
deposited to a participant's account in a bank or other financial
institution prior to the Secretary's receipt of notification of the
participant's death, the participant's estate shall be entitled to
retain the full pension payment for the month in which the death
occurred.
l0. Payment to Others
Benefits payable to a former employee, pensioner or annuitant
unable to execute a proper receipt may be paid to a relative or
other proper person, selected by the Secretary, to use for the
benefit of the former employee, pensioner or annuitant and the
receipt of such person shall be a sufficient discharge.
ll. Pension or Benefit Option During Disability
If a person receiving sickness or accident disability benefits
under the Sickness and Accident Disability Benefit Plan leaves the
service of a Participating Company for any reason and is entitled
to payment of a service or deferred vested pension, any such
disability benefits shall continue to be payable to such person;
provided, however, that upon the commencement of the service or
deferred vested pension payments, the Participating Company shall
reduce the amount of such disability benefits to an amount which
when added to the service or deferred vested pension amount ensures
that the total pension and disability payment does not exceed and
is not diminished below the rate of disability payments to which he
would have been entitled to receive if such pension payments did
not commence. If a person receiving a disability pension files a
written request for payment of a deferred vested pension and is
entitled thereto, the disability pension shall be discontinued upon
the
Page 110
SECTION 6. GENERAL PROVISIONS (Continued) SNETMPP
commencement of the deferred vested pension payment.
12. Multiple Participating Company Employment
If an employee of one Participating Company is an employee also
of one or more other Participating Companies, any pension or death
benefit to which such employee, his beneficiaries or his annuitant
may become entitled under the Plan shall be computed on the basis
of the total combined pay which the employee is receiving from all
such companies, and, except in the case of death due to accident
arising out of and in the course of employment by any of such
companies, shall be pro-rated among the Participating Companies on
the basis of the pay the employee was receiving from each company,
and the Participating Company or Companies, as applicable, shall
only pay its or their share thus determined. Any maximum or
minimum amounts fixed by the Plan for pensions or death benefits
shall apply to the total amount payable by all companies and not to
the portion payable by any Participating Company or Companies.
13. Merger or Consolidation
In case the Pension Plan is merged or consolidated with, or the
assets or liabilities of the Management Pension Fund Account
transferred to any other plan, the benefit that each participant in
the Pension Plan would receive if there were a termination
immediately after such merger, consolidation or transfer shall be
not less than he would have received if there were a termination
immediately before.
14. Annual Report
The Committee shall publish annually, in accordance with the
requirements of the Pension Act, a report of the operations under
the Plan.
15. Predecessor Plan Provisions
This Plan shall be deemed to incorporate the provisions of the
Predecessor Plan with respect to the entitlement to or computation
of any benefit of an individual who is not and never becomes an
employee on or after October l, l980
Page 111
GENERAL PROVISIONS (continued) SNETMPP
and such provisions shall apply to all such individuals who would
have been entitled to a benefit hereunder, pursuant to such
provisions, if this Plan had existed, from time to time, prior to
October l, l980.
16. Prior Provisions of the Plan
The Plan, as set forth herein, shall be deemed to incorporate
any prior provision which was effective at the time of or became
effective after an individual's termination from service or
retirement to the extent such individual's entitlement (or the
entitlement of a beneficiary of such individual) to any right under
the Plan continues to be determined in accordance with such
provision.
17. Unclaimed Benefits
If any payment or other benefit to which an individual is
entitled under this Plan is unclaimed or otherwise not subject to
payment to the person or persons so entitled, such amounts
representing such payment or payments shall be retained in the
trust associated with the Plan and shall not escheat to any state
or revert to any party unless required by law, but may in the
judgment of the Company, be used to offset future contributions to
the Plan and/or its associated trust; provided, however, that any
such benefits shall be restored pursuant to an eligible claim
therefor.
18. Top-Heavy Provisions
In the event that this Plan is deemed a "Top-Heavy Plan" with
respect to any Plan Year, the following provisions shall apply with
respect to such Plan Year, notwithstanding any other provisions of
the Plan to the contrary:
(1) Vesting: Any participant as defined in Paragraph 1(e) of
Section 4 who has completed two or more years of service, computed
in accordance with Paragraph 3(c) of Section 6, beginning with the
calendar year in which the participant attained the age referred to
in Section 203(b)(1)(A) of the Pension Act, namely age eighteen,
and any participant who is in the service of a
Page 112
SECTION 6. GENERAL PROVISIONS (Continued) SNETMPP
Participating Company at age sixty-five or later, who leaves the
service of a Participating Company for any reason other than
transfer to another Participating Company, and who is not eligible
for a service pension under Paragraph 1(a) of Section 4 on account
of the same period of employment, shall be eligible for a pension
which shall commence upon his sixty-fifth birthday or the day
following the termination of his employment with a Participating
Company, whichever is later, and shall be referred to in the Plan
as a deferred vested pension.
The monthly pension allowance for each person eligible for a
deferred vested pension under the preceding paragraph shall be
computed by multiplying the amount determined under Paragraph 2(f)
of Section 4, or one-twelfth of the "Minimum Accrued Benefit" as
determined under Subparagraph 2 of this Paragraph 18, whichever is
greater, by 100%, for any participant who is in the service of a
Participating Company at age sixty-five, or by the percentage in
the schedule below related to the employee's completed years of
service, as computed in accordance with the preceding paragraph,
for any participant who leaves the service of a Participating
Company before attaining age 65.
Years of Service Percentage
Less than 2 -0-
2 20%
3 40%
4 60%
5 or more 100%
If the Plan ceases to be a "Top-Heavy Plan", then any employee
who has at least three years of plan participation as of the 60th
day following the last day of the last Plan Year in which the Plan
was "Top-Heavy" may elect that the provisions contained in this
Subparagraph 1 shall continue to apply with respect to such
employee. For any other employee, the provisions contained in this
Subparagraph 1 shall apply only to the employee's eligibility for a
deferred vested pension and monthly pension allowance computed as
if the employee left the service of a Participating Company as of
the last day of the
Page 113
SECTION 6. GENERAL PROVISIONS (Continued) SNETMPP
last Plan Year in which the Plan was "Top-Heavy."
(2) Minimum Accrued Benefits: The "Minimum Accrued Benefit" of
each participant who is not a "Key Employee" on the "Determination
Date" and has completed at least 1,000 Hours of Service in the Plan
Year in which the Plan is deemed top-heavy shall equal the lesser
of (1) 20% of the participant's "Top-Heavy Average Compensation",
or (2) 2% of the participant's "Top-Heavy Average Compensation"
multiplied by such participant's "Top-Heavy Years of Service". The
"Minimum Accrued Benefit" applies even though under other Plan
provisions the participant would not otherwise be entitled to
receive an accrual for the year because the non-key employee is not
employed on the last day of the Plan Year.
For purposes of this Subparagraph 2, "Top-Heavy Average
Compensation" means the participant's average annual compensation
over the period of 5 consecutive years during which the participant
had the greatest aggregate compensation. Years ending in a Plan
Year beginning before January 1, 1984 and years beginning after the
close of the last Plan Year in which this Plan is deemed a "Top-
Heavy Plan" shall not be taken into account. For purposes of this
Subparagraph 2, compensation shall mean either (i) the total W-2
compensation paid by a Participating Company to a participant in
the normal course of employment but shall exclude contributions
made by a Participating Company to a deferred compensation plan to
the extent that such contributions are not includable in the gross
income for such participant for the taxable year in which
contributed prior to the application of Section 415 of the Code for
such plan, or (ii) all wages subject to tax under Code Section
3101(a) without the dollar limitation of Section 3121(a), but not
including deferred compensation other than contributions through a
salary reduction agreement to a cash or deferred annuity under Code
Section 401(k) or to a tax deferred annuity under Section 403(b) of
the Code, or (iii) W-2 wages for the calendar year ending
Page 114
SECTION 6. GENERAL PROVISIONS (Continued) SNETMPP
coincident with the Plan Year.
(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 present value of the cumulative accrued
benefits under the Plan for "Key Employees" exceeds 60% of the
present value of the cumulative accrued benefits under the Plan for
all employees.
For purposes of determining the present value of the cumulative
accrued benefit of any employee, such present value shall be
increased by the aggregate distribution (if any) made with respect
to such employee under this Plan, the Predecessor Plan, or both,
during the 5-year period ending on the "Determination Date".
However, a Plan distribution made after the "Valuation Date" and
before the "Determination Date" of any Plan Year shall be included
as a Plan distribution under this Subparagraph to the extent such
distribution is included in the present value of the accrued
benefits as of such "Valuation Date."
For purposes of calculating the present value of accrued
benefits under this Plan, such present values shall be calculated
as of the "Determination Date" using the same actuarial assumptions
that are used in the annual actuarial valuation, described in
Paragraph 8 of Section 4, except that the assumed rate of return
shall
be the rate used by the Pension Benefit Guaranty Corporation, as of
the "Determination Date", for determining the value of plan
benefits under termination pension plans. The accrued benefit for
any participant shall be calculated as if the participant had
terminated service as of the applicable "Determination Date".
For purposes of determining the present value of the cumulative
accrued benefit of any employee, such present value shall be
increased by the aggregate distribution (if any) made with respect
to such employee under this Plan, the
Page 115
SECTION 6. GENERAL PROVISIONS (continued) SNETMPP
Predecessor Plan, or both, during the 5-year period ending on the
"Determination Date".
(4) Adjustments to Section 415 Limits: In calculating the
denominator of the fraction described in Subparagraph (e)(1) of
Paragraph 9 of Section 4, the factor "1.0" shall be used instead of
"1.25", and in calculating the denominator of the fraction
described in Subparagraph (e)(2) of Paragraph 9 of Section 4, the
phrase "100% of the dollar limitation under Section 415(c)(1) (A)
of the Code for each such year" shall be substituted for the phrase
"125% of the dollar limitation under Section 415(c)(1)(A) of the
Code for each such year".
If a non-key employee is entitled to a Minimum Accrued Benefit
under this Plan in a Plan Year, he shall not be entitled to any
minimum contribution under any defined contribution plan in which
he participates which is maintained by a Participating Company in
the event such defined contribution plan is also deemed top-heavy
in such year.
(5) 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 Subparagraph 5, "Aggregation Group" means: (i) each plan of a
Participating Company in which a "Key Employee" is a participant,
and (ii) each other plan of a Participating Company which enables
the plan or plans described in (i) above to meet the requirements
of Sections 401(a)(4) or 410 of the Code, as amended. Any plan of
the employer 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 Sections 401(a)(4) and 410 of
the Code, as amended.
For purposes of this Subparagraph 5, "Top-Heavy Group" means any
"Aggregation Group" if the sum (as of the "Determination Date") of
the present value of the cumulative accrued benefits for "Key
Employees" under all defined
Page 116
SECTION 6. GENERAL PROVISIONS (continued) SNETMPP
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.
(6) Rollovers: For purposes of this Paragraph 18, an "Unrelated
Transfer" shall mean a plan-to-plan transfer that is both (i)
initiated by the employee and (ii) 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 (i) not
initiated by the employee or (ii) 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
Section 414(b), (c) and/or (m) of the Code, as amended, shall be
treated as the same employer.
If an "Unrelated Transfer" is received by this Plan, such
transfer will not be considered part of the employee's accrued
benefit if accepted after December 31, 1983. If an "Unrelated
Transfer" was received by this Plan before December 31, 1983, such
transfer will be considered part of the employee's accrued benefit.
If a distribution made from this Plan is deemed an "Unrelated
Transfer", such distribution shall be recognized pursuant to the
final sentence of Subparagraph 3 of this Paragraph 18. If a
distribution made from this Plan is deemed a "Related Transfer",
such distribution shall not be recognized pursuant to the final
sentence of Subparagraph 3 of this Paragraph 18.
(8) Valuation Date: The Valuation Date means the first day of
each Plan Year and any other date deemed necessary by the
Committee.
19. Unemployment Compensation Act of 1992
Effective for eligible distributions from the Plan made on or
after January 1, 1993, and notwithstanding any provision of the
Plan, a participant or a beneficiary may elect, at the time and in
the manner prescribed by the plan administrator, to have any
portion of an eligible rollover distribution paid
Page 117
SECTION 6. GENERAL PROVISIONS (continued) SNETMPP
directly in a direct rollover to an eligible retirement plan
specified by the participant or the beneficiary. The plan
administrator will notify each participant and beneficiary if a
distribution is eligible for the direct rollover provisions based
on Section 401(a)(31) of the Internal Revenue Code, and will
provide such individual with the special notice which outlines the
types of distributions eligible for a direct rollover, as well as
the tax withholding provisions which will apply if a direct
rollover is not elected when available, and the forms required to
instruct the Plan on the method of distribution chosen by such
individual.
An eligible rollover distribution is any distribution of all or
any portion of the balance to the credit of the participant or
beneficiary, except that an eligible rollover distribution does not
include any distribution that is one or a series of substantially
equal periodic payments (not less frequently than annually) made
for the life (or life expectancy) of the participant or beneficiary
or the joint lives (or joint life expectancy) of the participant
and his beneficiary, or for a specified period of ten years of
more; any distribution to the extent such distribution is required
under Section 401(a)(9) of the Code; and the portion of any
distribution that is not includible in gross income.
An eligible retirement plan is an individual retirement account
described in Section 408(a) of the Code, an individual retirement
annuity described in Section 408(b) of the Code, an annuity plan
described in Section 403(a) of the Code, or a qualified trust
described in Section 401(a) of the Code, that accepts the
participant's or beneficiary'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.
For purposes of this Paragraph 19, a participant includes an
employee or
Page 118
SECTION 6. GENERAL PROVISIONS (continued) SNETMPP
former employee, and a beneficiary includes the employee's or
former employee's surviving spouse, or the spouse or former spouse
who is the alternate payee under a qualified domestic relations
order, as defined in Section 414(p) of the Code.
A direct rollover is a payment by the Plan to the eligible
retirement plan specified by the participant or beneficiary.
Page 119
SECTION 7. TRANSFER PROVISIONS WITH THE SNETPP SNETMPP
In the event of the transfer of a participant in this Plan to
the SNETPP or from the SNETPP to this Plan, the obligation with
respect to the employee's pension benefits under this Plan or under
the SNETPP, as applicable, will be transferred from the plan from
which the employee transfers to the plan to which the employee
transfers pursuant to the provisions of Paragraph 6(c) of Section
4. Upon the transfer of such obligation, assets shall be
transferred in connection with such obligation transferred, as
required by and as determined in accordance with applicable
Internal Revenue Service Regulations, from the pension fund which
transfers the obligation to the pension fund which accepts the
obligation. Upon the transfer of an employee's pension obligation
from this Plan to the SNETPP or from the SNETPP to this Plan, such
employee's term of employment, as hereinabove defined, under the
plan to which he transfers shall include any applicable term of
employment with any Participating Company.
Page 120
SECTION 8. CHANGES IN PLAN; TERMINATION OF PLAN SNETMPP
This Plan may be amended from time to time or terminated at any
time by the Board acting in accordance with the Corporation's by-
laws. The Board may delegate authority to the Committee (or other
representative designated by the Board or the Committee) with
respect to modification of the Plan and the Committee, to the
extent authorized by the Board, may in turn delegate the authority
to modify the Plan to a representative of the Committee's choosing.
The Committee, acting in accordance with its by-laws, is
authorized to adopt amendments a) which are administrative
modifications and do not (i) affect the level or cost of benefits,
or (ii) change the Plan's eligibility or vesting requirements, or
(b) are dictated by requirements of Federal or State statutes or
regulations thereunder, or are authorized or made desirable by such
statutes or regulations, as determined by the Committee with the
advice of legal counsel.
The Committee may recommend other amendments for adoption by the
Board.
The Secretary is authorized to adopt amendments which, in the
opinion of the Secretary with the advice of legal counsel, are
dictated by requirements of federal or state statutes or
regulations thereunder, or are authorized or made desirable by such
statutes or regulations thereunder. The Secretary shall
periodically report such amendments to the Committee.
Any such changes or termination, whether adopted by the Board,
the Committee, the Secretary (or other designated representative)
shall not affect the rights of any employee, without his consent,
to any benefit or pension to which he may have previously become
entitled hereunder.
If an amendment changes the vesting schedule in the Plan, any
participant having three or more years of plan participation on the
date which is sixty days after such amendment is adopted or
effective (or, if later, sixty days after written notice of such
amendment is given) may, within a reasonable time after the
effective date of the amendment, elect to remain subject to the
vesting schedule in effect prior to such amendment.
Page 121
SNET MANAGEMENT PENSION PLAN
A summary of amendments to the SNET Management Pension Plan ("Plan")
is as follows:
Effective January 1, 1996:
For eligible management employees (as described below), the
SNET Management Pension Plan ("Plan") is amended to provide
for the conversion of the pension benefits payable under this
Plan to a total Cash Balance Plan ("CBP") using the conversion
formula and ongoing CBP accrual formula as described below.
1. Eligibility Criteria:
All regular full and part-time management employees who:
1) as of January 1, 1996 are on the active payroll or an
approved Leave of Absence; 2) are on the active payroll
as of December 13, 1995 and die on or after such date; 3)
terminate employment on or after December 13, 1995 at the
expiration of sickness or accident disability benefits
under the provisions of the SNET Disability Benefits
Plan; or 4) former management employees who accepted
employment with Computer Sciences Corporation (CSC), who
as of January 1, 1996 are still employed by CSC and have
not elected to commence their pension benefits.
2. Vesting:
Each employee's CBP shall vest in accordance with the
rules applicable under the provisions of the Plan, which
generally requires 5 years of service.
3. Determination of the Opening Cash Balance Plan Account:
Solely for purposes of determining the opening CBP
account amount, each eligible employee's prior
periods of service shall be 'bridged' to determine
the employee's net credited service date,
irrespective of such employee's actual eligibility
for such service bridging. Each eligible employee's
opening CBP account shall be credited with an amount
equal to the product of (1), (2), (3) and (4) below:
(1) The employee's annualized Base Pay Rate in
effect as of November 1, 1995 (including any lump
sum payment made in 1994 in lieu of a base pay rate
increase) plus five percent plus any eligible
incentive compensation payments
(as defined in the Plan Section 4, Paragraph 2(iii))
paid in 1995 or that would have been paid in 1995
except that the employee elected to defer such
payment in accordance with the terms of a deferred
compensation plan;
(2) The years and months of service calculated as
of December 31, 1996 except for those former
management employees who, due to their employment
status with CSC, are eligible for service credit up
through June 30, 1996 under the provisions adopted
May 10, 1995 in which case the years and months of
service shall be calculated as of June 30, 1996;
(3) .015; and
(4) The applicable transition multiplier factor
based on the employee's actual age and service as of
January 1, 1997 for the early retirement factor
component, and the actual age as of January 1, 1996
for the lump sum conversion factor component (as set
forth in Table 1(a) and 1(b)).
In the event that the total compensation eligible for
inclusion in Step 3(1) exceeds $150,000, the opening
account balance credited under the Plan shall be
determined based on eligible compensation up to and
including $150,000, and an opening account balance shall
be credited under the SNET Pension Benefit Plan based on
eligible compensation in excess of $150,000.
For eligible management employees, the pension benefit
shall never be less than the amount to which they would
be entitled as of January 1, 1996 pursuant to any pension
formula in effect prior to the adoption of this
amendment.
4. Interest credits:
For the period from January 1, 1997 through December 31,
1998, each employee's CBP account payable under this Plan
and the Pension Benefit Plan will be credited with interest
on the last business day of each month at a rate of a) for an
employee whose years and months of service as of December
31 of such year is less than 30 years, .565% (for an
effective annual rate of 7.0%), or b) for an employee
whose years and months of service as of December 31 of
such year is 30 or more years, .247% (for an effective
annual rate of 3.0%). For periods after December 31,
1998, an employee's CBP account shall be credited with an
effective annual rate of not less than 3.0%.
When the CBP account is to be distributed in the form of
an immediate life annuity or a single lump sum payment,
interest will be credited at the then current year's
crediting rate to the end of the month in which
termination or death occurs.
For an employee who retires or terminates service and who
elects to defer receipt of his/her pension benefits to
any later date up to the employee's normal retirement
age, the interest on such employee's CBP account will be
credited as of the last business day of each month at a
rate equal to the effective annual rate of 3% until the
end of the month prior to the month in which a life
annuity commences. If an employee elects to defer
receipt of pension benefits upon retirement or
termination, the lump sum pension distribution option
will not be available when such pension benefits
subsequently become payable.
5. Annual Pay Related Credits:
On the last day of each plan year beginning December 31,
1997, each employee's CBP account payable under this Plan
and the Pension Benefit Plan will be credited with basic
pay related credits as set forth below. Basic pay
related credits are based on age and service credit
(defined below) and the current years' eligible pay. An
employee's eligible pay shall be equal to the calculated
basic rate of pay based on the employee's scheduled work
hours for the period January 1 through December 31 of
such year and eligible incentive compensation payments
paid that year or that would have been paid in such year
except that the employee elected to defer such payment in
accordance with the terms of a deferred compensation
plan. The pay related credit will be determined based on
a) the years, months and days an employee has been
employed by SNET as of the end of each Plan year and will
include service credited under the Plan service bridging
provisions, and b) the years, months and days of the
employee's age as of the end of each Plan year. As of
January 1 of each Plan year beginning with January 1,
1997, the pay related credit shall be determined by
adding age and service expected as of the end of such
year and raising any fractional days of the sum of age
and service to a month to calculate the number of
"points" to be recognized for purposes of determining the
level of pay related credits to be granted for such year
based on the following table:
POINTS
(In years) CREDIT
Under 35 3.5%
35-44 4.0%
45-54 5.0%
55-64 6.0%
65-74 7.0%
75-84 8.0%
85-94 9.0%
Over 95 10.0%
For years in which an employee does not receive full
service credit due to a leave of absence or other break
in service, the employee's eligible pay shall be prorated
to reflect the deduction of the term of such break in
service.
6. Supplemental Pay Credits:
In the event that an employee's eligible pay exceeds 80%
of the Social Security Wage Base for any Plan year, such
employee's CBP account payable under this Plan and the
Pension Benefit Plan will be credited with a supplemental
pay credit which shall be determined by multiplying the
amount of eligible pay in excess of 80% of the Social
Security Wage Base by the same credit percentage as was
applied under Paragraph 5 above.
7. CBP Distribution Options:
In general, employees who terminate employment for any
reason will be eligible to elect to receive a
distribution of the vested CBP account in a single lump
sum distribution, monthly pension benefits (with
surviving spouse pension benefits available), or a
combination of monthly pension benefits and a lump sum
distribution. The normal form of payment of the CBP
shall be a joint and survivor annuity for married
employees or a single life annuity for unmarried
employees. The monthly payment amount of the CBP if
payable as a single life annuity, shall be determined by
dividing the CBP account balance as of the termination of
employment date by the applicable annuity factor provided
in Table 2. If the CBP is payable as a joint and
survivor annuity, such single
life annuity amount payable to the employee shall be
reduced by 10% with the named spouse as annuitant
eligible to receive 50% of the employee's reduced pension
benefit; provided, however, that if the named annuitant
shall predecease the employee, the 10 percent reduction
shall be restored to such employee effective with the
pension payment due for the month following the month of
such annuitant's death.
The employee may elect a lump sum certain option where
the employee elects to receive a reduced monthly pension
benefit to provide for a lump sum distribution of the
balance in the event the employee, and his or her
surviving spouse if the survivor annuity provisions are
elected, does not receive monthly pension benefit
payments equal to the lump sum benefit that would have
been payable when such employee terminated employment.
The lump sum certain option shall be calculated using the
reduction factors set forth in Table 3. In the event of
the death of an employee prior to termination of
employment, the surviving spouse will be eligible to
receive the employee's vested account balance in one lump
sum payment, or in monthly pension payments. If there is
no spouse, the employee's vested account balance will be
paid to the employee's estate in one lump sum payment.
For any employee who elects the entire portion of the
pension benefit to be payable in a lump sum distribution,
such employee shall not be considered a participant in
the Plan or the Pension Benefit Plan for any purpose
after the date of such distribution. For any employee
who elects all or any portion of the pension benefit to
be payable in a lump sum, such employee shall not be
eligible for future pension benefit increases, if any, or
the Death Benefit provisions of the Plan. The lump sum
certain option shall not be considered to be a lump sum
distribution for purposes of this paragraph.
If the CBP account balance as of the termination of
employment date is $3,500 or less, the entire CBP account
will be payable immediately in a single lump sum
distribution.
In addition:
The Plan is to provide for a combination of monthly pension
benefits and a lump sum distribution of the balance. The
combination options will require 50% or 75% of the total
pension benefit to be payable in monthly pension benefits, and
the balance payable in a lump sum.
The Plan is amended to provide that, for eligible management
employees on the active payroll or eligible leave of absence
as of January 1, 1996, the employee's annualized Base Pay Rate
used for determining an eligible employee's opening Cash
Balance Plan account shall (1) include the employee's
annualized differential rate in effect as of November 1, 1995
for evening and night tours (hereafter referred to as "fixed
differentials"); and (2) be the employee's annualized Base Pay
Rate in effect during the period January 1, 1995 through
December 31, 1995 in each case in which such employee's Base
Pay Rate in effect as of November 1, 1995 is less than the
Base Pay Rate in effect as of January 1, 1995.
The Plan is amended to provide that the definition of basic
rate of pay used for purposes of determining the amount of an
eligible employee's annual pay related credits shall include
the employee's calculated basic rate of pay plus the
employee's calculated fixed differential rate of pay, when
applicable, based on the employee's scheduled work hours for
the period January 1 through December 31 of such year.
Effective December 20, 1995
The Plan be clarified to provide that, in the event that a
former SNET bargaining unit employee who accepted employment
with Computer Sciences Corporation (CSC), in accordance with
the Agreement between SNET and CSC and related negotiations
with the Connecticut Union of Telephone Workers' Inc., is
subsequently rehired to a management position at SNET, such
individual shall be considered for all benefit purposes,
except for the vesting requirements under the SNETMPP as a new
employee with no previous SNET service. This clarification
reflects the provisions of the Agreement which provides that
the pension benefit assets associated with such bargaining
unit employees will be transferred to the CSC pension plan for
all purposes, and that the prior periods of SNET service will
be recognized by CSC for all purposes.
Effective March 1, 1996:
The Plan be amended to provide that employees of Participating
Companies who retire or terminate service with fifteen or more
years of credited service, whose date of termination or
retirement is on or after January 1, 1993 and who received the
maximum 52 week period of sickness or accident disability
benefits provided under the SNET Disability Benefit Plan,
shall be eligible to commence receipt of a Disability Service
Pension payable from the trust fund in accordance with the
provisions of the Plan and calculated using the undiscounted
pension benefits payable in accordance with the pension
formula and related distribution option provisions in effect
at the time such employee's employment ended (as described
below), unless such employee is eligible for distribution
under the Cash Balance Plan provisions of the SNETMPP.
For eligible management employees, the undiscounted pension
benefit amount payable under this provision shall mean the
undiscounted pension benefits payable in accordance with the
Adjusted Career Income formula in effect as of the earlier of
the employee's date of termination or December 31, 1995, with
such pension benefit payable in the form of: (1) for
terminations prior to January 1, 1996, monthly pension
payments with or without the survivor annuity provisions; or
(2) for terminations on or after January 1, 1996, monthly
pension payments with or without the survivor annuity or the
lump sum certain option provisions.
Effective April 1, 1996:
The Plan be amended to provide that any former employee who
commenced receiving a disability pension on or after January
1, 1976 and prior to January 1, 1993, and who is still
receiving such disability pension as of April 1, 1996, shall
be granted and retired with, in lieu of any other pension, a
pension designated a service pension, in the same amount as
the disability pension under the terms and conditions provided
under Section 4, Paragraph 1(d) of the SNETMPP and the
disability pension shall be discontinued.
- - Report of provisions adopted by the Secretary of the
Committee as authorized by this Committee on January 24, 1996
as necessary or desirable for the implementation of the change
to a Cash Balance Plan concerning the calculation of the
SNETMPP opening Cash Balance Plan account balance for eligible
management employees as of January 1, 1996.
For management employees who were on the active payroll or
an approved leave of absence as of January 1, 1996, the
following provisions were adopted and implemented:
- - Opening CBP account balances were created and provided to
all eligible employees who were vested (i.e., have 5 or more
years of service) or who would have become vested by December
31, 1996.
- - For eligible employees whose prior service was eligible
to be bridged on or before December 31, 1996, the prior
service was bridged solely for purposes of determining the
eligibility for the CBP during 1996, and the amount of the
opening CBP account balance.
- - Employees who were promoted to management status between
January 1, 1993 and December 31, 1995, inclusive, had their
opening CBP account balance created using all service as a
bargaining unit and management employee. The three year
waiting period previously required by the SNETMPP before
pension benefits would be determined using bargaining unit
service under the management formula was eliminated.
- - Employees who were rehired by SNET on or after January 1,
1992 and whose prior periods of service were bridged or were
eligible to be bridged by December 31, 1996, had their opening
CBP account balance created with the bridged credited service.
The requirement that a minimum of one year of reemployment be
completed in addition to the prior service being bridged was
waived solely for purposes of creating the opening CBP account
balance under the transition formula.
For eligible management employees who did not meet the
above criteria to be eligible to leave during 1996 with the
CBP account, the following provisions were adopted and
implemented:
- - Employees who will not become vested during 1996 must
remain as an active employee or on an approved leave of
absence continuously until they have completed five years of
service and became vested; they would then be eligible for
distribution of an opening CBP account balance created using
the transition formula. If they are not continuously
employed, they will be eligible for a CBP calculated in
accordance with the rehire provisions in effect when they are
subsequently rehired.
- - Employees who are not eligible to have their prior
service bridged during 1996 must remain on the active payroll
until such time as their prior service is eligible to be
bridged and they have completed one continuous year of service
to be eligible to have their opening CBP balance created using
all periods of service and the transition formula. If they do
not remain continuously employed until their prior periods of
service are eligible to be bridged, they will be eligible for
a CBP calculated in accordance with the rehire provisions in
effect when they are subsequently rehired.
The following provisions have been adopted regarding
calculations of CBP account balances for employees who, on
or after January 1, 1996, are promoted to management status
or rehired:
- - Employees promoted to management status on or after
January 1, 1996 shall have their opening CBP account balance
created using the CBP balance calculated under the SNETPP
provisions and reflecting all interest and service credits
through the date of promotion. Ongoing accruals in the
SNETMPP CBP shall be based on all credited service as a
bargaining unit and management employee. For employees
promoted during 1996, the SNETMPP accrual provisions for the
CBP shall apply for periods following the date of promotion
through December 31, 1996.
- - Employees who are rehired by SNET on or after January 1,
1996 must have their prior periods of service bridged in
accordance with the SNETMPP provisions and must satisfy the
minimum of one year of reemployment requirement to have their
prior accrued pension benefits converted to a CBP account
balance. Amounts accrued during such period of reemployment
shall be subject to offset for any pension benefits previously
distributed to such employee. The remaining specifics
relating to the rehire provisions have not been finalized at
this time.
EXHIBIT 12
1995 Form 10-K
Southern New England Telecommunications Corporation
Computation of
Ratio of Earnings to Fixed Charges
Dollars in Millions, for the Year
Ended December 31, 1995
Income from continuing operations before income taxes $278.4
Add:
Interest on indebtedness 85.3
Portion of rents representative of
the interest factor 9.7
Earnings before fixed charges, income taxes
and extraordinary items(1) $373.4
Fixed charges
Interest on indebtedness $ 85.3
Portion of rents representative of
the interest factor 9.7
Fixed charges(2) $ 95.0
Ratio of earnings to fixed charges [(1) divided by (2)] 3.93
Southern New England Telecommunications Corporation
Subsidiaries of the Registrant
Name State of Incorporation
The Southern New England
Telephone Company Connecticut
SNET America, Inc. Connecticut
SNET Cellular, Inc. Connecticut
SNET Mobility, Inc. Connecticut
SNET Paging, Inc. Connecticut
SNET Diversified Group, Inc. Connecticut
SNET Real Estate, Inc. Connecticut
SNET Credit, Inc. Connecticut
SNET Personal Vision, Inc. Connecticut
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference of our reports,
which include an explanatory paragraph related to the
discontinuance of SFAS No. 71, "Accounting for Certain Types
of Regulation" in 1995 and the changes in accounting methods
in 1993, dated January 22, 1996 on our audits of the
consolidated financial statements and financial statement
schedule of Southern New England Telecommunications
Corporation as of December 31, 1995 and 1994 and for each of
the three years in the period ended December 31, 1995,
included or incorporated by reference in this Annual Report
on Form 10-K, in the following documents filed by Southern
New England Telecommunications Corporation:
Registration Statement No. 33-59713 on Form S-3 relating
to the Shareholder Dividend Reinvestment and Stock
Purchase Plan.
Post-Effective Amendment No. 3 to Registration Statement
No. 33-6326 on Form S-8 relating to the SNET Bargaining
Unit Retirement Savings Plan.
Post-Effective Amendment No. 2 to Registration Statement
No. 33-6325 on Form S-8 relating to the SNET Management
Retirement Savings Plan.
Registration Statement No. 33-19058 on Form S-8 relating
to the SNET 1986 Stock Option Plan.
Registration Statement No. 33-41237 on Form S-3 relating
to the registration of $165 million of Debt Securities.
Registration Statement No. 33-51055 on Form S-8 relating
to the SNET Non-Employee Director Stock Plan.
Registration Statement No. 33-64975 on Form S-8
relating to the SNET 1995 Stock Incentive Plan.
Registration Statement No. 33-60133 on Form S-3
relating to the registration of $470 million of Debt
Securities.
Hartford, Connecticut
March 20, 1996
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Southern New England Telecommunications Corporation, a
Connecticut corporation (hereinafter referred to as the "Corporation"),
proposes to file shortly with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, as amended,
an annual report on Form 10-K; and
WHEREAS, each of the undersigned is an officer or director, or both,
of the Corporation, and holds the office, or offices, in the Corporation
herein below indicated under his or her name;
NOW, THEREFORE, the undersigned, and each of them, hereby constitutes
and appoints Donald R. Shassian their attorney-in-fact for them and in their
name, place and stead, and in each of their offices and capacities with
the Corporation, to execute and file such annual report, and thereafter
to execute and file any amendment or amendments thereto, hereby
giving and granting to said attorney full power and authority to do and
perform each and every act and thing whatsoever requisite and necessary to be
done in and about the premises, as fully, to all intents and purposes, as
the undersigned might or could do, if personally present at the doing
thereof, hereby ratifying and confirming all that said attorney may or
shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF each of the undersigned has executed this Power of
Attorney this 13th day of March 1996.
Principal Executive Officer: Directors:
/s/ Daniel J. Miglio
Daniel J. Miglio
Chairman, President and
Chief Executive Officer
and Director
/s/ William F. Andrews
William F. Andrews, Director
/s/ Richard H. Ayers
Richard H. Ayers, Director
/s/ Zoe Baird
Zoe Baird, Director
/s/ Robert L. Bennett
Robert L. Bennett, Director
/s/ Barry M. Bloom
Barry M. Bloom, Director
/s/ Frank J. Connor
Frank J. Connor, Director
/s/ William R. Fenoglio
William R. Fenoglio, Director
/s/ Claire L. Gaudiani
Claire L. Gaudiani, Director
/s/ James R. Greenfield
James R. Greenfield, Director
/s/ Ira D. Hall
Ira D. Hall, Director
/s/ Burton G. Malkiel
Burton G. Malkiel, Director
/s/ Frank R. O'Keefe, Jr.
Frank R. O'Keefe, Jr., Director
C E R T I F I C A T E
This is to certify that at a regular meeting of the Board of
Directors of Southern New England Telecommunications Corporation held on
March 13, 1996, the following vote was adopted and, as of the date of this
Certificate, has not been amended, modified or rescinded and is in full
force and effect:
"VOTED: That the Chief Executive Officer and the Chief Financial
Officer are, or either one of them is, authorized to
execute, personally or by attorney, in the name and on behalf of the
Company, and to cause to be filed with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended, the
Company's Annual Report on Form 10-K, for the fiscal year ended
December 31, 1995, in substantially the form submitted to this meeting,
but with such changes, additions and revisions as the officer executing
the same shall approve, such approval to be conclusively evidenced by
such execution and thereafter to execute personally, and to cause to be
filed, any amendments or supplements to such report, and to do any and
all other acts and things, and to execute and deliver any and all other
documents necessary or advisable in connection with the foregoing."
Attest:
/s/ Paula M. Anderson
Paula M. Anderson
Assistant Secretary
New Haven, Connecticut
March 20, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE 1995 ANNUAL REPORT ON FORM 10-K
OF SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 11,100
<SECURITIES> 0
<RECEIVABLES> 381,500
<ALLOWANCES> 34,200
<INVENTORY> 26,100
<CURRENT-ASSETS> 534,900
<PP&E> 4,532,100
<DEPRECIATION> 2,966,900
<TOTAL-ASSETS> 2,724,200
<CURRENT-LIABILITIES> 735,600
<BONDS> 1,182,400
0
0
<COMMON> 67,900
<OTHER-SE> 285,000
<TOTAL-LIABILITY-AND-EQUITY> 2,724,200
<SALES> 0
<TOTAL-REVENUES> 1,838,500
<CGS> 0
<TOTAL-COSTS> 1,474,200
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 85,900
<INCOME-PRETAX> 278,400
<INCOME-TAX> 109,600
<INCOME-CONTINUING> 168,800
<DISCONTINUED> 0
<EXTRAORDINARY> (687,100)
<CHANGES> 0
<NET-INCOME> (518,300)
<EPS-PRIMARY> (7.99)
<EPS-DILUTED> (7.99)
</TABLE>
