Exhibit 10-r
1996 STOCK AND INCENTIVE PLAN
Plan Effective: January 1, 1996
As amended through: September 29, 2000
TABLE OF CONTENTS
Article 1 Establishment and Purpose..................................1
1.1 Establishment of the Plan........................................1
1.2 Purpose of the Plan..............................................1
1.3 Effective Date of the Plan.......................................1
Article 2 Definitions................................................1
Article 3 Administration.............................................6
3.1 The Committee....................................................6
3.2 Authority of the Committee.......................................6
Article 4 Shares Subject to the Plan.................................7
4.1 Number of Shares.................................................7
4.2 Lapsed Awards....................................................8
4.3 Adjustments in Authorized Plan Shares............................8
Article 5 Eligibility and Participation..............................8
5.1 Eligibility......................................................8
5.2 Actual Participation.............................................8
Article 6 Stock Options..............................................8
6.1 Grant of Options.................................................8
6.2 Form of Issuance.................................................9
6.3 Exercise Price...................................................9
6.4 Duration of Options..............................................9
6.5 Vesting of Options...............................................9
6.6 Exercise of Options.............................................10
6.7 Payment.........................................................10
6.8 Termination of Employment.......................................11
6.9 Employee Transfers..............................................12
6.10 Restrictions on Exercise and Transfer of Options................13
6.11 Competition.....................................................13
Article 7 Restricted Stock..........................................14
7.1 Grant of Restricted Stock.......................................14
7.2 Restricted Stock Agreement......................................14
7.3 Transferability.................................................14
7.4 Other Restrictions..............................................14
7.5 Removal of Restrictions.........................................14
7.6 Voting Rights, Dividends and Other Distributions................15
7.7 Termination of Employment Due to Death or Disability............15
7.8 Termination of Employment for Other Reasons.....................15
7.9 Employee Transfers..............................................15
7.10 Other Grants....................................................15
Article 8 Performance Units and Performance Shares..................16
8.1 Grants of Performance Units and Performance Shares..............16
8.2 Value of Performance Shares and Units...........................16
8.3 Performance Period..............................................16
8.4 Performance Goals...............................................16
8.5 Dividend Equivalents on Performance Shares......................18
8.6 Form and Timing of Payment of Performance Units
and Performance Shares.........................................18
8.7 Termination of Employment Due to Death, Disability,
or Retirement..................................................19
8.8 Termination of Employment for Other Reasons.....................20
8.9 Termination of Employment for Cause.............................20
8.10 Nontransferability..............................................20
Article 9 Beneficiary Designation...................................20
Article 10 Deferrals.................................................20
Article 11 Employee Matters..........................................20
11.1 Employment Not Guaranteed.......................................20
11.2 Participation...................................................21
Article 12 Change in Control.........................................21
Article 13 Amendment, Modification, and Termination..................21
13.1 Amendment, Modification, and Termination........................21
13.2 Awards Previously Granted.......................................21
Article 14 Withholding...............................................21
14.1 Tax Withholding.................................................21
14.2 Share Withholding...............................................21
Article 15 Successors................................................22
Article 16 Legal Construction........................................22
16.1 Gender and Number...............................................22
16.2 Severability....................................................22
16.3 Requirements of Law.............................................23
16.4 Securities Law Compliance.......................................23
16.5 Governing Law...................................................23
SBC Communications Inc.
1996 Stock and Incentive Plan
Article 1 Establishment and Purpose.
1.1 Establishment of the Plan. SBC Communications Inc., a Delaware
corporation (the "Company" or "SBC"), hereby establishes an
incentive compensation plan (the "Plan"), as set forth in this
document.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the
success and enhance the value of the Company by linking the
personal interests of Participants to those of the Company's
shareowners, and by providing Participants with an incentive for
outstanding performance.
The Plan is further intended to attract and retain the
services of Participants upon whose judgment, interest, and
special efforts the successful operation of SBC and its
subsidiaries is dependent.
1.3 Effective Date of the Plan. The Plan shall become effective on
January 1, 1996; however, grants may be made before that time
subject to becoming effective on or after that date. During the
first year this Plan is effective, Awards shall be issued only to
the extent the potential payout of Shares shall not exceed 10% of
the Shares approved for issuance under this Plan.
Article 2 Definitions.
Whenever used in the Plan, the following terms shall have the
meanings set forth below and, when the meaning is intended, the
initial letter of the word is capitalized:
(a) "Award" means, individually or collectively, a grant
under this Plan of Nonqualified Stock Options,
Incentive Stock Options, Restricted Stock, Performance
Units, or Performance Shares.
(b) "Award Agreement" means an agreement which may be
entered into by each Participant and the Company,
setting forth the terms and provisions applicable to
Awards granted to Participants under this Plan.
(c) "Board" or "Board of Directors" means the SBC Board of
Directors.
(d) "Cause" shall mean willful and gross misconduct on the
part of an Employee that is materially and demonstrably
detrimental to the Company or any Subsidiary as
determined by the Committee in its sole discretion.
(e) "Change in Control" shall be deemed to have occurred if
(i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than a
trustee or other fiduciary holding securities under an
employee benefit plan of the Company or a corporation
owned directly or indirectly by the shareowners of the
Company in substantially the same proportions as their
ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said
Act), directly or indirectly, of securities of the
Company representing twenty percent (20%) or more of
the total voting power represented by the Company's
then outstanding voting securities, or (ii) during any
period of two (2) consecutive years, individuals who at
the beginning of such period constitute the Board of
Directors of the Company and any new Director whose
election by the Board of Directors or nomination for
election by the Company's shareowners was approved by a
vote of at least two-thirds (2/3) of the Directors then
still in office who either were Directors at the
beginning of the period or whose election or nomination
for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the
shareowners of the Company approve a merger or
consolidation of the Company with any other
corporation, other than a merger or consolidation which
would result in the voting securities of the Company
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving
entity) at least eighty percent (80%) of the total
voting power represented by the voting securities of
the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the
shareowners of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially
all the Company's assets.
(f) "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(g) "Committee" means the committee or committees, as
specified in Article 3, appointed by the Board to
administer the Plan with respect to grants of Awards.
(h) "Director" means any individual who is a member of the
SBC Board of Directors.
(i) "Disability" shall mean the Participant's inability to
perform the Participant's normal Employment functions
due to any medically determinable physical or mental
disability, which can last or has lasted 12 months or
is expected to result in death.
(j) "Employee" means any management employee of the Company
or of one of the Company's Subsidiaries. "Employment"
means the employment of an Employee by the Company or
one of its Subsidiaries. Directors who are not
otherwise employed by the Company shall not be
considered Employees under this Plan.
(k) "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, or any successor
Act thereto.
(l) "Exercise Price" means the price at which a Share may be
purchased by a Participant pursuant to an Option, as
determined by the Committee.
(m) "Fair Market Value" shall mean the closing price on the New
York Stock Exchange ("NYSE") for Shares on the relevant
date, or if such date was not a trading day, the next
preceding trading date, all as determined by the Company.
A trading day is any day that the Shares are traded on
the NYSE. In lieu of the foregoing, the Committee may
select any other index or measurement to determine the
Fair Market Value of Shares under the Plan.
(n) "Incentive Stock Option" or "ISO" means an option to
purchase Shares from SBC, granted under this Plan,
which is designated as an Incentive Stock Option and is
intended to meet the requirements of Section 422 of the
Code.
(o) "Insider" shall mean an Employee who is, on the
relevant date, an officer, director, or ten percent
(10%) beneficial owner of the Company, as those terms
are defined under Section 16 of the Exchange Act.
(p) "Key Executive Officer Short Term Award" means a
Performance Unit expressed in dollars.
(q) "Nonqualified Stock Option" or "NQSO" means the option to
purchase Shares from SBC, granted under this Plan, which
is not intended to be an Incentive Stock Option.
(r) "Option" or "Stock Option" shall mean an Incentive
Stock Option or a Nonqualified Stock Option, and shall
include a Restoration Option.
(s) "Participant" means a person who holds an outstanding
Award granted under the Plan.
(t) "Performance Unit" and "Performance Share" shall each
mean an Award granted to an Employee pursuant to
Article 8 herein.
(u) "Plan" means this 1996 Stock and Incentive Plan. The
Plan may also be referred to as the "SBC 1996 Stock and
Incentive Plan" or as the "SBC Communications Inc. 1996
Stock and Incentive Plan."
(v) "Restricted Stock" means an Award of Stock granted to
an Employee pursuant to Article 7 herein.
(w) "Restriction Period" means the period during which
Shares of Restricted Stock are subject to restrictions
or conditions under Article 7.
(x) "Retirement" or to "Retire" shall mean the termination
of a Participant's employment with the Company or one
of its Subsidiaries, for any reason other than death,
Disability or for Cause, on or after the earlier of the
following dates, or as otherwise provided by the
Committee: (1) the date the Participant would be
eligible to retire with an immediate pension under the
rules of the SBC Supplemental Retirement Income Plan,
whether or not actually a participant in such plan; or
(2) the date the Participant has attained one of the
following combinations of age and service at
termination of employment on or after April 1, 1997,
except as otherwise indicated below:
Net Credited Service Age
10 Years of more 65 or older
20 years or more 55 or older
25 years or more 50 or older
30 years or more Any age
With respect to a Participant who is granted an EMP
Service Pension under and pursuant to the provisions of
the SBC Pension Benefit Plan - Nonbargained Program
upon termination of employment, the terms "Retirement"
or to "Retire" shall include such Participant's
termination of employment.
Termination Under EPR. In determining whether an
Eligible Employee's termination of employment under the
Enhanced Pension and Retirement Program ("EPR") is a
Retirement for purposes of this Plan, five years shall
be added to each of age and net credited service
("NCS"). If with such additional age and years of
service, (1) an Eligible Employee upon such termination
of employment under EPR is Retirement Eligible
according to the SBC Supplemental Retirement Income
Plan ("SRIP") or (2) the Eligible Employee upon such
termination of employment under EPR has attained one of
the following combinations of age and service,
Actual NCS + 5 Years Actual Age + 5 Years
10 years or more 65 or older
20 years or more 55 or older
25 years or more 50 or older
30 years or more Any age
then such termination of employment shall be a
Retirement for all purposes under this Plan and the
Eligible Employee shall be entitled to the treatment
under this Plan afforded in the case of a termination
of employment which is a Retirement.
(y) "Rotational Work Assignment Company ("RWAC") shall mean
any entity with which SBC Communications Inc. or any of
its Subsidiaries may enter into an agreement to provide
an employee for a rotational work assignment.
(z) "Shares" or "Stock" means the shares of common stock of
the Company.
(aa) "Subsidiary" shall mean any corporation in which the
Company owns directly, or indirectly through
subsidiaries, more than fifty percent (50%) of the total
combined voting power of all classes of Stock, or any
other entity (including, but not limited to,
partnerships and joint ventures) in which the Company
owns more than fifty percent (50%) of the combined
equity thereof.
(bb) "Window Period" means the period beginning on the third
business day following the date of public release of the
Company's quarterly sales and earnings information, and
ending on the twelfth business day following such date.
Article 3 Administration.
3.1 The Committee. Administration of the Plan shall be bifurcated as
follows:
(a) With respect to Insiders, the Plan and all Awards
hereunder shall be administered only by the Human
Resources Committee of the Board or such other
Committee as may be appointed by the Board for this
purpose (the "Disinterested Committee"), where each
Director on such Disinterested Committee is a
"Disinterested Person" (or any successor designation
for determining who may administer plans, transactions
or awards exempt under Section 16(b) of the Exchange
Act), as that term is used in Rule 16b-3 under the
Exchange Act, as that rule may be modified from time to
time.
(b) The Disinterested Committee and such other Committee as
the Board may create, if any, specifically to
administer the Plan with respect to non-Insiders (the
"Non-Insider Committee") shall each have full authority
to administer the Plan and all Awards hereunder with
respect to all persons who are not Insiders, except as
otherwise provided herein or by the Board. Either
Committee may be replaced by the Board at any time.
3.2 Authority of the Committee. The Committee shall have full power
except as limited by law and subject to the provisions herein, to
select the recipients of Awards, to determine the size and types
of Awards; to determine the terms and conditions of such Awards
in a manner consistent with the Plan; to construe and interpret
the Plan and any agreement or instrument entered into under the
Plan; to establish, amend, or waive rules and regulations for the
Plan's administration; and (subject to the provisions of Article
13 herein) to amend the terms and conditions of any outstanding
Award to the extent such terms and conditions are within the
discretion of the Committee as provided in the Plan. Further,
the Committee shall make all other determinations which may be
necessary or advisable for the administration of the Plan.
No Award other than Restoration Options may be made under the
Plan after December 31, 2010.
All determinations and decisions made by the Committee
pursuant to the provisions of the Plan and all related orders or
resolutions of the Board shall be final, conclusive, and binding
on all persons, including the Company, its stockholders,
Employees, Participants, and their estates and beneficiaries.
Subject to the terms of this Plan, the Committee is
authorized, and shall not be limited in its discretion, to use
any of the Performance Criteria specified herein in its
determination of Awards under this Plan.
Article 4 Shares Subject to the Plan.
4.1 Number of Shares. Subject to adjustment as provided in Section
4.3 herein, the number of Shares available for grant under the
Plan shall not exceed 60 million Shares of Stock. No more than
10% of the Shares approved for issuance under this Plan may be
Shares of Restricted Stock. No more than 40% of the Shares
approved for issuance under this Plan may be issued to
Participants as a result of Performance Share or Restricted Stock
Awards. The Shares granted under this Plan may be either
authorized but unissued or reacquired Shares. The Disinterested
Committee shall have full discretion to determine the manner in
which Shares available for grant are counted in this Plan.
Without limiting the discretion of the Committee under this
section, unless otherwise provided by the Committee, the
following rules will apply for purposes of the determination of
the number of Shares available for grant under the Plan or
compliance with the foregoing limits:
(a) The grant of a Stock Option or a Restricted Stock Award
shall reduce the Shares available for grant under the
Plan by the number of Shares subject to such Award.
However, to the extent the Participant uses previously
owned Shares to pay the Exercise Price or any taxes, or
Shares are withheld to pay taxes, these Shares shall be
available for regrant under the Plan.
(b) With respect to Performance Shares, the number of
Performance Shares granted under the Plan shall be
deducted from the number of Shares available for grant
under the Plan. The number of Performance Shares which
cannot be, or are not, converted into Shares and
distributed (including deferrals) to the Participant
(after any applicable tax withholding) following the
end of the Performance Period shall increase the number
of Shares available for regrant under the Plan by an
equal amount.
(c) With respect to Performance Units representing a fixed
dollar amount that may only be settled in cash, the
Performance Units Award shall not affect the number of
Shares available under the Plan.
4.2 Lapsed Awards. If any Award granted under this Plan is canceled,
terminates, expires, or lapses for any reason, Shares subject to
such Award shall be again available for the grant of an Award
under the Plan.
4.3 Adjustments in Authorized Plan Shares. In the event of any
merger, reorganization, consolidation, recapitalization,
separation, liquidation, Stock dividend, split-up, Share
combination, or other change in the corporate structure of the
Company affecting the Shares, an adjustment shall be made in the
number and class of Shares which may be delivered under the Plan
(including individual limits), and in the number and class of
and/or price of Shares subject to outstanding Awards granted
under the Plan, and/or the number of outstanding Options, Shares
of Restricted Stock, and Performance Shares constituting
outstanding Awards, as may be determined to be appropriate and
equitable by the Committee, in its sole discretion, to prevent
dilution or enlargement of rights.
Article 5 Eligibility and Participation.
5.1 Eligibility. All management Employees are eligible to
participate in this Plan.
5.2 Actual Participation. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible
Employees, those to whom Awards shall be granted and shall
determine the nature and amount of each Award. No Employee is
entitled to receive an Award unless selected by the Committee.
Article 6 Stock Options.
6.1 Grant of Options. Subject to the terms and provisions of the
Plan, Options may be granted to Employees at any time and from
time to time, and under such terms and conditions, as shall be
determined by the Committee. The Committee shall have discretion
in determining the number of Shares subject to Options granted to
each Employee; provided, however, that the maximum number of
Shares subject to Options which may be granted to any single
Employee during any calendar year shall not exceed 2% of the
Shares approved for issuance under this Plan. The Committee may
grant ISOs, NQSOs, or a combination thereof; provided, however,
that no ISO may be issued after January 1, 2006. The Committee
may authorize the automatic grant of additional Options
("Restoration Options") when a Participant exercises already
outstanding Options, or options granted under a prior option plan
of the Company, on such terms and conditions as it shall
determine. Unless otherwise provided by the Committee, the
number of Restoration Options granted to a Participant with
respect to the exercise of an option (including an Option under
this Plan) shall not exceed the number of Shares delivered by the
Participant in payment of the Exercise Price of such option,
and/or in payment of any tax withholding resulting from such
exercise, and any Shares which are withheld to satisfy
withholding tax liability arising out of such exercise. A
Restoration Option shall have an Exercise Price of not less than
100% of the per Share Fair Market Value on the date of grant of
such Restoration Option, and shall be subject to all the terms
and conditions of the original grant, including the expiration
date, and such other terms and conditions as the Committee in its
sole discretion shall determine.
6.2 Form of Issuance. Each Option grant may be issued in the form of
an Award Agreement and/or may be recorded on the books and
records of the Company for the account of the Participant. If an
Option is not issued in the form of an Award Agreement, then the
Option shall be deemed granted as determined by the Committee.
The terms and conditions of an Option shall be set forth in the
Award Agreement, in the notice of the issuance of the grant, or
in such other documents as the Committee shall determine. Such
terms and conditions shall include the Exercise Price, the
duration of the Option, the number of Shares to which an Option
pertains (unless otherwise provided by the Committee, each Option
may be exercised to purchase one Share), and such other
provisions as the Committee shall determine, including, but not
limited to whether the Option is intended to be an ISO or a NQSO.
6.3 Exercise Price. Unless a greater Exercise Price is determined by
the Committee, the Exercise Price for each Option Awarded under
this Plan shall be equal to one hundred percent (100%) of the
Fair Market Value of a Share on the date the Option is granted.
6.4 Duration of Options. Each Option shall expire at such time as
the Committee shall determine at the time of grant (which
duration may be extended by the Committee); provided, however,
that no Option shall be exercisable later than the tenth (10th)
anniversary date of its grant.
6.5 Vesting of Options. Options shall vest at such times and under
such terms and conditions as determined by the Committee;
provided, however, unless a later vesting period is provided by
the Committee at or before the grant of an Option, one-third of
the Options will vest on each of the first three anniversaries of
the grant; if one Option remains after equally dividing the grant
by three, it will vest on the first anniversary of the grant, if
two Options remain, then one will vest on each of the first two
anniversaries. The Committee shall have the right to accelerate
the vesting of any Option; however, the Chairman of the Board or
the Senior Vice President-Human Resources, or their respective
successors, or such other persons designated by the Committee,
shall have the authority to accelerate the vesting of Options for
any Participant who is not an Insider.
6.6 Exercise of Options. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and
conditions as the Committee shall in each instance approve, which
need not be the same for each grant or for each Participant.
Options shall be exercised by providing notice to the
designated agent selected by the Company (if no such agent has
been designated, then to the Company), in the manner and form
determined by the Company, which notice shall be irrevocable,
setting forth the exact number of Shares with respect to which
the Option is being exercised and including with such notice
payment of the Exercise Price. When Options have been
transferred, the Company or its designated agent may require
appropriate documentation that the person or persons exercising
the Option, if other than the Participant, has the right to
exercise the Option. No Option may be exercised with respect to
a fraction of a Share.
6.7 Payment. The Exercise Price shall be paid in full at the time of
exercise. No Shares shall be issued or transferred until full
payment has been received therefor.
Payment may be made:
(a) in cash, or
(b) unless otherwise provided by the Committee at any time,
and subject to such additional terms and conditions
and/or modifications as the Committee or the Company
may impose from time to time, and further subject to
suspension or termination of this provision by the
Committee or Company at any time, by:
(i) delivery of Shares of Stock owned by the
Participant in partial (if in partial payment,
then together with cash) or full payment;
provided, however, as a condition to paying any
part of the Exercise Price in Stock, at the time
of exercise of the Option, the Participant must
establish to the satisfaction of the Company that
the Stock tendered to the Company must have been
held by the Participant for a minimum of six (6)
months preceding the tender; or
(ii) if the Company has designated a stockbroker to act
as the Company's agent to process Option
exercises, issuance of an exercise notice together
with instructions to such stockbroker irrevocably
instructing the stockbroker: (A) to immediately
sell (which shall include an exercise notice that
becomes effective upon execution of a limit order)
a sufficient portion of the Shares to pay the
Exercise Price of the Options being exercised and
the required tax withholding, and (B) to deliver
on the settlement date the portion of the proceeds
of the sale equal to the Exercise Price and tax
withholding to the Company. In the event the
stockbroker sells any Shares on behalf of a
Participant, the stockbroker shall be acting
solely as the agent of the Participant, and the
Company disclaims any responsibility for the
actions of the stockbroker in making any such
sales. No Stock shall be issued until the
settlement date and until the proceeds (equal to
the Option Price and tax withholding) are paid to
the Company.
If payment is made by the delivery of Shares of Stock, the
value of the Shares delivered shall be equal to the Fair Market
Value of the Shares on the day preceding the date of exercise of
the Option.
Restricted Stock may not be used to pay the Option Price.
6.8 Termination of Employment.
Unless otherwise provided by the Committee, the following
limitations on exercise of Options shall apply upon termination
of Employment:
(a) Termination by Death or Disability. In the event the
Employment of a Participant shall terminate by reason
of death or Disability, all outstanding Options granted
to that Participant shall immediately vest as of the
date of termination of Employment and may be exercised,
if at all, no more than three (3) years from the date
of the termination of Employment, unless the Options,
by their terms, expire earlier. However, in the event
the Participant was eligible to Retire at the time of
termination of Employment, notwithstanding the
foregoing, the Options may be exercised, if at all, no
more than five (5) years from the date of the
termination of Employment, unless the Options, by their
terms, expire earlier.
(b) Termination for Cause. If the Employment of a
Participant shall be terminated by the Company for
Cause, all outstanding Options held by the Participant
shall immediately be forfeited to the Company and no
additional exercise period shall be allowed, regardless
of the vested status of the Options.
(c) Retirement or Other Termination of Employment. If the
Employment of a Participant shall terminate for any
reason other than the reasons set forth in (a) or (b),
above, all outstanding Options which are vested as of
the effective date of termination of Employment may be
exercised, if at all, no more than five (5) years from
the date of termination of Employment if the
Participant is eligible to Retire, or one (1) year from
the date of the termination of Employment if the
Participant is not eligible to Retire, as the case may
be, unless in either case the Options, by their terms,
expire earlier. In the event of the death of the
Participant after termination of Employment, this
paragraph (c) shall still apply and not paragraph (a),
above.
(d) Options not Vested at Termination. Except as provided
in paragraph (a), above, all Options held by the
Participant which are not vested on or before the
effective date of termination of Employment shall
immediately be forfeited to the Company (and shall once
again become available for grant under the Plan).
(e) Notwithstanding the foregoing, the Committee may, in
its sole discretion, establish different terms and
conditions pertaining to the effect of termination of
Employment, but no such modification shall shorten the
terms of Options issued prior to such modification.
6.9 Employee Transfers. For purposes of the Plan, transfer of
employment of a Participant between the Company and any one of
its Subsidiaries (or between Subsidiaries) or between the Company
or a Subsidiary and a RWAC, to the extent the period of
employment at a RWAC is equal to or less than five (5) years,
shall not be deemed a termination of Employment. Provided,
however, for purposes of this Article 6, termination of
employment with a RWAC without a concurrent transfer to the
Company or any of its Subsidiaries shall be deemed a termination
of Employment as that term is used herein. Similarly,
termination of an entity's status as a Subsidiary or as a RWAC
shall be deemed a termination of Employment of any Participants
employed by such Subsidiary or RWAC.
6.10 Restrictions on Exercise and Transfer of Options. Unless
otherwise provided by the Committee:
(a) During the Participant's lifetime, the Participant's
Options shall be exercisable only by the Participant or
by the Participant's guardian or legal representative.
After the death of the Participant, except as otherwise
provided by SBC's Rules for Employee Beneficiary
Designations, an Option shall only be exercised by the
holder thereof (including, but not limited to, an
executor or administrator of a decedent's estate) or
his or her guardian or legal representative.
(b) No Option shall be transferable except: (i) in the case
of the Participant, only upon the Participant's death
and in accordance with the SBC Rules for Employee
Beneficiary Designations; and (ii) in the case of any
holder after the Participant's death, only by will or
by the laws of descent and distribution.
6.11 Competition and Solicitation. In the event a Participant directly or
indirectly, engages in competitive activity, or has become
associated with, employed by, controls, or renders service to any
business that is engaged in competitive activity, with (i) the
Company, (ii) any Subsidiary, or (iii) any business in which any
of the foregoing have a substantial interest, or if the
Participant attempts, directly or indirectly, to induce any
employee of the Company or a Subsidiary to be employed or perform
services elsewhere without the permission of the Company, then
the Company may (i) cancel any Option granted to such
Participant, whether or not vested, in whole or in part; and/or
(ii) rescind any exercise of the Participant's Options that
occurred on or after that date six months prior to engaging in
such activity, in which case the Participant shall pay the
Company the gain realized or received upon such exercise of
Options. "Has become associated with" shall include, among other
things, beneficial ownership of 1/10 of 1% or more of a business
engaged in competitive activity. The determination of whether a
Participant has engaged in any such activity and whether to
cancel Options and/or rescind the exercise of Options may be made
by the Committee, the Senior Executive Vice President of the
Company in charge of Human Resources or such person's successor,
or the delegate of or a committee appointed by any of the
foregoing, and in each case such determination shall be final,
conclusive and binding on all persons.
Article 7 Restricted Stock.
7.1 Grant of Restricted Stock. Subject to the terms and provisions
of the Plan, the Committee, at any time and from time to time,
may grant Shares of Restricted Stock to eligible Employees in
such amounts and upon such terms and conditions as the Committee
shall determine. In addition to any other terms and conditions
imposed by the Committee, vesting of Restricted Stock may be
conditioned upon the attainment of Performance Goals based on
Performance Criteria in the same manner as provided in Section
8.4, herein, with respect to Performance Shares. No Employee may
receive, in any calendar year, in the form of Restricted Stock
more than one-third of 1% of the Shares approved for issuance
under this Plan.
7.2 Restricted Stock Agreement. The Committee may require, as a
condition to an Award, that a recipient of a Restricted Stock
Award enter into a Restricted Stock Award Agreement, setting
forth the terms and conditions of the Award. In lieu of a
Restricted Stock Award Agreement, the Committee may provide the
terms and conditions of an Award in a notice to the Participant
of the Award, on the Stock certificate representing the
Restricted Stock, in the resolution approving the Award, or in
such other manner as it deems appropriate.
7.3 Transferability. Except as otherwise provided in this Article 7,
the Shares of Restricted Stock granted herein may not be sold,
transferred, pledged, assigned, or otherwise alienated or
hypothecated until the end of the applicable Restriction Period
established by the Committee, which shall not be less than a
period of three years.
7.4 Other Restrictions. The Committee shall impose such other
conditions and/or restrictions on any Shares of Restricted Stock
granted pursuant to the Plan as it may deem advisable including,
without limitation, a requirement that Participants pay a
stipulated purchase price for each Share of Restricted Stock
and/or restrictions under applicable Federal or state securities
laws; and may legend the certificates representing Restricted
Stock to give appropriate notice of such restrictions.
The Company shall also have the right to retain the
certificates representing Shares of Restricted Stock in the
Company's possession until such time as all conditions and/or
restrictions applicable to such Shares have been satisfied.
7.5 Removal of Restrictions. Except as otherwise provided in this
Article 7, Shares of Restricted Stock covered by each Restricted
Stock grant made under the Plan shall become freely transferable
by the Participant after the last day of the Restriction Period
and completion of all conditions to vesting, if any. However,
unless otherwise provided by the Committee, the Committee, in its
sole discretion, shall have the right to immediately waive all or
part of the restrictions and conditions with regard to all or
part of the Shares held by any Participant at any time.
7.6 Voting Rights, Dividends and Other Distributions. During the
Restriction Period, Participants holding Shares of Restricted
Stock granted hereunder may exercise full voting rights and shall
receive all regular cash dividends paid with respect to such
Shares. Except as provided in the following sentence, in the
sole discretion of the Committee, other cash dividends and other
distributions paid to Participants with respect to Shares of
Restricted Stock may be subject to the same restrictions and
conditions as the Shares of Restricted Stock with respect to
which they were paid. If any such dividends or distributions are
paid in Shares, the Shares shall be subject to the same
restrictions and conditions as the Shares of Restricted Stock
with respect to which they were paid.
7.7 Termination of Employment Due to Death or Disability. In the
event the Employment of a Participant shall terminate by reason
of death or Disability, all Restriction Periods and all
restrictions imposed on outstanding Shares of Restricted Stock
held by the Participant shall immediately lapse and the
Restricted Stock shall immediately become fully vested as of the
date of termination of Employment.
7.8 Termination of Employment for Other Reasons. If the Employment
of a Participant shall terminate for any reason other than those
specifically set forth in Section 7.7 herein, all Shares of
Restricted Stock held by the Participant which are not vested as
of the effective date of termination of Employment immediately
shall be forfeited and returned to the Company.
7.9 Employee Transfers. For purposes of the Plan, transfer of
employment of a Participant between the Company and any one of
its Subsidiaries (or between Subsidiaries) or between the Company
or a Subsidiary and a RWAC, to the extent the period of
employment at a RWAC is equal to or less than five (5) years,
shall not be deemed a termination of Employment. Provided,
however, for purposes of this Article, termination of employment
with a RWAC without a concurrent transfer to the Company or any
of its Subsidiaries shall be deemed a termination of Employment
as that term is used herein. Similarly, termination of an
entity's status as a Subsidiary or as a RWAC shall be deemed a
termination of Employment of any Participants employed by such
Subsidiary or RWAC.
7.10 Other Grants. Subject to the terms and provisions of the Plan,
the Committee, at any time and from time to time, may make grants
of cash or other property to eligible Employees in such amounts
and upon such terms and conditions as the Committee shall
determine. If the grant is in the form of stock or shares in a
company other than SBC, the award shall be subject to tax
withholding in accordance with Article 14, hereof, in the same
manner as Stock.
Article 8 Performance Units and Performance Shares.
8.1 Grants of Performance Units and Performance Shares. Subject to
the terms of the Plan, Performance Shares and Performance Units
may be granted to eligible Employees at any time and from time to
time, as determined by the Committee. The Committee shall have
complete discretion in determining the number of Performance
Units and/or Performance Shares Awarded to each Participant.
8.2 Value of Performance Shares and Units.
(a) A Performance Share is equivalent in value to a Share
of Stock. In any calendar year, no individual may be
Awarded Performance Shares having a potential payout of
Shares of Stock exceeding two-thirds of 1% of the
Shares approved for issuance under this Plan.
(b) A Performance Unit shall be equal in value to a fixed
dollar amount determined by the Committee. In any
calendar year, no individual may be Awarded Performance
Units having a potential payout equivalent exceeding
the Fair Market Value of two-thirds of 1% of the Shares
approved for issuance under this Plan. The number of
Shares equivalent to the potential payout of a
Performance Unit shall be determined by dividing the
maximum cash payout of the Award by the Fair Market
Value per Share on the effective date of the grant. In
the event the Committee denominates a Performance Unit
Award in dollars instead of Performance Units, the
Award may be referred to as a Key Executive Officer
Short Term Award. In all other respects, the Key
Executive Officer Short Term Award will be treated in
the same manner as Performance Units under this Plan.
8.3 Performance Period. The Performance Period for Performance
Shares and Performance Units is the period over which the
Performance Goals are measured. The Performance Period is set by
the Committee for each Award; however, in no event shall an Award
have a Performance Period of less than one year.
8.4 Performance Goals. For each Award of Performance Shares or
Performance Units, the Committee shall establish performance
objectives ("Performance Goals") for the Company, its
Subsidiaries, and/or divisions of any of foregoing, based on the
Performance Criteria and other factors set forth in (a) through
(d), below. Performance Goals shall include payout tables,
formulas or other standards to be used in determining the extent
to which the Performance Goals are met, and, if met, the number
of Performance Shares and/or Performance Units which would be
converted into Stock and/or cash (or the rate of such conversion)
and distributed to Participants in accordance with Section 8.6.
All Performance Shares and Performance Units which may not be
converted under the Performance Goals or which are reduced by the
Committee under Section 8.6 or which may not be converted for any
other reason after the end of the Performance Period shall be
canceled at the time they would otherwise be distributable. When
the Committee desires an Award to qualify under Section 162(m) of
the Code, as amended, the Committee shall establish the
Performance Goals for the respective Performance Shares and
Performance Units prior to or within 90 days of the beginning of
the service relating to such Performance Goal, and not later than
after 25% of such period of service has elapsed. For all other
Awards, the Performance Goals must be established before the end
of the respective Performance Period.
(a) The Performance Criteria which the Committee is
authorized to use, in its sole discretion, are any of
the following criteria or any combination thereof:
(1) Financial performance of the Company (on a
consolidated basis), of one or more of its
Subsidiaries, and/or a division of any of the
foregoing. Such financial performance may be
based on net income and/or Value Added (after-tax
cash operating profit less depreciation and less a
capital charge).
(2) Service performance of the Company (on a
consolidated basis), of one or more of its
Subsidiaries, and/or of a division of any of the
foregoing. Such service performance may be based
upon measured customer perceptions of service
quality.
(3) The Company's Stock price; return on
shareholders' equity; total shareholder return
(Stock price appreciation plus dividends, assuming
the reinvestment of dividends); and/or earnings
per share.
(4) With respect to the Company (on a consolidated
basis), to one or more of its Subsidiaries, and/or
to a division of any of the foregoing: sales;
costs; market share of a product or service;
return on net assets; return on assets; return on
capital; profit margin; and/or operating revenues,
expenses or earnings.
(b) If the performance of more than one Subsidiary is being
measured to determine the attainment of performance
goals, then a weighted average of the Subsidiaries'
results shall be used, as determined by the Committee,
including, but not limited to, basing such weighting
upon the revenues, assets or net income for each
Subsidiary for any year prior to the Performance Period
or by using budgets to weight such Subsidiaries.
(c) Except to the extent otherwise provided by the
Committee in full or in part, if any of the following
events occur during a Performance Period and would
directly affect the determination of whether or the
extent to which Performance Goals are met, they shall
be disregarded in any such computation: changes in
accounting principles; extraordinary items; changes in
tax laws affecting net income and/or Value Added;
natural disasters, including floods, hurricanes, and
earthquakes; and intentionally inflicted damage to
property which directly or indirectly damages the
property of the Company or its Subsidiaries. No such
adjustment shall be made to the extent such adjustment
would cause the Performance Shares or Performance Units
to fail to satisfy the performance based exemption of
Section 162(m) of the Code.
8.5 Dividend Equivalents on Performance Shares. Unless reduced or
eliminated by the Committee, a cash payment in an amount equal to
the dividend payable on one Share will be made to each
Participant for each Performance Share which on the record date
for the dividend had been awarded to the Participant and not
converted, distributed (or deferred) or canceled.
8.6 Form and Timing of Payment of Performance Units and Performance
Shares. As soon as practicable after the applicable Performance
Period has ended and all other conditions (other than Committee
actions) to conversion and distribution of a Performance Share
and/or Performance Unit Award have been satisfied (or, if
applicable, at such other time determined by the Committee at or
before the establishment of the Performance Goals for such
Performance Period), the Committee shall determine whether and
the extent to which the Performance Goals were met for the
applicable Performance Units and Performance Shares. If
Performance Goals have been met, then the number of Performance
Units and Performance Shares to be converted into Stock and/or
cash and distributed to the Participants shall be determined in
accordance with the Performance Goals for such Awards, subject to
any limits imposed by the Committee. Unless the Participant has
elected to defer all or part of his Performance Units or
Performance Shares as provided in Article 10, herein, payment of
Performance Units and Performance Shares shall be made in a
single lump sum, as soon as reasonably administratively possible
following the determination of the number of Shares or amount of
cash to which the Participant is entitled. Performance Units
will be distributed to Participants in the form of cash.
Performance Shares will be distributed to Participants in the
form of 50% Stock and 50% Cash, or at the Participant's election,
100% Stock or 100% Cash. In the event the Participant is no
longer an Employee at the time of the distribution, then the
distribution shall be 100% in cash, provided the Participant may
elect to take 50% or 100% in Stock. At any time prior to the
distribution of the Performance Shares and/or Performance Units
(or if distribution has been deferred, then prior to the time the
Awards would have been distributed), unless otherwise provided by
the Committee, the Committee shall have the authority to reduce
or eliminate the number of Performance Units or Performance
Shares to be converted and distributed or to mandate the form in
which the Award shall be paid (i.e., in cash, in Stock or both,
in any proportions determined by the Committee).
Unless otherwise provided by the Committee, any election to
take a greater amount of cash or Stock with respect to
Performance Shares must be made in the calendar year prior to the
calendar year in which the Performance Shares are distributed (or
if distribution has been deferred, then in the year prior to the
year the Performance Shares would have been distributed absent
such deferral). In addition, if required in order to exempt the
transaction from the provisions of Section 16(b) of the Exchange
Act, any election by an Insider to take a greater amount in cash
must be made during a Window Period and shall be subject to
Committee approval.
For the purpose of converting Performance Shares into cash
and distributing the same to the holders thereof (or for
determining the amount of cash to be deferred), the value of a
Performance Share shall be the average of the Fair Market Values
of Shares for the period of five (5) trading days ending on the
valuation date. The valuation date shall be the first business
day of the second month in the year of distribution (or the year
it would have been distributed were it not deferred).
Performance Shares to be distributed in the form of Stock will be
converted at the rate of one (1) Share of Stock per Performance
Share.
8.7 Termination of Employment Due to Death, Disability, or
Retirement. If the Employment of a Participant shall terminate
by reason of death or Disability, the Participant shall receive a
lump sum payout of all outstanding Performance Units and
Performance Shares calculated as if all unfinished Performance
Periods had ended with 100% of the Performance Goals achieved,
payable in the year following the date of termination of
Employment. In the event of Retirement, the full Performance
Units and Performance Shares shall be converted and distributed
based on and subject to the achievement of the Performance Goals
and in accordance with all other terms of the Award and this Plan.
8.8 Termination of Employment for Other Reasons. If the Employment
of a Participant shall terminate for other than a reason set
forth in Section 8.7 (and other than for Cause), the number of
Performance Units and Performance Shares to be converted and
distributed shall be converted and distributed based upon the
achievement of the Performance Goals and in accordance with all
other terms of the Award and the Plan; however, the Participant
may receive no more than a prorated payout of all Performance
Units and Performance Shares, based on the portions of the
respective Performance Periods that have been completed.
8.9 Termination of Employment for Cause. In the event that a
Participant's Employment shall be terminated by the Company for
Cause, all Performance Units and Performance Shares shall be
forfeited by the Participant to the Company.
8.10 Nontransferability. Performance Units and Performance Shares may
not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than in accordance with the SBC
Rules for Employee Beneficiary Designations.
Article 9 Beneficiary Designation. In the event of the death of a
Participant, distributions or Awards under this Plan, other than
Restricted Stock, shall pass in accordance with the SBC Rules for
Employee Beneficiary Designations.
Article 10 Deferrals. Unless otherwise provided by the Committee, a
Participant may, as permitted by the Stock Savings Plan or the
Salary and Incentive Award Deferral Plan, defer all or part of
awards made under this Plan in accordance with and subject to the
terms of such plans.
Article 11. Employee Matters.
11.1 Employment Not Guaranteed. Nothing in the Plan shall interfere
with or limit in any way the right of the Company or any
Subsidiary to terminate any Participant's Employment at any time,
nor confer upon any Participant any right to continue in the
employ of the Company or one of its Subsidiaries.
11.2 Participation. No Employee shall have the right to be selected
to receive an Award under this Plan, or, having been so selected,
to be selected to receive a future Award.
Article 12 Change in Control.
Upon the occurrence of a Change in Control:
(a) Any and all Options granted hereunder immediately shall
become vested and exercisable;
(b) Any Restriction Periods and all restrictions imposed on
Restricted Shares shall lapse and they shall
immediately become fully vested;
(c) The 100% Performance Goal for all Performance Units and
Performance Shares relating to incomplete Performance
Periods shall be deemed to have been fully achieved and
shall be converted and distributed in accordance with
all other terms of the Award and this Plan; provided,
however, notwithstanding anything to the contrary in
this Plan, no outstanding Performance Unit or
Performance Share may be reduced.
Article 13. Amendment, Modification, and Termination.
13.1 Amendment, Modification, and Termination. The Board may at any
time suspend or terminate the Plan in whole or in part; the
Disinterested Committee may at any time and from time to time,
alter or amend the Plan in whole or in part.
13.2 Awards Previously Granted. No termination, amendment, or
modification of the Plan shall adversely affect in any material
way any Award previously granted under the Plan, without the
written consent of the Participant holding such Award.
Article 14 Withholding.
14.1 Tax Withholding. The Company shall deduct or withhold an amount
sufficient to satisfy Federal, state, and local taxes (including
the Participant's employment tax obligations) required by law to
be withheld with respect to any taxable event arising or as a
result of this Plan ("Withholding Taxes").
14.2 Share Withholding. Upon the exercise of Options, the lapse of
restrictions on Restricted Stock, the distribution of Performance
Shares in the form of Stock, or any other taxable event hereunder
involving the transfer of Stock to a Participant, the Company
shall withhold Stock equal in value, using the Fair Market Value
on the date determined by the Company to be used to value the
Stock for tax purposes, to the Withholding Taxes applicable to
such transaction.
Any fractional Share of Stock payable to a Participant shall
be withheld as additional Federal withholding, or, at the option
of the Company, paid in cash to the Participant.
Unless otherwise determined by the Committee, when the method
of payment for the Exercise Price is from the sale by a
stockbroker pursuant to Section 6.7(b)(ii), herein, of the Stock
acquired through the Option exercise, then the tax withholding
shall be satisfied out of the proceeds. For administrative
purposes in determining the amount of taxes due, the sale price
of such Stock shall be deemed to be the Fair Market Value of the
Stock.
Prior to the end of any Performance Period a Participant may
elect to have a greater amount of Stock withheld from the
distribution of Performance Shares to pay withholding taxes;
provided, however, the Committee may prohibit or limit any
individual election or all such elections at any time. In
addition, if required in order to exempt the transaction from the
provisions of Section 16(b) of the Exchange Act, any such
election by an Insider must be made during a Window Period and
shall be subject to Committee approval.
Article 15 Successors.
All obligations of the Company under the Plan, with respect
to Awards granted hereunder, shall be binding on any successor to
the Company, whether the existence of such successor is the
result of a direct or indirect purchase, merger, consolidation,
or otherwise, of all or substantially all of the business and/or
assets of the Company.
Article 16 Legal Construction.
16.1 Gender and Number. Except where otherwise indicated by the
context, any masculine term used herein also shall include the
feminine; the plural shall include the singular and the singular
shall include the plural.
16.2 Severability. In the event any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining parts of the Plan, and
the Plan shall be construed and enforced as if the illegal or
invalid provision had not been included.
16.3 Requirements of Law. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws,
rules, and regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be required.
16.4 Securities Law Compliance. With respect to Insiders,
transactions under this Plan are intended to comply with all
applicable conditions or Rule 16b-3 or its successors under the
Exchange Act. To the extent any provision of the plan or action
by the Committee fails to comply with a condition of Rule 16b-3
or its successors, it shall not apply to the Insiders or
transactions thereby.
16.5 Governing Law. This Plan shall be governed by and construed in
accordance with the substantive laws of the State of Texas,
excluding any conflicts or choice of law rule or principle that
might otherwise refer constructive or interpretation of this Plan
to provisions of the substantive law of any jurisdiction other
than the State of Texas. Any action seeking to enforce the
rights of an employee, former employee or person who holds such
rights through, from or on behalf of such employee or former
employee under this Plan may be brought only in a Federal or
state court located in Bexar County, Texas.
