AT&T SENIOR MANAGEMENT INCENTIVE AWARD DEFERRAL PLAN
(as amended December 20, 1995)
1. ELIGIBILITY
Any Senior Manager (as defined in the AT&T 1987 Long
Term Incentive
Program [the "1987 Plan"]) of American Telephone and Telegraph Company ("AT&T")
or an Affiliate (as defined in the 1987 Plan) who is eligible for an award under
the AT&T Short Term Incentive Plan (the "Short Term Incentive Plan") and/or who
has been granted a Performance Award or a Stock Unit Award under the AT&T Senior
Management Long Term Incentive Plan (the "Long Term Incentive Plan") or the 1987
Plan, or who is eligible for an award under the AT&T Paradyne GMT Short Term
Incentive Plan (the "Paradyne Plan"), shall be eligible to participate in this
AT&T Senior Management Incentive Award Deferral Plan (the "Plan"). For purposes
of the Plan, AT&T and any Affiliate shall be referred to as a "Participating
Company". Prior to January 1, 1984, the Plan was named the Bell System Senior
Management Incentive Award Deferral Plan.
2. PARTICIPATION
(a) Prior to the beginning of any calendar year, any Senior Manager may
elect to participate in the Plan by directing that (i) all or part of the awards
under the Short Term Incentive Plan or the Paradyne Plan, or the Performance
Awards or the Stock Unit Awards under the Long Term Incentive Plan or the 1987
Plan and/or (ii) all or part of the dividend equivalent payments under the Long
Term Incentive Plan or the 1987 Plan, which such employee's Participating
Company would otherwise pay currently to such employee in such calendar year and
subsequent calendar years, shall be credited to a deferred account subject to
the terms of the Plan. However, in no event shall the part of an award under any
plan credited during any calendar year be less than $1,000 (based on a valuation
at the time the award would otherwise be paid). There shall be no such minimum
limitation on amounts credited during any calendar year that are related to
dividend equivalent payments.
In addition, prior to the beginning of any calendar year, the Chairman
of the Board and any other Senior Manager designated by the Chairman of the
Board may elect to participate in the Plan by directing that all or part of such
Senior Manager's salary, which such employee's Participating Company would
otherwise pay currently to such employee in such calendar year and subsequent
calendar years, shall be credited to a deferred account subject to the terms of
the Plan.
(b) Such an election to participate in the Plan shall be in the form of
a document executed by the employee and filed with the employee's Participating
Company. An election related to awards, dividend equivalent payments and/ or
salary otherwise payable currently in any calendar year shall become irrevocable
on the last day prior to the beginning of such calendar year.
(c) An election shall continue until the employee terminates or
modifies such election by written notice. Any such termination or modification
shall become effective as of the end of the calendar year in which such notice
is given with respect to all awards, dividend equivalents and/or salary
otherwise payable in subsequent calendar years.
(d) An eligible employee who has filed a termination of election may
thereafter again file an election to participate with respect to awards,
dividend equivalent payments and/or salary otherwise payable in calendar years
subsequent to the filing of such election.
3. DEFERRED ACCOUNTS
(a) (i) Deferred amounts related to awards, dividend equivalent
payments which would otherwise have been distributed in cash by a Participating
Company and deferred amounts related to salary shall be credited to the
employee's account and shall bear interest from the date the awards, dividend
equivalent payments and/or salary would otherwise have been paid. The interest
credited to the account will be compounded at the end of each calendar quarter,
and the annual rate of interest applied at the end of any calendar quarter shall
be determined by the AT&T Board of Directors from time to time.
(ii) Furthermore, if an employee made an election described in
Section 2, which election was effective on December 31, 1983, then such
employee's account shall also be credited during 1984 with an amount equal to
the deferred amounts which would have been credited to the employee's account
during 1984 had the company which employed the employee on December 31, 1983
continued to be a Participating Company during 1984, and such amount shall bear
interest in accordance with (a)(i) above from the date such amount would have
been credited had such company continued to be a Participating Company during
1984.
(b) Deferred amounts related to awards which would otherwise have been
distributed in AT&T common shares by a Participating Company shall be credited
to the employee's account as deferred AT&T shares. Furthermore, if an employee
made an election described in Section 2, which election was effective on
December 31, 1983, then such employee's account shall also be credited during
1984 with the deferred AT&T Shares which would have been credited to the
employee's account had the company which employed the employee on December 31,
1983 continued to be a Participating Company in the Plan and in the Long Term
Incentive Plan during 1984. The employee's account shall also be credited on
each dividend payment date for AT&T shares with an amount equivalent to the
dividend payable on the number of AT&T common shares equal to the number of
deferred AT&T shares in the employee's account on the record date for such
dividend. Such amount shall then be converted to a number of additional deferred
AT&T shares determined by dividing such amount by the price of AT&T common
shares, as determined in the following sentence. The price of AT&T common shares
related to any dividend payment date shall be the average of the daily high and
low sale prices of AT&T common shares on the New York Stock Exchange ("NYSE")
for the period of five trading days ending on such dividend payment date, or the
period of five trading days immediately preceding such dividend payment date if
the NYSE is closed on the dividend payment date.
(c) In the event of any change in outstanding AT&T common shares by
reason of any stock dividend or split, recapitalization, merger, consolidation,
combination or exchange of shares or other similar corporate change, the AT&T
Board of Directors shall make such adjustments, if any, that it deems
appropriate in the number of deferred AT&T shares then credited to employees'
accounts. Any and all such adjustments shall be conclusive and binding upon all
parties concerned.
4. DISTRIBUTION
(a) At the time an eligible employee makes an election to participate
in the Plan, the employee shall also make an election with respect to the
distribution (during the employee's lifetime or in the event of the employee's
death) of the amounts credited to the employee's deferred account. Such an
election related to the distribution during the employee's lifetime, of amounts
otherwise payable currently in any calendar year, shall become irrevocable on
the last day prior to the beginning of such calendar year.
The election related to the distribution in the event of the employee's
death, including the designation of a beneficiary or beneficiaries, may be
changed by the employee at any time by filing the appropriate document with the
Secretary of the Company.
Amounts credited as cash plus accumulated interest shall be distributed
in cash; amounts credited as deferred AT&T shares shall be distributed in the
form of an equal number of AT&T shares.
(b) An employee may elect to receive the amounts credited to the
employee's account in one payment or in some other number of approximately equal
annual installments (not exceeding 20), provided however, that the number of
annual installments may not extend beyond the life expectancy of the employee,
determined as of the date the first installment is paid. The employee's election
shall also specify that the first installment (or the single payment if the
employee has so elected) shall be paid either (1) on the first day of the
calendar quarter next following the end of the month in which the employee
attains the age specified in such election, which age shall not be earlier than
age 55 or later than age 70-1/2, (2) on the first day of the calendar quarter
next following the end of the month in which the employee retires from a
Participating Company or otherwise terminates employment with any Participating
Company (except for a transfer to another Participating Company); provided,
however, that the AT&T Board of Directors or the Compensation Committee of such
Board may, in its sole discretion, direct that the first installment (or the
single payment) shall be paid on the first day of the first calendar quarter in
the calendar year next following the year of retirement or other termination of
employment, or (3) on the first day of the first calendar quarter in the
calendar year next following the calendar year in which the employee retires
from a Participating Company or otherwise terminates employment with any
Participating Company (except for a transfer to another Participating Company).
(c) Notwithstanding an election pursuant to Paragraph (b) of this
Section 4, the entire amount then credited to an employee's account shall be
paid immediately in a single payment (a) if the employee is discharged for cause
by his or her Participating Company, (b) if the Board of Directors of such
Participating Company determined that the employee engaged in misconduct in
connection with the employee's employment with the Participating Company, (c) if
the employee without the consent of the Board of Directors of his or her
Participating Company, while employed by such Participating Company or after the
termination of such employment, becomes associated with, employed by, or renders
services to, or owns an interest in, any business that is in competition with
any Participating Company or with any business in which a Participating Company
has a substantial interest (other than as a shareholder with a non-substantial
interest in such business), or (d) the employee becomes employed by a
governmental agency having jurisdiction over the activities of a Participating
Company or any of its subsidiaries.
(d) An employee may elect that, in the event the employee should die
before full payment of all amounts credited to the employee's account, the
balance of the deferred amounts shall be distributed in one payment or in some
other number of approximately equal annual installments (not exceeding 10) to
the beneficiary or beneficiaries designated in writing by the employee, or if no
designation has been made, to the estate of the employee. The first installment
(or the single payment if the employee has so elected) shall be paid on the
first day of the calendar quarter next following the month of death; provided,
however, that the AT&T Board of Directors or the Compensation Committee of such
Board may, in its sole discretion, direct that the first installment (or the
single payment) shall be paid on the first day of the first calendar quarter in
the calendar year next following the year of death.
(e) Installments subsequent to the first installment to the employee,
or to a beneficiary or to the employee's estate, shall be paid on the first day
of the applicable calendar quarter in each succeeding calendar year until the
entire amount credited to the employee's deferred account shall have been paid.
Deferred amounts held pending distribution shall continue to be credited with
interest or additional deferred AT&T shares, as applicable, determined in
accordance with Section 3(a) and (b).
(f) In the event an employee, or the employee's beneficiary after the
employee's death, incurs a severe financial hardship, the AT&T Board of
Directors or the Compensation Committee of such Board, in its sole discretion,
may accelerate or otherwise revise the payment schedule from the employee's
account to the extent reasonably necessary to eliminate the severe financial
hardship. For the purpose of this subsection (f), a severe financial hardship
must have been caused by an accident, illness, or other event beyond the control
of the employee or, if applicable, the beneficiary.
(g) The obligation to make a distribution of deferred amounts credited
to an employee's account during any calendar year plus the additional amounts
credited on such deferred amounts pursuant to Section 3(a) and (b) shall be
borne by the Participating Company which otherwise would have paid the related
award or salary currently. However, the obligation to make distribution with
respect to deferred amounts which are related to amounts credited to an
employee's account under Section 3(a)(ii) and under the second sentence of
Section 3(b), and with respect to which no Participating Company would otherwise
have paid the related award currently, shall be borne by the Participating
Company which employed the employee on January 1, 1984.
5. MISCELLANEOUS
(a) The deferred amounts shall be held in the general funds of the
Participating Companies. The Participating Companies shall not be required to
reserve, or otherwise set aside, funds for the payment of such amounts.
(b) The rights of an employee to any deferred amounts plus the
additional amounts credited pursuant to Section 3(a) and (b) shall not be
subject to assignment by the employee.
(c) The Senior Vice President - Human Resources of AT&T shall have the
authority to administer and to interpret the Plan.
(d) The AT&T Board of Directors may at any time amend the Plan or
terminate the Plan, but such amendment or termination shall not adversely affect
the rights of any employee, without his or her consent, to any benefit under the
Plan to which such employee may have previously become entitled prior to the
effective date of such amendment or termination. The Senior Vice President Human
Resources of AT&T with the concurrence of the Senior Vice President and General
Counsel of AT&T shall be authorized to make minor or administrative changes to
the Plan, as well as amendments required by applicable federal or state law (or
authorized or made desirable by such statutes).