Exhibit 10-ff
SBC COMMUNICATIONS INC.
STOCK PURCHASE AND DEFERRAL PLAN
Adopted November 19, 2004
Article 1 - Statement of Purpose
The purpose of the Stock Purchase and Deferral Plan ("Plan") is to increase
stock ownership by, and to provide savings opportunities to, a select group of
management employees consisting of Eligible Employees of SBC Communications Inc.
("SBC") and its Subsidiaries.
Article 2 - Definitions
For the purpose of this Plan, the following words and phrases shall have
the meanings indicated, unless the context indicates otherwise:
Base Compensation. The following types of cash-based compensation paid by
an Employer (but not including payments made by a non-Employer, such as state
disability payments), before reduction due to any contribution pursuant to this
Plan or reduction pursuant to any deferral plan of an Employer, including but
not limited to a plan that includes a qualified cash or deferral arrangement
under Section 401(k) of the Code:
(a) annual base salary;
(b) lump sum payments in lieu of a salary increase; and
(c) Team Award.
Payments by an Employer under a disability plan made in lieu of any
compensation described above, shall be deemed to be a part of the respective
form of compensation it replaces for purposes of this definition. Base
Compensation does not include zone allowances or any other geographical
differential and shall not include payments made in lieu of unused vacation or
other paid days off, and such payments shall not be contributed to this Plan.
Determinations by SBC (the Committee with respect to Officer Level
Employees) of the items that make up Base Compensation shall be final. The
Committee may, from time to time, add or subtract types of compensation to or
from the definition of "Base Compensation" provided, however, any addition to
the definition of Base Compensation shall only be effective with respect to the
next period in which a Participant may make an election to establish a Share
Deferral Account.
Business Day. Any day during regular business hours that SBC is open for
business.
Chief Executive Officer. The Chief Executive Officer of SBC Communications
Inc.
Cingular. Cingular Wireless LLC, the successor thereto, or a direct or
indirect majority owned subsidiary thereof.
Code. References to the Code shall be to provisions of the Internal Revenue
Code, as amended, including regulations promulgated thereunder and successor
provisions.
Committee. The Human Resources Committee of the Board of Directors of SBC
Communications Inc.
Disability. Absence of an Employee from work with an Employer under the
relevant Employer's disability plan.
Disabled. Where a person either (a) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period for not less than 12 months or (b) is, by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, receiving income replacement benefits for a period of not less
than 3 months under an accident and health plan covering Employees of the
Participant's Employer. It is intended that "Disabled" have the same meaning in
this Plan as in Section 409A of the Code.
Eligible Employee. An Employee who:
(a) is a full or part time, salaried Employee of SBC or an Employer in
which SBC has a direct or indirect 100% ownership interest and who is on active
duty, Disability (but only while such Employee is deemed by the Employer to be
an Employee of such Employer) or Leave of Absence;
(b) is, as determined by SBC, a member of Employer's "select group of
management or highly compensated employees" within the meaning of the Employee
Retirement Income Security Act of 1974, as amended, and regulations thereunder
("ERISA"), which is deemed to include each Officer Level Employee; and
(c) has an employment status which has been approved by SBC to be eligible
to participate in this Plan or is an Officer Level Employee.
Notwithstanding the foregoing, SBC (the Committee with respect to Officer
Level Employees) may, from time to time, exclude any Employee or group of
Employees from being deemed an "Eligible Employee" under this Plan.
In the event a court or other governmental authority determines that an
individual was improperly excluded from the class of persons who would be
considered Eligible Employees during a particular time for any reason, that
individual shall not be an Eligible Employee for purposes of the Plan for the
period of time prior to such determination.
Employee. Any person employed by an Employer and paid on an Employer's
payroll system, excluding persons hired for a fixed maximum term and excluding
persons who are neither citizens nor permanent residents of the United States,
all as determined by SBC. For purposes of this Plan, a person on Leave of
Absence who otherwise would be an Employee shall be deemed to be an Employee.
Employer. SBC Communications Inc. or any of its Subsidiaries.
Exercise Price. The price per share of Stock purchasable under an Option.
Fair Market Value or FMV. In valuing Stock or any other item subject to
valuation under this Plan, the Committee may use such index or measurement as
the Committee may reasonably determine from time to time, and such index or
measurement shall be the FMV of such Stock or other item. In the absence of such
action by the Committee, FMV means, with respect to Stock, the closing price on
the New York Stock Exchange ("NYSE") of the Stock on the relevant date, or if on
such date the Stock is not traded on the NYSE, then the closing price on the
immediately preceding date such Stock is so traded.
Leave of Absence. Where a person is absent from employment with an Employer
on a formally granted leave of absence (i.e., the absence is with formal
permission in order to prevent a break in the continuity of term of employment,
which permission is granted (and not revoked) in conformity with the rules of
the Employer that employs the individual, as adopted from time to time). For
purposes of this Plan, a Leave of Absence shall be deemed to also include a
transfer by an Employer of a person to, and continuous employment by, an entity
for a rotational work assignment. In the event a transfer to such an entity
lasts more than 5 years or the rotational work assignment status is canceled by
SBC, it shall be deemed a Termination of Employment with the Employer at that
time for purposes of this Plan. To be a rotational work assignment, the Employer
must have indicated in writing to the person that the person was to be rehired
by the Employer upon termination of the rotational work assignment.
Officer Level Employee. Any executive officer of SBC, as that term is used
under the Securities Exchange Act of 1934, as amended, and any Employee that is
an "officer level" Employee for compensation purposes as shown on the records of
SBC.
Options or Stock Options. Options to purchase Stock issued pursuant to this
Plan.
Participant. An Eligible Employee or former Eligible Employee who
participates in this Plan.
Plan Year. The period from January 16 through the following January 15.
Retirement or Retire. Termination of Employment on or after the earlier of
the following dates, unless otherwise provided by the Committee: (a) for Officer
Level Employees, the date the Participant is at least age 55 and has five (5)
years of Net Credited Service; or (b) the date the Participant has attained one
of the following combinations of age and Net Credited Service:
Net Credited Service Age
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
For purposes of this Plan only, Net Credited Service shall be calculated in
the same manner as "Pension Eligibility Service" under the SBC Pension Benefit
Plan - Nonbargained Program ("Pension Plan"), as that may be amended from time
to time, except that service with an Employer shall be counted as though the
Employer were a "Participating Company" under the Pension Plan and the Employee
was a participant in the Pension Plan.
Shares or Share Units. An accounting entry representing the right to
receive an equivalent number of shares of Stock.
Share Deferral Account or Account. The Account established annually by an
election by a Participant to make Employee Contributions to the Plan over the
Plan Year relating to such election. The Plan Year shall run from and including
January 16 (the commencement date of the Share Deferral Account) through the
following January 15. One Share Deferral Account is created by each yearly
election, and all Share Units credited pursuant to such election, including
through Employee Contributions, SBC Matching Contributions, conversions of right
to receive Stock, earnings on Share Units, or otherwise, shall be part of the
same Share Deferral Account. Each annual Account is a separate Share Deferral
Account; only one Share Deferral Account will relate to a Plan Year.
Short Term Incentive Award. A cash award paid by an Employer (and not by a
non-Employer, such as state disability payments) under the Short Term Incentive
Plan or any successor plan; an award under a similar plan intended by the
Committee to be in lieu of an award under such Short Term Incentive Plan,
including, but not limited to, Performance Units granted under the 2001
Incentive Plan or any successor plan; or any other award that the Committee
designates as a Short Term Incentive Award specifically for purposes of this
Plan (regardless of the purpose of the award).
Stock. The common stock of SBC Communications Inc.
Subsidiary. Any corporation, partnership, venture or other entity in which
SBC holds, directly or indirectly, a 50% or greater ownership interest. The
Committee may, at its sole discretion, designate any other corporation,
partnership, limited liability company, venture or other entity a Subsidiary for
the purpose of participating in this Plan. Unless otherwise provided by the
Committee, Cingular shall be deemed a Subsidiary so long as SBC holds a direct
or indirect 25% interest in Cingular Wireless LLC or its successor.
Team Award. The annual award determined to be the "Team Award" by SBC,
together with any individual award determined by SBC to be the Individual
Discretionary Award made in connection therewith or comparable awards, if any,
determined by SBC to be used in lieu of these awards.
Termination of Employment. References herein to "Termination of
Employment," "Terminate Employment" or a similar reference, shall mean the event
where the Employee ceases to be an Employee of any Employer, including but not
limited to where the employing company ceases to be an Employer.
Article 3 - Administration of the Plan
3.1 The Committee.
The Committee shall be the administrator of the Plan and will administer
the Plan, interpret, construe and apply its provisions and determine entitlement
to benefits, all in its discretion. The Committee may further establish, adopt
or revise such rules and regulations and such additional terms and conditions
regarding participation in the Plan as it may deem necessary or advisable for
the administration of the Plan. References to determinations or other actions by
SBC, herein, shall mean actions authorized by the Committee, the Chief Executive
Officer, the Senior Executive Vice President of SBC in charge of Human
Resources, or their respective successors or duly authorized delegates, in each
case in the discretion of such person. All decisions by SBC shall be final and
binding.
3.2 Authorized Shares of Stock.
(a) Except as provided below, the number of shares of Stock which may be
distributed pursuant to the Plan, exclusive of Article 8, is 21,000,000. The
number of shares of Stock which may be issued pursuant to the exercise of Stock
Options is 34,000,000 (together with an equal number of Stock Options). Only the
actual number of shares of Stock that are issued (shares issued would not
include, for example, any reduction in shares to be issued as a result of tax
withholding in connection with a distribution of Stock, exercise of options, or
otherwise) shall be counted against the authorized number of shares of Stock. To
the extent an Option issued under this Plan is canceled, terminates, expires, or
lapses for any reason, such Option shall again be available for issuance under
the Plan. Conversions of Stock awards into Share Units and their eventual
distribution (excluding the effects of any dividends on such Share Units) shall
count only against the limits of the plans from which they originated and shall
not be applied against the limits in this Plan. To the extent Share Units are
credited through deferrals of Stock or Employee Contributions where the
distribution of which would be deductible by SBC under Section 162(m) of the
Code without regard to the size of the distribution, and such deductible Share
Units are available for distribution, such Share Units shall be distributed
first.
(b) In the event the Committee determines that continuing the purchase of
Share Units under the Plan may cause the number of shares of Stock that are to
be distributed under this Plan (which may take into account, among other things,
the number of Share Units acquired and the number of Stock Options issued or
required to be issued, reduced by the number of shares of Stock that would be
withheld for income tax purposes) to exceed the number of authorized shares of
Stock, then the Committee may cancel further purchases of Share Units and
require that any further dividend equivalents on Share Units be paid in cash to
the Participants.
(c) In the event of a merger, reorganization, consolidation,
recapitalization, separation, liquidation, stock dividend, stock split, share
combination, or other change in the corporate structure of SBC affecting the
shares of Stock (including a conversion of Stock into cash or other property),
such adjustment shall be made to the number and class of the shares of Stock
which may be delivered under the Plan (including but not limited to individual
limits), and in the number and class of and/or price of shares of Stock subject
to outstanding Options granted under the Plan, and/or in the number of
outstanding Options and Share Units, or such other adjustment determined by the
Committee, in each case as may be determined to be appropriate and equitable by
the Committee, in its sole discretion, to prevent dilution or enlargement of
rights.
3.3 Claims Procedure.
Subject to the authority of the Committee over the Plan, SBC shall appoint
a Claims Board to adjudicate claims brought by or in respect to Participants and
their beneficiaries relating to benefits under the Plan. A Participant may apply
in writing to the Claims Board to make a claim under this Plan. The Claims Board
shall provide written notice within 90 days to a Participant whose claim
hereunder has been denied, setting forth reasons for such denial or explaining
that an extension of the time for processing the claim is necessary, written in
a manner calculated to be understood by such person. After receipt of such
notice, or expiration of 90 days without any response from the Claims Board, the
Participant may appeal the decision in writing to the Senior Executive Vice
President of SBC in charge of Human Resources, or to the person's successor,
within 90 days, except that if the Participant is an Insider, as that term is
used in the 2001 Incentive Plan, then the Participant's appeal shall be to the
Committee. The Participant shall receive a full and fair review of the decision
denying the claim in accordance with the requirements of ERISA.
Article 4 - Contributions
4.1 Election to Make Contributions.
(a) The Committee shall establish dates and other conditions for
participation in the Plan and making contributions as it deems appropriate.
Except as otherwise provided by the Committee, each year:
(1) an Employee who is an Eligible Employee as of April 30 may thereafter
make an election on or prior to the last Business Day of the immediately
following June to establish a Share Deferral Account in order to elect any
combination of the following:
(A) to make contributions to the Plan ("Employee Contributions"),
through payroll deductions, during the immediately following Plan Year
(which shall be the Plan Year of such Account), to acquire Share Units
in such Account with any combination of the following:
(i) from 6% to 30% (in whole percentage increments) of the
Participant's monthly Base Compensation, as the same may change
from time to time (Participants who, at the time of the
determination of their eligibility to participate in an Account,
are paid through a "sales plan" involving the use of commissions)
may contribute up to 40% of Base Compensation, provided that upon
removal of a Participant from such "sales plan," the deferral
election shall not exceed 30% for the rest of the Plan Year,
beginning with the Employee Contributions relating to the first
pay period following such change in status; or
(ii) up to 100% (in whole percentage increments or in
dollars) of a Short Term Incentive Award (with any contribution
of a discretionary award related thereto determined separately).
If a Participant did not have a target Short Term Incentive Award
on June 30, but was subsequently granted such an award before the
end of such Plan Year, the Participant will be deemed to have
made the same percentage contribution election for the Short Term
Incentive Award as the Participant made for Base Compensation.
(B) to convert up to 100% (in whole percentage increments) of Stock
that would be distributed under the 2001 Incentive Plan or any
successor Plan (other than through the exercise of stock options or
the removal of restrictions on restricted Stock) during such Plan Year
into an equal number of Share Units in such Account; provided such
election would not cause the recognition of income for Federal income
tax purposes in respect of the Stock prior to payment under this Plan
and so long as the Participant is an Employee or has Retired as of the
conversion date.
(2) an Employee who was not an Eligible Employee as of April 30 but who is
an Eligible Employee the immediately following September 30 may thereafter
make an election on or prior to the last Business Day of the immediately
following November to establish a Share Deferral Account in order to
contribute Base Compensation, other than Team Award, in the same manner as
if the Employee was an Eligible Employee as of such April 30.
(b) The Committee may permit an Eligible Employee to purchase Share Units
under this Plan with amounts other than Base Compensation or Short Term
Incentive Awards on such terms and conditions as such Committee may permit from
time to time. In no event shall an acquisition of Share Units pursuant to this
paragraph (b) or pursuant to the conversion of a right to receive Stock into
Share Units (such as through a distribution of Stock under the 2001 Incentive
Plan) result in the crediting of an SBC Matching Contribution or Options.
(c) No contribution of compensation, other than for performance-based
compensation (as that term is defined under Section 409A of the Code), shall be
made to the Plan out of compensation for services where such services are
performed during or before the taxable year of the election to make such
Employee Contributions. In the case of the above referenced performance-based
compensation (based on services performed over a period of at least 12 months),
such election may be made no later than 6 months before the end of the period.
(d) Notwithstanding anything to the contrary in this Plan, no election
shall be effective to the extent it would permit an Employee Contribution or
distribution to be made that is not in compliance with Section 409A of the Code.
To the extent such election related to Employee Contributions that complied with
such statute and regulations, that portion of the election shall remain valid,
except as otherwise provided under this Plan.
(e) SBC may refuse or terminate, in whole or in part, any election to
purchase Share Units in the Plan at any time; provided, however, only the
Committee may take such action with respect to persons who are Officer Level
Employees.
(f) In the event the Participant takes a hardship withdrawal from a benefit
plan qualified under the Code and sponsored by an Employer, any election to make
Employee Contributions by such Participant shall be cancelled on a prospective
basis, and the Participant shall not be permitted to make a new election with
respect to Employee Contributions that would be contributed during the then
current and immediately following calendar year.
4.2 Purchase of Share Units.
(a) Employee Contributions (as well as any corresponding SBC Matching
Contributions) shall be made solely pursuant to a proper election and only
during the Employee's lifetime and while the Employee remains an Eligible
Employee (if the Employee ceases to be an Eligible Employee, his or her election
to make Employee Contributions shall be cancelled on a prospective basis);
provided, however, Termination of Employment of an Eligible Employee shall not
constitute loss of eligibility solely with respect to contribution of annual
base salary earned prior to termination but paid within 60 days thereafter or
with respect to a Short Term Incentive Award paid after Retirement (and such
person shall be deemed an Eligible Employee for such contributions).
(b) The number of Share Units purchased by a Participant during a calendar
month shall be found by dividing the Participant's Employee Contributions during
the month by the FMV on the last day of such month.
(c) A contribution to the Plan shall be made when the compensation - from
which the contribution is to be deducted - is paid ("paid," as used in this
Plan, includes amounts contributed to the Plan that would have been paid were it
not for an election under this Plan) using the "check date" shown on the related
pay record (sometimes referred to as the "paycheck stub") as the contribution
date (if no "check date" is shown, then the date of the pay record). When a
payment is made to correct an underpayment, or as a delayed payment, of gross
compensation for any reason, the related Employee Contribution to the Plan shall
be made when such correcting or delayed payment is made, again using the date on
the pay record. No correcting or delayed payment may be contributed to the Plan
if it is made after the period for making contributions in Article 4 for the
Share Deferral Account covering the payment to be corrected. For example, if an
underpayment is made in June 2005, but not corrected until May 2006, regardless
of the cause of such events, no part of the correcting payment may be
contributed to the Plan. Where there has been an overpayment of gross
compensation, the amount of the overpayment will not be considered in
determining the contribution amount. In no event shall the Participant have any
recourse against an Employer under this Plan for any underpayment, overpayment
or delayed or correcting payment of compensation. In the event a pay period (the
period over which services are rendered for the relevant compensation) relates
to services rendered during or before the taxable year of the relevant election,
then only the compensation relating to services performed in the calendar year
following the calendar year of the election may be contributed to this Plan. The
Committee may modify or change this paragraph (c) from time to time.
4.3 Reinvestment of Dividends.
In the month containing a record date for a cash dividend on Stock, each
Share Deferral Account shall be credited with that number of Share Units equal
to the declared dividend per share of Stock, multiplied by the sum of (a) the
number of Share Units held in such Share Deferral Account as of such record
date, plus (b) all Share Units purchased after such record date with
contributions made on or prior to such record date, and dividing the product by
the FMV on the last day of such month.
Article 5 - SBC Matching Contributions
5.1 SBC Match.
(a) SBC shall credit each Participant's relevant Share Deferral Account
with the number of Matching Share Units (defined below) found by taking eighty
percent (80%) of the Participant's Employee Contributions (the "Match Rate")
from no more than six percent (6%) of the Participant's Base Compensation (the
"Match Compensation Percentage") contributions made during the month with
respect to such Share Deferral Account and dividing the resulting figure by the
FMV of the Stock on the last day of such month ("SBC Matching Contribution").
However, if during any month the Participant is concurrently participating in
this Plan and (1) the match eligible portion of the SBC Savings Plan (which may
be referred to as "Basic Allotments") or (2) the match eligible portion of any
other tax qualified or nonqualified plan of an Employer, then the monthly Match
Compensation Percentage shall be reduced by the Participant's match eligible
percentage determined under such other plan.
In no event shall matching contributions under this Plan and all other
plans of SBC and all Employers combined (including but not limited to the SBC
Savings Plan) be paid with respect to more than six percent (6%) of
Participant's monthly Base Compensation, except as provided below. SBC Matching
Contributions shall only be paid on Base Compensation contributed to the Plan.
The Committee, in its discretion, may reduce or eliminate the SBC Matching
Contributions with respect to those Employee Contributions that have not been
the subject of a contribution election by the Participant.
Notwithstanding the foregoing, in the event that the tax-qualified plan
applicable to a Participant provides for a greater match rate and/or applies to
a larger percentage of compensation than this Plan provides, the Committee may,
to the extent it deems appropriate, raise the percentage of the Match Rate (set
at 80%, above) and/or the Match Compensation Percentage (set at 6%, above) to
approximate the matching benefit provided in such tax qualified plan for
applicable Participants.
(b) In the sole discretion of the Committee, in the event the Committee
reduces the number of Options that SBC issues for each Share Unit purchased, the
Committee may provide for the contribution of a Bonus Matching Contribution on
such terms as the Committee determines. Such Bonus Matching Contribution may not
exceed 20% of the Participant's Employee Contributions for the month. The Bonus
Matching Contribution shall be subject to such terms and conditions as required
by the Committee and, unless otherwise provided by the Committee, to the same
vesting and distribution requirements as SBC Matching Contributions.
5.2 Vesting and Distribution of Share Units Acquired with Matching
Contributions.
A Participant's interest in Share Units purchased with SBC Matching
Contributions, as well as earnings thereon, (collectively, "Matching Share
Units") shall vest when a Participant shall have three (3) years of Net Credited
Service (regardless of any subsequent break in service after achieving vesting)
as reflected on the records of SBC. Matching Share Units shall be distributed in
a lump sum, in accordance with the Plan's distribution provisions only upon
becoming vested, in the earlier of: (a) the calendar year following the calendar
year of the Termination of Employment of the Participant, or (b) the calendar
year in which the Participant reaches age 55.
Matching Share Units acquired as part of a Share Deferral Account that
commences in or after the calendar year the Participant reaches age 55 will be
distributed in the same manner and time as other Share Units in such Share
Deferral Account.
Upon the Participant's Termination of Employment, all the Participant's
unvested Share Units shall be forfeited and shall not be reinstated if
Participant is re-Employed.
Article 6 - Distributions
6.1 Distributions of Share Units.
(a) Initial Election with Respect to a Share Deferral Account. At the time
the Participant makes an election to make Employee Contributions with respect to
a Share Deferral Account, the Participant shall also elect the calendar year the
Share Deferral Account shall be distributed, which may be from one through five
years after the calendar year the Account commenced. For example, if an Account
commenced in 2005, the Participant may elect to commence the distribution in any
calendar year from and including 2006 to and including 2010. If no timely
distribution election is made by the Participant, then the Participant will be
deemed to have made an election to have the Share Deferral Account distributed
in a single installment in the first calendar year after the calendar year the
Account commenced. However, for purposes of the Initial Election only, in the
event the Participant Terminates Employment, the distribution of the Share
Deferral Unit shall occur in the calendar year following the calendar year of
the Participant's Termination of Employment. If the Participant Terminates
Employment but has a Share Deferral Account that commenced in the same year the
Share Deferral Account would be distributed, then that Account would instead
distribute in the calendar year following the year of the contribution. For
example, if a Retirement eligible Employee Terminated Employment in 2005 after
making an election with regard to an Incentive Award to be paid in 2006, the
Share Deferral Account relating to that award would be distributed in 2007.
(b) Election to Delay a Scheduled Distribution. While an Employee, a
Participant may elect to defer a scheduled distribution of a Share Deferral
Account for five (5) additional calendar years beyond that previously elected.
Unless otherwise provided by the Committee, the election to defer the
distribution must be made before the last Business Day of the December that is
at least one year before the scheduled distribution. An election to defer the
distribution of a Share Deferral Account may not be made in the same calendar
year that the election to establish the Share Deferral Account is made.
Notwithstanding anything to the contrary in this Plan, (1) an election to defer
the distribution of a Share Deferral Account must be made at least 12 months
prior to the date of the first scheduled payment under the prior distribution
election and (2) the election shall not take effect until at least 12 months
after the date on which the election is made.
(c) A Participant's Share Deferral Account shall be distributed to the
Participant on March 10 (or as soon thereafter as administratively practicable
as determined by SBC) of the calendar year elected by the Participant. In the
event the distribution is to be made to an Officer Level Employee or a "key
employee" (as defined in Section 416(i) of the Code, without regard to paragraph
(5) thereof) as a result of the Participant's Termination of Employment, the
distribution shall not occur until the later of such March 10 or six (6) months
after the Termination of Employment, except it shall be distributed promptly
upon the Participant's earlier death.
6.2 Death of the Participant or if the Participant Becomes Disabled.
In the event of the death of a Participant, all undistributed Share
Deferral Accounts shall be distributed to the Participant's beneficiary in
accordance with the SBC Rules for Employee Beneficiary Designations, as the same
may be amended from time to time. In the event a Participant becomes Disabled
and Terminates Employment, all undistributed Share Deferral Accounts shall be
promptly distributed to the Participant.
6.3 Unforeseeable Emergency Distribution.
In the event that SBC (the Committee in the case of Officer Level
Employees), upon written petition of the Participant, determines in its sole
discretion that the Participant has suffered an unforeseeable emergency, SBC
shall make such distributions to the Participant from the Participant's Share
Deferral Accounts (other than Matching Share Units), on a pro-rata basis, as it
deems necessary, as soon as practicable following such determination, subject to
the following. For purposes of this Plan, an unforeseeable emergency is a severe
financial hardship to the Participant resulting from an illness or accident of
the Participant, the Participant's spouse, or a dependent (as defined in Section
152(a) of the Code) of the Participant, loss of the Participant's property due
to casualty, or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant. The amounts
distributed with respect to an emergency may not exceed the amounts necessary to
satisfy such emergency plus amounts necessary to pay taxes reasonably
anticipated as a result of the distribution, after taking into account the
extent to which such hardship is or may be relieved through reimbursement or
compensation by insurance or otherwise or by liquidation of the Participant's
assets (to the extent the liquidation of such assets would not itself cause
severe financial hardship). It is the intent of this Plan that this provision
comply with the Unforeseeable Emergency provisions of Section 409A of the Code.
Upon such distribution, any election to make Employee Contributions by such
Participant shall be immediately cancelled, and the Participant shall not be
permitted to make a new election with respect to Employee Contributions that
would be contributed during the then current and immediately following calendar
year.
6.4 Ineligible Participant.
Notwithstanding any other provisions of this Plan to the contrary, if SBC
receives an opinion from counsel selected by SBC, or a final determination is
made by a Federal, state or local government or agency, acting within its scope
of authority, to the effect that an individual is not, or was not at the time of
his or her making Employee Contributions to this Plan, a member of Employer's
"select group of management or highly compensated employees" within the meaning
of ERISA, then such person will not be eligible to make further contributions to
the Plan.
6.5 Distribution Process.
A Share Deferral Account shall be distributed under this Plan by taking the
number of Share Units comprising the Account to be distributed and converting
them into an equal number of shares of Stock. (Once distributed, a Share Unit
shall be canceled.)
Article 7 - Transition Provisions
7.1 Stockholder Approval
All acquisitions of Share Units under this Plan are subject to Stockholder
approval of the Plan at the 2005 Annual Meeting of Stockholders. If the
Stockholders fail to approve the Plan, further contributions will be terminated
and all funds and Stock distributions contributed to the Plan by Participants
and all funds contributed as SBC Matching Contributions will be promptly paid to
the Participants, without interest, and, upon payment of such amounts to a
Participant, the Participant shall have no further rights under the Plan.
7.2 2005 Share Deferral Accounts.
Notwithstanding Article 4 to the contrary, if an Employee is an Eligible
Employee on September 30, 2004, the Employee may make an election under Article
4 on or prior to December 15, 2004, with respect to the establishment of a Stock
Deferral Account for the (i) contribution of Base Compensation and/or Short Term
Incentive Awards paid during the period from January 1, 2005, through January
15, 2006, which shall be the Plan Year for such Stock Deferral Account; and/or
(ii) the conversion of a distribution of Stock that would be made during the
same Plan Year pursuant to the 2001 Incentive Plan into an equal number of Share
Units, so long as such conversion would not cause the recognition of income for
Federal income tax purposes in respect of such distribution of Stock prior to
distribution of Share Units under this Plan.
Article 8 - Options
8.1 Grants.
Options may be issued in definitive form or recorded on the books and
records of SBC for the account of the Participant, at the discretion of SBC. If
SBC elects not to issue the Options in definitive form, they shall be deemed
issued, and the Participants shall have all rights incident thereto as if they
were issued on the dates provided herein, without further action on the part of
SBC or the Participant. In addition to the terms herein, all Options shall be
subject to such additional provisions and limitations as provided in any
Administrative Procedures adopted by the Committee prior to the issuance of such
Options. The number of Options issued to a Participant shall be reflected on the
Participant's annual statement of account.
8.2 Term of Options.
The Options may only be exercised: (a) after the earlier of (i) the
expiration of one (1) year from date of issue or (ii) the Participant's
Termination of Employment, and (b) no later than the tenth (10th) anniversary of
their issue; and Options shall be subject to earlier termination as provided
herein.
8.3 Exercise Price.
The Exercise Price of an Option shall be the FMV of the Stock on the date
of issuance of the Options.
8.4 Issuance of Options.
(a) For each Share Deferral Account established by a Participant:
(1) on each June 15 the Participant shall receive two (2) Options for each
Share Unit acquired by the Participant as part of such Share Deferral
Account during the immediately preceding January through May period with
Employee Contributions of Base Compensation and/or Short Term Incentive
Award. A fractional number of Options shall be rounded up to the next whole
number.
(2) on each February 15 a Participant shall receive:
(i) two (2) Options for each Share Unit acquired by the Participant as
part of such Share Deferral Account during the immediately preceding
June through January period with Employee Contributions of Base
Compensation and/or Short Term Incentive Award; and
(ii) two (2) Options for each Share Unit acquired prior to such date
by the Participant with dividend equivalents that were derived,
directly or indirectly (such as dividend equivalents paid on Share
Units acquired with dividend equivalents), from Share Units acquired
with Employee Contributions as part of such Share Deferral Account
during the immediately preceding thirteen (13) calendar months.
(b) A fractional number of Options shall be rounded up to the next whole
number.
(c) If Stock is not traded on the NYSE on any of the foregoing Option
issuance dates, then the Options shall not be issued until the next such day on
which Stock is so traded.
(d) If a Participant Terminates Employment other than (i) while Retirement
eligible or (ii) because of death or Disability, no further Options shall be
issued to or with respect to such Participant. In the event of re-Employment
following a Termination of Employment, the preceding sentence shall not apply to
those Options resulting from participation in the Plan after such re-Employment
until a subsequent Termination of Employment.
(e) No more than 400,000 Options shall be issued to any individual under
this Plan during a calendar year. No Share Unit may be counted more than once
for the issuance of Options.
(f) The Committee may, in its sole discretion, at any time, increase or
lower the number of Options that are to be issued for each Share Unit acquired,
not to exceed two (2) Options per Share Unit purchased. However, if the
Committee lowers the number of Options, then such change shall only be effective
with respect to the next Share Deferral Account a Participant may elect to
establish.
(g) The Committee may also, at any time and in any manner, limit the number
of Options which may be acquired as a result of the Short Term Incentive Award
being contributed to the Plan. Further, except as otherwise provided by the
Committee, in determining the number of Options to be issued to a Participant
with respect to a Participant's contribution of a Short Term Incentive Award to
the Plan and subsequent crediting of Share Units, Options may be issued only
with respect to an amount which does not exceed the target amount of such award
(or such other portion of the award as may be determined by the Committee).
(h) No options shall be issued to or in respect of a Participant for a
particular issuance, unless at least ten (10) Options will be issued to that
Participant.
8.5 Exercise and Payment of Options.
Options shall be exercised by providing notice to the designated agent
selected by SBC (if no such agent has been designated, then to SBC), in the
manner and form determined by SBC, which notice shall be irrevocable, setting
forth the exact number of shares of Stock with respect to which the Option is
being exercised and including with such notice payment of the Exercise Price.
When Options have been transferred, SBC 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 of Stock.
Exercises of Options may be effected only on days and during the hours that
the New York Stock Exchange is open for regular trading or as otherwise provided
or limited by SBC. If an Option expires on a day or at a time when exercises are
not permitted, then the Options may be exercised no later than the immediately
preceding date and time that the Options were exercisable.
The Exercise Price shall be paid in full at the time of exercise. No Stock
shall be issued or transferred until full payment has been received therefore.
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 SBC
may impose from time to time, and further subject to suspension or
termination of this provision by SBC at any time, by:
(i) delivery 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 SBC that
the Stock tendered to SBC must have been held by the Participant
for a minimum of six (6) months preceding the tender; or
(ii) if SBC has designated a stockbroker to act as SBC's agent to
process Option exercises, issuance of an exercise notice to such
stockbroker together with instructions irrevocably instructing
the stockbroker: (A) to immediately sell (which shall include an
exercise notice that becomes effective upon execution of a sell
order) a sufficient portion of the Stock 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 SBC. In the event the stockbroker sells
any Stock on behalf of a Participant, the stockbroker shall be
acting solely as the agent of the Participant, and SBC 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 Exercise Price and tax
withholding) are paid to SBC.
If payment is made by the delivery of Stock, the value of the Stock
delivered shall be equal to the FMV of the Stock on the day preceding the date
of exercise of the Option.
Restricted Stock may not be used to pay the Option exercise price.
8.6 Restrictions on Exercise and Transfer.
No Option shall be transferable except: (a) upon the death of a Participant
in accordance with SBC's Rules for Employee Beneficiary Designations, as the
same may be amended from time to time; and (b) in the case of any holder after
the Participant's death, only by will or by the laws of descent and
distribution. 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, 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.
8.7 Termination of Employment.
(a) Not Retirement Eligible. Unless otherwise provided by the Committee, if
a Participant Terminates Employment while not Retirement eligible, a
Participant's Options may be exercised, to the extent then exercisable:
(i) if such Termination of Employment is by reason of death or
Disability, then for a period of three (3) years from the date of such
Termination of Employment or until the expiration of the stated term
of such Option, whichever period is shorter; or
(ii) if such Termination of Employment is for any other reason, then
for a period of one (1) year from the date of such Termination of
Employment or until the expiration of the stated term of such Option,
whichever period is shorter.
(b) Retirement Eligible. Unless otherwise provided by the Committee, if a
Participant Terminates Employment while Retirement eligible, a Participant's
Option may be exercised, to the extent then exercisable: (i) for a period of
five (5) years from the date of Retirement or (ii) until the expiration of the
stated term of such Option, whichever period is shorter.
(c) Re-Employment of a Participant after a Termination of Employment shall
have no effect on the periods during which Options resulting from the prior
Employment may be exercised. For example, if the Option exercise period has been
shortened because of the prior Termination of Employment, it shall not be
extended because of the re-Employment.
Article 9 - Discontinuation, Termination, Amendment.
9.1 SBC's Right to Discontinue Offering Share Units.
The Committee may at any time discontinue offerings of Share Units under
the Plan. Any such discontinuance shall have no effect upon existing Share Units
or the terms or provisions of this Plan as applicable to such Share Units.
9.2 SBC's Right to Terminate Plan.
The Committee may terminate the Plan at any time. Upon termination of the
Plan, contributions shall no longer be made under the Plan.
After termination of the Plan, Participants shall continue to earn dividend
equivalents in the form of Share Units on undistributed Share Units and shall
continue to receive all distributions under this Plan at such time as provided
in and pursuant to the terms and conditions of Participant's elections and this
Plan.
9.3 Amendment.
The Committee may at any time amend the Plan in whole or in part including
but not limited to changing the formulas for determining the amount of SBC
Matching Contributions under Article 5 or decreasing the number of Options to be
issued under Article 8; provided, however, that no amendment, including but not
limited to an amendment to this section, shall be effective, without the consent
of a Participant, to alter, to the material detriment of such Participant, a
Share Deferral Account of the Participant. For purposes of this section, an
alteration to the material detriment of a Participant shall include, but not be
limited to, a material reduction in the period of time over which Stock may be
distributed to a Participant, any reduction in the Participant's number of
vested Share Units or Options, or an increase in the Exercise Price or decrease
in the term of an Option. Any such consent may be in a writing, telecopy, or
e-mail or in another electronic format. An election to acquire Share Units with
Employee Contributions shall be conclusively deemed to be the consent of the
Participant to any and all amendments to the Plan prior to such election, and
such consent shall be a condition to making any election with respect to
Employee Contributions.
Notwithstanding anything to the contrary contained in this section of the
Plan, the Committee may modify this Plan with respect to any person subject to
the provisions of Section 16 of the Securities Exchange Act of 1934, as amended
("Exchange Act") to place additional restrictions on the exercise of any Option
or the transfer of any Stock not yet issued under the Plan.
Article 10 - Miscellaneous.
10.1 Tax Withholding.
Upon distribution of Stock, including but not limited to, shares of Stock
issued upon the exercise of an Option, SBC shall withhold shares of Stock
sufficient in value, using the FMV on the date determined by SBC to be used to
value the Stock for tax purposes, to satisfy the minimum amount of Federal,
state, and local taxes required by law to be withheld as a result of such
distribution.
Any fractional share of Stock payable to a Participant shall be withheld as
additional Federal withholding, or, at the option of SBC, 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
8.5, hereof, 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 FMV of the Stock.
10.2 Elections and Notices.
Notwithstanding anything to the contrary contained in this Plan, all
elections and notices of every kind under this Plan shall be made on forms
prepared by SBC or the General Counsel, Secretary or Assistant Secretary, or
their respective delegates or shall be made in such other manner as permitted or
required by SBC or the General Counsel, Secretary or Assistant Secretary, or
their respective delegates, including through electronic means, over the
Internet or otherwise. An election shall be deemed made when received by SBC (or
its designated agent, but only in cases where the designated agent has been
appointed for the purpose of receiving such election), which may waive any
defects in form. Unless made irrevocable by the electing person, each election
with regard to making Employee Contributions or distributions of Share Deferral
Accounts shall become irrevocable at the close of business on the last day to
make such election. SBC may limit the time an election may be made in advance of
any deadline.
If not otherwise specified by this Plan or SBC, any notice or filing
required or permitted to be given to SBC under the Plan shall be delivered to
the principal office of SBC, directed to the attention of the Senior Executive
Vice President in charge of Human Resources for SBC or his or her successor.
Such notice shall be deemed given on the date of delivery.
Notice to the Participant shall be deemed given when mailed (or sent by
telecopy) to the Participant's work or home address as shown on the records of
SBC or, at the option of SBC, to the Participant's e-mail address as shown on
the records of SBC. It is the Participant's responsibility to ensure that the
Participant's addresses are kept up to date on the records of SBC. In the case
of notices affecting multiple Participants, the notices may be given by general
distribution at the Participants' work locations.
By participating in the Plan, each Participant agrees that SBC may provide
any documents required or permitted under the Federal or state securities laws,
including but not limited to the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, by e-mail, by e-mail attachment, or
by notice by e-mail of electronic delivery through SBC's Internet Web site or by
other electronic means.
10.3 Unsecured General Creditor.
Participants and their beneficiaries, heirs, successors, and assigns shall
have no legal or equitable rights, interest, or claims in any property or assets
of any Employer. No assets of any Employer shall be held under any trust for the
benefit of Participants, their beneficiaries, heirs, successors, or assigns, or
held in any way as collateral security for the fulfilling of the obligations of
any Employer under this Plan. Any and all of each Employer's assets shall be,
and remain, the general, unpledged, unrestricted assets of such Employer. The
only obligation of an Employer under the Plan shall be merely that of an
unfunded and unsecured promise of SBC to distribute shares of Stock
corresponding to Share Units and Options, under the Plan.
10.4 Offset.
SBC may offset against the amount of Stock otherwise distributable to a
Participant, any amounts due an Employer by a Participant, including but not
limited to overpayments under any compensation or benefit plans. In addition,
SBC may also cancel a Stock Option to satisfy such an obligation to an Employer.
For this purpose, each Stock Option shall be valued by subtracting the Exercise
Price of the Stock Option from the FMV of the Stock on such date.
10.5 Non-Assignability.
Neither a Participant nor any other person shall have any right to commute,
sell, assign, transfer, pledge, anticipate, mortgage, or otherwise encumber,
transfer, hypothecate or convey in advance of actual receipt, shares of Stock
corresponding to Share Units under the Plan, if any, or any part thereof, which
are, and all rights to which are, expressly declared to be unassignable and
non-transferable. No part of the Stock distributable shall, prior to actual
distribution, be subject to seizure or sequestration for the payment of any
debts, judgments, alimony or separate maintenance owed by a Participant or any
other person, nor be transferable by operation of law in the event of a
Participant's or any other person's bankruptcy or insolvency.
10.6 Employment Not Guaranteed.
Nothing contained in this Plan nor any action taken hereunder shall be
construed as a contract of employment or as giving any employee any right to be
retained in the employ of an Employer or to serve as a director.
10.7 Errors.
At any time SBC or an Employer may correct any error made under the Plan
without prejudice to SBC or any Employer. Such corrections may include, among
other things, changing or revoking a Stock Option issuance, canceling Share
Units and refunding contributions to a Participant with respect to any period he
or she made Employee Contributions while not an Eligible Employee, or canceling
the enrollment of a non-Eligible Employee. Neither SBC nor any Employer shall be
liable for any damages resulting from failure to timely allow any contribution
to be made to the Plan or for any damages resulting from the correction of, or a
delay in correcting, any error made under the Plan. In no event shall SBC or any
Employer be liable for consequential or incidental damages arising out of a
failure to comply with the terms of the Plan.
10.8 Captions.
The captions of the articles, sections, and paragraphs of this Plan are for
convenience only and shall not control nor affect the meaning or construction of
any of its provisions.
10.9 Governing Law.
To the extent not preempted by Federal law, the Plan, and all benefits and
agreements hereunder, and any and all disputes in connection therewith, shall be
governed by and construed in accordance with the substantive laws of the State
of Texas, without regard to conflict or choice of law principles which might
otherwise refer the construction, interpretation or enforceability of this Plan
to the substantive law of another jurisdiction.
Because benefits under the Plan are granted in Texas, records relating to
the Plan and benefits thereunder are located in Texas, and the Plan and benefits
thereunder are administered in Texas, SBC and the Participant under this Plan,
for themselves and their successors and assigns, irrevocably submit to the
exclusive and sole jurisdiction and venue of the state or Federal courts of
Texas with respect to any and all disputes arising out of or relating to this
Plan, the subject matter of this Plan or any benefits under this Plan, including
but not limited to any disputes arising out of or relating to the interpretation
and enforceability of any benefits or the terms and conditions of this Plan. To
achieve certainty regarding the appropriate forum in which to prosecute and
defend actions arising out of or relating to this Plan, and to ensure
consistency in application and interpretation of the Governing Law to the Plan,
the parties agree that (a) sole and exclusive appropriate venue for any such
action shall be an appropriate Federal or state court in Bexar County, Texas,
and no other, (b) all claims with respect to any such action shall be heard and
determined exclusively in such Texas court, and no other, (c) such Texas court
shall have sole and exclusive jurisdiction over the person of such parties and
over the subject matter of any dispute relating hereto and (d) that the parties
waive any and all objections and defenses to bringing any such action before
such Texas court, including but not limited to those relating to lack of
personal jurisdiction, improper venue or forum non conveniens.
10.10 Plan to Comply with Section 409A.
In the event any provision of this Plan is held invalid, void, or
unenforceable, the same shall not affect, in any respect whatsoever, the
validity of any other provision of this Plan. Notwithstanding any provision to
the contrary in this Plan, each provision in this Plan shall be interpreted to
permit the deferral of compensation in accordance with Section 409A of the Code
and any provision that would conflict with such requirements shall not be valid
or enforceable.
10.11 Successors and Assigns.
This Plan shall be binding upon SBC and its successors and assigns.