SNET PENSION BENEFIT PLAN
With Amendments Effective Through January 1, 1998
January 19, 1998
TABLE OF CONTENTS
ARTICLE A. SNET PENSION BENEFIT PLAN EXCESS BENEFIT PROGRAM
SECTION 1. PURPOSE OF ARTICLE A OF THIS PLAN 2
SECTION 2. DEFINITIONS APPLICABLE UNDER ARTICLE A OF THIS PLAN 3
SECTION 3. ADMINISTRATION OF ARTICLE A OF THIS PLAN 5
SECTION 4. EXCESS PENSION BENEFITS - BENEFIT LIMITATION 7
1. PARTICIPATION 7
2. AMOUNT AND METHOD OF PAYMENT 7
3. RELATIONSHIP TO OTHER PLANS 9
SECTION 5. EXCESS PENSION BENEFITS - COMPENSATION LIMITATION 10
1. PARTICIPATION 10
2. CASH BALANCE PLAN ACCOUNT 10
3. CBPA DISTRIBUTION OPTIONS 11
4. CBPA BENEFIT PAYABLE IN EVENT OF PRERETIREMENT DEATH 12
5. PRERETIREMENT DEATH BENEFIT 12
6. BENEFICIARY IN EVENT OF PRERETIREMENT DEATH 12
7. EXCESS DEATH BENEFIT 12
SECTION 6. GENERAL PROVISIONS 13
1. EFFECTIVE DATE 13
2. RIGHTS TO BENEFITS 13
3. ASSIGNMENT OR ALIENATION 13
4. BREAKS IN SERVICE 13
5. LEAVES OF ABSENCE 13
6. MULTIPLE PARTICIPATING COMPANY EMPLOYMENT 13
7. PAYMENT TO OTHERS 13
8. PLAN TERMINATION 14
9. SOURCE OF PAYMENTS 14
10. UNFUNDED STATUS 14
SECTION 7. CHANGE OF CONTROL 15
SECTION 8. PLAN MODIFICATION APPLICABLE TO ARTICLE A 18
ARTICLE B. SNET PENSION BENEFIT PLAN EXECUTIVE NON-QUALIFIED
PENSION AND DEATH BENEFIT PROGRAM
SECTION 1. PURPOSE OF ARTICLE B OF THIS PLAN 19
SECTION 2. DEFINITIONS APPLICABLE UNDER ARTICLE B OF THIS PLAN 20
SECTION 3. ADMINISTRATION OF THIS ARTICLE B 23
SECTION 4. NON-QUALIFIED PENSION BENEFITS 25
1. PARTICIPATION 25
2. ELIGIBILITY 25
3. BENEFIT AMOUNTS 26
4. PAYMENTS TO EXECUTIVES 30
5. NO SURVIVING SPOUSE 30
6. POST-TERMINATION JOINT AND SURVIVOR ANNUITY 30
7. DEFERRAL OF PAYMENTS 31
8. TREATMENT DURING SUBSEQUENT EMPLOYMENT 31
9. TERMINATION OF NON-QUALIFIED PENSION BENEFIT PROGRAM 32
SECTION 5. DEATH BENEFITS 33
1. PARTICIPATION AND ADMINISTRATION 33
2. DEFINITION OF DEATH BENEFIT AMOUNT 33
3. PAYMENT OF DEATH BENEFITS 33
4. WAIVER OF BENEFIT 33
SECTION 6. POST-RETIREMENT LIFE INSURANCE SUPPLEMENT PROGRAM 34
1. DESCRIPTION 34
2. PARTICIPATION 34
3. BENEFICIARY 34
4. COVERAGE AMOUNTS 34
SECTION 7. POST-RETIREMENT SURVIVOR'S ANNUITY OPTION 36
1. DESCRIPTION 36
2. BENEFICIARY 36
3. ELECTION OF BENEFIT 36
4. BENEFIT AMOUNT 37
SECTION 8. GENERAL PROVISIONS 38
1. EFFECTIVE DATE 38
2. RIGHTS TO BENEFITS 38
3. ASSIGNMENT OR ALIENATION 38
4. BREAKS IN SERVICE 38
5. LEAVES OF ABSENCE 38
6. LUMP SUM PAYMENTS 38
7. MULTIPLE PARTICIPATING COMPANY EMPLOYMENT 39
8. PAYMENT TO OTHERS 39
9. PLAN TERMINATION 39
10. SOURCE OF PAYMENTS 39
11. UNFUNDED STATUS 40
SECTION 9. CHANGE OF CONTROL 41
SECTION 10. PLAN MODIFICATION 44
ARTICLE C. SNET MID-CAREER PENSION PLAN PROGRAM
SECTION 1. PURPOSE OF ARTICLE C OF THIS PLAN 45
SECTION 2. DEFINITIONS APPLICABLE UNDER ARTICLE C OF THIS PLAN 46
SECTION 3. ADMINISTRATION OF THIS ARTICLE C 47
SECTION 4. MID-CAREER PENSION BENEFITS 49
1. PARTICIPATION 49
2. MID-CAREER PENSION BENEFIT 49
3. TERMINATION OF NON-QUALIFIED PENSION BENEFIT 49
SECTION 5. GENERAL PROVISIONS 50
1. EFFECTIVE DATE 50
2. RIGHTS TO BENEFITS 50
3. ASSIGNMENT OR ALIENATION 50
4. SOURCE OF PAYMENTS 51
5. UNFUNDED STATUS 51
SECTION 6. CHANGE OF CONTROL 52
SECTION 7. PLAN MODIFICATION APPLICABLE TO ARTICLE C 55
SNET PENSION BENEFIT PLAN
SECTION 1. PURPOSE
The purpose of the SNET Pension Benefit Plan (the "Plan") is to
provide for eligible management, bargaining unit and highly
compensated employees of Southern New England Telecommunications
Corporation (the "Corporation") (and its subsidiaries which have
determined, with the consent of the Committee, to participate in this
Plan), employer-provided benefits (i) for certain benefits not
otherwise available under the SNET Management Pension Plan
("SNETMPP") by reason of the application of Section 401(a)(17) of the
Internal Revenue Code ("Code"); and (ii) for certain benefits which
would have been otherwise payable under the SNETMPP or the SNET
Pension Plan ("SNETPP") but for the limitations imposed by Section
415 of the Code; and (iii) for certain non-qualified pension and
death benefits for highly compensated employees.
The Plan is intended to constitute an unfunded "excess benefit
plan" as defined in Section 3(36) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), to the extent it provides
benefits that would be distributed under the SNET Management Pension
Plan or the SNET Pension Plan but for the limitations of Section 415
of the Code, and an "unfunded plan of deferred compensation for a
select group of management or highly compensated employees" for
purposes of Title I of ERISA, to the extent it provides other
benefits.
This Plan shall consist of three components: (1) Article A which
contains the excess benefit plan program; (2) Article B which
contains the non-qualified pension and death benefit plan program;
and (3) Article C which incorporates the non-qualified pension
program provisions which were previously provided under the SNET Mid-
Career Pension Plan.
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ARTICLE A. SNET PENSION BENEFIT PLAN EXCESS BENEFIT PROGRAM
SECTION 1. PURPOSE OF ARTICLE A OF THIS PLAN
The purpose of this Article A of the Plan is to provide eligible
management, bargaining unit and highly compensated employees of the
Corporation (and its subsidiaries which have determined, with the
consent of the Committee, to participate in this Plan), employer-
provided benefits (i) for certain benefits not otherwise available
under the SNETMPP by reason of the application of Section 401(a)(17)
of the Internal Revenue Code ("Code"); and (ii) for certain benefits
which would have been otherwise payable under the SNETMPP or the
SNETPP but for the limitations imposed by Section 415 of the Code.
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SECTION 2. DEFINITIONS APPLICABLE UNDER ARTICLE A OF THIS PLAN
1. The term "ADEA" shall mean the Age Discrimination in
Employment Act of 1967 as amended in 1978 and as it may be amended
from time to time.
2. The term "Benefit Limitation" shall mean the maximum
"annual benefit" payable to participants under the SNETMPP or the
SNETPP in accordance with Section 415 of the Code, but after
application of the Compensation Limitation, if any, under the SNETMPP
or the SNETPP.
3. The words "Chairman of the Board", "President", and "Board
of Directors" or "Board" shall mean the Chairman of the Board of
Directors, President, and Board of Directors, respectively, of the
Corporation.
4. The term "Change of Control" shall be defined as set forth
in Section 7 of this Article A.
5. The term "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
6. The word "Committee" shall mean the Employees' Benefit
Committee appointed by the Board of Directors to administer the Plan.
7. The word "Company" shall mean The Southern New England
Telephone Company, a Connecticut corporation, or its successors.
8. The term "Compensation Limitation" shall mean the maximum
amount of compensation which may be included in the SNETMPP under
Section 401(a)(17) of the Code that may be taken into account in any
Plan Year for benefit accrual purposes under the SNETMPP.
9. The word "Corporation" shall mean Southern New England
Telecommunications Corporation, a Connecticut corporation, or its
successors.
10. The term "Excess Pension Benefit" means the benefit, if
any, described in Section 4 of this Article A which is payable to a
Participant under the terms of the Plan.
11. The term "Participant" shall mean an individual who has
satisfied the eligibility requirements of Paragraph 1 of Section 4 of
this Article A and/or of Paragraph 1 of Section 5 of this Article A,
for receipt of an excess pension benefit payable under the provisions
of this Article A.
12. The term "Participating Company" shall mean the Corporation
or any Subsidiary of the Corporation which shall have determined,
with the concurrence of the Committee, to participate in the Plan.
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13. The words "Pension Act" shall mean the Employee Retirement
Income Security Act of 1974 (ERISA), as it may be amended from time
to time.
14. The word "Plan" shall mean the SNET Pension Benefit Plan.
15. The term "SNETMPP" shall mean the SNET Management Pension
Plan.
16. The term "SNETPP" shall mean the SNET Pension Plan.
17. The words "Subsidiary or Subsidiaries" shall mean any
corporation, partnership or other entity of which at least 50% of the
Voting Stock is owned directly or indirectly by the Corporation.
18. The words "Surviving Spouse" shall mean a spouse who is
married to the Participant on the earlier of (a) the Participant's
annuity starting date under the SNETMPP or SNETPP, whichever is
applicable, or (b) the date of the Participant's death.
19. The expression "Term of Employment", except as expressly
limited or stated elsewhere in the Plan, shall have the same meaning
as that expression is used in the SNETMPP or the SNETPP.
20. The use in this Plan of personal pronouns of the masculine
gender is intended to include both the masculine and feminine
genders.
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SECTION 3. ADMINISTRATION OF ARTICLE A OF THIS PLAN
1. The Corporation shall be the Sponsor of the Plan and the
Plan Administrator of the Plan as those terms are defined in the
Pension Act. The Committee shall have the administrative
responsibilities set forth below.
2. (a) The Committee shall have the specific powers elsewhere
herein granted to it and shall have such other powers as may be
necessary in order to enable it to administer the Plan, except for
powers herein granted or provided to be granted to others.
(b) The procedures for adoption of by-laws, and rules of
procedure, for the employment of a Secretary and assistants, with
authority with respect to claims of Participants, shall be the same
as are set forth in the SNETMPP.
(c) In accordance with the terms of the Plan, the
Secretary of the Committee shall grant or deny claims for benefits
under the Plan with respect to Participants and authorize
disbursements according to the terms of this Plan. Adequate notice,
pursuant to applicable law, shall be provided in writing to any
Participant or beneficiary whose claim has been denied, setting forth
the specific reasons for such denial and any other information
required to be furnished under the Pension Act.
3. The review and appeal procedures for Participants whose
claims have been denied shall be the same as those procedures set
forth in the SNETMPP.
4. The Committee shall serve as the final review committee
under the Plan, with the authority to determine conclusively for all
parties any and all questions arising from administration of the
Plan, and shall have sole and complete discretionary authority and
control to manage the operation and administration of the Plan,
including, but not limited to, the determination of all questions
relating to eligibility for participation and benefits,
interpretation of all Plan provisions, determination of the amount
and kind of benefits payable to any Participant or Surviving Spouse,
and the construction of disputed and doubtful terms. Such decisions
by the Committee shall be conclusive and binding on all parties and
not subject to further review.
5. The expenses of the Committee in administering the Plan
shall be borne by the Participating Companies.
6. The Corporation, the Company and the Committee are each a
named fiduciary as that term is used in the Pension Act with respect
to the particular duties and responsibilities herein provided to be
allocated to each of them.
7. The Corporation may allocate responsibilities for the
operation and administration of the Plan consistent with the Plan's
terms. The Corporation and other named fiduciaries may designate in
writing other persons to carry out their respective responsibilities
under the Plan, and may employ persons to advise them with regard to
any such responsibilities.
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8. Any person or group of persons may serve in more than one
fiduciary capacity with respect to the Plan.
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SECTION 4. EXCESS PENSION BENEFITS - BENEFIT LIMITATION
1. Participation
Participation in Section 4 of this Article A shall be limited to
those individuals classified as a Regular or Provisional Regular
Management or Bargaining Unit Employee on the SNET payroll system or
their Surviving Spouse whose benefits under the SNETMPP or SNETPP are
limited by reason of the application of the Benefit Limitation.
2. Amount and Method of Payment
(a) Excess Pension Benefit. If the benefit payable to a
Participant or a Surviving Spouse under the SNETMPP or the SNETPP is
limited by reason of the application of the Benefit Limitation, an
Excess Pension Benefit shall be distributed as provided under Section
4 of this Article A in favor of such Participant or Surviving Spouse.
(b) Amount of Excess Pension Benefit. The amount, if any, of
the Excess Pension Benefit payable to a Participant or a Surviving
Spouse pursuant to Section 4 of this Article A shall be equal to the
difference between (i) and (ii) where:
(i) is the amount of the monthly pension benefit which
would be provided to the Participant or Surviving Spouse under the
SNETMPP or the SNETPP, without regard to the Benefit Limitation,
based upon the SNETMPP or the SNETPP formula, as applicable, in
effect as of the date of termination of employment or death; and
(ii) is the amount of the monthly pension benefits actually
payable to such Participant or Surviving Spouse under the SNETMPP or
the SNETPP.
The amount of the Excess Pension Benefit payable as a
result of the application of the Benefit Limitation under the SNETMPP
or the SNETPP shall be determined or redetermined, based upon the
SNETMPP or the SNETPP formula, as applicable, in effect as of the
date of termination of employment or death, (a) as of the date when
benefits are to commence pursuant to Paragraph (c) of Section 4 of
this Article A; (b) as of the effective date of any subsequent
increases and/or decreases in the Benefit Limitation, and/or (c) as
of the effective date of any cost of living increases in the monthly
benefit payable to a Participant, prior to application of the Benefit
Limitation, as a result of amendments to the SNETMPP and/or the
SNETPP, whichever is applicable.
(c) Payment of Pension Benefit. Subject to Section 7 of this
Article A, Excess Pension Benefits, if any, payable under Section 4
of this Article A, (a) shall commence at the same time as the
Participant's pension benefit payable under the SNETMPP or SNETPP
and, (b) shall be distributed as follows: (i) for any Participant who
terminated employment prior to January 1, 1997, for as long as and in
the same form as the Participant's pension benefit under the SNETMPP
or SNETPP, provided, however, that the Committee shall have the right
to approve the Participant's election of the form of benefit payment;
or (ii) for any Participant who terminated employment on or after
January 1, 1997 and: (A) for distributions
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effective prior to January 1, 1998, for as long as and in the same
form as the Participant's pension benefit under the SNETMPP or SNETPP,
provided, however, that the Committee shall have the right to approve
the Participant's election of the form of benefit payment; or
(B) for distributions effective on or after January 1, 1998, in
a single lump sum payment, unless the Participant has elected
at least one year prior to the commencement of payment of the
Excess Pension Benefit, one of the following forms of payment:
(i) a single life annuity, (ii) a 50% joint and survivor annuity,
(iii) a lump sum certain, with or without a 50% survivor annuity,
(iv) a combination 75% annuity, 25% lump sum, with or without a 50%
survivor annuity or (v) a combination 50% annuity, 50% lump sum,
with or without a 50% survivor annuity.
(d) CBPA Benefit Payable in Event of Preretirement Death. If a
Participant dies before the date as of which his or her vested CBPA
benefit commences under the SNETMPP or the SNETPP, the vested CBPA
payable under this Article A shall be distributed in a single lump
sum payment to the Participant's Surviving Spouse (or if there is no
Surviving Spouse, to the Participant's estate) after the death of the
Participant, except as otherwise provided in Paragraph 2(e) of this
Article A, Section 4. There shall be no benefit payable under
Section 4 of this Article A upon the death of any non-vested
Participant.
(e) Beneficiary in Event of Preretirement Death . Effective
May 22, 1996, a Participant, prior to termination of employment, may
designate a beneficiary other than a Surviving Spouse or his estate
to receive a single lump sum payment of his or her vested CBPA
payable under this Article A in the event the Participant dies prior
to termination of employment or prior to commencement of the payment
of the vested CBPA payable under this Article A following his or her
termination of employment. If there is no Beneficiary designated,
the vested CBPA shall be distributed in accordance with Paragraph
2(d) of this Article A, Section 4 in a single lump sum payment.
There shall be no benefit payable under Section 4 of this Article A
upon the death of any non-vested Participant.
(f) Determination of Pension Benefits. Payments under Section
4 of this Article A shall be calculated in accordance with the rules,
procedures and assumptions utilized under the SNETMPP or the SNETPP,
whichever is applicable. Whenever it is necessary to determine
whether one benefit is less than, equal to, or larger than another,
or to determine the equivalent actuarial value of any benefit, such
determination shall be made at the Committee's discretion by the
Corporation's enrolled actuary or by an independent actuary selected
by the Committee, using mortality, interest and other assumptions
normally used at the time by such actuary in determining actuarial
equivalence under the SNETMPP or the SNETPP, whichever is applicable.
(g) Treatment During Subsequent Employment. Employment with
any Participating Company subsequent to retirement or termination of
employment with entitlement to any type of benefit described
heretofore shall not suspend the right of a former Participant
receiving pension payments or a person otherwise entitled to receive
a pension payment during the period he continues in such employment
and the form of distribution of such pension payments shall not be
changed as a result of such employment.
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(h) Future Benefit Adjustments. If a Participant has commenced
receiving a benefit under Article A of this Plan in the form of a
joint and 50 percent survivor annuity and his or her surviving
annuitant subsequently predeceases him or her, the Participant's
Excess Pension Benefit under this Plan shall be calculated in
accordance with Paragraph 2(b) of this Section 4 and thereafter
distributed, prospectively, by restoring the original cost of the
joint and 50 percent survivor annuity form of benefit under this
Article A. Such adjustment shall be effective as of the first day of
the first month following the death of the Participant's surviving
annuitant. In the event that, following commencement of benefits to
a Participant under the Plan, the SNETMPP or SNETPP benefit is
subsequently increased, the Excess Pension Benefit to the Participant
under this Plan shall be recalculated as soon as practicable after
the SNETMPP or the SNETPP benefit is adjusted.
3. Relationship to Other Plans
Benefits payable to a Participant under Section 4 of this
Article A shall not duplicate benefits payable to such Participant
from any other plan or arrangement of the Corporation or any
Subsidiary.
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SECTION 5. EXCESS PENSION BENEFITS - COMPENSATION LIMITATION
1. Participation
Participation in Section 5 of this Article A shall be limited to
those individuals (a) whose benefits under the SNETMPP are vested,
under the terms and conditions of the SNETMPP; (b) who are considered
to be within "a select group of management or highly compensated
employees" for purposes of Title I of the Pension Act; and (c) whose
annual compensation in any year exceeds the Compensation Limitation.
2. Cash Balance Plan Account
(a) Effective Date
Effective on or after January 1, 1996, each Participant
under this Section 5 shall have a Cash Balance Plan Account (CBPA)
established under this Plan.
(b) Cash Balance Plan Account Opening Balance
The balance in each Participant's account as of the
effective date shall be calculated as is set forth in the SNETMPP,
except that the calculation shall include only eligible compensation
(as defined in the SNETMPP ) in excess of the maximum amount of
compensation which may be included in the SNETMPP under Section
401(a)(17) of the Code.
(c) Interest Credits
Each Participant's CBPA will be credited with interest at
the same time, at the same rate, and in the same manner as is set
forth in the SNETMPP.
(d) Annual Pay Related Credits
On the last day of each year commencing December 31, 1996,
each Participant's CBPA shall be credited with basic pay related
credits at the same time, at the same rate and in the same manner as
is set forth in the SNETMPP, provided, however, that such credit
shall be applied only to eligible compensation, as defined in the
SNETMPP, in excess of the maximum amount of compensation which may be
included in the SNETMPP under Section 401(a)(17) of the Code.
(e) Supplemental Pay Credits
On the last day of each year, commencing December 31, 1996,
each Participant's CBPA shall be credited with supplemental pay
credits at the same time, at the same rate and in the same manner as
is set forth in the SNETMPP, provided, however, that such supplemental
pay credit shall be applied only to eligible compensation, as defined in
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the SNETMPP, in excess of the maximum amount of compensation which
may be included in the SNETMPP under Section 401(a)(17) of the Code.
(f) Accounts for New Participants
If an individual is hired on or after January 1, 1996, no
CBPA shall be established on his behalf until a CBPA is established
on his behalf in the SNETMPP. At such time, the basic pay related
credits and supplemental pay credits shall be based on his eligible
compensation, as defined in the SNETMPP, for the entire plan year in
which a CBPA is established, in excess of the maximum amount of
compensation which may be included in the SNETMPP under Section
401(a)(17) of the Code.
(g) Determination of Pension Benefits. Payments under Section
5 of this Article A shall be calculated in accordance with the rules,
procedures and assumptions utilized under the SNETMPP. Whenever it
is necessary to determine whether one benefit is less than, equal to,
or larger than another, or to determine the equivalent actuarial
value of any benefit, such determination shall be made at the
Committee's discretion by the Corporation's enrolled actuary or by an
independent actuary selected by the Committee, using mortality,
interest and other assumptions normally used at the time by such
actuary in determining actuarial equivalence under the SNETMPP.
(h) Relationship to Other Plans. Benefits payable to a
Participant under Section 5 of this Article A shall not duplicate
benefits payable to such Participant from any other plan or
arrangement of the Corporation or any Subsidiary.
3. CBPA Distribution Options
Subject to Section 7 of this Article A, the distribution of a
Participant's CBPA, if any, payable under Section 5 of this Article
A, (a) shall commence at the same time time as the pension benefit
payable under the SNETMPP and (b) shall be distributed (b) shall be
distributed as follows: (i) for any Participant who terminated
employment prior to January 1, 1997, for as long as and in the same
form as the Participant's pension benefit under the SNETMPP,
provided, however, that the Committee shall have the right to approve
the Participant's election of the form of benefit payment; or (ii)
for any Participant who terminated employment on or after January 1,
1997 and: (A) for distributions effective prior to January 1, 1998,
for as long as and in the same form as the Participant's pension
benefit under the SNETMPP, provided, however, that the Committee
shall have the right to approve the Participant's election of the
form of benefit payment; or (B) for distributions effective on or
after January 1, 1998, in a single lump sum payment, unless the
Participant has elected at least one year prior to the commencement
of payment of the Excess Pension Benefit, one of the following forms
of payment (i) a single life annuity, (ii) a 50% joint and survivor
annuity, (iii) a lump sum certain, with or without a 50% survivor
annuity, (iv) a combination 75% annuity, 25% lump sum, with or
without a 50% survivor annuity or (v) a combination 50% annuity, 50%
lump sum, with or without a 50% survivor annuity.
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4. CBPA Benefit Payable in Event of Preretirement Death
If a Participant dies before the date as of which his or her
vested CPBA benefit commences under the SNETMPP, the vested CBPA
payable under this Article A shall be distributed in a single lump
sum payment to the Participant's Surviving Spouse (or if there is no
Surviving Spouse, to the Participant's estate), except as otherwise
provided in Paragraph 5 of Section 5 of this Article A. There shall
be no benefit payable under Section 5 of this Article A upon the
death of any non-vested Participant.
5. Beneficiary in Event of Preretirement Death
Effective May 22, 1996, a Participant, prior to termination of
employment, may designate a beneficiary other than a Surviving Spouse
or his estate, to receive a single lump sum payment of his or her
vested CBPA payable under this Article A in the event the Participant
dies prior to termination of employment or prior to commencement of
the payment of the vested CBPA payable under this Article A following
his or her termination of employment. If there is no Beneficiary
designated, the the vested CBPA shall be distributed in accordance
with Paragraph 4 of this Article A, Section 5 in a single lump sum
payment. There shall be no benefit payable under Section 5 of this
Article B upon the death of any non-vested Participant.
6. Excess Death Benefit
(a) If the actual Active Employee Death Benefit or Retiree
Death Benefit ("Death Benefit") payable to any person as a result of
the death of a Participant under the terms of the SNETMPP is reduced
or limited by reason of the Compensation Limitation, an Excess Death
Benefit shall be distributed as provided in this Section 5 to the
beneficiary otherwise entitled to receive the Death Benefit under the
terms and conditions of the SNETMPP.
(b) The amount, if any, of the Excess Death Benefit payable
shall be equal to the difference between (A) and (B) where:
(A) is the amount of the Death Benefit which would be
provided to the beneficiary under the SNETMPP without regard to
the Compensation Limitation under the SNETMPP in effect as of
the date of death; and
(B) is the amount of the Death Benefit actually payable to
such beneficiary under the SNETMPP.
(c) The Excess Death Benefit provided under this Plan (i) shall
commence at the same time, (ii) shall be distributed for as long as,
and (iii) shall be distributed in the same benefit form as the
Committee or its delegate has determined with respect to the Death
Benefit payable under the SNETMPP.
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SECTION 6. GENERAL PROVISIONS OF ARTICLE A
1. Effective Date
This Plan is effective with amendments through January 1, 1998.
2. Rights to Benefits
Neither the action of the Board of Directors in establishing
this Plan nor any action hereafter taken by the Board or the
Committee shall be construed as giving to any employee a right to be
retained in the service of any Participating Company or any right or
claim to any benefit after discharge from the service of any
Participating Company, unless the right to such benefit has accrued
prior to such discharge. No employee shall have any right against
any Participating Company to any benefit under the Plan other than
the amount to which the employee has theretofore become entitled and
which the Committee has directed be distributed to that employee
under the Plan. Benefits previously awarded may be discontinued at
any time at the sole discretion of the Corporation or any
Participating Company in accordance with the terms of the Plan.
3. Assignment or Alienation
Assignment or alienation of pensions or other benefits under
this Plan will not be permitted or recognized except as otherwise
required by law.
4. Breaks in Service
For purposes of this Plan, a break in service shall be defined
and treated in the same manner as is set forth in the SNETMPP.
5. Leaves of Absence
For purposes of this Plan, a leave of absence shall be defined
and administered in the same manner as is set forth in the SNETMPP.
6. Multiple Participating Company Employment
If a Participant is also a Participant of one or more other
Participating Companies, any benefit to which such Participant may
become entitled under the Plan shall be computed on the basis of the
total combined pay which he is receiving from all such companies.
Any maximum or minimum amounts fixed by the Plan for benefits shall
apply to the total amount payable by all companies and not to the
portion payable to any Participating Company or Companies.
7. Payment to Others
Benefits payable to any person to whom an amount is or
was payable under the Plan who is unable to execute a proper
receipt may be distributed to other person(s) in
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accordance with the standards and procedures set forth in the
SNETMPP or the SNETPP, as applicable.
8. Plan Termination
The Board retains the right to terminate the Plan in whole or in
part, and each Participating Company retains the right to withdraw
from this Plan, at any time, for any reason, with or without notice.
Unless the Participant provides prior written consent, however, said
withdrawal or termination, as applicable, shall not affect the rights
of any Participant or Surviving Spouse to any benefit under this
Article A of the Plan to which such person may have previously become
entitled as a result of the Participant's disability, death,
termination of employment or a Change in Control which occurred prior
to the effective date of the withdrawal or termination.
9. Source of Payments
Benefits arising under this Plan and all costs, charges, and
expenses relating thereto will be payable from SNET's general assets.
SNET may, however, establish a trust to pay all or a portion of such
benefits and related expenses, provided such trust does not cause the
Plan to be "funded" within the meaning of ERISA. To the extent trust
assets are available, they may be used to pay benefits arising under
this Plan and all costs, charges, and expenses relating thereto. To
the extent that the funds held in the trust, if any, are insufficient
to pay such benefits, costs, charges and expenses, SNET shall pay
such benefits, costs, charges, and expenses from its general assets.
10. Unfunded Status
The Plan at all times shall be entirely unfunded for purposes of
the Code and ERISA and no provision shall at any time be made with
respect to segregating any assets of a Participating Company for
payment of any benefits hereunder. Funds that may be invested
through a trust described in Paragraph 9 of Section 6 of this Article
A shall continue for all purposes to be part of the general assets of
the Participating Company which invested the funds. The Plan
constitutes a mere promise by SNET and the Participating Companies to
make benefit payments, if any, in the future. No Participant,
Surviving Spouse or any other person shall have any interest in any
particular assets of a Participating Company by reason of the right
to receive a benefit under the Plan and to the extent the
Participant, Surviving Spouse or any other person acquires a right to
receive benefits under this Plan, such right shall be no greater than
the right of any unsecured general creditor of a Participating
Company.
14
SECTION 7. CHANGE OF CONTROL
Any provision of the Plan to the contrary notwithstanding, in
the event of a Change of Control (as defined below), any benefit
accrued as of and through the Change of Control, including, without
limitation, by current Participants, former Participants or their
annuitants or beneficiaries, including those currently receiving
payments under the Plan, shall not be subject to forfeiture or
suspension and shall be distributed in a single lump sum on the last
day of the month following the month in which the Change of Control
occurred, for those individuals currently receiving payments under
Article A of the Plan, and on the last day of the month following the
month in which occurs the event (e.g., termination of employment,
disability or death) giving rise to the obligations of the Company or
Participating Company to pay such benefit, for those individuals not
currently receiving payments under Article A of the Plan. For this
purpose, the accrued benefit shall be calculated based upon the
provisions of the Plan in effect immediately prior to the Change of
Control as if the event giving rise to the obligation of the
Corporation or Participating Company to pay such benefit pursuant to
the preceding sentence had occurred on the date of the Change of
Control and shall not be adversely affected because of any subsequent
events, including, without limitation, termination or amendment of
the Plan or the SNETMPP or SNETPP, or lack of continued status.
For purposes of this Section 7 of Article A, a Change of Control
shall mean:
(A) an acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or more
of either (i) the then outstanding shares of common stock of the
Corporation (the Outstanding Corporation Common Stock") or (ii)
the combined voting power of the then outstanding voting
securities of the Corporation entitled to vote generally in the
election of directors (the "Outstanding Corporation Voting
Securities"); excluding, however, the following: (1) any
acquisition directly from the Corporation, other than an
acquisition by virtue of the exercise of a conversion privilege
unless the security being so converted was itself acquired
directly from the Corporation, (2) any acquisition by the
Corporation, (3) any acquisition by any employee benefit plan
(or related trust) participated in by the Corporation or any
corporation controlled by the Corporation or (4) any acquisition
by any corporation pursuant to a reorganization, merger,
consolidation or similar corporate transaction (in each case, a
"Corporate Transaction"), if, pursuant to such Corporate
Transaction, the conditions described in clauses (i), (ii) and
(iii) of Paragraph (C) of this Section 7 of this Article A are
satisfied; or
(B) a change in the composition of the Board of Directors
of the Corporation (the "Board") such that the individuals who,
as of December 12, 1990, constitute the Board (the Board as of
the above date shall be hereinafter referred to as the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, for purposes of this
Section 7, that any individual who becomes a member of the Board
subsequent to the above date whose election, or nomination for
15
election by the shareholders of the Corporation, was approved by
a vote of at least a majority of those individuals who are
members of the Board and who were also members of the Incumbent
Board (or deemed to be such pursuant to this provision) shall be
considered as though such individual were a member of the
Incumbent Board; but, provided further, that any such individual
whose initial assumption of office occurs as a result of either
an actual or threatened election contest (as such terms are used
in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board shall
not be so considered as a member of the Incumbent Board; or
(C) the approval by the shareholders of the Corporation of
a Corporate Transaction or, if consummation of such Corporate
Transaction is subject, at the time of such approval by
shareholders, to the consent of any government or governmental
agency, the obtaining of such consent (either explicitly or
implicitly by consummation); excluding, however, such a
Corporate Transaction pursuant to which (i) all or substantially
all of the individuals and entities who are the beneficial
owners, respectively, of the Outstanding Corporation Common
Stock and Outstanding Corporation Voting Securities immediately
prior to such Corporate Transaction will beneficially own,
directly or indirectly, more than 60% of, respectively, the
outstanding shares of common stock of the corporation resulting
from such Corporate Transaction and the combined voting power of
the outstanding voting securities of such corporation entitled
to vote generally in the election of directors, in substantially
the same proportions as their ownership, immediately prior to
such Corporate Transaction, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting Securities, as
the case may be, (ii) no Person (other than the Corporation, any
employee benefit plan (or related trust) participated in by the
Corporation or such Corporation resulting form such Corporate
Transaction and any Person beneficially owning, immediately
prior to such Corporate Transaction and any person beneficially
owning, immediately prior to such Corporate Transaction,
directly or indirectly, 20% or more of the Outstanding
Corporation Common Stock or Outstanding Voting Securities, as
the case may be) will beneficially own, directly or indirectly,
20% or more of, respectively, the outstanding shares of common
stock of the corporation resulting from such Corporate
Transaction or the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally
in the election of directors and (iii) individuals who were
members of the Incumbent Board will constitute at least a
majority of the members of the board of directors of the
corporation resulting from such Corporate Transaction; or
(D) the approval by the shareholders of the Corporation of
(i) a complete liquidation or dissolution of the Corporation or
(ii) the sale or other disposition of all or substantially all
of the assets of the Corporation; excluding, however, such a
sale or other disposition to a corporation, with respect to
which following such sale or other disposition, (l) more than
60% of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power of the then
16
outstanding voting securities of such corporation entitled
to vote generally in the election of directors will be then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting Securities
immediately prior to such sale of other disposition in
substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the
Outstanding Corporation Common Stock and Outstanding corporation
Voting Securities, as the case may be, (2) no Person (other than
the Corporation and any employee benefit plan (or related trust)
participated in by the Corporation or such corporation and any
Person beneficially owning, immediately prior to such sale or
other disposition, directly or indirectly, 20% or more of the
Outstanding Corporation Common Stock or Outstanding corporation
Voting Securities, as the case may be) will beneficially own,
directly or indirectly, 20% or more for, respectively, the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities
of such corporation entitled to vote generally in the election
of directors and (3) individuals who were members of the
Incumbent Board will constitute at least a majority of the
members of the board of directors of such corporation.
17
SECTION 8. PLAN MODIFICATION APPLICABLE TO ARTICLE A
The Board may from time to time make changes in the Plan. In
addition, the Senior Vice President-Organization Development of the
Corporation (or any successor to that officer's responsibilities),
with the concurrence of the Senior Vice President and General Counsel
of the Corporation (or any successor to that officer's
responsibilities), shall be authorized to make minor or
administrative changes to the Plan, as well as changes dictated by
the requirements of federal or state statutes applicable to any
Participating Company or authorized or made desirable by such
statutes. Such changes shall not affect the rights of any
Participant, Surviving Spouse or parent, without the Participant's
consent, to any benefit under the Plan to which such person may have
previously become entitled as a result of a disability, death,
termination of employment or a Change in Control which occurred prior
to the effective date of such change.
18
ARTICLE B. SNET PENSION BENEFIT PLAN EXECUTIVE NON-QUALIFIED PENSION
AND DEATH BENEFIT PROGRAM
SECTION 1. PURPOSE OF ARTICLE B OF THIS PLAN
The purpose of this Article B of the Plan is to provide eligible
management and highly compensated employees of the Corporation and
its subsidiaries which have determined, with the consent of the
Committee, to participate in this Plan, employer-provided benefits
(i) for certain forms of compensation otherwise excluded under the
SNETMPP accrued benefit formula; and (ii) for supplementary death
benefit coverage, as set forth more fully herein, to Non-
Grandfathered Executives of the Corporation who retire from service,
or in the event of death after retirement, to their annuitants,
dependent relatives or beneficiaries, as applicable. The benefits
provided under this Article B were formerly provided under the SNET
Executive Non-Qualified Pension Plan and Excess Benefit Plan.
Benefits are payable to Participants who retire from service, or in
the event of death after retirement, to their dependent relatives or
in certain cases, to their annuitants. These pension and death
benefits are predicated on the actual and/or Standard Awards under
SNET's Short Term Incentive Plan and on benefit entitlements payable
from the SNETMPP but for the limitations more fully described herein.
19
SECTION 2. DEFINITIONS APPLICABLE UNDER ARTICLE B OF THIS PLAN
1. The term "Active Payroll" shall mean in the active
employment of the Corporation or its Subsidiaries as determined in
accordance with their normal practices and procedures.
2. The term "ADEA" shall mean the Age Discrimination in
Employment Act of 1967 as amended in 1978 and as it may be amended
from time to time.
3. The term "Annual Basic Pay" shall mean annual base salary
rate, excluding (1) all differentials regarded as temporary or extra
payments and (2) all cash payments and incentive awards and
distributions made under the Bell System Senior Management Long Term
Incentive Plan or the SNET Short Term Incentive Plan or the SNET Long
Term Incentive Plan or any other similar plan, as determined by the
Committee.
4. The words "Chairman of the Board", "President", and "Board
of Directors" or "Board" shall mean the Chairman of the Board of
Directors, President, and Board of Directors, respectively, of the
Corporation.
5. The term "Change of Control" shall be defined as set forth
in Section 9 of this Article B.
6. The term "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
7. The word "Committee" shall mean the Employees' Benefit
Committee appointed by the Board of Directors to administer the Plan.
8. The word "Company" shall mean The Southern New England
Telephone Company, a Connecticut corporation, or its successors.
9. The word "Corporation" shall mean Southern New England
Telecommunications Corporation, a Connecticut corporation, or its
successors. 10. The word "Executive" shall mean a management
employee classified as a Regular Employee on the Active Payroll of
any Participating Company on or after August 10, 1980 who has
attained a level of or higher than Executive Salary Grade Level 2, or
its equivalent, or who on or after January 1, 1985 has attained a
level of or higher than Executive Salary Grade Level 1, or its
equivalent.
11. The term "Grandfathered Executives" shall mean Executives
who died prior to January 1, 1987, or retired prior to January 1,
1987 if they had attained age 55 on or before December 31, 1983.
12. The term "Mandatory Retirement Age" shall mean, in
accordance with applicable law, (1) for those employees referred to
in Section 12(c)(1) of the ADEA, age 65 or at such later time as may
be permissible under such section of the ADEA and (2) for those
20
employees for whom age is a bona fide occupational qualification
within the meaning of Section 4(f)(1) of the ADEA, at such time as
may be applicable under the ADEA.
13. The term "Non-Grandfathered Executive" shall mean an
Executive who is not a Grandfathered Executive and who was a Non-
Grandfathered Executive on or before December 8, 1993.
14. The term "Participating Company" shall mean the Corporation
or any Subsidiary of the Corporation which shall have determined,
with the concurrence of the Committee, to participate in the Plan.
15. The words "Pension Act" shall mean the Employee Retirement
Income Security Act of 1974 (ERISA), as it may be amended from time
to time.
16. The term "SNETMPP" shall mean the SNET Management Pension
Plan.
17. The word "Plan" shall mean the SNET Pension Benefit Plan.
18. The term "Position Rate" shall mean the mid-point of the
Executive's salary grade level established periodically for each
Executive's grade level.
19. The term "Short Term Incentive Award" shall mean that
amount distributed annually to an Executive which constitutes a
percentage of the Standard Award as determined pursuant to the SNET
Short Term Incentive Plan.
20. The term "Standard Award" shall mean an amount determined
annually under the SNET Short Term Incentive Plan.
21. The words "Subsidiary or Subsidiaries" shall mean any
corporation, partnership or other entity of which at least 50% of the
Voting Stock is owned directly or indirectly by the Corporation.
22. The words "Surviving Spouse" shall mean, except as
otherwise provided, (a) for an Executive who retires prior to
January 1, 1996 with a service or disability benefit payable under
this Article B or who dies while an active employee prior to January
1, 1996, a spouse married to the Executive as of the termination of
employment date; and (b) for an Executive who terminates employment
prior to January 1, 1996 with a deferred benefit payable under this
Article B, a spouse who has been married to the Executive throughout
the one-year period ending on the earlier of (a) the Executive's
annuity starting date under this Article B, or (b) the date of the
Executive's death; provided, however, if the Executive marries within
one year before the annuity starting date, and the Executive and the
Executive's spouse in such marriage have been married for at least a
one-year period ending on or before the date of the Executive's
death, such Executive and such spouse shall be treated as having been
married throughout the one-year period ending on the annuity starting
date.
21
23. The expression "Term of Employment", except as expressly
limited or stated elsewhere in the Plan, shall have the same meaning
as that expression is used in the SNETMPP.
27. The use in this Plan of personal pronouns of the masculine
gender is intended to include both the masculine and feminine
genders.
22
SECTION 3. ADMINISTRATION OF THIS ARTICLE B
1. The Corporation shall be the Sponsor of the Plan and the
Plan Administrator of the Plan as those terms are defined in the
Pension Act. The Committee shall have the administrative
responsibilities set forth below.
2. (a) The Committee shall have the specific powers elsewhere
herein granted to it and shall have such other powers as may be
necessary in order to enable it to administer the Plan, except for
powers herein granted or provided to be granted to others.
(b) The procedures for adoption of by-laws, and rules of
procedure, for the employment of a Secretary and assistants, with
authority with respect to claims of Executives shall be the same as
are set forth in the SNETMPP.
(c) In accordance with the terms of the Plan, the
Secretary of the Committee shall grant or deny claims for benefits
under the Plan with respect to Executives and Participants and
authorize disbursements according to the terms of this Plan.
Adequate notice, pursuant to applicable law, shall be provided in
writing to any Executive or beneficiary whose claim has been denied,
setting forth the specific reasons for such denial and any other
information required to be furnished under the Pension Act.
3. The review and appeal procedures for Executives whose
claims have been denied shall be the same as those procedures set
forth in the SNETMPP.
4. The Committee shall serve as the final review committee
under the Plan, with the authority to determine conclusively for all
parties any and all questions arising from administration of the
Plan, and shall have sole and complete discretionary authority and
control to manage the operation and administration of the Plan,
including, but not limited to, the determination of all questions
relating to eligibility for participation and benefits,
interpretation of all Plan provisions, determination of the amount
and kind of benefits payable to any Executive or Surviving Spouse,
and the construction of disputed and doubtful terms. Such decisions
by the Committee shall be conclusive and binding on all parties and
not subject to further review.
5. The expenses of the Committee in administering the Plan
shall be borne by the Participating Companies.
6. The Corporation, the Company and the Committee are each a
named fiduciary as that term is used in the Pension Act with respect
to the particular duties and responsibilities herein provided to be
allocated to each of them.
7. The Corporation may allocate responsibilities for the
operation and administration of the Plan consistent with the Plan's
terms. The Corporation and other named fiduciaries may designate in
writing other persons to carry out their respective responsibilities
under the Plan, and may employ persons to advise them with regard to
any such responsibilities.
23
8. Any person or group of persons may serve in more than one
fiduciary capacity with respect to the Plan.
24
SECTION 4. NON-QUALIFIED PENSION BENEFITS
1. Participation
All persons who were Grandfathered Executives or Non-
Grandfathered Executives on or before December 13, 1995 and who
retired or terminated employment prior to January 1, 1996 ("Eligible
Executives") are deemed participants in Section 4 of this Article B.
2. Eligibility
(a) Service Benefit: An individual who is an Eligible
Executive at the time of employment termination and (i) has received
or is eligible to receive an award under the SNET Short Term
Incentive Plan, and (ii) is eligible for a service pension pursuant
to the terms of the SNETMPP, is eligible for a service benefit
pursuant to this Plan, if the computation of a benefit amount
pursuant to Paragraph 3 of this Section 4 of this Article B results
in an amount payable to such Eligible Executive.
(b) Deferred Benefit: Except as otherwise specified in
Paragraph 8 of this Section 4 of this Article B, any individual who
is an Eligible Executive at the time of employment termination and
(i) has received or is eligible to receive an award under the SNET
Short Term Incentive Plan, and (ii) is eligible for a deferred vested
pension pursuant to the terms and conditions of the SNETMPP, is
eligible for a deferred benefit pursuant to this Article B, if the
computation of a benefit amount pursuant to Paragraph 3 of this
Section 4 of this Article B results in an amount payable to such
Eligible Executive.
(c) Disability Benefit: An individual who, while an Eligible
Executive, has become eligible for a disability pension pursuant to
the terms of the SNETMPP shall be eligible for a disability benefit
hereunder, if the computation of a benefit amount pursuant to
Paragraph 3 of this Section 4 of this Article B results in an amount
payable to such Eligible Executive. Should the disability pension be
discontinued pursuant to the terms of the SNETMPP, the disability
benefit hereunder shall be discontinued as well.
(d) Normal Retirement Age: "Normal Retirement Age" is the age
of sixty-five years.
(e) Mandatory Retirement Age: Each Eligible Executive shall be
retired from the Active Payroll or shall cease to be eligible for
continued employment, as applicable, no later than the last day of
the month in which such Executive attains the Mandatory Retirement
Age.
25
3. Benefit Amounts
(a) Computation of Benefit
(i) Benefit Formula: Effective December 8, 1993, for all
Eligible Executives in such executive position as of December 8,
1993, the monthly benefit shall equal the difference between A and B:
Where:
A = Adjusted career income as determined in Subparagraph
3(a)(ii) of this of this Section 4 of Article B
multiplied by 1.6% and the result then divided by 12; and
B = Adjusted career income as is set forth in the SNETMPP,
except that it shall be determined solely on actual
Short Term Incentive Awards granted for services
performed after 1988, multiplied by 1.6% and the result
then divided by 12;
Effective December 13, 1995, for all Eligible Executives
actively employed by SNET in such executive positions as of such
date, A and B above shall be determined as of December 13, 1995 and
shall not, in any year subsequent to 1995, be increased or decreased.
Such frozen benefit determined under this Section 4, Paragraph
3(a)(i) of this Article B shall be considered with the accrued
benefits calculated for each such Eligible Executive effective
January 1, 1996 under the initial cash balance plan account
provisions of the SNETMPP for purposes of ensuring that the total
SNET pension benefit shall never be less than the amount to which
each such Eligible Executive was previously entitled before
application of any plan amendments adopted effective December 13,
1995; provided, however, that such frozen pension benefit will not be
separately available under the provisions of this Article B.
(ii) Adjusted Career Income:
(1) The "adjusted career income" referred to in
Subparagraph 3(a)(i), of each Executive who retires during the period
January 1, 1991 to December 13, 1995, inclusive, shall equal the
product of the Executive's average annual compensation earned for the
highest five full performance years preceding such Executive's date
of retirement and such Executive's Term of Employment as of the date
of retirement. For purposes of this Paragraph 3(a)(ii)(1), the term
"compensation" shall mean an Executive's earned actual Short Term
Incentive Award which is not more than 50% of the Annual Basic Pay as
of December 31 of each performance year in which it is earned.
(2) The "adjusted career income", referred to in
Subparagraph 3(a)(i), of each Executive who retires during the period
beginning January 1, 1989 to December 31, 1990 shall equal the product of
the Executive's average annual compensation earned for the five full
performance years preceding such Executive's date of retirement and such
26
Executive's Term of Employment as of the date of retirement. For
purposes of this Paragraph 3(a)(ii)(2), the term "compensation"
shall mean an Executive's earned actual Short Term Incentive Award
which is not more than 50% of the Position Rate as of December 31
of each performance year in which it is earned.
(3) The "adjusted career income", referred to in
Subparagraph 3(a)(i), of each Executive who retired during the period
beginning January 1, 1985 to December 31, 1988, shall equal the sum
of (A) the product of the Executive's average annual compensation
earned for the period from January 1, 1979 to October 31, 1983,
inclusive, and such Executive's Term of Employment as of December 31,
1983, plus (B) such Executive's earned compensation for all periods
after December 31, 1983 which are included in his Term of Employment.
For purposes of this paragraph 3(a)(ii)(3), the term "compensation"
shall mean an Executive's earned actual Short Term Incentive Award
which is not more than 50% of the Position Rate as of December 31 of
each performance year in which it is earned.
(4) The "adjusted career income", referred to in
Subparagraph 3(a)(i), of each Executive who retired during the period
beginning September 15, 1983 to December 31, 1984, inclusive, shall
equal the sum of (A) the product of the Executive's average annual
compensation earned for the period from April 1, 1978 to March 31,
1983, inclusive, and such Executive's Term of Employment as of March
31, 1983, plus (B) such Executive's earned compensation for all
periods after March 31, 1983 which are included in his Term of
Employment. For purposes of this Paragraph 3(a)(ii)(4), the term
"compensation shall mean an Executive's earned actual Short Term
Incentive Award which is not more than 50% of the Position Rate as of
December 31 of each performance year in which it is earned.
(5) The "adjusted career income", referred to in
Subparagraph 3(a)(i), of each Executive who retired during the period
beginning January 31, 1982 to September 14, 1983, inclusive, shall
equal the sum of (A) the product of the Executive's average annual
compensation earned for the period from October 1, 1976 to September
30, 1981, inclusive, and such Executive's Term of Employment as of
September 30, 1981, plus (B) such Executive's earned compensation for
all periods after September 30, 1981 which are included in his Term
of Employment. For purposes of this Paragraph 3(a)(ii)(5), the term
"compensation" shall mean an Executive's earned actual Short Term
Incentive Award which is not more than 15% of the Position Rate as of
December 31 of each performance year in which it is earned.
(6) The "adjusted career income", referred to in
Subparagraph 3(a)(i), of each Executive who retired during the period
beginning August 10, 1980 to January 30, 1982, inclusive, shall equal the
sum of (A) the product of the Executive's average annual compensation
earned for the period from January 1, 1975 to December 31, 1979,
inclusive, and such Executive's Term of Employment as of December 31,
1979, plus (B) such Executive's earned compensation or all periods after
December 31, 1979 which are included in his Term of Employment. For
purposes of this Paragraph 3(a)(ii)(6), the term "compensation"
shall mean an Executive's earned actual Short Term Incentive Award which
27
is not more than 15% of the Position Rate as of December 31 of
each performance year in which it is earned.
(b) Year of Retirement Proration
When determining the extent to which the 15% or 50% limitation,
respectively, may apply to limit the pensionable portion of the Short
Term Incentive Award, the Position Rate will be prorated by
multiplying such Position Rate by a fraction, the numerator of which
shall be the number of months worked (to the next full month) in the
final year of employment and the denominator of which shall be
twelve.
(c) Early Retirement Discount
The monthly service benefit allowance, determined in accordance
with the provisions of this Paragraph 3, for each Eligible Executive
who is granted a service benefit for reasons other than total
disability as a result of sickness or injury, shall be reduced by one-
half percent (0.5%) for each calendar month or part thereof by which
his age at time of retirement is less than 55 years, except that each
Executive retired with thirty (30) or more years of service shall
receive a monthly benefit allowance reduced by one-quarter percent
(0.25%) for each calendar month or part thereof by which such
Executive's age at the time of retirement is less than 55 years.
(d) Deferred Benefit Amount
The monthly benefit allowance for each Executive who terminated
employment on or before January 1, 1996 and who is eligible for a
deferred benefit under the provisions of Paragraph 2(b) of this
Section 4 shall be calculated exclusively in accordance with the
provisions specified as applicable to those receiving a benefit under
Paragraph 2(a) or 2(c) of this Section 4 effective as of the date
such Executive leaves the service of a Participating Company other
than for reasons of transfer to another Participating Company, or the
date which is the last day of the month in which the 65th birthday
occurs, whichever is earlier, and, in any case, as if such Executive
had retired on such date and no recomputation of the benefit shall be
made after such date or as a result of amendments made to this Plan
subsequent to such date. An Executive who leaves the service of a
Participating Company with eligibility for a deferred benefit in
accordance with Paragraph 2(b) of this Section 4 but is not entitled
to any other class of pension or benefit shall not be considered a
retiree pursuant to the SNETMPP or a retired Executive.
(e) Automatic Survivor Annuity
In the event of the death of an Executive who (i) is eligible
to participate in this Plan pursuant to Paragraph 1 of this
Section 4 as of December 8, 1993 and (ii) is on the Active Payroll
as of the time of his death on or before January 1, 1996 and
(iii) is eligible for a deferred benefit under Paragraph 2(b)
of this Section 4 at the time of his death or who is
28
eligible for a service benefit under Paragraph 2(a) of this
Section 4 at the time of his death and (iv) who leaves a
Surviving Spouse married to him at the time of his death, such
Surviving Spouse shall receive a survivor annuity in the amount of
45% of the benefit which would have been payable had such Executive
retired with a service benefit, regardless of his actual eligibility
therefore, on the date of his death; provided, however, that if an
Executive has less than 10 years of service (as defined under the
SNETMPP) and is eligible for deferred benefit under Section 4,
Paragraph 2(b) of this Article B as of his date of death, the present
value (as determined under the SNETMPP) of the automatic survivor
annuity provided under this Paragraph 3(e) shall be distributed to
the Surviving Spouse in a single lump sum as of the last day of the
month following the month in which the Executive has died. For
purposes of calculating the automatic survivor annuity provided in
this Paragraph 3(e), the early retirement discount in Paragraph 3(c)
of this Section 4 of this Article B shall not apply. No annuity or
lump sum under this Paragraph 3(e) shall be payable at the death of a
pensioner or former employee or upon the death of an Executive who
does not have a Surviving Spouse.
(f) Service Beyond Normal Retirement Age
Service after the last day of the month in which an Executive
attains Normal Retirement Age shall be considered in the same manner
as is set forth in the SNETMPP.
(g) Special Increases
Monthly service and disability benefit payments as determined
under Paragraphs 3(a) and (c) of this Section 4 to retired
Executives, and automatic survivor annuity payments to Surviving
Spouses married to an Executive at the time of his death as
determined under Paragraph 3(e) of this Section 4, shall be increased
by the same percentage and pursuant to the same terms and conditions
as are set forth in the SNETMPP for similar forms of benefits.
(h) Minimum Benefit
The monthly benefit of (i) each Executive eligible to
participate in the Plan during the period December 8, 1993 to
December 13, 1995, inclusive, and (ii) each Executive in such
executive position as of December 8, 1993 to December 13, 1995,
inclusive, to the extent this monthly benefit exceeds the benefit
provided in Paragraph 3(a)(i) of this Section 4, shall equal one-
twelfth of the excess, if any, of (A) over (B) below, where--
(A) is the product of (i) for an Executive with less than
twenty-five years of service, two percent (2%) and Term of Employment
(not exceeding forty percent) multiplied by Average Annual Basic Pay;
or (ii) for an Executive with twenty-five or more years of service,
the product of one and six-tenths percent (1.6%) and Term of
Employment multiplied by Average Annual Basic Pay. For this purpose,
Average Annual Basic Pay shall mean Annual Basic Pay for the 36
month period immediately preceding the date the Executive terminates
from service;
29
(B) is the sum of:
(1) the annual amount, if any, payable under
Paragraph 3(a)(i) of this Article B in a single life annuity form to
the Executive as of the termination of employment date;
(2) the annual amount, if any, payable under Article
C of this Plan, payable in a single life annuity form to the
Executive as of the termination of employment date; and
(3) the annual amount, if any, payable under the
SNETMPP, payable in a single life annuity form to the Executive as of
the termination of employment date.
The monthly benefit provided in this Paragraph 3(h) shall
be subject to the early retirement discount, if any, as determined
under Paragraph 3(c) of Section 4 of this Article B.
Effective December 31, 1995, eligibility for a
determination of a monthly benefit as provided in this Paragraph 3(h)
shall be eliminated for all Executives on the Active Payroll on or
after such date.
4. Payments to Executives
Subject to Paragraph 3(e) of this Section 4 and Sections 7 and 9
of this Article B, benefits to an Executive (a) shall commence at the
same time, (b) shall be distributed for as long as and (c) shall be
distributed in the same form as the Executive's pension benefit under
the SNETMPP. Payments under this Section 4 shall be calculated in
accordance with the rules, procedures and assumptions utilized under
the SNETMPP, except as otherwise expressly provided in this Article
B.
5. No Surviving Spouse
If an Executive dies before the date as of which his or her
benefit commences under Section 4 of this Article B and he or she
does not have a Surviving Spouse on his or her date of death, no
benefit otherwise payable under this Section 4 shall be distributed
after the death of the Executive with respect to the Executive.
6. Post-Termination Joint and Survivor Annuity
a) Eligibility. The Post-Termination Joint and Survivor
Annuity option ("Joint and Survivor Annuity") provides a monthly
benefit to a Surviving Spouse upon the death, after termination of
employment for reasons other than retirement with a service or
disability benefit, of a Non-Grandfathered Executive. The benefit is
payable to the Surviving Spouse only if the Non-Grandfathered
Executive leaves a Participating Company with eligibility for a
deferred vested pension under the SNETMPP and this Article B on or
after August 10, 1980. If there is no Surviving Spouse, or if the
Non-Grandfathered Executive waived the provisions
30
under this Paragraph 6, no Joint and Survivor Annuity benefit will
be paid under this Section 4.
b) Election of Benefit. A Non-Grandfathered Executive shall be
deemed to have elected to receive the Joint and Survivor Annuity
option for all benefits under this Section 4 if the Non-Grandfathered
Executive has a Surviving Spouse as of the date the Executive
commences deferred vested pension benefits under the SNETMPP;
provided, however, that a Non-Grandfathered Executive may make a one-
time irrevocable election to waive this Joint and Survivor Annuity
option with respect to payments which would otherwise be made to a
Surviving Spouse following the death of the Executive. Such election
shall be made within sixty (60) days of an employee becoming
classified as an Executive or within sixty (60) days of adoption of
this election procedure, whichever is later, and shall permit the Non-
Grandfathered Executive to waive the Joint and Survivor Annuity
regardless of his marital status at the time of election. A Non-
Grandfathered Executive shall not otherwise be entitled to the Joint
and Survivor Annuity option under this Plan.
c) Benefit Amount. If the Joint and Survivor Annuity option is
applicable as of the date a Non-Grandfathered Executive is entitled
to commence deferred vested pension benefits under this Section 4,
such deferred vested pension benefits payable to the Non-
Grandfathered Executive shall be reduced to eighty-five percent (85%)
of such amount; provided, however, if the Non-Grandfathered Executive
elects to commence receipt of such pension payments prior to the
Normal Retirement Age, the aforementioned reduction shall be
consistent with the early retirement factors (with joint and survivor
annuity election) under the SNETMPP. If the Non-Grandfathered
Executive's Surviving Spouse predeceases the Non-Grandfathered
Executive, the aforementioned percentage reduction shall not be
restored. Subject to Section 9 of this Article B, the amount to be
paid the Surviving Spouse for as long as such Surviving Spouse
survives the Executive shall be computed as of the time of
commencement of such Executive's deferred vested pension as an amount
equal to fifty percent (50%) of the reduced pension payable to the
Executive under Section 4 of this Article B.
7. Deferral of Payments
If an Executive, who terminates employment on or after September
8, 1993, elects the Pension Deferral Option in accordance with the
terms and conditions under the SNETMPP, benefit payments under
Section 4 of this Article B shall commence simultaneously with the
commencement of the service pension under the SNETMPP. If the
Executive who elected the Pension Deferral Option should die prior to
commencement of benefit payments under this Article B, the provisions
of Section 4, Paragraph 3(e) of this Article B shall apply.
8. Treatment During Subsequent Employment
Employment with any Participating Company subsequent to retirement or
termination of employment with entitlement to any type of benefit described
in this Section 4 shall not suspend the right of a former Participant
receiving pension payments or a person otherwise entitled to receive
a pension to payment payments during the period he continues in such
31
employment and the form of distribution of such
pension payments shall not be changed as a result of such employment.
9. Termination of Non-Qualified Pension Benefit Program
Effective December 13, 1995, the provisions of Section 4 of this
Article B will no longer be effective on the date that the last
benefit payment is made pursuant to this Section 4.
32
SECTION 5. DEATH BENEFITS
1. Participation and Administration
Only Executives who were on the Active Payroll as of September
17, 1989 shall be eligible under Section 5 of this Article B to
receive a death benefit in an amount described below in Paragraph 2
while an Executive and remaining on the Active Payroll. Only those
Executives who were eligible for a service pension on or before
September 17, 1989 will be eligible under Section 5 of this Article B
to receive a death benefit during retirement in an amount described
below in Paragraph 2. The death benefits described in this Section 5
provide for active employee and retiree death benefits in addition
to, and subject to the same terms and conditions and administered in
the same manner as the Death Benefit provisions within the SNETMPP,
except as is herein specified.
2. Definition of Death Benefit Amount
For purposes of death benefits under Section 5 of this Article
B, the death benefit amount is defined as follows:
(a) For an Executive who dies while on the Active Payroll
or who retires on or after October 31, 1981, the death benefit
amount shall be the lesser of (i) the Executive's Standard Award
in effect as of the earlier of retirement or death; (ii) 50% of
the Executive's Position Rate as of the earlier of retirement or
death; (iii) the Executive's Standard Award in effect as of
January 1, 1992; or (iv) 50% of the Executive's Position Rate on
such date.
(b) For an Executive who retired during the period from
August 10, 1980 through October 30, 1981, inclusive, the death
benefit amount shall be the lesser of the Executive's Standard
Award in effect as of his retirement, or 15% of the Executive's
Position Rate as of retirement.
3. Payment of Death Benefits
Payment of death benefits under this Section 5 shall be made as
of the last day of the month following the month in which the
Executive's death occurred.
4. Waiver of Benefit
If a Grandfathered Executive is deemed to have waived the death
benefit for which he was eligible under the SNETMPP, he will be
deemed to have irrevocably waived the death benefit pursuant to
Section 5 of this Article B as well. Effective November 1, 1991, no
Grandfathered Executive shall be permitted to waive the death benefit
or revoke an existing waiver of such death benefit under Article B of
this Plan.
33
SECTION 6. POST-RETIREMENT LIFE INSURANCE SUPPLEMENT PROGRAM
1. Description
The Post-Retirement Life Insurance Supplement Program makes up
for the post-age 65 reduction in the level of Company- provided Group
Life Insurance for Non-Grandfathered Executives and for individuals
who become Executives after December 8, 1993 ("Eligible
Individuals"). In combination with the post-retirement Company-
provided level of Group Life Insurance, it assures a total death
benefit equal to the Annual Basic Pay at retirement rounded to the
coverage amount at retirement, to the extent required by Paragraph 4
of this Section 6.
2. Participation
All persons who retire as an Eligible Individual from a
Participating Company with a service benefit or disability benefit as
defined under Section 4 of this Article B are participants in this
program.
3. Beneficiary
An Eligible Individual may name any person or persons, his or
her estate, any organization or a trust as beneficiary. Beneficiary
designations need not be the same as under other coverages.
Beneficiary designations can be changed any time by submitting a new
form to the Corporation or its delegate. In the event of death, the
Post-Retirement Life Insurance Supplement Program provides a benefit
that is distributed in a lump sum to the beneficiary or
beneficiaries; if there are no surviving beneficiaries, the benefit
is distributed in a lump sum to the Eligible Individual's estate.
Payments are made as of the last day of the month following the month
in which the Eligible Individual's date of death occurred.
4. Coverage Amounts
The Company-provided level of Group Life Insurance equals Annual
Basic Pay at the time of retirement rounded to the next higher $1,000
for Eligible Individual's retiring prior to April 1, 1986, and, for
Eligible Individual's retiring on or after April 1, 1986, Annual
Basic Pay shall be determined for purposes of this Section 6 as of
the September 1 of the year immediately preceding the year of the
Eligible Individual's retirement, rounded to the next higher $10,000.
This level of coverage shall remain in effect through age 65. At age
66 and on each of the next four anniversaries of that coverage,
coverage under the Company-provided Group Life Insurance is reduced
by 10% until, during the year in which age 70 is attained, it equals
50% of the Company-provided level of Group Life Insurance. To offset
this reduction, the Post-Retirement Life Insurance Supplement Program
provides a schedule of death benefit coverage equal to:
34
10% of final active Company-provided Group Life Insurance
beginning at age 66 increased to
20% at age 67
30% at age 68
40% at age 69
to a maximum of
50% at age 70 -- which continues in effect until death.
Nothing contained in this Section 6 shall require the
Corporation or any Participating Company to purchase life insurance
on the life or lives of any Eligible Individuals. Benefits payable
under this Section 6 shall represent an obligation of the Corporation
or Participating Company, if applicable, and shall not entitle an
Eligible Individual to rights or payments under any life insurance
policy.
35
SECTION 7. POST-RETIREMENT SURVIVOR'S ANNUITY OPTION
1. Description
The Post-Retirement Survivor's Annuity Option provides a monthly
benefit to the eligible beneficiary (spouse or parent) upon the
death, after retirement, of a Non-Grandfathered Executive. The
benefit is payable to the beneficiary only if the Non-Grandfathered
Executive retires from a Participating Company with a service pension
or disability pension under the SNETMPP on or after August 10, 1980
and is a Non-Grandfathered Executive on the Active Payroll on
December 8, 1993 and retired prior to January 1, 1996.
2. Beneficiary
The benefit is payable, in the order of priority shown, to the
eligible beneficiary as follows:
(a) the Surviving Spouse, if living with the Non-
Grandfathered Executive at the time of death; otherwise to
(b) a surviving parent. (If both parents survive, benefit
will be distributed in equal shares to both.)
If there is no Surviving Spouse or parent, or if the Non-
Grandfathered Executive waived the provisions of this Section 7 and
terminated employment prior to January 1, 1996, no benefit will be
distributed under this Section 7.
3. Election of Benefit
A Non-Grandfathered Executive who was on the Active Payroll on
December 8, 1993 and who retired prior to January 1, 1996 shall be
deemed to have elected to receive the Survivor Annuity option for all
benefits payable under Section 4 of this Article B if the Non-
Grandfathered Executive is married or has a surviving parent as of
the date the Executive commences benefits under the SNETMPP;
provided, however, that a Non-Grandfathered Executive may make a one-
time irrevocable election to waive this Survivor Annuity option with
respect to payments which would otherwise be made to a Surviving
Spouse or parent following the death of the Executive. Such election
shall be made within sixty (60) days of an Executive becoming
eligible for a benefit under Section 4 of this Article B prior to
December 13, 1995 or within sixty (60) days of adoption of this
election procedure, whichever is later, and shall permit the Non-
Grandfathered Executive to waive the Survivor Annuity regardless of
his marital status or whether he has parents surviving at the time of
election. A Non-Grandfathered Executive shall not otherwise be
entitled to a Survivor's Annuity option under this Article B.
36
4. Benefit Amount
If the Survivor's Annuity option is applicable as of the date a
Non-Grandfathered Executive is entitled to commence benefits under
Section 4 of this Article B, the amount of the pension otherwise
payable under Section 4 of this Article B to the Non-Grandfathered
Executive shall be reduced to ninety percent (90%) of such amount.
Notwithstanding the foregoing, if the Non-Grandfathered Executive's
spouse, if any, and parents predecease the Non-Grandfathered
Executive, the aforementioned percentage shall be increased from
ninety percent (90%) to one hundred percent (100%) as of the first
day of the month following the month in which the last surviving
parent or spouse has died. Subject to Section 9 of this Article B,
the amount to be distributed the annuitant for as long as such
annuitant survives the Executive shall be computed as of the time of
retirement of such Executive as an amount equal to fifty percent
(50%) of the reduced pension payable to the Executive under Section 4
of this Article B.
37
SECTION 8. GENERAL PROVISIONS
1. Effective Date
This Plan is effective with amendments through January 1, 1998.
2. Rights to Benefits
Neither the action of the Board of Directors in establishing
this Plan nor any action hereafter taken by the Board or the
Committee shall be construed as giving to any employee a right to be
retained in the service of any Participating Company or any right or
claim to any benefit after discharge from the service of any
Participating Company, unless the right to such benefit has accrued
prior to such discharge. No employee shall have any right to a
service or deferred benefit unless he meets the conditions specified
in Paragraph 2(a) or 2(b) of Section 4 of the Plan, respectively, nor
any right against any Participating Company to any benefit under the
Plan other than the amount to which the employee has theretofore
become entitled and which the Committee has directed be distributed
to that employee under the Plan. Benefits previously awarded may be
discontinued at any time at the sole discretion of the Corporation or
any Participating Company in accordance with the terms of the Plan.
In addition to the prerequisites for a service benefit, a deferred
benefit, a disability benefit, and/or a death benefit set forth
herein, an individual, or his annuitants or beneficiaries, as
applicable, shall only be eligible for a benefit if the individual is
an Executive with respect to the respective benefits at the time of
retirement, termination of employment or death. There shall be no
eligibility for benefits in the case of an individual who was an
Executive for any period during his Term of Employment, but who is
not an Executive at the time of his retirement, termination of
employment or death.
3. Assignment or Alienation
Assignment or alienation of pensions or other benefits under
this Plan will not be permitted or recognized except as otherwise
required by law.
4. Breaks in Service
For purposes of this Plan, a break in service shall be defined
and treated in the same manner as is set forth in the SNETMPP.
5. Leaves of Absence
For purposes of this Plan, a leave of absence shall be defined
and administered in the same manner as is set forth in the SNETMPP.
6. Lump Sum Payments
A lump sum payment or payments to applicable beneficiaries and
annuitants of retired Executives (except Grandfathered Executives)
who have retired as of January 1, 1987 or who were Executives as of
January 1, 1987 and eligible to participate in this Plan pursuant
38
to Paragraph 1 of Section 4 as of December 8, 1993 will be reasonably
estimated so that applicable beneficiaries and annuitants shall
receive a tax differential payment equal to the difference between
(a) the beneficiary's or annuitant's assumed Federal income tax
liability from payment of the SNETMPP death benefit and payment of
this Article B's survivor annuity and death benefits and (b) the
beneficiary's or annuitant's assumed Federal income tax liability had
such benefits been distributed under the SNET Executive Life
Insurance Program.
7. Multiple Participating Company Employment
If an Executive of the Corporation is also an Executive of one
or more other Participating Companies, any benefit to which such
Executive may become entitled under the Plan shall be computed on the
basis of the total combined pay which he is receiving from all such
companies. Any maximum or minimum amounts fixed by the Plan for
benefits shall apply to the total amount payable by all companies and
not to the portion payable to any Participating Company or Companies.
8. Payment to Others
Benefits payable to any person to whom an amount is or was
payable under the Plan who is unable to execute a proper receipt may
be distributed to other person(s) in accordance with the standards
and procedures set forth in the SNETMPP.
9. Plan Termination
The Board retains the right to terminate the Plan in whole or in
part, and each Participating Company retains the right to withdraw
from this Plan, at any time, for any reason, with or without notice.
Unless the Executive provides prior written consent, however, said
withdrawal or termination, as applicable, shall not affect the rights
of any Executive, Surviving Spouse or parent to any benefit under
this Article B to which such person may have previously become
entitled as a result of the Executive's disability, death,
termination of employment or Change in Control which occurred prior
to the effective date of the withdrawal or termination.
10. Source of Payments
Benefits arising under this Plan and all costs, charges, and
expenses relating thereto will be payable from SNET's general assets.
SNET may, however, establish a trust to pay such benefits and related
expenses, provided such trust does not cause the Plan to be "funded"
within the meaning of ERISA. To the extent trust assets are
available, they may be used to pay benefits arising under this Plan
and all costs, charges, and expenses relating thereto. To the extent
that the funds held in the trust, if any, are insufficient to pay
such benefits, costs, charges and expenses, SNET shall pay such
benefits, costs, charges, and expenses from its general assets.
39
11. Unfunded Status
The Plan at all times shall be entirely unfunded for purposes of
the Code and ERISA and no provision shall at any time be made with
respect to segregating any assets of a Participating Company for
payment of any benefits hereunder. Funds that may be invested
through a trust described in Paragraph 10 of Section 8 of this
Article B continue for all purposes to be part of the general assets
of the Participating Company which invested the funds. The Plan
constitutes a mere promise by SNET and the Participating Companies to
make payments, if any, in the future. No Participant, Surviving
Spouse or any other person shall have any interest in any particular
assets of a Participating Company by reason of the right to receive a
benefit under the Plan and to the extent the Participant, Surviving
Spouse or any other person acquires a right to receive benefits under
this Plan, such right shall be no greater than the right of any
unsecured general creditor of a Participating Company.
40
SECTION 9. CHANGE OF CONTROL
Any provision of the Plan to the contrary notwithstanding, in
the event of a Change of Control (as defined below), any benefit
accrued as of and through the Change of Control, including, without
limitation, by current Executives, retired Executives or their
annuitants or beneficiaries, including those currently receiving
payments under the Plan, shall not be subject to forfeiture or
suspension and shall be distributed in a single lump sum on the last
day of the month following the month in which the Change of Control
occurred, for those individuals currently receiving payments under
Article B of the Plan, and on the last day of the month following the
month in which occurs the event (e.g., termination of employment,
disability or death) giving rise to the obligations of the Company or
Participating Company to pay such benefit, for those individuals not
currently receiving payments under Article B of the Plan. For this
purpose, the accrued benefit shall be calculated based upon the
provisions of the Plan in effect immediately prior to the Change of
Control as if the event giving rise to the obligation of the
Corporation or Participating Company to pay such benefit pursuant to
the preceding sentence had occurred on the date of the Change of
Control and shall not be adversely affected because of any subsequent
events, including, without limitation, termination or amendment of
the Plan or the SNETMPP, or lack of continued status; provided,
however, that any early retirement discount pursuant to Paragraph
2(c) of Section 4 of this Article B as in effect immediately prior to
the Change of Control shall be taken into account, if applicable, to
reduce such accrued benefit only based on actual date of retirement.
For purposes of this Section 9 of Article B, a Change of Control
shall mean:
(A) an acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or more
of either (i) the then outstanding shares of common stock of the
Corporation (the Outstanding Corporation Common Stock") or (ii)
the combined voting power of the then outstanding voting
securities of the Corporation entitled to vote generally in the
election of directors (the "Outstanding Corporation Voting
Securities"); excluding, however, the following: (1) any
acquisition directly from the Corporation, other than an
acquisition by virtue of the exercise of a conversion privilege
unless the security being so converted was itself acquired
directly from the Corporation, (2) any acquisition by the
Corporation, (3) any acquisition by any employee benefit plan
(or related trust) participated in by the Corporation or any
corporation controlled by the Corporation or (4) any acquisition
by any corporation pursuant to a reorganization, merger,
consolidation or similar corporate transaction (in each case, a
"Corporate Transaction"), if, pursuant to such Corporate
Transaction, the conditions described in clauses (i), (ii) and
(iii) of Paragraph (C) of this Section 9 of this Article B are
satisfied; or
(B) a change in the composition of the Board of Directors
of the Corporation (the "Board") such that the individuals who,
as of December 12, 1990, constitute the Board (the Board as of
the above date shall be hereinafter referred to as the
41
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, for purposes of this
Section 9 of Article B, that any individual who becomes a member
of the Board subsequent to the above date whose election, or
nomination for election by the shareholders of the Corporation,
was approved by a vote of at least a majority of those
individuals who are members of the Board and who were also
members of the Incumbent Board (or deemed to be such pursuant to
this provision) shall be considered as though such individual
were a member of the Incumbent Board; but, provided further,
that any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election
contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board shall not be so considered as a
member of the Incumbent Board; or
(C) the approval by the shareholders of the Corporation of
a Corporate Transaction or, if consummation of such Corporate
Transaction is subject, at the time of such approval by
shareholders, to the consent of any government or governmental
agency, the obtaining of such consent (either explicitly or
implicitly by consummation); excluding, however, such a
Corporate Transaction pursuant to which (i) all or substantially
all of the individuals and entities who are the beneficial
owners, respectively, of the Outstanding Corporation Common
Stock and Outstanding Corporation Voting Securities immediately
prior to such Corporate Transaction will beneficially own,
directly or indirectly, more than 60% of, respectively, the
outstanding shares of common stock of the corporation resulting
from such Corporate Transaction and the combined voting power of
the outstanding voting securities of such corporation entitled
to vote generally in the election of directors, in substantially
the same proportions as their ownership, immediately prior to
such Corporate Transaction, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting Securities, as
the case may be, (ii) no Person (other than the Corporation, any
employee benefit plan (or related trust) participated in by the
Corporation or such Corporation resulting form such Corporate
Transaction and any Person beneficially owning, immediately
prior to such Corporate Transaction and any person beneficially
owning, immediately prior to such Corporate Transaction,
directly or indirectly, 20% or more of the Outstanding
Corporation Common Stock or Outstanding Voting Securities, as
the case may be) will beneficially own, directly or indirectly,
20% or more of, respectively, the outstanding shares of common
stock of the corporation resulting from such Corporate
Transaction or the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally
in the election of directors and (iii) individuals who were
members of the Incumbent Board will constitute at least a
majority of the members of the board of directors of the
corporation resulting from such Corporate Transaction; or
(D) the approval by the shareholders of the Corporation of
(i) a complete liquidation or dissolution of the Corporation or
(ii) the sale or other disposition of all or substantially all of
the assets of the Corporation; excluding, however, such a sale or
42
other disposition to a corporation, with respect to
which following such sale or other disposition, (l) more than
60% of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power of the
then outstanding voting securities of such corporation entitled
to vote generally in the election of directors will be then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting Securities
immediately prior to such sale of other disposition in
substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the
Outstanding Corporation Common Stock and Outstanding corporation
Voting Securities, as the case may be, (2) no Person (other than
the Corporation and any employee benefit plan (or related trust)
participated in by the Corporation or such corporation and any
Person beneficially owning, immediately prior to such sale or
other disposition, directly or indirectly, 20% or more of the
Outstanding Corporation Common Stock or Outstanding corporation
Voting Securities, as the case may be) will beneficially own,
directly or indirectly, 20% or more for, respectively, the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities
of such corporation entitled to vote generally in the election
of directors and (3) individuals who were members of the
Incumbent Board will constitute at least a majority of the
members of the board of directors of such corporation.
43
SECTION 10. PLAN MODIFICATION APPLICABLE TO ARTICLE B
The Board may from time to time make changes in the Plan. In
addition, the Senior Vice President-Organization Development of the
Corporation (or any successor to that officer's responsibilities),
with the concurrence of the Senior Vice President and General Counsel
of the Corporation (or any successor to that officer's
responsibilities), shall be authorized to make minor or
administrative changes to the Plan, as well as changes dictated by
the requirements of federal or state statutes applicable to any
Participating Company or authorized or made desirable by such
statutes. Such changes shall not affect the rights of any Executive,
Surviving Spouse or parent, without the Executive's consent, to any
benefit under the Plan to which such person may have previously
become entitled as a result of a disability, death, termination of
employment or a Change in Control which occurred prior to the
effective date of such change.
44
ARTICLE C. SNET MID-CAREER PENSION PLAN PROGRAM
SECTION 1. PURPOSE OF ARTICLE C OF THIS PLAN
The purpose of this Article C of the Plan is to provide eligible
management and highly compensated employees of the Corporation and
its subsidiaries which have determined, with the consent of the
Committee, to participate in this Plan, employer-provided benefits
for certain unfunded single life pension payments, as set forth more
fully herein, to eligible employees of the Corporation. The benefits
provided under this Article C were formerly provided under the SNET
Mid-Career Pension Plan effective with amendments through November 1,
1991 ("Predecessor Plan"), which is incorporated by reference into
this Article C except as otherwise provided in this Article C.
45
SECTION 2. DEFINITIONS APPLICABLE UNDER ARTICLE C OF THIS PLAN
The terms in this Article C shall have the same meaning as
defined in the Predecessor Plan, except for the definition of
Participant which shall be as follows.
1. The word "Participant" shall mean an individual hired or
rehired prior to December 8, 1993 at age 35 or older at Fourth Level
or above and terminated employment at Fifth Level or above, who, if
hired or rehired prior to November 18, 1991, has completed five years
of service at Fifth Level or above prior to the last day of the month
in which he reaches age 65, or who, if hired or rehired on or after
November 18, 1991 and prior to December 8, 1993, has completed at
least five years of full-time service at Fifth Level or above prior
to the last day of the month in which he reaches age 65, and whose
entire term of employment after November 18, 1991 was classified as
full-time.
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SECTION 3. ADMINISTRATION OF THIS ARTICLE C
The administration of this Article C shall be in accordance with
the restated provisions set forth in this Section 3 of Article C.
1. The Corporation shall be the Sponsor of the Plan and the
Plan Administrator of the Plan as those terms are defined in the
Pension Act. The Committee shall have the administrative
responsibilities set forth below.
2. (a) The Committee shall have the specific powers elsewhere
herein granted to it and shall have such other powers as may be
necessary in order to enable it to administer the Plan, except for
powers herein granted or provided to be granted to others.
(b) The procedures for adoption of by-laws, and rules of
procedure, for the employment of a Secretary and assistants, with
authority with respect to claims of Executives shall be the same as
are set forth in the SNETMPP.
(c) In accordance with the terms of the Plan, the
Secretary of the Committee shall grant or deny claims for benefits
under the Plan with respect to Executives and Participants and
authorize disbursements according to the terms of this Plan.
Adequate notice, pursuant to applicable law, shall be provided in
writing to any Executive or beneficiary whose claim has been denied,
setting forth the specific reasons for such denial and any other
information required to be furnished under the Pension Act.
3. The review and appeal procedures for Executives whose
claims have been denied shall be the same as those procedures set
forth in the SNETMPP.
4. The Committee shall serve as the final review committee
under the Plan, with the authority to determine conclusively for all
parties any and all questions arising from administration of the
Plan, and shall have sole and complete discretionary authority and
control to manage the operation and administration of the Plan,
including, but not limited to, the determination of all questions
relating to eligibility for participation and benefits,
interpretation of all Plan provisions, determination of the amount
and kind of benefits payable to any Executive or Surviving Spouse,
and the construction of disputed and doubtful terms. Such decisions
by the Committee shall be conclusive and binding on all parties and
not subject to further review.
5. The expenses of the Committee in administering the Plan
shall be borne by the Participating Companies.
6. The Corporation, the Company and the Committee are each a
named fiduciary as that term is used in the Pension Act with respect
to the particular duties and responsibilities herein provided to be
allocated to each of them.
7. The Corporation may allocate responsibilities for the
operation and administration of the Plan consistent with the Plan's
terms. The Corporation and other named fiduciaries may designate
in writing other persons to carry out their respective
47
responsibilities under the Plan, and may employ persons to advise
them with regard to any such responsibilities.
8. Any person or group of persons may serve in more than one
fiduciary capacity with respect to the Plan.
48
SECTION 4. MID-CAREER PENSION BENEFITS
The benefits determined in this Section 4 shall be in accordance
with the provisions of the Predecessor Plan, except as modified by
the following provisions of this Section 4 of Article C.
1. Participation
All persons who were eligible Participants on or before December
8, 1993 are deemed Participants in Section 4 of this Article C and
the Predecessor Plan.
2. Mid-Career Pension Benefit
Effective December 13, 1995, for all eligible Participants
on the active payroll on such date, the monthly benefit provided
under this Article C and the Predecessor Plan shall be determined as
of December 13, 1995 and shall not, in any year subsequent to 1995,
be increased or decreased. Such frozen benefit determined under this
Section 4, Paragraph 2 of this Article C shall not be included with
the accrued benefits calculated for each such Eligible Executive
effective January 1, 1996 under the initial cash balance plan
provisions of Section 4 of the SNETMPP; provided, however, that in
the event that a comparison of pension benefit amounts calculated in
accordance with the pension formula provisions, as in effect as of
December 13, 1995, under Article V of the SNETMPP, Section 4,
Paragraph 3(I) of Article B of this Plan, and the "Frozen Mid-career
Pension Benefit calculated under this Section 4, Paragraph 2 of
Article C (collectively referred to herein as the "12/13/95 Total
Frozen SNET Pension Benefit Amount"), is higher than the monthly
pension benefit determined under the initial opening cash balance
plan provisions and the ongoing cash balance plan provisions
effective on and after January 1, 1996 as set forth in Article V of
the SNETMPP (referred to herein as the "1/1/96 SNETMPP Benefit"),
each eligible Participant shall continue to be eligible to receive
all or a portion of such Frozen Mid-career Pension Benefit calculated
under this Section 4, Paragraph 2 of Article C to the extent such
12/13/95 Total Frozen SNET Pension Benefit Amount exceeds the 1/1/96
SNETMPP Benefit, until such time that the monthly benefit amount
determined solely in accordance with the provisions of Article V of
the SNETMPP as in effect on or after January 1, 1996 exceeds the
12/13/95 Total Frozen SNET Pension Benefit Amount described herein,
at which time all eligibility for benefits payable under this Article
C to such Participants shall cease.
3. Termination of Non-Qualified Pension Benefit
The provisions of this Section 4 will no longer be effective on
the date that the last benefit payment is made pursuant to this
Section 4.
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SECTION 5. GENERAL PROVISIONS
The general provisions of benefits of this Article C shall be in
accordance with the restated provisions set forth in this Section 5
of Article C.
1. Effective Date
This Plan is effective with amendments through January 1, 1998.
2. Rights to Benefits
Neither the action of the Board of Directors in establishing
this Plan nor any action hereafter taken by the Board or the
Committee shall be construed as giving to any employee a right to be
retained in the service of any Participating Company or any right or
claim to any benefit after discharge from the service of any
Participating Company, unless the right to such benefit has accrued
prior to such discharge. No employee shall have any right to a
service or deferred benefit unless he meets the conditions specified
in Section 4 of this Article C and the Predecessor Plan,
respectively, nor any right against any Participating Company to any
benefit under the Plan other than the amount to which the employee
has theretofore become entitled and which the Committee has directed
be distributed to that employee under the Plan. Benefits previously
awarded may be discontinued at any time at the sole discretion of the
Corporation or any Participating Company in accordance with the terms
of the Plan. In addition to the prerequisites for a service benefit,
a deferred benefit, a disability benefit, and/or a death benefit set
forth herein, an individual shall only be eligible for a benefit if
the individual is an Executive with respect to the respective
benefits at the time of retirement, termination of employment or
death. There shall be no eligibility for benefits in the case of an
individual who was an Executive for any period during his Term of
Employment, but who is not an Executive at the time of his
retirement, termination of employment or death.
3. Assignment or Alienation
Assignment or alienation of pensions or other benefits under
this Plan will not be permitted or recognized except as otherwise
required by law.
4. Plan Termination
The Board retains the right to terminate the Plan in whole or in
part, and each Participating Company retains the right to withdraw
from this Plan, at any time, for any reason, with or without notice.
Unless the Executive provides prior written consent, however, said
withdrawal or termination, as applicable, shall not affect the rights
of any Executive to any benefit under this Article C to which such
person may have previously become entitled as a result of the
Executive's disability, death, termination of employment or Change in
Control which occurred prior to the effective date of the withdrawal
or termination.
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5. Source of Payments
Benefits arising under this Plan and all costs, charges, and
expenses relating thereto will be payable from SNET's general assets.
SNET may, however, establish a trust to pay such benefits and related
expenses, provided such trust does not cause the Plan to be "funded"
within the meaning of ERISA. To the extent trust assets are
available, they may be used to pay benefits arising under this Plan
and all costs, charges, and expenses relating thereto. To the extent
that the funds held in the trust, if any, are insufficient to pay
such benefits, costs, charges and expenses, SNET shall pay such
benefits, costs, charges, and expenses from its general assets.
6. Unfunded Status
The Plan at all times shall be entirely unfunded for purposes of
the Code and ERISA and no provision shall at any time be made with
respect to segregating any assets of a Participating Company for
payment of any benefits hereunder. Funds that may be invested
through a trust described in Section 6 of this Article C continue for
all purposes to be part of the general assets of the Participating
Company which invested the funds. The Plan constitutes a mere
promise by SNET and the Participating Companies to make payments, if
any, in the future. No Participant, Surviving Spouse or any other
person shall have any interest in any particular assets of a
Participating Company by reason of the right to receive a benefit
under the Plan and to the extent the Participant, Surviving Spouse or
any other person acquires a right to receive benefits under this
Plan, such right shall be no greater than the right of any unsecured
general creditor of a Participating Company.
51
SECTION 6. CHANGE OF CONTROL
The provisions of this Article C in the event of a Change of
Control shall be in accordance with the restated provisions set forth
in this Section 6 of Article C.
Any provision of the Plan to the contrary notwithstanding, in
the event of a Change of Control (as defined below), any benefit
accrued as of and through the Change of Control, including, without
limitation, by current Executives, retired Executives or their
annuitants or beneficiaries, including those currently receiving
payments under the Plan, shall not be subject to forfeiture or
suspension and shall be distributed in a single lump sum on the last
day of the month following the month in which the Change of Control
occurred, for those individuals currently receiving payments under
Article C of the Plan, and on the last day of the month following the
month in which occurs the event (e.g., termination of employment,
disability or death) giving rise to the obligations of the Company or
Participating Company to pay such benefit, for those individuals not
currently receiving payments under Article C of the Plan. For this
purpose, the accrued benefit shall be calculated based upon the
provisions of the Plan in effect immediately prior to the Change of
Control as if the event giving rise to the obligation of the
Corporation or Participating Company to pay such benefit pursuant to
the preceding sentence had occurred on the date of the Change of
Control and shall not be adversely affected because of any subsequent
events, including, without limitation, termination or amendment of
the Plan or the SNETMPP, or lack of continued status; provided,
however, that any early retirement discount pursuant to Paragraph
2(c) of Section 4 of this Article C as in effect immediately prior to
the Change of Control shall be taken into account, if applicable, to
reduce such accrued benefit only based on actual date of retirement.
For purposes of this Section 6 of Article C, a Change of Control
shall mean:
(A) an acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or more
of either (i) the then outstanding shares of common stock of the
Corporation (the Outstanding Corporation Common Stock") or (ii)
the combined voting power of the then outstanding voting
securities of the Corporation entitled to vote generally in the
election of directors (the "Outstanding Corporation Voting
Securities"); excluding, however, the following: (1) any
acquisition directly from the Corporation, other than an
acquisition by virtue of the exercise of a conversion privilege
unless the security being so converted was itself acquired
directly from the Corporation, (2) any acquisition by the
Corporation, (3) any acquisition by any employee benefit plan
(or related trust) participated in by the Corporation or any
corporation controlled by the Corporation or (4) any acquisition
by any corporation pursuant to a reorganization, merger,
consolidation or similar corporate transaction (in each case, a
"Corporate Transaction"), if, pursuant to such Corporate
Transaction, the conditions described in clauses (i), (ii) and
(iii) of Paragraph (C) of this Section 6 of this Article C are
satisfied; or
52
(B) a change in the composition of the Board of Directors
of the Corporation (the "Board") such that the individuals who,
as of December 12, 1990, constitute the Board (the Board as of
the above date shall be hereinafter referred to as the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, for purposes of this
Section 6 of Article C, that any individual who becomes a member
of the Board subsequent to the above date whose election, or
nomination for election by the shareholders of the Corporation,
was approved by a vote of at least a majority of those
individuals who are members of the Board and who were also
members of the Incumbent Board (or deemed to be such pursuant to
this provision) shall be considered as though such individual
were a member of the Incumbent Board; but, provided further,
that any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election
contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board shall not be so considered as a
member of the Incumbent Board; or
(C) the approval by the shareholders of the Corporation of
a Corporate Transaction or, if consummation of such Corporate
Transaction is subject, at the time of such approval by
shareholders, to the consent of any government or governmental
agency, the obtaining of such consent (either explicitly or
implicitly by consummation); excluding, however, such a
Corporate Transaction pursuant to which (i) all or substantially
all of the individuals and entities who are the beneficial
owners, respectively, of the Outstanding Corporation Common
Stock and Outstanding Corporation Voting Securities immediately
prior to such Corporate Transaction will beneficially own,
directly or indirectly, more than 60% of, respectively, the
outstanding shares of common stock of the corporation resulting
from such Corporate Transaction and the combined voting power of
the outstanding voting securities of such corporation entitled
to vote generally in the election of directors, in substantially
the same proportions as their ownership, immediately prior to
such Corporate Transaction, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting Securities, as
the case may be, (ii) no Person (other than the Corporation, any
employee benefit plan (or related trust) participated in by the
Corporation or such Corporation resulting form such Corporate
Transaction and any Person beneficially owning, immediately
prior to such Corporate Transaction and any person beneficially
owning, immediately prior to such Corporate Transaction,
directly or indirectly, 20% or more of the Outstanding
Corporation Common Stock or Outstanding Voting Securities, as
the case may be) will beneficially own, directly or indirectly,
20% or more of, respectively, the outstanding shares of common
stock of the corporation resulting from such Corporate
Transaction or the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally
in the election of directors and (iii) individuals who were
members of the Incumbent Board will constitute at least a
majority of the members of the board of directors of the
corporation resulting from such Corporate Transaction; or
53
(D) the approval by the shareholders of the Corporation of
(i) a complete liquidation or dissolution of the Corporation or
(ii) the sale or other disposition of all or substantially all
of the assets of the Corporation; excluding, however, such a
sale or other disposition to a corporation, with respect to
which following such sale or other disposition, (l) more than
60% of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power of the
then outstanding voting securities of such corporation entitled
to vote generally in the election of directors will be then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting Securities
immediately prior to such sale of other disposition in
substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the
Outstanding Corporation Common Stock and Outstanding corporation
Voting Securities, as the case may be, (2) no Person (other than
the Corporation and any employee benefit plan (or related trust)
participated in by the Corporation or such corporation and any
Person beneficially owning, immediately prior to such sale or
other disposition, directly or indirectly, 20% or more of the
Outstanding Corporation Common Stock or Outstanding corporation
Voting Securities, as the case may be) will beneficially own,
directly or indirectly, 20% or more for, respectively, the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities
of such corporation entitled to vote generally in the election
of directors and (3) individuals who were members of the
Incumbent Board will constitute at least a majority of the
members of the board of directors of such corporation.
54
SECTION 7. PLAN MODIFICATION APPLICABLE TO ARTICLE C
The provisions for modification of this Article C shall be in
accordance with the restated provisions set forth in this Section 7
of Article C.
The Board may from time to time make changes in the Plan. In
addition, the Senior Vice President-Organization Development of the
Corporation (or any successor to that officer's responsibilities),
with the concurrence of the Senior Vice President and General Counsel
of the Corporation (or any successor to that officer's
responsibilities), shall be authorized to make minor or
administrative changes to the Plan, as well as changes dictated by
the requirements of federal or state statutes applicable to any
Participating Company or authorized or made desirable by such
statutes. Such changes shall not affect the rights of any Executive,
without the Executive's consent, to any benefit under the Plan to
which such person may have previously become entitled as a result of
a disability, death, termination of employment or a Change in Control
which occurred prior to the effective date of such change.