1 (10) (iii) (A)3
LUCENT TECHNOLOGIES INC.
OFFICER LIFE INSURANCE OPTION PLAN
1. PURPOSE
The purpose of the Lucent Technologies Inc. Officer Life Insurance
Option Plan (the "Plan") is to provide Officers of Lucent Technologies
Inc. (the "Company") insurance coverage pursuant to a split-dollar life
insurance arrangement.
2. DEFINITIONS
For purposes of this Plan, the following terms have the meanings set
forth below:
2.01 AGREEMENT means the Agreement executed by Participant (or
Assignee) and Company implementing the terms of this Plan.
2.02 ALTERNATIVE DEATH BENEFIT AMOUNT means, with respect to a
Participant, an amount that, after subtracting any Company
federal, state, and local income tax savings resulting from the
deductibility of the payment for corporate tax purposes, is
equal to the Participant's Coverage Amount. The Alternative
Death Benefit Amount shall be determined at the time the payment
is to be made, based on Company's federal, state and local
income tax rate (calculated at the highest marginal tax rate
then applicable to Company, but net of any federal deduction for
state and local taxes) at the time of the payment, and shall be
determined by Company.
2.03 ASSIGNEE means that person or entity to whom the Participant has
assigned his/her interest in the Policy by designating said
Assignee on forms provided by Company. If the Participant's
Policy is a Survivorship Policy and if the Participant has not
designated an Assignee, then, after the Participant's death, if
the Participant's spouse survives, the Assignee shall be that
person or entity who succeeds to the Participant's interest in
the Participant's Policy after the death of the Participant.
2.04 CHANGE IN CONTROL means a Change in Control of Company, as such
term is defined in the Lucent Technologies Inc. 1996 Long Term
Incentive Program, as amended from time to time, or any
successor plan to such Program.
2.05 COMMITTEE means the Corporate Governance and Compensation
Committee of the Board of Directors of Company.
2.06 EFFECTIVE DATE means December 18, 1996.
2.07 EMPLOYEE means an employee or former employee of Company who is
eligible to participate in the Plan.
2.08 COMPANY means Lucent Technologies Inc., a Delaware corporation.
2.09 COMPANY DEATH BENEFIT means the portion of the Policy's death
benefit payable to Company as indicated in the Participant's
Agreement.
2.10 INSURER means, with respect to a Participant's Policy, the
insurance company issuing the Policy on the Participant's life
(or on the lives of the Participant and a Participant's spouse,
in the case of a Survivorship Policy pursuant to the provisions
of the Plan).
2.11 PARTICIPANT means an eligible Employee who elects to participate
in the Plan.
2 (10) (iii) (A)3
2.12 PARTICIPANT'S COVERAGE AMOUNT means the portion of the Policy's
death benefit payable to the beneficiary(ies) of the Participant
(or Assignee).
2.13 POLICY means the life insurance coverage acquired on the life of
the Participant (or on the lives of the Participant and a
Participant's spouse, in the case of a Survivorship Policy) by
Company.
2.14 POLICY OWNER means the Company.
2.15 POLICY VESTING DATE means the date the Participant completes
his/her commitment to forego the amount of compensation
specified in the Participant's Election to Forego Compensation.
2.16 PREMIUM means, with respect to a Policy on the life of any
Participant (and/or the lives of any Participant and a
Participant's spouse, as the case may be), the amount Company is
obligated, pursuant to the terms of the Agreement, to pay to the
Insurer with respect to such Policy.
2.17 SURVIVORSHIP POLICY means a Policy insuring the lives of the
Participant and a Participant's spouse, with the death benefit
payable at the death of the last survivor of the Participant and
his/her spouse.
3. PARTICIPATION
3.01 ELIGIBILITY. All Officers of Company deemed eligible by the
Committee shall be eligible to participate in the Plan.
3.02 ELECTION TO FOREGO COMPENSATION. As a condition of participating
in the Plan, each Participant will be required to make an
election in which the Participant will commit to forego the
receipt of a specified dollar amount of compensation for a
period of up to four years beginning on the Policy's effective
date (as specified in the Agreement), with such election to
remain in effect until the first to occur of: (a) the completion
of the commitment to forego compensation; (b) the date on which
the Participant terminates employment with Company for any
reason; (c) the date on which the Participant is demoted to a
position ineligible to participate in the Plan; or (d) the date
on which the Agreement terminates. The Participant shall make
such election by execution of an "Election to Forego
Compensation" prior to the Policy's effective date. Any foregone
compensation will, depending upon the Participant's election,
reduce the payout to the Participant under the Lucent
Technologies Inc. Short Term Incentive Plan or successor to such
Plan and/or the Participant's salary during that period. A
Participant's election to forego compensation shall be
irrevocable, provided, however, that the election may be
modified at anytime with respect to compensation not yet earned
by a written document delivered to the Company. The amounts that
a Participant agrees to forego pursuant to such election, unless
precluded by tax or other laws to the contrary, shall be
included in determining a Participant's compensation for
purposes of any benefit plans maintained by the Company.
4. AMOUNT AND TYPE OF COVERAGE
The amount and type of coverage provided under the Policy shall be that
amount and type specified in the Agreement.
5. PAYMENT OF PREMIUMS
5.01 COMPANY PAYMENTS. The amount, timing, and duration of Premiums
to be paid by Company shall be specified in the Agreement.
3 (10) (iii) (A)3
5.02 PARTICIPANT PAYMENTS. Unless otherwise provided in an Agreement,
a Participant (or Assignee) shall not be required to pay any
portion of the Premium due on the Policy. However, if the
Participant's Election to Forego Compensation is no longer in
effect under Section 3.02 because of the Participant's
termination of employment, then the Participant (or Assignee)
may, within thirty (30) days of the Participant's termination of
employment, elect to pay to Company as a premium payment the
difference (or some portion thereof) between the compensation
the Participant elected to forego and the premiums paid by
Company up to such date (hereinafter referred to as the
"Participant Special Contribution").
5.03 TERMINATION EVENTS. Except as provided in Section 5.04,
Company's obligation to pay Premiums with respect to a Policy
shall terminate:
a. Automatically upon the death of the Participant (or upon
the death of the survivor of the Participant and the
Participant's spouse, if the Policy is a Survivorship
Policy).
b. Upon the written action of the Committee, if the
Participant terminates employment with Company for any
reason other than death prior to the Policy Vesting
Date.
c. Upon the mutual written agreement of Company and
Participant (or Assignee).
5.04 IRREVOCABLE OBLIGATION. Notwithstanding any other provision of
the Plan, (a) Company's obligation to pay Policy Premiums,
unless the Participant is demoted to a position ineligible to
participate in the Plan, shall be irrevocable while such person
is employed by Company, and shall remain irrevocable thereafter
unless the Participant terminates employment with Company for
any reason other than death prior to the Policy Vesting Date and
(b) Company's obligation to pay Policy Premiums for a
Participant who obtains an irrevocable right pursuant to the
provisions of Section 9 hereof relating to Change in Control
thereafter shall be irrevocable.
6. POLICY OWNERSHIP
6.01 OWNERSHIP. Company shall be the owner of any Policy and shall be
entitled to exercise the rights of ownership, except that the
following rights shall be exercisable by the Participant (or
Assignee): (i) the right to designate the beneficiary(ies) to
receive payment of that portion of the death benefit under such
Policy equal to the Participant's Coverage Amount unless there
is an election for Alternative Death Benefit in effect; (ii) the
right to increase or decrease the face amount of the Policy
(subject to any conditions or restrictions imposed by the
Insurer); and (iii) the right to assign any part or all of the
Participant's rights under the Policy to any person, entity or
trust by the execution of a written instrument prescribed by
Company that is delivered to Company. Company shall not borrow
from, hypothecate, withdraw cash value from, surrender in whole
or in part, cancel, or in any other manner encumber a Policy
without the prior written consent of the Participant (or
Assignee). Company shall not take any other action with respect
to a Policy that may reduce the Participant's Coverage Amount
without the prior written consent of the Participant (or
Assignee). The claim of the Participant, Assignee, or any
beneficiary to the portion of the death benefit under the
Policy, up to but not in excess of the amount of the Company
Death Benefit, which is attributable to the cash values of the
Policies shall be an unsecured claim against the general assets
of the Company and no provision contained in the Plan shall be
construed to give any Participant, Assignee, or beneficiary a
security interest in such cash values. If the Company becomes
insolvent, the Company's creditors shall have the right to
exercise all rights of ownership of the Policy conferred on the
Company. Company shall be
4 (10) (iii) (A)3
considered "insolvent" for purposes of this Plan if (i) Company
is unable to pay its debts as they become due, or (ii) Company
is subject to a pending proceeding as a debtor under the United
States Bankruptcy Code.
6.02 POSSESSION OF POLICY. Company shall keep possession of the
Policy. Company agrees to make the Policy available to the
Participant (or Assignee) or to the Insurer at such times, and
on such terms as Company determines for the sole purposes of
endorsing or filing any change of beneficiary or assignment on
the Policy.
6.03 INVESTMENT OF CASH VALUES. If the Policy provides the Policy
owner with a choice of investment funds for the cash values,
Company shall invest the cash values in the funds selected by
and in the proportions specified by the Participant (or
Assignee). Company agrees to make any investment election within
30 days of receipt of a written investment request by the
Participant (or Assignee).
7. TERMINATION OF EMPLOYMENT
7.01 IMPACT OF TERMINATION OR DEMOTION. If, prior to the Policy
Vesting Date, a Participant (i) terminates employment with
Company or (ii) is demoted to a position ineligible to
participate in the Plan, then:
a. Company's obligation to pay premiums with respect to a
Participant's Policy shall terminate as provided in
Sections 5.03 and 5.04.
b. Participant's obligation to forego compensation pursuant
to an election made under Section 3.02 shall terminate.
c. The Policy's face amount shall be reduced to an amount
determined by multiplying the initial face amount and
Company Death Benefit by a fraction, the numerator of
which is the amount of premiums paid by Company plus any
Participant Special Contribution under Section 5.02, and
the denominator of which is the total premium payments
Company agreed to pay under the terms of the Agreement.
The Participant (or Assignee) and Company agree to
execute an amendment to the Agreement and to complete
any forms required by the Insurer to implement these
changes.
7.02 NON-COMPETITIVE PROVISION. Notwithstanding any other provisions
of this Plan or Agreement to the contrary, if a participant
terminates employment with Company (including a termination
after the Policy Vesting Date) and without consent of the
Committee, establishes a relationship with a competitor of
Company or engages in any competitive activity as provided in
the Lucent Technologies Inc. Non-Competition Guideline, then:
a. The Agreement with the Participant (or Assignee) shall
immediately terminate.
b. Company shall withdraw from the cash values of the
Policy an amount equal to its cumulative premium
payments and, following the withdrawal, shall transfer
ownership of the Policy to the Participant (or
Assignee).
7.03 ALLOCATION OF DEATH BENEFIT. In the event of a termination due
to the death of the Participant (or the death of the survivor of
the Participant and the Participant's spouse, if the Policy is a
Survivorship Policy), the death benefit under the Policy shall
be divided as follows:
5 (10) (iii) (A)3
a. Company shall be entitled to receive an amount equal to
the Company Death Benefit. If the Policy provides for a
death benefit equal to the sum of the face amount of the
Policy and any account or accumulation value, any
Company Death Benefit should first be paid from the
account or accumulation value portion of the death
benefit.
b. The beneficiary(ies) of the Participant (or Assignee)
shall be entitled to receive the Participant's Coverage
Amount, which shall consist of the excess, if any, of
the Policy's death benefit over the Company Death
Benefit.
Company agrees to execute an endorsement to the Policy issued to
it by the Insurer providing for the division of the Policy's
death benefit in accordance with the provisions of this Section.
Notwithstanding the provisions of this Section, if the Policy's
death benefit becomes payable while there is an Alternative
Death Benefit Election in effect for the Participant (or
Assignee) pursuant to Section 8, then the entire Policy's death
benefit shall be paid to Company.
8. ALTERNATIVE DEATH BENEFIT ELECTION.
A Participant (or Assignee) may elect to receive an Alternative Death
Benefit in lieu of the insurance benefit provided under the Plan. The
Alternative Death Benefit shall be paid by Company from the general
funds of Company, and shall not constitute an insurance benefit. It
shall be paid by Company to Participant's (or Assignee's)
beneficiary(ies) at the time Participant's death benefit would have been
paid (at Participant's death for single life coverage, or at the death
of the survivor of the Participant and the Participant's spouse for
survivorship coverage). The amount of the payment shall be equal to the
Alternative Death Benefit Amount. As long as an Alternative Death
Benefit Election is in effect, the beneficiary(ies) of the Participant
(or Assignee) shall receive only the Alternative Death Benefit, and
shall not be entitled to receive any portion of any death benefits that
would become payable under the Participant's Policy, and the Participant
(or Assignee) shall cooperate with Company in effecting a change of
beneficiary of the Participant's Policy to achieve such result.
9. CHANGE IN CONTROL
If there is a Change in Control:
a. the Plan and Company's obligation to pay Policy Premiums
hereunder shall become irrevocable for all Participants in the
plan at the time of the Change in Control;
b. Company immediately shall transfer the ownership of all
Participants' Policies to an irrevocable trust to: (i) pay any
premiums projected to be payable on all Policies after the
Change in Control and (ii) pay any Alternative Death Benefit
that becomes payable under Section 8 of this Plan; and
c. Company immediately shall fund such irrevocable trust with an
amount sufficient to pay all necessary projected future premiums
for all Participants' Policies.
6 (10) (iii) (A)3
Notwithstanding the creation and funding of an irrevocable trust in
accordance with the provisions of this Section, Company or its successor
shall continue to be responsible for the Premium costs associated with
the Participants' Policies and any Alternative Death Benefits payable
under Section 8 if such amounts are not paid by the trust for any
reason, or if the trust's assets become insufficient to pay any required
amounts.
10. COMPANY DEFAULT
10.01 COMPANY DEFAULT. A Company Default shall be deemed to have
occurred with respect to a Policy if Company fails to pay a
Premium on the Policy as required under the terms of the
Agreement within 30 days after the due date for such Premium, or
if Company processes or attempts to process a policy loan, or a
complete or partial surrender, or a cash value withdrawal
without prior written approval from Participant (or Assignee).
10.02 RIGHTS UPON COMPANY DEFAULT. In the event of Company Default as
described in Section 10.01, the Participant (or Assignee) shall
have the right to require Company to transfer its interest in
the Participant's Policy to Participant (or Assignee). The
Participant (or Assignee) may exercise this right by notifying
Company, in writing, within sixty (60) days after the Company
Default occurs. Upon receipt of such notice, Company shall
immediately transfer its rights in the Policy to the Participant
(or Assignee) and Company shall thereafter have no rights with
respect to such Policy. A Participant's (or Assignee's) failure
to exercise its rights under this Section shall not be deemed to
release Company from any of its obligations under the Plan, and
shall not preclude the Participant (or Assignee) from seeking
other remedies with respect to the Company Default. Also, a
Participant's (or Assignee's) failure to exercise its rights
under this Section will not preclude the Participant (or
Assignee) from exercising such rights upon later Company
Default.
11. GOVERNING LAWS & NOTICES
11.01 GOVERNING LAW.
This Plan shall be governed by and construed in accordance with
the substantive law of the State of New Jersey without giving
effect to the choice of law rules of the State of New Jersey.
11.02 NOTICES. All notices hereunder shall be in writing and sent by
first class mail with postage prepaid. Any notice to Company
shall be addressed to the Attention of Senior Vice President
Human Resources at Lucent Technologies Inc., 000 Xxxxxxxx
Xxxxxx, Xxxxxx Xxxx, XX 00000. Any notice to the Participant (or
Assignee) shall be addressed to the Participant (or Assignee) at
the address following such party's signature on his/her
Agreement. Any party may change its address by giving written
notice of such change to the other party pursuant to this
Section.
12. MISCELLANEOUS PROVISIONS
12.01 This Plan and any Agreement executed hereunder shall not be
deemed to constitute a contract of employment between an
Employee and Company, or a Participant and Company, nor shall
any provision restrict the right of Company to discharge an
Employee or Participant, or to restrict the right of an Employee
or Participant to terminate employment.
12.02 The masculine pronoun includes the feminine and the singular
includes the plural where appropriate for valid construction.
7 (10) (iii) (A)3
12.03 In order to be eligible to participate in this Plan, the
Participant (and, in the case of a Survivorship Policy, the
Participant's spouse) shall cooperate with the Insurer by
furnishing any and all information requested by the Insurer in
order to facilitate the issuance of the policy, including
furnishing such medical information and taking such physical
examinations as the Insurer may deem necessary. In the absence
of such cooperation, Company shall have no further obligation to
the Participant to allow him/her to participate in the Plan.
12.04 If a Participant (or a Participant's spouse, if the Policy is a
Survivorship Policy) commits suicide within two years of the
Participant's Policy's issue, or if the Participant (or
Participant's spouse, if the Policy is a Survivorship Policy)
makes any material misstatement of information or nondisclosure
of medical history pertaining to the Policy's issue and dies
within two years of the Policy's issue, then no benefits will be
payable to the beneficiary(ies) of such Participant (or
Assignee, where applicable).
12.05 In the event of any inconsistency between the terms of this Plan
as described herein and the terms of any Policy purchased
hereunder or any related Agreement, the terms of such Policy or
Agreement shall be controlling as to that Participant, his/her
Assignee (if any), his successor-in-interest (if any) and
his/her beneficiary or beneficiaries.
13. AMENDMENT, TERMINATION, ADMINISTRATION, AND SUCCESSORS
13.01 AMENDMENT. The Plan may be modified or amended by Company at any
time, but an amendment which is adverse to a Participant (or
Assignee) will not apply to such Participant (or Assignee)
unless such Participant (or Assignee) consents, in writing, to
the amendment.
13.02 TERMINATION. Company may terminate the Plan at any time, but any
such termination will not affect the rights of any Participant
(or Assignee) unless such Participant (or Assignee) consents, in
writing, to such termination.
13.03 ADMINISTRATION. This Plan shall be administered by the
Committee. The Committee, in its sole discretion, shall have the
authority to make, amend, interpret, and enforce all rules and
regulations for the administration of the Plan, and to decide or
resolve all questions, including interpretation of the Plan, as
may arise in connection with the Plan. In the administration of
this Plan, the Committee may employ agents and delegate to them
or to others (including Employees) such administrative duties as
it sees fit. The Committee may consult with counsel, who may be
counsel to Company. The decision or action of the Committee (or
its designee) with respect to any question arising out of, or in
connection with, the administration, interpretation and
application of this Plan shall be final and conclusive and
binding upon all persons having any interest in the Plan.
13.04 SUCCESSORS. The terms and conditions of this Plan shall inure to
the benefit of and bind Company and the Participant and their
successors, assignees (including any Assignee), and
representatives. The Employer shall have the right to absolutely
and irrevocably assign its rights, title and interest in a
Policy without the consent of the Participant (or Assignee).
8 (10) (iii) (A)3
14. CLAIMS PROCEDURE
Any controversy or claim arising out of or relating to this Plan shall
be filed with the Committee which shall make all determinations
concerning such claim. Any decision by the Committee denying such claim
shall be in writing and shall be delivered to all parties in interest in
accordance with the notice provisions of Section 11.02 herein. Such
decision shall set forth the reasons for denial in plain language.
Pertinent provisions of the Plan shall be cited and, where appropriate,
an explanation as to how the claimant can perfect the claim will be
provided. This notice of denial of benefits will be provided within
ninety (90) days of the Committee's receipt of the claim for benefits.
If the Committee fails to notify the claimant of its decision regarding
the claim, the claim shall be considered denied, and the claimant then
shall be permitted to proceed with an appeal as provided for in this
Section.
A claimant who has been completely or partially denied a benefit shall
be entitled to appeal this denial of his/her claim by filing a written
statement of his/her position with the Committee no later than sixty
(60) days after receipt of the written notification of such denial. The
Committee shall schedule an opportunity for a full and fair review of
the issue within thirty (30) days of receipt of the appeal. The decision
on review shall set forth specific reasons for the decision, and shall
cite specific references to the pertinent Plan provisions on which the
decision is based.
Following the review of any additional information submitted by the
claimant, either through the hearing process or otherwise, the Committee
shall render a decision on the review of the denied claim in the
following manner:
a. The Committee shall make its decision regarding the merits of
the denied claim within sixty (60) days following receipt of the
request for review (or within 120 days after such receipt, in a
case where there are special circumstances requiring extension
of time for reviewing the appealed claim). The Committee shall
deliver the decision to the claimant in writing. If an extension
of time for reviewing the appealed claim is required because of
special circumstances, written notice of the extension shall be
furnished to the claimant prior to the commencement of the
extension. If the decision on review is not furnished within the
prescribed time, the claim shall be deemed denied on review.
b. The decision on review shall set forth specific reasons for the
decision, and shall cite specific references to the pertinent
Plan provisions on which the decision is based.
9 (10) (iii) (A)3
IN WITNESS WHEREOF, the Company has caused this Plan to be effective on December
18, 1996 and to be executed on this day of December, 1996.
For Lucent Technologies Inc.
/S/ Xxxx X. Xxxxx
By:
Xxxx X. Xxxxx
Senior Vice President, Human Resources
/S/ Xxxxxx X. Xxxxxx
Attest:
Xxxxxx X. Xxxxxx
Vice President - Law
Assistant Secretary
