Exhibit 10-xx

AT&T

SENIOR MANAGEMENT LONG TERM

DISABILITY AND SURVIVOR PROTECTION PLAN

 
 
 
 
 

 

As Amended and Restated effective January 1, 1998
With Amendments through December 31, 2008
 

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PURPOSE
 

The Senior Management Long Term Disability and Survivor Protection Plan (the
“Plan”) has provided disability benefits to Senior Managers of AT&T Corp. The
Plan also has provided a minimum retirement benefit (from all AT&T sources) to a
Senior Manager who satisfies certain age and service requirements at termination
of employment. The Surviving Spouse of a Senior Manager is also entitled to a
minimum Surviving Spouse benefit (from all AT&T sources) if the Senior Manager
dies while actively employed, or after termination of employment with
eligibility for a minimum retirement benefit.

Effective December 31, 2007, the Plan was amended to eliminate the disability
benefit with respect to future disabilities.  Also effective after December 31,
2007, new Senior Managers do not become participants in this Plan.

During the period from January 1, 2005 to December 31, 2008, the Plan has been
operated in good faith compliance with the provisions of Code Section 409A,
Internal Revenue Notice 2005-1, and the final Treasury Regulations for Code
Section 409A, and any other generally applicable guidance published in the
Internal Revenue Service Bulletin with an effective date prior to January 1,
2009.  On or after January 1, 2009, this Plan shall be interpreted and construed
consistent with the requirements of Code Section 409A and all applicable
guidance issued thereunder with respect to all accrued benefits under this Plan,
including, except as indicated below, those benefits that may be otherwise
treated as existing prior to the statutory effective date of Code Section 409A
(“grandfathered benefits”) within the meaning of Treasury Regulation Section
1.409A-6(a)(3).  The preceding sentence notwithstanding, it is the intention of
the Company that the grandfathering provisions of Code Section 409A be applied
under this Plan with respect to any Participant (and any surviving Spouse,
Beneficiary or Estate of such Participant) who terminated employment prior to
January 1, 2005, with respect to all benefits earned under the Plan with respect
to such Participant prior to termination of employment.  If any individual who
terminated employment prior to January 1, 2005 is rehired after December 31,
2004 and earns additional benefits following reemployment the terms of the Plan
shall be applied separately with respect to benefits earned prior to January 1,
2005 and with respect to benefits earned following rehire. The Company reserves
the right to amend any provision of the Plan or any election submitted by a
Participant, or take any other action that the Company deems appropriate to
ensure compliance with Code Section 409A, including altering the time and form
of any distribution so as to accomplish the intended purpose of this Plan.
 

 
ARTICLE 1
DEFINITIONS
 

For the purpose of the Plan, the following terms shall have the meanings set
forth in this Article 1.

1.01.  
“Administrator” shall mean the person identified as the Pension Plan
Administrator under the Pension Plan or such other person or entity designated
by the Company.

1.02.  
“Affiliated Corporation” shall mean any corporation or other entity of which 50
percent or more of the voting stock is owned directly or indirectly by AT&T.

1.03.  
“AT&T” or “Company” shall mean AT&T Corp. (formerly American Telephone and
Telegraph Company), a New York Corporation, or its successors.

1.04.  
“AT&T Inc.” shall mean AT&T Inc. (formerly SBC Communications Inc.), a Delaware
Corporation, which acquired AT&T Corp. effective November 18, 2005 pursuant to
that certain merger agreement dated January 30, 2005.

1.05.  
“Annual Basic Pay” shall mean the Participant’s annual base salary rate on the
last day the Participant was on the active payroll plus an amount determined
with reference to the Short Term Plan, but excluding all differentials regarded
as temporary or extra payments and all awards and distributions made under the
Long Term Plan.  For purposes of determining the Disability Allowance under
Article A-2, the amount determined with reference to the Short Term Plan shall
be the last Short Term Award granted to the Participant prior to the last day
the Participant was on the active payroll.  For purposes of determining the
Minimum Retirement Benefit under Article 3 and Article A-3, and the Surviving
Spouse Benefit under Article 4 and Article A-4, the amount determined with
reference to the Short Term Plan shall be the greater of (a) the Short Term
Award for the last full calendar year of service prior to the earlier of the
Participant’s retirement, termination or death, or (b) the Short Term Award
granted with respect to any later partial calendar year of service.

1.06.  
“Board” shall mean the Board of Directors of AT&T Corp.

1.07.  
“Committee” shall mean the Employees’ Benefit Committee appointed by the Company
to administer the Pension Plan, or any successor to such Employees’ Benefit
Committee.

1.08.  
“Leave of Absence” shall mean where a person is absent from employment with AT&T
on a leave of absence, military leave, or sick leave, where the leave is given
in order to prevent a break in the continuity of term of employment, and
permission for such leave is granted (and not revoked) in conformity with the
rules of the employer that employs the individual, as adopted from time to time,
and the employee is reasonably expected to return to service. Except as set
forth below, the leave shall not exceed six (6) months for purposes of this
Plan, and the employee shall Terminate Employment upon termination of such leave
if the employee does not return to work prior to or upon expiration of such six
(6) month period, unless the individual retains a right to reemployment under
law or by contract. A twenty-nine (29) month limitation shall apply in lieu of
such six (6) month limitation if the leave is due to the employee being
“disabled” (within the meaning of Treasury Regulation Section 1.409A-3(i)(4)). A
Leave of Absence shall not commence or shall be deemed to cease under the Plan
where the employee has incurred a Termination of Employment.

1.09.  
“Disability Benefit Plan” shall mean a Participating Company’s Sickness and
Accident Disability Benefit Plan.

1.10.  
“Long Term Plan” shall mean the AT&T Senior Management Long Term Incentive
Program or successor long term incentive plans.

1.11.       (a)
“Participant” for purposes of the Disability Allowance under Article A-2, shall
mean an employee of a Participating Company holding a position evaluated or
classified as above “E-band” or equivalent, except that no employee who has been
notified in writing that the assignment to such position will be temporary shall
be considered as a Participant for any purpose under the Plan.  Effective
January 1, 2004, for purposes of Section A-2.04, “Participant” shall mean an
employee of a Participating Company holding a position as a Senior Manager.
Notwithstanding the preceding, effective January 1, 2008, an individual shall be
a Participant for purposes of the Disability Allowance only if such individual
is considered “disabled” pursuant to Section A-2.01(a) prior to January 1, 2008,
and only with respect to a continuous uninterrupted period of disability
commencing prior to January 1, 2008.

 
(b)
“Participant” for purposes of the Minimum Retirement Benefit under Article 3,
shall mean (i) an employee of a Participating Company who holds a position
evaluated or classified as above “E-band” or equivalent, except that no employee
who has been notified in writing that the assignment to such position will be
temporary shall be considered as a Participant for any purpose under the Plan,
or (ii) effective January 1, 2004, an employee of a Participating Company
holding a position as a Senior Manager. For purposes of the Minimum Retirement
Benefit under Article 3, “Participant” shall also include a former employee who
met the requirements of the preceding sentence on the last day of employment
with AT&T Corp. and who (i) terminated employment with five or more years of
service and on or after age 62, or (ii) retired on a service pension under the
Pension Plan or, (iii) effective for a termination of employment on or after
January 1, 1998, was Service Pension Eligible as defined herein at the date of
termination of employment.

 
Notwithstanding the preceding, an individual who is not a Participant on
December 31, 2007 shall not become a Participant under this Plan.

 
(c)
“Participant” for purposes of the Surviving Spouse Benefit under Article 4,
shall mean an employee described in Section 1.11(a) above, or a former employee
of a Participating Company who was a Participant under Section 1.11(a) on the
last day of employment, if such former employee (1) is eligible to receive a
Disability Allowance under Article 2, or (2) is eligible to receive a Minimum
Retirement Benefit under Article 3.

 
(d)
“Participant” for purposes of the Death Benefit under Article 5, shall mean a
former employee of a Participating Company who was a Participant under Section
1.11(b) above on the last day of employment, if such former employee is eligible
to receive a Disability Allowance under Article 2, or is eligible to receive a
Minimum Retirement Benefit under Article 3.

      (e)  
For purposes of Sections 1.11(b), 1.11(c), and 1.11(d) above, a former employee
shall be considered to be eligible to receive a Disability Allowance under
Article 2 or a Minimum Retirement Benefit under Article 3 if he or she has met
the conditions specified in Article 2 or in Article 3, even though the receipt
of other benefits by such former employee precludes his or her receipt of any
benefits under Article 2 or Article 3.

      (f)  
For purposes of Section 1.11, Senior Manager shall mean a management employee of
a Participating Company classified as “Manager 6” in a non-banded environment,
or at salary grade level above “E-band” or its equivalent, in a banded
environment.

1.12.  
“Participating Company” shall mean AT&T Corp. and any Affiliated Corporation
that has elected, with the approval of the Committee as required by Section
8.01, to participate in the Plan.

1.13.  
“Pension Plan” shall mean the AT&T Management Pension Plan or successor pension
plans.

1.14.  
“Plan” shall mean this AT&T Senior Management Long Term Disability and Survivor
Protection Plan.

1.15.  
“SERP Participant” shall mean an officer who is designated as a participant in
the AT&T Inc. 2005 Supplemental Employee Retirement Plan (the “AT&T SERP”). The
initial day of participation in such plan is the named officer’s “SERP Effective
Date” as defined in the AT&T SERP. For purposes of this Plan, such individual is
considered a SERP Participant whether or not he or she has satisfied the vesting
requirements of the SERP.

1.16.  
“SERP Vesting Date” shall mean the date a SERP Participant becomes vested in his
or her benefit under the 2005 Supplemental Employee Retirement Plan of AT&T
Inc., or January 1, 2011 if later.

1.17.  
“Service Pension Eligible” means termination of employment with a combination of
age and/or Term of Employment as follows:

(i)          the Participant’s Term of Employment has been at least thirty
years, regardless of his or her age, or

(ii)          the Participant’s Term of Employment has been at least twenty-five
years and he or she has reached the age of fifty years, or

(iii)          the Participant’s Term of Employment has been at least twenty
years and he or she has reached the age of fifty-five years, or

(iv)          the Participant’s Term of Employment has been at least ten years
and he or she has reached the age of sixty-five years

For purposes of determining whether a Participant is Service Pension Eligible at
his or her termination of employment on or after January 1, 1998, “term of
employment” shall include the period of a transition leave of absence, as
defined in the Pension Plan, determined in accordance with the provisions of the
Pension Plan.

1.18.  
“Short Term Award” means the actual amount awarded (including any amounts
deferred pursuant to the AT&T Senior Management Incentive Award Deferral Plan)
annually to a Participant pursuant to the AT&T Short Term Incentive Plan or
successor short term incentive plans.  Short Term Awards shall, for purposes of
this Plan, be considered to be awarded on the last day of the performance period
with respect to which they are earned.

1.19.  
“Short Term Plan” shall mean the AT&T Short Term Incentive Plan or predecessor
short term incentive plans.

1.20.  
“Specified Employee” shall mean any Participant who is a Key Employee (as
defined in Code Section 416(i) without regard to paragraph (5) thereof), as
determined by AT&T in accordance with its uniform policy with respect to all
arrangements subject to Code Section 409A, based upon the 12-month period ending
on each December 31st (such 12-month period is referred to below as the
identification period). All Participants who are determined to be Key Employees
under Code Section 416(i) (without regard to paragraph (5) thereof) during the
identification period shall be treated as Key Employees for purposes of the Plan
during the 12-month period that begins on the first day of the 4th month
following the close of such identification period.

1.21.  
“Surviving Spouse” means a deceased Participant’s surviving spouse of the
opposite sex who is such Participant’s “spouse” within the meaning of the
Qualified Plan, as defined in the respective provisions of the Qualified
Plan.  Notwithstanding the preceding, if an alternate payee (as that term is
defined in Section 414(p) of the Code) is deemed the surviving spouse for
purposes of all or a portion of the Participant’s benefit under the Qualified
Plan, such alternate payee shall not be deemed to be the “spouse” for any
purpose under this Plan

1.22.  
“Term of Employment” shall have the same meaning as the meaning assigned to such
expression in the Pension Plan.

1.23.  
“Termination of Employment” shall mean the ceasing of the Participant’s
employment from the AT&T controlled group of companies for any reason
whatsoever, whether voluntarily or involuntarily. References herein to
Termination of Employment, Terminate Employment, or a similar reference, shall
mean the event where the employee has a separation from service, as defined
under Code Section 409A, with all members of the AT&T controlled group.
Notwithstanding the foregoing, the employment relationship of a Participant with
the AT&T controlled group is considered to remain intact while the individual is
on a Leave of Absence. With respect to periods on or after November 18, 2005,
the controlled group shall be determined with respect to entities required to be
aggregated recognizing the acquisition of AT&T Corp. by SBC Communications Inc.
(now known as AT&T Inc.).

 
ARTICLE 2
DISABILITY ALLOWANCE
 

Disability benefits under this Plan are provided only with respect to an
eligible Participant whose disability commenced prior to January 1, 2008.  Plan
provisions applicable to disability benefits are described in Article A-2.

 
ARTICLE 3
MINIMUM RETIREMENT BENEFIT
 

This Article 3 describes the Minimum Retirement Benefit payable with respect to
a Participant who terminates employment on or after December 1, 2008. The
provisions of Article A-3 describe the Minimum Retirement Benefit with respect
to a Participant who terminates employment prior to December 1, 2008.

3.01.
A Participant described in Section 1.11(a) whose Term of Employment has been
five years or more who terminates employment on or after his or her sixty-second
birthday, or a Participant described in Section 1.11(b) who is Service Pension
Eligible at the time of his or her termination of employment, shall be eligible
to receive a monthly minimum retirement benefit equal to one and one-quarter
percent of Participant’s Annual Basic Pay, as defined in Section 1.05, on the
last day the Participant was on the active payroll reduced by the sum of the
Immediate Annuity Value of the Qualified Plan, and the Immediate Annuity Value
of the AT&T Nonqualified Pension Plans.  For purposes of this Section 3.01,

 
(a) the Immediate Annuity Value of the Qualified Plan means the monthly amount
of annuity payments that would be paid under the Pension Plan on a single life,
level payment annuity basis assuming payment of such plan benefit commenced
immediately upon the Participant’s Termination of Employment, notwithstanding
the form of payment of such Pension Plan benefit actually made to the
Participant and notwithstanding the actual commencement date of such Pension
Plan benefit; and

 
(b) the Immediate Annuity Value of the AT&T Nonqualified Pension Plans shall
mean the monthly amount of annuity benefits paid under the AT&T Excess Benefit
and Compensation Plan and the AT&T Non-Qualified Pension Plan, as applicable,
commencing at the actual time and pursuant to the actual form such benefit
payments are made from such plans; provided, however, that if such payments are
made in a form of payment other than a life annuity, the “Immediate Annuity
Value” for purposes of this Section 3.01(b) shall mean the amount payable as a
single life annuity that is the actuarial equivalent of the payments made from
such plans. Actuarial equivalence for this purpose shall be determined based on
the actuarial assumptions and methodology in effect under the SERP as of the
date payments commence.

 
Notwithstanding the preceding, with respect to a Participant whose Termination
of Employment occurs after the SERP Vesting Date, as defined herein, a benefit
shall be calculated pursuant to the provisions of the preceding paragraph as of
the Participant’s SERP Vesting Date, as if the Participant had a Termination of
Employment and benefits under the Pension Plan and AT&T Nonqualified Pension
Plans had commenced as of such date.  Thereafter, the Minimum Retirement Benefit
shall be a frozen amount equal to the amount so determined as of such date.  If
a Participant is not Service Pension Eligible or is not age 62 or older with
five or more years of service as of the SERP Vesting Date, the Participant’s
Minimum Retirement Benefit shall thereafter be zero.

3.02.
The minimum retirement benefit shall be paid as an annuity, lump sum, or in
installments payments, pursuant to an election under the AT&T SERP made on or
before December 31, 2008 with respect to benefits that may become payable to the
Participant under the AT&T SERP. The amount of any payment made in the form of
installments or a lump sum will be the actuarial equivalent of the single life
annuity benefits determined pursuant to Section 3.01, based on the actuarial
assumptions and methodology in effect under the SERP as of the date payments
commence.

3.03.
Payment of the Minimum Retirement Benefit shall commence at the Participant’s
Termination of Employment. Notwithstanding the preceding, effective on and after
January 1, 2005 with respect to payments in the form of a commercial annuity
pursuant to Section 6.01 and effective on and after January 1, 2009 with respect
to all other payments under the Plan, payment under the Plan to or with respect
to a Participant who is eligible to participate in the SERP or who is determined
to meet the definition of Specified Employee shall be payable as otherwise
provided in this Plan, except that the initial payment shall be made no earlier
than six (6) months following his or her Termination of Employment.  If, absent
this Section 3.03, payment to a Specified Employee would have commenced before
the expiration of such six-month period, the first payment with respect to such
Specified Employee will include the sum of the annuity payments withheld,
together with interest thereon.    For purposes of the immediately preceding
sentence, interest shall be credited using the GAAP Rate in effect as of the end
of the calendar year immediately preceding the Participant’s Termination of
Employment, for distributions made after December 31, 2007.  “GAAP Rate” means
such rate as defined under the SERP for the referenced period. Notwithstanding
the preceding, for distributions made prior to January 1, 2008, interest
credited for purposes of this Section 3.03 shall be at an effective annual rate
equal to 120 percent of the Federal Mid-term rate in effect as of the date such
annuity payments otherwise would have commenced..

3.04.
Payments made pursuant to this Article 3 shall terminate at the death of the
Participant, but shall terminate earlier if the form of payment, determined
pursuant to Section 3.02, is other than a life annuity form of payment.

 
ARTICLE 4
SURVIVING SPOUSE BENEFIT
 
This Article 4 describes the Surviving Spouse Benefit payable with respect to a
Participant who is an employee on December 1, 2008 and whose death occurs on or
after December 1, 2008. The provisions of Article A-4 describe the Surviving
Spouse Benefit with respect to a Participant not described in the preceding
sentence.

4.01.
Subject to the provisions of Section 4.02, in the event of the death of a
Participant, who is described in Section 1.11(c), the Surviving Spouse of such
Participant shall be eligible to receive a monthly benefit equal to one and
one-quarter percent of the Participant’s Annual Basic Pay, as defined in Section
1.04, on the last day the Participant was on the active payroll prior to his or
her death reduced by the Spouse Immediate Annuity Value of the Qualified Plan,
and the Spouse Immediate Annuity Value of the AT&T Nonqualified Pension
Plans.  The Spouse Immediate Annuity Value of the Qualified Plan means the
monthly annuity payment that would be paid to the Participant under the Pension
Plan on a single life, level payment annuity basis assuming payment of such plan
benefit commenced immediately upon the Participant’s Termination of Employment,
whether by death or otherwise, notwithstanding the form of payment of such
Pension Plan benefit actually made to the Participant and notwithstanding the
actual commencement date of such Pension Plan benefit.  For purposes of this
Section 4.01, the Spouse Immediate Annuity Value of the AT&T Nonqualified
Pension Plans shall mean the monthly annuity benefits paid to the Surviving
Spouse under the AT&T Excess Benefit and Compensation Plan and the AT&T
Non-Qualified Pension Plan, as applicable, commencing at the actual time and
pursuant to the actual form such benefit payments are made to the Surviving
Spouse from such plans following the death of the Participant.

 
Notwithstanding the preceding, with respect to a Participant whose Termination
of Employment occurs after the SERP Vesting Date, a benefit shall be calculated
pursuant to the provisions of the preceding paragraph as of the Participant’s
SERP Vesting Date, as if the Participant died and benefits under the Pension
Plan and the AT&T Nonqualified Pension Plans had commenced on such date.  The
amount so determined shall be fixed, and shall not be subject to
redetermination. With respect to a benefit payable upon the death of a
Participant occurring after the SERP Vesting Date, the Surviving Spouse Benefit
shall be determined as follows:

 
(i)   If the Participant dies following Termination of Employment, the Surviving
Spouse Benefit shall be equal to the amount determined as of the SERP Vesting
Date; provided, however, if the Participant is not Service Pension Eligible or
is not age 62 or older with five or more years of service as of the SERP Vesting
Date, the Surviving Spouse Benefit shall be zero.

 
 
(ii)  If the Participant dies prior to Termination of Employment, the Surviving
Spouse Benefit shall be equal to the amount determined as of the SERP Vesting
Date.

4.02.
Notwithstanding any provision of Section 4.01 to the contrary, the Surviving
Spouse of a Participant shall not be eligible to receive benefits under this
Article 4 if the form of payment designated by the Participant pursuant to an
election under the AT&T SERP made on or before December 31, 2008 with respect to
benefits that may become payable to the Participant under the AT&T SERP is other
than a joint and survivor form of payment with the Surviving Spouse as the joint
annuitant.

4.03.  
The benefit payable to the Surviving Spouse shall be paid in the form of a
single life annuity, commencing upon the death of the Participant.

4.04.
Payments made pursuant to this Article 4 shall terminate at the death of the
Surviving Spouse.

 
ARTICLE 5
DEATH BENEFITS
 

5.01.  
Upon the death of a Participant described in Section 1.11(d) whose last day on
the active payroll occurred on or after January 1, 1987, and who has not retired
on a service pension or a disability pension under the Pension Plan, or who was
not Service Pension Eligible at the time of termination, a death benefit in the
amount of the Participant’s annual base salary rate in effect on the last day
said Participant was on the active payroll shall be paid to one or more of the
beneficiaries listed in Section 5.02 below as determined by the Committee,
provided, however, that such death benefit shall be reduced by the sum of any
death benefit paid under Section 5 of the Pension Plan, the AT&T Excess Benefits
and Compensation Plan, and the AT&T Non-Qualified Pension Plan on account of the
Participant’s death.

5.02.  
The persons who may be the beneficiaries of the death benefit described in
Section 5.01 are the Participant’s legal spouse if living with him at the time
of his or her death, his or her unmarried child or children under age 23 (or
over that age if physically or mentally incapable of self-support) who were
being supported in whole or in part by the deceased at his or her death, or a
dependent parent or parents living with the deceased at the time of his or her
death or in a separate household in the vicinity of the deceased and provided by
him.

5.03.  
If the Participant is not survived by any person listed in Section 5.02, a death
benefit up to the maximum amount shown in Section 5.01 above may be payable, at
the discretion of the Committee, to any other dependent relative receiving or
entitled to receive support from the deceased; if no such dependent relative
survives the deceased, no death benefit will be payable under this Plan.

 
ARTICLE 6
SOURCE OF PAYMENT
 

 
6.01.       Source of Payments.
 

(a)           AT&T may establish a trust to hold assets to be used to make
benefit payments under the terms of this Plan, provided such trust does not
cause the Plan to be “funded” within the meaning of ERISA.  Funds invested
hereunder shall, for purposes of this Plan, be considered to be part of the
general assets of the Participating Company which invested the funds, and no
Participant, beneficiary or lawful spouse shall have any interest or right in
such funds.  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 are insufficient to pay
such benefits, costs, charges and expenses, AT&T or the responsible
Participating Company shall pay such benefits, costs, charges and expenses from
its general assets.

(b)           In addition, the Company may, in its sole discretion, purchase and
distribute one or more commercial annuity contracts, or cause the trustee of the
trust to purchase and distribute one or more commercial annuity contracts, to
make benefit payments required under this Plan, to any Officer, as defined
herein, or the Surviving Spouse of any Officer, provided, however, that with
respect to an annuity purchase occurring prior to January 1, 2005,  the purchase
and distribution of any such annuity contracts shall be no sooner than the
expiration of any forfeiture provisions applicable to the Officer  under the
AT&T Non-Competition Guidelines, or as otherwise may be provided in accordance
with procedures establish by the Executive Vice President – Human Resources (or
any successor to such position), and provided further that, effective January 1,
2004, the Company’s right to direct that payments under the Plan shall be made
through one or more commercial annuity contracts shall be applicable to only the
benefits payable to any Participant, or the Surviving Spouse of any such
Participant, as applicable, who (1) was  on the active payroll of the Company
(or on an approved leave of absence with guaranteed right of reinstatement) and
classified as an Officer on December 31, 2003, and (2) satisfies the age and
service requirements, or is within twelve months of satisfying the  requirements
in effect at the time the Participant terminates employment with the Company for
the receipt of retirement-related health benefits under the AT&T Corp.
Postretirement Welfare Benefits Plan (or any successor to such plan) (other than
by virtue of the “Rule of 65”or  through a Company-sponsored employee-paid
health benefits access program, or through the AT&T Corp. Separation Medical
Plan), without regard to whether or not the Officer has five years of service as
of December 31, 1999. Such annuity contracts may be purchased from a commercial
insurer acceptable to the Executive Vice President - Human Resources (or any
successor to such position). Further, the Executive Vice President - Human
Resources (or any successor to such position), may determine, in his or her sole
discretion, to pay additional sums to any Officer, from the Company’s general
assets or from the trust, if any, to reimburse the Officer for additional
federal and state income taxes estimated to be incurred by reason of the
distribution of any such annuity contracts. The Executive Vice President - Human
Resources (or any successor to such position) shall establish a methodology or
methodologies for determining the amount of such additional sums. The
methodology or methodologies selected shall be those that the Executive Vice
President - Human Resources (or any successor to such position) determines, in
his or her sole discretion, to be the most effective and administratively
feasible for the purpose of producing after-tax periodic benefit payments that
approximate the after-tax periodic benefit payments that would have been
received by Officers in the absence of the distribution of the annuity
contract.  Any such purchase and distribution of an annuity contract shall be a
full and complete discharge of the Plan’s, AT&T’s and the Participating
Companies’ liability for payments assumed by the issuer of the annuity contract.

(c)    Notwithstanding the provisions of the preceding Section 6.01(b),
effective January 1, 2005, a Participant who is eligible to elect to receive his
or her benefit under the Plan in the form of a third-party commercial annuity
contract pursuant to Section 6.01(b) shall be required to submit an election, on
a form provided by the Company, with respect to the time and form of payment in
which benefits under this Plan shall be distributed for any reason other than
the death of the Participant.  Such election form shall be submitted to the
Company no later than one of the following dates, whichever is applicable:  (i)
such Participant’s separation from service, with respect to distribution of such
annuity contract during the 2005 calendar year, (ii) the earlier of (A) such
employee’s separation from service, or (B) December 31, 2005, with respect to
the distribution of such annuity contract during the 2006 calendar year, and
(iii) December 31, 2006, for distributions of such annuity contracts occurring
after the 2006 calendar year.  Notwithstanding the foregoing, the Company may
permit such a Participant to submit a distribution election form in 2006 with
respect to his or her benefits under the Plan, provided that such election in
the 2006 calendar year may not result in a change in payment elections with
respect to payments that the Participant would otherwise receive during the 2006
calendar year, or to cause payments to be made in 2006, to the extent permitted
under the proposed Treasury Regulations under Code Section 409A.

(d)  Notwithstanding the provisions of the preceding Section 6.01(b) and Section
6.01(c), the annuity purchase program described in Section 6.01(b) shall be
discontinued effective September 6, 2007, and any election in effect on
September 6, 2007 pursuant to which a Participant has elected to receive
distribution of his or her benefits under this Plan through the purchase of a
commercial annuity contract shall be null and void, as such election relates to
any distribution from this Plan to a Participant or Surviving Spouse occurring
after September 6, 2007.
 
6.02.       Unfunded Status.
 
The Plan at all times shall be entirely unfunded for purposes of the Internal
Revenue Code of 1986, and ERISA, and, except as provided in Section 6.01, 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 invested
hereunder 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 the Participating Company to make payments, if any, in the
future.  No Participant, spouse, beneficiary 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 lawful spouse, beneficiary 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.

 
ARTICLE 7
ADMINISTRATION OF THE PLAN
 

 
7.01.       Administration and Authorities.
 
The Plan shall be administered by the Company and it shall have full
discretionary authority to manage and control the operation and administration
of the Plan, including the power to interpret provisions of the Plan, make
determinations of fact, promulgate rules and regulations, determine benefit
eligibility of individual and classes of Participants, delegate its powers and
duties hereunder to the Committee, the Administrator or others and take such
other action as it shall find necessary and appropriate to implement the
provisions of the Plan.  The Committee and the Administrator may retain
attorneys, consultants, accountants or other persons (who may be employees of
the Company or an Affiliated Corporation) to render advice and assistance and
may delegate any of the authorities conferred on it to such persons as it shall
determine to be appropriate to effect the discharge of its duties
hereunder.  The Company, the Affiliated Corporations and any of their officers
and employees shall be entitled to rely upon the advice, opinions, and
determinations of any such persons.  Any exercise of the authorities set forth
in this Section, whether by the Company, the Committee or its Delegate, or the
Administrator, shall be final and binding upon the Company, its Affiliated
Corporations, their officers, directors and affected Participants and
beneficiaries.
 
7.02.      Committee.
 
The Company has delegated to the Committee authority to make the final
determination to grant or deny claims for benefits under the Plan with respect
to Participants and to authorize disbursements according to the terms of the
Plan.
 
7.03.      Indemnification.
 
No member of the Board or the Committee or the Administrator shall be personally
liable by reason of any contract or other instrument executed by such individual
on his or her behalf or in his or her capacity as a member of the Board,
Committee or the Administrator nor for any mistake of judgment made in good
faith, and AT&T shall indemnify and hold harmless each member of the Board, each
member of the Committee, the Administrator and each other employee, officer, or
director of AT&T or any Participating Company to whom any duty or power relating
to the administration or interpretation of the Plan may be allocated or
delegated, against any cost or expense (including attorneys’ fees) or liability
(including any sum paid in settlement of a claim) arising out of any act or
omission to act in connection with the Plan unless arising out of such person’s
own fraud or bad faith.
 
7.04.  
Benefit Claims and Appeals.

 

       (a)  
Benefit Claims.

All claims for benefit payments under the Plan shall be submitted in writing by
a Participant, a Surviving Spouse, beneficiary, or the estate of the
Participant, or the duly authorized representative of such person or estate
(“Claimant” for purposes of this Section 7.04) to the Administrator. The
Administrator shall notify the Claimant in writing within 90 days after receipt
as to whether the claim has been granted or denied. This period may be extended
for up to an additional 90 days, for a total of 180 days, in the case of special
circmstances provided that written notice of the extension is furnished to the
Claimant prior to the termination of the initial 90-day period. The extension
notice shall indicate the special circumstances requiring an extension of time
and the date by which the Administrator expects to render the benefit
determination. In the event the claim is denied, in whole or in part, the
Claimant will receive notice of the Administrator’s decision, including: (i) the
specific reasons for the adverse determination, (ii) reference to the pertinent
Plan provisions on which the adverse determination is based, (iii) a description
of any additional material or information necessary for the Claimant to perfect
the claim and an explanation of why such material or information is necessary,
and (iv) a description of the Plan’s procedures for appealing the adverse
determination (including applicable time limits) and the Claimant’s right to
bring a civil action under section 502(a) of ERISA following an adverse
determination on review.

      (b)  
Benefit Appeals.

A Claimant whose claim for benefits has been denied, in whole or in part, may,
within 60 days of receipt of any adverse benefit determination, appeal such
denial to the Committee. All appeals shall be in the form of a written statement
and shall (i) set forth all of the reasons in support of favorable action on the
appeal, (ii) identify those provisions of the Plan upon which the Claimant is
relying, and (iii) include copies of any other documents, records and other
materials which may support favorable consideration of the claim. If the
Claimant submits a written request for review of a denied claim, the Claimant is
entitled to receive, upon request and free of charge, reasonable access to, and
copies of, all documents, records and other information relevant to the claim
(as defined in DOL Reg. §2560.503-1(m)(8) for claims filed on or after January
1, 2002), and (iv) a statement of the right of the Claimant to bring a civil
action under section 502(a) of ERISA following an adverse benefit determination
on review.  The Claimant may raise issues even if such issues were not raised in
the initial benefit determination. The Committee shall decide the issues
presented within 60 days after receipt of such request, but this period may be
extended for up to an additional 60 days in the case of special circumstances
provided that written notice of the extension is furnished to the Claimant prior
to the termination of the initial 60-day period.  The extension notice shall
indicate the special circumstances requiring an extension of time and the date
by which the Committee expects to render the determination. In the case of an
adverse determination, the decision of the Committee shall be set forth in
writing and include (i) the specific reason or reasons for the adverse
determination, (ii) reference to the pertinent Plan provisions on which the
denial is based, (iii) a statement that the Claimant is entitled to receive,
upon request and free of charge, reasonable access to, and copies of, all
documents, records, and other information (as defined in DOL Reg.
§2560.503-1(m)(8) for claims filed on or after January 1, 2002) relevant to the
Claimant’s claim for benefits, and (iv) a statement of the right of the Claimant
to bring a civil action action section 502(a) of ERISA.

Any Claimant whose claim for benefits has been denied shall have such further
rights of review as are provided in ERISA § 503, and the Committee and
Administrator shall retain such right, authority, and discretion as is provided
in or not expressly limited by ERISA § 503.  The Plan provisions require that
the Claimant pursue all claim and appeal rights described in this Section 7.04
before seeking any other legal recourse regarding claims for benefits.

      (c)  
Final Review.

The Committee shall serve as the final review committee, under the Plan and
ERISA, for the review of all appeals by Claimants (as defined in Section 7.04)
whose initial claims for benefits have been denied, in whole or in part, by the
Administrator. The Committee shall have the authority, subject to Section
7.04(c), 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, authorizing disbursements according to the Plan,
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, Surviving Spouse or estate, 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.

 
ARTICLE 8
 
 
ADOPTION, AMENDMENT AND TERMINATION
 

 
8.01.        Adoption of Plan.
 
Any Affiliated Corporation that participates in the Pension Plan may, with the
consent of the Committee, elect to participate in the Plan.  Such Affiliated
Corporation shall become a Participating Company as of the date specified by the
Committee in its resolution approving the participation of the Affiliated
Corporation in the Plan.
 
8.02.        Amendment and Termination.
 
AT&T is the Sponsor of the Plan and the Board or its delegates, may from time to
time amend, modify or change the Plan as set forth in this document, and the
Board or its delegate (acting pursuant to the Board’s delegations of authority
then in effect) may terminate the Plan at any time.  Plan amendments may
include, but are not limited to, elimination or reduction in the level or type
of benefits provided to any class or classes or Participants, surviving lawful
spouses and beneficiaries).  Any and all Plan amendments may be made without the
consent of any employee, Participant, spouse or beneficiary.  Notwithstanding
the foregoing, the exercise of the power to amend, modify or terminate the Plan
shall be subject to the limitations described in paragraphs (a) and (b) below.

      (a)  
Such amendment, modification or termination shall not affect the rights of any
Participant or surviving lawful spouse, without his or her consent, to any
benefit under the Plan to which such Participant or surviving lawful spouse may
have previously become entitled as a result of disability, death or termination
of employment which occurred prior to the later of the adoption date or the
effective date of such amendment or termination.

      (b)  
Such amendment, modification or termination shall not affect the rights of any
Participant or his or her surviving lawful spouse, without his or her consent,
to any future benefits payable under Article 3 or Article 4, provided that,
prior to the later of the adoption date or the effective date of such amendments
or termination, such Participant either (i) had satisfied the requirements for
eligibility for the benefits described in Article 3, other than the termination
of employment requirement, or (ii) had begun to receive a disability allowance
under Article 2.  For purpose of determining a spouse’s benefit, it shall be
assumed that a Participant who is receiving a disability allowance as of the
later of the adoption date or effective date of such amendment will continue to
receive said allowance until his or her death.  The Annual Basic Pay used to
compute such future benefits under Article 3 or Article 4 shall be the
Participant’s highest Annual Basic Pay as described in Section 1.04 on any day
during the term of his or her employment completed prior to the later of the
adoption date or the effective date of such amendments or termination as if the
Participant had terminated employment on that day.

Notwithstanding the preceding, the Board may adopt any prospective or
retroactive amendment that it determines is necessary for the Plan to maintain
its compliance with Code Section 409A.
 
8.03.       Sale, Spin-Off, or Other Disposition of Participating Company
 
      (a)  
Subject to Section 8.02 of this Plan, in the event AT&T sells, spins off, or
otherwise disposes of an Affiliated Corporation, or disposes of all or
substantially all of the assets of an Affiliated Corporation such that one or
more Participants terminate employment for the purposes of accepting employment
with the purchaser of such stock or assets, any person employed by such
Affiliated Corporation who ceases to be an employee of the Company or an
Affiliated Corporation as a result of the sale, spin-off, or disposition shall
be deemed to have terminated his or her employment with a Participating Company
for all relevant purposes under this Plan. Notwithstanding the preceding,
effective January 1, 2005, no distribution shall commence pursuant to this
Section 8.03(a) unless the Participant has a separation from service, as defined
under Code Section 409A, with all members of the AT&T controlled group. With
respect to periods on or after November 18, 2005, the controlled group shall be
determined with respect to entities required to be aggregated recognizing the
acquisition of AT&T Corp. by SBC Communications Inc. (now known as AT&T Inc.).

        (b)  
Notwithstanding the foregoing provisions of this Section 8.03, and subject to
Section 8.02 of this Plan, if the sale, spin-off, or other disposition of the
stock or assets of an Affiliated Corporation is to a Successor Plan Sponsor with
the effect that a Participant is or becomes a Transition Participant, the
Successor Plan Sponsor shall be solely liable for the payment of the pension and
death benefits described in this Plan, and the entitlement of the Transition
Participant or his or her surviving lawful spouse or beneficiary to benefits
under this Plan shall terminate.  A Transition Participant shall not be
considered to have terminated his or her employment with AT&T or a Participating
Company for any purpose under this Plan.

 
ARTICLE 9
GENERAL PROVISIONS
 

 
9.01.        Effective Date.
 
This Plan was first adopted with effect on March 17, 1976 and was previously
amended and restated effective January 1, 1995.  This amended and restated Plan
shall be effective with respect to Participants who are eligible for benefits
under this Plan on or after January 1, 1998.  The provisions of the Plan in
effect before January 1, 1998 shall apply to Participants who are terminate
employment with eligibility for benefits under the Plan before January 1, 1998,
and the spouse of such Participant, if applicable.
 
9.02.        Assignment of Benefits.
 
The benefits payable hereunder or the right to receive future benefits under the
Plan may not be anticipated, alienated, sold, transferred, assigned, pledged,
executed upon, encumbered, or subjected to any charge or legal process; no
interest or right to receive a benefit may be taken, either voluntarily or
involuntarily, for the satisfaction of the debts of, or other obligations or
claims against, such person or entity, including without limitation, any
judgment or claim for alimony, support or separate maintenance pursuant to a
domestic relations order within the meaning of Section 206(d)(3) of ERISA and
claims in bankruptcy proceedings.  Any such attempted disposition shall be null
and void.
 
9.03.       Claims Release.
 
In case of accident resulting in injury to or death of a Participant which
entitles the Participant or his or her surviving lawful spouse to benefits under
the Plan, the Participant or his or her surviving lawful spouse may elect to
accept such benefits or to prosecute such claims at law as the Participant or
the surviving lawful spouse may have against one or more Participating
Companies.  If an election is made to accept the benefits under the Plan, such
election shall be in writing and shall release such Participating Company or
such Participating Companies from all claims and demands that the Participant or
his or her surviving lawful spouse may have against it, or against them,
otherwise than under this Plan or under any other plan maintained by a
Participating Company, on account of such accident.  The right of the
Participant to a disability allowance under Article A-2 of the Plan shall lapse
if election to accept such benefits, as above provided, is not made within sixty
days after injury, or within such greater time as the Company shall fix for the
making of such election.
 
9.04.       Damage Claims or Suits.
 
Should a claim other than under this Plan or under any other plan maintained by
a Participating Company be presented or suit brought against a Participating
Company, for damages on account of injury or death of a Participant, nothing
shall be payable under this Plan on account of such injury or death except as
provided in Section 9.05, provided, however, that the Company may, in its
discretion and upon such terms as it may prescribe waive this provision if such
claims be withdrawn or if such suit be discontinued.
 
9.05.        Judgment or Settlement.
 
In case any judgment is recovered against a Participating Company or any
settlement is made of any claim or suit on account of the injury or death of a
Participant, and the total amount which would otherwise have been payable under
the Plan and under any other plan maintained by the Participating Company is
greater than the amount paid on account of such judgment or settlement, the
lesser of (a) the difference between such two amounts or (b) the amount which
would otherwise have been payable under this Plan, may in the discretion of the
Company, be distributed to the beneficiaries who would have received benefits
under this Plan.
 
9.06.        Forfeiture of Benefits.
 
All Benefits to which a Participant and his or her lawful spouse would be
otherwise eligible hereunder may be forfeited, at the discretion of the Board or
of the Committee, if an individual without the Company’s consent establishes a
relationship with a competitor of the Company or engages in any activity in
conflict with or adverse to the interests of the Company under the standards of
the AT&T Non-Competition Guideline and as determined by the Board or the
Committee in its sole discretion.  To the extent a benefit under any other
nonqualified plan of AT&T is offset by benefits payable under this Plan, such
offset shall be determined as if a forfeiture had not occurred.

 
9.07.        Payment under Law.
 
In the case of any benefit, which the Committee shall determine to be of the
same general character as a payment provided by the Plan, shall be payable to
any participant, to his or her beneficiaries, his or her estate or his or her
annuitant under any law now in force or hereafter enacted, only the excess, if
any, of the amount prescribed in the Plan above the amount of such payment
prescribed by law shall be payable under the Plan; provided, however, that no
benefit payable under the Plan shall be reduced by reason of any governmental
benefit or pension payable on account of military service or by reason of any
benefit which the recipient would be entitled to receive under the Social
Security Act or Railroad Retirement Act.  In those cases where, because of
differences in the beneficiaries or in the time or methods of payment or
otherwise, the determination of any such excess is not ascertainable by mere
comparison but adjustments are necessary, the Committee or the Administrator, as
applicable, shall, in its discretion, determine whether or not in fact any such
excess exists and make the adjustments necessary to carry out in a fair and
equitable manner the spirit of the provision for the payment of any such excess.

 
9.08.       Governing Law.
 
To the extent such laws are not preempted by the laws of the United States of
America, the Plan shall be governed by the laws of the State of Texas, except as
to its principles of conflict of laws.
 
9.09.        Severability.
 
If any section, clause, phrase, provision or portion of this Plan or the
application thereof to any person or circumstance shall be invalid or
unenforceable under any applicable law, such event shall not affect or render
invalid or unenforceable the remainder of this Plan and shall not affect the
application of any section, clause, provision, or portion hereof to other
persons or circumstances.
 
9.10.       Facility of Payment.
 
If the Administrator shall find that any person to whom any amount is or was
payable under the Plan is unable to care for his or her affairs because of
illness or accident, then any payment, or any part thereof, due to such person
(unless a prior claim therefore has been made by a duly appointed legal
representative), may, if the Administrator so directs AT&T, be paid to the same
person or institution that benefit with respect to such person is paid or to be
paid under the Pension Plan if applicable, or the Participant’s lawful spouse, a
child, a relative, an institution maintaining or having custody of such person,
or any other person deemed by the Administrator to be a proper recipient on
behalf of such person otherwise entitled to payment.  Any such payment shall be
in complete discharge of the liability of AT&T, the Board, the Committee, the
Administrator, and the Participating Company therefore.  If any payment to which
a Participant or beneficiary is entitled under this Plan is unclaimed or
otherwise not subject to payment to the person or persons so entitled, such
amounts representing such payment or payments shall be forfeited after a period
of two years from the date the first such payment was payable and shall not
escheat to any state or revert to any party; provided, however, that any such
payment or payments shall be restored if any person otherwise entitled to such
payment or payments makes a valid claim.
 
9.11.  
Headings.

 
The captions of the preceding the sections and articles hereof have been
inserted solely as a matter of convenience and shall not in any manner define or
limit the scope or intent of any provision of the Plan.
 
9.12.  
Tax Withholding.

 
AT&T shall withhold all federal, state, local or other taxes required by law to
be withheld from payments or accruals under the Plan.
 
9.13.  
Fiduciary Relationship.

 
Nothing contained in the Plan, and no action taken pursuant to the provisions of
the Plan, shall create or be construed to create a trust or contract of any
kind, or a fiduciary relationship between or among AT&T, any other Participating
Company, any Affiliated Corporation, the Board, the Administrator, the
Committee, any Participant, employee, any surviving lawful spouse or any other
person.
 
9.14.  
No Guarantee of Employment.

 
Neither the Plan nor any action taken hereunder shall be construed as (i) a
contract of employment or deemed to give any employee the right to be retained
in the employment of a Participating Company, the right to any level of
compensation, or the right to future participation in the Plan; or (ii)
affecting the right of the Participating Company to discharge or dismiss any
employees at any time.
 
9.15.  
Plan Year.

 
For purposes of administering the Plan, the plan year shall begin on January 1
and end on December 31.
 
9.16.  
Entire Plan.

 
This written Plan document is the final and exclusive statement of the terms of
this Plan, and any claim of right or entitlement under the Plan shall be
determined in accordance with its provisions pursuant to the procedures
described in Article 7.  Unless otherwise authorized by the Board or its
delegate, no amendment or modification to this Plan shall be effective until
reduced to writing and adopted pursuant to Section 8.02.
 
9.17.  
Overpayments.

 
If any overpayment is made by the Plan for any reason, the Plan shall have the
right to recover such overpayment.  The Participant shall cooperate fully with
the Plan to recover any overpayment and provide any necessary information and
required documents. Any recovery of overpayment pursuant to this Section 9.17
may be deducted from future benefits payable to or on behalf of the Participant
from this Plan.

 

 
APPENDIX A
PRIOR PLAN PROVISIONS
 

This Appendix A sets forth the provisions related to the determination of
benefit amounts and payment of such benefits payable to or with respect to a
Participant whose employment terminated prior to December 1, 2008.  A reference
in this Appendix A to a provision of Article 2, Article 3 or Article 4 means
such provision as set forth in this Appendix A, unless the reference
specifically indicates otherwise.

 
ARTICLE A-2
DISABILITY ALLOWANCE
 
 

2.01 
(a)
A Participant shall be considered to be “disabled” at any time during the first
fifty-two week period (or twenty-six week period for a Participant “disabled” on
or after January 1, 2004) following the onset of a physical or mental
impairment, if such impairment prevents the Participant from meeting the
performance requirements of the position held immediately preceding the onset of
the physical or mental impairment.

 
 
(b)
A Participant shall be considered to be “disabled” after the first fifty-two
week period (or twenty-six week period for a Participant “disabled” on or after
January 1, 2004) following the onset of a physical or mental impairment if such
impairment prevents the Participant from meeting the performance requirements of
(1) the position held immediately preceding the onset of the physical or mental
impairment, (2) a similar position, or (3) any appropriate position with the
Company or any other Participating Company which the Participant would otherwise
be capable of performing by reason of the Participant’s background and
experience.

 
(c)
The Administrator shall make the determination of whether a Participant is
disabled within the meaning of paragraph (a) above; the Committee shall make
such determination with respect to paragraph (b) above.

 
(d)
Notwithstanding the preceding, for purposes of the Plan, a Participant shall not
be considered disabled with respect to any disability that commences after
December 31, 2007.

 
2.02
(a)
A Participant who is disabled, before January 1, 2004, during a period described
in Section 2.01(a) shall be eligible to receive a monthly disability allowance
equal to one hundred percent of the Participant’s monthly base salary rate on
the last day the Participant was on the active payroll, reduced by any amounts
described in Section 2.05(a) which are attributable to the period for which
benefits are provided under this Section 2.02.

 
 
(b)
A Participant who is disabled, on or after January 1, 2004, during a period
described in Section 2.01(a) shall be eligible to receive a weekly disability
allowance equal to one hundred percent of the Participant’s salary rate on the
last day the Participant was on the active payroll, reduced by any amounts
described in Section 2.05(a) which are attributable to the period for which
benefits are provided under this Section 2.02.  The disability allowance
provided under this Section 2.02(b) shall commence on the eighth consecutive day
of the Participant’s absence from work due to his or her disability, and end on
the earlier of (i) the date the Participant ceases to be disabled under Section
2.01(a), or (ii) the last day of the twenty-sixth week after commencement of the
short-term disability benefit.

2.03.          (a)
A Participant who is disabled, before January 1, 2004, during a period described
in Section 2.01(b) shall, prior to his or her sixty-fifth birthday, be eligible
to receive a monthly disability allowance equal to sixty percent of the
Participant’s monthly base salary rate on the last day the Participant was on
the active payroll, reduced by any amounts described in Section 2.05(b) which
are attributable to the period for which benefits are provided under this
Section 2.03.

 
(b)
A Participant who is disabled, on or after January 1, 2004, during a period
described in Section 2.01(b) shall, prior to his or her sixty-fifth birthday, be
eligible to receive a weekly disability allowance equal to sixty percent of the
Participant’s salary rate on the last day the Participant was on the active
payroll, reduced by any amounts described in Section 2.05(b) which are
attributable to the period for which benefits are provided under Section
2.03.  Benefits under this Section 2.03(b) shall be payable if the Participant
remains disabled as a result of the same physical or mental impairment resulting
in the payment of disability benefits under Section 2.02(b).  The disability
allowance provided under this Section 2.03(b) shall commence on the twenty
seventh week following the date when the Participant commenced receiving
disability benefits under Section 2.02(b) and shall end on the earlier of (i)
the date the Participant ceases to be disabled under Section 2.01(b), or (ii)
the Participant’s sixty-fifth birthday.

2.04.  
A Participant who is disabled during a period described in Section 2.01(b) shall
commencing with his or her sixty-fifth birthday or the start of the period
described in Section 2.01(b), if later, be eligible to receive a monthly
disability allowance equal to the greater of:

(i)  
one and one-quarter percent of the Participant’s Annual Basic Pay, as defined in
Section 1.04, on the last day the Participant was on the active payroll, or

(ii)  
if the Participant’s Term of Employment has been five years or more, ninety
percent of the sum of (a) the monthly pension the Participant would have been
entitled to receive commencing at age sixty-five under the Pension Plan (as in
effect on the last day the Participant was on the active payroll, but ignoring
any minimum service requirements for eligibility to a pension), if the period
after the last day the Participant was on the active payroll and prior to the
Participant’s sixty-fifth birthday had been included in the Participant’s Term
of Employment as of the end of the applicable averaging period under the Pension
Plan, plus (b) the monthly pension the Participant would have been entitled to
receive commencing at age 65 under the AT&T Non-Qualified Pension Plan (as in
effect on the last day the Participant was on the active payroll, but ignoring
any minimum service requirements for eligibility to a pension), if the period
after the last day the Participant was on the active payroll and prior to the
Participant’s sixty-fifth birthday had been included in the Participant’s Term
of  Employment as of the end of the applicable averaging period under the AT&T
Non-Qualified Pension Plan, reduced by any amounts described in Section 2.05(c)
that are attributable to the period for which benefits are provided under this
paragraph.

2.05.
(a)
The Disability allowance determined for any period under Section 2.02 shall be
reduced by the sum of the following benefits received by the Participant which
are attributable to the period for which such disability allowance is provided:
a service pension, deferred vested pension, or disability pension under the
Pension Plan, a pension under the AT&T Excess Benefit and Compensation Plan, a
pension under the AT&T Non-Qualified Pension Plan, a pension under the AT&T
Mid-Career Pension Plan, an accident disability benefit or sickness disability
benefit under the Disability Benefit Plan, any Workers’ Compensation Benefit,
plus any comparable benefits provided under the plans or programs of any
Successor Plan Sponsor and any other benefit payments required by law on account
of the Participant’s disability.  However, no reduction shall be made on account
of any pension under the Pension Plan at a rate greater than the rate of such
pension on the date the Participant first received such pension after his or her
disability, and no reduction shall be made on account of any pension under the
AT&T Non-Qualified Pension Plan, the AT&T Excess Benefit and Compensation Plan,
or the AT&T Mid-Career Pension Plan at a rate greater than the rate of such
pension, including adjustments if any to reflect post-retirement incentive
awards to the Participant under the Short Term Plan, as of the first date the
Participant was entitled to receive such pension after his or her disability.

 
(b)
The disability allowance determined for any period under Section 2.03 shall be
reduced by the sum of the following benefits received by the Participant which
are attributable to the period for which such disability allowance is provided:
a service pension, deferred vested pension or disability pension under the
Pension Plan, a pension under the AT&T Excess Benefit and Compensation Plan, a
pension under the AT&T Non-Qualified Pension Plan, a pension under the AT&T
Mid-Career Pension Plan, an accident disability benefit under the Disability
Benefit Plan, any other retirement income payments from the Participant’s
Participating Company or any Successor Plan Sponsor, any Workers’ Compensation
Benefit, plus any Social Security Insurance Benefit.  However, no reduction
shall be made on account of any pension under the Pension Plan at a rate greater
than the rate of such pension on the date the Participant first received such
pension after his or her disability, and no reduction shall be made on account
of any pension under the AT&T Non-Qualified Pension Plan, the AT&T Excess
Benefit and Compensation Plan, or under the AT&T Mid-Career Pension Plan at a
rate greater than the rate of such pension, including adjustments if any to
reflect post-retirement incentive awards to the Participant under the Short Term
Plan, as of the first date the Participant was entitled to receive such pension
after his or her disability, and no reduction shall be made on account of any
Social Security Benefit at a rate greater than the rate which the Participant
would have first been eligible to receive after his or her disability and as if
no other members of his or her family were eligible for any Social Security
Benefit.

 
Furthermore, the Board, in its discretion, may reduce the disability allowance
by the amount of outside compensation or earnings of the Participant for work
performed by the Participant during the period for which such disability
allowance is provided.

 
(c)
The disability allowance determined for any period under Section 2.04 shall be
reduced by the sum of the following benefits received by the Participant which
are attributable to the period for which such disability allowance is provided:
a service pension, deferred vested pension or disability pension under the
Pension Plan, a pension under the AT&T Excess Benefit and Compensation Plan, a
pension under the AT&T Non-Qualified Pension Plan, a pension under the AT&T
Mid-Career Pension Plan, an accident disability benefit under the Disability
Benefit Plan, any other retirement income payments from the Participant’s
Participating Company or any Successor Plan Sponsor, plus any Workers’
Compensation Benefit.  However, no reduction shall be made on account of any
pension under the Pension Plan at a rate greater than the rate of such pension
on the date the Participant first received such pension after his or her
disability, and no reduction shall be made on account of any pension under the
AT&T Non-Qualified Pension Plan, the AT&T Excess Benefit and Compensation Plan,
or under the AT&T Mid-Career Pension Plan at a rate greater than the rate of
such pension, including adjustments if any to reflect post-retirement incentive
awards to the Participant under the Short Term Plan, as of the first date the
Participant was entitled to receive such pension after his or her disability.

2.06.
For purposes of Sections 2.01(a) and 2.01(b), the measurement of time following
the onset of a physical or mental impairment shall coincide with the measurement
of time used to calculate periods of Sickness and Accident Disability Benefits
under Sections 4 and 5 of the Disability Benefit Plan.  Successive periods of
physical or mental impairment shall be counted together in computing the periods
during which the Participant shall be entitled to the benefits provided under
Sections 2.02 and 2.03, except that any disability absence after the Participant
has been continuously engaged in the performance of duty for thirteen weeks
shall be considered to commence a new period of physical or mental impairment
under Section 2.01(a), so that such Participant shall be entitled during such
new period to the benefits provided under Section 2.02.

2.07.
With respect to a Participant not subject to mandatory retirement at age 65
under the Age Discrimination in Employment Act (29 U.S.C. 631), the period of
eligibility for the disability allowance provided in Section 2.03 and the period
of eligibility for the disability allowance provided in Section 2.04, shall be
the period described in Section 2.03, and the period described in Section 2.04,
respectively, or such other period as is required under the Age Discrimination
in Employment Act or under any applicable governing regulations or
interpretations thereunder.

 
ARTICLE A-3
MINIMUM RETIREMENT BENEFIT
 

3.01.
The Minimum Retirement Benefit shall be payable as described herein:

       (a)
Subject to the provisions of Section 3.01(b) with respect to a Participant who
terminates employment after December 31, 1997, a Participant described in
Section 1.11(a) whose Term of Employment has been five years or more and is not
disabled, who terminates employment on or after his or her sixty-second
birthday, or a Participant described in Section 1.11(b) who is retired on a
service pension under the Pension Plan, shall be eligible to receive a monthly
minimum retirement benefit equal to one and one-quarter percent of Participant’s
Annual Basic Pay, as defined in Section 1.04, on the last day the Participant
was on the active payroll reduced by the sum of the following benefits received
by the Participant which are attributable to the period for which benefits are
provided under this Article 3: a service pension or deferred vested pension
under the Pension Plan, a pension under the AT&T Excess Benefit and Compensation
Plan, a pension under the AT&T Non-Qualified Pension Plan, a pension under the
AT&T Mid-Career Pension Plan, and by any other retirement income payments
received by the Participant from his or her Participating Company or from a
Successor Plan Sponsor.  However, no reduction shall be made on account of any
pension under the Pension Plan at a rate greater than the rate of such pension
on the date the Participant first received such pension after his or her
retirement or other termination of employment, and no reduction shall be made on
account of any pension under the AT&T Non-Qualified Pension Plan, the AT&T
Excess Benefit and Compensation Plan, or under the AT&T Mid-Career Pension Plan
at a rate greater than the rate of such pension, including adjustments if any to
reflect post-retirement incentive awards to the Participant under the Short Term
Plan, as of the first date the Participant was entitled to receive such pension
after his or her retirement or other termination of employment.

        (b) 
The provisions of this Section 3.01(b) apply with respect to a Participant who
terminates employment on or after January 1, 1998.  A Participant described in
Section 1.11(a) whose Term of Employment has been five years or more and is not
disabled, who terminates employment on or after his or her sixty-second
birthday, or a Participant described in Section 1.11(b) who is Service Pension
Eligible at the time of his or her termination of employment, shall be eligible
to receive a monthly minimum retirement benefit equal to one and one-quarter
percent of Participant’s Annual Basic Pay, as defined in Section 1.04, on the
last day the Participant was on the active payroll reduced by an offset which is
the sum of the benefits, determined in accordance with the following Section
3.01(c),  accrued under the Pension Plan, the AT&T Excess Benefit and
Compensation Plan, the AT&T Non-Qualified Pension Plan, the AT&T Mid-Career
Pension Plan, and by any other retirement income payments received by the
Participant from his or her Participating Company or from a Successor Plan
Sponsor (“Offset Plans”), which are attributable to the period for which
benefits are provided under this Article 3.  However, no reduction shall be made
on account of any pension under the Pension Plan at a rate greater than the rate
of such pension on the date the Participant first received such pension after
his or her retirement or other termination of employment, and no reduction shall
be made on account of any pension under the AT&T Non-Qualified Pension Plan, the
AT&T Excess Benefits and Compensation Plan, or under the AT&T Mid-Career Pension
Plan at a rate greater than the rate of such pension, including adjustments if
any to reflect post-retirement incentive awards to the Participant under the
Short Term Plan, as of the first date the Participant was entitled to receive
such pension after his or her retirement or other termination of employment.

                  (c)
The following rules shall apply for purposes of determining the offset described
in the preceding Section 3.01(b), effective for pensions that commence under
this Plan on or after January 1, 1998 and prior to December 31, 2008:

(i)  
with respect to a Participant who commences distribution of all of his or her
pension benefit under the Pension Plan simultaneously with commencement of
distribution of benefits under this Plan, the offset is the sum of the monthly
benefit payable to the Participant under the Offset Plans, or, with respect to
the portion of the benefit paid under such Offset Plan in a form other than a
monthly annuity, the monthly single life annuity that is the actuarial
equivalent of the amount paid in a form other than a monthly annuity. For
purposes of this Section 3.01(c)(i), actuarial equivalence is determined
pursuant to the provisions of the applicable Offset Plan; and

(ii)  
with respect to a Participant who does not commence distribution of all of his
or her pension benefit under the Pension Plan simultaneously with commencement
of distribution of benefits under this Plan, the offset shall be determined (I)
in accordance with Section 3.01(c)(i) with respect to the portion of the benefit
under the Offset Plans that commences simultaneously with commencement of
distribution under this Plan, and (II) with respect to the portion of the
benefit under the Offset Plans that does not commence simultaneously with
distribution under this Plan, the amount that would be payable, with respect to
such portion of the benefit, in the form of a single life annuity under such
Offset Plan, if such single life annuity payment commenced simultaneously with
distribution of benefits under this Plan.

3.02.
If an amendment to the Pension Plan effective on or after January 1, 1988 and
before December 31, 2004, provides for an increase in the service pensions of
previously retired employees, then a Participant’s minimum retirement benefit
shall be increased pursuant to the same terms and conditions as are set forth in
such Pension Plan amendment.

3.03.
Subject to the provisions of Section 3.03 in the main text of the Plan regarding
payment to Specified Employees, payment of the Minimum Retirement Benefit shall
commence at the Participant’s Termination of Employment.

3.04
A Participant who terminated employment before January 1, 1997 with eligibility
for a service pension or a disability pension under the Pension Plan shall
receive a special pension increase, effective July 1, 1999, in accordance with
the following schedule:

 

(a)  
a Participant who terminated employment before January 1, 1976 shall receive an
increase in his or her minimum retirement benefit of 15%;

(b)  
a Participant who terminated employment after December 31, 1975 and before
January 1, 1986 shall receive an increase in his or her minimum retirement
benefit of 12.5%;

(c)  
a Participant who terminated employment after December 31, 1985 and before
January 1, 1991 shall receive an increase in his or her minimum retirement
benefit of 10%;

(d)  
a Participant who terminated employment during the 1991 calendar year shall
receive an increase in his or her minimum retirement benefit of 9%;

(e)  
a Participant who terminated employment during the 1992 calendar year shall
receive an increase in his or her minimum retirement benefit of 8%;

(f)  
a Participant who terminated employment during the 1993 calendar year shall
receive an increase in his or her minimum retirement benefit of 7%;

(g)  
a Participant who terminated employment during the 1994 calendar year shall
receive an increase in his or her minimum retirement benefit of 6%;

(h)  
a Participant who terminated employment during the 1995 calendar year shall
receive an increase in his or her minimum retirement benefit of 5%; and

(i)  
a Participant who terminated employment during the 1996 calendar year shall
receive an increase in his or her minimum retirement benefit of 4%.

 
ARTICLE A-4
SURVIVING SPOUSE BENEFIT
 

4.01.            (a)
Subject to the provisions of Section 4.02 with respect to the Spouse of a
Participant who terminates employment after December 31, 1997, in the event of
the death of a Participant, who is described in Section 1.11(c), the surviving
lawful spouse of such Participant shall be eligible to receive a monthly benefit
equal to one and one-quarter percent of the Participant’s Annual Basic Pay, as
defined in Section 1.04, on the last day the Participant was on the active
payroll prior to his or her death reduced by the sum of the following benefits
received by the Participant’s surviving lawful spouse on account of the death of
the Participant and which are attributable to the period for which benefits are
provided under this Article 4: an annuitant’s pension under the Pension Plan, an
annuity under the Insured Annuitant’s Plan, an annuitant’s pension under the
AT&T Excess Benefit and Compensation Plan, an annuitant’s pension under the AT&T
Non-Qualified Pension Plan and any other lifetime payments to such surviving
lawful spouse from the Participant’s Participating Company or from any Successor
Plan Sponsor.  However, no reduction shall be made on account of an annuitant’s
pension under the Pension Plan, or on account of an annuitant’s pension under
the AT&T Non-Qualified Pension Plan or on account of an annuitant’s pension
under the AT&T Excess Benefit and Compensation Plan, or on account of any
annuity under the Insured Annuitant’s Plan at a rate greater than (1) the rate
of such pension or annuity on the date such pension or annuity was first payable
in the case of the death of a Participant who is on the active payroll or (2)
the rate of such pension or annuity on the date such pension or annuity first
would have been payable had the Participant died on the day after the last day
the Participant was on the active payroll in the case of the death of a
Participant who is not on the active payroll.

              (b)
Notwithstanding the preceding, if the benefit to the surviving spouse commences
on or after January 1, 1998, and the surviving spouse does not simultaneously
commence distribution of benefits under the Pension Plan, the reductions
described in the preceding paragraph (a) shall be determined as if payments to
the surviving spouse commenced in the form of a single life annuity at the same
time as payments commence under this Plan.

              (c)
Notwithstanding the preceding paragraphs (a) and (b), with respect to a
Participant who terminated employment after December 31, 2004 and prior to
December 1, 2008, if the Participant commenced distribution of the benefit under
the Pension Plan prior to his or her death, but distribution of such benefit did
not commence on or before December 1, 2008, the benefit payable to a surviving
spouse pursuant to this Section 4.01 shall be further reduced by the single life
annuity benefit, if any, which would have been payable to the Participant
commencing on December 1, 2008 from the AT&T Excess Benefits and Compensation
Plan and from the AT&T Non-Qualified Pension Plan

4.02.
Notwithstanding any provision of Section 4.01 to the contrary, the surviving
lawful spouse of a Participant shall not be eligible to receive benefits under
this Article 4 if, prior to the Participants death, the Participant could have
elected under the Pension Plan or under any predecessor pension plan maintained
by a Participating Company to receive a reduced pension for his or her life in
order to provide thereafter an annuity for the life of his or her lawful spouse,
but he declined to make such an election. Effective for payments with respect to
a Participant who terminates employment after December 31, 1997 and dies after
commencement of distribution of the Pension Plan, the provisions of this Section
4.02 shall be applied as follows, to reflect the expanded optional forms of
payment available under the Pension Plan:

           (a)
if the Participant elected a lump sum or single life annuity form of payment
under the Pension Plan, no surviving spouse benefit shall be paid under this
Plan;

            (b)
if the Participant elected the cash payment option (with residual annuity) under
the Pension Plan, the benefit otherwise payable to the Surviving Spouse pursuant
to Section 4.01 shall be reduced by the actuarial equivalent, determined as a
single life annuity, of the amount of the cash payment made to the Participant
pursuant to the cash payment option.

4.03
If an amendment to the Pension Plan effective on or after January 1, 1988 and
before December 31, 2004, provides for an increase in the survivor annuities
payable under said Plan, then the Surviving Spouse Benefit payable under Section
4.01 above shall be increased pursuant to the same terms and conditions as are
set forth in such Pension Plan amendment, except that no such increase shall
apply to the Surviving Spouse Benefit related to a deceased Participant who had
not terminated employment or died prior to the effective date of such amendment.

4.04.
The Surviving Spouse Benefit payable under Section 4.01 above shall be
increased, effective July 1, 1999, in accordance with the following schedule:

             (a)  
if the Surviving Spouse Benefit is with respect to a Participant who terminated
employment before January 1, 1976, the Surviving Spouse Benefit shall be
increased by 15%;

(b)  
if the Surviving Spouse Benefit is with respect to a Participant who terminated
employment after December 31, 1975 and before January 1, 1986, the Surviving
Spouse Benefit shall be increased by 12.5%;

(c)  
if the Surviving Spouse Benefit is with respect to a Participant who terminated
employment after December 31, 1985 and before January 1, 1991 , the Surviving
Spouse Benefit shall be increased by 10%;

(d)  
if the Surviving Spouse Benefit is with respect to a Participant who terminated
employment during the 1991 calendar year, the Surviving Spouse Benefit shall be
increased by 9%;

(e)  
if the Surviving Spouse Benefit is with respect to a Participant who terminated
employment during the 1992 calendar year, the Surviving Spouse Benefit shall be
increased by 8%;

(f)  
if the Surviving Spouse Benefit is with respect to a Participant who terminated
employment during the 1993 calendar year, the Surviving Spouse Benefit shall be
increased by 7%;

(g)  
if the Surviving Spouse Benefit is with respect to a Participant who terminated
employment during the 1994 calendar year, the Surviving Spouse Benefit shall be
increased by 6%;

(h)  
if the Surviving Spouse Benefit is with respect to a Participant who terminated
employment during the 1995 calendar year, the Surviving Spouse Benefit shall be
increased by 5%; and

(i)  
if the Surviving Spouse Benefit is with respect to a Participant who terminated
employment during the 1996 calendar year, the Surviving Spouse Benefit shall be
increased by 4%.

--------------------------------------------------------------------------------

 
APPENDIX B
Annual Pay Definition Prior to 1991
 

Section 1.  Definition of Annual Basic Pay

For retirements occurring after August 10, 1980, and before April 15, 1991, the
following was the applicable definition of “Annual Basic Pay”:

“Annual Basic Pay” shall mean the Participant’s annual base salary rate on the
last day the Participant was on the active payroll plus, with respect to a
Participant whose last day on the active payroll occurred after August 9, 1980,
an amount determined with reference to the Short Term Plan, but excluding all
differentials regarded as temporary or extra payments and all cash payments and
distributions made under the Long Term Plan.  The amount determined with
reference to the Short Term Plan shall be the lesser of the Participant’s
standard Short Term Award in effect on the last day the Participant was on the
active payroll or the Participant’s position rate on the last day the
participant was on the active payroll multiplied by the applicable percentage
determined as follows:

Last Day on Active Payroll
August 10, 1980 through October 30, 1981
October 31, 1981 through September 29, 1983
On or after September 30, 1983
% of Position Rate
15%
50%
60%