Exhibit 10-hh

 

AT&T CORP.

SENIOR MANAGEMENT INCENTIVE AWARD DEFERRAL PLAN

(as amended September 18, 2006)

 

1. ELIGIBILITY

 

Any Senior Manager (as defined in the AT&T 1997 Long Term Incentive Program [the
"1997 Plan"]) of AT&T Corp. ("AT&T") or an Affiliate (as defined in the 1997
Plan) who is eligible for an award under the AT&T Short Term Incentive Plan (the
"Short Term Incentive Plan") and/or who has been granted a Performance Award or
a Stock Unit Award under the AT&T Senior Management Long Term Incentive Plan
(the "Long Term Incentive Plan") the 1987 Long Term Incentive Plan (the "1987
Plan") or the 1997 Plan shall be eligible to participate in this AT&T Senior
Management Incentive Award Deferral Plan (the "Plan"). For purposes of the Plan,
AT&T and any Affiliate shall be referred to as a "Participating Company". Prior
to January 1, 1984, the Plan was named the Bell System Senior Management
Incentive Award Deferral Plan.

 

2. PARTICIPATION

 

(a) Prior to the beginning of any calendar year, any Senior Manager may elect to
participate in the Plan by directing that (i) all or part of an award under the
Short Term Incentive Plan, or a Performance Award or a Stock Unit Award under
the Long Term Incentive Plan, the 1987 Plan or the 1997 Plan and/or (ii) all or
part of the dividend equivalent payments under the Long Term Incentive Plan, the
1987 Plan or the 1997 Plan, that such employee's Participating Company would
otherwise pay currently to such employee in such calendar year, shall be
credited to a deferred account subject to the terms of the Plan. However, in no
event shall the part of an award under any plan credited during any calendar
year be less than $1,000 (based on a valuation at the time the award would
otherwise be paid). There shall be no such minimum limitation on amounts
credited during any calendar year that are related to dividend equivalent
payments.

 

In addition, prior to the beginning of any calendar year, any Senior Manager may
elect to participate in the Plan by directing that all or part of the
compensation related to the exercise (more than six months following such
election and prior to the employee's retirement or other termination of
employment) of an Option awarded under the 1987 Plan or the 1997 Plan shall be
credited to a deferred account subject to the terms of the Plan. The exercise of
an Option shall be considered as an exercise described in the preceding sentence
only if the exercise would otherwise satisfy the requirements for a
stock-for-stock exercise under the stock option award agreement pertaining to
such Option.

 

In addition, prior to the beginning of any calendar year, the Chairman of the
Board and any other Senior Manager designated by the Chairman of the Board may
elect to participate in the Plan by directing that all or part of such Senior
Manager's salary that such employee's Participating Company would otherwise pay
currently to such employee in such calendar year shall be credited to a deferred
account subject to the terms of the Plan.

 

In addition, provided such participation shall have been approved by the
Compensation and Employee Benefits Committee of the AT&T Board of Directors (the
"Committee"), prior to the beginning of any calendar year, any Senior Manager
may elect to participate in the Plan as to other awards under the 1987 Plan or
1997 Plan, or other amounts of compensation of such Senior Manager, by directing
that all or part of such awards or compensation that such Senior Manager's
Participating Company would otherwise pay currently to such Senior Manager in
such calendar year be credited to a deferred account subject to the terms of the
Plan.

 

(b) Such an election to participate in the Plan shall be in the form of a
document executed by the employee and filed with the employee's Participating
Company. An election related to awards, dividend equivalent payments, salary
and/ or other compensation otherwise payable currently in any calendar year
shall become irrevocable on the last day prior to the beginning of such calendar
year.

 

(c) Notwithstanding anything to the contrary contained in this Section 2, in the
case of a Senior Manager who is newly eligible to participate in the Plan, or in
the case of any Senior Manager with respect to awards or compensation newly
eligible to be deferred under the Plan, a deferral election may be made with
respect to compensation otherwise receivable in the same calendar year and
subsequent to such election, provided such election is made within ninety (90)
days of such eligibility.

 

(d) Notwithstanding anything in this Plan to the contrary, there shall be no
additional deferrals under Section 2 or Section 3(b)(iii) credited to a deferred
account after December 31, 2006.

3. DEFERRED ACCOUNTS

 

(a) (i) Except as provided in Section 3(b)(iii), deferred amounts related to
awards, dividend equivalent payments which would otherwise have been distributed
in cash by a Participating Company and deferred amounts related to salary and/or
other cash compensation shall be credited to the employee's account and shall
bear interest from the date the awards, dividend equivalent payments, salary
and/or other cash compensation would otherwise have been paid. The interest
credited to the account will be compounded at the end of each calendar quarter,
and the annual rate of interest applied at the end of any calendar quarter shall
be determined by the Committee from time to time, provided however, that the
interest rate to be applied, for any subsequent quarter, to an employee's (or
former employee's) deferred account balance as of December 31, 1998, plus any
additions to such account after December 31, 1998 that result from deferral
elections made by an employee prior to December 31, 1998, (reduced by any
distributions attributable to such account balance) shall not be less than the
applicable 10 Year U.S. Treasury Note Rate for the prior calendar quarter, plus
five (5) percent.

 

(ii) Furthermore, if an employee made an election described in Section 2, which
election was effective on December 31, 1983, then such employee's account shall
also be credited during 1984 with an amount equal to the deferred amounts which
would have been credited to the employee's account during 1984 had the company
which employed the employee on December 31, 1983 continued to be a Participating
Company during 1984, and such amount shall bear interest in accordance with
(a)(i) above from the date such amount would have been credited had such company
continued to be a Participating Company during 1984.

 

(b)(i) Deferred amounts related to awards that would otherwise have been
distributed in AT&T common shares by a Participating Company shall be credited
to the employee's account as deferred AT&T shares. Furthermore, if an employee
made an election described in Section 2, which election was effective on
December 31, 1983, then such employee's account shall also be credited during
1984 with the deferred AT&T shares which would have been credited to the
employee's account had the company which employed the employee on December 31,
1983 continued to be a Participating Company in the Plan and in the Long Term
Incentive Plan during 1984.

 

(ii) Deferred amounts related to the compensation on the exercise of an Option
also shall be credited to the employee's account as deferred AT&T shares. The
number of deferred AT&T shares credited under the preceding sentence shall equal
the number of additional AT&T shares the employee would have received on the
actual stock-for-stock exercise of such Option.

 

(iii) Prior to the beginning of any calendar year, the Chairman of the Board and
any other Senior Manager designated by the Chairman of the Board may elect that
deferred amounts related to dividend equivalent payments, which would otherwise
have been distributed in cash by a Participating Company during such calendar
year, shall be credited to the employee's account as deferred AT&T shares. The
number of deferred AT&T shares credited, with respect to each dividend
equivalent, shall be determined in accordance with the conversion formula set
forth in the following paragraph, as if such dividend equivalent were the amount
to be converted to a number of additional deferred AT&T shares.

 

(iv) The employee's account shall also be credited on each dividend payment date
for AT&T shares with an amount equivalent to the dividend payable on the number
of AT&T common shares equal to the number of deferred AT&T shares in the
employee's account on the record date for such dividend. Such amount shall then
be converted to a number of additional deferred AT&T shares determined by
dividing such amount by the price of AT&T common shares, as determined in the
following sentence. The price of AT&T common shares related to any dividend
payment date shall be the average of the daily high and low sale prices of AT&T
common shares on the New York Stock Exchange ("NYSE") for the period of five
trading days ending on such dividend payment date, or the period of five trading
days immediately preceding such dividend payment date if the NYSE is closed on
the dividend payment date.

 

(c) In the event of any change in outstanding AT&T common shares by reason of
any stock dividend or split, recapitalization, merger, consolidation,
combination or exchange of shares or other similar corporate change, the
Committee shall make such adjustments, if any, that it deems appropriate in the
number of deferred AT&T shares then credited to employees' accounts. Any and all
such adjustments shall be conclusive and binding upon all parties concerned.

 

4. DISTRIBUTION

 

(a) At the time an eligible employee makes an election to participate in the
Plan, the employee shall also make an election with respect to the distribution
(during the employee's lifetime or in the event of the employee's death) of the
amounts credited to the employee's deferred account. Such an election related to
the distribution during the employee's lifetime, of amounts otherwise payable
currently in any calendar year, shall become irrevocable on the last day prior
to the beginning of such calendar year.

 

The election related to the distribution in the event of the employee's death,
including the designation of a beneficiary or beneficiaries, may be changed by
the employee at any time by filing the appropriate document with the Secretary
of the Company.

 

Amounts credited as cash plus accumulated interest shall be distributed in cash;
amounts credited as deferred AT&T shares shall be distributed in the form of an
equal number of AT&T shares.

 

(b)(i) With respect to amounts related to deferred cash credited to the
employee's account under Section 3(a), and to deferred AT&T shares credited to
the employee's account under Section 3 (b)(i) or (iii), an employee may elect to
receive such amounts in one payment or in some other number of approximately
equal annual installments (not exceeding 20), provided however, that the number
of annual installments may not extend beyond the life expectancy of the
employee, determined as of the date the first installment is paid. The
employee's election shall also specify that the first installment (or the single
payment if the employee has so elected) shall be paid either (1) as soon as
practicable after the first day of the calendar quarter next following the end
of the month in which the employee attains the age specified in such election,
which age shall not be earlier than age 55 or later than age 70-1/2, or (2) as
soon as practicable after the first day of the calendar quarter next following
the end of the month in which the employee retires from a Participating Company
or otherwise terminates employment with a Participating Company (except for a
transfer to another Participating Company); provided, however, that the
Committee may, in its sole discretion, direct that the first installment (or the
single payment) shall be paid on the first day of the first calendar quarter in
the calendar year next following the year of retirement or other termination of
employment. In addition any Senior Manager eligible to defer salary may specify
that the first installment (or the single payment if the employee has so
elected) shall be paid as soon as practicable after the first day of the first
calendar quarter in the calendar year next following the calendar year in which
the employee retires from a Participating Company or otherwise terminates
employment with a Participating Company (except for a transfer to another
Participating Company).

 

(ii) With respect to deferred AT&T shares credited to the employee's account
under Section 3(b)(ii), an employee may elect to receive the deferred AT&T
shares in one payment or in some other number of approximately equal annual
installments (not exceeding 20), provided however, that the number of annual
installments may not extend beyond the life expectancy of the employee,
determined as of the date the first installment is paid. The employee's election
shall also specify that the first installment (or the single payment if the
employee has so elected) shall be paid as soon as practicable after the first
day of the calendar quarter next following the later of (1) the end of the month
that is five years following the month in which the related deferred AT&T shares
were initially credited, and (2)(A) the end of the month in which the employee
attains the age specified in such election, which age shall not be earlier than
age 55 or later than age 70-1/2, or (B) the end of the month in which the
employee retires from a Participating Company or otherwise terminates employment
with a Participating Company (except for a transfer to another Participating
Company); provided, however, that the Committee may, in its sole discretion,
direct that the first installment (or the single payment) shall be paid on

the first day of the first calendar quarter in the calendar year next following
the year of retirement or other termination of employment.

 

(c) Notwithstanding an election pursuant to Paragraph (b) of this Section 4, the
entire amount then credited to an employee's account shall be paid immediately
in a single payment (1) if the employee is discharged for cause by his or her
Participating Company, (2) if the such Participating Company determines that the
employee engaged in misconduct in connection with the employee's employment with
the Participating Company, (3) if the employee without the consent of his or her
Participating Company, while employed by such Participating Company or after the
termination of such employment, establishes a relationship with a competitor of
the Company or engages in activity which is in conflict with or adverse to the
interest of the Company as determined under the AT&T Non-Competition Guideline,
or (4) the employee becomes employed by a governmental agency having
jurisdiction over the activities of a Participating Company or any of its
subsidiaries.

 

(d) An employee may elect that, in the event the employee should die before full
payment of all amounts credited to the employee's account, the balance of the
deferred amounts shall be distributed in one payment or in some other number of
approximately equal annual installments (not exceeding 10) to the beneficiary or
beneficiaries designated in writing by the employee, or if no designation has
been made, to the estate of the employee. The first installment (or the single
payment if the employee has so elected) shall be paid on the first day of the
calendar quarter next following the month of death; provided, however, that the
Committee may, in its sole discretion, direct that the first installment (or the
single payment) shall be paid on the first day of the first calendar quarter in
the calendar year next following the year of death.

 

(e) Installments subsequent to the first installment to the employee, or to a
beneficiary or to the employee's estate, shall be paid on the first day of the
applicable calendar quarter in each succeeding calendar year until the entire
amount credited to the employee's deferred account shall have been paid.
Deferred amounts held pending distribution shall continue to be credited with
interest or additional deferred AT&T shares, as applicable, determined in
accordance with Section 3(a) and (b).

 

(f) In the event an employee, or the employee's beneficiary after the employee's
death, incurs a severe financial hardship, the Committee, in its sole
discretion, may accelerate or otherwise revise the payment schedule from the
employee's account to the extent reasonably necessary to eliminate the severe
financial hardship. For the purpose of this subsection (f), a severe financial
hardship must have been caused by an accident, illness, or other event beyond
the control of the employee or, if applicable, the beneficiary.

 

(g) The obligation to make a distribution of deferred amounts credited to an
employee's account during any calendar year plus the additional amounts credited
on such deferred amounts pursuant to Section 3(a) and (b) shall be borne by the
Participating Company which otherwise would have paid the related award or
salary currently. However, the obligation to make distribution with respect to
deferred amounts which are related to amounts credited to an employee's account
under Section 3(a)(ii) and under the second sentence of Section 3(b)(i), and
with respect to which no Participating Company would otherwise have paid the
related award currently, shall be borne by the Participating Company which
employed the employee on January 1, 1984.

 

(h) Nothwithstanding any provision to the contrary, the amount credited to an
employee’s account shall be reduced by the amount specified in an Election to
Forego Compensation Form executed by the employee under the AT&T Corp. Estate
Enhancement Program, and the reduction shall be effective as of the effective
date of such election.

 

5. MISCELLANEOUS

 

(a) The deferred amounts shall be held in the general funds of the Participating
Companies. The Participating Companies shall not be required to reserve, or
otherwise set aside, funds for the payment of such amounts.

 

(b) The rights of an employee to any deferred amounts plus the additional
amounts credited pursuant to Section 3(a) and (b) shall not be subject to
assignment by the employee.

 

(c) The Executive Vice President - Human Resources of AT&T shall have the
authority to administer the Plan.

 

(d) The Committee may at any time amend the Plan or terminate the Plan, but such
amendment or termination shall not adversely affect the rights of any employee,
without his or her consent, to any benefit under the Plan to which such employee
may have previously become entitled prior to the effective date of such
amendment or termination. The Executive Vice President - Human Resources of AT&T
with the concurrence of the General Counsel of AT&T shall be authorized to make
minor or administrative changes to the Plan, as well as amendments required by
applicable federal or state law (or authorized or made desirable by such
statutes).