Exhibit 10-ggg

 
AT&T NON-QUALIFIED PENSION PLAN
 

 

 
THIS DOCUMENT, LIKE ALL COMPANY PLANS, PERSONNEL POLICIES OR PRACTICES, IS NOT A
CONTRACT OF EMPLOYMENT.  IT IS NOT INTENDED TO CREATE, AND IT SHOULD NOT BE
CONSTRUED TO CREATE, ANY CONTRACTUAL RIGHTS TO CONTINUED EMPLOYMENT, EITHER
EXPRESS OR IMPLIED, BETWEEN THE COMPANY AND ITS EMPLOYEES.

AT AT&T CORP., THE EMPLOYMENT RELATIONSHIP WITH EMPLOYEES COVERED BY THIS PLAN
IS "AT-WILL."  THIS MEANS THAT EMPLOYEES HAVE THE RIGHT TO QUIT THEIR EMPLOYMENT
AT ANY TIME AND FOR ANY REASON, AND THE COMPANY RESERVES THE RIGHT TO TERMINATE
ANY EMPLOYEE’S EMPLOYMENT, WITH OR WITHOUT CAUSE, AT ANY TIME FOR ANY REASON,
SUBJECT TO THE RIGHTS OF ELIGIBLE PARTICIPANTS TO BENEFITS PROVIDED BY THIS
PLAN.

IN THE EVENT THERE IS A CONFLICT BETWEEN STATEMENTS IN THIS PLAN AND THE TERMS
OF ANY OTHER BENEFIT PLAN, POLICY, OR PRACTICE, THE APPLICABLE BENEFIT PLAN,
POLICY OR PRACTICE PROVIDING THE BENEFITS IN QUESTION WILL CONTROL.  AT&T CORP.
RESERVES THE RIGHT, AT ANY TIME, TO MODIFY, SUSPEND, CHANGE, OR TERMINATE ITS
EMPLOYEE BENEFIT PLANS OR EXECUTIVE LEVEL INCENTIVE, BENEFIT AND/OR PERQUISITE
PLANS, PROGRAMS, POLICIES OR PRACTICES.
 

 
 
As Amended and Restated Effective January 1, 1997, Including
Amendments Adopted Through December 31, 2008
 
 

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AT&T NON-QUALIFIED PENSION PLAN
 

Article 1.
Purpose
 
This AT&T Non-Qualified Pension Plan (the “Plan”) is an amendment and
restatement of predecessor programs sponsored by the Company that were first
adopted on October 1, 1980, and reflects amendments adopted through December 31,
2008.  The Plan provides supplemental pension, disability and death benefits to
certain employees of AT&T Corp. (“AT&T”) and its Affiliated Corporations, as
defined herein. The Plan is intended to constitute an unfunded plan of deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of ERISA.  Except as otherwise indicated herein, the
provisions of this amended and restated AT&T Non-Qualified Pension Plan shall
apply only with respect to a Participant, as defined herein, who terminates
employment on or after January 1, 1997. For former employees who terminated
employment before January 1, 1997, the provisions of the AT&T Non-Qualified
Pension Plan in effect on the date of the former employee’s termination of
employment shall govern.
 
Effective January 1, 1997, the Plan was amended to provide a Special Update to
the Basic Formula and a Special Update to the Alternate Formula, for employees
who were actively employed and participating in the Plan on January 1,
1997.  Effective January 1, 1998, the Plan was amended to discontinue ongoing
benefit accruals for employees other than Officers, to implement a Cash Balance
Formula as the only formula providing ongoing accruals, and to provide for the
transfer of the benefit accrued as of December 31, 1996 under the AT&T
Mid-Career Pension Plan to this Plan, for Officers who participate in this Plan
on or after January 1, 1998.
 
Effective January 1, 2004, the Plan was amended to provide benefit accruals for
a select group of management or highly compensated employees of a Participating
Company who participate in the AT&T Executive Deferred Compensation Plan.  The
benefit provided to such employees by the Plan is generally equal to the
reduction in the benefit payable to or on behalf of such employee under the AT&T
Management Pension Plan and the AT&T Excess Benefit and Compensation Plan,
resulting from such employee’s election to defer amounts (“Qualified Deferrals”
herein) under the AT&T Executive Deferred Compensation Plan or the AT&T Inc.
Cash Deferral Plan.  Accruals under this provision ceased December 31, 2007.
 
Effective after December 31, 2008, benefit accruals under this Plan are limited
to accruals under the cash balance formula with respect to short term incentive
awards, for employees who are Officers on December 31, 2008. These accruals will
continue for this group of Officers until the individuals “SERP Vesting Date,”
as defined herein, at which time the benefit will be frozen. Employees who
become Officers after December 31, 2008 are not entitled to benefits under this
Plan, except with respect to benefits earned under a prior formula that was
frozen effective December 31, 1997, or with respect to benefits based on
Qualified Deferrals, with respect to which benefit accruals ceased December 31,
2007.
 
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 2. 
Definitions
 
Unless the context clearly indicates otherwise, the following terms have the
meanings described below when used in this Plan, and references to a particular
Article, Section, or Appendix shall mean the Article, Section, or Appendix so
delineated in this Plan.
 
Section 2.01 Adjusted Career Average Pay
 
    “Adjusted Career Average Pay,” as used in the Alternate Formula described in
Section 4.02(b), means (i) in the case of an Officer, the sum of A and B below,
divided by such Officer’s Term of Employment, and (ii) in the case of an E-band
Employee, the amount described in B below divided by such E-band Employee’s Term
of Employment;  for purposes of this Section 2.01, the last day of a
Participant’s Term of Employment is the earliest to occur of July 31, 1997, the
date specified in the applicable provision of Section 3.02(c) for purposes of
determining a benefit under the Alternate Formula, or the date of the
Participant’s termination of employment from a Participating Company:
 
 
A.
the sum of (1) and (2), where (1) is the product of (a) the average of the
Officer’s annual Short Term Incentive Awards includable in the 1989 Base Period,
and (b) the Officer’s Term of Employment as of December 31, 1989, and (2) is his
or her Short Term Incentive Awards and any Deferred Salary for the period from
January 1, 1990 through the earliest to occur of (i) July 31, 1997, (ii) the
date specified in the applicable provision of Section 3.02(c) for purposes of
determining a benefit under the Alternate Formula, or (iii) the date of the
Participant’s termination of employment from a Participating Company.

 
 
B.
the sum of (1) and (2), where (1) is the product of (a) the Participant’s
average annual “Compensation” (as defined in the Pension Plan) for the 1992 Base
Period, and (b) the Participant’s Term of Employment as of December 31, 1992,
and (2) is the Participant’s “Compensation” (as defined in the Pension Plan) for
the period from January 1, 1993 through the earliest to occur of (i) July 31,
1997, (ii) the date specified in the applicable provision of Section 3.02(c) for
purposes of determining a benefit under the Alternate Formula, or (iii) the date
of the Participant’s termination of employment from a Participating Company.

 
Section 2.02  Administrator
 
    “Administrator” means the person identified as the Pension Plan
Administrator under the Pension Plan, or such other person or entity designated
by the Company.
 
Section 2.03 Affiliated Corporation
 
    “Affiliated Corporation” means any corporation or other entity of which 50
percent or more of the voting stock is owned directly or indirectly by AT&T.
 
Section 2.04 AT&T, Company
 
    “AT&T” or “Company” means AT&T Corp., a New York Corporation, or its
successors. Effective on November 18, 2005, AT&T Corp. was acquired by SBC
Communications Inc. (now known as AT&T Inc.) pursuant to a plan and agreement of
merger dated January 30, 2005.
 
Section 2.05 AT&T Controlled Group
 
    “AT&T Controlled Group” means AT&T and each other entity required to be
aggregated with AT&T under Code Sections 414(b), (c), (m), or (o). 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.).
 
Section 2.06 1989 Base Period
 
    “1989 Base Period” means the period from January 1, 1987, through December
31, 1989, inclusive.  Notwithstanding the provisions of the immediately
preceding sentence, the “1989 Base Period” shall in no event include any period
on or after the date specified in the applicable provision of Section 3.02(c)
for purposes of determining a benefit under the Basic Formula or under the
Alternate Formula.
 
Section 2.07 1992 Base Period
 
    “1992 Base Period” means the period from January 1, 1990, through December
31, 1992, inclusive.  Notwithstanding the provisions of the immediately
preceding sentence, the “1992 Base Period” shall in no event include any period
on or after the date specified in the applicable provision of Section 3.02(c)
for purposes of determining a benefit under the Alternate Formula or under the
Alternate Minimum Formula.
 
Section 2.08 1996 Base Period
 
    “1996 Base Period” means the period from January 1, 1994 through December
31, 1996, inclusive.  Notwithstanding the provisions of the immediately
preceding sentence, the “1996 Base Period” shall in no event include any period
on or after the date specified in the applicable provision of Section 3.02(c)
for purposes of determining a benefit under the Special Update to the Basic
Formula or under the Special Update to the Alternate Formula.
 
Section 2.09 Board
 
    “Board” means the Board of Directors of AT&T.
 
Section 2.10 Cash Balance Account
 
    “Cash Balance Account” means a hypothetical bookkeeping account used solely
in calculating the amount under this Plan of a Cash Balance Participant’s
Benefit Based on the Cash Balance Account, as described in Section 4.03.  The
term “Cash Balance Account” does not include amounts credited to the Qualified
Deferrals Cash Balance Account, as described in Section 4.11.
 
Section 2.11 Cash Balance Participant
 
    “Cash Balance Participant” means an employee who is on the active roll of a
Participating Company as an Officer on or after January 1, 1998. Notwithstanding
the preceding sentence, an individual who is promoted to an Officer position
after December 31, 2008 shall not be eligible to earn benefits as a “Cash
Balance Participant.”
 
Section 2.12 CIC Eligible Employee
 
“CIC Eligible Employee” means a Deferral Participant who is considered a “CIC
Eligible Employee” under the terms of the Pension Plan.
 
Section 2.13 Code
 
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
Any reference to a particular section of the Code includes any applicable
regulations promulgated under that section.
 
Section 2.14 Committee
 
“Committee” means the Employees’ Benefit Committee appointed by AT&T to
administer the Pension Plan.
 
Section 2.15 Concert Employee
 
“Concert Employee” means a former employee of a Participating Company who,
pursuant to pertinent agreement(s) concluded between AT&T and British
Telecommunications, PLC (“BT”) became employed by a Concert entity after
December 15, 1999 and before April 1, 2002, under such circumstances that his or
her net credited service would be subject to an immediate bridge if the Concert
entity were a participating company under the Pension Plan,  who was an Officer
immediately prior to his or her employment by Concert, and who returned to the
employment of a Participating Company as an Officer immediately following the
termination of his or her employment by Concert on or before April 1, 2002.  For
purposes of this definition, “Concert” means the joint venture established
pursuant to pertinent agreement(s) concluded between AT&T and BT.
 
Section 2.16 Covered Compensation Base
 
“Covered Compensation Base” means an amount which is the average of the maximum
wage amounts on which an employee’s liability for Social Security taxes was
determined for each year beginning with January 1, 1958 and ending with December
31, 1993.
 
Section 2.17 Deferral Participant
 
“Deferral Participant” means an employee who defers compensation under the AT&T
Executive Deferred Compensation Plan, or for periods after 2006, the AT&T Inc.
Cash Deferral Plan, to the extent that such deferred compensation is a Qualified
Deferral.
 
Section 2.18 Deferred Salary
 
“Deferred Salary” means any salary amounts deferred under the AT&T Senior
Manager Incentive Award Deferral Plan, for periods commencing on or after
January 1, 1994 and prior to January 1, 2005.  For periods commencing on or
after January 1, 2005, “Deferred Salary” is zero.  Deferred Salary does not
include amounts deferred pursuant to Code Section 401(k) or amounts contributed
pursuant to Code Section 125.
 
Section 2.19 Deferred Vested Benefit
 
“Deferred Vested Benefit” means a benefit determined pursuant to Section 4.02E
(under  benefit formulas prior to January 1, 1998) and payable to a Participant
who is vested under the Pension Plan at the time of his or her termination of
employment, and who is not Service Pension Eligible as of the date specified by
the relevant provision of  this Plan.
 
Section 2.20 Disability Benefit
 
“Disability Benefit” means the benefit payable from the Plan to a Participant
who, prior to January 1, 1998, became eligible for a disability pension from the
Pension Plan while an Officer.  If the disability pension from the Pension Plan
is discontinued (other than by reason of attainment of normal retirement age, as
defined in the Pension Plan), the Disability Benefit hereunder shall also be
discontinued.
 
Section 2.21 E-band Employee
 
“E-band Employee” means any employee of a Participating Company employed in a
position evaluated or classified by the Company as an “E-band” (formerly
E-level, Fifth level and SG-12 through SG-14) or equivalent position in a banded
environment, or Manager 5 or its equivalent in a non-banded environment, except
that no employee who is assigned to such a position on a temporary basis after
being notified in writing of the temporary status of such assignment shall be an
“E-band Employee” for any purpose under this Plan.
 
Section 2.22 ERISA
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time. Any reference to a particular section of ERISA includes any
applicable regulations promulgated under that section.
 
Section 2.23 50% Joint and Survivor Annuity
 
“50% Joint and Survivor Annuity” means an annuity form of payment under which
payments continue to the surviving Spouse of the Participant, effective as of
the first day of the month after the death of the Participant, and continuing
until the last day of the month in which the death of the Spouse occurs, in an
amount equal to fifty percent of the amount of the monthly benefit which was
being paid to the Participant.  If the Spouse predeceases the Participant after
the Pension Commencement Date (and the pension is other than a Deferred Vested
Pension described in Section 4.02(a)(iii)), the Participant’s pension shall be
restored by the amount of the original reduction for this election, starting
with the pension payment for the month following the death of the Spouse. For
purposes of the 50% Joint and Survivor Annuity, the Spouse is the Spouse to whom
the Participant was married on his or her Pension Commencement Date. This
definition does not apply with respect to any benefit payable pursuant to a SERP
Election made by a SERP Participant.
 
Section 2.24 100% Joint and Survivor Annuity
 
“100% Joint and Survivor Annuity” means an annuity form of payment under which
payments continue to the surviving Spouse of the Participant, effective as of
the first day of the month after the death of the Participant, and continuing
until the last day of the month in which the death of the Spouse occurs, in an
amount equal to amount of the monthly benefit which was being paid to the
Participant.  If the Spouse predeceases the Participant after the Pension
Commencement Date, the Participant’s pension shall be restored by the amount of
the original reduction for this election, starting with the pension payment for
the month following the death of the Spouse. For purposes of the 100% Joint and
Survivor Annuity, the Spouse is the Spouse to whom the Participant was married
on his or her Pension Commencement Date. This definition does not apply with
respect to any benefit payable pursuant to a SERP Election made by a SERP
Participant.
 
Section 2.25 Leave of Absence
 
A “Leave of Absence” means 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.
 
Section 2.26 Normal Retirement Date
 
“Normal Retirement Date” means the Participant’s normal retirement date as that
term is defined in the Pension Plan.
 
Section 2.27 Officer
 
“Officer” means any employee of a Participating Company holding a position
evaluated or classified by the Company above the “E-band” level in a banded
environment, or classified at the Manager 6 level or above in a non-banded
environment, except that no employee who is assigned to such a position on a
temporary basis after being notified in writing of the temporary status of such
assignment shall be an “Officer” for any purpose under this Plan.
 
Section 2.28 Participant
 
“Participant” means an Officer or an E-band Employee who satisfies the
requirements of Article 3 for eligibility to accrue benefits under the Plan.  An
employee who has become a Participant, but who is no longer eligible to accrue
benefits under the Plan, shall continue to be a Participant with respect to any
nonforfeitable benefits he or she has accrued under the Plan, until such accrued
benefits have been fully discharged through payment or through the purchase of
an annuity contract.
 
Section2.29 Participating Company
 
“Participating Company” means AT&T and any Affiliated Corporation which shall
have determined, with the concurrence of AT&T, to participate in the Plan.  In
order to be a Participating Company under this Plan, a company must also be a
participating company under the AT&T Management Pension Plan.
 
Section 2.30 Pension Commencement Date
 
“Pension Commencement Date” means the first day of the first month for which a
payment under this Plan is payable in the form of an annuity or any other form.
With respect to payments that commenced prior to January 1, 2009, the pension
commencement date under the Pension Plan was the same as the Pension
Commencement Date under this Plan.
 
Section 2.31 Pension Plan
 
“Pension Plan” means the AT&T Management Pension Plan, as amended and restated
from time to time, and effective January 1, 2007, the AT&T Pension Benefit Plan
– AT&T Legacy Management Program.
 
Section 2.32 Pension Plan Benefit
 
“Pension Plan Benefit” means (i) for purposes of determining the benefit under
Section 4.02E(b) of the Plan, the “accrued benefit” under any of the pay base
formulas under the Pension Plan, other than the special update formula,  (ii)
for purposes of determining the benefit under Section 4.02E(e) of the Plan, the
“accrued benefit” under any of the pay base formulas under the Pension Plan,
including the special update formula, and (iii) for purposes of determining the
benefit under Section 4.02E(c) of the Plan, the “accrued benefit” under the
Pension Plan under any of the pay base formulas under the Pension Plan,
including the special update formula, each of (i), (ii)  and (iii) herein
determined without regard to the limitations on covered compensation under Code
Section 401(a)(17), or the limitations on benefit accruals and payments under
Code Section 415 and, unless otherwise indicated in the Plan, before any
reduction in such pension benefit for the cost of a survivor benefit or for
early commencement. Notwithstanding the provisions of the immediately preceding
sentence, in applying the pay base formulas under the Pension Plan to a
Participant described in Section 3.02(c), service and compensation after the
date specified in the applicable provisions of Section 3.02(c) for purposes of
determining the benefit under Section 4.02E(b) or Section 4.02E(e) of this Plan
shall be excluded.
 
Section 2.33  
Plan

 
“Plan” means this AT&T Non-Qualified Pension Plan, as set forth herein and as
amended from time to time.
 
Section 2.34  
Position Rate

 
“Position Rate” means an amount established periodically by the Company for each
Officer’s position, upon which base salaries are administered.
 
Section 2.35  
Qualified Deferral

 
A “Qualified Deferral” means any salary or bonus amounts deferred under the AT&T
Executive Deferred Compensation Plan, for periods commencing on or after
January 1, 2005, or the AT&T Inc. Cash Deferral Plan for periods after December
31, 2006, to the extent such salary or bonus would have been included as
“Eligible Pay” (determined before application of any limitations under Code
Section 401(a)(17)) under the Pension Plan if not deferred. Notwithstanding the
preceding, the term “Qualified Deferral” does not include amounts deferred
pursuant to Code Section 401(k) or amounts contributed pursuant to Code Section
125.  An amount is treated as deferred for the period in which such amount would
have been paid, if not deferred. Notwithstanding the preceding, a Qualified
Deferral does not include amounts deferred with respect to any paycheck dated
after December 31, 2007.
 
Section 2.36  
Qualified Deferrals Cash Balance Account

 
“Qualified Deferrals Cash Balance Account” means a hypothetical bookkeeping
account used solely in calculating the amount under this Plan of a Deferral
Participant’s Benefit Based on the Qualified Deferrals Cash Balance Account, as
described in Section 4.11E.  The term “Qualified Deferrals Cash Balance Account”
does not include amounts credited to the Cash Balance Account described in
Section 4.03E.
 
Section 2.37  
SERP

 
“SERP” means the 2005 Supplemental Employee Retirement Plan of AT&T Inc., as
amended from time to time.
 
Section 2.38  SERP Effective Date
 
“SERP Effective Date” means SERP Effective Date as defined in the SERP.
 
Section 2.39  
SERP Election

 
“SERP Election” means the election made before December 31, 2008 and in effect
on December 31, 2008 with respect to distributions under the 2005 Supplemental
Employee Retirement Plan of AT&T Inc. The SERP Election shall also apply to
benefits payable under this Plan to a Participant who became a SERP Participant
prior to January 1, 2009.
 
Section 2.40  
SERP Participant

 
“SERP Participant” means an individual who has been designated as eligible to
participate in the 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.
 
Section 2.41  
SERP Vesting Date

 
“SERP Vesting Date” means 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.
 
Section 2.42  
Service Benefit

 
“Service Benefit” means the benefit determined pursuant to Section 4.02E(a)
through (e), as applicable, and payable under the Plan to a Participant who is
Service Pension Eligible at the date specified by the relevant provision of this
Plan as if the Participant terminated employment as of such date.
 
Section 2.43  
Service Pension Eligible

 
“Service Pension Eligible” means (i) with respect to a termination of employment
prior to January 1, 1997, the Participant is eligible for a service pension
under the Pension Plan; and (ii) with respect to a termination of employment on
or after January 1, 1997, the Participant meets the following requirements:
 
 
(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 subparagraphs (i) through (iv) above, a Participant’s “term of
employment” is determined under the provisions of the Pension Plan, as that plan
was in effect on January 1, 1997, and is measured as of the date specified by
the relevant provision of this Plan as if the Participant terminated employment
of such date, or if no date is specified, as of the date of such Participant’s
termination of employment.  In determining the Participant’s “term of
employment” under the Pension Plan, and in determining a Participant’s status as
eligible for a service pension under the Pension Plan, the effect of the
Management Pension Enhancement under the Pension Plan for employees with five or
more years of term of employment (under the Pension Plan) as of December 30,
1989, shall be disregarded.
 
Section 2.44  
Short Term Incentive Award

 
“Short Term Incentive Award” means the actual amount awarded annually (including
any such amounts deferred pursuant to the AT&T Senior Management Incentive Award
Deferral Plan or the AT&T Executive Deferred Compensation Plan) to an Officer
pursuant to the AT&T Short Term Incentive Plan, or any predecessor short term
incentive plan. A Short Term Incentive Award shall, for purposes of Sections
4.02E(a) and 4.02E(d) of this Plan, be considered to be awarded on the last day
of the performance period with respect to which it is earned. For purposes of
the annual award credit under the Cash Balance Account, the Short Term Incentive
Awards shall be taken into account in the year paid (or in which it would have
been paid, if not deferred) and only if such amount is paid (or would have been
paid, if not deferred) on or before the end of the month in which the Officer
terminates employment. Notwithstanding the preceding, after calendar year 2007,
a short term incentive award shall be taken into account if it is paid in the
month following termination of employment as part of the regular payroll
schedule applied for payment of amounts earned during the final pay period of
the month in which employment terminated.
 
Effective December 15, 1999, any short term award received from Concert by a
Concert Employee while employed in “Concert service” (as defined in the Pension
Plan) shall be treated as a Short Term Incentive Award provided that, had the
award been received from a Pension Plan participating company, it would have
been considered a Short Term Incentive Award.
 
Section 2.45  
Special Update Adjusted Career Average Pay

 
“Special Update Adjusted Career Average Pay,” as used in the Special Update to
the Alternate Formula described in Section 4.02E(e), means (i) in the case of an
Officer the sum of (a) the average annual Short Term Incentive Awards and the
average annual Deferred Salary under the AT&T Senior Management Incentive Award
Deferral Plan for the 1996 Base Period and (b) the average annual “Compensation”
(as defined in the Pension Plan) for the 1996 Base Period, and (ii) in the case
of an E-band Employee, the average annual “Compensation” (as defined in the
Pension Plan) for the 1996 Base Period.
 
Section 2.46  
Specified Employee

 
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.
 
Section 2.47  
 Successor Plan Sponsor

 
“Successor Plan Sponsor” means Lucent Technologies Inc. and any other
corporation or entity that enters into an agreement or agreements providing for
the assumption of liabilities arising under this Plan, including the Management
Interchange Agreement dated as of April 8, 1996, and the Employee Benefits
Agreement dated February 1, 1996, and amended and restated as of March 29, 1996,
between AT&T and Lucent Technologies Inc.
 
Section 2.48  
Spouse

 
“Spouse” means a person of the opposite sex who is the lawful spouse of a
married Participant, under the laws of the state of the Participant’s domicile,
and at the relevant time period stated under the applicable Plan
provisions.   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 Pension
Plan, such alternate payee shall not be deemed to be the “spouse” for any
purpose under this Plan.
 
Section 2.49  
Term of Employment

 
 “Term of Employment” means “term of employment” as determined under the
provisions of the Pension Plan, as that plan was in effect on January 1, 1997,
but excluding any service subsequent to the date indicated, if any, by a
provision of this Plan for purposes of applying such Plan provision.
Notwithstanding the foregoing, except for purposes of determining a CIC Credit
pursuant to Section 4.11E(c), a Participant’s Term of Employment shall end no
later than the date the Participant is reclassified or reassigned (or such later
date as otherwise specified in Section 3.02(c) for the purpose indicated
therein).
 
Section 2.50  
Termination of Employment

 
The ceasing of the Participant’s employment from the AT&T controlled group of
companies for any reason whatsoever, whether voluntarily or involuntarily.
Effective January 1, 2009, 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.
 
Section 2.51  
Total Compensation

 
“Total Compensation” as used in the Alternate Minimum Formula described in
Section 4.02(c) means, with respect to any period, the sum of (i) “Compensation”
as defined in  the Pension Plan, (ii) Deferred Salary under the AT&T Senior
Management Incentive Award Deferral Plan, and (iii) Short Term Incentive Awards,
applicable to such period.
 
Section 2.52  
Transition Employee

 
“Transition Employee” means a former Participant, as to whom the responsibility
and liability for the payment of benefits accrued or payable under this Plan has
been assumed by a Successor Plan Sponsor.
 
Section 2.53  
Years of Service

 
“Years of Service” with respect to a Participant means the years of service as
defined in Article 2 of the Pension Plan as that plan was in effect on December
31, 1993.  “Years of Service” is used herein solely for the purpose of
determining a Participant’s eligibility for the Alternate Minimum Formula.
 

Article 3.
Participation and Eligibility for Plan Benefits
 
Section 3.01  
 Eligibility to Accrue Plan Benefits

 
Effective for periods prior to January 1, 1997, eligibility to accrue benefits
under this Plan shall be determined in accordance with the provisions of the
Plan as in effect from time to time prior to January 1, 1997.
 
Effective January 1, 1997 through July 31, 1997, all Officers and E-band
Employees shall be eligible to accrue benefits under this Plan.
 
During the period beginning August 1, 1997 and ending December 31, 1997, no
employee will accrue additional retirement benefits under this Plan.
 
Effective January 1, 1998, an employee who was an Officer prior to January 1,
1998 shall be eligible to accrue benefits under the Cash Balance Formula of this
Plan, during the period on or after January 1, 1998 that he or she continues to
be an Officer of a Participating Company.   Any other employee who becomes an
Officer prior to January 1, 2009 shall become eligible to accrue benefits under
the Cash Balance Formula on the date he or she becomes an Officer.
Notwithstanding the preceding, such Officer shall not accrue additional benefits
hereunder after the SERP Vesting Date. An individual who is not an Officer on
December 31, 2008 shall not be eligible to accrue benefits under the Plan after
December 31, 2008.
 
Effective January 1, 2004, an employee who defers compensation under the AT&T
Executive Deferred Compensation Plan, or the AT&T Inc. Cash Deferral Plan for
periods after December 31, 2006, shall be eligible to accrue benefits under this
Plan with respect to amounts deferred under such plan, to the extent such
amounts deferred are Qualified Deferrals.  Notwithstanding the preceding, a
Qualified Deferral does not include amounts deferred with respect to any
paycheck dated after December 31, 2007.
 
No individual shall become a Participant in this Plan after December 31, 2008.
 

 
Section 3.02  
Eligibility to Receive Plan Benefits

 
(a) Participants Who Are Officers
 
Participants Who Are Officers Before January 1, 2009
 
Subject to the provisions of Section 3.01, Section 3.02(c) regarding
reassignments and reclassifications, and Section 3.02(d) regarding Qualified
Deferrals and Section 3.02(a)(v) regarding Participants who become an Officer
after December 31, 2008, a Participant who is an Officer prior to January 1,
2009 shall be eligible for the following pension benefits from the Plan, in an
amount determined in accordance with the provisions of Article 4 and Appendix
E.  If a Participant is eligible for a benefit determined pursuant to more than
one subparagraph of this Section 3.02(a), the benefit payable from the Plan
shall be determined under the provision which applies to him or her and which
produces the greatest benefit, taking into account the Pension Commencement Date
and the form of payment. Notwithstanding the preceding, the benefit with respect
to a Participant who is an Officer prior to January 1, 2009 shall be calculated
as of the earlier of the Participant’s termination of employment or SERP Vesting
Date as the immediate single life annuity that would be payable under the Plan
commencing on such date, and once determined, the amount of the single life
annuity payable under this Plan shall not change.
 
(i)  
If the Participant is a Cash Balance Participant, a Benefit Based on the Cash
Balance Account, as described in Section 4.03E(f), provided that the Participant
is vested under the Pension Plan at the time of his or her termination of
employment from the AT&T Controlled Group;

 
(ii)  
If the Participant is Service Pension Eligible at the time of his or her
termination of employment with a Participating Company, a Service Benefit
determined in accordance with the applicable provision of  Section 4.01E and
Section 4.02E (with regard to benefits frozen prior to January 1, 1998);

 
(iii)  
If the Participant is not Service Pension Eligible at the time specified in the
relevant Plan provision, a Deferred Vested Benefit determined in accordance with
Section 4.02E(a) or Section 4.02E(d) (with regard to benefits frozen prior to
January 1, 1998), as applicable, provided that the Participant is vested under
the Pension Plan at the time of his or her termination of employment from the
AT&T Controlled Group;

 
(iv)  
If the Participant became eligible for a disability pension from the Pension
Plan while an Officer, a Disability Benefit, determined in accordance with
Section 4.02E(a) or Section 4.02E(d) (with regard to benefits frozen prior to
January 1, 1998), as applicable. Such Disability Benefit shall be paid in lieu
of any other benefit under the Plan, so long as the Participant is prevented by
such disability from resuming active service with a Participating Company. If
the Participant’s disability continues to his or her Normal Retirement Date, the
Disability Benefit shall be converted to a Service Benefit commencing on the
first day of the month following such Normal Retirement Date;

 
Participants Who Become Officers After December 31, 2008
 
(v)  
If an individual first becomes an Officer after December 31, 2008, the only
benefits payable under the Plan with respect to such individual will be benefits
attributable to Qualified Deferrals, if any, and benefits that were accrued
under the Plan prior to January 1, 1998, if any. Benefits earned prior to
January 1, 1998 will be paid pursuant to the provisions of Section 3.02(b)
applicable to Participants who are E-band Employees, and benefits attributable
to Qualified Deferrals pursuant to Section 3.02(d). The benefit with respect to
such Participant shall be calculated as of the SERP Effective Date as the
immediate single life annuity that would be payable under the Plan commencing on
such date, and once determined, the amount of the single life annuity payable
under this Plan shall not change.

 
(b) Participants Who Are E-band Employees (and Certain Officer Promotions)
 
Subject to the provisions of Section 3.01, Section 3.02(c) regarding
reassignments and reclassifications, and Section 3.02(d) regarding Qualified
Deferrals, a Participant who is an E-band Employee, and a Participant who
becomes an Officer after December 31, 2008, shall be eligible for the following
pension benefits from the Plan, in an amount determined in accordance with the
provisions of Article 4 and, as applicable Appendix E:
 
(i)  
If the Participant is Service Pension Eligible at the time of his or her
termination of employment from a Participating Company, a Service Benefit
determined in accordance with the applicable provision of Section 4.01E and
Section 4.02E (with respect to benefits frozen prior to January 1, 1998) ;

 
(ii)  
If the Participant is not Service Pension Eligible at the time of his or her
termination of employment with a Participating Company, a Deferred Vested
Benefit determined in accordance with Section 4.02E(a) or Section 4.02E(d) (with
respect to benefits frozen prior to January 1, 1998), as applicable, provided
that the Participant is vested under the Pension Plan at the time of his or her
termination of employment from the AT&T Controlled Group.

 
In applying the provisions of this Section 3.02(b) to a Participant who is
promoted to Officer after December 31, 2008, the determinations in (i) and (ii)
of whether the Participant is Service Pension Eligible shall be made as of such
Participant’s SERP Effective Date. The benefit with respect to such a
Participant shall be determined as described in Section 3.02(a)(v).
 
(c) Reassignments
 
 
 (i)
An Officer who, on or after January 1, 1986 and before January 1, 1998, was
reassigned to a position evaluated below the E-band level for reasons other than
unsatisfactory performance, and who has satisfied the vesting requirements of
the Pension Plan as of the reassignment date shall be eligible for benefits as
follows:

 
(A) such a former Officer who was Service Pension Eligible as of the
reassignment date, shall be eligible for a Service Benefit under Section
3.02(a)(ii) as of his or her termination of employment.  The benefit of any
reassigned Officer described in this Section 3.02(c)(i)(A) shall equal the
greater of (1) or (2), as follows:
 
(1)  
an amount computed in accordance with Section 4.02(a), the Basic Formula, or
Section 4.02(d), the Special Update to the Basic Formula, as applicable, as in
effect on the reassignment date.  For purposes of determining a benefit under
the Basic Formula, the Participant’s Term of Employment shall exclude any period
following the earliest to occur of the last day of the year in which he or she
was reassigned, July 31, 1997, or termination of employment; and

 
(2)  
an amount computed in accordance with Section 4.02(b) (the Alternate Formula),
or Section 4.02(e) (the Special Update to the Alternate Formula), as applicable,
as in effect on the reassignment date. For purposes of determining a benefit
under the Alternate Formula, the Participant’s Term of Employment shall exclude
any period following the last day of 1988 or if later, the earliest to occur of
the last day of the year in which he or she was reassigned, July 31, 1997, or
termination of employment.

 
(B) such a former Officer who was not Service Pension Eligible, but who was
eligible for a deferred vested pension pursuant to the Pension Plan as of the
reassignment date, shall be eligible for a Deferred Vested Benefit under Section
3.02(a)(iii) as of his or her termination of employment.  For purposes of
determining benefits pursuant to this Section 3.02(c)(i) (B) the Participant’s
Term of Employment shall exclude any period following the earliest to occur of
the last day of the year in which such reassignment occurs, July 31, 1997, or
termination of employment, and.
 
 
(ii)
An Officer who, on or after January 1, 1986 and before January 1, 1998, was
reassigned to a position evaluated below the E-band level, and who was not
Service Pension Eligible or eligible for a deferred vested pension pursuant to
the Pension Plan as of the reassignment date, will not be eligible for benefits
under this Plan.

 
 
(iii)
An Officer who, on or after January 1, 1986 and before January 1, 1998, was
reassigned to a position evaluated at the E-band level for reasons other than
unsatisfactory performance, shall be eligible for benefits as follows:

 
 (A) such a former Officer who was Service Pension Eligible as of the
reassignment date, shall be eligible for a Service Benefit under Section
3.02(a)(ii) upon his or her termination of employment. The benefit of any
reassigned Officer described in this Section 3.02(c)(iii)(A) shall equal the
greater of (1) and (2) as follows:
 
(1)  
 an amount computed in accordance with Section 4.02(a), the Basic Formula, or
Section 4.02(d), the Special Update to the Basic Formula, as applicable, as in
effect on the reassignment date. For purposes of determining a benefit under the
Basic Formula, the Participant’s Term of Employment shall exclude any period
following the earliest to occur of the last day of the year in which his or her
job was reclassified, July 31, 1997, or termination of employment;  for purposes
of determining a benefit under the Special Update to the Basic Formula, the
Participant’s Term of Employment shall exclude any period following the earliest
to occur of the last day of the year in which his or her job was reclassified,
December 31, 1996, or termination of employment; and

 
(2)  
 an amount computed in accordance with Section 4.02(b) (the Alternate Formula),
or Section 4.02(e) (the Special Update to the Alternate Formula), as applicable,
as in effect on the reassignment date.  For purposes of determining a benefit
under the Alternate Formula, the Participant’s Term of Employment shall exclude
any period following the last day of 1988 or if later, the earliest to occur of
the last day of the year in which his or her job was reclassified, July 31,
1997, or termination of employment; for purposes of determining a benefit under
the Special Update to the Alternate Formula, the Participant’s Term of
Employment shall exclude any period following the earliest to occur of the last
day of the year in which his or her job was reclassified, December 31, 1996, or
termination of employment.

 
 (B) such a former Officer who was not Service Pension Eligible but was eligible
for a deferred vested pension pursuant to the Pension Plan, as of the
reassignment date, shall be eligible for a Deferred Vested Benefit under Section
3.02(a)(iii) upon his or her termination of employment.  The benefit of any
reassigned Officer described in this Section 3.02(c)(iii)(B) shall be computed
under Section 4.02(a) (the Basic Formula), or Section 4.02(d) (the Special
Update to the Basic Formula), as applicable, in effect as of the date of such
reassignment.  For purposes of determining a benefit under the Basic Formula,
the Participant’s Term of Employment shall exclude any period following the
earliest to occur of the last day of the year in which his or her job was
reclassified, July 31, 1997, or termination of employment; for purposes of
determining a benefit under the Special Update to the Basic Formula, the
Participant’s Term of Employment shall exclude any period following the earliest
to occur of the last day of the year in which his or her job was reclassified,
December 31, 1996, or termination of employment.
 
 
(iv)
A Participant, other than an Officer, whose job was classified or reclassified
during or after 1986 and prior to January 1, 1998 to a level below E-band, will
be eligible for the Service Benefit computed in accordance with Section 4.02(b)
(the Alternate Formula), or Section 4.02(e) (the Special Update to the Alternate
Formula), as applicable, as in effect on the reclassification date, provided he
or she is Service Pension Eligible as of the date of such classification or
reclassification, and further provided he or she is not demoted subsequent to
such day because of unsatisfactory job performance prior to termination of
employment.  For purposes of determining a benefit under the Alternate Formula,
the Participant’s Term of Employment shall exclude any period following the last
day of 1988 or if later, the earliest to occur of the last day of the year in
which his or her job was reclassified, July 31, 1997, or termination of
employment;  For purposes of determining a benefit under the Special Update to
the Alternate Formula, the Participant’s Term of Employment shall exclude any
period following the earliest to occur of the last day of the year in which his
or her job was reclassified, December 31, 1996, or termination of employment.

 
       (v)  
The benefit with respect to a Participant who is an Officer on or after January
1, 1998 who is reassigned on or after January 1, 1998 and before January 1,
2009, shall be determined pursuant to Section 4.03(f); provided, however, that
the benefit of such former Officer shall be determined in accordance with
subparagraphs (i) through (iii) of this Section 3.02(c) assuming a reassignment
date of December 31, 1997, if such determination produces a higher benefit, as
of the Participant’s Pension Commencement Date.

 
(d) Benefits Based on Qualified Deferrals
 
A Participant who is a Deferral Participant shall be eligible for a Benefit
Based on the Qualified Deferrals Cash Balance Account, as described in Section
4.11E.  Notwithstanding any other provision of the Plan to the contrary, the
Benefit Based on the Qualified Deferrals Cash Balance Account shall be payable
in addition to any other benefits payable under the Plan.

Article 4.
Pension Benefits After 2008
 
Section 4.01  
Applicable Benefit Formulas.

 
The provisions of this Article 4 apply with respect to benefits payable to or
with respect to a Participant who terminates employment on or after December 1,
2008.  This article also describes the distribution provisions with respect to
Participants who terminated employment after December 31, 2004 with respect to
whom benefit payments had not commenced on or before December 1, 2008. The
determination of pension benefits in all other cases is made as described in
Appendix E. Appendix E generally includes the provisions of Article 4 as in
effect prior to December 31, 2008.  References in the Plan to a provision in
Article 4 should in general be interpreted as reference to the corresponding
provision in Appendix E when applied to or with respect to a termination of
employment prior to December 1, 2008.
 
(a) Participants Terminated Before January 1, 1997
 
The Service Benefit, Deferred Vested Benefit, or Disability Benefit payable to a
Participant who terminated employment from a Participating Company prior to
January 1, 1997 is determined in accordance with the terms of the Plan as in
effect from time to time prior to January 1, 1997.
 
(b) Active Participants on  January 1, 1997
 
 
(i)
Participants Whose Eligibility to Accrue Benefits Ends Prior to August 1, 1997.

 
 
(A)
Subject to the provisions of Section 4.01(b)(i)(D), the annual benefit of a
Participant, who is an Officer or an E-band Employee on January 1, 1997, who is
an Officer at the time he or she leaves the service of a Participating Company
prior to August 1, 1997, and who is Service Pension Eligible as of the last day
of his or her Term of Employment, will be the greater of the annual benefit
amount determined under the Basic Formula described in Section 4.02E(a), the
annual benefit amount determined under the Alternate Formula described in
Section 4.02E(b), or, in the case of an Officer who had at least five Years of
Service as an Officer as of December 31, 1993, the annual benefit amount
determined under the Alternate Minimum Formula described in Section 4.02E(c).

 
 
(B)
Subject to the provisions of Section 4.01(b)(i)(D), the annual benefit of a
Participant, who is an Officer or an E-band Employee on January 1, 1997, who is
an Officer at the time he leaves the service of a Participating Company prior to
August 1, 1997, but who is not Service Pension Eligible as of the last day of
his or her Term of Employment, will be a Deferred Vested Benefit determined
under the Basic Formula described in Section 4.02E(a), provided he or she is
vested under the Pension Plan at the time of termination of employment from the
AT&T Controlled Group.  Notwithstanding the provisions of the immediately
preceding sentence, if such Participant was an Officer who had at least five
Years of Service as an Officer as of December 31, 1993, the annual benefit shall
not be less than the annual benefit determined under the Alternate Minimum
Formula described in Section 4.02E(c).

 
 
 (C)
Subject to the provisions of Section 4.01(b)(i)(D), the annual benefit of a
Participant, who is an E-band Employee on January 1, 1997, who terminates
employment as an E-band Employee prior to August 1, 1997 and who is Service
Pension Eligible as of the last day of his or her Term of Employment, will be
the annual benefit amount determined under the Alternate Formula described in
Section 4.02E(b).

 
 
(D)
Effective August 1, 1997, the annual benefit of a Participant described in this
Section 4.01(b)(i) shall increase (but shall not be decreased) to the amount
determined pursuant to the following subsection 4.01(b)(ii)(A), if the
Participant is described in subsection 4.01(b)(i)(A), or to the amount
determined pursuant to subsection 4.01(b)(ii)(B) if the Participant is described
in subsection 4.01(b)(i)(B), or to the amount determined pursuant to the
following subsection 4.01(b)(ii)(D), if the Participant is described in
subsection 4.01(b)(i)(C).  For purposes of applying the provisions of Section
4.01(b)(ii) to increase a benefit which commenced prior to August 1, 1997
pursuant to this subsection 4.01(b)(i)(D), any age-based reduction shall be
based on such Participant’s age on his or her original Pension Commencement
Date.

 
 
 (ii)
Participants  Whose Eligibility to Accrue Benefits Ends after July 31, 1997.

 
 
(A)
Subject to the provisions of subsection 4.01(b)(ii)(C) for Officers after
December 31, 1997, the annual benefit of a Participant who is an Officer or an
E-band Employee on January 1, 1997, who is an Officer at the time he or she
leaves the service of a Participating Company after July 31, 1997, and who is
Service Pension Eligible as of his or her termination of employment from a
Participating Company, will be the greater of the annual benefit amount
determined under the Special Update to the Basic Formula described in Section
4.02E(d) and the annual benefit amount determined under the Special Update to
the Alternate Formula described in Section 4.02E(e). Notwithstanding the
preceding, in no event shall be the benefit with respect to a Participant
described in this subsection 4.01(b)(ii)(A) be less than the amounts determined
pursuant to Section 4.01(b)(i)(A).

 
 
(B)
Subject to the provisions of subsection 4.01(b)(ii)(C), the annual benefit of a
Participant who is an Officer or an E-band Employee on January 1, 1997, who is
an Officer at the time he leaves the service of a Participating Company after
July 31, 1997  but  who is not Service Pension Eligible as of the last day of
his or her termination of employment will be a Deferred Vested Benefit equal to
the greater of the annual benefit amount determined under the Special Update to
the Basic Formula described in Section 4.02E(d) or the amounts determined
pursuant to Section 4.01(b)(i)(B), provided he or she is vested under the
Pension Plan at the time of termination of employment from the AT&T Controlled
Group.

 
 
(C)
The annual benefit of a Participant on January 1, 1997 who is also an Officer on
or after January 1, 1998 shall not be less than the amount determined pursuant
to subsection 4.01(d).

 
 
(D)
Subject to the provisions of Section 4.01(d)(ii) regarding an E-band Employee
who becomes an Officer on or after January 1, 1998, the benefit of a Participant
who is an E-band Employee on January 1, 1997, who terminates employment as an
E-band Employee after July 31, 1997, and who is Service Pension Eligible as of
his or her termination of employment from a Participating Company, will be the
annual benefit amount determined under the Special Update to the Alternate
Formula described in Section 4.02E(e), but shall in no event be less than the
amount determined pursuant to Section 4.01(b)(i)(C).

 
(c) New Participants after January 1, 1997 and before January 1, 1998
 
 
(i)
An individual who first becomes a Participant after January 1, 1997 and before
January 1, 1998, and who is an Officer on January 1, 1998, shall be eligible for
benefits determined pursuant to Section 4.01(d).

 
 
(ii)
An individual who first becomes an Officer on or after August 1, 1997, who was
not previously an E-band Employee, and who leaves the service of a Participating
Company prior to January 1, 1998 shall not be eligible for benefits under the
Plan.

 
 
(iii)
An individual, who first becomes a Participant after January 1, 1997 and before
January 1, 1998, who is not an Officer at any time on or after January 1, 1998,
and who terminates employment with a Participating Company on or after January
1, 1998 shall be eligible for a Service Benefit if the Participant is Service
Pension Eligible at the time of his or her termination of employment from a
Participating Company. Such benefit shall be determined only under the Alternate
Formula described in Section 4.02E(b). No benefit shall be payable from the Plan
if such Participant is not Service Pension Eligible at the time of his or her
termination of employment from a Participating Company.

 
(d) Participants who are Officers on or after January 1, 1998 (Cash Balance
Participants)
 
Participants Who Are Officers Before January 1, 2009
 
   (i)
An individual who is an Officer on or after January 1, 1998, who first became an
Officer on or after August 1, 1997 and who was not previously an E-band Employee
shall be eligible for a benefit determined under Section 4.03 if such Officer is
vested in his or her benefit under the Pension Plan upon his or her termination
of employment from the AT&T Controlled Group.

 
    (ii)
An individual who is an Officer on or after January 1, 1998, who was an Officer
or an E-band Employee prior to August 1, 1997, and whose Pension Commencement
Date is after July 1, 1998, shall be eligible for a benefit from the Plan if
such Officer is vested in his or her benefit under the Pension Plan upon
termination of employment from the AT&T Controlled Group. The benefit shall be
the greater of (A) the benefit determined pursuant to Section 4.03, or (B) the
sum of (I) the Mid-Career Pension Benefit determined pursuant to Section 4.07
and (II) the benefit accrued under the Plan prior to January 1, 1998 and payable
pursuant to the terms of Section 4.01E(b)(ii)(A) or Section 4.01E(b)(ii)(B), as
applicable.  For purposes of the preceding sentence, the determination of the
greater of (A) and (B) shall be made taking into account the Pension
Commencement Date and the form of payment determined in accordance with Section
4.09E.

 
Participants Who Become Officers After December 31, 2008
 
 
(iii)
Notwithstanding the preceding Sections 4.01(d)(i) and 4.01(d)(ii), benefits, if
any, with respect to an individual who first becomes on Officer after December
31, 2008 shall be determined pursuant to the provisions of the Plan related to a
Qualified Deferral Participant and to a Participant who is an E-band Employee,
as applicable with respect to such individual. Such a Participant shall not be
eligible for benefits determined under the Cash Balance Formula.

 
(e)   Surviving Spouse of an E-band Employee or Officer
 
 An Automatic Survivor Annuity will be paid to the Spouse to whom an E-band
Employee or Officer is married at the time of his or her death while an active
employee, provided such Participant is vested as of his or her date of death,
and satisfies the provisions of Section 4.04 at the date of death.  The benefit
payable to such Spouse shall be equal to the present value of the benefit
determined in accordance with Section 4.04.  The provisions of this Section
4.01(e) do not apply to a benefit determined under the cash balance formula of
Section 4.11, or to a benefit based on a Mid-Career Pension Benefit of Section
4.07E. The benefit to a Surviving Spouse shall not be payable under both this
Section 4.01(e) and Section 4.01(f).
 
(f) Surviving Spouse (or Estate) of a Cash Balance Participant
 
A benefit, determined pursuant to the provisions of Section 4.10, shall be
payable to the surviving Spouse (or estate, in the case of a Participant who is
not married at the time of death) of a Cash Balance Participant who is vested in
his or her benefit under the Pension Plan as of his or her date of death and who
dies prior to commencing distribution of his or her benefit under the Plan.  The
benefit to a Surviving Spouse shall not be payable under both this Section
4.01(f) and Section 4.01(e).
 
(g) Deferral Participant
 
An individual who is a Deferral Participant shall be eligible for a benefit
determined pursuant to Section 4.11, provided that such Participant is vested in
his or her benefit under the Pension Plan upon his or her termination of
employment from the AT&T Controlled Group.  Notwithstanding any other provision
of the Plan to the contrary, such benefit shall be payable in addition to any
other benefits otherwise payable under the Plan.
 
(h) Surviving Spouse (or Estate) of a Deferral Participant
 
A benefit, determined pursuant to the provisions of Section 4.10, shall be
payable to the surviving Spouse (or estate, in the case of a Participant who is
not married at the time of death) of a Deferral Participant who is vested in his
or her benefit under the Pension Plan as of his or her date of death and who
dies prior to commencing distribution of his or her benefit under the Plan.
 
Section 4.02  
Benefit Formulas (other than Cash Balance)

 
To the extent that a benefit payable to a Participant who terminates employment
on or after December 1, 2008 is based on a formula other than the Cash Balance
Account of Section 4.03 or the Qualified Deferral Cash Balance Account of
Section 4.11, the amount of such benefit shall be determined in accordance with
the provisions of Section 4.02E of Appendix E.

Section 4.03  
Cash Balance Accounts

 
Effective January 1, 1998, a cash balance formula was added to the Plan,
applicable only to Participants who were Officers on or after such
date.  Section 4.03E describes the manner in which cash balance accounts were
established, and the annual accruals under such formula.

The Cash Balance Account of a Participant who is an Officer prior to January 1,
2009 shall continue to be credited with Annual Award Credits and Interest
Credits until the earlier of such Participant’s termination of employment or
SERP Vesting Date, at which time no further amounts shall be credited to the
Cash Balance Account.  In the latter case, the provisions of Section 4.03E(c)
and Section 4.03E(d) shall be applied as if the SERP Vesting Date is the
Participant’s termination date and commencement date, as applicable.   The
amount of the single life annuity that would be payable from the Cash Balance
Account commencing as of such date shall be determined in accordance with the
provisions of Section 4.03E(f). Any reference to the Benefit Based on the Cash
Balance Account for a period after the SERP Vesting Date shall be the amount so
determined as of such date.

The Cash Balance Account with respect to a Participant who is not an Officer
prior to January 1, 2009 shall be zero.

Section 4.04  
Automatic Survivor Annuities

 
The Automatic Survivor Annuity described in this Section 4.04 does not apply to
a benefit determined under the cash balance formula of Section 4.03 or 4.11, or
to a benefit based on the Mid-Career Pension Benefit of Section 4.07. The
Automatic Survivor Annuity is payable upon the death of a Participant who dies
while actively employed after December 31, 2008, if such Participant’s benefit
under the Plan is determined under a formula described in Section 4.02E.
 
The surviving Spouse of such a Participant shall be entitled to a pre-retirement
Automatic Survivor Annuity determined pursuant to this Section 4.04 effective
commencing as of the first day of the month following the death of a Participant
who dies while an employee if such Participant  has a Term of Employment of at
least fifteen years at the time of death, or,  if such Participant meets the age
and Term of Employment requirements for a Service Benefit (or is Service Pension
Eligible) at the time of his or her death. The pre-retirement Automatic Survivor
Annuity shall be payable monthly in an amount equal to forty six percent of the
monthly benefit that would have been payable to the Participant pursuant to
Section 4.02E had such Participant terminated employment with a Service Benefit,
regardless of his or her actual eligibility therefore, on the date of his or her
death.  For purposes of determining the Automatic Survivor Annuity provided in
this Section 4.04(a), the early retirement discounts in Sections 4.02E(a),
4.02E(b), 4.02E(d) or 4.02E(e) shall not apply.  With respect to a Participant
whose benefit is determined pursuant to Section 4.01(d)(ii)(B), the Automatic
Survivor Annuity shall not include the portion, if any, of the Participant’s
benefit attributable to the Participant’s transferred Mid-Career Pension Benefit
described in Section 4.07. With respect to a Participant who terminates
employment on or after December 1, 2008, distribution of a benefit determined
pursuant to this Section 4.04 shall be made in a lump sum payment upon the death
of the Participant.  The amount of the lump sum payment shall be determined by
multiplying the monthly benefit determined above by the immediate single life
annuity factor based on the age of the surviving Spouse as of the commencement
date, and the Code Section 417(e) actuarial assumptions in effect under the
Pension Plan as of such date.
 
Section 4.05  
Special Increases

 
The provisions of Section 4.05E do not apply to a benefit that commences after
December 1, 2008, except in the case of a survivor benefit payable with respect
to a Participant who commenced distribution of a Plan benefit on or before
December 1, 2008.
 
Section 4.06  
Monthly Payments

 
The annual benefit determined under Section 4.02 shall be divided by twelve to
determine a monthly benefit amount.  All annuity benefits under the Plan shall
be payable monthly or at such other periods as the Committee or the
Administrator, as applicable, may determine in each case; a benefit payable
other than monthly shall be adjusted to reflect the period covered by such
payment.  Notwithstanding the preceding, distributions after December 1, 2008
with respect to a Participant who terminates employment on or after December 1,
2008 shall only be made in the form of a lump sum or installments over a period
of 120 months, except with respect to a SERP Election.
 
Section 4.07  
Mid-Career Pension Benefit

 
The description of the Mid-Career Pension Benefit is set forth in Section 4.07E
of Appendix E.
 
Section 4.08  
Treatment During Subsequent Employment

 
Effective beginning January 1, 2005, benefits shall not be suspended during a
period of employment or reemployment. Benefits paid upon a subsequent
termination of employment shall be reduced by the actuarial equivalent of the
benefit payments that were continued during reemployment.
 
Section 4.09  
Payment of Pensions

 
(a) Commencement Prior to 2005
 
Provisions governing the payment of pension benefits that commenced after 2004
and prior to 2009 are set forth in Section 4.09E of Appendix E.
 
(b) Commencement After 2004 and Prior to 2009
 
Provisions governing the payment of pension benefits that commenced after 2004
and prior to 2009 are set forth in Section 4.09E of Appendix E.
 
(c) Commencement After 2008
 
Payment of benefits that commence after December 1, 2008, except in the case of
a survivor benefit payable with respect to a Participant who commenced
distribution of a Plan benefit on or before December 1, 2008, shall be made in
the time and form as described in the following subparagraphs (i) through (iv),
as applicable.

(i) Participants Terminating Prior to 2005:  The provisions of Section 4.09E
regarding the time and form of payment of benefits under the Plan shall apply
with respect to benefits commencing after 2008 to or with respect to a
Participant who terminated employment prior to 2005.  If such an individual is
rehired into a position covered by this Plan after 2004, the terms of the Plan
shall apply separately to the benefit earned prior to 2005 and the benefit
earned after 2004.

     (ii) Participants Terminating Employment after 2004 and Prior to December
1, 2008: Subject to the provisions of Section 4.09(d) and Section 6.01, benefits
payable to or with respect to a Participant who terminates employment after
December 31, 2004 and prior to December 1, 2008 shall be paid

(A) if distribution of benefits to or on behalf of the Participant commence on
or before December 1, 2008, pursuant to the provisions of Section 4.09E, or

(B) if distribution of benefits does not commence on or before December 1, 2008,
the annual benefit amount to which such Participant is entitled commencing at
Normal Retirement Date shall be determined under the terms of the Plan as set
forth in Appendix E.  Distribution of such benefit shall be made to the
Participant commencing on July 1, 2009 in the form of a lump sum, equal to the
present value determined pursuant to Section 4.09(c)(iv); provided, however, if
the amount so determined exceeds $50,000, distribution shall be paid in monthly
installments over a period of 120 months. If the Participant dies prior to the
commencement of such payment, distribution equal to the present value of the
amount that otherwise would have been payable to the Participant shall be made
on July 1, 2009 to the Surviving Spouse, if any, otherwise to the estate of the
Participant.  If the Surviving Spouse entitled to receive the benefit described
in the preceding sentence dies after the Participant but before distribution of
such benefit, the benefit shall be paid to the estate of the Surviving Spouse.
Survivor benefits, if any, upon death following commencement of distribution to
the Participant shall be determined pursuant to the provisions of Section
4.10(d).

(iii) Participants Terminating Employment on or After December 1, 2008: Subject
to the provisions of Section 4.09(c)(iv) and Section 4.09(d), benefits payable
to or with respect to a Participant who terminates employment on or after
December 1, 2008 shall be paid as follows:

(A) Participants Who Are Not SERP Participants:

The “Plan Retirement Benefit” for a Participant who does not become a SERP
Participant is equal to the sum of (i) the benefit earned prior to January 1,
1998, determined pursuant to the provisions of Section 4.02E, and (ii) the
Benefit Based on the Qualified Deferrals Cash Balance Account, if any, payable
at Normal Retirement Date and determined pursuant to the provisions of Section
4.11, expressed as a single life annuity payable commencing at Normal Retirement
Date. Distribution of such benefit shall be paid in the form of a lump sum, in
an amount determined pursuant to Section 4.09(c)(iv), upon the Participant’s
Termination of Employment; provided, however, if the present value so determined
exceeds $50,000, distribution shall be paid in monthly installments over a
period of 120 months. If the Participant dies before receiving a complete
distribution of the benefits so determined, survivor benefits, if any, shall be
paid in accordance with the provisions of Section 4.10.

(B) Participants Who Are SERP Participants on December 31, 2008:

(I) A Participant who is a SERP Participant on December 31, 2008 shall continue
to accrue benefits under the Cash Balance Formula until the earlier of his or
her SERP Vesting Date or termination of employment. As of such date, the
Participant’s benefit under the Plan shall be determined as the greater of (A)
the Participant’s benefit, if any, determined pursuant to Section 4.02 or (B)
the sum of (i) the Benefit Attributable to the Cash Balance Formula and (ii) the
Benefit Attributable to Qualified Deferrals, determined as if payment of such
benefit were to commence on such date. The amount of the monthly benefit so
determined, expressed as a single life annuity, shall be fixed and shall not
change (the “Frozen Single Life Annuity”);

(II) Subject to the provisions of Section 4.09(d), upon Termination of
Employment, distribution of the benefit determined pursuant to subparagraph (I)
shall commence in a form of payment determined pursuant to such Participant’s
SERP Election, as defined herein.  The amount payable to such Participant shall
be the actuarial equivalent of the single life annuity determined pursuant to
subparagraph (I), based on actuarial equivalent factors under the AT&T SERP as
of the Participant’s Termination of Employment. Survivor benefits, if any,
following the death of the Participant shall be determined in accordance with
the provisions of Section 4.10.

(C) Participants who become SERP Participants after December 31, 2008:

(I) A Participant who becomes a SERP Participant after December 31, 2008 shall
not be entitled to accrued additional benefits under the Plan after December 31,
2008.  The sum of (i) the benefit earned prior to January 1, 1998, determined
pursuant to the provisions of Section 4.02E, and (ii) the Benefit Attributable
to Qualified Deferrals, determined pursuant to the provisions of Section 4.11,
if any, shall be determined as if payment of such benefits were to commence on
the SERP Effective Date, and the amount of the monthly benefit so determined,
expressed as a single life annuity, shall be fixed and shall not change (the
“Frozen Single Life Annuity”).

(II) Subject to the provisions of Section 4.09(d), distribution of the benefit
determined pursuant to subparagraph (I) shall be paid in the form of a lump sum
or in 120 monthly installments commencing upon Termination of Employment; the
applicable form of payment shall be determined on the Participant’s SERP
Effective Date, based on the present value of the Frozen Single Life Annuity if
distribution of such benefit commenced on the SERP Effective Date in the form of
a single life annuity, and based on the actuarial assumptions in effect under
the SERP as of such date.  If the present value determined as of such SERP
Effective Date is $50,000 or less, the form of payment shall be a lump sum, and
if the present value exceeds $50,000, the form of payment shall be 120 monthly
installments.  The amount of the benefit payable commencing at Termination of
Employment shall be determined in accordance with the provisions of Section
4.09(c)(iv).  If the Participant dies before receiving a complete distribution
of the benefits so determined, survivor benefits, if any, shall be determined in
accordance with the provisions of Section 4.10.

(iv) Determination of Present Value:  For purposes of Section 4.09(c)(ii)(B),
Section 4.09(c)(iii)(A), and Section 4.09(c)(iii)(C), present value shall be
determined as follows:

 
(A)      Employee who is not a SERP Participant: with respect to a Participant
described in Section 4.09(c)(ii)(B) or Section 4.09(c)(iii)(A), an amount equal
to the present value of the single life annuity that would be payable under the
Plan commencing on the Participant’s Normal Retirement Date.  Such present value
shall be determined on the basis of actuarial assumptions under the Qualified
Plan as of such date, calculated as follows: the annual amount of such benefit
payable at Normal Retirement Date shall be multiplied by the factor for
determining the lump sum value as set forth in Appendix B of the Qualified Plan
for the Participant’s age at Termination of Employment.  Notwithstanding the
preceding, for a Participant described in Section 4.09(c)(ii)(B), the present
value shall be based on the Participant’s age as of December 1, 2008, and the
amount so determined will be accumulated to July 1, 2009 at an effective annual
interest rate of four percent; and

 
(B)       Employee who is a SERP Participant other than a SERP Participant on
December 31, 2008:  with respect to a Participant described in Section
4.09(c)(iii)(C), the present value of the amount payable commencing at
Termination of Employment shall be determined by multiplying the Frozen Single
Life Annuity (determined pursuant to Section 4.09(c)(iii)(C)(I)) by an immediate
annuity factor based on the age of the Participant at Termination of
Employment.  The immediate annuity factor shall be based on the Mortality Tables
and the GAAP Rate, both as in effect for the calendar year immediately preceding
the calendar year of the Participant’s Termination of Employment, and as defined
in the SERP.

With respect to benefits payable in installments over a period of 120 months,
the amount of each monthly installment shall be calculated in the same manner
that a financial institution would calculate the monthly payments for a 10-year
fixed interest loan, based on the present value of Plan benefits determined
pursuant to Section 4.09(c)(iv). The interest rate used in the calculations
shall be equal to the Code Section 417(e) interest rate in effect under the
Pension Plan on the date of the Participant’s Termination of Employment, or,
with respect to distributions made pursuant to Section 4.09(c)(ii)(B), the rate
in effect for the 2008 calendar year.

 
(d) Payments to Specified Employees
 
Notwithstanding the provisions of the preceding sections 4.09(a) through
4.09(c), 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 4.09(d), 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 4.09(d) 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.
 
Section 4.10  
Payment of Plan Benefits Following Death

 
The provisions of this Section 4.10 apply upon the death of a Participant who is
an employee on or after December 1, 2008, and, for purposes of Section 4.10(d),
upon the death of a Participant described in Section 4.09(c)(ii)(B).

(a) Death prior to commencement:  If a Participant described in Section
4.09(c)(iii) dies before Termination of Employment, or following Termination of
Employment but before the date as of which distribution of the Plan benefit
commences, benefits will be payable in a lump sum to the  Spouse, or if there is
no surviving Spouse, to the Participant’s estate.  The amount of such lump sum
payment shall be determined pursuant to the provisions of Section 4.10(c).

(b) Death of Spouse before payment of survivor benefit:  If a Participant dies
before the date as of which distribution of the Plan benefits commences, and he
or she is survived by a Spouse entitled to payment pursuant to Section 4.10(a),
and such surviving Spouse dies prior to the date payment of benefits under this
Plan commence, a lump sum benefit shall be payable to the estate of the Spouse
upon the death of the Spouse. The amount of such lump sum payment shall be
determined pursuant to the provisions of Section 4.10(c).

(c) Determination of lump sum amount for death before commencement:

(i) With respect to a Participant described in Section 4.09(c)(iii)(A), the lump
sum payment payable pursuant to Section 4.10(a) or Section 4.10(b) shall be an
amount equal to the present value of the Plan Retirement Benefit, as defined in
Section 4.09(c)(iii)(A).  Such present value shall be determined on the basis of
actuarial assumptions under the Qualified Plan as of the date of death,
calculated as follows: the annual amount the Plan Retirement Benefit, payable in
the form of a single life annuity commencing at Normal Retirement Date shall be
multiplied by the factor for determining the lump sum value as set forth in
Appendix B of the Qualified Plan for the Participant’s age at death;

(ii) The lump sum payment payable pursuant to Section 4.10(a) or Section 4.10(b)
upon the death of a Participant who is a SERP Participant, shall be determined
by multiplying the Frozen Single Life Annuity determined pursuant to Section
4.09(c)(iii)(B) or Section 4.09(c)(iii)(C), as applicable, by an immediate
annuity factor based on the age of the Participant as of the date of death.  The
immediate annuity factor shall be based on the Mortality Tables and the GAAP
Rate, both as in effect for the calendar year immediately preceding the calendar
year of the date of death and as defined in the SERP.

(d) Death following commencement of distribution for a Participant who is not a
SERP Participant on December 31, 2008:  If a Participant described in Section
4.09(c)(ii)(B), Section 4.09(c)(iii)(A) or Section 4.09(c)(iii)(C) dies
following distribution of Plan benefits in the form of a lump sum, no benefit
shall be payable following the death of the Participant. If the Participant is
receiving payment of the Plan benefit in the form of 120 monthly installments,
the present value of the remaining payments shall be made to the surviving
Spouse of the Participant, or if there is no surviving Spouse, to the estate of
the Participant. Such present value shall be calculated using the interest rate
that was used to determine the amount of the monthly installments at the time
distribution of such payments commenced.

(e) Death following commencement of distribution for a Participant who is a SERP
Participant on December 31, 2008:  Upon the death following commencement of
benefits under the Plan of a Participant who is a SERP Participant on December
31, 2008, further payment of benefits related to the retirement benefit under
the Plan shall be the survivor benefit, if any, payable under the terms of an
election made on or before December 31, 2008 with respect to benefits that may
become payable to the Participant under the SERP, determined under the actuarial
assumptions and methodology set forth in the SERP.   Any survivor benefit
payable pursuant to this Section 4.10(e) shall be paid to the same beneficiary
to whom survivor benefits are payable under the SERP.

Section 4.11  
   Qualified Deferrals Cash Balance Account

 
A Qualified Deferral Cash Balance Account was added to the Plan effective
January 1, 2005, or such later date on which an Officer, E-band Employee, or
other eligible employee began deferring certain compensation under the AT&T
Executive Deferred Compensation Plan or the AT&T Inc. Cash Deferral Plan
(“Qualified Deferrals,” as defined in Section 2.35 herein).  Annual Qualified
Deferral Credits were discontinued under the Plan effective with respect to
amounts deferred under such deferral plan from any paycheck dated after December
31, 2007.

Deferral Interest Credits shall continue to be credited to the Qualified
Deferral Cash Balance Account of all Participants who made Qualified Deferrals
as defined herein. The Benefit Based on the Qualified Deferrals Cash Balance
Account shall be the benefit commencing at Normal Retirement determined pursuant
to the provisions of Section 4.11E(e).  Notwithstanding the preceding sentence,
with respect to a Participant who is an Officer, the following provisions shall
apply:

(i) with respect to a Participant who is an Officer prior to December 31, 2008,
Deferral Interest Credits shall cease as of the earlier of the Participant’s
termination of employment or SERP Vesting Date.  In the latter case, the
provisions of Section 4.11E(d) with respect to application of the interest
credit shall be applied as if the SERP Vesting Date is the Participant’s
commencement date.   The amount of the single life annuity that would be payable
from the Qualified Deferral Cash Balance Account commencing as of the date or
termination or the SERP Vesting Date shall be determined in accordance with the
provisions of Section 4.11E(e).  Any reference to the Benefit Based on the
Qualified Deferral Cash Balance Account for a period after the SERP Vesting Date
shall mean the benefit so determined as of such date; and

(ii) with respect to a Participant who becomes an Officer after December 31,
2008, Deferral Interest Credits shall cease as of the Participant’s SERP
Effective Date. The provisions of Section 4.11E(d) with respect to application
of the interest credit shall be applied as if the SERP Effective Date is the
Participant’s commencement date.   The amount of the single life annuity that
would be payable from the Qualified Deferral Cash Balance Account commencing as
of the SERP Effective Date shall be determined in accordance with the provisions
of Section 4.11E(e).  Any reference to the Benefit Based on the Qualified
Deferral Cash Balance Account for a period after the SERP Effective Date shall
mean the benefit so determined as of such date.

Article 5.
Death Benefits
 
Section 5.01  
Participation

 
A Death Benefit shall be provided under this Article 5, in the following cases:
(a) upon the death prior to January 1, 1998 of an active Officer; (b) upon the
death of an Officer who, on or after August 10, 1980 and prior to January 1,
1998, (i) terminated employment with eligibility for a pensioner death benefit
under the Pension Plan (excluding for purposes of this Section 5.01 the effect
of any management pension enhancement pursuant to the Pension Plan) or (ii)
terminated employment with eligibility to receive payments under the AT&T Senior
Management Long Term Disability and Survivor Protection Plan; (c) upon the death
prior to January 1, 2008 of an active Officer, provided such Officer is eligible
for the sickness death benefit under the Pension Plan; or (d) upon the death of
an Officer who is on the active payroll of a Participating Company on January 1,
1998 and who terminates employment prior to January 1, 2008, if such Officer was
Service Pension Eligible or otherwise satisfied eligibility requirements for the
Pensioner Death Benefit under the Pension Plan (such as, under certain
circumstances, the Rule of 65, as defined in the Pension Plan), at the time of
his or her termination of employment (excluding for purposes of this Section
5.01 the effect of any management pension enhancement pursuant to the Pension
Plan). A Participant who terminates employment on or after January 1, 1998 and
is subsequently reemployed prior to January 1, 2008 shall not be eligible for a
Death Benefit following such reemployment unless he or she was eligible for the
pensioner death benefit under the Pension Plan as of the date of such earlier
termination of employment, and provided further that such Participant’s last
employment with a Participating Company was with one covered by the death
benefit provisions of the Pension Plan; such eligibility for a Death Benefit
shall terminate with respect to a Participant who remains employed within the
AT&T Controlled Group on January 1, 2008.
 
Notwithstanding the provisions of the preceding paragraph, no Death Benefit
under this Article 5 shall be provided with respect to a Participant who made a
qualified election for a form of payment that resulted in a lump sum
distribution of the full present value of his or her accrued benefit (as reduced
to reflect the limitations of Code Section 415 and Code Section 401(a)(17) as of
the Participant’s Pension Commencement Date) under the Pension Plan.
 
The Death Benefit under this Article 5 is in addition to the sickness and
pensioner death benefits under the Death Benefit Plan in the Pension Plan, and
shall be paid to the same beneficiary or beneficiaries, and administered in the
same manner as such benefits under the Death Benefit Plan in the Pension
Plan.  Notwithstanding the preceding, effective for deaths occurring on or after
January 1, 2009, the Death Benefit shall be paid in a lump sum within a
reasonable period of time following the date the Beneficiary is identified by
the Committee or its delegate.
 
Section 5.02  
Death Benefits

 
(a) Sickness or Pensioner Death Benefit
 
In the case of the death of an Officer described in Section 5.01, as eligible
for death benefit coverage, except as otherwise determined under Section
5.02(a)(ii), a Death Benefit equal to one year’s wages (as defined below) shall
be paid.
 
(i)           Death after January 1, 1996 and before January 1, 1998
 
For purposes of determining the Death Benefit payable under Section 5.02(a),
with respect to an Officer described in Section 5.01, who died after January 1,
1994 and before January 1, 1998, “one year’s wages” is defined as the greater of
(A) the Officer’s Short Term Award for the calendar year preceding the earlier
of (i) his or her date of death, or (ii) the date of his or her termination of
employment, or (B) the Officer’s Short Term Award with respect to any later
partial calendar year of service, but only with respect to a calendar year prior
to 1998.
 
(ii)           Death on or after January 1, 1998
 
For purposes of determining the Death Benefit under Section 5.02(a), with
respect to an Officer described in Section 5.01, who dies on or after January 1,
1998, the amount of the Death Benefit shall equal the amount that would have
been payable if the Participant died with eligibility for the Death Benefit as
of December 31, 1997.
 

 
(b) Other Post-Retirement Death Benefits
 
Additional death benefits described in this Section 5.02(b) shall be provided,
(i) with respect to an Officer who terminated employment on a service pension or
disability pension under the Pension Plan, after December 31, 1986 and before
January 1, 1997 (or who terminated employment on a service pension or a
disability pension prior to December 31, 1986, provided he or she did not attain
age fifty-five on or before December 31, 1983), and (ii) with respect to an
Officer who terminates employment after December 31, 1996, only if such Officer
is Service Pension Eligible at the time of his or her termination of
employment.  The death benefits described under Section 5.02(b)(ii) shall also
be paid upon the death of an Officer who terminates employment with entitlement
to the benefits under the AT&T Senior Management Long Term Disability and
Survivor Protection Plan.
 
(i) Group Life Differential
 
Upon the death of an Officer, age sixty-six or older who retired after December
31, 1986 and before October 1, 1990, the difference between (i) the amount of
his or her Basic Group Life Insurance coverage under the Company’s Group Life
Insurance Program, as in effect on the day before his or her sixty-sixth
birthday, and (ii) the amount of such insurance coverage, as in effect on the
date of his or her death, shall be paid in a lump sum to the beneficiary or
beneficiaries designated by the Officer, or, if there is no such beneficiary, to
the Officer’s estate.
 
(ii) Tax Differential
 
An individual who is the beneficiary of a deceased retired Officer or of an
Officer who terminated employment with entitlement to payments under the AT&T
Senior Management Long Term Disability and Survivor Protection Plan, and who
receives one or more of the benefits listed below, shall be eligible to receive,
under this Section 5.02(b)(ii), a tax differential payment related to the
difference between (i) the beneficiary’s assumed federal income tax liability on
such benefit or benefits and (ii) the beneficiary’s assumed federal income tax
liability had such benefit or benefits been paid as a non-tax death benefit
under a life insurance policy on the life of the retired Officer:
 
 
(A)
Post-Retirement Survivor Annuity described in Section 4.04(b),

 
 
(B)
Pensioner Death Benefit described in Section 5.02(a),

 
 
(C)
Group Life Differential Death Benefit described in Section 5.02(b)(i),

 
 
(D)
Pensioner Death Benefit described in Article 5 of the Pension Plan,

 
 
(E)
The Death Benefit described in Section 5 of the AT&T Senior Management Long Term
Disability and Survivor Protection Plan, and

 
 
(F)
The Death Benefit described in the AT&T Excess Benefit and Compensation Plan.

 
Pursuant to the terms of the various plans described above, no benefit
identified in (A), (B), (C), (D) or (F) is payable with respect to a Participant
who terminates employment after December 31, 2007 (or such earlier date as may
be specified in such plan), and no benefit shall be payable under this Plan with
respect to such plans.

 
Federal estate tax, state and local inheritance taxes, and state and local
income taxes, shall not be considered in computing the tax differential payment
under this Section 5.02(b)(ii).
 

Article 6.
Source Of Payment
 
Section 6.01  
Source of Payments

 
(a)     Benefits arising under this Plan and all costs, charges, and expenses
relating thereto will be payable from the Company’s general assets. The Company
may, however, establish a trust to pay such benefits and related expenses,
provided such trust does not cause the Plan to be “funded” within the meaning of
ERISA. To the extent trust assets are available, they may be used to pay
benefits arising under this Plan and all costs, charges, and expenses relating
thereto. To the extent that the funds held in the trust, if any, are
insufficient to pay such benefits, costs, charges and expenses, the 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.

Any such annuity contracts described above 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.
 
Section 6.02  
Unfunded Status

 
The Plan at all times shall be entirely unfunded for purposes of the Code and
ERISA, and, except as provided in Section 6.01, no provision shall be made at
any time with respect to segregating any assets of a Participating Company for
the payment of any benefits hereunder. The Plan constitutes a mere promise by
the Participating Companies to make payments, if any, in the future. No
Participant, surviving Spouse or any other person shall have any interest in any
particular assets of a Participating Company by reason of the right to receive a
benefit under the Plan, and to the extent a Participant, surviving Spouse, or
any other person, acquires a right to receive benefits under this Plan, such
right shall be no greater than the right of any unsecured general creditor of
any Participating Company.
 
 
Article 7.
Administration Of The Plan
 
Section 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 the provisions of the Plan, to
make determinations of fact, promulgate rules and regulations, to determine
benefit eligibility of individuals and classes of Participants (including,
without limitation, determinations of a Participant’s applicable Term of
Employment and Position Rate), delegate its powers and duties hereunder to the
Committee, the Administrator, or others, and to 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 them to such persons as they shall determine to be
appropriate to effect the discharge of their duties hereunder. The Company,
other Participating Companies, and any of their Officers and E-band 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 Article 7,
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.
 
Section 7.02  
Committee

 
The Company has delegated to the Committee the authority to make the final
determination to grant or deny claims for benefits under the Plan with respect
to Participants, surviving Spouses, and other beneficiaries, and to authorize
disbursements according to the terms of the Plan.
 
Section 7.03  
Indemnification

 
No member of the Board, the Committee or the Administrator shall be personally
liable, by reason of any contract or other instrument executed by such
individual, or on his or her behalf, in his or her capacity as a member of the
Board, the 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, to whom any duty or power relating to the
administration or interpretation of the Plan have been 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.
 
Section 7.04  
Benefit Claims and Appeals

 
(a) Benefit Claims
 
All claims for benefit payments under the Plan shall be submitted in writing by
the 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
circumstances 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 under 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.
 
(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.
 
(d) Action by Trustee
 
In the event that the Company (or its designee) fails to make a decision on a
claim and/or appeal within 20 days of an event entitling the Claimant to a
payment under this Plan (or, if later, within the ninety/sixty day period, with
extensions, set forth in Section 7.04(a) and (b)), the Trustee of the AT&T Corp.
Benefits Protection Trust (“Trust”) may make a decision in lieu of the Company
(or its designee) as authorized by the Trust and subject to the terms and
conditions of the Trust.  Any decision by the Trustee to make a payment under
this Plan to the Claimant is subject to the availability of Trust assets
allocated to pay benefits under this Plan.  A payment to the Claimant from the
prorated Trust assets shall be considered a satisfaction of the Company’s
liability under this Plan to the extent payment from the Trust was sufficient to
cover the amount determined by the Trustee as the amount to which the Claimant
was entitled.
 

Article 8.
Adoption, Amendment And Termination
 
Section 8.01  
Adoption of Plan

 
Any Affiliated Corporation that participates in the Pension Plan may, with the
consent of AT&T, elect to participate in the Plan.  Such Affiliated Corporation
shall become a Participating Company as of the date specified by AT&T in its
resolution approving the participation of the Affiliated Corporation in the
Plan.
 
Section 8.02  
Amendment and Termination

 
AT&T is the sponsor of the Plan, and the Board or its delegate, 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,
modifications, and changes may include, but are not limited to, elimination or
reduction in the level or type of benefits provided to any class or classes of
Participant (and surviving Spouses and other beneficiaries).  Any and all Plan
amendments, modifications, and changes may be made without the consent of any
Participant, surviving Spouse or beneficiary.  Notwithstanding the foregoing, no
such amendment, modification, or change shall retroactively impair or otherwise
adversely affect the rights of any Participant or surviving Spouse to benefits
under the Plan to which he or she has previously become entitled as a result of
a Participant’s satisfaction of the vesting schedule of this Plan which is the
same as and never will be greater than the vesting schedule under the Pension
Plan.
 
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.

Section 8.03  
Sale, Spin-Off, or Other Disposition of Participating Company

 
(a)           Subject to Section 9.01 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 with a Participating Company for
the purpose of accepting employment with the acquirer of such Affiliated
Corporation or such assets, each such Participant shall be deemed to have
terminated his or her employment with such 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.
 
(b)           Notwithstanding the provisions of Section 8.03(a), and subject to
Section 9.01 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 Employee, the
Successor Plan Sponsor shall be solely liable for the payment of the annual
benefits and death benefits described in this Plan, and the entitlement of the
Transition Employee, or of his or her surviving Spouse or beneficiary, to
benefits under this Plan shall terminate. A Transition Employee 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
 
Section 9.01  
Binding Effect

 
The Plan shall be binding upon and inure to the benefit of each Participating
Company and its successors and assigns, and to the benefit of each Participant,
his or her successors, assigns, designees, spouse, and estate. The Plan also
shall be binding upon any successor corporation or organization succeeding to
substantially all of the assets and business of AT&T, but nothing in the Plan
shall preclude AT&T from merging or consolidating into or with, or transferring
all or substantially all of its assets to, another corporation which assumes the
Plan and all obligations of AT&T hereunder. AT&T agrees that it will make
appropriate provision for the preservation of the rights of Participants,
surviving Spouses and beneficiaries under the Plan, in any agreement or plan or
reorganization into which it may enter to effect any merger, consolidation,
reorganization or transfer of assets. Upon such a merger, consolidation,
reorganization, or transfer of assets and assumption of obligations, that
results in a Participant continuing to be employed by the Company or an
Affiliated Corporation, the term “Participating Company” shall refer to such
other corporation and the Plan shall continue in full force and effect as to
that Participant and his or her lawful spouse or other beneficiary.
 
Section 9.02  
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, any surviving Spouse or any other person.
 
Section 9.03  
No Guarantee of Employment

 
Neither the Plan, nor any action taken thereunder, shall be construed as (i) a
contract of employment, or (ii) deemed to give any employee the right to be
retained in the employment of a Participating Company, or (iii) the right to any
position level or level of compensation, or (iv) the right to future
participation in the Plan, or (v) affecting the right of a Participating Company
to discharge or dismiss any employee at any time.
 
Section 9.04  
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.
 
Section 9.05  
Assignment of Benefits

 
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, any Participant, Spouse, or beneficiary,
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.
 
Section 9.06  
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 the benefits with respect to such person are paid
under the Pension Plan, if applicable, or to the person’s spouse, under the laws
of the state of the person’s domicile, Participant’s surviving Spouse,  child,
or relative, or to an institution maintaining or having custody of such person,
or to 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 for such amount, of AT&T, the Board, the
Committee, the Administrator, and the Participating Company therefore. If any
payment, to which a Participant, a surviving Spouse, or a beneficiary, is
entitled under this Plan, is unclaimed or otherwise not subject to payment to
the person or persons so entitled, the amounts representing such payment or
payments shall be forfeited after a period of two (2) 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.
 
Section 9.07  
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 invalidity or unenforceability
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.
 
Section 9.08  
Effective Date

 
This Plan first became effective for Officers actively employed on or after
October 1, 1980 and for E-band Employees actively employed on or after on
January 1, 1984 and is amended and restated effective January 1, 1997, with
subsequent amendments through December 31, 2008.
 
Section 9.09  
Plan Year

 
The Plan Year shall begin on January 1 and end on December 31.
 
Section 9.10  
Headings

 
The captions of 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.
 
Section 9.11  
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.
 
Section 9.12  
Forfeiture of Benefits

 
Except as provided in this Section 9.12 and Section 3.02, benefits previously
awarded may not be canceled, and upon attaining the right under the Plan for a
Service Benefit or a  Deferred Vested Benefit, or for an automatic survivor
annuity, such right shall be nonforfeitable. Notwithstanding any eligibility or
entitlement to benefits of an individual arising or conferred under any other
provision or paragraph of this Plan, all benefits for which a Participant would
otherwise be eligible hereunder may be forfeited, subject to the requirements of
ADEA (29 CFR 1625.12), (i) at the discretion of the Board or the Committee, if
an individual without the Company’s consent establishes a relationship with a
competitor of the Company or (ii) at the discretion of the Executive Vice
President – Human Resources, if an individual violates the AT&T Non-Competition
Guideline, as determined by the Executive Vice President – Human Resources in
his or her 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.

 
Section 9.13  
Special Classification

 
For purposes of the Plan, the determination of those causes of death not
classified as due to accident shall be accomplished in the same manner as set
forth in the Pension Plan, as such plan was in effect on October 1, 1996.
 
Section 9.14  
Claims Release

 
In case of accident resulting in the death of a Participant which entitles his
or her beneficiary or beneficiaries or his or her surviving Spouse to death
benefits under the Plan, such beneficiary(ies) or surviving Spouse shall, prior
to the payment of any such benefits, sign a release, releasing the Company
and/or other Participating Companies, as applicable, from all claims and demands
which the deceased had and which his or her beneficiary(ies) or his or her
surviving Spouse may have against them, otherwise than under the Plan, on
account of such accident. If any person(s), other than the beneficiary(ies)
and/or the surviving Spouse under this Plan, might legally assert claims against
a Participating Company on account of the death of a Participant, no part of the
Death Benefit under the Plan shall be due or payable until there have also been
delivered to the Committee or the Administrator, as applicable, good and
sufficient releases of all claims, arising from or growing out of the death of
the Participant, which such other beneficiary(ies) and/or surviving Spouse might
legally assert against any Participating Company. The Committee or the
Administrator, as applicable, in its discretion, may require that the releases
described above shall release any other company connected with the accident.
This requirement of a release or releases shall not apply in the case of
Survivor Annuities as described in Section 4.04.
 
Section 9.15  
Damage Claims or Suits

 
Should a claim, other than under the Plan, be presented, or suit brought against
the Company or any Participating Company, for damages on account of death of the
Participant, nothing shall be payable under the Plan on account of such death
except as provided in Section 9.17; provided, however, that the Committee or the
Administrator, as applicable, may, in its discretion and upon such terms as it
may prescribe, waive this provision if such claim be withdrawn or if such suit
be discontinued; and provided further that this provision shall not preclude the
payment of Survivor Annuities as described in Section 4.04.
 
Section 9.16  
Judgment or Settlement

 
In case any judgment is recovered against any Participating Company, or any
settlement is made of any claim or suit, on account of the death of a
Participant, and the amount paid to the beneficiary(ies) or surviving Spouse who
would have received benefits under the Plan is less than what would otherwise
have been payable under the Plan, the difference between the two amounts may, in
the discretion of the Committee or the Administrator, as applicable, be
distributed to such beneficiary(ies) or surviving Spouse.
 
Section 9.17  
Payment under Law

 
In the case that any benefit (which the Committee or the Administrator, as
applicable, shall determine to be of the same general character as a benefit
provided by the Plan) is payable to any Participant, to his or her
beneficiary(ies), to his or her estate, or to his or her surviving Spouse 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 the
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. Further,
in determining whether or not there is an excess, to the extent any payments
under any law are considered in determining whether there is any excess payable
to an employee under any other plan sponsored by the Company, the amount of such
payments under law shall not be considered under this Plan.
 
Section 9.18  
CIC Provision

 
         (a)   Applicability
 
This Section 9.18 applies only to an individual who, as of the date a Change in
Control (“CIC”) occurs (as defined in the Pension Plan) is an employee of a
Participating Company and a Participant in this Plan.
 
(b)  
Nonforfeitable Benefits

 
Notwithstanding any other provisions of this Plan, on and after the date a CIC
occurs, solely for purposes of determining entitlement to benefits from this
Plan, and individual described in Section 9.18(a) shall be deemed to be vested
under the Pension Plan, whether or not such Participant is otherwise entitled to
a vested benefit from the Pension Plan.
 
(c)  
Amendments to CIC Provisions

 
Notwithstanding the provisions of Section 8.02, or any other provision of the
Plan, unless required by applicable law, this Section 9.18 may not be amended in
any manner adverse to the interests of Participants without their consent and,
further, upon the occurrence of a CIC, no amendment may be made to this Section
9.18 by the Board, the Company, (including any successor to the Company), any
committee, any officer, or any other party to suspend, modify, or eliminate any
benefit provisions that are applicable upon occurrence of a CIC.
 
Section 9.19  
Entire Plan

 
This written Plan document is the 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.
 
Section 9.20  
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 9.20
may be deducted from future benefits payable to or on behalf of the Participant
from this Plan.

 
 
 

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

 
AT&T Non-Qualified Pension Plan

Appendix A.
Section 4.02(c)E Alternate Minimum Formula - Table of Factors
 
Service/Age
50 or less
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
20 or less
1.33
1.33
1.33
1.36
1.43
1.47
1.43
1.38
1.33
1.28
1.25
1.20
1.15
1.10
1.05
1.00
21
1.38
1.32
1.32
1.35
1.42
1.46
1.42
1.37
1.32
1.27
1.24
1.19
1.14
1.09
1.05
1.00
22
1.42
1.37
1.31
1.34
1.41
1.45
1.41
1.36
1.30
1.26
1.23
1.18
1.14
1.09
1.05
1.00
23
1.47
1.41
1.36
1.33
1.40
1.44
1.40
1.35
1.29
1.25
1.22
1.17
1.13
1.09
1.04
1.00
24
1.52
1.46
1.40
1.39
1.39
1.43
1.39
1.34
1.29
1.24
1.21
1.17
1.12
1.08
1.04
1.00
25
1.58
1.51
1.45
1.43
1.45
1.42
1.38
1.33
1.28
1.23
1.20
1.16
1.12
1.08
1.04
1.00
26
1.57
1.50
1.44
1.42
1.44
1.41
1.37
1.32
1.27
1.22
1.19
1.15
1.11
1.08
1.04
1.00
27
1.57
1.49
1.43
1.42
1.43
1.40
1.36
1.31
1.26
1.21
1.18
1.15
1.11
1.07
1.04
1.00
28
1.56
1.48
1.42
1.41
1.43
1.39
1.36
1.31
1.25
1.21
1/18
1.14
1.11
1.07
1.04
1.00
29
1.55
1.48
1.42
1.40
1.42
1.39
1.35
1.30
1.25
1.20
1.17
1.14
1.10
1.07
1.03
1.00
30
1.38
1.36
1.33
1.35
1.39
1.38
1.34
1.29
1.24
1.19
1.17
1.13
1.10
1.07
1.03
1.00
31
1.38
1.35
1.33
1.34
1.39
1.37
1.34
1.29
1.24
1.19
1.16
1.13
1.10
1.06
1.03
1.00
32
1.37
1.35
1.32
1.34
1.38
1.37
1.33
1.28
1.23
1.18
1.16
1.12
1.09
1.06
1.03
1.00
33
1.37
1.34
1.32
1.34
1.38
1.36
1.33
1.28
1.23
1.18
1.15
1.12
1.09
1.06
1.03
1.00
34
1.36
1.34
1/31
1.33
1.37
1.36
1.32
1.27
1.22
1.17
1.15
1.12
1.09
1.06
1.03
1.00
35 or more
1.36
1.33
1.31
1.33
1.37
1.35
1.32
1.27
1.22
1.17
1.14
1.11
1.09
1.06
1.03
1.00

 
 
 

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

 
 

Appendix B.                                           
Early Retirement Factors – Alternate Formula, Special Update to the Alternate
Formula, and Alternate Minimum Formula
 

The benefit payable under the Alternate Formula of Section 4.02E(b), under the
Special Update to the Alternate Formula of Section 4.02E(e), or under Formula B
of the Alternate Minimum Formula of Section 4.02E(c), for commencement prior to
Normal Retirement Age shall equal the amount otherwise determined under such
sections, multiplied by the applicable factor based on completed years and
months of age effective as of the Pension Commencement Date:

Attained Age
 
Years/Months
0
1
2
3
4
5
6
7
8
9
10
11
50
.29
.29
.30
.30
.31
.31
.32
.32
.32
.33
.33
.34
51
.34
.34
.35
.35
.36
.36
.37
.37
.37
.38
.38
.39
52
.39
.40
.40
.41
.42
.42
.43
.44
.44
.45
.46
.46
53
.47
.48
.48
.49
.50
.50
.51
.52
.52
.53
.54
.54
54
.55
.56
.57
.57
.58
.59
.60
.60
.61
.62
.63
.63
55
.64
.64
.66
.66
.66
.66
.67
.67
.67
.67
.69
.69
56
.69
.69
.71
.71
.71
.72
.72
.72
.74
.74
.74
.76
57
.76
.76
.78
.78
.78
.79
.79
.79
.81
.81
.81
.83
58
.83
.83
.84
.84
.86
.86
.88
.88
.88
.90
.90
.91
59
.91
.91
.93
.93
.95
.95
.97
.97
.97
.98
.98
1.00
60
1.00
                     

 
 
 

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

 

Appendix C.
Initial Conversion Factors
 
 
Age
Conversion
Factor
 
Age
Conversion
Factor
20
17.16
43
50.04
21
17.88
44
51.60
22
18.48
45
52.92
23
19.20
46
55.08
24
20.04
47
57.12
25
20.76
48
59.28
26
22.08
49
61.32
27
24.12
50
63.24
28
26.16
51
65.88
29
29.76
52
68.28
30
31.68
53
70.80
31
33.72
54
73.20
32
35.16
55
75.60
33
36.48
56
78.60
34
37.44
57
81.60
35
38.40
58
84.60
36
40.08
59
87.48
37
41.64
60
90.36
38
42.84
61
94.56
39
44.16
62
98.76
40
45.36
63
102.84
41
46.92
64
106.92
42
48.60
65 or later
111.12

 

 
 

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

 

Appendix D.
Deferred Vested Benefit – Early Commencement Factors
 

Single Life Annuity Early Commencement Factors
 
Based Upon Completed Years and Months of Age
 
At Commencement of Non-Service Benefit
 
Years\Months
0
1
2
3
4
5
6
7
8
9
10
11
50
0.26
0.26
0.26
0.26
0.26
0.26
0.27
0.27
0.27
0.27
0.27
0.28
51
0.28
0.28
0.28
0.28
0.28
0.29
0.29
0.29
0.29
0.29
0.30
0.30
52
0.30
0.30
0.30
0.31
0.31
0.31
0.31
0.32
0.32
0.32
0.32
0.32
53
0.33
0.33
0.33
0.33
0.34
0.34
0.34
0.34
0.34
0.35
0.35
0.35
54
0.35
0.36
0.36
0.36
0.36
0.37
0.37
0.37
0.37
0.38
0.38
0.38
55
0.38
0.39
0.39
0.39
0.40
0.40
0.40
0.40
0.41
0.41
0.41
0.42
56
0.42
0.42
0.43
0.43
0.43
0.44
0.44
0.44
0.44
0.45
0.45
0.45
57
0.46
0.46
0.46
0.47
0.47
0.48
0.48
0.48
0.49
0.49
0.49
0.50
58
0.50
0.50
0.51
0.51
0.52
0.52
0.52
0.53
0.53
0.54
0.54
0.54
59
0.55
0.55
0.56
0.56
0.57
0.57
0.57
0.58
0.58
0.59
0.59
0.60
60
0.60
0.61
0.61
0.62
0.62
0.63
0.63
0.64
0.64
0.65
0.65
0.66
61
0.66
0.67
0.67
0.68
0.68
0.69
0.70
0.70
0.71
0.71
0.72
0.72
62
0.73
0.74
0.74
0.75
0.76
0.76
0.77
0.78
0.78
0.79
0.80
0.80
63
0.81
0.82
0.82
0.83
0.84
0.85
0.85
0.86
0.87
0.88
0.88
0.89
64
0.90
0.91
0.91
0.92
0.93
0.94
0.95
0.96
0.97
0.97
0.98
0.99
65
l.00
                     

 

 
 

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

 

Appendix E.
Article 4E - Pension Benefits
 
This Appendix E sets forth the provisions related to the determination of
benefit amounts and payment of such benefits commencing on or before December 1,
2008, and to the extent indicated herein, and as modified by Article 4 of the
main text of the Plan, the determination of benefit amounts with respect to
certain benefits commencing after December 1, 2008.   A reference in this
Appendix E to a provision of Article 4 means such provision as set forth in this
Appendix E, unless the reference specifically indicates otherwise.

Section 4.01E     Applicable Benefit Formulas.
 
For purposes of applying the provisions of Sections 4.01 and 4.02 with respect
to a Participant described in Section 3.02(c), the Participant’s “Term of
Employment” and the day for the determination of such a Participant’s status as
“Service Pension Eligible” shall be subject to the provisions of Section
3.02(c).
 
(a) Participants Terminated Before January 1, 1997
 
The Service Benefit, Deferred Vested Benefit, or Disability Benefit payable to a
Participant who terminated employment from a Participating Company prior to
January 1, 1997 is determined in accordance with the terms of the Plan as in
effect from time to time prior to January 1, 1997.
 
(b) Active Participants on January 1, 1997
 
 
(i)
Participants Whose Eligibility to Accrue Benefits Ends Prior to August 1, 1997.

 
 
(A)
Subject to the provisions of Section 4.01(b)(i)(D), the annual benefit of a
Participant, who is an Officer or an E-band Employee on January 1, 1997, who is
an Officer at the time he or she leaves the service of a Participating Company
prior to August 1, 1997, and who is Service Pension Eligible as of the last day
of his or her Term of Employment, will be the greater of the annual benefit
amount determined under the Basic Formula described in Section 4.02(a), the
annual benefit amount determined under the Alternate Formula described in
Section 4.02(b), or, in the case of an Officer who had at least five Years of
Service as an Officer as of December 31, 1993, the annual benefit amount
determined under the Alternate Minimum Formula described in Section 4.02(c).

 
 
(B)
Subject to the provisions of Section 4.01(b)(i)(D), the annual benefit of a
Participant, who is an Officer or an E-band Employee on January 1, 1997, who is
an Officer at the time he leaves the service of a Participating Company prior to
August 1, 1997, but who is not Service Pension Eligible as of the last day of
his or her Term of Employment, will be a Deferred Vested Benefit determined
under the Basic Formula described in Section 4.02(a), provided he or she is
vested under the Pension Plan at the time of termination of employment from the
AT&T Controlled Group.  Notwithstanding the provisions of the immediately
preceding sentence, if such Participant was an Officer who had at least five
Years of Service as an Officer as of December 31, 1993, the annual benefit shall
not be less than the annual benefit determined under the Alternate Minimum
Formula described in Section 4.02(c).

 
 
(C)
Subject to the provisions of Section 4.01(b)(i)(D), the annual benefit of a
Participant, who is an E-band Employee on January 1, 1997, who terminates
employment as an E-band Employee prior to August 1, 1997 and who is Service
Pension Eligible as of the last day of his or her Term of Employment, will be
the annual benefit amount determined under the Alternate Formula described in
Section 4.02(b).

 
 
(D)
Effective August 1, 1997, the annual benefit of a Participant described in this
Section 4.01(b)(i) shall increase (but shall not be decreased) to the amount
determined pursuant to the following subsection 4.01(b)(ii)(A), if the
Participant is described in subsection 4.01(b)(i)(A), or to the amount
determined pursuant to subsection 4.01(b)(ii)(B) if the Participant is described
in subsection 4.01(b)(i)(B), or to the amount determined pursuant to the
following subsection 4.01(b)(ii)(D), if the Participant is described in
subsection 4.01(b)(i)(C).  For purposes of applying the provisions of Section
4.01(b)(ii) to increase a benefit which commenced prior to August 1, 1997
pursuant to this subsection 4.01(b)(i)(D), any age-based reduction shall be
based on such Participant’s age on his or her original Pension Commencement
Date.

 
 
(ii)
Participants  Whose Eligibility to Accrue Benefits Ends after July 31, 1997.

 
 
(A)
Subject to the provisions of subsection 4.01(b)(ii)(C) for Officers after
December 31, 1997, the annual benefit of a Participant who is an Officer or an
E-band Employee on January 1, 1997, who is an Officer at the time he or she
leaves the service of a Participating Company after July 31, 1997, and who is
Service Pension Eligible as of his or her termination of employment from a
Participating Company, will be the greater of the annual benefit amount
determined under the Special Update to the Basic Formula described in Section
4.02(d) and the annual benefit amount determined under the Special Update to the
Alternate Formula described in Section 4.02(e). Notwithstanding the preceding,
in no event shall be the benefit with respect to a Participant described in this
subsection 4.01(b)(ii)(A) be less than the amounts determined pursuant to
Section 4.01(b)(i)(A).

 
 
(B)
Subject to the provisions of subsection 4.01(b)(ii)(C), the annual benefit of a
Participant who is an Officer or an E-band Employee on January 1, 1997, who is
an Officer at the time he leaves the service of a Participating Company after
July 31, 1997  but  who is not Service Pension Eligible as of the last day of
his or her termination of employment will be a Deferred Vested Benefit equal to
the greater of the annual benefit amount determined under the Special Update to
the Basic Formula described in Section 4.02(d) or the amounts determined
pursuant to Section 4.01(b)(i)(B), provided he or she is vested under the
Pension Plan at the time of termination of employment from the AT&T Controlled
Group.

 
 
(C)
The annual benefit of a Participant on January 1, 1997 who is also an Officer on
or after January 1, 1998 shall not be less than the amount determined pursuant
to subsection 4.01(d).

 
 
(D)
Subject to the provisions of Section 4.01(d)(ii) regarding an E-band Employee
who becomes an Officer on or after January 1, 1998, the benefit of a Participant
who is an E-band Employee on January 1, 1997, who terminates employment as an
E-band Employee after July 31, 1997, and who is Service Pension Eligible as of
his or her termination of employment from a Participating Company, will be the
annual benefit amount determined under the Special Update to the Alternate
Formula described in Section 4.02(e), but shall in no event be less than the
amount determined pursuant to Section 4.01(b)(i)(C).

 
(c) New Participants after January 1, 1997 and before January 1, 1998
 
 
(i)
An individual who first becomes a Participant after January 1, 1997 and before
January 1, 1998, and who is an Officer on January 1, 1998, shall be eligible for
benefits determined pursuant to Section 4.01(d).

 
 
(ii)
An individual who first becomes an Officer on or after August 1, 1997, who was
not previously an E-band Employee, and who leaves the service of a Participating
Company prior to January 1, 1998 shall not be eligible for benefits under the
Plan.

 
 
(iii)
An individual, who first becomes a Participant after January 1, 1997 and before
January 1, 1998, who is not an Officer at any time on or after January 1, 1998,
and who terminates employment with a Participating Company on or after January
1, 1998 shall be eligible for a Service Benefit if the Participant is Service
Pension Eligible at the time of his or her termination of employment from a
Participating Company. Such benefit shall be determined only under the Alternate
Formula described in Section 4.02(b). No benefit shall be payable from the Plan
if such Participant is not Service Pension Eligible at the time of his or her
termination of employment from a Participating Company.

 
(d) Participants who are Officers on or after January 1, 1998 (Cash Balance
Participants)
 
Participants Who Are Officers Before January 1, 2009
 
 
(i)       An individual who is an Officer on or after January 1, 1998, who first
became an Officer on or after August 1, 1997 and who was not previously an
E-band Employee shall be eligible for a benefit determined under Section 4.03 if
such Officer is vested in his or her benefit under the Pension Plan upon his or
her termination of employment from the AT&T Controlled Group.

 
 
(ii)      An individual who is an Officer on or after January 1, 1998, who was
an Officer or an E-band Employee prior to August 1, 1997, and whose Pension
Commencement Date is after July 1, 1998, shall be eligible for a benefit from
the Plan if such Officer is vested in his or her benefit under the Pension Plan
upon termination of employment from the AT&T Controlled Group. The benefit shall
be the greater of (A) the benefit determined pursuant to Section 4.03, or (B)
the sum of (I) the Mid-Career Pension Benefit determined pursuant to Section
4.07 and (II) the benefit accrued under the Plan prior to January 1, 1998 and
payable pursuant to the terms of Section 4.01(b)(ii)(A) or Section
4.01(b)(ii)(B), as applicable.  For purposes of the preceding sentence, the
determination of the greater of (A) and (B) shall be made taking into account
the Pension Commencement Date and the form of payment determined in accordance
with Section 4.09.

 
Participants Who Become Officers After December 31, 2008
 
 
(iii)
Notwithstanding the preceding Sections 4.01(d)(ii) and 4.01(d)(ii), benefits, if
any, with respect to an individual who first becomes on Officer after December
31, 2008 shall be determined pursuant to the provisions of the Plan related to a
Qualified Deferral Participant or to a Participant who is an E-band Employee, as
more fully described in the provisions of Article 4 of the main text of the Plan
effective after December 31, 2008 (such provisions which are not included in
this Appendix E). Such a Participant shall not be eligible for benefits
determined under the Cash Balance Formula.

 
(e) Surviving Spouse of an Officer (other than a Cash Balance Participant)
 
(i)  An Automatic Survivor Annuity will be paid to the Spouse to whom an Officer
(other than a Cash Balance Participant) is married at the time of his or her
death, provided such Participant is vested as of his or her date of death, and
satisfies the provisions of Section 4.04(a) or Section 4.04(b), as
applicable.  The benefit payable to such Spouse shall be determined in
accordance with Section 4.04(a) if such Officer is an employee of the AT&T
Controlled Group at the time of death, and in accordance with Section 4.04(b) if
such Officer is not an employee of the AT&T Controlled Group at the time of
death.
 
(ii)  Notwithstanding the provisions of the preceding subsection 4.01(e)(i), if
the Officer elects distribution of his or her Pension Plan benefit in the form
of a 50% Joint and Survivor Annuity and dies following his or her Pension
Commencement Date, the surviving Spouse will be eligible for a monthly benefit
equal to 50% of the monthly benefit being paid to the Officer at the time of his
or her death.  The benefit payable to the surviving Spouse will commence on the
first day of the month following the date of the Officer’s death. For purposes
of this subsection 4.01(e)(ii), the surviving Spouse is the Spouse to whom the
Officer was married at his or her date of death.  In no event will a benefit be
paid pursuant to this subsection 4.01(e)(ii), if a benefit is payable pursuant
to subsection 4.01(e)(i) or subsection 4.01(g).
 
(f) Surviving Spouse of an E-band Employee
 
 An Automatic Survivor Annuity will be paid to the Spouse to whom an E-band
Employee is married at the time of his or her death while an active employee,
provided such Participant is vested as of his or her date of death, and
satisfies the provisions of Section 4.04(a) at the date of death.  The benefit
payable to such Spouse shall be determined in accordance with Section
4.04(a).  The provisions of this Section 4.01(f) do not apply to a benefit
determined under the cash balance formula of Section 4.11, or to a benefit based
on a Mid-Career Pension Benefit of Section 4.07.
 
(g) Surviving Spouse (or Estate) of a Cash Balance Participant
 
A benefit, determined pursuant to the provisions of Section 4.10, shall be
payable to the surviving Spouse (or estate, in the case of a Participant who is
not married at the time of death) of a Cash Balance Participant who is vested in
his or her benefit under the Pension Plan as of his or her date of death and who
dies prior to commencing distribution of his or her benefit under the Plan.
 
A benefit, determined pursuant to the provisions of Section 4.09, shall be
payable to the surviving Spouse of a Cash Balance Participant who dies prior to
December 1, 2008 following commencement of his or her benefits under the Plan,
if such Participant’s benefit was being paid under the 50% Joint and Survivor
Annuity or 100% Joint and Survivor Annuity form of payment.
 
(h) Deferral Participant
 
An individual who is a Deferral Participant shall be eligible for a benefit
determined pursuant to Section 4.11, provided that such Participant is vested in
his or her benefit under the Pension Plan upon his or her termination of
employment from the AT&T Controlled Group.  Notwithstanding any other provision
of the Plan to the contrary, such benefit shall be payable in addition to any
other benefits otherwise payable under the Plan.
 
(i) Surviving Spouse (or Estate) of a Deferral Participant
 
A benefit, determined pursuant to the provisions of Section 4.11(f), shall be
payable to the surviving Spouse (or estate, in the case of a Participant who is
not married at the time of death) of a Deferral Participant who is vested in his
or her benefit under the Pension Plan as of his or her date of death and who
dies prior to commencing distribution of his or her benefit under the Plan.
 
A benefit, determined pursuant to the provisions of Section 4.09, shall be
payable to the surviving Spouse of a Deferral Participant who dies prior to
December 1, 2008 following commencement of his or her benefits under the Plan,
if such Participant’s benefit was being paid under the 50% Joint and Survivor
Annuity or 100% Joint and Survivor Annuity form of payment.
 
Section 4.02E     Benefit Formulas (other than Cash Balance)
 
(a) Basic Formula
 
 
(i)
Service Benefit.  The annual Service Benefit under the Basic Formula shall be
determined by adding (A) the product of one and five-tenths percent (1.5%) of
the average annual Short Term Incentive Awards for the 1989 Base Period and the
Officer’s Term of Employment as of December 31, 1989, and (B) the sum of one and
six-tenths percent (1.6%) of the Short Term Incentive Award for each successive
full or partial calendar year of employment following 1989, through the earlier
of the date of termination of active participation in the Plan or July 31, 1997.

 
 
(ii)
Service Benefit - Early Commencement.  If a Participant commences distribution
of the annual Service Benefit prior to attainment of age fifty-five, the Service
Benefit determined in accordance with the Basic Formula of this Section 4.02(a)
shall be reduced by one-half percent for each calendar month or part thereof by
which his or her age at commencement is less than fifty-five years, except that
the Service Benefit for an Officer who terminates employment with a Term of
Employment of thirty or more years shall be reduced by one-quarter percent for
each calendar month or part thereof by which such Officer’s age at commencement
is less than fifty-five years.

 
 
(iii)
Deferred Vested Benefit.

 
The annual benefit determined under the Basic Formula for as Officer eligible
for a Deferred Vested Benefit under the provisions of Section 3.02(a)(iii) shall
be payable commencing at the Officer’s Normal Retirement Date in an amount equal
to the benefit determined pursuant to Section 4.02(a)(i). An Officer who has
elected to have his deferred vested pension under the Pension Plan payable early
in reduced amounts pursuant to the terms and conditions of the Pension Plan
shall be deemed to have elected to have his or her Deferred Vested Benefit under
this Plan payable early in reduced amounts.  In the event of such an election,
the amount of Deferred Vested Benefit shall be determined as follows:
 
 
 (A)
with respect to payments for the months occurring on or after January, 1997 and
prior to August, 1997, the amount determined pursuant to Section 4.02(a)(i)
shall be multiplied by a factor determined in accordance with Appendix D, based
on the Participant’s age on his or her Pension Commencement Date, or

 
                   (B)
with respect to payments for months commencing on or after August 1, 1997, the
amount determined pursuant to Section 4.02(a)(i) shall be multiplied by a factor
of one-half percent for each calendar month or part thereof by which the
Participant’s age at commencement is less than fifty-five years, except that the
reduction with respect to an Officer with a Term of Employment of thirty or more
years shall be one-quarter percent for each calendar month or part thereof by
which such Officer’s age at commencement is less than fifty-five years.

 
 
 (iv)
Disability Benefit.  The annual Disability Benefit payable to a Participant who
becomes eligible for a disability pension from the Pension Plan because of total
disability as a result of sickness or injury incurred while an Officer, shall be
equal to the Service Benefit determined pursuant to this Section 4.02(a),
unreduced for early commencement.  Such Disability Benefit shall continue to be
paid so long as the employee is prevented by such disability from resuming
active service with a Participating Company.  If the employee’s disability
continues to his or her Normal Retirement Date, the Disability Benefit shall be
converted to a Service Benefit.

 
(b) Alternate Formula
 
The annual Service Benefit under the Alternate Formula shall be the excess of B
over A, where A equals the Participant’s annual Pension Plan Benefit and B
equals the product of (i) one and seven-tenths percent of the Participant’s
Adjusted Career Average Pay, less eight-tenths of one percent of the
Participant’s Covered Compensation Base, and (ii) the Participant’s Term of
Employment. The Service Benefit under this Alternate Formula will be reduced in
case of commencement before age sixty by multiplying such benefit by the
appropriate reduction factor from Appendix B.  For purposes of the Alternate
Formula, the Participant’s Term of Employment is determined as of the earliest
to occur of (i) July 31, 1997, (ii) the date specified in the applicable
provision of Section 3.02(c) for purposes of determining a benefit under the
Alternate Formula, or (iii) the date of termination of employment from a
Participating Company.
 
(c) Alternate Minimum Formula
 
The annual Service Benefit under the Alternate Minimum Formula in this Section
4.02(c) shall be an amount equal to (A) the product of the greater of the amount
determined under the following Formula A or Formula B, multiplied by the
applicable factor set forth in Appendix A, where such factor is based on the
Participant’s age and service as of December 31, 1996, less (B) the amount of
the Officer’s Pension Plan Benefit (as adjusted to reflect any reduction for
early commencement).  If the Pension Commencement Date under this Plan occurs
prior to the date the Participant is eligible to commence receipt of his or her
deferred vested pension from the AT&T Management Pension Plan, payments under
this Plan shall be made without the reduction in (B) of the immediately
preceding sentence until the earliest date on which the Participant is eligible
to commence distribution of such deferred vested pension from the AT&T
Management Pension Plan, at which time payments from the Plan shall be adjusted
to reflect such reduction.
 
 
(i)
Formula A.  For purposes of the Alternate Minimum Formula in this
Section 4.02(c), Formula A means the sum of (a) the product of one and five
tenths percent of average calendar year Total Compensation for the 1992 Base
Period and the Term of Employment as of December 31, 1992 and (b) one and six
tenths percent of Total Compensation for the calendar year 1993. Such sum shall
be actuarially reduced in case of commencement before age fifty-five by applying
the appropriate reduction factor set forth in Section 4.02(a)(ii).

 
 
(ii)
Formula B.  For purposes of the Alternate Minimum Formula in this
Section 4.02(c), Formula B means the product of (a) the excess of one and seven
tenths percent of Adjusted Career Average Pay, over eight tenths of one percent
of the Covered Compensation Base (determined as of December 31, 1993), and (b)
the Officer’s Term of Employment at December 31, 1993.  Such product shall be
actuarially reduced in case of commencement before age sixty by applying the
appropriate reduction factor set forth in Appendix B.  Solely for purposes of
this Formula B, “Adjusted Career Average Pay” means the Participant’s Total
Compensation for his or her Term of Employment through December 31, 1993,
divided by such Participant’s Term of Employment as of December 31, 1993.

 
(d) Special Update to the Basic Formula
 
 
(i)
Service Benefit.  The annual Service Benefit under the Special Update to the
Basic Formula shall be equal to one and six-tenths percent of the sum of the
Officer’s average annual Short Term Incentive Awards and the average annual
Deferred Salary for the 1996 Base Period, multiplied by the lesser of (1) one
plus the Officer’s Term of Employment as of December 31, 1996 and (2) one
hundred and five percent of the Officer’s Term of Employment as of December 31,
1996. The Special Update to the Basic Formula is equal to zero for any
determination date prior to January 1, 1997.

 
(ii)  
Service Benefit - Early Commencement.  If a Participant commences distribution
of the annual Service Benefit prior to attainment of age fifty-five, the Service
Benefit determined in accordance with the Special Update to the Basic Formula of
this Section 4.02(d), shall be reduced by one-half percent for each calendar
month or part thereof by which his or her age at commencement is less than
fifty-five years, except that the Service Benefit for an Officer who terminates
employment with  a Term of Employment of thirty or more years shall be reduced
by one-quarter percent for each calendar month or part thereof by which such
Officer’s age at commencement is less than fifty-five years.

 
(iii)  
Deferred Vested Benefit.  The annual benefit determined under the Special Update
to the Basic Formula for each Officer eligible for a Deferred Vested Benefit
under the provisions of Section 3.02(a)(iii) shall be payable commencing at the
Normal Retirement Date in an amount equal to the benefit determined pursuant to
Section 4.02(d)(i). An Officer who has elected to have his deferred vested
pension under the Pension Plan payable early in reduced amounts pursuant to the
terms and conditions of the Pension Plan shall be deemed to have elected to have
his or her Deferred Vested Benefit under this Plan payable early in reduced
amounts.  In the event of such an election, the amount determined pursuant to
Section 4.02(d)(i) shall be reduced by one-half percent for each calendar month
or part thereof by which the Participant’s age at commencement is less than
fifty-five years, except that the reduction with respect to an Officer with a
Term of Employment of thirty or more years shall be one-quarter percent for each
calendar month or part thereof by which such Officer’s age at commencement is
less than fifty-five years.

 
(e)  Special Update to the Alternate Formula
 
The annual Service Benefit under the Special Update to the Alternate Formula
shall be the excess of B over A, where A equals the Participant’s Pension Plan
Benefit and B equals the product of (i) and (ii), where (i) is one and
seven-tenths percent of the Participant’s Special Update Adjusted Career Average
Pay, less eight-tenths of one percent of the Participant’s Covered Compensation
Base (determined as of December 31, 1996), and (ii) is the lesser of (1) one
plus the Participant’s Term of Employment as of December 31, 1996 and (2) one
hundred and five percent of the Participant’s Term of Employment as of December
31, 1996. The benefit under this Alternate Formula will be reduced in case the
Pension Commencement Date is before age sixty by applying the appropriate
reduction factor from the Table of such factors shown in Appendix B to such
benefit.  The Special Update to the Alternate Formula is equal to zero for any
determination date prior to January 1, 1997.
 
Section 4.03E   Cash Balance Accounts
 
The provisions of this Section 4.03E describe the establishment and development
of the Cash Balance Account with respect to a Participant who is an Officer on
or after January 1, 1998 and before January 1, 2009 with respect to benefits
that commence under the Cash Balance Formula prior to January 1, 2009. Except as
modified by the provisions of Article 4 of the main text of the Plan, the
methodology set forth in this Section 4.03E also applies for purposes of
determining a Benefit Based on the Cash Balance Account with respect to benefits
that commence after December 1, 2008 to or with respect to a Participant who was
an Officer prior to January 1, 2009.

The Cash Balance Account with respect to a Participant who is not an Officer
prior to January 1, 2009 shall be zero.

(a) Establishment of Cash Balance Accounts
 
A Cash Balance Participant’s Cash Balance Account is a hypothetical bookkeeping
account used solely in calculating the amount of the Cash Balance Participant’s
Benefit Based on the Cash Balance Account. The Cash Balance Account is
calculated by accumulating the initial cash balance credit determined pursuant
to Section 4.03(b), annual award credits determined pursuant to Section 4.03(c),
and interest credits determined pursuant to Section 4.03(d).
 
A Participant’s Cash Balance Account shall be established as of the later of
January 1, 1998 or the date the Participant becomes a Cash Balance Participant
in the Plan. Except as provided in Section 4.03(b), the initial Cash Balance
Account shall be zero.
 
(b) Initial Cash Balance Credit
 
(i)           Effective as of January 1, 1998, the Cash Balance Account of each
Cash Balance Participant on the roll of a Participating Company on that date
shall be credited with an initial cash balance credit determined by multiplying
the Participant’s conversion benefit (as defined below) by one hundred seven
percent (107%) of the applicable conversion factor set forth in Appendix C,
based on the Participant’s attained age (in whole years) as of December 31,
1996.  The Cash Balance Participant’s conversion benefit under this Section
4.03(b) shall equal one-twelfth of his or her annual benefit determined in
accordance with Section 4.02(d).
 
(ii)           The initial cash balance credit shall be zero for any Participant
who is not an Officer on January 1, 1998.   
 
(c) Annual Award Credit
 
(i) January 1, 1998
 
Effective as of January 1, 1998, the Cash Balance Account of each Cash Balance
Participant on the roll of a Participating Company on that date shall be
credited with an annual award credit.  This annual award credit shall equal the
sum of (A) and (B) where (A) is the product of (I) and (II), where (I) is the
Short Term Incentive Award, if any, for 1997 and (II) is two times the pay
factor for the Participant as set forth in Section 4.04(c)(v) of the Pension
Plan, based on the Participant’s attained age as of December 31, 1997, and (B)
is the credit based on the Participant’s 1997 Deferred Salary, if any,
determined pursuant to the following (x), (xi) or (xii), as applicable, where
for purposes of (x), (xi) and (xii), “pay factor” means the pay factor as set
forth in Section 4.04(c)(v) of the Pension Plan based on the Participant’s
attained age as of December 31, 1997, and:
 
(x)  
if the sum of the pay taken into account for such Participant under the Pension
Plan and the AT&T Excess Benefit and Compensation Plan (such sum constituting
“1997 Considered Pay”) is equal to or greater than the Social Security Wage Base
for 1997, the credit described in Section 4.03(c)(i)(B) shall be equal to the
Participant’s 1997 Deferred Salary multiplied by two times the pay factor, and

 
(xi)  
if the sum of the Participant’s 1997 Deferred Salary and 1997 Considered Pay (as
defined in (x) above) is less than or equal to the Social Security Wage Base for
1997, the credit described in Section 4.03(c)(i)(B) shall be equal to the
Participant’s 1997 Deferred Salary multiplied by one times the pay factor, and

 
(xii)  
if the 1997 Considered Pay, (as defined in (x) above), is less than the Social
Security Wage Base for 1997, but the sum of the Participant’s 1997 Deferred
Salary and 1997 Considered Pay is greater than such Social Security Wage Base,
the credit described in Section 4.03(c)(i)(B) shall be equal to the sum of (I)
and (II), where (I) is the 1997 Deferred Salary multiplied by one times the pay
factor, and (II) is one times the pay factor multiplied by the excess over the
1997 Social Security Wage Base of the sum of 1997 Deferred Salary and 1997
Considered Pay.

 
(ii) Calendar Year 1998 and Thereafter
 
Except as otherwise provided herein, effective as of December 31, 1998, and each
December 31 thereafter, the Cash Balance Account of each individual who is a
Cash Balance Participant during the respective calendar year shall be credited
with an annual award credit. The Cash Balance Participant’s annual award credit
shall equal  (A), plus, for Plan Years prior to 2005, (B), where (A) is the
product of (I) and (II), where (I) is the Short Term Incentive Award for the
respective calendar year (as determined pursuant to Section 2.40), and (II) is
two times the supplemental pay factor for the Participant as set forth in
Section 4.04(c)(v) of the Pension Plan, based on the Participant’s attained age
as of December 31 of such calendar year, and (B) is the credit based on the
Participant’s Deferred Salary, if any, for the calendar year determined pursuant
to the following (xiii), (xiv) or (xv), as applicable, where for purposes of
(x), (xi) and (xii), “pay factor” means the pay factor as set forth in Section
4.04(c)(v) of the Pension Plan based on the Cash Balance Participant’s attained
age as of December 31 of such calendar year, and
 
(xiii)  
if the sum of the pay taken into account for such Participant under the Pension
Plan and the AT&T Excess Benefit and Compensation Plan (such sum constituting
“Considered Pay”) is equal to or greater than the Social Security Wage Base for
the calendar year, the credit described in Section 4.03(c)(ii)(B) shall be equal
to the Participant’s Deferred Salary multiplied by two times the pay factor, and

 
(xiv)  
if the sum of the Participant’s Deferred Salary and Considered Pay (as defined
in (xiii) above) is less than or equal to the Social Security Wage Base for the
calendar year, the credit described in Section 4.03(c)(ii)(B) shall be equal to
the Participant’s  Deferred Salary multiplied by one times the pay factor, and

 
(xv)  
if the Considered Pay, (as defined in (xiii) above), is less than the Social
Security Wage Base for the calendar year, but the sum of the Participant’s
Deferred Salary  and Considered Pay is greater than such Social Security Wage
Base, the credit described in Section 4.03(c)(ii)(B) shall be equal to the sum
of (I) and (II), where (I) is the Deferred Salary multiplied by one times the
pay factor, and (II) is one times the pay factor multiplied by the excess over
such Social Security Wage Base of the sum of  the Participant’s Deferred Salary
and Considered Pay.

 
Notwithstanding the foregoing, in any calendar year in which a Cash Balance
Participant terminates employment, any such annual award credit shall be based
on his or her attained age as of the end of the month in which the Participant
terminates employment and shall be credited to the Participant’s Cash Balance
Account as of that date.
 
(d) Interest Credits
 
Beginning in 1998, a Cash Balance Participant’s Cash Balance Account shall be
credited with an interest credit based on the balance of his or her Cash Balance
Account as of the first day of the Plan Year.  Notwithstanding the provisions of
the immediately preceding sentence, no Interest Credits shall be made with
respect to the period after the last day of the month immediately preceding the
Participant’s Pension Commencement Date.
 
For the Plan Year in which a Cash Balance Participant terminates employment, his
or her Cash Balance Account shall also be credited with an interest credit based
on any annual award credit for that Plan Year.
 
Unless the Participant commences his or her pension during the Plan Year, the
interest credit shall be made as of the last day of that Plan Year.  For the
Plan Year in which the Participant commences his or her pension, the interest
credit shall be made as of the last day of the month immediately preceding the
Participant’s Pension Commencement Date.
 
The interest crediting rate shall be the same interest crediting rate in effect
for such period under the Pension Plan, and shall be credited at the same time
and in the same manner as interest credits are applied under the Pension Plan.
 
(e) Cash Balance Account Attributable to the Mid-Career Pension Benefit
 
 (i)           With respect to an employee who is an Officer on or after January
1, 1998, effective as of the later of January 1, 1998 or the first day of the
month following the transfer to this Plan of the liability for a Participant’s
annual benefit from the AT&T Mid-Career Pension Plan, if any, as described in
Section 4.07, a Mid-Career Cash Balance Subaccount shall be established for such
Participant.  The initial credit to such Mid-Career Cash Balance Subaccount
shall be determined by multiplying the Cash Balance Participant’s Mid-Career
Conversion Benefit (as defined below) by one hundred seven percent (107%) of the
applicable conversion factor set forth in Appendix C, based on the Cash Balance
Participant’s attained age (in whole years) as of December 31, 1996.  The Cash
Balance Participant’s Mid-Career Conversion Benefit under this Section 4.03(b)
shall equal the monthly benefit (commencing at Normal Retirement Age)
transferred from the AT&T Mid-Career Pension Plan.  Such initial Mid-Career Cash
Balance Subaccount shall be credited with interest credits as follows:
 
 
(A)
with respect to the Mid-Career Cash Balance Subaccount for a Participant who is
Officer on January 1, 1998, interest credits, beginning in 1998, determined in
the manner described in Section 4.03(d);

 
 
 (B)
with respect to the Mid-Career Cash Balance Subaccount for a Participant who is
not an Officer on January 1, 1998, interest credits determined as follows:

 
  (I)            
an initial interest credit effective as of the date the Mid-Career Cash Balance
Subaccount is established, equal to the interest that would have been credited
in accordance with the provisions of Section 4.03(d) for the period beginning
January 1, 1998 to the date such Subaccount is established; and

 
(II)          
interest credits determined in the manner described in Section 4.03(d),
effective for periods following the establishment of such Subaccount.

 
 (ii)           A benefit attributable to the Mid-Career Cash Balance
Subaccount, if any, shall be payable only if the Participant has completed a
Term of Employment of at least five years classified by the Company as
full-time, for one or more Participating Companies, at E-band or above, prior to
the Normal Retirement Date. For purposes of determining whether the Participant
has completed a Term of Employment of at least five years, the provisions of the
Pension Plan providing exceptions to what is considered a break in the
continuity of service shall not apply.  Except as otherwise provided under the
terms of the Plan, if the Participant becomes eligible to receive a benefit
based on the Mid-Career Cash Balance Subaccount, the Mid-Career Cash Balance
Subaccount shall be added to the Participant’s Cash Balance Account determined
pursuant to Section 4.03(b) through (d).
 
(f) Benefit Based on the Cash Balance Account
 
A Cash Balance Participant’s Benefit Based on the Cash Balance Account shall be
a monthly benefit determined in the manner described in the Pension Plan, taking
into account the Participant’s Cash Balance Account as of the date such benefit
is being determined.
 
Section 4.04E    Automatic Survivor Annuities
 
The Automatic Survivor Annuity described in this Section 4.04 does not apply to
a benefit determined under the cash balance formula of Section 4.03 or 4.11, or
to a benefit based on the Mid-Career Pension Benefit of Section 4.07.  For
purposes of this Section 4.04, an Officer who is not Service Pension Eligible at
the time of his or her termination of service with a Participating Company shall
not be considered a retired Officer, unless such Officer was eligible for a
Disability Benefit at the time of his or her termination of service.
 
(a) Before-Retirement
 
The surviving Spouse shall be entitled to a pre-retirement Automatic Survivor
Annuity determined pursuant to this Section 4.04(a) effective commencing as of
the first day of the month following the death of a Participant who dies while
an employee if such Participant  has a Term of Employment of at least fifteen
years at the time of death, or,  if such Participant meets the age and Term of
Employment requirements for a Service Benefit (or is Service Pension Eligible)
at the time of his or her death. The pre-retirement Automatic Survivor Annuity
shall be payable monthly in an amount equal to forty five percent (forty six
percent effective for benefits commencing on or after July 1, 1998) of the
monthly benefit that would have been payable to the Participant pursuant to
Section 4.02 had such Participant terminated employment with a Service Benefit,
regardless of his or her actual eligibility therefore, on the date of his or her
death.  For purposes of determining the Automatic Survivor Annuity provided in
this Section 4.04(a), the early retirement discounts in Sections 4.02(a),
4.02(b), 4.02(d) or 4.02(e) shall not apply.  With respect to a Participant
whose benefit is determined pursuant to Section 4.01(d)(ii)(B), the Automatic
Survivor Annuity shall not include the portion, if any, of the Participant’s
benefit attributable to the Participant’s transferred Mid-Career Pension Benefit
described in Section 4.07.
 
(b) Post-Retirement
 
(i)           Subject to the provisions of Section 4.04(b)(ii), upon the death
of an Officer receiving (or eligible to receive) a Service or Disability Benefit
under this Plan who retired on or after December 31, 1986 (or retired prior to
that date but had not reached age fifty-five on or before December 31, 1983), a
survivor annuity in the amount of forty five percent  (forty six percent
effective for benefits commencing on or after July 1, 1998) of such retired
Officer’s monthly benefit amount will be payable beginning on the first day of
the month following the date of his or her death to the surviving Spouse to
whom  such retired Officer is married at the time of death.  If the Officer had
not yet commenced distribution of his or her benefit, the benefit will be
reduced for early commencement, as if the Officer’s Pension Commencement Date
were the date payments to the surviving Spouse commence. For purposes of
determining the monthly benefit payable to the surviving Spouse pursuant to this
Section 4.04(b), the Officer’s Service or Disability Benefit determined pursuant
to Section 4.02 is based on the amount that would be paid in the form of a
single life annuity, and is not reduced to reflect any optional form of payment.
With respect to a Participant whose benefit is determined pursuant to Section
4.01(d)(ii)(B), the Automatic Survivor Annuity shall not include the portion, if
any, of the Service or Disability Benefit attributable to the Participant’s
transferred Mid-Career Pension Benefit described in Section 4.07.
 
(ii)           In the case of an Officer who terminates employment on or after
August 1, 1997, no benefit shall be payable pursuant to Section 4.04(b)(i)
unless (A) the Officer’s benefit under the Pension Plan is larger under a “pay
base” formula of the Pension Plan than under the cash balance formula of such
plan, (B) the benefit determined under Section 4.02(a), 4.02(b), 4.02(d) or
4.02(e), as applicable, is greater than the benefit determined under Section
4.03 of this Plan, and (C) the Officer elected to receive his or her Pension
Plan benefit in the form of a single life annuity or a 50% joint and survivor
annuity.   For purposes of making the determination under (A) and (B) of this
Section 4.04(b)(ii), any applicable reduction for commencement prior to age 65
is taken into account, and any amounts attributable to the Mid-Career Pension
Benefit, whether pursuant to Section 4.03(e) or Section 4.07, shall be
disregarded.  If pursuant to the immediately preceding provisions of this
Section 4.04(b)(ii) the provisions of Section 4.04(b)(i) do not apply with
respect to such Participant, the benefits, if any, payable following the death
of a Participant after his or her Pension Commencement Date shall be determined
solely in accordance with the provisions of Section 4.09(a)(iv).
 
Section 4.05E    Special Increases
 
Monthly pension payments being made under the Plan to a terminated Participant
or the surviving Spouse of a terminated Participant shall be increased by the
same percentage and pursuant to the same terms and conditions, as are set forth
for comparable payments to similarly situated individuals, from time to time,
under the Pension Plan.
 
Section 4.06E   Monthly Payments
 
The annual benefit determined under Section 4.02 shall be divided by twelve to
determine a monthly benefit amount.  All annuity benefits under the Plan shall
be payable monthly or at such other periods as the Committee or the
Administrator, as applicable, may determine in each case; a benefit payable
other than monthly shall be adjusted to reflect the period covered by such
payment.
 
Section 4.07E    Mid-Career Pension Benefit
 
(a) Transfer of Mid-Career Pension Benefit
 
Effective January 1, 1998, for an Officer who is a Participant as of January 1,
1998, the liability for the monthly benefit from the AT&T Mid-Career Pension
Plan, if any, shall be transferred to this Plan, and the AT&T Mid-Career Pension
Plan shall retain no further obligation with respect to such benefit.   With
respect to an employee who becomes an Officer after January 1, 1998, the
liability for the annual benefit from the AT&T Mid-Career Pension Plan, if any,
shall be transferred to this Plan effective upon his or her designation as an
Officer, and the AT&T Mid-Career Pension Plan shall retain no further obligation
with respect to such benefit. Solely for purposes of determining the benefit
transferred to this Plan, it shall be assumed that the Participant had completed
a Term of Employment of at least five years classified by the Company as
full-time, for one or more Participating Companies, at E-band or above prior to
December 31, 1997, and had terminated employment as of December 31, 1997.
 
(b) Eligibility for Payment of Mid-Career Pension Benefit
 
Following the transfer of the AT&T Mid-Career Pension Plan benefit to this Plan,
such transferred benefit shall be paid from this Plan, in the manner described
in Section 4.07(c), provided that such Participant has completed a Term of
Employment of at least five years classified by the Company as full-time, for
one or more Participating Companies, at E-band or above, prior to the last day
of the month in which he or she reaches Normal Retirement Age. For purposes of
determining whether the Participant has completed a Term of Employment of at
least five years, the provisions of the Pension Plan providing exceptions to
what is considered a break in the continuity of service shall not
apply.  Notwithstanding the preceding provisions of this Section 4.07, if a
benefit paid under this Plan is paid pursuant to the Cash Balance Formula of
Section 4.03, no additional benefit shall be paid pursuant to this Section 4.07,
because such transferred benefit is already included in the determination of
benefit amounts under Section 4.03.
 
(c) Manner of Payment of Mid-Career Pension Benefit
 
The transferred Mid-Career Pension Benefit is included in the benefit determined
pursuant to Section 4.01(d)(ii)(A) or Section 4.01(d)(ii)(B), as applicable.  A
Mid-Career Pension Benefit payable pursuant to Section 4.01(d)(ii)(A) is
included in the “Benefit Based on the Cash Balance Account” described in Section
4.03(f), through the operation of Section 4.03(e)(ii).  If a Participant’s
benefit is payable pursuant to Section 4.01(d)(ii)(B) and commences prior to
January 1, 2009, the portion of such benefit attributable to the Mid-Career
Pension Benefit shall be paid only in the form of a single life annuity, and if
such benefit commences prior to Normal Retirement Date shall be reduced in
accordance with the terms of the AT&T Mid-Career Pension Plan as in effect on
December 31, 1997, and shall not be included in determining the Automatic
Survivor Annuity of Section 4.04 (a) or Section 4.04(b). In addition to the
provisions of this Section 4.07(c), distribution of the Mid-Career Pension
Benefit shall be subject to the provisions of Section 4.09.
 
Section 4.08E     Treatment During Subsequent Employment
 
When a Participant’s Term of Employment includes service with more than one
Participating Company, the last Participating Company to employ him or her
immediately prior to his or her termination of employment, with entitlement to a
benefit hereunder, shall be responsible for the full benefit under this Plan. If
a Participant’s benefit payments under the Pension Plan are suspended under the
terms of the Pension Plan, because of his or her employment or reemployment
subsequent to termination of employment, any benefit payment he or she is
entitled to under this Plan shall be permanently suspended for the period of
such employment or reemployment to the same extent and in the same manner,
consistent with the terms and conditions applicable to the suspension of benefit
payments under the Pension Plan, provided, however, that payments to which an
Officer is entitled under an annuity contract purchased on his or her behalf
shall not be suspended for the period of such employment or
reemployment.  Payment of a Participant’s benefit under this Plan shall resume
simultaneously with the recommencement of his or her benefits under the Pension
Plan. Following recommencement of benefit payments under this Plan, the
Participant (or surviving Spouse) shall not be eligible to receive any payments
under this Plan that would otherwise have been payable but for the suspension.
 
Notwithstanding the preceding, effective beginning January 1, 2005, benefits
shall not be suspended during a period of employment or reemployment. Benefits
paid upon a subsequent termination of employment shall be reduced by the
actuarial equivalent of the benefit payments that were continued during
reemployment.
 
Section 4.09E    Payment of Pensions
 
(a) Commencement Prior to 2005
 
(i) Subject to the exception set forth in paragraph (ii) of this Section
4.09(a), (regarding the Alternate Minimum Formula), benefits payable to the
Participant under this Plan shall commence on the date the benefits under the
Pension Plan are first paid to the Participant, and shall, except for the
reasons specified in Section 3.02(a)(iv), Section 4.08 or Section 9.12, continue
to the death of the recipient.  Benefits payable to the surviving Spouse or the
estate of the Participant shall commence and be paid as indicated in the
applicable provision of this Plan.
 
(ii) Any benefit payable to an Officer pursuant to Section 4.02(c) shall not
commence before age sixty-five, except that an Officer who has been employed for
at least five years as an Officer as of December 31, 1993, and as to whom the
sum of his or her attained age and Term of Employment equaled or exceeded
seventy as of that date, shall be eligible to commence his or her benefit as of
the first day of the month following his or her termination of employment and
shall, except for the reasons specified in Section 4.09(a)(i), continue to his
or her death.
 
 (iii) For a Participant who terminated employment prior to August 1, 1997, the
benefit under this Plan shall be payable in the form of a single life
annuity.  Any post-retirement survivor benefits, with respect to such a
Participant, shall be determined solely in accordance with the provisions of
Section 4.04(b).
 
(iv) This Section 4.09(a)(iv) applies only to a Participant who terminates
employment on or after August 1, 1997, and who is not described in Section
4.09(a)(v).
 
(A)   If the Participant elects the cash payment option under the Pension Plan,
with no remaining annuity payable from the Pension Plan, or a lump sum, if
applicable, the benefit under this Plan shall be paid in the form of a single
life annuity.  For purposes of this subparagraph (A), an annuity payable under
the AT&T Excess Benefit and Compensation Plan is not considered to be an annuity
payable from the Pension Plan.
 
(B)  If the Participant elected the cash payment option under the Pension Plan,
with an annuity remaining under the Pension Plan, the benefit under this Plan
shall be paid in the same form as the remaining annuity under the Pension Plan
is paid.
 
(C)  The form of payment under this Plan shall be the same form of payment, as
elected by the Participant under the Pension Plan, unless the benefit under the
Pension Plan is the cash payment option or a lump sum, if applicable, (in which
case the form of payment under this Plan shall be determined pursuant to the
immediately preceding subparagraphs (A) or (B)).  If the form of payment under
the Pension Plan includes a joint and survivor form of payment with the survivor
benefit payable to an alternate payee, the benefit to the Participant under this
Plan shall be (i) paid as a single life annuity, if the Participant is not
married on the Pension Commencement Date, or (ii) paid in the joint and survivor
form of payment elected by the Participant under the Pension Plan, with the
survivor benefit under this Plan payable to the Spouse to whom the Participant
is married at the Pension Commencement Date, if the Participant is married on
the Pension Commencement Date.
 
  (D)  The single life annuity benefit otherwise payable under this Plan to a
Participant will be reduced as follows to reflect the form of payment: (1) the
benefit under this Plan based on the Cash Balance Account shall be reduced by 8%
(10% for a Pension Commencement Date prior to July 1, 1999) if payment is made
in the form of a 50% Joint and Survivor Annuity, and by 15% (18% for a Pension
Commencement Date prior to July 1, 1999) if payment is made in the form of a
100% Joint and Survivor Annuity; (2) the benefit under this Plan which is not
based on the Cash Balance Account, with respect to a Participant who is not
Service Pension Eligible on termination of employment, shall be reduced by 12%
if the benefit is to be paid under the 50% Joint and Survivor Annuity form of
payment; and (3) in the case of a Participant whose benefit under the Plan is
based on a formula other than the Cash Balance Account, a benefit payable in the
form of a 100% Joint and Survivor Annuity shall be reduced for commencement
prior to Normal Retirement Date by applying the early commencement factors
applicable to the cash balance formula, as described in the Pension Plan, and
shall be reduced for the 100% Joint and Survivor Annuity form of payment by 15%
(18% for a Pension Commencement Date prior to July 1, 1999).
 
  (E)  Notwithstanding the preceding (A) through (D), the benefit payable under
this Plan that is attributable to the Mid-Career Pension Benefit and paid
pursuant to Section 4.01(d)(ii)(B) shall be paid only in the form of a single
life only.
 
(v) The benefit under this Plan with respect to an Officer who is Service
Pension Eligible at his or her termination of employment on or after August 1,
1997, and who meets the requirements set forth in Section 4.04(b)(ii), shall be
paid in the form of a single life annuity, and any post-retirement survivor
benefit will be determined pursuant to Section 4.04(b)(ii).  In lieu of the
benefit payable pursuant to the immediately preceding sentence, such Officer may
instead elect distribution of his benefit in the form of a 100% Joint and
Survivor Annuity, with reduction for commencement prior to Normal Retirement
Date and for the 100% Joint and Survivor Annuity form of payment determined as
described in the preceding subsection 4.09(a)(iv)(D)(3).
 
(b) Commencement After 2004 and Prior to 2009
 
Except as provided in Section 6.01 regarding payments in the form of a
commercial annuity contract, the provisions of Section 4.09(a) regarding the
time and form of payment of benefits under the Plan shall apply with respect to
benefits for which distribution to a Participant commenced, or with respect to
benefits payable on behalf of a Participant whose death occurred, after 2004 and
prior to 2009. The provisions of Section 4.09(a) relating to commencement of the
benefit under the Pension Plan shall refer to commencement of the Participant’s
regular pension under the Pension Plan (and not to commencement of any benefit
under the Pension Plan based on the Special CIC Credit or the Force Management
Pension Credit).
 
(c) Commencement After 2008
 
Provisions related to payment of benefits to the Participant that commence after
December 31, 2008 or with respect to a Participant who is an employee on
December 31, 2008 and whose death occurs after December 31, 2008 are not
included in Appendix E.  Such payments shall be made in the time and form as
described in Section 4.09(c) of Article 4 as in effect after December 31, 2008
as set forth in the main text of the Plan.

 
(d) Payments to Specified Employees
 
Notwithstanding the provisions of the preceding sections 4.09(a) through
4.09(c), 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 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
4.09(d), 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 4.4(d) 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.
 
Section 4.10E    Preretirement Survivor Benefits for Cash Balance Participants
 
(a) Preretirement Death Benefit
 
(i)  If a Cash Balance Participant who is vested under the Pension Plan dies
before the date as of which his or her benefit commences under this Plan, and he
or she has a surviving Spouse at the time of death, a single life annuity
determined pursuant to Section 4.10(b), shall be payable to the surviving Spouse
commencing on the first day of any month following the death of the Participant,
(A) with respect to a Participant who terminated employment prior to January 1,
2005, or (B) with respect to a Participant who terminated employment after
December 31, 2004 and dies before December 1, 2008, but only to the extent that
such surviving Spouse otherwise satisfies the requirements of the Plan with
respect to receipt of such a benefit.  Payment shall commence at the same time
as payment to a surviving Spouse commences under the Pension Plan. For purposes
of this Section 4.10(a), the surviving Spouse shall be the Spouse to whom the
Participant is married on the date of the Participant’s death and who has
survived the Cash Balance Participant to at least the next calendar day after
the Cash Balance Participant’s death.   If the Cash Balance Participant is
unmarried at the date of his or her death, or if the surviving Spouse does not
survive the Participant to at least the next calendar day after the
Participant’s death, the Participant’s Cash Balance Account shall be payable to
the estate of the Participant.  No death benefit is payable with respect to a
Participant who terminated employment after December 31, 2004 who dies after
December 1, 2008, except as described in Section 4.09(c)(ii) of Article 4 of the
main text of the Plan effective after December 31, 2008 (such provisions which
are not included in this Appendix E),
 
(ii)  If a Participant dies before the date as of which his or her benefit
commences under this Plan, and he or she does not have a surviving Spouse at the
time of his or her death, or if such surviving Spouse is not eligible for a
benefit pursuant to the provisions of Section 4.10(a)(i), a lump sum benefit
shall be payable to the surviving Spouse of the Participant, or, if there is no
surviving Spouse, to the Participant’s estate, within a reasonable period of
time following the death of the Participant.  The amount of such single cash
payment shall be equal to the Participant’s Cash Balance Account.
 
(iii) If a Participant dies before the date as of which his or her benefit
commences under this Plan and he or she is survived by a surviving Spouse who is
entitled to a benefit pursuant to the preceding Section 4.10(a)(i) or Section
4.10(a)(ii), and such surviving Spouse dies prior to the date payment of
benefits under this Plan commence, a lump sum benefit shall be payable to the
estate of the surviving Spouse upon the death of the surviving Spouse. The
amount of such single cash payment shall be equal to the Participant’s Cash
Balance Account.
 
(b) Single Life Annuity
 
A surviving Spouse’s single life annuity shall equal the Cash Balance
Participant’s Benefit Based on the Cash Balance Account under Section 4.03(f),
but substituting the surviving Spouse’s attained age, for the age of the
Participant when applying the procedures of the Pension Plan for purposes of
such determination.
 
If the Cash Balance Participant would have been eligible for a benefit
determined pursuant to Section 4.02 had he or she terminated employment on the
day preceding the date of death, the surviving Spouse’s single life annuity will
be determined in accordance with the provisions of Section 4.04(a), if that
provision produces a higher benefit (determined as of the Spouse’s Pension
Commencement Date) for the surviving Spouse than the benefit determined under
this Section 4.10(b).
 
Section 4.11E    Qualified Deferrals Cash Balance Account
 
The provisions of this Section 4.03E describe the establishment and development
of the Qualified Deferrals Cash Balance Account with respect to benefits that
commence under the Qualified Deferrals Cash Balance Account Formula prior to
January 1, 2009. Except as modified by the provisions of Article 4 of the main
text of the Plan, the methodology set forth in this Section 4.11E also applies
for purposes of determining a Benefit Based on the Qualified Deferrals Cash
Balance Account with respect to benefits that commence after December 1, 2008.

(a) Establishment of Qualified Deferrals Cash Balance Accounts
 
A Deferral Participant’s Qualified Deferrals Cash Balance Account is a
hypothetical bookkeeping account used solely in calculating the amount of the
Deferral Participant’s Benefit Based on the Qualified Deferrals Cash Balance
Account. The Qualified Deferrals Cash Balance Account is calculated by
accumulating the annual qualified deferral credits determined pursuant to
Section 4.11(b), and deferral interest credits determined pursuant to Section
4.11(c).
 
A Participant’s Qualified Deferrals Cash Balance Account shall be established as
of the date the Deferral Participant begins to make Qualified Deferrals under
the AT&T Executive Deferred Compensation Plan or the AT&T Inc. Cash Deferral
Plan.
 
(b) Annual Qualified Deferral Credits
 
Effective as of each December 31 following the date an individual becomes a
Deferral Participant, the Qualified Deferrals Cash Balance Account of such
individual shall be credited with an annual qualified deferral credit. The
Deferral Participant’s annual qualified deferral credit shall equal the credit
based on the participant’s Qualified Deferral, if any, for the calendar year
determined pursuant to the following (xvi), (xvii) or (xviii), as applicable,
where for purposes of (xvi), (xvii) and (xviii), “pay factor” means the pay
factor as set forth in Section 4.04(c)(v) of the Pension Plan based on the
Participant’s attained age as of December 31 of such calendar year, and
 
(xvi)  
if the sum of the pay taken into account for such Participant under the Pension
Plan and the AT&T Excess Benefit and Compensation Plan (such sum constituting
“Considered Pay”) is equal to or greater than the Social Security Wage Base for
the calendar year, the annual qualified deferral credit shall be equal to the
Qualified Deferral multiplied by two times the pay factor, and

 
(xvii)  
if the sum of the participant’s Qualified Deferral and Considered Pay (as
defined in (xvi) above) is less than or equal to the Social Security Wage Base
for the calendar year, the annual qualified deferral credit shall be equal to
the participant’s  Qualified Deferrals multiplied by one times the pay factor,
and

 
(xviii)  
if the Considered Pay, (as defined in (xvi) above), is less than the Social
Security Wage Base for the calendar year, but the sum of the participant’s
Qualified Deferrals and Considered Pay is greater than such Social Security Wage
Base, the annual qualified deferral credit shall be equal to the sum of (I) and
(II), where (I) is the Qualified Deferrals multiplied by one times the pay
factor, and (II) is one times the pay factor multiplied by the excess over such
Social Security Wage Base of the sum of  the participant’s Qualified Deferrals
and Considered Pay.

 
Notwithstanding the foregoing, in any calendar year in which a Deferral
Participant terminates employment, any such annual qualified deferral credit
shall be based on his or her attained age as of the end of the month in which
the participant terminates employment and shall be credited to the Qualified
Deferrals Cash Balance Account as of that date.
 
Annual Qualified Deferral Credits were discontinued under the Plan effective
with respect to amounts deferred from any paycheck dated after December 31,
2007.
 
(c) CIC Subaccount
 
A Deferral Participant who is a CIC Eligible Employee shall have a “CIC credit”
credited to his or her CIC Subaccount as of the date of such termination of
employment that allows the Deferral Participant to be considered a CIC Eligible
Employee.  The CIC credit shall be an amount equal to the sum of (i) and (ii) as
follows:
 
(i)  
The CIC Eligible Employee’s Qualified Deferral for the calendar year immediately
preceding the calendar year in which the “change in control” (as such term is
defined in the Pension Plan) occurs, multiplied by the lesser of (A) five
percent for each whole year of the CIC Eligible Employee’s Term of Employment as
of the last day of the month in which the change in control occurs, or (B) one
hundred percent;

 
(ii)  
An interest credit on the amount determined in (i) above from the first of the
month following the month in which the change in control occurs through the last
day of the month in which such termination of employment occurs, based on the
effective annual rates set forth in Section 4.10(d), as in effect for the period
beginning on the first of the month following the month in which the change in
control occurs through the month in which such termination of employment
described in this Section 4.10(c) occurs.

 
The CIC Subaccount shall be credited with interest credits in the manner
described in the following Section 4.11(d). The benefit amount, method of
payment, and pre-retirement survivor benefit, if any, attributable to the CIC
Subaccount shall be determined in the manner described with respect to the “CIC
Credit” under the Pension Plan. The benefit provisions of this Section 4.11(c)
shall be subject to the provisions of Section 9.18.    For purposes of any joint
and survivor annuity benefit, the surviving Spouse is the Spouse to whom the
Participant was married on his or her Pension Commencement Date.
 
In order to fulfill the intent of the CIC resolutions as adopted by the Board of
Directors of the Company in October, 2000, prior to the adoption of the AT&T
Executive Deferred Compensation Plan, solely for the purpose of determining
severance payments with respect to a CIC Eligible Employee under an “applicable
severance plan” as that term is defined in Section G.07(j) of the Pension Plan,
the benefit attributable to the CIC Subaccount with respect to a Deferral
Participant shall be treated as paid from the Pension Plan.
 
(d) Deferral Interest Credits
 
Effective as of each December 31 following the date an individual becomes a
Deferral Participant, the Qualified Deferrals Cash Balance Account of such
individual shall be credited with an interest credit based on the balance of his
or her Qualified Deferrals Cash Balance Account as of the first day of the Plan
Year.  Notwithstanding the provisions of the immediately preceding sentence, no
Interest Credits shall be made with respect to the period after the last day of
the month immediately preceding the participant’s Pension Commencement Date.
 
For the Plan Year in which a Deferral Participant terminates employment, his or
her Qualified Deferrals Cash Balance Account shall also be credited with an
interest credit based on any annual qualified deferral credit for that Plan
Year.
 
Unless the Participant commences his or her pension during the Plan Year, the
interest credit shall be made as of the last day of that Plan Year.  For the
Plan Year in which the Deferral Participant commences his or her pension, the
interest credit shall be made as of the last day of the month immediately
preceding the participant’s Pension Commencement Date.
 
The interest crediting rate shall be the same interest crediting rate in effect
for such period under the Pension Plan, and shall be credited at the same time
and in the same manner as interest credits are applied under the Pension Plan.
 
(e) Benefit Based on the Qualified Deferrals Cash Balance Account
 
A Deferral Participant’s Benefit Based on the Qualified Deferrals Cash Balance
Account shall be a monthly benefit determined in the manner described in the
Pension Plan, taking into account the participant’s Qualified Deferrals Cash
Balance Account as of the date such benefit is being determined, and multiplied
by twelve to produce an annual benefit.  Notwithstanding the preceding, the
Benefit Based on the Qualified Deferrals Cash Balance Account shall not exceed
(I) the benefit that would have been payable under the Pension Plan, determined
before application of the limitations of Code Section 401(a)(17) and Code
Section 415, if eligible pay under the Pension Plan for a Plan Year included the
Qualified Deferrals for such Plan Year, minus (II) the benefit actually payable
under the Pension Plan plus the benefit actually payable under the AT&T Excess
Benefit and Compensation Plan, where (I) and (II) are determined as of the
Participant’s Pension Commencement Date, and the form of payment elected by the
participant.  The Benefit Based on the Qualified Deferrals Cash Balance Account
shall be paid in the same form of payment elected by the Participant under the
Pension Plan.  Notwithstanding the preceding, if the Participant elected the
cash payment option under the Pension Plan, the benefit under this Plan shall be
paid in the same form as the remaining annuity elected by the Participant under
the Pension Plan.  For purposes of any joint and survivor annuity benefit, the
surviving Spouse is the Spouse to whom the Participant was married on his or her
Pension Commencement Date.
 
(f) Preretirement Death Benefit
 
(i)  If a Deferral Participant dies prior to his or her Pension Commencement
Date and he or she has a surviving Spouse at the time of death, a single life
annuity determined pursuant to the following Section 4.11(f)(iv), commencing on
the first day of any month following the death of the Participant, shall be
payable to the surviving Spouse if such Participant terminates employment after
December 31, 2004 and dies before January 1, 2009, but only to the extent that
such surviving Spouse otherwise satisfies the requirements of the Plan with
respect to receipt of such a benefit. For purposes of this Section 4.11(f), a
surviving Spouse shall be the individual to whom the Participant is legally
married on the date of the Participant’s death and who has survived the
Participant to at least the next calendar day after the Participant’s death.  If
the Deferral Participant is unmarried at the date of his or her death, or if the
surviving Spouse does not survive the Participant to at least the next calendar
day after the Participant’s death, the Participant’s Qualified Deferrals Cash
Balance Account shall be payable to the estate of the Participant.
 
(ii)  If a Deferral Participant dies before the date as of which his or her
benefit commences under this Plan, and he or she does not have a surviving
Spouse at the time of his or her death, or if such surviving Spouse is not
eligible for a benefit pursuant to the provisions of Section 4.11(f)(i), a lump
sum benefit shall be payable to the surviving Spouse of the Participant, or, if
there is no surviving Spouse, to the Participant’s estate, within a reasonable
period of time following the death of the Participant.  The amount of such
single cash payment shall be equal to the Participant’s Qualified Deferrals Cash
Balance Account.
 
(iii) If a Deferral Participant dies before the date as of which his or her
benefit commences under this Plan and he or she is survived by a surviving
Spouse who is entitled to a benefit pursuant to the preceding Section 4.11(f)(i)
or Section 4.11(f)(ii), and such surviving Spouse dies prior to the date payment
of benefits under this Plan commence, a lump sum benefit shall be payable to the
estate of the surviving Spouse within a reasonable period of time following the
death of the surviving Spouse. The amount of such single cash payment shall be
equal to the Participant’s Qualified Deferrals Cash Balance Account.
 
(iv)  A surviving Spouse’s single life annuity payable pursuant to Section
4.11(f)(i) shall equal the Participant’s Benefit Based on the Qualified
Deferrals Cash Balance Account under Section 4.03(d), but substituting the
surviving Spouse’s attained age, for the age of the Participant when applying
the procedures of the Pension Plan for purposes of such determination.