ex10bb.htm


    Exhibit
10-bb

    


    


    


    AT&T
INC.

    


    STOCK
PURCHASE AND DEFERRAL PLAN

    


    Adopted
November 19, 2004

    As
amended through November 19, 2009

    


    Article
1 - Statement of Purpose

    


    The
purpose of the Stock Purchase and Deferral Plan (“Plan”) is to increase stock
ownership by, and to provide savings opportunities to, a select group of
management employees of AT&T Inc. (“AT&T”) and its
Subsidiaries.

    


    Article
2 - Definitions

    


    For the
purpose of this Plan, the following words and phrases shall have the meanings
indicated, unless the context indicates otherwise:

    


    Annual Bonus.  The
award designated the “Annual Bonus” by AT&T (including but not limited to an
award that may be paid in more frequent installments than annually), together
with any individual discretionary award made in connection therewith, or
comparable awards, if any, determined by AT&T to be used in lieu of these
awards.

     
 

               Base
Compensation.  The following types of cash-based compensation
paid by an Employer (but not including payments made by a non-Employer, such as
state disability payments), before reduction due to any contribution pursuant to
this Plan or reduction pursuant to any deferral plan of an Employer, including
but not limited to a plan that includes a qualified cash or deferral arrangement
under Section 401(k) of the Code:


      

    
      (a)  base
salary;

       

    

    (b)  lump sum payments in
lieu of a base salary increase;  and

    


    (c)
Annual Bonus.

    


    Payments
by an Employer under a disability plan made in lieu of any compensation
described above, shall be deemed to be a part of the respective form of
compensation it replaces for purposes of this definition.  Base
Compensation does not include zone allowances or any other geographical
differential and shall not include payments made in lieu of unused vacation or
other paid days off, and such payments shall not be contributed to this
Plan.

    


    Determinations
by AT&T (the Committee with respect to Officer Level Employees) of the items
that make up Base Compensation shall be final.  The Committee may,
from time to time, add or subtract types of compensation to or from the
definition of “Base Compensation” provided, however, any such addition or
subtraction shall be effective only with respect to the next period in which a
Participant may make an election to establish a Share Deferral
Account.  Base Compensation that was payable in a prior Plan Year but
paid in a later Plan Year shall not be used to determine Employee Contributions
or Matching Contributions in such later Plan Year.

    


    Business Day.  Any
day during regular business hours that AT&T is open for
business.

    


    Change in
Control.  With respect to AT&T’s direct and indirect
ownership of an Employer, a “Change in the effective control of a Corporation,”
as defined in Treasury Regulation Section 1.409A-3(i)(5)(vi)(A)(1), regardless
of whether the Employer is a corporation or non corporate entity as permitted by
the regulation, and using “50 percent” in lieu of “30 percent” in such
regulation.  A Change in Control will not apply to AT&T
itself.

    


    Chief Executive
Officer.  The Chief Executive Officer of AT&T
Inc.

    


    Code.  References to
the Code shall be to provisions of the Internal Revenue Code of 1986, as
amended, including regulations promulgated thereunder and successor
provisions.  Similarly, references to regulations shall include
amendments and successor provisions.

    


    Committee.  The
Human Resources Committee of the Board of Directors of AT&T
Inc.

    


    Disability. Absence of an
Employee from work with an Employer under the relevant Employer's disability
plan.

    


    Eligible
Employee.  An Employee who:

    (a) is a
full or part time, salaried Employee of AT&T or an Employer in which
AT&T has a direct or indirect 100% ownership interest and who is on active
duty or Leave of Absence (but only while such Employee is deemed by the Employer
to be an Employee of such Employer);

    


    (b) is,
as determined by AT&T, a member of Employer's “select group of management or
highly compensated employees” within the meaning of the Employee Retirement
Income Security Act of 1974, as amended, and regulations thereunder (“ERISA”),
which is deemed to include each Officer Level Employee; and

    


    (c) has
an employment status which has been approved by AT&T to be eligible to
participate in this Plan or is an Officer Level Employee.

     

    Notwithstanding
the foregoing, AT&T (the Committee with respect to Officer Level Employees)
may, from time to time, exclude any Employee or group of Employees from being
deemed an “Eligible Employee” under this Plan.

    


    In the
event a court or other governmental authority determines that an individual was
improperly excluded from the class of persons who would be permitted to make
Employee Contributions during a particular time for any reason, that individual
shall not be permitted to make such contributions for purposes of the Plan for
the period of time prior to such determination.

    


                Employee.  Any
person employed by an Employer and paid on an Employer’s payroll system,
excluding persons hired for a fixed maximum term and excluding persons who are
neither citizens nor permanent residents of the United States, all as determined
by AT&T. For
purposes of this Plan, a person on Leave of Absence who otherwise would be an
Employee shall be deemed to be an Employee.

     

    Employee
Contributions.  Amounts credited to a Share Deferral Account
pursuant to Section 4.1 (Election to Make Contributions) of the
Plan.

    


    Employer.  AT&T
Inc. or any of its Subsidiaries.

    


    Exercise Price.  The
price per share of Stock purchasable under an Option.

    


                 Fair Market Value or
FMV.  In valuing Stock or any other item subject to valuation
under this Plan, the Committee may use such index or measurement as the
Committee may reasonably determine from time to time, and such index or
measurement shall be the FMV of such Stock or other item, provided that for
purposes of determining the Exercise Price of Stock Options, the Committee shall
use a value consistent with the requirements of Section 409A.  In the
absence of such action by the Committee, FMV means, with respect to Stock, the
closing price on the New York Stock Exchange (“NYSE”) of the Stock on the
relevant date, or if on such date the Stock is not traded on the NYSE, then the
closing price on the immediately preceding date such Stock is so
traded.

    


    Leave of
Absence.  Where a person is absent from employment with an
Employer on a leave of absence, military leave, sick leave, or Disability 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
§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.

    


    Officer Level
Employee.  Any executive officer of AT&T, as that term is
used under the Securities Exchange Act of 1934, as amended, and any Employee
that is an “officer level” Employee for compensation purposes as shown on the
records of AT&T.

    


    Options or Stock
Options.  Options to purchase Stock issued pursuant to this
Plan.

    


    Participant.  An
Employee or former Employee who participates in this Plan.

    


    Plan Year.  Each of
the following shall be a Plan Year:  the period January 1, 2005,
through January 15, 2006; the period January 16, 2006, through December 31,
2006; and, for all later Plan Years, it is defined as the period from January 1
through December 31.

    


    Retirement or
Retire.  Termination of Employment on or after the earlier of
the following dates, unless otherwise provided by the Committee:  (a)
for Officer Level Employees, the date the Participant is at least age 55 and has
five (5) years of Net Credited Service; or (b) the date the Participant has
attained one of the following combinations of age and Net Credited
Service:

    


    


     

    
      	Net Credited
      Service	Age
	10 years or
      more	65 or
      older 
	20 years or
      more 	55 or
      older 
	25 years or
      more 	50 or
      older 
	30 years or
      more	Any
    age 


    

     

     

    For
purposes of this Plan only, Net Credited Service shall be calculated in the same
manner as “Pension Eligibility Service” under the AT&T Pension Benefit Plan
– Nonbargained Program (“Pension Plan”), as amended from time to time, except
that service with an Employer shall be counted as though the Employer were a
“Participating Company” under the Pension Plan and the Employee was a
participant in the Pension Plan.

    


    Senior Manager.  Any
Employee who is a “senior manager” for compensation purposes as shown on the
records of AT&T.

    


    Shares or Share
Units.  An accounting entry representing the right to receive
an equivalent number of shares of Stock.

    


    Share Deferral Account or Account.   The
Account or Accounts established annually by an election by a Participant to make
Employee Contributions to the Plan, with each Account relating to a Plan
Year.  For each Plan Year after 2008, there shall be (1) a separate
Share Deferral Account for Share Units purchased with Employee Contributions of
Base Compensation (excluding Annual Bonus) and related Matching Share Units and
(2) a separate Share Deferral Account for Share Units purchased with Employee
Contributions of Short Term Incentive Award and/or Annual Bonus and any related
Matching Share Units.  Earnings on Share Units and Matching Share
Units shall accrue to the respective Share Deferral Accounts where they are
earned.

    


    Short Term Incentive
Award.  A cash award paid by an Employer (and not by a
non-Employer, such as state disability payments) under the Short Term Incentive
Plan or any successor plan, together with any individual discretionary award
made in connection therewith; an award under a similar plan intended by the
Committee to be in lieu of an award under such Short Term Incentive Plan,
including, but not limited to, Performance Units granted under the 2006
Incentive Plan or any successor plan.  It shall also include any other
award that the Committee designates as a Short Term Incentive Award specifically
for purposes of this Plan (regardless of the purpose of the award) provided the
deferral election is made in accordance with Section 409A.

    


    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.

    


    Stock.  The common
stock of AT&T Inc.

    


    Subsidiary.  Any
corporation, partnership, venture or other entity or business with which
AT&T would be considered a single employer under Sections 414(a) and (c) of
the Code, using 50% as the ownership threshold as provided under Section 409A of
the Code.

    


    Termination of Employment.
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 Section 409A, with all Employers. For purposes
of this Plan, a Termination of Employment with respect to an Employer shall be
deemed to also occur when such Employer incurs a Change in Control.

    


    


    Article
3 - Administration of the Plan

    


    3.1           The Committee.

    Except as
delegated by this Plan or by the Committee, the Committee shall be the
administrator of the Plan and will administer the Plan, interpret, construe and
apply its provisions and determine all questions of administration,
interpretation and application of the Plan, including, without limitation,
questions and determinations of eligibility, entitlement to benefits and payment
of benefits, all in its sole and absolute discretion.  The Committee
may further establish, adopt or revise such rules and regulations and such
additional terms and conditions regarding participation in the Plan as it may
deem necessary or advisable for the administration of the
Plan.  References in this Plan to determinations or other actions by
AT&T, herein, shall mean actions authorized by the Committee, the Chief
Executive Officer, the Senior Executive Vice President of AT&T in charge of
Human Resources, or their respective successors or duly authorized delegates, in
each case in the discretion of such person.  All decisions by the
Committee, its delegate or AT&T, as applicable, shall be final and
binding.

    


    3.2           Authorized
Shares of Stock.

    (a)
Except as provided below, the number of shares of Stock which may be distributed
pursuant to the Plan, exclusive of Article 8 - Options, is
21,000,000.  The number of shares of Stock which may be issued
pursuant to the exercise of Stock Options is 34,000,000 (together with an equal
number of Stock Options).  Only the actual number of shares of Stock
that are issued (shares issued would not include, for example, any reduction in
shares to be issued as a result of tax withholding in connection with a
distribution of Stock, exercise of options, or otherwise) shall be counted
against the authorized number of shares of Stock. To the extent an Option issued
under this Plan is canceled, terminates, expires, or lapses for any reason, such
Option shall again be available for issuance under the
Plan.  Conversions of Stock awards into Share Units and their eventual
distribution (excluding the effects of any dividends on such Share Units) shall
count only against the limits of the plans from which they originated and shall
not be applied against the limits in this Plan.  To the extent Share
Units are credited through deferrals of Stock or Employee Contributions where
the distribution of which would be deductible by AT&T under Section 162(m)
of the Code without regard to the size of the distribution, and such deductible
Share Units are available for distribution, such Share Units shall be
distributed first.

    


    (b)  In
the event the Committee determines that continuing the issuance of Share Units
under the Plan or Stock Options under the Plan may cause the number of shares of
Stock that are to be distributed under this Plan or the number of Stock Options
(as determined pursuant to subsection (a), above) to exceed the number of
authorized shares of Stock, then in lieu of distributing Stock, the Committee
may provide after such determination and only with respect to Share Units that
have not theretofore been credited to a Share Deferral Account, that such Share
Units may be settled in cash equal to the value of the Stock that would
otherwise be distributed based on the FMV of the Stock on the date of the
distribution of such Share Unit.  The Committee may also provide after
such determination and only with respect to Stock Options that have not
theretofore been issued that such Stock Options may only be settled on a
Net-Settled basis in cash equal to the value of the Stock that would otherwise
be distributed based on the FMV of the Stock on the day of
exercise.

    


    (c) In
the event of a merger, reorganization, consolidation, recapitalization,
separation, liquidation, stock dividend, stock split, share combination, or
other change in the corporate structure of AT&T affecting the shares of
Stock (including a conversion of Stock into cash or other property), such
adjustment shall be made to the number and class of the shares of Stock which
may be delivered under the Plan (including but not limited to individual
limits), and in the number and class of and/or price of shares of Stock subject
to outstanding Options granted under the Plan, and/or in the number of
outstanding Options and Share Units, or such other adjustment determined by the
Committee, in each case as may be determined to be appropriate and equitable by
the Committee, in its sole discretion, to prevent dilution or enlargement of
rights.

    


    3.3           Claims and
Appeals.

     

     (a)           Claims.  A
person who believes that he or she is being denied a benefit to which he or she
is entitled under this Plan (hereinafter referred to as a “Claimant”) may file a
written request for such benefit with the Executive Compensation Administration
Department, setting forth his or her claim. The request must be addressed to the
AT&T Executive Compensation Administration Department at its then principal
place of business.

     

    (b)           Claim
Decision.  Upon receipt of a claim, the AT&T Executive
Compensation Administration Department shall review the claim and provide the
Claimant with a written notice of its decision within a reasonable period of
time, not to exceed ninety (90) days, after the claim is received. If the
AT&T Executive Compensation Administration Department determines that
special circumstances require an extension of time beyond the initial ninety
(90)- day claim review period, the AT&T Executive Compensation
Administration Department shall notify the Claimant in writing within the
initial ninety (90)-day period and explain the special circumstances that
require the extension and state the date by which the AT&T Executive
Compensation Administration Department expects to render its decision on the
claim. If this notice is provided, the AT&T Executive Compensation
Administration Department may take up to an additional ninety (90) days (for a
total of one hundred eighty (180) days after receipt of the claim) to render its
decision on the claim.

     

    If the
claim is denied by the AT&T Executive Compensation Administration
Department, in whole or in part, the AT&T Executive Compensation
Administration Department shall provide a written decision using language
calculated to be understood by the Claimant and setting forth:  (i)
the specific reason or reasons for such denial; (ii) specific references to
pertinent provisions of this Plan on which such denial is based; (iii) a
description of any additional material or information necessary for the Claimant
to perfect his or her claim and an explanation of why such material or such
information is necessary; (iv) a description of the Plan’s procedures for review
of denied claims and the steps to be taken if the Claimant wishes to submit the
claim for review; (v) the time limits for requesting a review of a denied claim
under this section and for conducting the review under this section ; and
(vi)  a statement of the Claimant’s right to bring a civil action
under Section 502(a) of ERISA if the claim is denied following review under this
section .

     

    (c)           Request
for Review. Within sixty (60) days after the receipt by the Claimant of the
written decision on the claim provided for in this section , the Claimant may
request in writing that the Committee review the determination of the AT&T
Executive Compensation Administration Department.  Such request must
be addressed to the Committee at the address for giving notice in this
Plan.  To assist the Claimant in deciding whether to request a review
of a denied claim or in preparing a request for review of a denied claim, a
Claimant shall be provided, upon written request to the Committee and free of
charge, reasonable access to, and copies of, all documents, records and other
information relevant to the claim.  The Claimant or his or her duly
authorized representative may, but need not, submit a statement of the issues
and comments in writing, as well as other documents, records or other
information relating to the claim for consideration by the
Committee.  If the Claimant does not request a review by the Committee
of the AT&T Executive Compensation Administration Department’s decision
within such sixty (60)-day period, the Claimant shall be barred and estopped
from challenging the determination of the AT&T Executive Compensation
Administration Department.

     

    (d)           Review
of Decision.  Within sixty (60) days after the Committee’s receipt of
a request for review, the Administrator will review the decision of the AT&T
Executive Compensation Administration Department.  If the Committee
determines that special circumstances require an extension of time beyond the
initial sixty (60)-day review period, the Committee shall notify the Claimant in
writing within the initial sixty (60)-day period and explain the special
circumstances that require the extension and state the date by which the
Committee expects to render its decision on the review of the
claim.  If this notice is provided, the Committee may take up to an
additional sixty (60) days (for a total of one hundred twenty (120) days after
receipt of the request for review) to render its decision on the review of the
claim.

     

    During
its review of the claim, the Committee shall:

     

    (1)           Take
into account all comments, documents, records, and other information submitted
by the Claimant relating to the claim, without regard to whether such
information was submitted or considered in the initial review of the claim
conducted pursuant to this section;

     

    (2)           Follow
reasonable procedures to verify that its benefit determination is made in
accordance with the applicable Plan documents; and

     

    (3)           Follow
reasonable procedures to ensure that the applicable Plan provisions are applied
to the Participant to whom the claim relates in a manner consistent with how
such provisions have been applied to other similarly-situated
Participants.

     

    After
considering all materials presented by the Claimant, the Committee will render a
decision, written in a manner designed to be understood by the
Claimant.  If the Committee denies the claim on review, the written
decision will include (i) the specific reasons for the decision; (ii) specific
references to the pertinent provisions of this Plan on which the decision is
based; (iii) a statement that the Claimant is entitled to receive, upon request
to the Committee and free of charge, reasonable access to, and copies of, all
documents, records, and other information relevant to the claim; and (iv) a
statement of the Claimant’s right to bring a civil action under Section 502(a)
of ERISA.

     

    The
Committee shall serve as the final review committee under the Plan and shall
have sole and complete discretionary authority to administer, interpret,
construe and apply the Plan provisions, and determine all questions of
administration, interpretation, construction, and application of the Plan,
including questions and determinations of eligibility, entitlement to benefits
and the type, form and amount of any payment of benefits, all in its sole and
absolute discretion.  The Committee shall further have the authority
to determine all relevant facts and related issues, and all documents, records
and other information relevant to a claim conclusively for all parties, and in
accordance with the terms of the documents or instruments governing the
Plan.  Decisions by the Committee shall be conclusive and binding on
all parties and not subject to further review.

     

    In any
case, a Participant or Beneficiary may have further rights under ERISA. The Plan
provisions require that Participants or Beneficiary pursue all claim and appeal
rights described in this section before they seek any other legal recourse
regarding claims for benefits.

     

    


    Article
4 - Contributions

    


    4.1           Election to Make
Contributions.

    (a) The
Committee shall establish dates and other conditions for participation in the
Plan and making contributions as it deems appropriate.  Except as
otherwise provided by the Committee, each year an Employee who is an Eligible
Employee as of September 30 may thereafter make an election on or prior to the
last Business Day of the immediately following November (such election shall be
cancelled if the Employee is not an Eligible Employee on the last day such an
election may be made) to contribute on a pre-tax basis, through payroll
deductions, any combination of the following:

    


    (1)  From
6% to 30% (in whole percentage increments) of the Participant’s monthly Base
Compensation, other than Annual Bonus, during the calendar year (the Plan Year
for such contributions) following the calendar year of such
election.  The Employee Contributions shall be used to acquire Share
Units to be credited to the Share Deferral Account for that Plan
Year.

    


    (2)  Up
to 95% (in whole percentage increments or limited to the target amount) of a
Short Term Incentive Award, or from 6% to 30% (in whole percentage increments)
of Annual Bonus, in each case such contributions shall be made during the second
calendar year (which is the Plan Year for such contributions) following the year
of such election, except that in 2008 a separate election may be made with
respect to contributions to be made in 2009. An Employee may make such an
election with respect to the type of Award (Short Term Incentive Award or Annual
Bonus) that the Employee is under as of the time the Employee’s eligibility to
make such election is determined.  If because of a promotion or
otherwise, the Employee receives a different type of Award instead of, or in
partial or full replacement for, the type of Award subject to the Employee’s
election for the relevant Plan Year, the election will apply to the other Award
as well, including but not limited to any individual discretionary award related
thereto.

    


    (b)  The Committee may permit
an Eligible Employee to make an election to purchase Share Units under this Plan
with compensation other than Base Compensation or Short Term Incentive Awards on
such terms and conditions as such Committee may permit from time to time,
provided that any such election is made in accordance with Section 409A of the
Code.  In no event shall an acquisition of Share Units pursuant to
this paragraph (b) or pursuant to the conversion of a right to receive Stock
into Share Units (such as through a distribution of Stock under the 2001
Incentive Plan) result in the crediting of an AT&T Matching Contribution or
Options.

    


    (c)
Notwithstanding anything to the contrary in this Plan, no election shall be
effective to the extent it would permit an Employee Contribution or distribution
to be made that is not in compliance with Section 409A of the
Code.  To the extent such election related to Employee Contributions
that complied with such statute and regulations thereunder, that portion of the
election shall remain valid, except as otherwise provided under this
Plan.

    


    (d)  To
the extent permitted by Section 409A of the Code, AT&T may refuse or
terminate, in whole or in part, any election to purchase Share Units in the Plan
at any time; provided, however, that only the Committee may take such action
with respect to persons who are Officer Level Employees.

    


    (e)  In
the event the Participant takes a hardship withdrawal pursuant to Treasury
Regulation §1.401(k)-1 from a benefit plan qualified under the Code and
sponsored by an Employer, any election to make Employee Contributions by such
Participant shall be cancelled on a prospective basis, and the Participant shall
not be permitted to make a new election with respect to Employee Contributions
that would be contributed during the then current and immediately following
calendar year.

    


    4.2           Purchase
of Share Units.

    (a)
Employee Contributions (as well as any corresponding AT&T Matching
Contributions) shall be made pursuant to a proper election, only during the
Participant’s lifetime; provided, however, with respect to Employee Contribution
elections made prior to 2007, the Employee must remain an Eligible Employee
while making any such contributions.  In the event of a Change in
Control of an Employer, subsequent compensation from the Employer may not be
contributed to the Plan.  The Employer may continue the then current
elections of the participants under a subsequent plan in order to comply with
applicable tax laws.

    


    (b)  The
number of Share Units purchased by a Participant during a calendar month shall
be found by dividing the Participant's Employee Contributions during the month
by the FMV of a share of Stock on the last day of such month.

    


    (c)  A
contribution to the Plan shall be made when the compensation – from which the
contribution is to be deducted – is to be paid (“paid,” as used in this Plan,
includes amounts contributed to the Plan that would have been paid were it not
for an election under this Plan), as determined by the relevant
Employer.   The Committee may modify or change this paragraph (c)
from time to time.

    


    4.3           Reinvestment of
Dividends.

    In the
month containing a record date for a cash dividend on Stock, each Share Deferral
Account shall be credited with that number of Share Units equal to the declared
dividend per share of Stock, multiplied by the number of Share Units held in
such Share Deferral Account as of such record date, and dividing the product by
the FMV of a share of Stock on the last day of such month.

     
 

    


    Article
5 - AT&T Matching Contributions

    


    5.1           AT&T Match.

    (a) Each month AT&T shall credit
the Participant's relevant Share Deferral Account with  the number of
“Matching Share Units” found by taking eighty percent (80%) of the Participant's
Employee Contributions from Base Compensation made to this Plan and to the Cash
Deferral Plan during the month with respect to the first six percent (6%) of the
Participant’s monthly Match Eligible Compensation (as defined below) and
dividing the resulting figure by the FMV of the Stock on the last day of such
month. The monthly “Match Eligible Compensation” shall be the sum
of:

    


    (1) the
monthly Employee Contributions from Base Compensation to this Plan and the Cash
Deferral Plan (in the aggregate, “Deferred BC”), plus

    


    (2) the
amount of the Participant’s monthly Base Compensation in excess of the Deferred
BC (“Non-Deferred BC”) but only to the extent such monthly Non-Deferred BC, when
aggregated with the Participant’s total Non-Deferred BC for prior months in such
Plan Year, as determined by the relevant Employer, exceeds the limit in effect
under Section 401(a)(17) of the Code applicable with respect to such Plan
Year.

    


    The
foregoing formula shall apply regardless of whether or not the Participant makes
contributions to a 401(k) plan.

    


    A Participant may receive Matching
Share Units in a Share Deferral Account for a particular form of compensation
only if the Participant is then making contributions to the same Share Deferral
Account; provided, however, this condition shall not apply for purposes of
determining under Section 5.1(a)(2) whether the limit described therein has been
reached.

     

    As provided in the definition of Share
Deferral Account, Matching Share Units shall be credited to the respective Share
Deferral Account that is related to the same form of Employee Contributions
(either (1) Base Compensation excluding Annual Bonus or (2) Annual
Bonus).

    


    (b) In the sole discretion of the
Committee, in the event the Committee reduces the number of Options that
AT&T issues for each Share Unit purchased, the Committee may provide for the
contribution of a Bonus Matching Contribution on such terms as the Committee
determines.  Such Bonus Matching Contribution may not exceed 20% of
the Participant’s Employee Contributions for the month.  The Bonus
Matching Contribution shall be subject to such terms and conditions as required
by the Committee and, unless otherwise provided by the Committee, to the same
vesting and distribution requirements as AT&T Matching
Contributions.

    


    5.2           Distribution of Share Units Acquired
with Matching Contributions.

    A
Participant's Matching Share Units shall be distributed in a lump sum, in
accordance with the Plan's distribution provisions, in the earlier of: (a) the
calendar year following the calendar year of the Termination of Employment of
the Participant, or (b) the calendar year in which the Participant reaches age
55, in each case only with respect to Matching Share Units relating to Share
Deferral Accounts for Plan Years before such distribution calendar
year.

    


    Matching
Share Units acquired as part of a Share Deferral Account that commences in or
after the calendar year the Employee reaches age 55 or after the calendar year
in which the Employee Terminates Employment will be distributed in the same
manner and time as other Share Units in such Share Deferral
Account.

    


    Notwithstanding
anything to the contrary in this section, Matching Share Units acquired in 2008
and later shall be distributed at the same time as other Share Units (including
those acquired with Employee Contributions) in the same Share Deferral
Account.

    


    


    Article
6 - Distributions

    


    
      	
              6.1

            	
              Distributions of Share
      Units.

            


    

    (a)  Initial
Election with Respect to a Share Deferral Account.  At the time the
Participant makes an election to make Employee Contributions with respect to a
Share Deferral Account, the Participant shall also elect the calendar year the
Share Deferral Account shall be distributed, which may be from the first through
fifth calendar years after the Plan Year the Account commenced (except as
otherwise provided in this Plan with respect to Matching Share
Units).  For example, if an Account commenced in 2005, the Participant
may elect to commence the distribution in any calendar year from and including
2006 to and including 2010.  If no timely distribution election is
made by the Participant, then the Participant will be deemed to have made an
election to have the Share Deferral Account distributed in a single installment
in the first calendar year after the calendar year the Account
commenced.  However, for purposes of Initial Elections with respect to
Plan Years prior to 2008 only, in the event the Participant Terminates
Employment, the distribution of the Share Deferral Unit shall occur in the
calendar year following the calendar year of the Participant’s Termination of
Employment unless the Employee has made an irrevocable election under (b),
below.

    


    (b)  Election
to Delay a Scheduled Distribution.  A Participant may elect to defer a
scheduled distribution of a Share Deferral Account for five (5) additional
calendar years beyond that previously elected (except as otherwise provided in
this Plan with respect to Matching Share Units).  Unless otherwise
provided by the Committee, the election to defer the distribution must be made
on or after October 1, and on or before the last Business Day of the next
following December, of the calendar year that is the second calendar year
preceding the calendar year of the relevant scheduled
distribution.  To make this election, the Participant must be an
Eligible Employee both on the September 30 immediately preceding such election
and on the last day such an election may be made.  For example, an
election to defer a scheduled distribution in 2010 must be made during the
period from October 1, 2008, through the last business day of December 2008, and
the Participant must be an Eligible Employee both on September 30, 2008, and the
last business day of December 2008.  An election to defer the
distribution of a Share Deferral Account may not be made in the same calendar
year that the election to establish the Share Deferral Account is
made.  Notwithstanding anything to the contrary in this Plan, (1) an
election to defer the distribution of a Share Deferral Account must be made at
least 12 months prior to the date of the first scheduled payment under the prior
distribution election and (2) the election shall not take effect until at least
12 months after the date on which the election is made.

    


    (c)  A
Participant’s Share Deferral Account shall be distributed to the Participant on
March 10 (or as soon thereafter as administratively practicable as determined by
AT&T) of the calendar year elected by the Participant for that
Account.  In the event the distribution is to be made to a “Specified
Employee” as a result of the Participant’s Termination of Employment (other than
as a result of a Change in Control), the distribution shall not occur until the
later of such March 10 or six (6) months after the Termination of Employment,
except it shall be distributed upon the Participant’s earlier death in
accordance with this Plan.

    


    6.2           Death
of the Participant.

    In the
event of the death of a Participant, notwithstanding anything to the contrary in
this Plan, all undistributed Share Deferral Accounts shall be distributed to the
Participant's beneficiary in accordance with the AT&T Rules for Employee
Beneficiary Designations, as the same may be amended from time to time, within
the later of 90 days following such determination or the end of the calendar
year in which determination was made.

    


    6.3           Unforeseeable Emergency
Distribution.

    If a
Participant experiences an “Unforeseeable Emergency,” the Participant may submit
a written petition to AT&T (the Committee in the case of Officer Level
Employees), to receive a partial or full distribution of his Share Deferral
Account(s).  In the event that AT&T (the Committee in the case of
Officer Level Employees), upon review of the written petition of the
Participant, determines in its sole discretion that the Participant has suffered
an “Unforeseeable Emergency,” AT&T shall make a distribution to the
Participant from the Participant’s Share Deferral Accounts (other than Matching
Share Units), on a pro-rata basis, within the later of 90 days following such
determination or the end of the calendar year in which determination was made,
subject to the following:

    


    (a)       “Unforeseeable
Emergency” shall mean a severe financial hardship to the Participant resulting
from an illness or accident of the Participant, the Participant’s legal spouse,
the Participant’s beneficiary, or the Participant’s dependent (as defined in
Code Section 152, without regard to Code Section 152(b)(1), (b)(2), and
(d)(1)(B)); loss of the Participant’s property due to casualty; or other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant, all as determined in the sole discretion
of the Committee.  Whether a Participant is faced with an
Unforeseeable Emergency permitting a distribution is to be determined based on
the relevant facts and circumstances of each case, but, in any case, a
distribution on account of Unforeseeable Emergency shall not be made to the
extent that such emergency is or may be relieved through reimbursement or
compensation from insurance or otherwise, by liquidation of the Participant’s
assets, to the extent the liquidation of such assets would not cause severe
financial hardship, or by cessation of deferrals under the Plan.

    


    (b)       The
amount of a distribution to be made because of an Unforeseeable Emergency shall
not exceed the lesser of (i) the FMV of the Participant's vested Share Deferral
Account, calculated as the date on which the amount becomes payable, as
determined by AT&T (the Committee in the case of Officer Level Employees) in
its sole discretion, and (ii) the amount reasonably necessary, as determined by
the AT&T (the Committee in the case of Officer Level Employees) in its sole
discretion, to satisfy the emergency need (which may include amounts necessary
to pay any Federal, state, local, or foreign income taxes or penalties
reasonably anticipated to result from the
distribution).  Determinations of the amount reasonably necessary to
satisfy the emergency need shall take into account any additional compensation
that is available if the plan provides for cancellation of a deferral election
upon a payment due to an Unforeseeable Emergency.  The determination
of amounts reasonably necessary to satisfy the Unforeseeable Emergency need is
not required to, but may, take into account any additional compensation that,
due to the Unforeseeable Emergency, is available under another nonqualified
deferred compensation plan but has not actually been paid, or that is available
due to the Unforeseeable Emergency under another plan that would provide for
deferred compensation except due to the application of the effective date
provisions under Treasury Regulation §1.409A-6.

    


    (c)       Upon
such distribution on account of an Unforeseeable Emergency under this Plan, any
election to make Employee Contributions by such Participant shall be immediately
cancelled, and the Participant shall not be permitted to make a new election
with respect to Employee Contributions that would be contributed during the then
current and immediately following calendar year.

    


    6.4          Ineligible
Participant.

    Notwithstanding
any other provisions of this Plan to the contrary, if AT&T receives an
opinion from counsel selected by AT&T, or a final determination is made by a
Federal, state or local government or agency, acting within its scope of
authority, to the effect that an individual’s continued participation in the
Plan would violate applicable law, then such person shall not make further
contributions to the Plan to the extent permitted by Section 409A of the
Code.

    


    
      	
              6.5

            	
              Distribution
      Process.

            


    

    A Share
Deferral Account shall be distributed under this Plan by taking the number of
Share Units comprising the Account to be distributed and converting them into an
equal number of shares of Stock.  (Once distributed, a Share Unit
shall be canceled.)

    


    


    Article
7 - Transition Provisions

    


    
      	
              7.1

            	
              Stockholder Approval
      

            


    

    The Plan
was approved by Stockholders at the 2005 Annual Meeting of
Stockholders.

    


    7.2           2005 Share Deferral
Accounts.

    Notwithstanding
Article 4 to the contrary, if an Employee is an Eligible Employee on September
30, 2004, the Employee may make an election under Article 4 on or prior to
December 15, 2004, with respect to the establishment of a Share Deferral Account
for the (i) contribution of Base Compensation and/or Short Term Incentive Awards
paid during the period from January 1, 2005, through January 15, 2006, which
shall be the Plan Year for such Share Deferral Account; and/or (ii) the
conversion of a distribution of Stock that would be made during the same Plan
Year pursuant to the 2001 Incentive Plan into an equal number of Share Units, so
long as such conversion would not cause the recognition of income for Federal
income tax purposes in respect of such distribution of Stock prior to
distribution of Share Units under this Plan.

    


    


    7.3           2007
Amendments.

    (a)
Amendments made to the Plan on November 15, 2007, shall be effective January 1,
2008. except for amendments to this Article 7, which shall be effective upon
adoption.  Any Participants electing prior to November 15, 2007, to
make Employee Contributions in 2008 shall have their elections canceled if they
do not consent by December 14, 2007, to all prior amendments to this Plan and to
the Cash Deferral Plan.  Subject to the foregoing consent
requirements, all Employee Contribution elections made prior to 2008, including
but not limited to elections to contribute Stock that would be distributed under
the 2001 Incentive Plan or a successor plan, shall remain in force, subject to
all other terms of the amended Plan. In addition, all unvested but not forfeited
Matching Share Units shall vest on November 15, 2007.  Matching Shares
that have been forfeited shall not be reinstated, and no amendment to this Plan
shall be interpreted as reinstating such forfeitures.

    


     (b)  Not
withstanding anything to the contrary in this Plan, a Participant who as of
December 29, 2006, was eligible for an additional payment pursuant to Section 4A
of the BellSouth Corporation Executive Incentive Award Deferral Plan shall not,
with respect to the 2008 Plan Year, receive Matching Share Units on Base
Compensation that exceeds $230,000.

    


    7.4           2008
Amendments.

    For Plan Years prior to 2009,
Participants who, at the time of the determination of their eligibility to
participate in an Account, are paid through a “sales plan” involving the use of
commissions may elect to contribute up to 40% of Base
Compensation.  For the 2008 Plan Year, only Salary and Short Term
Incentive Awards paid after Termination of Employment may be contributed to the
Plan.

    


    


    Article
8 - Options

    


    8.1           Grants.

    Options
may be issued in definitive form or recorded on the books and records of
AT&T for the account of the Participant, at the discretion of
AT&T.  If AT&T elects not to issue the Options in definitive
form, they shall be deemed issued, and the Participants shall have all rights
incident thereto as if they were issued on the dates provided herein, without
further action on the part of AT&T or the Participant.  In
addition to the terms herein, all Options shall be subject to such additional
provisions and limitations as provided in any Administrative Procedures adopted
by the Committee prior to the issuance of such Options.  The number of
Options issued to a Participant shall be reflected on the Participant's annual
statement of account.

    


    8.2           Term of Options.

    The
Options may only be exercised:  (a) after the earlier of (i) the
expiration of one (1) year from date of issue or (ii) the Participant's
Termination of Employment, and (b) no later than the tenth (10th)
anniversary of their issue; and Options shall be subject to earlier termination
as provided herein.

    


    8.3           Exercise Price.

    The
Exercise Price of an Option shall be the FMV of the Stock on the date of
issuance of the Option, and an Option may not be repriced.

    


    8.4           Issuance of
Options.

    


    (a)  For
each Share Deferral Account established by a Participant:

    


    (1)  on
June 15 of the Plan Year for the Share Deferral Account, the Participant shall
receive two (2) Options for each Share Unit acquired by the Participant as part
of such Share Deferral Account during the immediately preceding January through
May period with Employee Contributions of Base Compensation and/or Short Term
Incentive Award.  A fractional number of Options shall be rounded up
to the next whole number.

    


    (2)  on
the February 15 immediately following the Plan Year for the Share Deferral
Account, a Participant shall receive:

     

    (i)  two (2)
Options for each Share Unit acquired by the Participant as part of such Share
Deferral Account during the immediately preceding June through the remainder of
the relevant Plan Year with Employee Contributions of Base Compensation and/or
Short Term Incentive Award; and

    


    (ii)      two
(2) Options for each Share Unit acquired prior to such date by the Participant
with dividend equivalents that were derived, directly or indirectly (such as
dividend equivalents paid on Share Units acquired with dividend equivalents),
from Share Units acquired with Employee Contributions as part of such Share
Deferral Account.

    


    (b) A
fractional number of Options shall be rounded up to the next whole
number.

    


    (c) If
Stock is not traded on the NYSE on any of the foregoing Option issuance dates,
then the Options shall not be issued until the next such day on which Stock is
so traded.

    


    (d) If a
Participant Terminates Employment other than (i) while Retirement eligible or
(ii) because of death or Disability, no further Options shall be issued to or
with respect to such Participant.  In the event of re-Employment
following a Termination of Employment, the preceding sentence shall not apply to
those Options resulting from participation in the Plan after such re-Employment
until a subsequent Termination of Employment.

    


    (e) No
more than 400,000 Options shall be issued to any individual under this Plan
during a calendar year.  No Share Unit may be counted more than once
for the issuance of Options.

    


    (f) The
Committee may, in its sole discretion, at any time, increase or lower the number
of Options that are to be issued for each Share Unit acquired, not to exceed two
(2) Options per Share Unit purchased.  However, if the Committee
lowers the number of Options, then such change shall only be effective with
respect to the next Share Deferral Account a Participant may elect to
establish.

    


    (g) The
Committee may also, at any time and in any manner, limit the number of Options
which may be acquired as a result of the Short Term Incentive Award being
contributed to the Plan.  Further, except as otherwise provided by the
Committee, in determining the number of Options to be issued to a Participant
with respect to a Participant's contribution of a Short Term Incentive Award to
the Plan and subsequent crediting of Share Units, Options may be issued only
with respect to an amount which does not exceed the target amount of such award
(or such other portion of the award as may be determined by the
Committee).  Where a Participant’s election to contribute a Short Term
Incentive Award to the Plan becomes applicable to Annual Bonus, the above
limitation on options shall apply to the contribution of Annual Bonus as though
it were a Short Term Incentive Award.

    


    (h) No
options shall be issued to or in respect of a Participant for a particular
issuance, unless at least ten (10) Options will be issued to that
Participant.

    


    8.5           Exercise and Payment of
Options.

    Options
shall be exercised by providing notice to the designated agent selected by
AT&T (if no such agent has been designated, then to AT&T), in the manner
and form determined by AT&T, which notice shall be irrevocable, setting
forth the exact number of shares of Stock with respect to which the Option is
being exercised and including with such notice payment of the Exercise
Price.  When Options have been transferred, AT&T or its designated
agent may require appropriate documentation that the person or persons
exercising the Option, if other than the Participant, has the right to exercise
the Option.  No Option may be exercised with respect to a fraction of
a share of Stock.

    


    Exercises
of Options may be effected only on days and during the hours that the New York
Stock Exchange is open for regular trading or as otherwise provided or limited
by AT&T.  If an Option expires on a day or at a time when
exercises are not permitted, then the Options may be exercised no later than the
immediately preceding date and time that the Options were
exercisable.

    


    The
Exercise Price shall be paid in full at the time of exercise.  No
Stock shall be issued or transferred until full payment has been received
therefore.

    


    Payment
may be made:

    


    (a) in
cash, or

    


    (b)
unless otherwise provided by the Committee at any time, and subject to such
additional terms and conditions and/or modifications as AT&T may impose from
time to time, and further subject to suspension or termination of this provision
by AT&T at any time, by:

    


    (i) delivery
of Stock owned by the Participant in partial (if in partial payment, then
together with cash) or full payment; provided, however, as a condition to paying
any part of the Exercise Price in Stock, at the time of exercise of the Option,
the Participant must establish to the satisfaction of AT&T that the Stock
tendered to AT&T must have been held by the Participant for a minimum of six
(6) months preceding the tender; or

    


    (ii) if
AT&T has designated a stockbroker to act as AT&T's agent to process
Option exercises, issuance of an exercise notice to such stockbroker together
with instructions irrevocably instructing the stockbroker:  (A) to
immediately sell (which shall include an exercise notice that becomes effective
upon execution of a sell order) a sufficient portion of the Stock to pay the
Exercise Price of the Options being exercised and the required tax withholding,
and (B) to deliver on the settlement date the portion of the proceeds of the
sale equal to the Exercise Price and tax withholding to AT&T.  In
the event the stockbroker sells any Stock on behalf of a Participant, the
stockbroker shall be acting solely as the agent of the Participant, and AT&T
disclaims any responsibility for the actions of the stockbroker in making any
such sales.  No Stock shall be issued until the settlement date and
until the proceeds (equal to the Exercise Price and tax withholding) are paid to
AT&T.

    


    If
payment is made by the delivery of Stock, the value of the Stock delivered shall
be equal to the FMV of the Stock on the day preceding the date of exercise of
the Option.

    


    Restricted
Stock may not be used to pay the Option exercise price.

    


    8.6           Restrictions on Exercise and
Transfer.

    No Option
shall be transferable except: (a) upon the death of a Participant in accordance
with AT&T's Rules for Employee Beneficiary Designations, as the same may be
amended from time to time; and (b) in the case of any holder after the
Participant's death, only by will or by the laws of descent and
distribution.  During the Participant's lifetime, the Participant's
Options shall be exercisable only by the Participant or by the Participant's
guardian or legal representative.  After the death of the Participant,
an Option shall only be exercised by the holder thereof (including but not
limited to an executor or administrator of a decedent's estate) or his or her
guardian or legal representative.  In each such case the Option holder
shall be considered a Participant for the limited purpose of exercising such
Options.

    


    


    8.7           Termination of
Employment.

    (a)  Not Retirement
Eligible.  Unless otherwise provided by the Committee, if a
Participant Terminates Employment while not Retirement eligible, a Participant's
Options may be exercised, to the extent then exercisable:

    


    (i) if
such Termination of Employment is by reason of death or Disability, then for a
period of three (3) years from the date of such Termination of Employment or
until the expiration of the stated term of such Option, whichever period is
shorter; or

    


    (ii) if
such Termination of Employment is for any other reason, then for a period of one
(1) year from the date of such Termination of Employment or until the expiration
of the stated term of such Option, whichever period is shorter.

    


    (b)  Retirement
Eligible.  Unless otherwise provided by the Committee, if a
Participant Terminates Employment while Retirement eligible, the Participant's
Option may be exercised, to the extent then exercisable:  (i) for a
period of five (5) years from the date of Retirement or (ii) until the
expiration of the stated term of such Option, whichever period is
shorter.

    


    (c) Re-Employment of a Participant
after a Termination of Employment shall have no effect on the periods during
which Options resulting from the prior Employment may be
exercised.  For example, if the Option exercise period has been
shortened because of the prior Termination of Employment, it shall not be
extended because of the re-Employment.

    


    (d)  Notwithstanding any
other definition of Termination of Employment under this Plan, for purposes of
this Article 8 – Options only, a Termination of Employment shall mean the
cessation of the Employee being employed by any corporation, partnership,
venture or other entity in which AT&T holds, directly or indirectly, a 50%
or greater ownership interest, including but not limited to where AT&T
ceases to hold such interest in the employing company.  In addition,
the definition of Retirement for purposes of this Article 8 shall use the
immediately foregoing definition of Termination of Employment in  lieu
of any other definition.

    


    


    


    Article 9 - Discontinuation,
Termination, Amendment.

    


    9.1           AT&T's Right to Discontinue
Offering Share Units.

    The
Committee may at any time discontinue offerings of Share Units under the
Plan.  Any such discontinuance shall have no effect upon existing
Share Units or the terms or provisions of this Plan as applicable to such Share
Units.

    


    9.2           AT&T's Right to Terminate
Plan.

    The
Committee may terminate the Plan at any time.  Upon termination of the
Plan, contributions shall no longer be made under the Plan.

    


    After
termination of the Plan, Participants shall continue to earn dividend
equivalents in the form of Share Units on undistributed Share Units and shall
continue to receive all distributions under this Plan at such time as provided
in and pursuant to the terms and conditions of Participant's elections and this
Plan.  Notwithstanding the foregoing, the termination of the Plan
shall be made solely in accordance with Section 409A of the Code and in no event
shall cause the accelerated distribution of any Account unless such termination
is effected in accordance with Section 409A of the Code.

    


    
      	
              9.3

            	
              Amendment.

            


    

    The
Committee may at any time amend the Plan in whole or in part including but not
limited to changing the formulas for determining the amount of AT&T Matching
Contributions under Article 5 or decreasing the number of Options to be issued
under Article 8; provided, however, that no amendment, including but not limited
to an amendment to this section, shall be effective, without the consent of a
Participant, to alter, to the material detriment of such Participant, a Share
Deferral Account of the Participant, other than as provided elsewhere in this
section.   For purposes of this section, an alteration to the
material detriment of a Participant shall include, but not be limited to, a
material reduction in the period of time over which Stock may be distributed to
a Participant, any reduction in the Participant's number of vested Share Units
or Options, or an increase in the Exercise Price or decrease in the term of an
Option.   Any such consent may be in a writing, telecopy, or
e-mail or in another electronic format. An election to acquire Share Units with
Employee Contributions shall be conclusively deemed to be the consent of the
Participant to any and all amendments to the Plan prior to such election, and
such consent shall be a condition to making any election with respect to
Employee Contributions.

    


    Notwithstanding
anything to the contrary contained in this section of the Plan, the Committee
may modify this Plan with respect to any person subject to the provisions of
Section 16 of the Securities Exchange Act of 1934, as amended (“Exchange Act”)
to place additional restrictions on the exercise of any Option or the transfer
of any Stock not yet issued under the Plan.

    


    The Plan
is established in order to provide deferred compensation to a select group of
management and highly compensated employees with in the meaning of Sections
201(2) and 301(a)(3) of ERISA. To the extent legally required, the Code and
ERISA shall govern the Plan, and if any provision hereof is in violation of an
applicable requirement thereof, the Company reserves the right to retroactively
amend the Plan to comply therewith to the extent permitted under the Code and
ERISA.  The Company also reserves the right to make such other changes
as may facilitate implementation of Section 409A of the
Code.  Provided, however, that in no event shall any such amendments
be made in violation of the requirements of Section 409A of the
Code.

    


    


    Article
10 – Miscellaneous.

    


    10.1           Tax Withholding.

    Upon
distribution of Stock, including but not limited to, shares of Stock issued upon
the exercise of an Option, AT&T shall withhold shares of Stock sufficient in
value, using the FMV on the date determined by AT&T to be used to value the
Stock for tax purposes, to satisfy the minimum amount of Federal, state, and
local taxes required by law to be withheld as a result of such
distribution.

    


    Any
fractional share of Stock payable to a Participant shall be withheld as
additional Federal withholding, or, at the option of AT&T, paid in cash to
the Participant.

    


    Unless
otherwise determined by the Committee, when the method of payment for the
Exercise Price is from the sale by a stockbroker pursuant to Section 8.5,
hereof, of the Stock acquired through the Option exercise, then the tax
withholding shall be satisfied out of the proceeds.  For
administrative purposes in determining the amount of taxes due, the sale price
of such Stock shall be deemed to be the FMV of the Stock.

    


    10.2           Elections and
Notices.

    Notwithstanding
anything to the contrary contained in this Plan, all elections and notices of
every kind under this Plan shall be made on forms prepared by AT&T or the
General Counsel, Secretary or Assistant Secretary, or their respective delegates
or shall be made in such other manner as permitted or required by AT&T or
the General Counsel, Secretary or Assistant Secretary, or their respective
delegates, including through electronic means, over the Internet or
otherwise.  An election shall be deemed made when received by AT&T
(or its designated agent, but only in cases where the designated agent has been
appointed for the purpose of receiving such election), which may waive any
defects in form.  Unless made irrevocable by the electing person, each
election with regard to making Employee Contributions or distributions of Share
Deferral Accounts shall become irrevocable at the close of business on the last
day to make such election. AT&T may limit the time an election may be made
in advance of any deadline.

    


    If not otherwise specified by this Plan
or AT&T, any notice or filing required or permitted to be given to AT&T
under the Plan shall be delivered to the principal office of AT&T, directed
to the attention of the Senior Executive Vice President in charge of Human
Resources for AT&T or his or her successor.  Such notice shall be
deemed given on the date of delivery.

    


    Notice to
the Participant shall be deemed given when mailed (or sent by telecopy) to the
Participant's work or home address as shown on the records of AT&T or, at
the option of AT&T, to the Participant's e-mail address as shown on the
records of AT&T.  It is the Participant's responsibility to ensure
that the Participant's addresses are kept up to date on the records of
AT&T.  In the case of notices affecting multiple Participants, the
notices may be given by general distribution at the Participants' work
locations.

    


    By
participating in the Plan, each Participant agrees that AT&T may provide any
documents required or permitted under the Federal or state securities laws,
including but not limited to the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, by e-mail, by e-mail attachment, or
by notice by e-mail of electronic delivery through AT&T's Internet Web site
or by other electronic means.

    


    10.3           Unsecured General
Creditor.

    Participants
and their beneficiaries, heirs, successors, and assigns shall have no legal or
equitable rights, interest, or claims in any property or assets of any
Employer.  No assets of any Employer shall be held under any trust for
the benefit of Participants, their beneficiaries, heirs, successors, or assigns,
or held in any way as collateral security for the fulfilling of the obligations
of any Employer under this Plan.  Any and all of each Employer's
assets shall be, and remain, the general, unpledged, unrestricted assets of such
Employer.  The only obligation of an Employer under the Plan shall be
merely that of an unfunded and unsecured promise of AT&T to distribute
shares of Stock corresponding to Share Units and Options, under the
Plan.

     
 

    10.4           Non-Assignability.

    Neither a
Participant nor any other person shall have any right to commute, sell, assign,
transfer, pledge, anticipate, mortgage, or otherwise encumber, transfer,
hypothecate or convey in advance of actual receipt, shares of Stock
corresponding to Share Units under the Plan, if any, or any part thereof, which
are, and all rights to which are, expressly declared to be unassignable and
non-transferable.  No part of the Stock distributable shall, prior to
actual distribution, be subject to seizure or sequestration for the payment of
any debts, judgments, alimony or separate maintenance owed by a Participant or
any other person, nor be transferable by operation of law in the event of a
Participant's or any other person's bankruptcy or insolvency.

    


    10.5           Employment Not
Guaranteed.

    Nothing
contained in this Plan nor any action taken hereunder shall be construed as a
contract of employment or as giving any employee any right to be retained in the
employ of an Employer or to serve as a director.

    


    10.6           Errors.

    At any
time AT&T or an Employer may correct any error made under the Plan without
prejudice to AT&T or any Employer.  Neither AT&T nor any
Employer shall be liable for any damages resulting from failure to timely allow
any contribution to be made to the Plan or for any damages resulting from the
correction of, or a delay in correcting, any error made under the
Plan.  In no event shall AT&T or any Employer be liable for
consequential or incidental damages arising out of a failure to comply with the
terms of the Plan.

    


    
      	
              10.7

            	
              Captions.

            


    

    The
captions of the articles, sections, and paragraphs of this Plan are for
convenience only and shall not control nor affect the meaning or construction of
any of its provisions.

    


    10.8        Governing Law.

    To the
extent not preempted by Federal law, the Plan, and all benefits and agreements
hereunder, and any and all disputes in connection therewith, shall be governed
by and construed in accordance with the substantive laws of the State of Texas,
without regard to conflict or choice of law principles which might otherwise
refer the construction, interpretation or enforceability of this Plan to the
substantive law of another jurisdiction.

    


    Because
benefits under the Plan are granted in Texas, records relating to the Plan and
benefits thereunder are located in Texas, and the Plan and benefits thereunder
are administered in Texas, AT&T and the Participant under this Plan, for
themselves and their successors and assigns, irrevocably submit to the exclusive
and sole jurisdiction and venue of the state or Federal courts of Texas with
respect to any and all disputes arising out of or relating to this Plan, the
subject matter of this Plan or any benefits under this Plan, including but not
limited to any disputes arising out of or relating to the interpretation and
enforceability of any benefits or the terms and conditions of this
Plan.  To achieve certainty regarding the appropriate forum in which
to prosecute and defend actions arising out of or relating to this Plan, and to
ensure consistency in application and interpretation of the Governing Law to the
Plan, the parties agree that (a) sole and exclusive appropriate venue for any
such action shall be an appropriate Federal or state court in Dallas County,
Texas, and no other, (b) all claims with respect to any such action shall be
heard and determined exclusively in such Texas court, and no other, (c) such
Texas court shall have sole and exclusive jurisdiction over the person of such
parties and over the subject matter of any dispute relating hereto and (d) that
the parties waive any and all objections and defenses to bringing any such
action before such Texas court, including but not limited to those relating to
lack of personal jurisdiction, improper venue or forum non
conveniens.

    


    10.9        Plan to Comply with Section
409A.

    In the
event any provision of this Plan is held invalid, void, or unenforceable, the
same shall not affect, in any respect whatsoever, the validity of any other
provision of this Plan.  Notwithstanding any provision to the contrary
in this Plan, each provision in this Plan shall be interpreted to permit the
deferral of compensation in accordance with Section 409A of the Code and any
provision that would conflict with such requirements shall not be valid or
enforceable.

    


    10.10      Successors and
Assigns.

    This Plan
shall be binding upon AT&T and its successors and assigns.

    


    10.11     
Loyalty Conditions for Officer Level Employees and Senior
Managers

    


    Each Officer Level Employee or a Senior
Manager who elects to make Employee Contributions under Section 4.1 of this Plan
shall be subject to the agreements and conditions of this section.

    


    (a) By making
an Employee Contribution election under Section 4.1 of this Plan after September
1, 2009, a Participant acknowledges that AT&T would be unwilling to provide
for such an election but for the loyalty conditions and covenants set forth in
this section, and that the conditions and covenants herein are a material
inducement to AT&T’s willingness to sponsor the Plan and to offer Plan
benefits for the Participants.  Accordingly, as a condition to making
an Employee Contribution election under Section 4.1 of this Plan after September
1, 2009,  each such electing Participant is deemed to agree that he
shall not, without obtaining the written consent of the Committee in advance,
participate in activities that constitute engaging in competition with AT&T
or engaging in conduct disloyal to AT&T, as those terms are defined in this
section.

     

    (b) Definitions.  For
purposes of this section and of the Plan generally:

     

    (i) an
“Employer Business” shall mean AT&T Inc. and any of its Subsidiaries, or any
business in which they or any affiliate of theirs has a substantial ownership or
joint venture interest;

     

    (ii) “engaging
in competition with AT&T” shall mean, while employed by AT&T or any of
its Subsidiaries, or within two (2) years after Participant’s Termination of
Employment, engaging by the Participant in any business or activity in all or
any portion of the same geographical market where the same or substantially
similar business or activity is being carried on by an Employer
Business.  “Engaging in competition with AT&T” shall not include
owning a non-substantial publicly traded interest as a shareholder in a business
that competes with an Employer Business.  “Engaging in competition
with AT&T” shall include representing or providing consulting services to,
or being an employee of, any person or entity that is engaged in competition
with any Employer Business or that takes a position adverse to any Employer
Business.

     

    (iii) “engaging
in conduct disloyal to AT&T” means, while employed by AT&T or any of its
Subsidiaries, or within two (2) years after Participant’s Termination of
Employment, (i) soliciting for employment or hire, whether as an employee or as
an independent contractor, for any business in competition with an Employer
Business, any person employed by AT&T or any of its Subsidiaries during the
one (1) year prior to the Participant’s Termination of Employment, whether or
not acceptance of such position would constitute a breach of such person’s
contractual obligations to AT&T or any of its Subsidiaries; (ii) soliciting,
encouraging, or inducing any vendor or supplier with which Participant had
business contact on behalf of any Employer Business during the two (2) years
prior to the Participant’s Termination of Employment (regardless of the reason
for that termination) to terminate, discontinue, renegotiate, reduce, or
otherwise cease or modify its relationship with AT&T or any of its
Subsidiaries; or (iii) soliciting, encouraging, or inducing any customer or
active prospective customer with whom Participant had business contact, whether
in person or by other media (“Customer”), on behalf of any Employer Business
during the two (2) years prior to the Participant’s Termination of Employment
(regardless of the reason for that termination), to terminate, discontinue,
renegotiate, reduce, or otherwise cease or modify its relationship with any
Employer Business, or to purchase competing goods or services from a business
competing with any Employer Business, or accepting or servicing business from
such Customer on behalf of himself or any other business.  “Engaging
in conduct disloyal to AT&T” shall also mean, disclosing Confidential
Information to any third party or using Confidential Information, other than for
an Employer Business, or failing to return any Confidential Information to the
Employer Business following termination of employment.

     

    (iv) “Confidential
Information” shall mean all information belonging to, or otherwise relating to,
an Employer Business, which is not generally known, regardless of the manner in
which it is stored or conveyed to Participant, and which the Employer Business
has taken reasonable measures under the circumstances to protect from
unauthorized use or disclosure.  Confidential Information includes
trade secrets as well as other proprietary knowledge, information, know-how, and
non-public intellectual property rights, including unpublished or pending patent
applications and all related patent rights, formulae, processes, discoveries,
improvements, ideas, conceptions, compilations of data, and data, whether or not
patentable or copyrightable and whether or not it has been conceived,
originated, discovered, or developed in whole or in part by
Participant.  For example, Confidential Information includes, but is
not limited to, information concerning the Employer Business’ business plans,
budgets, operations, products, strategies, marketing, sales, inventions,
designs, costs, legal strategies, finances, employees, customers, prospective
customers, licensees, or licensors; information received from third parties
under confidential conditions; or other valuable financial, commercial,
business, technical or marketing information concerning the Employer Business,
or any of the products or services made, developed or sold by the Employer
Business.  Confidential Information does not include information that
(i) was generally known to the public at the time of disclosure; (ii) was
lawfully received by Participant from a third party; (iii) was known to
Participant prior to receipt from the Employer Business; or (iv) was
independently developed by Participant or independent third parties; in each of
the foregoing circumstances, this exception applies only if such public
knowledge or possession by an independent third party was without breach by
Participant or any third party of any obligation of confidentiality or non-use,
including but not limited to the obligations and restrictions set forth in this
Plan.

     

    (c) Equitable
Relief.    The
parties recognize that any Participant’s breach of any of the covenants in this
section will cause irreparable injury to the AT&T, will represent a failure
of the consideration under which AT&T (in its capacity as creator and
sponsor of the Plan) agreed to provide the Participant with the opportunity to
receive Plan benefits, and that monetary damages would not provide AT&T with
an adequate or complete remedy that would warrant AT&T’s continued
sponsorship of the Plan (including the accrual or granting of Share Units,
Matching Share Units and Options) for all Participants.  Accordingly,
in the event of a Participant’s actual or threatened breach of the covenants in
this section, the Committee, in addition to all other rights and acting as a
fiduciary under ERISA on behalf of all Participants, shall have a fiduciary duty
(in order to assure that AT&T receives fair and promised consideration for
its continued Plan sponsorship and funding) to seek an injunction restraining
the Participant from breaching the covenants in this
Section.  AT&T shall pay for any Plan expenses that the Committee
incurs hereunder, and shall be entitled to recover from the Participant its
reasonable attorneys’ fees and costs incurred in obtaining such injunctive
remedies.

     

    (d) Uniform
Enforcement.  In recognition of AT&T’s need for nationally uniform
standards for the Plan administration, it is an absolute condition in
consideration of any Participant’s ability to make Employee Contribution
elections under Section 4.1 of this Plan after September 1, 2009, that each and
all of the following conditions apply to all such electing
Participants:

     

    (i) ERISA
shall control all issues and controversies hereunder, and the Committee shall
serve for purposes hereof as a “fiduciary” of the Plan and its “named fiduciary”
within the meaning of ERISA.

     

    (ii) All
litigation between the parties relating to this section shall occur in federal
court, which shall have exclusive jurisdiction; any such litigation shall be
held in the United States District Court for the Northern District of Texas, and
the only remedies available with respect to the Plan shall be those provided
under ERISA.