Exhibit 10-b


 


AT&T INC.


 


STOCK PURCHASE AND DEFERRAL PLAN


 


Adopted November 19, 2004


As amended through July 25, 2019


 


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 



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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 



 2 










    




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(b) 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 76,000,000.  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).  In determining the number of authorized shares
remaining available for issuance, shares withheld for taxes in a distribution
shall not be considered issued and shall not reduce the number of authorized shares. 
When an Option is exercised, the authorized shares of Stock that may be issued
pursuant to an Option exercise shall be reduced by the number of Options so
exercised.  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 stopped from
challenging the determination of the AT&T Executive Compensation
Administration Department. 





 5 







(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 of Annual Bonus or Short Term Incentive Award during 2020 by such
Participant shall be cancelled on a prospective basis.  


 


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 the percentage of company
matching contribution that the Employee is eligible to receive under the
AT&T Retirement Savings Plan (or such other 401(k) plan of an Employer
that the Employee is eligible to participate in) 



multiplied
by 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 (such resulting amount shall be the “Matching
Contribution”).  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
distribution requirements as Matching Contributions.  Pursuant to the foregoing
authority and until otherwise provided by the Committee, effective for Share
Accounts created pursuant to Employee Contribution elections where such
elections are made after January 1, 2010,  AT&T shall make Bonus Matching
Contributions equal to 20% of the Participant’s monthly Employee Contributions
from each of Base Compensation and Short Term Incentive Award (not to exceed
the target amount of such award, which limit shall be pro rated for any partial
year award).  Such Bonus Matching Contribution shall be used to purchase that
number of Matching Share Units found by dividing the relevant Bonus Matching
Contribution for the month by the FMV of the Stock on the last day of such
month.


 


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.  


 


(b)  Election to Delay a
Scheduled Distribution.  


(i)        
 An Employee 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 AT&T, the election to defer the
distribution must be made on or after October 16, 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.    


(ii)        To
make this election, the Participant must be an Employee that is, as determined
by AT&T, a member of Employer’s “select group of management or highly
compensated employees” within the meaning of ERISA on the September 30
immediately preceding such election and on the day of such election.  


(iii)      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: 


a.       
 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 


b.        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          Conflict of Interest
Distribution.


                AT&T may in its sole discretion
accelerate a distribution(s) to the Participant, provided he or she is no
longer actively employed by AT&T: (a) to the extent necessary for any
Federal officer or employee in the executive branch to comply with an ethics
agreement with the Federal government or (b) to the extent reasonably necessary
to avoid the violation of an applicable






 10 







Federal, state, local, or foreign ethics law or conflicts
of interest law (including where such payment is reasonably necessary to permit
the service provider to participate in activities in the normal course of his
or her position in which the service provider would otherwise not be able to
participate under an applicable rule).  Any such distribution may only be made
in accordance with Section 409A of the Code and the regulations thereunder.


 


6.6          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 pursuant to an Employee Contribution election where such election
was made prior to January 1, 2010:


 


(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) electing a Stock-Settled Exercise on or after February
1, 2013.  Upon exercise of Options through a Stock-Settled Exercise, the
Participant shall receive that number of shares of Stock found by (1)
subtracting the Exercise Price of an Option being exercised (on a per share
basis) from the FMV of the Stock as of the immediately preceding day that the
Stock was traded on the NYSE, (2) multiplying the difference by the number of
Options being exercised, and (3) dividing the result by the same FMV.  For
example, a Participant exercises 1,000 Options with an Exercise Price of $30 (exercises
may only occur on a day when the NYSE is open for regular trading) and the FMV
for the immediately preceding trading day was $40.  In that case, the
Participant would receive his $10,000 profit in the form of 250 shares of
Stock, subject to tax withholding and any other costs provided under this Plan.


 


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.


 


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.






 14 







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. Employment taxes incurred by a Participant on
Employee Contributions and on Matching Contributions shall be withheld from the
Participant’s regular wages or paid in cash by the Participant as they become
due.


 


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 (1)
on forms prepared by AT&T or the General Counsel, Secretary or Assistant
Secretary, or their respective delegates, or (2) 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 the Employee is permitted
to make such election. Notwithstanding anything to the contrary in this Plan,
AT&T may place additional limits on the times during which elections may be
made to make contribution(s) or to delay distribution(s). 


 


                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 



 16 







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.