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    CHANGE IN CONTROL SEVERANCE
PLAN

    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    Effective January 1,
2007

    Amended through June 26,
2008


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    AT&T INC.

    CHANGE IN CONTROL SEVERANCE
PLAN

     

     

    Article 1 -
Purpose

     

    The
purpose of the AT&T Inc. Change in Control Severance Plan (the “Plan”) is to foster the
continuous employment of key management personnel of the Company and its
Subsidiaries and to reinforce and encourage their continued attention and
dedication to their duties in the face of potentially disturbing circumstances
arising from the possibility of a Change in Control (as defined in Section 2) of
the Company, although no such change is now apparent or
contemplated.

     

    Article 2  -
Definitions

     

    As used
in this Plan, the following terms shall have the respective meanings set forth
below, and, when the meaning is intended, the initial letter of the word is
capitalized:

     

    “Base Salary”
means the Participant’s annual rate of base salary in effect immediately prior
to the occurrence of the circumstance giving rise to the Participant’s
Termination of Employment, or, if greater, the Participant’s annual rate of base
salary in effect immediately prior to the Change in Control. 

     

    “Board” means
the Board of Directors of the Company and, after a Change in Control, the “board
of directors” of the Ultimate Parent (as defined below under Change in
Control). 

     

    “Bonus Amount”
means a Participant’s target annual bonus for the fiscal year in which the
Change in Control occurs or in which Participant’s Date of Termination occurs,
whichever is greater; provided that, if a target annual bonus has not been
established for the applicable fiscal year, then the target annual bonus
established for the preceding fiscal year shall be substituted in lieu
thereof.

     

    “Cause” means
(i) the willful and continued failure by a Participant to substantially perform
his or her duties with the Company and its Subsidiaries (other than any such
failure resulting from his or her incapacity due to physical or mental
impairment, or any such actual or anticipated failure after the issuance of a
notice of termination by him or her for Good Reason) after a written demand for
substantial performance is delivered to the Participant by the Company which
demand specifically identifies the manner in which the Company believes that he
or she has not substantially performed his or her duties, or (ii) the willful
engaging by a Participant in conduct which is demonstrably and materially
injurious to the Company or any Subsidiary, monetarily or
otherwise.  For purposes of this definition, no act, or failure to
act, on a Participant’s part shall be deemed “willful” unless done, or omitted
to be done, by the Participant not in good faith and without reasonable belief
that his or her action or omission was in the best interest of the Company and
its Subsidiaries.  Notwithstanding the foregoing, a Participant shall
not be deemed to have been terminated for Cause unless and until there shall
have been delivered to him or her a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the entire membership
of the Board at a meeting of the Board called and held for such purpose (after
reasonable notice to the Participant and an opportunity for him or her, together
with counsel, to be heard before the Board), finding that in the good faith
opinion of the Board the Participant was guilty of the conduct set forth above
in clauses (i) or (ii) of the first sentence of this definition and specifying
the particulars thereof in detail.

     

    
      
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    “Change in
Control” shall be deemed to have occurred if (i) any “person” (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned directly or indirectly by the shareowners of
the Company in substantially the same proportions as their ownership of stock of
the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3
under said Act), directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the total voting power represented
by the Company’s then outstanding voting securities, or (ii) during any period
of two (2) consecutive years, individuals who at the beginning of such period
constitute the Board of Directors and any new Director whose election by the
Board of Directors or nomination for election by the Company’s shareowners was
approved by a vote of at least two-thirds (2/3) of the Directors then still in
office who either were Directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the consummation of a merger
or consolidation of the Company with any other corporation, other than a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation (such post-merger
surviving entity the "Ultimate
Parent"), or the shareowners of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company’s assets.

     

    “Committee”
means the Human Resources Committee of the Board.

     

    “Company” means
AT&T Inc.

     

    “Date of
Termination” means the date of the Participant's Termination of
Employment with the Company and its Subsidiaries as determined under Section 4.1
of the Plan.

     

    “Disability”
has the meaning ascribed under the relevant Employer’s long-term disability
plan.

     

    “Employee”
means any person employed as an employee by an Employer and paid on an
Employer’s employee 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 the Employer.  For purposes of
this Plan, a person on a Leave of Absence who otherwise would be an Employee
shall be deemed to be an Employee.

     

    
      
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    “Employer”
means the Company or any of its Subsidiaries provided that, if an entity ceases
to be a Subsidiary during the Termination Period, such entity shall continue to
be an Employer and the Employee shall continue to be a Participant until the
second anniversary of the Change in Control and, notwithstanding any other
provision to the contrary, any benefits under the Plan shall be paid or provided
by the Company.

     

    “Exchange Act”
means the Securities Exchange Act of 1934.

     

    “Executive
Officer” means a person who has been identified by the Company as
an executive officer under Rule 3b-7 of the Securities Exchange Act of 1934
prior to a Change in Control.

     

    “Good Reason”
means, without the Participant’s express written consent, the occurrence of any
of the following events after a Change in Control:  (i) the assignment
to the Participant of any duties inconsistent with his or her title(s) or status
immediately prior to the Change in Control, or a substantial adverse alteration
in the nature or status of his or her responsibilities from those in effect
immediately prior to the Change in Control; (ii) a reduction in the
Participant’s annual base salary, target short-term or long term incentive award
opportunity (including any current payments that may be made thereunder, such as
the payment of dividend equivalents) as in effect immediately prior to the
Change in Control, except for across-the-board salary reductions similarly
affecting all officers of the Company and its Subsidiaries and all managers in
equivalent positions of any person in control of the Company; (iii) the failure
to pay to the Participant any portion of his or her current compensation or
deferred compensation under any compensation or benefit program within seven (7)
days of the date such payment is due; (iv)  the failure to continue to
provide the Participant with benefits substantially similar to those enjoyed by
him or her under the pension, life insurance, medical, health, accident and
disability plans, or any fringe benefit  material to the Participant
that he or she was eligible for at the time of the Change in Control; the direct
or indirect material reduction in any of such benefits; or the failure to
provide the Participant with the number of paid vacation days to which he or she
is entitled on the basis of his or her duration of service with the Company and
its Subsidiaries, in accordance with the Employer's normal vacation policy in
effect immediately prior to the Change in Control; (v) the failure to obtain a
satisfactory agreement from any successor to assume and agree to perform this
Plan, as contemplated in Article 7; or (vi) any purported termination of the
Participant’s employment after a Change in Control which is not effected
pursuant to a notice of termination satisfying the requirements of Sections 4.1
and 8.1 (for purposes of this Plan, no such purported termination shall be
effective); provided, however, that a good faith determination within ninety
(90) days of the occurrence of a Change in Control by a Participant who is the
Chief Executive Officer of the Company (the “CEO”) or who was an Executive
Officer on January 1, 1990 that, as a result of such Change in Control, he or
she is not able to discharge his or her duties effectively shall constitute Good
Reason.

     

    An
isolated, insubstantial and inadvertent action taken in good faith implicating
clauses (i), (iv), (v) or (vi) of this definition which is fully corrected by
the Company prior to the Date of Termination specified in the notice of
termination shall not constitute Good Reason.  A Participant’s right
to terminate his or her employment for Good Reason shall not be affected by his
or her incapacity due to physical or mental impairment.  A
Participant’s continued employment shall not constitute consent to, or a waiver
of rights with respect to, any circumstance constituting Good Reason
hereunder.

     

    
      
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    “Leave of
Absence” shall mean when a
Participant is absent from employment with an Employer on a leave of absence
military leave, or sick leave, where the leave is given in order to prevent a
break in the continuity of term of employment, and permission for such leave is
granted (and not revoked) in conformity with the rules of the Employer that
employs the individual, as adopted from time to time and the Employee is
reasonably expected to return to service.  Except as set forth below,
the leave shall not exceed six (6) months for purposes of this Plan, and the
Employee shall incur a Termination of Employment upon cessation of such leave if
the Employee does not return to work prior to that time, 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)), and the Employee shall incur a
Termination of Employment upon cessation of such leave.  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.  For purposes of
this Plan, a Leave of Absence shall be deemed to also include a transfer by an
Employer of a person to, and continuous employment by, an entity for a
rotational work assignment.  To be a rotational work assignment, the
Employer must have indicated in writing to the person that the person was to be
rehired by the Employer upon the earlier of the termination of the rotational
work assignment and the end of the six month period commencing on the first day
of such potential work assignment.

     

    “Officer Level
Employee” means any Executive Officer and any Employee who is an
“officer level” Employee for compensation purposes as shown on the records of
the Company and its Subsidiaries.

     

    “Participant”
means the CEO, each Officer Level Employee who had in effect on September 28,
2006 a Severance Benefits – Change in Control Agreement with the Company, and
each other Officer Level Employee (i) who is designated from time to time in
writing by the CEO and (ii) whose designation is evidenced in writing by a
notification of participation to the Employee signed by the CEO.  A
person shall cease to be a Participant upon (a) the Participant’s Termination of
Employment prior to a Potential Change in Control or (b) the Board, the
Committee or the CEO determining, in their sole discretion, that the person
shall cease to qualify for benefits under this Plan (but any such determination
made in respect of a Participant shall be considered an amendment of the Plan
adverse to the interests of the affected Participant and is subject to the
provisions of Section 8.5).

     

    “Potential Change in
Control” shall be deemed to have occurred if (i) the Company
enters into an agreement, the consummation of which would result in the
occurrence of a Change in Control or (ii)  the Board adopts a
resolution to the effect that, for purposes of this Plan, a potential change in
control of the Company has occurred.

     

    “Qualifying
Termination” means a Participant’s Termination of Employment
during the Termination Period (i) by the Employer other than for Cause or (ii)
by the Participant for Good Reason.  Termination of Employment on
account of death, Disability or Retirement shall not be treated as a Qualifying
Termination.

     

    
      
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    “Retirement”
means the Participant’s mandatory retirement in accordance with the Employer’s
mandatory retirement age policy, if any, for officers as in effect immediately
prior to a Change in Control or in accordance with any retirement arrangement
established with the Participant’s consent with respect to him or her; provided,
however, that a Participant's termination for Good Reason shall not constitute
Retirement.

     

    “Specified Employee” means any
Participant who is a “Key Employee” (as defined in Code Section 416(i) without
regard to paragraph (5) thereof), as determined by the Company in accordance
with its uniform policy with respect to all arrangements subject to Code Section
409A, based upon the twelve (12) month period ending on each December 31st (such
twelve (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 Specified Employees for purposes of
the Plan during the twelve (12) month period that begins on the first day of the
4th month following the close of such identification period.

     

    “Subsidiary”
means any corporation, partnership, venture or other entity in which the Company
holds, directly or indirectly, a fifty percent (50%) or greater ownership
interest.  The Committee may, at its sole discretion, designate, on
such terms and conditions as the Committee shall determine, any other
corporation, partnership, limited liability company, venture or other entity a
Subsidiary for purposes of this Plan.

     

    “Termination of
Employment” means the event where the Participant has a
“separation from service,” as defined under Section 409A, with the
Employer. 

     

    “Termination
Period” means the period of time beginning with a Change in
Control and ending on the second anniversary of such Change in
Control.

     

    Article 3  - Effectiveness
of the Plan

     

    This Plan
shall be effective as of January 1, 2007.  Nothing in this Plan shall
be deemed to entitle any Participant to continued employment with any Employer,
and if a Participant's employment with any Employer terminates prior to a Change
in Control, the Participant shall have no rights under this Plan (except in the
case of a Qualifying Termination).

     

    Article 4 - Payments Upon a
Qualifying Termination

     

    4.1  Termination of
Employment.

     

    (a)  Notice of
Termination.  Any purported termination of a
Participant’s employment during the Termination Period by an Employer or by a
Participant shall be communicated by written notice of termination to the other
party in accordance with this Section 4.1 and Section 8.1 (regarding
notices).  For purposes of this Plan, a “notice of termination” shall
mean a notice which shall indicate the specific termination provision in this
Plan relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for the Participant’s Termination of
Employment under the provision so indicated.  The failure by the
Participant or the Employer to set forth in such notice any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any right
of the Participant or the Employer hereunder or preclude the Participant or the
Employer from asserting such fact or circumstance in enforcing the Participant’s
or the Employer’s rights hereunder.

     

    
      
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      (b)  Date of
Termination.  If a Participant has a Qualifying
Termination, the Date of Termination shall be the date specified in the notice
of termination (which, in the case of a termination other than for Cause or a
termination for Good Reason shall not be less than fifteen (15) nor more than
sixty (60) days from the date such notice is given).  If a
Participant's Termination of Employment is for Cause, the Date of Termination
shall not be less than thirty (30) days from the date notice is
given.  In the event of a dispute arising out of the Participant’s
Termination of Employment, the Date of Termination will be determined in
accordance with Section 4.1(c).

    

     

    (c)  Disputes Involving
Termination.  If within fifteen (15) days after any
notice of termination is given, or, if later, prior to the Date of Termination
(as determined without regard to this provision), the party receiving such
notice of termination notifies the other party that a dispute exists concerning
whether the termination is a Qualifying Termination or for Cause, the Date of
Termination for purposes of Section 4.2 hereof shall be the date on which the
dispute is finally resolved either by mutual written agreement of the parties,
or by a final judgment, order or decree of a court of competent jurisdiction
(which is not appealable or with respect to which the time for appeal therefrom
has expired and no appeal has been perfected); provided, however, that if the
dispute is not resolved prior to the end of the Termination Period, the
Termination Period shall be extended so as not to deprive the Participant of the
benefits under Section 4.2 in respect of such termination;  provided
further, that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.  During the
pendency of any such dispute (the “Dispute Period”), subject to Section 6.1, the
Employer will (i) continue to pay the Participant his or her full Base Salary in
accordance with the Company’s payroll practice in effect from time to time
(provided that the amount paid in any calendar year shall be equal to the
Participant’s annual rate of Base Salary or a proportionate fraction thereof
with respect to portions of calendar years during the Dispute Period (other than
amounts that are required to be paid in a subsequent calendar year pursuant to
Section 6.1)), and (ii) continue the Participant as a participant in all Health
Benefits as described in Section 4.2(c) of the Plan (subject to Section 6.2 of
the Plan) on the same basis as provided under Section 4.2(c).  Amounts
paid under this provision are in addition to all other amounts due under this
Plan and shall not be offset against or reduce any other amounts due under this
Plan.

     

    
      
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    4.2  Severance
Payments.

     

             If the Participant has a Qualifying
Termination, then the Company shall or shall cause the Employer to provide
to the Participant:

     

    (a)  his or
her full base salary through the Date of Termination at the rate in effect at
the time notice of termination is given, plus all other amounts to which he or
she is entitled under any compensation plan in effect immediately prior to the
Change in Control, at the time such payments are due; provided that, subject to
the Participant’s execution of (and not revoking) a Release in the form attached
to this Plan as Schedule A (the “Release”) for purposes of
determining the amount to which a Participant is entitled under the Financial
Counseling Program, he or she shall be regarded as having retired under the
terms of the program; and

     

    (b)  subject
to the Participant’s execution of (and not revoking) a Release, a lump sum cash
payment equal to the result of multiplying (i) the sum of (A) the Participant’s
Base Salary, plus (B) the Participant’s Bonus Amount by (ii) 2.99; provided,
however, that if the amount of such payment cannot be finally determined on or
before such day, the Participant shall be paid an estimate, as determined in
good faith by the Company of the minimum amount of such payment and the
remainder of such payment (together with interest at the rate provided in
section 1274(b)(2)(B) of the Internal Revenue Code of 1986, as amended (the
“Code”)) as soon as the
amount thereof can be determined; provided further that, in the event that the
amount of the estimated payment exceeds the amount subsequently determined to
have been due, such excess shall be reimbursed by the Participant, payable on
the fifth (5th) day after demand
by the Company (together with interest at the rate provided in section
1274(b)(2)(B) of the Code); and

     

    (c)  subject
to the Participant’s execution of (and not revoking) a Release, if the
Participant is not otherwise entitled to such benefits at no cost to him or her
pursuant to the terms of such plans, subject to section 6.2 of the Plan, for a
thirty six (36) month period from the Date of Termination or until December 31
of the year in which the Participant reaches age sixty-five (65), whichever is
the shorter period (the “Benefit Period”), life, health
and dental benefits (including spouse and dependent coverage) (“Health
Benefits”) substantially similar to those that he or she was  receiving
immediately prior to the Date of Termination and such benefits shall be provided
at no cost to the Participant (or spouse and
dependents).  Notwithstanding the foregoing, the Participant shall not
be provided any Health Benefit pursuant to this Section 4(c) if an equivalent
benefit is actually received by the Participant during the Benefit Period from
another Employer following his or her Date of Termination and any such Health
Benefit actually received by the Participant shall be reported by the
Participant to the Company; and

     

    (d)  subject
to the Participant’s execution of (and not revoking) a Release, if the
Participant is subject to any excise tax imposed under Section 4999 of the Code
(the “Excise Tax”)
by reason of the Change in Control and the prior deferral of income (whether or
not the Participant has a Qualifying Termination), then the Company shall pay to
the Participant an amount as specified in Schedule B.

     

    
      
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(e)  Except as
otherwise expressly provided pursuant to this Plan, this Plan shall be construed
and administered in a manner which avoids duplication of compensation and
benefits which may be provided under any other plan, program, policy, or other
arrangement or individual contract.  In the event a Participant is
covered by any other plan, program, policy, individually negotiated agreement or
other arrangement, in effect as of his or her Date of Termination, that may
duplicate the payments and benefits provided for in this Article 4, the Company
may reduce or eliminate the duplicative benefits provided for under the Plan but
solely to the extent such reduction or elimination  does not cause the
Participant to be subject to penalty taxes under Section
409A.  

    

     

    (f)  This Plan
does not abrogate any of the usual entitlements which a Participant has or will
have, first, while a regular employee, and subsequently, after termination, and
thus a Participant shall be entitled to receive all benefits payable to him or
her under each and every qualified plan, welfare plan and any other plan or
program relating to benefits and deriving from his or her employment with the
Company and it Subsidiaries, but solely in accordance with the terms and
provisions thereof. 

     

    Article 5 - Withholding
Taxes

     

    The
Company and its Subsidiaries may withhold from all payments due to the
Participant (or his beneficiary or estate) hereunder all taxes which, by
applicable federal, state, local or other law, is required to be
withheld.

     

    Article 6 - Certain Additional
Agreements under Section 409A

     

    6.1  Delay of
Payment.  In the event that
a payment to be made pursuant to Sections 4.1(c), 4.2(b) or Schedule B or any
other amounts under this Plan that constitutes non-qualified deferred
compensation under Section 409A of the Code ("Section 409A") is to be made
to a “Specified Employee,” such payment will be delayed for six (6) months after
the Date of Termination if required in order to avoid additional tax under
Section 409A and paid in a single lump sum on the first business day of the
month following the end of such six (6) month period.  If a
Participant who is a Specified Employee dies within six (6) months following
such Termination of Employment, any such delayed payments shall not be further
delayed, and shall be immediately payable within thirty (30) days to his or her
estate in accordance with the applicable provisions of this Plan.

     

    6.2  Health
Benefits.  Health Benefits shall be provided in such a manner
that such benefits (and the costs and premiums thereof) are excluded from the
Participant’s income for federal income tax purposes and, if the Company
reasonably determines that providing continued coverage under one or more of its
health care benefit plans contemplated herein could be taxable to the
Participant, the Company shall provide such benefits at the level required
hereby through the purchase of individual insurance coverage. 

     

    
      
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    6.3  Cash Payments.  The
Company shall use its best efforts to pay, or shall use its best efforts to
cause the Employer to pay, to the Participant the cash lump sum described
in  Section 4.2(b) within eight (8) days following the execution by
the Participant of the Release (subject to the Participant not revoking such
Release); provided, however, that in no event shall such payment be made later
than the later of (i) the date provided in Section 6.1, if applicable, and (ii)
the end of the ninety (90) day period commencing with the Date of
Termination.

     

    6.4  No Adverse
Action.  No Employer will take any action that
would expose any payment or benefit to a Participant under this Plan to the
additional tax imposed under Section 409A unless (i) the Employer is obligated to
take the action under an agreement, plan or arrangement, (ii) a Participant
requests the action, (iii) the Employer advises such Participant in writing that
the action may result in the imposition of the additional tax and (iv) such
Participant subsequently requests the action in a writing that acknowledges that
he or she will be responsible for any effect of the action under Section
409A.

     

    Article 7 - Successors; Binding
Agreement

     

    7.1  The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company to
unconditionally assume all of the obligations of the Employer hereunder.  Failure of the Company to
obtain such assumption prior to the effectiveness of any such succession shall
constitute Good Reason hereunder and shall entitle the Participants to
compensation and other benefits in the same amount and on the same terms as the
Participants would be entitled hereunder if they had a Qualifying Termination,
except that for purposes of implementing the foregoing, the date on which any
succession becomes effective shall be deemed the Date of
Termination.

     

    7.2  The benefits provided under this Plan
shall inure to the benefit of and be enforceable by the Participant’s personal
or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.  If the Participant shall die
while any amounts would be payable to the Participant hereunder had the
Participant continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Plan to such person
or persons appointed in writing by the Participant to receive such amounts or,
if no person is so appointed, to the Participant’s estate.

     

    Article 8 - Miscellaneous

     

    8.1  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 the Company or its General Counsel, Secretary
or Assistant Secretary, or their respective delegates or shall be made in such
other manner as permitted or required by the Company or its 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 the Company (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.

     

    
      
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    If not otherwise specified by this Plan
or the Company, any notice or filing required or permitted to be given to the
Company under the Plan shall be delivered to the principal office of the
Company, directed to the attention of the Senior Executive Vice President in
charge of Human Resources for the Company 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 the Employer or, at the option of the
Company, to the Participant’s e-mail address as shown on the records of the
Employer.  It is the Participant’s responsibility to ensure that the
Participant’s addresses are kept up to date on the records of the
Employer.  In the case of notices affecting multiple Participants, the
notices may be given by general distribution at the Participants’ work
locations.

     

    8.2  No Mitigation; Resolution of
Disputes and Costs.

     

            (a)  In no event shall the Participant be
obligated to seek other employment or take other action by way of mitigation of
the amounts payable to the Participant under any of the provisions of this Plan
and, except as provided in Section 4.2(c), such amounts shall not be reduced
whether or not the Participant obtains other employment.

     

            (b)  Participants may submit claims for
benefits by giving notice to the Company pursuant to Section 8.1.  If
a Participant believes that he or she has not received coverage or benefits to
which he or she is entitled under the Plan, the Participant may notify the
Company in writing of a claim for coverage or benefits.  If the claim
for coverage or benefits is denied in whole or in part, the Company shall notify
the applicant in writing of such denial within thirty (30) days (which may be
extended to sixty (60) days under special circumstances), with such notice
setting forth: (i) the specific reasons for the denial; (ii) the Plan provisions
upon which the denial is based; (iii) any additional material or information
necessary for the applicant to perfect his or her claim; and (iv) the procedures
for requesting a review of the denial.  Upon a denial of a claim by
the Company, the Participant may:  (i) request a review of the denial
by the Board or, where review authority has been so delegated, by such other
person or entity as may be designated by the Board for this purpose; (ii) review
any Plan documents relevant to his or her claim; and (iii) submit issues and
comments to the Board or its delegate that are relevant to the
review.  Any request for review must be made in writing and received
by the Board or its delegate within sixty (60) days of the date the applicant
received notice of the initial denial, unless special circumstances require an
extension of time for processing.  The Board or its delegate will make
a written ruling on the applicant’s request for review setting forth the reasons
for the decision and the Plan provisions upon which the denial, if appropriate,
is based.  This written ruling shall be made within thirty (30) days
of the date the Board or its delegate receives the applicant’s request for
review unless special circumstances require an extension of time for processing,
in which case a decision will be rendered as soon as possible, but not later
than sixty (60) days after receipt of the request for review.  All
extensions of time permitted by this Section 18 will be permitted at the sole
discretion of the Board or its delegate.  If the Board does not
provide the Participant with written notice of the denial of his or her appeal,
the Participant’s claim shall be deemed denied.

     

    
      
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(c)  Notwithstanding
anything in this Plan to the contrary, any court, tribunal or arbitration panel
that adjudicates any dispute, controversy or claim arising between a Participant
and any Employer, or any of their delegates or successors, in respect of a
Participant’s Qualifying Termination, will apply a denovo standard of
review to any determinations made by such person. Such denovo standard shall
apply notwithstanding the grant of full discretion hereunder to any such person
or characterization of any such decision by such person as final, binding or
conclusive on any party.

    

     

            (d)  If any
contest or dispute shall arise under this Plan involving a Participant’s Termination of
Employment or involving the failure or refusal of any Employer to perform fully
in accordance with the terms hereof, the Company shall or shall cause the
Employer to reimburse the Participant on a current basis for all reasonable
legal fees and related expenses, if any, incurred by the Participant at any time from the Effective Date of
this Plan through the Participant’s remaining lifetime (or, if longer, through
the 20th anniversary of the Change in Control) in connection with such contest or
dispute (regardless of the result thereof), together with interest at the rate
provided in section 1274(b)(2)(B) of the Code, such interest to accrue thirty
(30) days from the date the Company receives the Participant’s statement
for such fees and expenses through the date of payment thereof, regardless of
whether or not the Participant’s claim is upheld by a court of competent
jurisdiction or an arbitration panel; provided, however, that the
Participant shall be required to repay immediately any such amounts to the
Employer to the extent that a court or an arbitration panel issues a final and
non-appealable order setting forth the determination that the position taken by
the Participant was frivolous or
advanced by the Participant in bad faith. To comply with Section 409A, in no event
shall the payments by the Employer under this Section 8.2(d) be made later than
the end of the calendar year next following the calendar year in which such fees
and expenses were incurred, provided, that the Participant shall have submitted
an invoice for such fees and expenses at least ten (10) days before the end of
the calendar year next following the calendar year in which such fees and
expenses were incurred.  The amount of such legal fees and expenses
that the Employer is obligated to pay in any given calendar year shall not
affect the legal fees and expenses that the Employer is obligated to pay in any
other calendar year, and the Participant’s right to have the Employer pay such
legal fees and expenses may not be liquidated or exchanged for any other
benefit. 

     

    8.3  Survival.  The respective obligations
and benefits afforded to the Company and the Participant as provided in Articles
4 (to the extent that payments or benefits are owed as a result of a Qualifying
Termination that occurs during the term of this Plan), 5, 6, 7 and 8 shall
survive the termination of this Plan.

     

    
      
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    8.4  Governing Law;
Validity.

     

    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 Delaware, 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.

     

    8.5  Amendment and
Termination.  The Board or the Committee
may amend (and, by amendment, terminate) this Plan at any time; provided, however, that (i) no amendment that reduces or
eliminates any benefit or other entitlement of any Participant or that is
otherwise adverse to the interests of a Participant (an “Adverse Amendment”) may take effect prior to the
beginning of any calendar year, and any such amendment shall be void
and of no effect, unless the Participant was notified of
such amendment by September 30 of the prior year, (ii) no Adverse Amendment may
be adopted during the period of time beginning on a Potential Change in Control
and ending on the earlier of (a) the termination of the agreement that
constituted the Potential Change in Control and (b) the second anniversary of the resulting Change in
Control, without the Participant’s written consent, and (iii) no Adverse
Amendment may be adopted during the period commencing on a Change in Control and
ending on the second anniversary of the Change in Control without the
Participant’s written consent. The restrictions on amendments set forth
in the prior sentence shall not apply to any amendment adopted within the period
specified in clauses (ii) or (iii), above, if the following three conditions are
satisfied: (1) the amendments do not take effect until the expiration of the
periods, as applicable, set forth in such clauses, (2) each adversely affected
Participant receives written notice of the adoption of such amendments within
ten (10) days of such adoption and (3) such written notice is provided at least
ninety (90) days prior to such amendments taking effect.

     

    8.6  Interpretation and
Administration.  The Plan shall be
administered by the Board.  The Board may delegate any of its powers
under the Plan to a committee thereof or prior to a Change in Control, to the
CEO.  Unless otherwise provided in this Plan, actions of the Board or
such committee shall be taken by a majority vote of its members.  All
references to the “Board” herein shall be deemed to be references to such
delegate, as appropriate.  The Board shall have the authority (i) to
exercise all of the powers granted to it under the Plan, (ii) to construe,
interpret and implement the Plan, (iii) to prescribe, amend and rescind rules
and regulations relating to the Plan, (iv) to make all determinations necessary
or advisable in administration of the Plan and (v) to correct any defect, supply
any omission and reconcile any inconsistency in the Plan.

     

    8.7  Type of
Plan.  This Plan is intended to be,
and shall be interpreted as an unfunded employee welfare plan under Section 3(1)
of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and
Section 2520.104-24 of the Department of Labor Regulations, maintained primarily
for the purpose of providing employee welfare benefits, to the extent that it
provides welfare benefits, and under Sections 201, 301 and 401 of ERISA, as a
plan that is unfunded and maintained primarily for the purpose of providing
deferred compensation, to the extent that it provides such compensation, in each
case for a select group of management or highly compensated
employees.

     

    8.8  Nonassignability.  Benefits under the Plan may
not be sold, assigned, transferred, pledged, anticipated, mortgaged, or
otherwise encumbered, transferred, hypothecated, or conveyed in advance of
actual receipt of the amounts, if any, payable hereunder, or any part thereof by
the Participant.

     


    
      
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    Schedule A

     

    RELEASE AND WAIVER

     

    I, ________________, hereby fully waive
and forever release and discharge Company, AT&T, any and all other
subsidiaries of Company and of AT&T, their officers, directors, agents,
servants, employees, successors and assigns and any and all employee benefit
plans maintained by AT&T or any subsidiary thereof and/or any and all
fiduciaries of any such plan from any and all common law and/or statutory
claims, causes of action or suits of any kind whatsoever arising from or in
connection with my past employment by Company (and any AT&T subsidiary to
the extent applicable) and/or my separation therefrom, including but not limited
to claims, actions, causes of action or suits of any kind allegedly arising
under the Employee Retirement Income Security Act (ERISA), as amended, 29 USC §§
1001 et seq.; the Rehabilitation Act of 1973, as amended, 29 USC §§ 701 et seq.;
the Civil Rights Acts of 1866 and 1870, as amended, 42 USC §§ 1981, 1982 and
1988; the Civil Rights Act of 1871, as amended, 42 USC §§ 1983 and 1985; the
Civil Rights Act of 1964, as amended, 42 USC § 2000d et seq.; the Americans With
Disabilities Act, as amended, 42 USC §§ 12101 et seq., and the Age
Discrimination in Employment Act of 1967 (ADEA), as amended, 29 USC §§ 621 et
seq., known and unknown. In addition, I, ___________, agree not to file any
lawsuit or other claim seeking monetary damage or other relief in any state or
federal court or with any administrative agency against any of the
aforementioned parties in connection with or relating to any of the
aforementioned matters. Provided, however, by executing this Release and Waiver,
I, ________________, do not waive rights or claims that may arise after the date
of execution; provided further, however, this Release and Waiver shall not
affect my right to receive or enforce through litigation, any indemnification
rights to which I am entitled as a result of my past employment by the Company
or contract rights pursuant to the Agreement and Release and Waiver of Claims
entered into contemporaneously herewith and, if applicable, any subsidiary of
AT&T; and, provided further, this Release and Waiver shall not affect the
ordinary distribution of benefits/entitlements, if any, to which I am entitled
upon termination from Company; it being understood by me that said
benefits/entitlements, if any, will be subject to and provided in accordance
with the terms and conditions of their respective governing plan and this
Agreement.

     


    
      
        A-1

      

      
        
        

        
          

        

      

      
        
        

      

    


    Schedule B

     

    Additional Reimbursement
Payments by the Company

     

    (a)           Pursuant to Section 4.2(d) of the Plan,
in the event it shall be determined that any payment, award, benefit or
distribution (or any acceleration of any payment, award, benefit or
distribution) by the Company (or any of its affiliated entities) or any entity
which effectuates a Change in Control (or any of its affiliated entities) to or
for the benefit of the Participant (whether pursuant to the terms of this Plan
or otherwise, but determined without regard to any additional payments required
under this Schedule B) (the “Payments”) would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
“Code”), or any interest or penalties are
incurred by the Participant with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the “Excise
Tax”), then
the Company shall
remit to the Internal
Revenue Service or any other applicable taxing authority an additional payment (a “Reimbursement
Payment”) in
an amount such that after payment by the Participant of all taxes (including any
Excise Tax) imposed upon the Reimbursement Payment, the Participant retains an
amount of the Reimbursement Payment equal to the Excise Tax imposed upon the
Payments; provided, however, that the Company shall have the obligation to make
a Reimbursement Payment only to the extent the Participant is subject to the
Excise Tax by virtue of the reduction of his or her “base amount” (as defined in
Section 280G(b)(3) of the Code) by reason of his or her election to defer a
portion of his or her compensation payable during the applicable period (such
Excise Tax, a “Qualifying Excise
Tax”).  For purposes of
determining the amount of the Reimbursement Payment, the Participant shall be
deemed to (i) pay federal income taxes at the highest marginal rates of federal
income taxation for the calendar year in which the Reimbursement Payment is to
be made and (ii) pay applicable state and local income taxes at the highest
marginal rate of taxation for the calendar year in which the Reimbursement
Payment is to be made, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local
taxes.

     

    (b)           Subject to the provisions of Paragraph
(a), all determinations required to be made under this Schedule B, including
whether and when a Reimbursement Payment is required, the amount of such
Reimbursement Payment, the amount of any Option Redetermination (as defined
below), and the assumptions to be utilized in arriving at such determinations,
shall be made by a public accounting firm that is retained by the Company as of
the date immediately prior to the Change in Control (the “Accounting
Firm”) which
shall provide detailed supporting calculations both to the Company and the
Participant within fifteen (15) business days of the receipt of notice from the
Company or the Participant that there has been a Payment, or such earlier time
as is requested by the Company (collectively, the “Determination”).  For the avoidance of
doubt, the Accounting Firm may use the Option Redetermination amount in
determining the reduction of the Payments to the Safe Harbor
Cap.  Notwithstanding the foregoing, in the event (i) the Board shall
determine prior to the Change in Control that the Accounting Firm is precluded
from performing such services under applicable auditor independence rules or
(ii) the Audit Committee of the Board determines that it does not want the
Accounting Firm to perform such services because of auditor independence
concerns or (iii) the Accounting Firm is serving as accountant or auditor for
the person(s) effecting the Change in Control, the Board shall appoint another
nationally recognized public accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder).  All fees and expenses of the Accounting Firm shall
be borne solely by the Company, and the Company shall enter into any agreement
reasonably requested by the Accounting Firm in connection with the performance
of the services hereunder.  The Reimbursement Payment under this
Schedule B with respect to any Payments shall be made no later than thirty (30)
days following such Payment.  If the Accounting Firm determines that
no Qualifying Excise Tax is payable by a Participant, it shall furnish the
Participant with a written opinion to such effect, and to the effect that
failure to report the Qualifying Excise Tax, if any, on the Participant’s
applicable federal income tax return will not result in the imposition of a
negligence or similar penalty.  The Determination by the Accounting
Firm shall be binding upon the Company and the Participant.

     

    
      
        B-1

      

      
        
        

        
          

        

      

      
        
        

      

    

    As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the Determination, it is
possible that Reimbursement Payments which will not have been made by the
Company should have been made (“Underpayment”) or Reimbursement Payments are made by
the Company which should not have been made (“Overpayment”), consistent with the calculations
required to be made hereunder.  In the event the amount of the
Reimbursement Payment is less than the amount necessary to reimburse the
Participant for the Qualifying Excise Tax, the Accounting
Firm shall determine the amount of the Underpayment that has occurred and any
such Underpayment (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) shall be promptly remitted to the Internal Revenue Service
or any other applicable taxing authority an additional payment (to or for the benefit of the
Participant.  In the event the amount of the Reimbursement Payment
exceeds the amount necessary to reimburse the Participant for the Qualifying Excise Tax, the Accounting Firm shall
determine the amount of the Overpayment that has been made and any such
Overpayment (together with interest at the rate provided in Section 1274(b)(2)
of the Code) shall be promptly paid by the Participant (to the extent the
Participant has received a refund if the applicable Qualifying Excise Tax has
been paid to the Internal Revenue Service) to or for the benefit of the
Company.  The Participant shall cooperate, to the extent his or
her expenses are reimbursed by the Company,
with any reasonable requests by the Company in connection with any contests or
disputes with the Internal Revenue Service in connection with the Excise
Tax.  In the event that the Company makes a Reimbursement Payment to
the Participant and subsequently the Company determines that the value of any
accelerated vesting of stock options held by the Participant shall be
redetermined within the context of Treasury Regulation §1.280G-1 Q/A 33 (the
“Option
Redetermination”), the Participant shall (i) file with
the Internal Revenue Service an amended federal income tax return that claims a
refund of the overpayment of the Qualifying Excise Tax attributable to such
Option Redetermination and (ii) promptly pay the refunded Qualifying Excise Tax to the Company; provided that the Company shall pay all
reasonable professional fees incurred in the preparation of the Participant’s
amended federal income tax return.  If the Option Redetermination
occurs in the same year that the Reimbursement Payment is included in the
Participant’s taxable income, then in addition to returning the refund to the
Company, the Participant will also promptly return to the Company any tax
benefit realized by the return of such refund and the return of the additional
tax benefit payment (all determinations pursuant to this sentence shall be made
by the Accounting Firm).

     

    Notwithstanding any other provision to
the contrary, a Reimbursement Payment described in this Schedule B shall be made
by the end of the calendar year next following the calendar year in which the
related taxes are remitted to the taxing authority by the
Participant. 

     

     

     

     

     

    B-3